01a52131
04-20-2005
Judith K. Cozzino, Complainant, v. Dr. Francis J. Harvey, Secretary, Department of the Army, Agency.
Judith K. Cozzino v. Department of the Army
01A52131
April 20, 2005
.
Judith K. Cozzino,
Complainant,
v.
Dr. Francis J. Harvey,
Secretary,
Department of the Army,
Agency.
Appeal No. 01A52131
DECISION
Complainant filed a timely appeal with this Commission from an agency
final determination dated December 13, 2004, finding that it was in
compliance with a September 19, 2001 settlement agreement. The Commission
accepts the appeal. See 29 C.F.R. � 1614.402; 29 C.F.R. � 1614.504(b);
and 29 C.F.R. � 1614.405.
The September 19, 2001 settlement agreement provided, in pertinent
part, that:
.....Within 30 days of the date of this Agreement the [agency] will
initiate the necessary paper work to:
pay complainant one lump sum of one hundred and ten thousand
($110,000.00) dollars in consideration of, but not limited to: past
and future pecuniary damages, past and future non-pecuniary damages,
attorney fees and litigation costs.
The payment will be issued under the name of both [complainant]
and [her attorney].<1>
.....No deductions will be made to this lump sum unless the paying agent
(the Defense Finance and Accounting Service or "DFAS") determines,
after consulting with the [agency], that it is illegal and contrary to
applicable laws and regulations.
In correspondence to the agency dated November 22, 2004,
complainant, through her attorney, claimed breach of the settlement
agreement. Complainant acknowledged that she received the above referenced
lump sum payment, with no deductions taken, and that everything was
"fine," until October 25, 2004, when the Internal Revenue Service (IRS)
notified her that she owed $65,694.48 in back taxes. Complainant argues
that the agency improperly, and in violation of the settlement agreement,
informed the IRS that the lump sum was taxable, thereby breaching the
settlement agreement. In subsequent correspondence to the agency, dated
January 19, 2005, complainant avers that the agency also breached the
settlement agreement when it failed to make the appropriate deductions
to the lump sum payment, resulting in her tax debt.
In its December 13, 2004 final determination, the agency found that it
timely issued the lump sum payment at issue, and indicated that it is
not a breach to report a lump sum payment for compensatory damages to
the IRS. On appeal, complainant states that at the time the settlement
agreement was executed, the parties were uncertain about the tax status
of the lump sum payment, and that was the reason that it was left to
DFAS to make necessary deductions, if any. When no deductions were
made, complainant assumed that the payment was tax-free, and she did
not realize that the agency reported it as taxable income to the IRS.
Complainant asserts that while she now acknowledges that the lump sum
payment is taxable, she avers that the agency acted in a retaliatory
manner when it identified her to the IRS as "self-employed," and should
have instead made "mandatory tax deductions" to the lump sum payment,
given that she was still in the federal system as a disability retiree.
Complainant alleges that the agency perpetrated this "scheme," for the
sole purpose of causing her "tax problems."
In response, in pertinent part, the agency asserts that the taxability
of the lump sum was not addressed in the settlement agreement, except
to designate the DFAS as the paying agent responsible for making any
required deductions. The agency asserts that complainant's 'tax problem'
is between her and the IRS, and that it is therefore beyond the purview
of the settlement agreement.
EEOC Regulation 29 C.F.R. � 1614.504(a) provides that any settlement
agreement knowingly and voluntarily agreed to by the parties, reached at
any stage of the complaint process, shall be binding on both parties.
The Commission has held that a settlement agreement constitutes a
contract between the employee and the agency, to which ordinary rules
of contract construction apply. See Herrington v. Department of Defense,
EEOC Request No. 05960032 (December 9, 1996). The Commission has further
held that it is the intent of the parties as expressed in the contract,
not some unexpressed intention, that controls the contract's construction.
Eggleston v. Department of Veterans Affairs, EEOC Request No. 05900795
(August 23, 1990). In ascertaining the intent of the parties with regard
to the terms of a settlement agreement, the Commission has generally
relied on the plain meaning rule. See Hyon O v. United States Postal
Service, EEOC Request No. 05910787 (December 2, 1991). This rule states
that if the writing appears to be plain and unambiguous on its face,
its meaning must be determined from the four corners of the instrument
without resort to extrinsic evidence of any nature. See Montgomery
Elevator Co. v. Building Eng'g Servs. Co., 730 F.2d 377 (5th Cir. 1984).
