Huerta v. United States

• Decision Date: 04 March 1977
• Docket Number: No. 110-69.,110-69.
• Parties: Juan M. HUERTA v. The UNITED STATES.
• Court: U.S. Claims Court

548 F.2d 343

Juan M. HUERTA v. The UNITED STATES.

No. 110-69.

United States Court of Claims.

January 26, 1977.

As Amended on Denial of Rehearing and Rehearing March 4, 1977.

F. Trowbridge vom Baur, Washington, D.C., atty. of record, for plaintiff; vom Baur, Coburn, Simmons & Turtle, Washington, D.C., of counsel.

Marc J. Fink, Washington, D.C., with whom was Asst. Atty. Gen., Rex E. Lee, Washington, D.C., for defendant.

Before COWEN, Chief Judge, and DAVIS and KUNZIG, Judges.

As Amended on Denial of Rehearing and Rehearing En Banc March 4, 1977.

OPINION

PER CURIAM:

This case comes before the court on plaintiff's exceptions to the recommended decision of Trial Judge Louis Spector, filed October 21, 1975, pursuant to Rule 134(h), having been submitted on the briefs and oral argument of counsel. Upon consideration thereof, since the court agrees with the trial judge's recommended decision,^* as hereinafter set forth, it hereby affirms and adopts said decision as the basis for its judgment in this case. It is, therefore, concluded that plaintiff is not entitled to recover and the petition is dismissed.

OPINION OF TRIAL JUDGE

SPECTOR, Trial Judge:

When Fidel Castro came to power in Cuba in 1959, many Cuban nationals and others lost commercial and personal property located in Cuba as a result of the confiscatory acts of the Castro regime. Plaintiff in this case, Juan M. Huerta, a Cuban national until his American naturalization in 1974, was one of those who incurred property losses attributable to the policies of the Cuban Government. His position is unique, however, in that part of his property so lost was situated on territory controlled not by Fidel Castro but by the U.S. Navy at Guantanamo. He brings this action to recover almost $900,000 on the alternative grounds of breach of contract, and the uncompensated taking of property. The property, hereinafter described, has rested on the naval base since the early 1960's, and what is left of it remains there today.

Plaintiff, aided by his brother Guillermo Huerta, conducted a large and profitable demolition, salvage, and construction materials business in Santiago, Cuba, during the period 1956-63. Beginning in 1958, he from time to time performed demolition work for the Navy on its base at Guantanamo Bay, some 80 miles from Santiago. In the years 1960, 1961, and 1962, plaintiff was awarded and performed five demolition contracts on the base, taking as the principal consideration for his work the title to all materials, with certain exceptions not relevant here, which he carefully salvaged from the structures he demolished. It had been plaintiff's custom under previous contracts to remove the salvaged materials to his place of business in Santiago for eventual resale. There was a brisk market for those materials in Cuba. However, for reasons vigorously disputed by the parties, the materials salvaged from the above five contracts never left the base but remained on a storage site that the Navy made available for plaintiff in late 1960. Those materials, now valueless due to prolonged exposure to the elements and certain alleged thefts, are the subject matter of this case.

Plaintiff claims that the United States is responsible for the fact that he received no economic benefit from his salvaged materials because of the acts and omissions of certain Naval personnel on the base. He states three separate grounds for recovery. First he says the United States breached all five contracts when Navy officials in effect refused his requests for permission to take the materials into Cuba. They did this, he avers, by continually telling him over a 2-year period that removal to Cuba was not currently permissible, all the while assuring him that obstacles to removal would soon disappear. However, he says permission to remove was never granted, and this converted the Navy's words into ones of refusal.

Plaintiff's first theory of recovery is that the Navy's refusals constituted a breach by depriving him of the principal consideration for his contracts, by violating an implied covenant of cooperation, or by amounting to a cardinal change order. The latter premise is based on the parties' understanding in executing the contracts that plaintiff could and would take the salvaged materials into Cuba for resale.

The second ground asserted is that there was a taking of his property without compensation, by virtue of the same Navy refusals of his requests to remove it (hereinafter, "first taking claim"). Finally, plaintiff complains that his materials, while stored on the base, were physically appropriated by agents of the United States and used in the building of base structures. This, he urges, also constituted an uncompensated taking of his property ("second or pilferage taking claim").

