Fort Vancouver Plywood Co. v. U.S.

• Citation: 747 F.2d 547
• Decision Date: 14 November 1984
• Docket Number: No. 83-4143,83-4143
• Parties: FORT VANCOUVER PLYWOOD CO., a Washington corporation, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 547

747 F.2d 547

FORT VANCOUVER PLYWOOD CO., a Washington corporation, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 83-4143.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 6, 1984.

Decided Nov. 14, 1984.

Jeffrey M. Batchelor, Spears, Lubersky, Campbell, Bledsoe, Anderson & Young, Portland, Or., for plaintiff-appellant.

Anastasia Dritshulas, Asst. U.S. Atty., Seattle, Wash., for defendant-appellee.

Appeal from the United States District Court for the Western District of Washington.

Before ANDERSON, SKOPIL and BOOCHEVER, Circuit Judges.

SKOPIL, Circuit Judge:

FACTS AND PROCEEDINGS BELOW

In 1977 the Fort Vancouver Plywood Company ("Fort Vancouver") entered into a timber sales contract with the United States Forest Service. After most of the timber was cut and bucked, but before it was removed, it was destroyed by fire as it lay on the ground.

The fire began on a site adjacent to the site where Fort Vancouver was operating. The Forest Service was conducting a slash burn on the adjacent site. The fire swept through Fort Vancouver's sale, destroying both cut and standing timber.

In September 1981 Fort Vancouver submitted a claim for loss of the timber to the Forest Service pursuant to the Federal Tort Claims Act ("FTCA") and accompanying regulations. The Forest Service did not respond to the claim. ¹

In September 1982 Fort Vancouver filed a complaint against the United States in the district court. Fort Vancouver alleged that the government had negligently started and maintained the fire. On June 23, 1983 Fort Vancouver filed a motion for partial summary judgment contending that appellee's defenses were legally insufficient. The government filed a cross motion for summary judgment and, in the alternative, a motion to dismiss on the ground that the district court lacked jurisdiction. The government also filed a motion to dismiss on the ground that Fort Vancouver had failed to state a claim upon which relief could be granted. The district court ruled that "[p]laintiff's claim has its basis in contract" and dismissed for lack of subject matter jurisdiction. The district court did not reach the question of whether Fort Vancouver had failed to state a claim.

Fort Vancouver appeals.

DISCUSSION

1. Jurisdiction.

A. Standard of Review

This court reviews de novo a district court's determination that it is without subject matter jurisdiction. Clayton v. Republic Airlines, Inc., 716 F.2d 729, 730 (9th Cir.1983).

B. Merits

The district courts have no jurisdiction over contract claims exceeding $10,000. 28 U.S.C. Sec. 1346(a)(2). Fort Vancouver argues that its action is in tort, not contract. On its face the complaint does allege negligence and not breach of contract. Fort Vancouver does not allege that the government's liability arises from its contract obligations. It alleges that the government is liable under Washington tort law. See 28 U.S.C. Sec. 1346(b) (district court has jurisdiction over tort claims against government for injury to property if private person would be liable under law of place where act or omission occurred). Fort Vancouver acknowledges that the timber sale contract is implicated, but argues that the contract only establishes Fort Vancouver's property interest in the timber which was allegedly invaded by the government's negligent actions. For purposes of jurisdiction under the FTCA, Fort Vancouver argues that a court must focus on the theory and source of liability, not the source of the interest harmed.

A series of cases involving this issue supports Fort Vancouver. The seminal case is Aleutco Corporation v. United States, 244 F.2d 674 (3d Cir.1957). Aleutco Corporation ("Aleutco") had purchased surplus war materials on a contract which required removal of the goods by a particular date. Some of the goods were not timely removed. There was evidence that Aleutco had received informal assurances that it could delay removal of the goods. When Aleutco attempted to claim the goods, the government refused and instead shipped the goods to another location and sold them to a third party. Aleutco prevailed in an action under the Federal Tort Claims Act for the tort of conversion. The government appealed, arguing that the district court was without jurisdiction. It claimed that Aleutco Corporation's action was in contract, not tort, and therefore should have been before the Court of Claims. Affirming, the Third Circuit said:

In deciding whether the action is one in tort, the nature of the complaint against the United States must be determined ... The fact that the claimant and the United States were in a contractual relationship does not convert an otherwise tortious claim into one in contract .... Aleutco's complaint is a sufficient statement of a cause in tort for conversion, and it would seem that Aleutco could have equally well made out a complaint for breach of contract ... [T]here is no policy in the law which requires that the forum of the district court be denied a plaintiff who pleads and proves a classic case in tort....

