MODROWSKI v. DEPARTMENT OF VETERANS

• Decision Date: 13 June 2001
• Citation: 252 F.3d 1344
• Parties: (Fed. Cir. 2001) LEON J. MODROWSKI, Petitioner, v. DEPARTMENT OF VETERANS AFFAIRS, Respondent. 00-3311 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1344

252 F.3d 1344 (Fed. Cir. 2001)

LEON J. MODROWSKI, Petitioner, v. DEPARTMENT OF VETERANS AFFAIRS, Respondent.

00-3311

United States Court of Appeals for the Federal Circuit

DECIDED: June 13, 2001

Appealed from: Merit Systems Protection Board

[Copyrighted Material Omitted] Kenneth P. Dobbs, Kenneth Dobbs Law Offices, of Chicago, Illinois, argued for petitioner.

Marian E. Sullivan, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for respondent. With her on the brief were David M. Cohen, Director; and Bryant G. Snee, Assistant Director. Of counsel on the brief was Gregory Burke, Attorney, Office of Regional Counsel, Department of Veterans Affairs, Hines, Illinois.

Before MAYER, Chief Judge, MICHEL and CLEVENGER, Circuit Judges.

MICHEL, Circuit Judge.

This is a federal employment case. Leon Modrowski petitions for review of the June 24, 1999 decision of the Merit Systems Protection Board ("Board") affirming the decision of the Department of Veterans Affairs ("DVA," or "agency") to remove him from federal service. Modrowski v. DVA, No. CH-0752-98-0126-I-1 (MSPB June 24, 1999). The Board's decision became final on March 16, 2000 upon the Board's denial of Modrowski's petition for review. Modrowski filed a timely petition for review with this court under 5 U.S.C. § 7703 (1994), and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(9) (1994). We heard oral argument in this appeal on May 10, 2001. We affirm the Board's decision to sustain two charges: (1) that Modrowski violated conflict of interest rules by participating in the sale of agency-owned property to his son-in-law, and (2) that he knowingly concealed such information from the agency, in violation of agency rules of conduct for employees. However, because we conclude that Modrowski was improperly denied an adequate opportunity to consult with his lawyer about the effective scope of a purported grant of prosecutorial immunity before being compelled to answer questions or be removed, we reverse the Board's decision sustaining the third charge: refusal to cooperate in the agency's investigation. Because it is unclear what penalty would have been imposed for only the two charges here affirmed, we vacate the Board's decision sustaining his removal. Accordingly, we affirm-in-part, reverse-in-part, vacate-in-part, and remand for further proceedings.

Facts

A. The Unauthorized Sales to Modrowski's Son-in-Law

Until his removal, Modrowski was employed as a GS-12 Senior Realty Specialist with the DVA's Regional Office in Chicago, Illinois. Modrowski's duties involved processing sales of DVA-owned real estate. It is undisputed that Modrowski participated in the sale of two agency-owned houses to his son-in-law, Ronald Perzanowski, by authorizing the payment of brokerage fees for both sales. One house, which Perzanowski purchased on March 20, 1992, is in Coal City, Illinois. The second house, purchased on August 9, 1996, is in Thornton, Illinois.

The DVA prohibits unauthorized sales of agency property to "VA affiliates." Veterans Benefits Administration Manual 26-5, ¶ 3.03. DVA property may be sold to VA affiliates, but only if specified procedures are followed. It is undisputed that such procedures were not followed in this case. At the time of the incidents in question, the Manual defined "VA affiliates" as "VA employees assigned to stations having Loan Guaranty Divisions and close members of their families." Id. (promulgated January 26, 1988) ("1988 Manual") (emphasis added). The 1988 Manual states that the policy behind this rule is "to minimize the possibility of criticism arising out of the sale of VA-owned properties to VA employees and other VA affiliates." Id. We will refer to this rule as the "VA affiliates" rule, notwithstanding the subsequent change in the name of the agency from Veterans Administration ("VA") to the DVA.

The DVA later amended its VA affiliates rule concerning the disposition of VA-owned property to specify that VA affiliates include "[s]pouses, parents, in-laws, children, step-children, brothers and sisters of, and persons who reside with, any of the above." Veterans Benefits Administration Manual 26-5, ¶ 3.03 (promulgated October 20, 1996) ("1996 Manual") (emphasis added). The stated policy behind this rule is essentially the same as that set forth in the 1988 Manual.

