Nutt v. United States

• Decision Date: 12 September 2016
• Docket Number: 2015–5118
• Citation: 837 F.3d 1292
• Parties: Cynthia G. Nutt, individually as surviving spouse and as the Executrix of the Estate of James N. Nutt, Sr., Deceased, James N. Nutt, Jr., Individually, Plaintiffs–Appellants v. United States, Defendant–Appellee
• Court: U.S. Court of Appeals — Federal Circuit

837 F.3d 1292

Cynthia G. Nutt, individually as surviving spouse and as the Executrix of the Estate of James N. Nutt, Sr., Deceased, James N. Nutt, Jr., Individually, Plaintiffs–Appellants

v.United States, Defendant–Appellee

2015–5118

United States Court of Appeals, Federal Circuit.

Decided: September 12, 2016

Andrew J. Maloney III, Kreindler & Kreindler LLP, New York, NY, argued for plaintiffs-appellants.

Ryan Majerus , Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Deborah A. Bynum, Robert E. Kirschman, Jr., Benjamin C. Mizer, Alexander Orlando Canizares .

Before Dyk, Mayer, and Stoll, Circuit Judges.

Stoll, Circuit Judge.

Cynthia Nutt and her son, James Nutt, Jr., (collectively, “Appellants” or “Plaintiffs”) appeal a decision of the United States Court of Federal Claims granting the Government's motion for summary judgment that it did not breach an agreement to pay a claim arising under the Federal Tort Claims Act (“FTCA”). Nutt v. United States (Summary Judgment Order ), 121 Fed.Cl. 579 (Fed.Cl.2015). For the reasons below, we affirm.

BACKGROUND

James Nutt, Sr. was hit and killed by a United States Army soldier driving an Army truck in 1983. Mr. Nutt's wife, Cynthia Nutt—on behalf of herself as surviving spouse, the estate, and the couple's son, James Nutt, Jr.—filed a claim against the Government pursuant to 28 U.S.C. § 2674 of the FTCA. The parties entered into a settlement agreement (“the Agreement”) in 1985, in which Appellants received payments “in full satisfaction and final settlement of all claims.” Joint Appendix (“J.A.”) 25. The Agreement provided for payments resulting from the Government's purchase of an annuity to benefit the Nutt family, as well as lump-sum payments from the Government to the family and its attorneys.

In particular, the Agreement set forth two obligations for the Government. First, in section I, it stated that the Government “agrees to purchase annuities which will pay the following amounts:” (a) $60,000 per year “commencing 30 days from the date of purchase of the annuity” to Cynthia Nutt, (b) lump-sum payments on specified “anniversaries of the purchase of the annuity” to Cynthia Nutt, and (c) lump-sum payments on specified “anniversaries of the purchase of the annuity” to James Nutt, Jr. Summary Judgment Order , 121 Fed.Cl. at 581–82 ; J.A. 25–26. Second, in section II, the Agreement stated that the Government “[a]s soon as practicable after approval of this agreement ... agrees to pay the sum of” $240,000 to Cynthia Nutt and “twenty percent of the total cost to the United States of the entire settlement” to the Nutts' attorneys. J.A. 26–27. The next paragraph of the Agreement provided that “[t]he payments by the United States set forth above shall operate as full and complete discharge of all payments to be made to and of all claims which might be asserted.” Summary Judgment Order , 121 Fed.Cl. at 582 ; J.A. 27.

In accordance with the Agreement, the Government purchased a structured annuity from Executive Life Insurance Company of New York (“ELNY”) in 1985. ELNY went into receivership in 1991. In 2011, the New York State Liquidation Bureau informed Appellants that “[d]ue to the liquidation, at this time it is anticipated that the amount of your benefit payments will ultimately be reduced.” Summary Judgment Order , 121 Fed.Cl. at 583. In 2013, Appellants began receiving payments reduced to approximately 45% of their expected benefits. Appellants were also informed that, as of 2015, they would not be receiving the anniversary payments.

In 2014, Appellants filed a complaint in the Court of Federal Claims alleging that the Government “breached its agreement to pay plaintiffs' scheduled annuity payments and refused to pay future periodic and lump sum payments pursuant to the terms of the 1985 Settlement Agreement.” J.A. 20. The parties then cross moved for partial summary judgment on liability. Appellants argued that the Agreement “states that the future payments ‘shall be paid’ thereby rendering the future payments mandatory.” Summary Judgment Order , 121 Fed.Cl. at 585. The Government maintained that the Agreement only required it to purchase the annuity, not to guarantee the annuity's future payments. Id. at 586.