The settlement agreement is silent on the tax treatment of the lump sum
payment awarded to complainant and her attorney. Complainant presents
no evidence to prove that the payment was subject to mandatory payroll
deductions, to include taxes, which appears unlikely given that the
payment is not designated as wages or retirement pay, and the settlement
agreement specified that payment be issued jointly to both complainant
and her attorney. Based on the record, there is no evidence to suggest
that the agency, or the DFAS, acted improperly in its report of this
payment as income to the IRS. Additionally, we find no evidence of
bad faith on the part of the agency, as suggested by complainant.
Notwithstanding complainant's arguments to the contrary, we concur
with the agency, that because the tax treatment of the lump sum is not
addressed in the settlement agreement, complainant's "tax problem" is
between herself and the IRS, and it is not a matter for the Commission
to adjudicate. See, generally, Gallagher v. Department of the Navy,
EEOC Appeal No. 01A45644 (December 21, 2004).
We AFFIRM the agency's final determination finding no breach of the
settlement agreement.
STATEMENT OF RIGHTS - ON APPEAL
RECONSIDERATION (M0701)
The Commission may, in its discretion, reconsider the decision in this
case if the complainant or the agency submits a written request containing
arguments or evidence which tend to establish that:
1. The appellate decision involved a clearly erroneous interpretation
of material fact or law; or
2. The appellate decision will have a substantial impact on the policies,
practices, or operations of the agency.
Requests to reconsider, with supporting statement or brief, must be filed
with the Office of Federal Operations (OFO) within thirty (30) calendar
days of receipt of this decision or within twenty (20) calendar days of
receipt of another party's timely request for reconsideration. See 29
C.F.R. � 1614.405; Equal Employment Opportunity Management Directive for
29 C.F.R. Part 1614 (EEO MD-110), 9-18 (November 9, 1999). All requests
and arguments must be submitted to the Director, Office of Federal
Operations, Equal Employment Opportunity Commission, P.O. Box 19848,
Washington, D.C. 20036. In the absence of a legible postmark, the
request to reconsider shall be deemed timely filed if it is received by
mail within five days of the expiration of the applicable filing period.
See 29 C.F.R. � 1614.604. The request or opposition must also include
proof of service on the other party.
Failure to file within the time period will result in dismissal of your
request for reconsideration as untimely, unless extenuating circumstances
prevented the timely filing of the request. Any supporting documentation
must be submitted with your request for reconsideration. The Commission
will consider requests for reconsideration filed after the deadline only
in very limited circumstances. See 29 C.F.R. � 1614.604(c).
COMPLAINANT'S RIGHT TO FILE A CIVIL ACTION (S0900)
You have the right to file a civil action in an appropriate United States
District Court within ninety (90) calendar days from the date that you
receive this decision. If you file a civil action, you must name as
the defendant in the complaint the person who is the official agency head
or department head, identifying that person by his or her full name and
official title. Failure to do so may result in the dismissal of your
case in court. "Agency" or "department" means the national organization,
and not the local office, facility or department in which you work. If you
file a request to reconsider and also file a civil action, filing a civil
action will terminate the administrative processing of your complaint.
RIGHT TO REQUEST COUNSEL (Z1199)
If you decide to file a civil action, and if you do not have or cannot
afford the services of an attorney, you may request that the Court appoint
an attorney to represent you and that the Court permit you to file the
action without payment of fees, costs, or other security. See Title VII
of the Civil Rights Act of 1964, as amended, 42 U.S.C. � 2000e et seq.;
the Rehabilitation Act of 1973, as amended, 29 U.S.C. �� 791, 794(c).
The grant or denial of the request is within the sole discretion of
the Court. Filing a request for an attorney does not extend your time
in which to file a civil action. Both the request and the civil action
must be filed within the time limits as stated in the paragraph above
("Right to File A Civil Action").
FOR THE COMMISSION:
______________________________
Carlton M. Hadden, Director
Office of Federal Operations
April 20, 2005
__________________
Date
1The settlement agreement further requires the agency to change its
records to reflect that complainant's separation from the agency was
due to a disability retirement, effective April 7, 1999.