Kania v. United States

• Citation: 650 F.2d 264
• Decision Date: 20 May 1981
• Docket Number: No. 6-80C.,6-80C.
• Parties: Eugene B. KANIA v. The UNITED STATES
• Court: Court of Federal Claims

650 F.2d 264

Eugene B. KANIA v. The UNITED STATES

No. 6-80C.

United States Court of Claims.

May 20, 1981.

Joseph J. Marcheso, New York City, atty. of record, for plaintiff.

Frank M. Rapoport, Washington, D.C., with whom was Acting Asst. Atty. Gen. Thomas S. Martin, Washington, D.C., for defendant.

Before NICHOLS, KUNZIG and SMITH, Judges.

ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

NICHOLS, Judge.

This case comes before the court on cross-motions for summary judgment filed by plaintiff and defendant. There is no issue of relevant fact. The claim is for expenses incurred in preparing the defense of a party indicted for a crime, under peculiar circumstances, but never tried. Plaintiff seeks recovery in the amount of $42,000 plus interest and costs.

I

Plaintiff, Eugene Kania, is a former officer of the Railway Express Agency, Inc. (REA). He served as vice president of finance from approximately December 1970 to December 1974. REA was for many years engaged in commerce as a common carrier and conducted a ground and air express service within the United States. On or about February 18, 1975, REA filed a petition in the United States District Court for the Southern District of New York, pursuant to Chapter XI of the Bankruptcy Act. On or about November 6, 1975, REA was adjudicated a bankrupt and a trustee in bankruptcy was appointed.

In or about 1974 the Interstate Commerce Commission (ICC) began an investigation into the affairs of REA. The investigation was subsequently referred to the United States Attorney for the Southern District of New York who then assumed control of the investigation in collaboration with the ICC. The investigation dealt with complex and myriad activities of REA spanning a period in excess of 12 years and encompassed, with other things, allegations of political and financial corruption.

In July 1974 an investigator of the ICC sought out the plaintiff and asked his assistance in unraveling the affairs of REA. Plaintiff was assured by the investigator that he was not a target of the investigation. Plaintiff cooperated with the investigator, was interviewed without an attorney, and was thereafter subpoenaed to appear before a grand jury empaneled in the Southern District of New York.

On or about October 25, 1977, an Assistant United States Attorney (AUSA) for the Southern District of New York, Dominic Amorosa, spoke with plaintiff and told him his assistance was valuable to the government's investigation, the government was desirous of his continued assistance, and, under no circumstances was he a target of the investigation. On the same day, pursuant to subpoena, plaintiff testified before the grand jury concerning various matters at REA.

In January 1978 AUSA Amorosa solicited plaintiff's further cooperation. Plaintiff was then represented by counsel. Prior to divulging any information, plaintiff and AUSA Amorosa entered into an agreement with regard to plaintiff's appearance before the grand jury. It concerned the question of whether plaintiff would or would not be prosecuted. That agreement was never reduced to writing.

A dispute later arose over the terms of the agreement. It was plaintiff's understanding that if he cooperated with the government by testifying truthfully before the grand jury he would not be prosecuted for any of his actions which occurred while he was employed at REA. Plaintiff described the agreement as affording him transactional immunity.

It was the government's position that plaintiff's obligation encompassed not only the giving of truthful testimony before the grand jury, but also a duty to answer fully all government inquiries outside the courtroom and to reveal all of his and others' wrongful conduct at REA. The government denied that plaintiff had been given full transactional immunity. Instead, the government explained that plaintiff had been afforded only informal, conditional immunity.

Plaintiff was brought before the grand jury in March 1978 to testify about the bribery schemes. On November 2, 1978, Amorosa notified Mr. Kania that he was a target of a grand jury investigation. After Mr. Kania declined to appear voluntarily and denied all wrongdoing, the matter was brought before the grand jury which indicted him on March 8, 1979.

