BOARD OF ED., EAST MEADOW UNION FREE SCH. v. Bell, 81 CV 1697.

• Decision Date: 14 January 1982
• Docket Number: 81 CV 1697.
• Citation: 530 F. Supp. 1130
• Parties: BOARD OF EDUCATION, EAST MEADOW UNION FREE SCHOOL DISTRICT and Board of Education, Rome City School District and Michael Turner, Martin A. Hollander, Arthur Coultoff, Angelo Gaglione, Christopher Jensen, Robert Kushner and Elaine O'Sullivan, individually as taxpayers and property owners and in their capacities as members of the Board of Education of the East Meadow Union Free School District, Plaintiffs, v. Terrell BELL, Secretary of the United States Department of Education, Defendant.
• Court: U.S. District Court — Eastern District of New York

530 F. Supp. 1130

BOARD OF EDUCATION, EAST MEADOW UNION FREE SCHOOL DISTRICT and Board of Education, Rome City School District and Michael Turner, Martin A. Hollander, Arthur Coultoff, Angelo Gaglione, Christopher Jensen, Robert Kushner and Elaine O'Sullivan, individually as taxpayers and property owners and in their capacities as members of the Board of Education of the East Meadow Union Free School District, Plaintiffs, v. Terrell BELL, Secretary of the United States Department of Education, Defendant.

81 CV 1697.

United States District Court, E. D. New York.

January 14, 1982.

Dalton, Henoch & Kadin, Hempstead, N. Y. by Jack I. Slepian, New York City, for plaintiffs.

J. Paul McGrath, Asst. Atty. Gen., Washington, D. C., Edward R. Korman, U. S. Atty., Brooklyn, N. Y., Brook Hedge, David M. Glass, Attys., Dept. of Justice, Civil Division, Washington, D. C., for defendant.

DECISION AND ORDER

BRAMWELL, District Judge.

Defendant Terrell Bell, the Secretary of Education (the "Secretary") has moved this Court for an Order dismissing the instant action pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. For reasons to be set forth herein the motion is granted in part and denied in part.

Plaintiffs in this action, the Board of Education of the East Meadow Union Free School District ("East Meadow") and the Board of Education of the Rome City School District ("Rome") commenced this action in May of 1981 seeking declaratory and injunctive relief preventing implementation of a funding cutback to the "Impact Aid" program administered by the Secretary. See 20 U.S.C. § 236 et seq. (1976 & Supp.1981).

BACKGROUND

The massive industrial mobilization undertaken during World War II had the result of removing from local tax rolls numerous parcels of real property which were being employed as part of the war effort. Congress, in response to the plight of these local school districts confronted with the compound problem of educating additional children relocated within their jurisdiction without the benefit of this additional tax revenue, undertook in 1950 to enact what is commonly known as the Impact Aid Program. See Public Law 874, 64 Stat. 1100 (Act of September 30, 1950), codified at 20 U.S.C. § 236 et seq. (1976 & Supp.1981). The stated purpose of the legislation was to help relieve the increased financial burden of educating such children by providing "federal assistance to those areas which are or may become overburdened by reason of increased federal activities." 1950 U.S. Code Cong.Serv. 4014, at 4015; see also the declaration of policy contained in 20 U.S.C. § 236; Hergenrether v. Hayden, 295 F.Supp. 251, 252 (D.Kan.1968).

Pursuant to this statutory mandate, certain local education agencies ("LEAs") become eligible to receive annual payments from the Secretary. See 20 U.S.C. § 240(b).¹ In order to become eligible, the LEA must provide a free public education to at least 400 children who come within the scope of either 20 U.S.C. § 238(a) ("Category A Children") or 20 U.S.C. § 238(b) ("Category B Children"). See 20 U.S.C. §§ 238, 244(1) and 244(6). Generally speaking, Category A Children are children whose parents both live and work on federal property and Category B Children are children whose parents either live or work on federal property. The exact dollar amount of aid is a function of the respective number of Category A and B Children to which it provides a free public education. See 20 U.S.C. § 238(d)(1)(A).

Under the Impact Aid Program, plaintiffs East Meadow and Rome, both of them being LEAs, have received, over the past twenty years, annual sums totaling in excess of $500,000 and $1,000,000 respectively. Amended Complaint ¶ 16. East Meadow is charged with the legal responsibility for educating at least 400 eligible children while the figure for Rome is 975. Id.

In January of 1981, as part of its proposed 1982 fiscal budget, the Carter Administration recommended that the appropriation for the Impact Aid Program be substantially reduced by limiting payments of Impact Aid to only those LEAs where more than 20% of the students were Category A Children. See H.Doc. 97-1 (97th Cong., 1st Sess.) at 207, 211. In March of 1981, the Reagan Administration expressly adopted the Carter Administration proposal on Impact Aid. See H.Doc. 97-26 (97th Cong., 1st Sess.) at 67.

