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Home 9 Federal Legal Corner 9 Breach of Settlement, But No Remedy

Breach of Settlement, But No Remedy

Ms. Markey filed a petition for enforcement with the MSPB. In her petition, Ms. Markey requested that the terms of the settlement remain in force, but that the agency either be “sanctioned” for the disclosure or that her IRA appeal be reinstated. For its part, the agency denied that the disclosure was a breach of the settlement and argued that the terms of the settlement were ambiguous or that, if there was a breach, the breach was not “material.”

In finding that a breach occurred, the Board first noted that in construing the terms of a settlement, the words are of paramount importance and parol (other) evidence of the parties’ intent will only be considered if the terms of the agreement were ambiguous. The Board found no ambiguity in the nondisclosure provision of the settlement. Moreover, the Board found no justifiable reason for the breach because the agency could have disclosed that Ms. Markey “resigned” by disclosing the SF-50 Notice of Personnel Action to the EEO investigator without the need to disclose the settlement.

The Board also rejected the agency’s argument that the breach was not “material.” The Board noted its past decisions finding that the violation of a nondisclosure provision to be a material breach. The Board that the nondisclosure provision was a major benefit to Ms. Markey who, in exchange, agreed to withdraw her IRA appeal.

Nonetheless, the Board found that there was no available enforcement remedy that would cure the agency’s material breach. The Board noted that in most cases, the non-breaching party may elect to enforce the agreement or rescind the agreement and reinstate the appeal. However, in this case, Ms. Markey specifically requested that the agreement not be rescinded and that it remain in effect. The Board rejected Ms. Markey’s requests for sanctions against the agency, holding that sanctions are a means to enforce compliance. Because the agency had already failed to comply and Ms. Markey wanted the agreement to remain in force, the Board found sanctions to be inappropriate. The Board similarly denied Ms. Markey’s request that her IRA appeal be reinstated, finding no legal basis for allowing Ms. Markey to pursue her appeal without rescinding the settlement agreement.

This case points out the difficulties employees face when an agency breaches a settlement agreement. Often, the only remedy is to reinstate the case the employee settled. That remedy is frequently not a practical solution depending on the employee’s current circumstances at the time of the breach and the risks of litigating the case that was settled. In this case, Ms. Markey’s “victory” was a hollow one.