SJ Groves & Sons Co. v. United States

• Decision Date: 08 August 1980
• Docket Number: Civ. A. No. 79-K-125.
• Citation: 495 F. Supp. 201
• Parties: S. J. GROVES & SONS COMPANY, a corporation, Plaintiff, v. The UNITED STATES of America; Cecil V. Andrus, Secretary of the Interior; R. Keith Higginson, Commissioner of the Bureau of Reclamation; Robert B. Jansen, Assistant Commissioner of Engineering and Research for the Bureau of Reclamation; and Donald J. Duck, Deputy Assistant Commissioner of Engineering and Research for the Bureau of Reclamation, Defendants.
• Court: U.S. District Court — District of Colorado

495 F. Supp. 201

S. J. GROVES & SONS COMPANY, a corporation, Plaintiff, v. The UNITED STATES of America; Cecil V. Andrus, Secretary of the Interior; R. Keith Higginson, Commissioner of the Bureau of Reclamation; Robert B. Jansen, Assistant Commissioner of Engineering and Research for the Bureau of Reclamation; and Donald J. Duck, Deputy Assistant Commissioner of Engineering and Research for the Bureau of Reclamation, Defendants.

Civ. A. No. 79-K-125.

United States District Court, D. Colorado.

August 8, 1980.

COPYRIGHT MATERIAL OMITTED

Donald E. Phillipson, Davis, Graham & Stubbs, Denver, Colo., Theodore T. Davis, Minneapolis, Minn., for plaintiff.

Richard A. Jost, Asst. U. S. Atty., Denver, Colo., for defendants.

ORDER

KANE, District Judge.

This action by S. J. Groves & Sons Company against the United States Government and officers of the Department of Interior and Bureau of Reclamation involves a dispute regarding a government contract between Groves and the United States to construct the Current Creek Pipeline, Currant Creek Dam, and other features of the Bonneville Unit, Central Utah Project. Contract No. 14-06-D-7566, dated July 15, 1974, was bid, executed, and administered pursuant to the Federal Property and Administrative Services Act, 41 U.S.C. §§ 5 and 252. Plaintiff alleges that the defendant officers exceeded their statutory and contractual authority by directing corrective construction because testing in March, 1977 concluded that the pipe was faulty.

Plaintiff contends that the dispute, a matter of contract interpretation, arises under federal law and invokes jurisdiction under 28 U.S.C. § 1331(a) (federal question jurisdiction) and § 1361 (mandamus), and the Administrative Procedures Act, 5 U.S.C. §§ 701-706. Defendants move to dismiss, or in the alternative for summary judgment, on the grounds of lack of subject matter jurisdiction, failure to state a claim upon which relief can be granted, and failure to exhaust administrative remedies. Defendants assert that jurisdiction does not lie under § 1331 and that this dispute, being one grounded in contract and involving a controversy exceeding $10,000, is exclusively within the jurisdiction of the Court of Claims pursuant to 28 U.S.C. §§ 1346(a)(2) and 1491. The district court has concurrent jurisdiction of contract disputes involving less than $10,000. 28 U.S.C. § 1346(a)(2).

I agree that I do not have subject matter jurisdiction of this dispute and therefore dismiss the complaint. However, because of the perimeters of jurisdiction under § 1331 for purposes of judicial review of administrative actions are undefined and in dispute among the circuits,¹ and because the complaint was not drafted as merely a claim for damages under a contract, thus not fitting neatly into Court of Claims jurisdiction, I will attempt to clarify the problem and bring my reasoning into focus.

I.

The pertinent facts follow: The pipeline was completed and delivered to the government in the fall of 1976. The government did not accept the pipeline as a finished project. On March 28, 1977, Groves filled the pipeline pursuant to Bureau directives and the contract. At this time the pipeline was found to be defective. Observation, testing, and consultation with technical experts continued from March, 1977, to March, 1978, to determine the cause of the failure. On March 14, 1978, Groves advised the Bureau in a detailed presentation that the failure was attributable to incorrect design, excessive ground water, landslides, and changed conditions after completion of the pipeline. The Bureau nonetheless directed Groves to make corrections beginning in 1978. Groves performed corrective construction several times during this period until the third filling on November 22, 1978, resulted in severe leakage and further corrections were aborted.

In response to Groves letter of December 5, 1978, requesting a determination of responsibility, the Bureau, in a letter dated January 5, 1979, stated that Groves was responsible for replacement or repair and directed further construction. On February 23, 1978, the contracting officer, defendant Robert B. Jansen, issued his findings of fact and directed Groves to proceed immediately with corrective measures. The findings concluded that faulty construction and laying of the pipeline resulted in the failure of the pipeline. On March 23, 1979, Groves filed its notice of appeal which was referred by Interior to the Board of Contract Appeals. Groves never filed a formal appeal although it requested four extensions of time. Groves then filed this action in district court on February 7, 1979.