On December 15, 1981 President Reagan signed a continuing resolution which reduced the Impact Aid appropriation from approximately $825 million to $412.8 million. See House Joint Resolution 370 (97th Cong., 1st Sess.), § 142(a). The resolution also contained an allocation formula whereby the Secretary is to pay LEAs 90% of the amount of Impact Aid they received in fiscal 1981 on behalf of Category A Children. Id. at § 117. In addition, it directs the Secretary to pay certain LEAs 75% of the amount they received in fiscal 1981 on behalf of Category B Children with certain others to receive 45% of that amount. Id..²

Plaintiff school districts, both threatened with the loss of such funding, commenced this action requesting both declaratory and injunctive relief preventing the funding cutoff. Amended Complaint ¶ 20, ¶¶ 1 and 2 of Wherefore Clause. For a first cause of action, they assert that an implied contract exists between the Secretary and themselves. Id. at ¶ 19. For a second cause of action, they assert that inasmuch as they and their taxpayers will be forced to foot the bill for educating the federally connected after the budget cut, they are being deprived of property without due process of law in violation of the Fifth Amendment to the Constitution. Id. at ¶ 23. In redress they request that the Secretary be enjoined from cutting off the funds, or, in the alternative, that they be relieved of the legal responsibility of educating the affected children. Id. ¶ 2 of Wherefore Clause.

In July of 1981, defendant moved to dismiss the action for failure of subject matter jurisdiction and failure to state a claim upon which relief can be granted under Fed.R.Civ.Pro. 12(b)(1) and 12(b)(6).³ After careful consideration, the court finds that inasmuch as plaintiffs purport to state a cause of action in implied contract against the defendant in his official capacity, they state a claim over which this Court has no subject matter jurisdiction and is accordingly constrained to dismiss that portion of the action.

Plaintiffs' Implied Contract Claim

Plaintiffs, in redress of the wrong they contend they have suffered by virtue of the funding cutback, request from this Court a declaration that "... an implied contract exists between the defendant on behalf of the United States of America and each of the plaintiffs Board of Education requiring defendant to supply funds..." Amended Complaint, ¶ 1 of Wherefore Clause. (Emphasis the Court's) They also request relief "enjoining the defendant from terminating such payments to the plaintiffs Board of Education, or, in the alternative, directing the defendant to relieve the plaintiffs Board of Education of the responsibility to educate the Children by Defendant's supplying an education..." to them. Id., ¶ 2 of Wherefore Clause. In essence then the plaintiffs' first cause of action is one for declaratory and injunctive relief in support of the continuing payments on an implied contract theory. Plaintiffs East Meadow and Rome state that they have been receiving annual sums in excess of $500,000 and $1,000,000 respectively under the program. Id. at ¶ 16. Because the gravamen of their action is essentially one in contract against an officer of the United States in his official capacity the issue of sovereign immunity looms large as a preliminary matter. It is to this issue that the Court now turns.

It is beyond cavil that the United States, as the sovereign, is wholly immune from suit absent its consent to be sued. See United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 769, 85 L.Ed. 1058 (1941). Congress, via the "Tucker Act", 24 Stat. 505 (1887), specifically undertook to waive such sovereign immunity only under very limited circumstances including an action in contract brought against the United States. See United States v. Sherwood, supra at 586-87, 61 S.Ct. at 769-70. See also Glidden Co. v. Zdanok, 370 U.S. 530, 556-557, 82 S.Ct. 1459, 1475-1476, 8 L.Ed.2d 671 (1962); Estate of Watson v. Blumenthal, 586 F.2d 925, 929 (2d Cir. 1978). The Tucker Act, codified at 28 U.S.C. §§ 1346(a)(2) and 1491, vests original concurrent jurisdiction in the Federal District Courts and the Court of Claims of all contractual claims against the United States where the matter in dispute is less than $10,000 and exclusive original jurisdiction in the Court of Claims for all such contractual claims exceeding this amount. More specifically, 28 U.S.C. § 1346(a)(2) provides in pertinent part that:

(a) The district courts shall have original jurisdiction concurrent with the Court of Claims, of: (2) any ... civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States...

Section 1491 goes on to provide that:

The Court of Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States...

A long line of decisions construing the import of the term "implied contract" as used in the foregoing sections of the Tucker Act have taken the position that the term contemplates only those contracts implied in fact, not those implied in law, the so-called quasi contracts, the difference of course being that a contract implied in law or quasi contract is really not a contract at all but rather a legal fiction employed by a court in...