851 F.2d 1372 (Fed. Cir. 1988), 87-1121, Cornetta v. United States

Docket Nº:87-1121.
Citation:851 F.2d 1372
Party Name:Ronald J. CORNETTA, Plaintiff-Appellant, v. The UNITED STATES of America and John Lehman, Secretary of the Navy, Defendants-Appellees.
Case Date:June 20, 1988
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1372

851 F.2d 1372 (Fed. Cir. 1988)

Ronald J. CORNETTA, Plaintiff-Appellant,

v.

The UNITED STATES of America and John Lehman, Secretary of

the Navy, Defendants-Appellees.

No. 87-1121.

United States Court of Appeals, Federal Circuit

June 20, 1988

Page 1373

George S. King, Mangham, Hardy, Rolfs & Abadie, Baton Rouge, La., argued for plaintiff-appellant. With him on the brief was Louis R. Davis, Mangham, Rolfs & Abadie, Lafayette, La.

Mary E. Baluss, Morgan, Lewis & Bockius, Washington, D.C., argued for amicus curiae. The Bar Ass'n of the District of Columbia and The Vietnam Veterans of America. With her on the brief was Kristan Peters-Hamlin. Also on the brief were David F. Grimaldi, President and Neil B. Kabatchnick, Chairman, Military Law Committee, The Bar Ass'n of the District of Columbia, Washington, D.C., David Addlestone and Barton F. Stichman, Vietnam Veterans of America Legal Services, Washington, D.C., Guy J. Ferrante, King & Everhard, P.C., Falls Church, Virginia.

John S. Groat, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for defendants-appellees. With him on the brief were Richard K. Willard, Asst. Atty. Gen., John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Thomas W. Petersen, Asst. Director and James M. Kinsella. Also on the brief were Captain Michael McCloskey, U.S. Marine Corps and John Halliburton, Asst. U.S. Atty., Western District of Louisiana, Shreveport, La., and LCDR Michael Lawlor, Dept. of the Navy, of counsel.

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Before MARKEY, Chief Judge, and FRIEDMAN, RICH, DAVIS, NIES, NEWMAN, BISSELL, ARCHER, MAYER, and MICHEL, Circuit Judges. [*]

OPINION

MAYER, Circuit Judge.

This is a rehearing in banc of an appeal from the United States District Court for the Western District of Louisiana, No. 86-1080 (Oct. 8, 1986), granting the government's motion for summary judgment and dismissing, because of laches, Ronald J. Cornetta's claim for reinstatement and back pay stemming from his allegedly unlawful discharge from the United States Marine Corps. We vacate our earlier judgment and opinion of the panel, 831 F.2d 1039 (1987), and reverse the judgment of the district court.

I. Background

The district court granted summary judgment on the allegations set out in the complaint, so the facts are not now in dispute. After graduation from the United States Naval Academy, Cornetta was commissioned a second lieutenant in the United States Marine Corps. In his early assignments, he was described by his rating officers as an officer with outstanding growth potential, and in September 1968 he was promoted to the rank of first lieutenant. In 1970, he volunteered for duty in the Republic of Vietnam where he flew combat support missions as a helicopter copilot. On four occasions, he participated in the rescue of wounded and stranded soldiers under hazardous flight conditions and hostile fire for which he was decorated in recognition of his superior airmanship and devotion to duty.

Cornetta was promoted to captain shortly after he returned from Vietnam. For the next six years, his superiors consistently reported that he was qualified for promotion and rated him "excellent," "excellent-to-outstanding," or "outstanding" in terms of his growth potential and overall value to the Marine Corps. He was awarded the Navy Achievement Medal for 1974, and in 1975 he was named "Training Air Wing Helicopter Instructor of the Year."

In 1977, Cornetta was assigned to a logistic support unit near San Francisco. His rating officer in this assignment gave him an unfavorable Officer Fitness Report (OFR) covering less than a two-month period, which recognized his limited background and experience in logistics and that this was the primary reason for the low rating. The report included the remark that "within the context of the assignment to the Logistic Support Unit" he was not qualified for promotion. According to Cornetta, "This unfavorable report was prepared, processed and incorporated into [his] naval records in a manner that violated substantive and procedural regulations governing Marine Corps Officer Fitness Reports...."

At his next assignment, Cornetta's rating officer reported that he was an officer of "excellent" value to the Marine Corps and judged him to be qualified for promotion. Shortly thereafter, however, he was passed over for promotion to major. The 1977 San Francisco OFR was part of the file the selection board considered in passing him over.

