Ghent v. Lynn

• Decision Date: 24 April 1975
• Docket Number: Civ. No. N-74-137.
• Citation: 392 F. Supp. 879
• Court: U.S. District Court — District of Connecticut
• Parties: Donald J. GHENT v. James T. LYNN, Secretary of the Department of Housing & Urban Development of the United States.

392 F. Supp. 879

Donald J. GHENT v. James T. LYNN, Secretary of the Department of Housing & Urban Development of the United States.

Civ. No. N-74-137.

United States District Court, D. Connecticut.

April 24, 1975.

Gary I. Cohen, Seymour, Conn., for plaintiff.

Peter Mear, Asst. U. S. Atty., New Haven, Conn., for defendant.

RULING ON DEFENDANT'S MOTION TO DISMISS AND FOR SUMMARY JUDGMENT

NEWMAN, District Judge.

This case presents the question of the jurisdiction of a United States district court to entertain breach of contract claims against the Secretary of Housing and Urban Development (H.U.D.) when the relief requested is damages in excess of $10,000. On August 3, 1971, the Hartford (Connecticut) Area Director of H.U.D. issued a conditional commitment for mortgage insurance on a construction project known as the Woodhaven Apartments, see 12 U.S.C. § 1701s and § 1715z-1 et seq. Plaintiff claims that an extension of the conditional commitment was illegally rescinded prior to its date of expiration, and that such rescission entitles him to recover $300,000 in damages, including both expenses incurred in reliance on the commitment and loss of anticipated profits. The defendant, Secretary of H.U.D., moves to dismiss the suit for lack of jurisdiction, and, in the alternative, for summary judgment.

I.

Plaintiff relies for jurisdiction primarily on 12 U.S.C. § 1702, which states that in carrying out the provisions of certain statutes, including those under which the conditional commitment was issued to plaintiff, the Secretary of H. U.D. is "authorized in his official capacity, to sue and be sued in any court of competent jurisdiction, State or Federal."

On its face, § 1702 does no more than waive the sovereign immunity that would otherwise preclude suit against the Secretary in his official capacity. Though it permits suit by or against the Secretary in "any court of competent jurisdiction," the statute does not specify in which courts such suits may be brought. If there is subject matter jurisdiction, some other statute must provide it. Harms v. Federal Housing Administration, 256 F.Supp. 757 (D.Md. 1966); Choy v. Farragut Gardens, 131 F.Supp. 609 (S.D.N.Y.1955); cf. Bank of United States v. Deveaux, 9 U.S. (5 Cranch) 61, 85, 3 L.Ed. 38 (1809).

Some courts have construed § 1702 to provide subject matter jurisdiction, and have supported that interpretation by what they consider to be the anomalous result of reading the statute only as a waiver of sovereign immunity. I agree that there is district court jurisdiction for suits such as this one, but for reasons quite apart from this broad "interpretation" of § 1702.

A suit for damages against the Secretary in his official capacity is a suit against the United States, Edelman v. Federal Housing Administration, 382 F.2d 594 (2d Cir. 1967), and for nontort claims against the federal government, the Tucker Act, 28 U.S.C. §§ 1346 and 1491, both provides subject matter jurisdiction and waives the government's sovereign immunity from suit. The Tucker Act permits such suit in the Court of Claims without regard to the amount in controversy (§ 1491), but permit such suits in the district courts only when the amount sought is $10,000 or less (§ 1346).

By waiving the Secretary's sovereign immunity, § 1702 opens the door to suits against him in his official capacity brought in state courts of general jurisdiction. Such courts are "competent" within the meaning of § 1702 only because state jurisdictional statutes make them so. While § 1702 also waives the Secretary's sovereign immunity in federal courts, and does so (unlike the Tucker Act's district court provision) with no limit on the amount in controversy, it is no more a source of federal court jurisdiction than of state court jurisdiction. A claimant who sued the Secretary in federal district court and relied on the Tucker Act for the jurisdiction § 1702 does not provide, would encounter the Tucker Act's $10,000 limit on district court jurisdiction. If no other federal statute provided jurisdiction, such a claimant could sue the Secretary for more than $10,000 only in a state court or in the Court of Claims.

In Ferguson v. Union National Bank, 126 F.2d 753, 756 (4th Cir. 1942), the court reasoned that,

It could hardly have been intended by Congress that suits for over $10,000 against the Administrator predecessor to the Secretary could be brought in any state court of general jurisdiction, but in the federal jurisdiction, only in the Court of Claims . . ..

To avoid that result the Court construed § 1702 to be a grant of jurisdiction to the district courts. James T. Barnes & Co. v. Romney, 334 F.Supp. 657 (E.D. Mich.1971), expressly relied on this supposed anomaly, and George H. Evans & Co. v. United States, 169 F.2d 500 (3d Cir. 1948), expressly relied on Ferguson.

Had § 1702 created the jurisdictional anomaly Ferguson suggested, that anomaly would be of Congress' making. Considerations of convenience to the claimants and preference for the federal forum might justify access to the federal district courts to supplement jurisdiction in the Court of Claims and in state courts. On the other hand, it would not have been unreasonable for Congress to require that the large claims of plaintiffs who choose to sue in the federal courts be brought in a single, specialized forum. Thus policy considerations do not compel a reading of § 1702 as a jurisdictional grant, and claimants seeking a recovery in the district court against the Secretary beyond the Tucker Act's monetary limit must look elsewhere for a source of district court jurisdiction.

Ferguson assumed that if § 1702 did not provide district court jurisdiction for claims against the government in excess of $10,000, no other statute would. No consideration, however, was given to the grant of general federal question jurisdiction, 28 U.S.C. § 1331, which gives district courts jurisdiction to hear any suit that "arises under the Constitution, laws, or treaties of the United States," where the amount in controversy exceeds $10,000. Understandably, few, if any, courts have considered the applicability of this statute to suits against the United States. Most claimants against the government rely on the Tucker Act for the waiver of sovereign immunity that would otherwise preclude their suits. When such a claimant attempts to sue in a district court for a sum that exceeds § 1331's $10,000 jurisdictional minimum, he encounters the Tucker Act's $10,000 maximum, and his claim therefore fails as an unconsented suit against the sovereign. Hence it is commonly said that suits against the government for more than $10,000 are in the exclusive jurisdiction of the Court of Claims, Philips v. United States, 206 F. 2d 867 (9th Cir. 1953); State Road Department of Florida v. United States, 166 F.2d 843 (5th Cir. 1948). In fact, the jurisdiction of the Court of Claims for suits claiming more than $10,000 is not exclusive; rather, there is rarely any statute available that waives sovereign immunity for suits in the district court, other than the Tucker Act with its $10,000 limit.

There are specific instances in which Congress has waived sovereign immunity for district court suits without regard to the amount in controversy, but in those same situations Congress has also given a complementary grant of jurisdiction to the district courts that makes resort to § 1331 unnecessary, see e. g., 12 U.S.C. § 1819; 12 U.S.C. § 1452; and see 28 U.S.C. § 1345. Ferguson, and those decisions that followed it, construed § 1702 as both a waiver of sovereign immunity and a grant of jurisdiction, and therefore never considered § 1331 either, but cf. Harms v. Federal Housing Administration, supr...