Deborah Frahm v. United States of America

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 DEBORAH FRAHM,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA; PAUL H. No. 05-1825 
O’NEILL, Secretary, Department of
Treasury; INTERNAL REVENUE
SERVICE,
Defendants-Appellees. 
Appeal from the United States District Court
for the Western District of Virginia, at Danville.
Jackson L. Kiser, Senior District Judge.
(CA-02-89)
Argued: May 25, 2006
Decided: June 27, 2007
Before WIDENER and DUNCAN, Circuit Judges, and
Joseph R. GOODWIN, United States District Judge for the
Southern District of West Virginia, sitting by designation.
Affirmed by published opinion. Judge Widener wrote the opinion, in
which Judge Duncan and Judge Goodwin concurred.
COUNSEL
ARGUED: Monica Taylor Monday, GENTRY, LOCKE, RAKES &
MOORE, Roanoke, Virginia, for Appellant. I. Glenn Cohen,

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UNITED STATES DEPARTMENT OF JUSTICE, Civil Division,
Appellate Section, Washington, D.C., for Appellees. ON BRIEF:
Peter D. Keisler, Assistant Attorney General, John L. Brownlee,
United States Attorney, Marleigh D. Dover, UNITED STATES
DEPARTMENT OF JUSTICE, Civil Division, Appellate Section,
Washington, D.C., for Appellees.
OPINION
WIDENER, Circuit Judge:
I.
This case involves the construction of a settlement agreement
between the Internal Revenue Service (IRS) and Miss Deborah
Frahm, a former IRS employee. Miss Frahm contends that she should
receive money damages and attorneys’ fees because of the govern-
ment’s breach of the settlement agreement. The government concedes
that it violated the agreement but argues that Miss Frahm is not enti-
tled to the relief she seeks. The district court sided with the govern-
ment, and we affirm.
II.
The facts of this case are not in dispute. Miss Frahm was previ-
ously employed as Chief of the Criminal Investigation Division of the
IRS in Columbia, South Carolina. In October of 1993, the IRS’s
Inspection Division (now referred to as Treasury Inspector General
for Tax Administration) investigated an allegation that one of Miss
Frahm’s subordinates consumed alcohol while driving his govern-
ment vehicle, and that Miss Frahm had knowledge of this conduct but
failed to act. Following the investigation, in 1994, Miss Frahm was
subjected to disciplinary action that consisted of a thirty-day suspen-
sion.
The suspension prompted Miss Frahm to file an administrative
claim of employment discrimination with the EEO under Title VII.
On June 10, 1994, Miss Frahm and the IRS resolved the discrimina-
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tion claim through the execution of a settlement agreement. As part
of the settlement, the IRS agreed to "remove and destroy all refer-
ences to Frahm’s records regarding the suspension within 30 days,"
with the exception of "one copy [to] be maintained in the IRS Greens-
boro District EEO office . . . in the event of a breach of [the] Agree-
ment."
Miss Frahm retired from the IRS in 2000 and subsequently applied
for Enrolled Agent status, which would allow her to represent individ-
ual taxpayers in IRS proceedings. In July of 2001, Miss Frahm
received a letter from the Director of Practice of the IRS advising her
that her application was being considered for denial.1 As grounds for
denial, the letter detailed specific information regarding Miss Frahm’s
suspension in 1994. On August 3, 2001, Miss Frahm sent a letter to
the IRS’s Assistant Secretary of the Treasury to notify the agency of
its non-compliance with the settlement agreement by failing to
remove the records of her suspension. The IRS did not respond to
Miss Frahm’s letter, leading Miss Frahm to file an appeal with the
EEOC pursuant to 29 C.F.R. § 1614.504(b) to seek enforcement of
the settlement agreement. In a decision dated August 22, 2002, the
EEOC stated it was unable to determine whether the IRS breached the
terms of the agreement. Accordingly, the EEOC remanded the matter
to the IRS for a decision within thirty days as to whether the agency
violated the agreement. When the IRS did not respond to the EEOC’s
remand, Miss Frahm brought suit in the United States District Court
for the Western District of Virginia on October 18, 2002.