Cornetta appealed to the Board for the Correction of Naval Records for removal of the 1977 OFR and reversal of the nonselection for promotion. See 10 U.S.C. Sec. 1552. The board found that the presence of the 1977 OFR constituted an injustice and that its inclusion in his record "may have substantially prejudiced his promotional opportunity." In accordance with the board's recommendation, the Secretary of the Navy ordered its removal. Instead of setting Cornetta's nonselection for promotion aside, the Secretary ordered that his record be presented to the next selection board as if he were an officer in the promotion zone for the first time. If the second selection

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board did not select him for promotion, however, his first passover would be counted for purposes of mandatory separation from the service. See 10 U.S.C. Secs. 627, 632.

Soon thereafter, Cornetta was passed over for promotion again and was considered to have been twice passed over. Accordingly, on May 31, 1979, he was honorably discharged. Following his separation from the Marine Corps, he served three years on active duty as a lieutenant j.g. in the United States Coast Guard Reserve.

On May 20, 1986, Cornetta filed this suit in the district court alleging that his discharge from the Marine Corps was unlawful. To bring his case within the district court's jurisdiction under the Little Tucker Act, he limited his claim for back pay to $10,000. See 28 U.S.C. Sec. 1346(a)(2). With his complaint, Cornetta served a discovery request on the government seeking production of records and documents which purportedly would show that his delay in filing suit was "neither unjustified nor unreasonable" and that the government would suffer no prejudice if the suit were to proceed.

The government did not produce the documents; instead it filed a motion for summary judgment because of laches. In response, Cornetta said the motion was premature because the materials he sought to discover were relevant to both the excuse for his delay in filing suit and whether the government was prejudiced by the delay. Accordingly, he moved to compel discovery and stay proceedings on the laches motion until the requested information was produced.

Cornetta separately argued that the government had not been prejudiced by his delay. He said the government had suffered no detriment to its ability to defend against his claim because it was based on "a legal error patent on the face of the administrative record." Moreover, he claimed that the government could not establish economic prejudice because "the potential for back pay recovery was fixed at an insubstantial amount by virtue of the jurisdictional limit of the Little Tucker Act, as well as by substantial offsets for Coast Guard earnings, private sector earnings and severance payments, the exact amounts of which would be established by the pending discovery request." Finally, Cornetta argued that the government's attempt to establish prejudice by virtue of his potential receipt of retired pay was unsustainable as a matter of law.

The district court granted the government's motion for summary judgment and dismissed the case. It concluded that Cornetta's delay of nearly seven years from the date of his discharge was unreasonable, and that the government had been prejudiced by the delay. The conclusion of prejudice was not bottomed on defense prejudice, such as loss of records or fading memories, but on the potential recovery of $10,000 in back pay "for work he has not performed and which possibly was performed by another officer," and increased retirement benefits should Cornetta prevail.

Cornetta appealed here. Before a panel of this court, the government conceded that it did not claim defense prejudice, but argued that the potential recovery of $10,000 in back pay and increased retirement benefits was sufficient to establish economic prejudice. The panel affirmed the judgment of the district court.

We accepted Cornetta's suggestion for rehearing in banc to reconsider the scope of the laches defense in military pay cases, and the novel idea that potential receipt of increased retired pay is prejudicial to the government. 837 F.2d 473 (1988).

II. Discussion

A. Development of Laches in Military Cases

The doctrine of laches emerged in an era when equity courts were not bound by statutes of limitations. 2 J. Pomeroy, Equity Jurisprudence Secs. 418-19 (5th ed. 1941). It was premised on the maxim vigilantibus non dormientibus aequitas subvenit, equity aids the vigilant not those who slumber on their rights:

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The doctrine of laches is based upon grounds of public policy, which require for the peace of society the discouragement of stale demands. And where the difficulty of doing entire justice by reason of the death of the principal witness or witnesses, or from the original transactions having become obscured by time, is attributable to gross negligence or deliberate delay, a court of equity will not aid a party whose application is thus destitute of conscience, good faith and reasonable diligence.

Mackall v. Casilear, 137 U.S. 556, 566, 11 S.Ct. 178, 181, 34 L.Ed. 776 (1890); see also Hayward v. National Bank, 96 U.S. (6 Otto) 611, 617, 24 L.Ed. 855 (1878).

Because laches is an equitable defense, it has traditionally been unavailable in actions at law brought within the applicable statute of limitations. See, e.g., Clark v. Amoco Prod. Co., 794 F.2d 967,...

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