Allied Coin Inv., Inc. v. US Postal Service

• Decision Date: 05 November 1987
• Docket Number: Civ. No. 4-86-644.
• Citation: 673 F. Supp. 982
• Parties: ALLIED COIN INVESTMENT, INC. v. U.S. POSTAL SERVICE.
• Court: U.S. District Court — District of Minnesota

673 F. Supp. 982

ALLIED COIN INVESTMENT, INC. v. U.S. POSTAL SERVICE.

Civ. No. 4-86-644.

United States District Court, D. Minnesota, Fourth Division.

November 5, 1987.

Joseph F. Lulic, Hanson, Noel and Lulic, Minneapolis, Minn., for plaintiff.

James E. Lackner, Asst. U.S. Atty., Minneapolis, Minn., for defendant.

ORDER

ROSENBAUM, District Judge.

A package containing coins, valued in excess of $17,000, was lost in the "Express Mail," a service of the United States Postal Service (USPS). The package belonged to the plaintiff who now sues seeking the recovery of the value of its coins. The USPS denies liability based upon its claim of sovereign immunity. For the purposes of this motion, these facts are not in dispute. The parties bring cross motions for summary judgment.

Defendant USPS has moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure (Fed.R. Civ.P.), contending the action is barred by the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346 and 2671, et seq. For its side, plaintiff Allied Coin Investments, Inc. (Allied Coin), moves for summary judgment asserting that "Express Mail" is a commercial entity in the marketplace, a non-governmental function, and, therefore, the USPS cannot shield itself behind the FTCA.

After hearing oral argument, and based on the files, records, and proceedings herein, defendant's motion for summary judgment is granted and plaintiff's motion for summary judgment is denied.

FACTS/PROCEDURAL HISTORY

Plaintiff Allied Coin is a Minnesota corporation with its principal place of business in Richfield, Minnesota. Allied Coin is in the business of buying and selling rare coins. Defendant USPS is an independent establishment of the executive branch of the government of the United States. 39 U.S.C. § 201.

On or about August 14, 1985, Paul Del Grosso, acting as agent for plaintiff, purchased rare coins in the State of Michigan. Pursuant to plaintiff's instructions, Del Grosso delivered a package, which plaintiff asserts contained rare coins worth $17,698.25, to a post office in Madison Heights, Michigan, for delivery to plaintiff, at Richfield, Minnesota, via USPS "Express Mail."

The package was never delivered. It was apparently lost in the mail. Plaintiff was reimbursed $500 for its loss, the maximum amount allowable for lost "Express Mail," pursuant to the Domestic Mail Manual (DMM), Section 294. Plaintiff then filed an administrative claim pursuant to 28 U.S.C. § 2675. The claim was denied, and after denial the plaintiff timely filed this lawsuit on August 13, 1986. Plaintiff brought this action pursuant to 39 U.S.C. § 409, alleging a claim for money damages against the USPS in the amount of $17,198.25, which the plaintiff contends is the balance due and owing after defendant's $500 payment. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1339, and 39 U.S.C. § 409(a).

LEGAL ISSUE

The question presented is whether the USPS is immune from liability under the doctrine of sovereign immunity for the loss of a package sent through its "Express Mail" service. As seen below, the question devolves into the ultimate issue—is "Express Mail" postal matter?

DISCUSSION

Summary judgment is appropriate when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R. Civ.P. 56(c). Kegel v. Runnels, 793 F.2d 924, 926-28 (8th Cir.1986); Williams v. City of St. Louis, 783 F.2d 114, 115 (8th Cir.1986). The facts in this case are not in dispute. The liability of the United States is purely a question of law; therefore, resolution by summary judgment is appropriate.

The Court notes at the outset that plaintiff's claim against the USPS is a suit against the government of the United States. See Anderson v. United States Postal Service, 761 F.2d 527, 528 (9th Cir. 1985); see also Sportique Fashions, Inc. v. Sullivan, 597 F.2d 664, 665 (9th Cir.1979). The United States, as sovereign, is "immune from suit save as it consents to be sued ... and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit." Lehman v. Nakshian, 453 U.S. 156, 160, 101 S.Ct. 2698, 2701, 69 L.Ed.2d 548 (1981). Thus, if Congress waives the government's sovereign immunity from suit, a plaintiff's rights are limited to the terms of the government's consent to be sued. See United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 953, 47 L.Ed.2d 114 (1976). Limitations and conditions which the government places on its consent to be sued must be strictly observed and exceptions are not to be implied. Soriano v. United States, 352 U.S. 270, 276, 77 S.Ct. 269, 273, 1 L.Ed.2d 306 (1957).