Miss Frahm’s complaint against the government consisted of four
counts: fraud, defamation, breach of settlement, and Title VII gender
discrimination and retaliation. The government filed a motion to dis-
miss the complaint, which the district court granted with respect to the
fraud and defamation counts. The district court found that it lacked
jurisdiction with respect to the breach of settlement agreement claim
because of 28 U.S.C. § 1491(a)(1), which confers jurisdiction on the
Court of Federal Claims for "any claim against the United States
founded . . . upon any express or implied contract with the United
States."2 The district court stayed proceedings on the Title VII claim
1Miss Frahm was eventually approved as an Enrolled Agent in 2002.
2District courts share concurrent jurisdiction over such matters with the
Court of Federal Claims if the damages sought do not exceed $10,000.
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and transferred the breach of settlement agreement claim to the Court
of Federal Claims pursuant to 38 U.S.C. § 1631.
Upon reviewing the case, the Court of Federal Claims found that
it in fact lacked jurisdiction over the breach of settlement agreement
claim. The court noted that the settlement agreement was entered into
pursuant to the Rehabilitation Act of 1973 (29 U.S.C. §§ 791 et seq.)
as a resolution of a federal employment discrimination charge. The
court concluded that Title VII, as a comprehensive and exclusive stat-
utory scheme for reviewing employment discrimination, preempted
any jurisdiction for monetary claims under the Rehabilitation Act or
Title VII that the court might otherwise assert according to its con-
tract jurisdiction of 28 U.S.C. § 1491. As additional grounds for its
holding, the claims court also found that the settlement agreement
itself did not expressly require or authorize the government to pay
damages in case of breach, and therefore was not a contract within the
court’s jurisdiction under 28 U.S.C. § 1491.
After the case was transferred back to the district court from the
claims court pursuant to 28 U.S.C. § 1631, the government ultimately
acknowledged in May of 2005 that it had breached the settlement
agreement. The parties subsequently stipulated to a voluntary dis-
missal without prejudice of Miss Frahm’s original Title VII claim,
leaving the breach of the settlement agreement as the remaining
count. Jury trial was cancelled, and both parties submitted memo-
randa to the court in support of their positions regarding Miss
Frahm’s right to money damages and the amount to be awarded due
to the government’s breach of the settlement agreement.
On June 3, 2005, the district court denied Miss Frahm’s request for
damages and dismissed the action.3 Miss Frahm’s timely notice of
28 U.S.C. § 1346(a)(2). However, because Miss Frahm requested relief
in excess of $10,000, the district court found it lacked the authority to
assert concurrent jurisdiction over her breach of settlement agreement
claim.
3Pursuant to Fed. R. Civ. P. 59(e), the parties filed a joint motion to
alter or amend the court’s order and memorandum opinion. In response,
the district court filed an amended memorandum opinion on June 23,
2005. In our discussion of the district court’s holdings on this case, we
refer to this amended memorandum.
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appeal followed. Our jurisdiction is proper under 28 U.S.C. § 1291.
We review Miss Frahm’s claims for monetary damages and attorneys’
fees in turn.
III.
The district court’s decision as to Miss Frahm’s right to money
damages involves contract interpretation and regulatory interpreta-
tion. The interpretation of a contract is a question of law, Scarbor-
ough v. Ridgeway, 726 F.2d 132, 135 (4th Cir. 1984), as is the
construction of a regulation. See United States v. Bursey, 416 F.3d
301, 306 (4th Cir. 2005). We therefore review de novo the district
court’s legal conclusions in this case. Waters v. Gatson Co., 57 F.3d
422, 425 (4th Cir. 1995).
Miss Frahm contends that she is entitled to monetary damages for
the government’s breach of the 1994 settlement agreement. The dis-
trict court determined that Miss Frahm is not entitled to this relief for
two reasons: 1) the language of the settlement agreement does not
allow for monetary damages as a remedy in case of breach, and 2) 29
C.F.R. § 1614.504(a) provides for two exclusive alternatives in the
event of breach of a settlement agreement, neither of which includes
monetary recovery.