Id. at 678-79.

This court was confronted with a similar issue in Woodbury v. United States, 313 F.2d 291 (9th Cir.1963). In Woodbury, a land developer brought an action in district court in connection with a failed housing development, alleging that a government housing agency had violated a fiduciary duty owed to the plaintiff developer. On appeal, we rejected the appellant's argument that his breach of fiduciary duty claim constituted a tort:

Many breaches of contract can also be treated as torts. But in cases such as this,--where the "tort" complained of is based entirely upon a breach by the government of a promise made by it in a contract, so that the claim is in substance a breach of contract claim, and only incidentally and conceptually also a tort claim, we do not think that ... brings the case within the Federal Tort Claims Act.

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We only hold that where, as in this case, the action is essentially for breach of a contractual undertaking, and the liability ... depends wholly upon the government's alleged promise, the action ... cannot be under the Federal Tort Claims Act.

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[W]e do not think that [Aleutco ] is really contrary to our views. It was an action for conversion of property--"a classic tort"--as the court stated. We think that in Aleutco the action was essentially one sounding in tort, while here the action is one essentially sounding in contract. There, the breach of contract ... was a mere background for the tort....

Id. at 294-96 (emphasis added).

In United States v. Peter Kiewit Sons' Co., 345 F.2d 879 (8th Cir.1965), a contractor leased equipment and an operator to the federal government. The equipment was damaged while in use by the Army Corps of Engineers. The contractor brought an action under the FTCA alleging that the damage was the result of negligent supervision by a government employee. The district court entered judgment for the contractor and the government appealed, arguing that the district court was without jurisdiction. The Eighth Circuit reversed. The contract between Kiewit and the government specifically allocated responsibility for negligent actions and resulting damages. The contract also contained a "disputes clause" which required administrative resolution of "any dispute concerning a question of fact arising under this contract...." Id. at 880. The court held that any tort action which Kiewit might have otherwise been able to maintain was bargained away in the contract. Because all rights and remedies were covered by the contract, it was error for the district court to permit a tort action under the FTCA. Id. at 883-86.

This circuit was again confronted with the issue in Martin v. United States, 649 F.2d 701 (9th Cir.1981). There, the plaintiff's mother purchased a house from the Veterans Administration ("VA"). The VA agreed to make certain repairs in the house, including repairs to the plumbing in the bathtub. The VA required the purchaser to occupy the house before the repairs were completed. Because of the VA's failure to repair faulty plumbing, the plaintiff was injured. The district court entered judgment for the plaintiff in her claim under the FTCA for tortious breach of a contractual duty. The government appealed. This court affirmed over a vigorous dissent.

The majority in Martin attempted to distinguish Woodbury by characterizing Martin's claim as a "classic tort" as in Aleutco, because "the tort alleged here arises from an unsafe condition leading to personal injury." Martin, 649 F.2d at 705.

If the claim arising out of the breach of contract were for expectation damages, i.e., asking for the installation of a good spout, it would be more characteristic of a contractual action ... It would be improper to limit the plaintiff to a purely contract remedy. The cases that require such a limitation ... involve breaches in commercial relationships leading to loss of profit or other purely economic harm.

Id. The dissent would have denied jurisdiction, arguing that Woodbury held that jurisdiction is improper under the FTCA if government liability is predicated exclusively on: "(1) an express or implied promise by the government ... and (2) a wrongful breach of that promise." Martin, 649 F.2d at 706. In the dissent's view of the case, the government's liability was founded in the breach of its contractual obligations.

The most recent in this series of cases is Walsh v. United States, 672 F.2d 746 (9th Cir.1982). In Walsh, a landowner had conveyed to the government an easement across lands used for the pasturage of cattle. The easement was for a road, which the government was responsible for maintaining. Cattle guards were built on the easement to contain the plaintiff's cattle. The government failed to maintain the cattle guards. The plaintiff's cattle escaped. He brought an action under the FTCA against the government,...