MB Financial Group, Inc. v. United States Postal Service
United States Court of Appeals for the Ninth Circuit
September 25 2008
No. 06-56267 D.C. No. CV-06-00266-DMS

Postal Service PO Box Tort Liability Affirmed

To borrow the words of the Court, this is an unusual case. It is a case which tries to establish United States Postal Service (USPS) tort liability for failing to make available a post office box it was obligated to provide for receipt of plaintiff’s business mail.

The antecedent facts reveal that MB Financial Group, Inc. is an entity which sells mail mortgage loans to members of labor unions in the San Diego area. Its business depends on receiving mailed-in responses to its solicitations.

MB Financial rented a post office box in a USPS branch office in San Diego and paid for six months of usage. The USPS, admittedly through its own fault of prematurely closing the PO Box, did not make the box available for the full six months due to “improper handling of fees”. As a consequence, MB Financial lost hundreds of thousands of dollars worth of business.

Thus, MB Financial sued USPS and the United States alleging two claims, to wit:

1. Negligence under the provisions of the Federal Tort Claims Act (FTCA) because USPS negligently denied MB Financial use of post office box for which MB Financial had paid rental fees


2. Breach of contract because USPS failed to credit MB Financial’s payment and wrongfully failed to make the box available for plaintiff’s use

USPS moved to dismiss the action, which motion was granted by the district court. The court held that the law barred relief on the tort claim on the ground that it was essentially a claim for negligent mail transmission. And since the breach of contract claim was also “based on the same facts as the negligence claim”, the same is also barred.

On the alternative, the district court held that the Postal Reorganization Act of 1971 did not provide subject matter jurisdiction over the contract claim.

MB Financial appeals from the judgment of the district court to the Court of Appeals.

In reversing the decision of the district court, the Court held that the alleged negligence in this instant case was not about transmission of a mail to the proper place of delivery. Rather, it was about the admittedly improper handling of MB Financial’s payment for its post office box – due to the failure to process the renewal.

The Court said that “the policy of the FTCA supports the principle that the USPS should be held liable on the same basis that a private provider of mail box services would be liable under state law for failing to exercise reasonable care to see that the box remained open to receive responses to MB Financial’s solicitations.”

Since the Court already held that the tort claim is not barred, it follows that the contract claim is also not barred following the rationale of the district court that the same is barred because it was based on the same facts as that in tort claim.

The Court said that the claim in this instant case arise out of the same situation but do not necessarily rest on the same facts. The tort claim seeks damages that resulted from the USPS’ alleged negligent record keeping that closed the box to MB Financial’s mail, while the contract claim alleges that the post office breached an express agreement to provide a six-month rental of a post office box in exchange for MB Financial’s payment of the fee.