A. L. Rowan & Son, General Contractors, Inc. v. Department of Housing and Urban Development, 77-2870

Decision Date13 February 1980
Docket NumberNo. 77-2870,77-2870
Citation611 F.2d 997
Parties27 Cont.Cas.Fed. (CCH) 80,201 A. L. ROWAN & SON, GENERAL CONTRACTORS, INC., Plaintiff-Appellant, v. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Denis Paul Juge, Gordon F. Wilson, Jr., New Orleans, La., for plaintiff-appellant.

Daniella Sapriel, Gwynn T. Swinson, Dept. of Justice, Washington, D. C., for defendants-appellees.

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

Before JONES, JOHN R. BROWN and RUBIN, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

Because the jurisdiction of United States district courts is limited, and cannot be extended by consent or waiver, because our appellate jurisdiction is derivative, and because plaintiffs choose those courts in preference to other forums, we confront frequently the question whether an asserted claim lies within the jurisdiction of the district court. The problem becomes an enigma when, as here, there are two different claims, the district court is vested with jurisdiction of only one and another federal court is vested with jurisdiction of the other. 1 There are three possible solutions to the riddle: dividing the case in half, upholding jurisdiction in the district court over a claim not permitted it by Congress because it may have jurisdiction of the other, or, because one of the claims is a contract claim in excess of $10,000, within the jurisdiction of the Court of Claims under the Tucker Act, transferring the case to that court. We review the situation that creates the problem.

A general contractor, A. L. Rowan & Son, whose controlling stockholders are members of a minority group and who, therefore, was solicited for a bid pursuant to policies of the Department of Housing and Urban Development, agreed with the Monroe, Louisiana Housing Authority to build and sell to the Housing Authority a low income housing project for $2,100,139. The price of the project was based on cost estimates, including one from the City of Monroe for off-site improvements necessary to complete the project. The Housing Authority, in turn, entered into an annual contributions contract with HUD, pursuant to 42 U.S.C. § 1437, which, as amended, committed HUD to provide the Housing Authority with financial assistance not to exceed.$2,273,921 to allow it to purchase and develop the project. Rowan's bid was accepted.

After the project had been completed, the city assessed a total cost for the off-site improvements that exceeded by $113,173 the sum used to calculate the bid. Both HUD and the Housing Authority refused to increase the amount paid Rowan. Consequently the general contractor sought to recover the excess in district court either as a third-party beneficiary under the annual contribution contract or for unjust enrichment of HUD on the theory that the project was worth $113,173 more than the sum paid for it. The plaintiff alleged jurisdiction under 28 U.S.C. § 1331 (federal question), § 1346 (civil actions against the United States) and § 1361 (action in the nature of mandamus to compel an officer of the United States to perform a duty owed to the plaintiff).

When an action against the United States or its agencies is "founded . . . upon any express or implied contract with the United States" or "for liquidated or unliquidated damages in cases not sounding in tort," 28 U.S.C. § 1346(a)(2), that section is normally relied upon, for it operates both as a waiver of sovereign immunity and a grant of jurisdiction. See Trans-Bay Engineers & Builders, Inc. v. Hills, D.C. Cir. 1976, 179 U.S.App.D.C. 184, 190, 551 F.2d 370, 376. However, if such claims exceed $10,000, exclusive jurisdiction to determine them is vested in the Court of Claims. Blanchard v. St. Paul Fire & Marine Ins. Co., 5 Cir. 1965, 341 F.2d 351, 358, Cert. denied, 382 U.S. 829, 86 S.Ct. 66, 15 L.Ed.2d 73.

The claim on Rowan's behalf as a third-party beneficiary of the contract between HUD and the Housing Authority is a claim based on contract. The rights of a third-party beneficiary spring from the contract and are determined by general contract law. See Restatement of Contracts §§ 142, 143; Restatement of Contracts 2d § 142, (Tent.Draft No. 3, 1967). See also G. Palmer, The Law of Restitution, § 4.11 (1978). Therefore, because Rowan seeks to recover $113,000, the district court properly ruled that it did not have jurisdiction under § 1346.

On the other hand, a claim for unjust enrichment rests on the concept of a contract implied in law, and is not contractual in nature. The Supreme Court has explicitly held: "The Tucker Act does not give a right of action against the United States in those cases where, if the transaction were between private parties, recovery could be had upon a contract implied in law." Merritt v. United States, 1925, 267 U.S. 338, 341, 45 S.Ct. 278, 279, 69 L.Ed. 643. See generally The Restatement of Restitution § 5; G. Palmer, Supra, at § 1.1. This rationale is further explained in Cleveland Chair Co. v. United States, Ct.Cl.1977, 557 F.2d 244: "Unjust enrichment . . . lacks the consensual element needed to find a contract implied in fact, and only provides support for the remedial device known as a contract implied in law, over which this court has no jurisdiction." 557 F.2d at 246. See also Algonac Manufacturing Co. v. United States, 1970, 428 F.2d 1241, 1255, 192 Ct.Cl. 649. See generally Baltimore & Ohio Railroad Co. v. United States, 1923, 261 U.S. 592, 597, 43 S.Ct. 425, 426, 67 L.Ed. 816. If asserted alone, that claim might properly be litigated in a United States district court as a claim arising under the laws of the United States under § 1331.

However, this would only get the plaintiff into the courtroom and would not keep it there, for, unlike § 1346, § 1331 implies no general waiver of sovereign immunity. The plaintiff seeks to find the United States' consent in 42 U.S.C. § 1404a, which reads cryptically: "The United States Housing Authority may sue and be sued only with respect to its functions under the United States Housing Act of 1937, as amended, and title II of Public Law 671, Seventy-sixth Congress, approved June 28, 1940, as amended." 2 We do not now attempt to resolve the immunity issue, for to do so would still leave the third party beneficiary claim pending. Moreover, Rowan continues to assert its contract claim as a basis for recovery in this same suit. Its insistence upon asserting both bases for recovery raises the further question: assuming that jurisdiction of the original unjust enrichment claim may be based on § 1331 And that the United States has waived its sovereign immunity, 3 may jurisdiction of this claim carry with it jurisdiction over a contract claim in excess of $10,000 so that a federal district court has jurisdiction of both?

We might escape that problem by dismissing the contract claim without prejudice, thus forcing on the plaintiff the severance that it has firmly resisted. However, a solution to the problems that piece-meal consideration would occasion both courts and litigants may be available.

Section 1406(c) of the Judicial Code authorizes transfer to the Court of Claims of an action that was within its exclusive jurisdiction but was filed in a district court. We have interpreted the statute to permit transfer from a court of appeals to the Court of Claims. Dr. John T. MacDonald Foundation, Inc. v. Califano, 5 Cir. 1978, 571 F.2d 328, 332, Cert. denied, 439 U.S. 893, 99 S.Ct. 250, 58 L.Ed.2d 238. Accordingly, we have authority to transfer a contract claim over $10,000.

If the contract claim were transferred, the bifurcation of the suit would also be avoided. In Marine Transport Lines, Inc. v. United States, 1956, 139 F.Supp. 301, 135 Ct.Cl. 874, Cert. denied, 352 U.S. 935, 77 S.Ct. 227, 1 L.Ed.2d 163, where suit was brought on a contract claim, the Court of Claims held it also had jurisdiction over other non-contract claims...

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