Lewis v. U.S.

• Decision Date: 16 November 1995
• Docket Number: No. 95-5038,95-5038
• Parties: James L. LEWIS, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 597

70 F.3d 597

James L. LEWIS, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 95-5038.

United States Court of Appeals Federal Circuit.

Nov. 16, 1995.

Stephen Shelnutt, Arlington, Virginia, argued for plaintiff-appellant. With him on the brief was Charles Russell Twist, Arlington, Virginia.

Mary L. Smith, Commercial Litigation Branch, Department of Justice, Washington, D.C., argued for defendant-appellee. With her on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, and Michael S. Kane.

Before NEWMAN, Circuit Judge, BENNETT, Senior Circuit Judge, and BRYSON, Circuit Judge.

BRYSON, Circuit Judge.

Appellant, proceeding under the pseudonym James L. Lewis, claims that he is entitled to a $20,000,000 recovery against the United States. His theory is that by offering to obtain information for the Customs Service, he entered into an implied-in-fact contract with the government, and that the government interfered with his rights under that contract. The Court of Federal Claims dismissed the complaint, holding that the statute on which Lewis relies does not give rise to a contract that accords enforceable rights to any person who agrees to provide information to the Customs Service. Lewis v. United States, 32 Fed.Cl. 301 (1994). We affirm.

I

According to the allegations in his complaint, Lewis contacted a United States Customs Service agent in 1989 and offered to provide information concerning the purchase and importation of arms from Vietnam, activities that would violate the Trading With the Enemy Act, 50 U.S.C.App. Sec. 1 et seq. The agent allegedly accepted Lewis's offer after obtaining the approval of a supervisor in a regional Customs Service office. Lewis alleges that the Customs Service agreed to pay his expenses in connection with the investigation and ultimately to provide him with an award for his services under 19 U.S.C. Sec. 1619.

No award was ever paid, because the investigation was terminated without any arrests being made or enforcement proceedings being initiated. Lewis then filed a complaint in the Court of Federal Claims, in which he alleged that by agreeing to provide information he had entered into an implied-in-fact contract with the government, and that by obstructing and otherwise failing to pursue the investigation, Customs officials had interfered with his performance under that contract. Lewis sought $20,000,000 in damages, the amount he claims he would have received had the government successfully prosecuted all the violations about which he alleged he could have provided information.

Relying on Rule 27 of the Rules of the Court of Federal Claims, Lewis filed discovery requests for documents relating to the merits of his claim. The government responded by moving to dismiss the complaint for lack of jurisdiction or for failure to state a claim upon which relief could be granted.

The trial court dismissed the complaint in a thorough opinion with which we are in general agreement. The court first noted that a claim of tortious interference with a contract is cognizable under the Tucker Act, 28 U.S.C. Sec. 1491, if it arises out of a contract with the government. The court, however, held that Lewis had failed to establish a legal basis for his claim that his offer to provide information to the Customs Service resulted in the formation of a contract. The court explained that 19 U.S.C. Sec. 1619 does not give rise to an implied contract, but simply authorizes the Secretary of the Treasury to grant an award to an informant who provides information that leads to a monetary recovery. Because there was no contract, the court denied Lewis's discovery requests, which were designed to elicit information that Lewis regarded as pertinent to the question whether the government breached its obligations under the putative contract. Finally, finding that Lewis's contractual basis for jurisdiction was "so clearly lacking as to border on the frivolous," 32 Fed.Cl. at 307, the court dismissed the complaint for want of jurisdiction.

II

On appeal, Lewis renews his claim that he entered into an implied-in-fact contract with the government, which the government breached by hindering and preventing his performance. Lewis's theory is that the Customs Service "informer award" statute, 19 U.S.C. Sec. 1619, constitutes an offer, under which the United States promises to pay an award to anyone who provides original information regarding violations of the customs laws. Section 1619 provides, in relevant part:

(a) If--

(1) any person who is not an employee or officer of the United States--

. . . . .