In its five claims for relief Groves seeks to prevent the Bureau from directing plaintiff to replace or repair the pipeline and from declaring plaintiff in breach of the contract for failure to perform the work, and declarations that the directives are outside the terms of the contract and its disputes clause, that no further work is required under the contract or the maintenance warranty of three years and that reimbursement on the basis of reasonable costs plus overhead and profit be awarded plaintiff for all work performed to correct or test the cause of the failure in the pipeline after March 28, 1977, to present.

II

Groves invokes jurisdiction under 28 U.S.C. § 1331 and the Administrative Procedures Act, 5 U.S.C. §§ 701-706, and seeks determination that the Bureau actions are ultra vires. The Administrative Procedures Act alone does not create an independent basis of jurisdiction. "The APA does not afford an implied grant of subject matter jurisdiction permitting federal judicial "review of agency action." Califano v. Sanders, 430 U.S. 99, 107, 97 S.Ct. 980, 985, 51 L.Ed.2d 792 (1977). Accord Fry Bros. Corp. v. Department of Housing, 614 F.2d 732 (10th Cir. 1980). Federal question jurisdiction under § 1331 presents several problems as well.

In foreclosing the APA as a basis for jurisdiction, the Supreme Court in Sanders relied on the 1976 amendments to § 1331 which removed the amount in controversy requirement for suits against the United States. The Supreme Court concluded that the obvious result of the amendments was that § 1331 provided jurisdiction to review federal agency action "subject only to preclusion-of-review statutes created or retained by Congress . . .." Califano v. Sanders, 430 U.S. at 105, 97 S.Ct. at 984.² At first blush, absent a law precluding judicial review, I could consider an APA claim pursuant to general federal question jurisdiction provided by § 1331. See Kennecott Copper Corp. v. Costle, 572 F.2d 1349, 1356 (9th Cir. 1978). However, the doctrine of sovereign immunity presents an insurmountable obstacle to jurisdiction which I will first address because it is the basis for plaintiff's invocation of § 1331.

It is fundamental that the United States may not be sued without its consent, United States v. Testan, 424 U.S. 392, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976), Stubbs v. United States, 620 F.2d 775 (10th Cir. 1980), and that consent must be clearly stated. United States v. King, 395 U.S. 1, 4, 89 S.Ct. 1501, 1502, 23 L.Ed.2d 52 (1969). Section 1331 itself is not a general waiver of sovereign immunity. Plaintiff asserts, however, that section 702 of the APA constitutes a waiver of sovereign immunity as a defense to § 1331 jurisdiction. The circuits are in considerable dispute over the scope and effect of the amendments in 1976 which both removed the sovereign immunity defense in APA non-monetary actions against the United States, and which eliminated the jurisdictional amount in federal question actions against the United States. 5 U.S.C. § 702, 28 U.S.C. § 1331.³

Although recognizing that the status of sovereign immunity under § 1331 is unclear, the Second Circuit relied on legislative history and congressional intent in Watson v. Blumenthal, 586 F.2d 925 (2d Cir. 1978), to conclude that "the amendments to the APA do not provide for jurisdiction but only make it clear that sovereign immunity will not be a defense in actions in which jurisdiction does exist; there is . . . no jurisdiction under § 1331, because of sovereign immunity, a defense that the amendments did not affect." Id. at 932 (emphasis added). The Third Circuit reached an opposite conclusion in Jaffee v. United States, 592 F.2d 712 (3d Cir.), cert. denied, 441 U.S. 961, 99 S.Ct. 2406, 60 L.Ed.2d 1066 (1979), by finding that "Congress amended section 702 with a specific purpose of waiving sovereign immunity in equitable actions brought under section 1331." Id. at 718. Stating that it was "constrained to disagree with the Second Circuit," the Jaffee court held that "section 702, when it applies, waives sovereign immunity in `nonstatutory' review of agency action under section 1331." Id.⁴

I conclude that there is no waiver of sovereign immunity under § 702 to pursue an action under § 1331, especially under the circumstances of this case where a contract dispute is involved.⁵ I agree with the reasoning of the Ninth Circuit in Lee v. Blumenthal, 588 F.2d 1281 (9th Cir. 1979), and the Second Circuit in Watson, that the terms of the Tucker Act, 28 U.S.C. §§ 1346(a)(2) and 1491 preclude district court jurisdiction under § 1331, regardless of the APA amendment's effect on the defense of sovereign immunity under § 1331. Even under the permissive interpretation of Jaffee sovereign immunity is not waived because under the facts of this case, statutory review of the Bureau's actions regarding the contract is available under the Tucker Act.

III

Plaintiff characterizes its case as one arising under federal law and regulations governing government contracts,⁶ rather than as a dispute arising under the contract. This fine distinction is insufficient to circumvent the jurisdiction of the appropriate court. The Court of Claims has exclusive jurisdiction over contract actions against the United States where the amount in controversy exceeds $10,000. 28 U.S.C. §§ 1346(a)(2), ...