By enacting the FTCA, Congress provided a waiver of sovereign immunity in certain cases. 28 U.S.C. § 1346(b).¹ However, § 2680(b) of the FTCA specifically retains sovereign immunity for tort claims against the United States for "loss, miscarriage, or negligent transmission" of the mails or postal matter.² Anderson v. United States Postal Service, 761 F.2d 527, 528 (9th Cir.1985); Insurance Co. of North America v. United States Postal Service, 675 F.2d 756, 758 (5th Cir.1982); see also Sportique Fashions, Inc., 597 F.2d at 665.

Notwithstanding this postal restriction of the waiver of sovereign immunity, plaintiff argues that this immunity no longer exists in light of the Postal Reorganization Act of 1970, 39 U.S.C. §§ 101, et seq.³ The Postal Reorganization Act includes a provision that "the Postal Service shall have the power (1) to sue and be sued in its official name...." 39 U.S.C. § 401(1). Plaintiff contends the Supreme Court's decision in Franchise Tax Bd. of Cal. v. United States Postal Service, 467 U.S. 512, 104 S.Ct. 2549, 81 L.Ed.2d 446 (1984), and the Seventh Circuit's decision in Azar v. United States Postal Service, 777 F.2d 1265 (7th Cir.1985), establish the proposition that not all services provided by the USPS are protected by § 2680(b) of the FTCA and that the "sue and be sued" clause should be construed so as to find an exception to § 2680(b).

Upon a consideration of Franchise Tax Bd. and Azar, the Court finds plaintiff's reliance on these cases is misplaced. Neither Franchise Tax Bd. nor Azar involved a claim of legal liability on the part of the USPS. The issue in each case was the status of the USPS entity itself, but in altogether different contexts.

The Franchise Tax Bd. case involved the question of whether the USPS was required to honor a garnishment order against a USPS employee resulting from an unpaid state administrative tax. In that case, four postal employees were delinquent in payment of state income taxes. The Franchise Tax Board of California served a garnishment on the USPS ordering the withholding of delinquent amounts from the employees' checks. The USPS refused to comply, and the Franchise Tax Board filed suit. In that lawsuit, no sum of money was claimed against the United States. The Supreme Court held the USPS was required to honor the garnishment. Thus, the "sue and be sued" clause now permits actions against the USPS which were prohibited against its predecessor, such as a suit requiring the Postal Service to honor a garnishment order resulting from a state administrative tax levy. But this is not a limitation of the FTCA.

Similarly, the Azar court did not analyze § 2680(b). In that case, a USPS employee incorrectly informed a postal customer that the customer's package was automatically insured to $50,000 rather than only $500. The Seventh Circuit court held the USPS to be equitably estopped to assert its $500 limit based on its own agent's assertion. However, the Azar court itself stated that its application of the doctrine of equitable estoppel would have a "narrow reach." The rule was specifically limited to the circumstances present in that case. Azar, 777 F.2d at 1271. For that case and that specific purpose, the court found it relevant that USPS "Express Mail" was in competition with private companies. The circuit court noted that the doctrine of equitable estoppel is a judicial doctrine and is subject to judicial interpretation. Azar in no regard acts as a restriction on § 2680(b).

The present case, ultimately, asserts that the United States owes and must pay money. This is the core of the issue of sovereign immunity. As to this, the FTCA defines the limits of the United States' willingness to assume this legal obligation.

Plaintiff, here, argues that Congress has launched the USPS into the commercial world, and, therefore, this Court must construe the "sue and be sued" clause in a fashion whereby the USPS may be held liable for lost packages in the same manner a private commercial business enterprise would be. The Court is not persuaded by this argument. While Congress did provide a general waiver of immunity for the USPS in the Postal Reorganization Act of 1970, 39 U.S.C. § 401(1), it specifically retained sovereign immunity as to lost postal matter. 39 U.S.C. § 409(c).⁴ Congress never repealed 28 U.S.C. § 2680(b). Congress may have launched the USPS into the commercial world, Franchise Tax, 467 U.S. at 520, 104 S.Ct. at 2554, but it did not send it off to fly alone. Congress maintained the Postal Service under the protective wing of § 2680(b) of the FTCA.

In sum, suits against the USPS are permitted under 39 U.S.C. § 409(a). Section 409(c), however, states that the FTCA applies to claims against the USPS sounding in tort; and § 2680(b) of the FTCA states that the bar of sovereign immunity is not waived with respect to claims involving the "loss, miscarriage or negligent transmission of the mails." See Insurance Co. of North America, 675 F.2d at 758.

The FTCA is the exclusive remedy in tort actions against a federal agency, and this is so despite the statutory authority of any federal agency "to sue and be sued in its own name."⁵ Peak v. Small Business Administration, 660 F.2d 375, 377 (8th Cir.1981)....