The Government disclaims all responsibility for plaintiff's loss. It responds that plaintiff never requested permission to take his materials into Cuba; that he elected not to take the property there, for reasons hereinafter amplified, and that there was no appropriation of the materials for a public use by agents of the United States.

The defendant further disavows liability by raising a series of independent defenses unrelated to the above-described issue on the merits. Its answer to the petition alleges that since plaintiff was a Cuban national, this court lacks jurisdiction to entertain his suit under the so-called Reciprocity Statute, 28 U.S.C. § 2502 (1970), unless American citizens also had the right to sue the Cuban Government in its courts. Next, says defendant, the defense of "sovereign act" relieves it of any liability in contract that may arise from the imposition of a trade embargo in 1962, as further described below. Finally, it raises for the first time (in its response to plaintiff's pretrial statement on liability) the defenses that the 6-year Statute of Limitations, 28 U.S.C. § 2501 (1970), had run before plaintiff filed his petition in this court on February 26, 1969, and further that the Government was discharged by releases executed by plaintiff on each of the five contracts. None of these independent defenses was raised by filing a motion for summary judgment.

As hereinafter indicated, this case has from the beginning been considered and tried on its facts, and on the "merits" issue earlier described. Resolution of that issue therefore represents the most efficient avenue for disposition of the case.

Trial was held on the breach and the two taking theories from March 26 to April 1, 1974. Earlier, the contracting officer had issued a final decision on August 9, 1967, denying plaintiff's request for an equitable adjustment under the five contracts. Plaintiff thereafter prosecuted an appeal to the Armed Services Board of Contract Appeals. The board denied the appeal on April 6, 1971, on the ground that relief was not available to plaintiff under the contract terms. On July 6, 1971, plaintiff filed a petition with this court amending his originally filed protective petition of February 26, 1969. The amended petition is the basis for the present suit for a breach and a taking. Plaintiff then moved for a trial de novo in this court. His motion was granted and not appealed. Defendant's later motion that the board's decision be deemed binding in the trial de novo was denied, and the denial upheld on appeal.

The testimony on the merits of the case is voluminous and in direct conflict, although certain details providing background for the parties' various actions are not disputed, and provide an important objective guide to resolution of conflicting evidence. The evidence is set forth in detail in the findings of fact, and only briefly summarized here.

The Government of Cuba, under Castro's leadership, embarked on a program of state ownership and direction of major, basic business enterprises in Cuba beginning in 1960. A large number of Cuban-owned businesses were "nationalized" or "intervened" immediately and this pattern was continued over a period of years until even small enterprises were subjected to seizure starting in 1964. During the same period relations between the United States and Cuba deteriorated rapidly. All American property in Cuba was expropriated in late 1960, following President Eisenhower's reduction of the Cuban sugar import quota. After expropriation, the Commerce Department issued a ban on exports from the United States to Cuba.

The first contract at issue was signed just before the expropriation of American property by Cuba, and the second contract shortly thereafter. The two nations severed diplomatic relations in January 1961, just as performance on the first two contracts neared completion. By April of 1961, the Bay of Pigs invasion had occurred, failing in its objective, and creating further hostility between the two countries. Soon thereafter the Cuban Government forbade the movement of all vehicular traffic through the northeast gate at Guantanamo. This was the only land route from the Guantanamo Base to Cuba. In May 1961, the Cuban Central Bank placed tighter controls on foreign exchange transactions involving American dollars and Cuban pesos.

After performance under the third contract was completed, and while work on the fourth was underway, President Kennedy, on February 3, 1962, issued Proclamation No. 3447, placing a total embargo on Cuban-American trade. This Proclamation recited that the earlier Commerce Department ban on exports to Cuba remained in effect. Plaintiff and base construction officials thereafter recognized the February 1962 Proclamation as a legal impediment to the movement of plaintiff's property into Cuba from Guantanamo, and as the first such explicit barrier. The following month plaintiff signed the fifth and last contract. This was the only one containing a clause expressly permitting plaintiff to store his materials on the base.

On the breach of contract and "first taking" claim issues, the parties disagree as...