B. The DVA's Investigation of Modrowski

In early 1997, the DVA initiated an investigation of Modrowski. The record indicates that the investigation originally targeted Modrowski's suspected participation in criminal acts, particularly theft of property from DVA-owned houses, vandalism, and illegal issuance of checks. While it is unclear if any evidence of such crimes was uncovered, the DVA did learn through the investigation that Modrowski had participated in the sale of two DVA-owned houses to his son-in-law, and that the sales were not conducted in accordance with established procedures for conveyances to DVA affiliates, as would require special authorization.

On July 9, 1997, Ronald Rogala, a Loan Guaranty Officer employed by the DVA, first confronted Modrowski concerning his participation in the sale of real estate to Perzanowski. Modrowski contends that he was presented with documentary evidence of "criminal and/or ethical violations." Rogala advised Modrowski to seek representation. Modrowski did not respond to the accusations.

Two days later, on July 11, 1997, Modrowski was again questioned by Rogala. This time Modrowski was accompanied by Helmut Matthies, Modrowski's union representative. According to testimony elicited during the hearing before the Board, Modrowski refused to answer Rogala's questions and invoked the Fifth Amendment.

Thereafter, DVA officials informed the local United States Attorney's Office of the situation, and ascertained that the U.S. Attorney declined to prosecute Modrowski. On July 30, 1997, Rogala sent Modrowski a letter on DVA letterhead, signed by himself, stating as follows:

1. The U.S. Attorney has been apprised of the situation, granted you immunity and has declined to prosecute you in the matter of the purchase of two properties by Ronald Perzanowski.

2. You are hereby notified your assertion of your Fifth Amendment rights is unnecessary since you will not be prosecuted.

3. You are therefore ordered to respond to my questions concerning this matter.

The very next day, July 31, 1997, Rogala questioned Modrowski for a third time. After Modrowski persisted in his refusal to respond to Rogala's questioning, Rogala terminated the meeting.

The following week, on August 6, 1997, Rogala interrogated Modrowski for a fourth time in pursuit of the investigation. According to his testimony before the Board, Modrowski informed Rogala that he had made an appointment to meet with an attorney on August 8, 1997, and that he would not respond to Rogala's questions until after such consultation. It is undisputed that Modrowski did meet with his attorney on August 8, 1997. Why questioning did not resume after this consultation is unclear.

On August 22, 1997, however, apparently without any further questioning, Rogala sent Modrowski a letter proposing to remove him from his position with the DVA. As to each sale of property, the agency charged Modrowski with participating in relationships with those seeking contracts that would be contrary to the best interests of the agency and its customers, and intentionally concealing a material fact in connection with his employment. The agency also set forth two charges for refusing to cooperate, i.e., answering questions, in the investigative proceedings on July 31, 1997 and August 6, 1997, respectively.

On August 27, 1997, Modrowski sent Rogala a response letter stating that his mental health had been "seriously impaired," and that his attorney was on vacation. Accordingly, he stated that "I surely need competent legal counsel to guide me through the purported allegations." He requested "an additional 30 calendar days to digest the content of the evidence file, and prepare a proper response." The record does not reveal any response to this request for a delay. In any event, on September 4, 1997, Modrowski sent Rogala an additional memorandum responding to the letter of proposed removal. Concerning the conflict of interest charges, Modrowski denied knowingly participating in the sale of the properties to Perzanowski. Moreover, Modrowski asserted that selling the properties to his son-in-law did not constitute an unauthorized sale to a "close member[ ] of [his] famil[y]," as proscribed by the 1988 Manual. Regarding his alleged refusal to cooperate, Modrowski asserted that he was not able to meet with his lawyer until August 8, and that he was thus under no obligation to respond to Rogala's questions on pain of dismissal for refusal to answer until thereafter.

Soon thereafter, Montgomery Watson, the Director of the DVA's Regional Office in Chicago and the Deciding Official in this case, called Modrowski on the phone, in the presence of Helmut Matthies. In the brief exchange, according to Watson's later testimony, Modrowski insisted that he "had not done anything wrong," and thus that the charges and inquiry were improper. On September 29, 1997, Watson sent Modrowski a letter stating that a decision had been made to remove him from employment based on a finding that "[e]ach of the twelve reasons stated in the notice of proposed removal is sustained."¹ The removal became effective October 6, 1997. Modrowski timely appealed to the Board.

Discussion

A. Standard of Review

The scope of judicial review of decisions of the Board is defined narrowly and limited by statute. Specifically, this court must affirm the Board's decision unless it finds the decision to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; obtained without procedures required by law, rule or regulation having...