(B) furnishes to a United States ... customs officer original information concerning--

(i) any fraud upon the customs revenue, or

(ii) any violation of the customs laws or the navigation laws which is being, or has been, perpetrated or contemplated by any other person; and

(2) such ... information leads to a recovery of--

(A) any duties withheld, or

(B) any fine, penalty, or forfeiture of property incurred;

the Secretary [of the Treasury] may award and pay such person an amount that does not exceed 25 percent of the net amount so recovered.

The statute makes clear that, in order for an informant to be eligible for an award under section 1619, several conditions must be met. First, the informant must provide "original information" to the Customs Service. Second, the information must result in an investigation and prosecution of the violator that leads to an actual recovery of duties, a fine, a penalty, or a forfeiture. While it is unclear whether Lewis ever supplied any information regarding the alleged customs violations, it is clear that the alleged violations never led to an enforcement action or a recovery of any kind. Lewis therefore never met the second condition under section 1619 and was not eligible for an award.

Lewis argues that section 1619 should be read as an offer to pay an award for any information leading to a recovery, and he contends that by agreeing to collect information, he accepted that offer. At that point, he argues, the government was bound to pursue the investigation and ultimately refer the matter to the Department of Justice, so that the Department of Justice could make a determination whether to institute enforcement proceedings. That argument, however, is contrary to well-settled principles of contract law and to the statutes governing Customs Service investigations.

A

An implied-in-fact contract is one "founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding." Baltimore & Ohio R.R. Co. v. United States, 261 U.S. 592, 597, 43 S.Ct. 425, 426-27, 67 L.Ed. 816 (1923). See also Porter v. United States, 496 F.2d 583, 590, 204 Ct.Cl. 355 (1974). Like an express contract, an implied-in-fact contract requires "(1) mutuality of intent to contract; (2) consideration; and, (3) lack of ambiguity in offer and acceptance." City of El Centro v. United States, 922 F.2d 816, 820 (Fed.Cir.1990), cert. denied, 501 U.S. 1230, 111 S.Ct. 2851, 115 L.Ed.2d 1019 (1991). When the United States is a party, a fourth requirement is added: the government representative "whose conduct is relied upon must have actual authority to bind the government in contract." Id. Lewis's claim that section 1619 gave rise to a contract in this case fails on the first and third of the conditions for establishing an implied-in-fact contract.

Section 1619 expresses no intent to bind the government if the statutory requirements are not met, nor can such intent be inferred from the terms of the statute. Rather, section 1619 empowers the Secretary to make an award only if information is provided and the information leads to a recovery. The legislative history of section 1619 also provides no support for Lewis's position that the statute constitutes an offer that can be accepted by a promise to perform. In fact, in a 1986 amendment Congress enlarged the discretion already given the Secretary of the Treasury in deciding whether to award payments to informants under section 1619. See H.R.Rep. No. 794, 99th Cong., 2d Sess. 6, 16-17 (1986). We therefore agree with the trial court that section 1619 does no more than provide that, if all the statutory conditions are met, the Secretary of the Treasury may make an award to an informant of up to a specified amount from government funds.

Lewis suggests that the purported statutory offer was reaffirmed by the Customs Service agents who spoke with him concerning his potential information, thereby evidencing the necessary intent to bind the government. As the trial court noted, however, any promise by Customs Service officials to make an award under a statute that specifically authorizes such awards only under certain conditions must be construed at most as a promise to pay if the promisee meets all the conditions of the statute. See Fountain v. United States, 427 F.2d 759, 761-62, 192 Ct.Cl. 495 (1970), cert. denied, 404 U.S. 839, 92 S.Ct. 131, 30 L.Ed.2d 73 (1971). Because Lewis did not satisfy the requirements of the statute, he had no right to any recovery.

Section 1619 also does not contain sufficiently definite terms to serve as the basis for a contract. In Merrick v. United States, 846 F.2d 725 (Fed.Cir.1988), this court held that a similar statute, 26 U.S.C. Sec. 7623, did not contractually bind the government to pay a reward. The court noted that only after the informant and the government agreed on a specific reward did a contract arise. See also Gordon v. United States, 36 F.Supp. 639, 640, 92 Ct.Cl. 499 (1941) (under 26 U.S.C. Sec. 7623, no contract found between government and informant in the absence of an offer to pay a definite sum). Lewis does not allege that the government ever offered a specific sum or percentage of the funds that might...