We agree with the district court’s conclusions. The language of the
settlement agreement that addresses the possibility of breach by the
government reads as follows:
(7) The IRS acknowledges its obligation under applicable
laws not to retaliate against Frahm in any form or man-
ner. If a breach of this provision or any other provision
occurs, Frahm will be permitted to reassert any and all
claims covered by this Agreement. IRS acknowledges
and waives any applicable time restraints and/or stat-
utes of limitation generally applicable to such claims,
expressly permitting such claims to be reopened and
asserted.
Other clauses in the settlement agreement make clear that the terms
outlined "constitute[ ] the complete understanding of the parties," and
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that "[n]o other promises or agreements shall be binding unless placed
in writing by the parties." Nowhere does the settlement agreement
contemplate monetary damages for Miss Frahm in case of the IRS’s
breach.
"The United States, as sovereign, is immune from suit save as it
consents to be sued . . . ." United States v. Sherwood, 312 U.S. 584,
586 (1941). Congress has, admittedly, waived sovereign immunity in
Title VII suits where the federal government is the employer. 42
U.S.C. § 2000e-16(d). However, this statutory waiver does not
expressly extend to monetary claims against the government for
breach of a settlement agreement that resolves a Title VII dispute.
Even if the matter were at all ambiguous, the issue is revolved by the
rule that the "scope" of a "waiver of the Government’s sovereign
immunity will be strictly construed . . . in favor of the sovereign."
Lane v. Pena, 518 U.S. 187, 192 (1996). Because neither the settle-
ment agreement nor a statute allow Miss Frahm to sue the govern-
ment for breach of the settlement agreement, her action was properly
dismissed.
As additional grounds for dismissing Miss Frahm’s suit, we find
that the government has specifically limited by regulation the forms
of relief a plaintiff may seek when she alleges breach of a Title VII
settlement agreement by a government agency. In this regard, the
EEOC has promulgated 29 C.F.R. § 1614.504(a), which states in per-
tinent part:
If the complainant believes that the agency has failed to
comply with the terms of a settlement agreement or deci-
sion, the complainant shall notify the EEO Director, in writ-
ing, of the alleged noncompliance within 30 days of when
the complainant knew or should have known of the alleged
noncompliance. The complainant may request that the terms
of the settlement agreement be specifically implemented or,
alternatively, that the complaint be reinstated for further
processing from the point processing ceased.
Miss Frahm contends that the two forms of relief outlined in
§ 1614.504(a) — i.e., specific implementation of the agreement or
reinstatement of the original discrimination claim — are not the only
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remedies available in case of breach. We disagree. By its plain lan-
guage, the regulation permits an employee who claims a breach of a
Title VII settlement agreement to elect between only two options.
With the use of the word "alternatively," the regulation sets out the
only alternatives that may be chosen. Miss Frahm’s reading implies
that when the EEOC drafted its regulations, the agency desired to per-
mit additional remedies without so expressing. This interpretation
cannot be sustained. See Reyes-Gaona v. North Carolina Growers
Ass’n, 250 F.3d 861, 865 (4th Cir. 2001) ("[T]he doctrine of expressio
unis est exclusio alterius instructs that where a law expressly
describes a particular situation to which it shall apply, what was omit-
ted or excluded was intended to be omitted or excluded.").
IV.
Although a decision to award attorneys’ fees is reviewed under an
abuse of discretion standard, the legal determinations justifying an
award, such as whether the plaintiff is a prevailing party, are reviewed
de novo. Smyth v. Rivero, 282 F.3d 268, 274 (4th Cir. 2002).
We affirm the district court’s conclusion that Miss Frahm is not
entitled to attorneys’ fees, as she is not yet a "prevailing party" under
42 U.S.C. § 2000e-5(k). If Miss Frahm chooses to reinstate her origi-
nal Title VII claim of discrimination against the IRS, she may seek
attorneys’ fees after pursuing that claim to a successful end.
V.
For the foregoing reasons, the judgment of the district court is
affirmed.
AFFIRMED
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