The court granted summary judgment in the Government's favor, determining that “[b]ased on the four corners of the Agreement, ... the Government was obligated to pay certain fixed sums to Plaintiffs and pay for an annuity.” Id. at 590. The court further concluded that the Government “was not obligated to guarantee or insure that annuity; its obligation ended at the initial purchase of the ELNY annuity.” Id. at 590–91. The court denied Appellants' summary judgment motion and dismissed the complaint. The Nutts appealed to this court, and we have jurisdiction under 28 U.S.C. § 1295(a)(3).

DISCUSSION

“Summary judgment is appropriate when, drawing all justifiable inferences in the nonmovant's favor, there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Amergen Energy Co. v. United States , 779 F.3d 1368, 1372 (Fed.Cir.2015) (internal citations and quotation marks omitted). We review the Court of Federal Claims' grant of summary judgment de novo, applying the same standard applied by the court below. Barseback Kraft AB v. United States , 121 F.3d 1475, 1479 (Fed.Cir.1997).

I.

As a threshold issue, we first address the Government's argument regarding alleged limits on how FTCA settlements may be paid by the Government. According to the Constitution's Appropriations Clause, “funds may be paid out [by the Treasury] only on ... the express terms of a specific statute.” OPM v. Richmond , 496 U.S. 414, 432, 110 S.Ct. 2465, 110 L.Ed.2d 387 (1990) ; see U.S. Const. art. I, § 9, cl. 7. The Government contends that the FTCA constitutes a limited waiver of the Government's sovereign immunity and, as such, only Congress can set the terms for paying claims that fall within that waiver of sovereign immunity. The Government argues that, in this settlement, it did not have authority from Congress to pay or guarantee future periodic payments under the FTCA.

The FTCA “waive[s] the sovereign immunity of the United States for certain torts committed by federal employees,” FDIC v. Meyer , 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994), but restricts the type of remedy a court may order for injuries to a private person caused by the negligent or wrongful act of a Government employee. The FTCA states that federal district courts “have exclusive jurisdiction of civil actions on claims against the United States, for money damages .” 28 U.S.C. § 1346(b)(1) (emphasis added). The Government argues in this case that a court may only award money damages under the FTCA in the form of a lump-sum payment. The Government insists that cases from other circuits dictate that “[a]bsent an additional waiver of sovereign immunity or specific statutory authority granted by Congress, no authority exists for payment of damages in future installments under the FTCA.” Gov't Br. 36–37. Several of the cases the Government relies on to support its position, however, reject its narrow interpretation of the FTCA and specifically acknowledge Appellants' argument here that parties can agree to structure a damages plan to include future installment payments.

For example, in Reilly v. United States , 863 F.2d 149 (1st Cir.1988), it was the Government that proposed a damages structure where the award would be payable over time in periodic installments, much like the damages plan Appellants seek in this case. In that case, the First Circuit stated that “[p]eriodic damage awards are permissible in lieu of lump sums in certain situations,” such as “if a controlling statute permits.” Id. at 169 n.16 (internal citations omitted). Relevant here, it also specified that “[s]uch an outcome can also be achieved by agreement of the parties in interest ... or where a trust, annuity, or other prophylactic arrangement is necessary to ensure that the injured party will in fact receive his due.” Id. (emphasis added) (internal citations omitted). Put another way, the First Circuit recognized that “[w]hen a tortfeasor loses at trial, then—absent a statute or the parties' contrary agreement , ...—it must pay the judgment in one fell swoop.” Id. at 170 (emphasis added).

In Vanhoy v. United States , 514 F.3d 447, 454 (5th Cir.2008), the Fifth Circuit “refuse[d] to deviate from a conventional lump-sum award” by ordering that the district court create a reversionary trust. The Fifth Circuit, however, expressly recognized that “particular circumstances,” including “agreement of the parties in interest,” could warrant periodic damage awards. Id. at 454 & n.34 (quoting Reilly , 863 F.2d at 169 n.16 ). The propriety of periodic damage awards when agreed to by the parties is explicitly contemplated by our sister circuits, but notably left out of the Government's discussion of these cases here. Gov't Br. 36–37. The Government's persistence in this case—that no authority exists for paying damages in periodic installments—fails to account for circumstances where the parties expressly agree to such payments. Like the FTCA cases from the First and Fifth Circuits, we reiterate that periodic damage awards under the FTCA may be permissible in lieu of lump-sum payments with one of the recognized exceptions, including by agreement of the parties. See Reilly , 863 F.2d at 169 n.16 ; Vanhoy , 514 F.3d at 454.

II.

We next turn to the language of the Agreement itself, which both parties argue is unambiguous in supporting their respective positions. Appellants argue that the terms of the Agreement “unambiguously obligate the Government to ensure full payment of all annual payments and periodic lump sums it promised.” Appellant Br. 11. The Government argues that the terms of the Agreement “unambiguously...