Shortly thereafter, Mr. Kania through his present counsel, filed a motion to dismiss the indictment averring that the government had violated its agreement not to prosecute him if he testified truthfully before the grand jury. The government opposed this motion and a hearing was held. Judge Morris E. Lasker, of the United States District Court for the Southern District of New York, granted the motion to dismiss the indictment on May 2, 1979. In so ruling, Judge Lasker held that the agreement was that Mr. Kania would not be prosecuted if he testified truthfully to whatever he was asked to testify, and that there was no evidence that Mr. Kania violated that agreement. There was no appeal of that decision.

II

Plaintiff says that his agreement with the government was a contract. The terms of that contract were that the United States Attorney's office would not prosecute plaintiff in connection with any of his actions at REA in return for his good faith testimony before the grand jury. According to plaintiff, the contract terms were memorialized by AUSA Amorosa at the commencement of plaintiff's grand jury appearance on March 8, 1978. At that time and after plaintiff had been duly sworn in, he was asked by Mr. Amorosa, "Mr. Kania, have you been told by a representative of the government that you will not be prosecuted in connection with this matter in return for your good-faith testimony?" Plaintiff then replied, "Yes, I have."

Continuing along this line of argument, plaintiff says that by testifying before the grand jury he performed his obligations under the contract. The government was benefitted by plaintiff's performance, yet breached the contract when AUSA Amorosa asked the grand jury for the Southern District of New York to return an indictment against the plaintiff. According to plaintiff, this breach damaged him because he was forced to proceed with time consuming and expensive pretrial discovery and trial preparation without ascertaining the scope of his immunity, because of the provisions of the Speedy Trial Act, 18 U.S.C. § 3161 which require trial to commence within 60 days of the date of arraignment. Although he moved expeditiously to dismiss the indictment, there was no assurance that the motion would be granted. Therefore, plaintiff claims that he was damaged in that he incurred various costs and expenses including but not limited to legal fees incurred in defending against the indictment.

The government counters by asserting that plaintiff's claim is based in tort, not contract, and is a claim for malicious prosecution. Or in the alternative it is a claim for attorney's fees incurred by plaintiff while defending a criminal prosecution. Either way, plaintiff would not be entitled to recovery if defendant is correct.

III

We cannot agree with plaintiff's argument that Judge Lasker found that there was a contract between plaintiff and the United States and that therefore the doctrine of collateral estoppel precludes relitigation of that question. Judge Lasker did find that there was an agreement between plaintiff and defendant. His exact language was —

In January of 1978, the Government indicated to Mr. Kania that they wanted further testimony from him. * * * And an oral agreement was entered into between the Government and the defendant with regard to his appearance before the grand jury and the question of whether he would or would not be prosecuted.

Throughout his opinion Judge Lasker referred to the arrangement as an agreement, not a contract. But, of course the fact that the catch-word, or exact legal terminology of "contract" was or was not used is not dispositive. Our decision here does not turn on whether Judge Lasker or either of the parties might have earlier described the arrangement as a "contract."

Indeed, both parties have changed their respective positions on the question of whether or not their arrangement was or was not a contract. The government in its affidavit sworn to on April 20, 1979, by AUSA Amorosa states, "he Kania and the Government simply entered into a contract which barred his prosecution for all offenses he committed while at REA in return for * * *." And Judge Lasker found, "it is the Government's position that it had a contract with Mr. Kania to cooperate in good faith." The government's current position is that there was no contract and that plaintiff invokes contract theory to mask what is in reality a claim alleging tortious injury and violations of constitutional due process.

And plaintiff's earlier position was also quite different from his present position. In response to the government's prior contract argument, plaintiff asserted, "in paragraphs 8 and 9 of his affidavit, Mr. Amorosa attempts to reduce the issue now before the Court to a matter of contract law. * * * The issue before this Court U.S. District Court SDNY is not one which can be decided on the basis of a simplistic consideration of contract law. Rather the issue is one of fairness which rises to constitutional dimensions." Now both parties chastise one another for their prior statements and positions, and subsequent turnabouts.

IV

The reason that plaintiff's contract argument must fail here is because this court has no jurisdiction to award damages for his claim against the government. Section 1491 of Title 28 of the United States Code (Tucker Act) grants the court jurisdiction to redress claims against the U.S. Government "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, or for liquidated or unliquidated damages in cas...