Massie v. U.S.

• Decision Date: 29 January 1999
• Docket Number: No. 98-5051,98-5051
• Parties: Jill K. MASSIE, as mother and next friend of Autumn Massie, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1184

166 F.3d 1184

Jill K. MASSIE, as mother and next friend of Autumn Massie Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 98-5051.

United States Court of Appeals Federal Circuit.

Jan. 29, 1999.

R. Gordon Pate, Pate, Lloyd, Fuston & Cochrun, LLP, Birmingham, Alabama, argued for plaintiffs-appellants.

Mark L. Josephs, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, DC, argued for defendant-appellee. With him on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, and Anthony H. Anikeeff, Assistant Director.

Before MAYER, Chief Judge, MICHEL, and LOURIE, Circuit Judges.

MAYER, Chief Judge.

Jill K. Massie, as mother and next friend of Autumn Massie, appeals the judgment of the United States Court of Federal Claims, 40 Fed.Cl. 151, which granted the government's motion for summary judgment that it did not breach an agreement to pay a claim arising under the Military Claims Act, 10 U.S.C. §§ 2731-2738 (1994). We reverse and remand for entry of judgment in favor of Massie.

Background

Autumn Massie suffered injuries during her birth at a naval hospital in 1983. The Massies filed a claim with the Department of the Navy pursuant to section 2733 of the Military Claims Act ("MCA"), alleging that Autumn's injuries were caused by medical malpractice. In 1986, the government agreed to pay the claim and entered into an agreement ("the Agreement"), ^* in which the Massies accepted monetary awards in "full satisfaction and final settlement of any and all claims, liens, rights, or subrogated interests" they had against the government for personal injuries alleged to have resulted from medical malpractice during Autumn's birth. These awards included cash payments to the family, a medical care trust fund, and the purchase of an annuity.

The Agreement states that the annuity "will result in distributions on behalf of the United States" in a certain manner. First, monthly payments in the amount of $2,500 "shall be paid to Autumn Massie or the guardian(s) of her life estate" until the twentieth year of the funding annuity, after which the monthly payments "shall be" $3,500 for the remainder of her life. The Agreement states that these monthly payments "are guaranteed for fifteen (15) years," and that if Autumn were to die before the fifteenth anniversary of the funding annuity, the monthly payments would be made to her estate. Second, the Agreement provides that lump sum payments of $100,000, $200,000, and $200,000 "shall be paid to Autumn Massie or the guardian(s) of her life estate" on the twenty-second, twenty-seventh, and thirty-second anniversaries of the funding annuity, respectively. These "deferred lump-sum payments ... are guaranteed" and if Autumn dies before receiving them, they "shall be paid to her estate." On the tenth and twentieth anniversaries of the funding annuity, a lump-sum payment of $100,000 "shall be paid into the Reversionary Medical Care Trust." Finally, the Agreement requires the government to purchase the annuity from an "insurance company rated A+ by A.M. Best" and does not place any restrictions on the parties' rights to enforce its terms.

Through JMW Settlements, Inc., the government purchased an annuity that satisfied the disbursement requirements from Executive Life Insurance Company, which had an A+ rating at the time of purchase, but subsequently went into conservatorship in 1991. In 1993, the insurance company's final rehabilitation plan was approved and the Massies were given the option to participate, which they did. The rehabilitation plan reduced the payments from the annuity significantly; Autumn now receives about 52% of the original amount and the medical care trust fund receives 59% of the original amount.

Massie brought suit in the Court of Federal Claims alleging that the government breached the Agreement because the annuity no longer disburses payments as the Agreement requires. She argued that the Agreement obligates the government to guarantee the annuity payments. The government filed a motion to dismiss, arguing that the court lacks jurisdiction over the claim because the MCA controls and the Agreement is not a contract to which the Tucker Act, 28 U.S.C. § 1491 (1994), applies. The court denied the motion, explaining that the Tucker Act applies to agreements formed after the allowance of an MCA claim.

In response to the parties' cross motions for summary judgment pertaining to the interpretation of the Agreement, however, the trial court held that the government did not agree to guarantee the annuity payments. The court found that the government discharged its obligations the moment it funded the annuity. The court also reasoned that the requirement that the government purchase the annuity from an "insurance company rated A+ by A.M. Best," which is the second highest possible rating, would be superfluous if it interpreted the Agreement as the Massies urged because "[i]f the government were obligated ... to guarantee the monthly annuity payments, ... the annuity could have been purchased from an insurance company offering a cheaper rate." Massie appeals.

Discussion

We review the trial court's action on the motion to dismiss and the motions for summary judgment de novo because they involve no disputed issues of fact and concern the construction of the MCA, the Tucker Act, and the Agreement. See Barseback Kraft AB v. United States, 121 F.3d 1475, 1479 (Fed.Cir.1997) (reviewing the grant of summary judgment and questions of contract interpretation de novo ); James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1541 (Fed.Cir.1996) ("Jurisdiction is a question of law which we review de novo."); Gump v. United States, 86 F.3d 1126, 1127 (Fed.Cir.1996) ("We review the summary judgment of the Court of Federal Claims, as well as its interpretation and application of the governing law, de novo.").

Jurisdiction

We first address whether the court had jurisdiction over Massie's claim. In reviewing the decision to deny a motion to dismiss for lack of jurisdiction, we accept as true the complaint's undisputed factual allegations. See Reynolds v. Army and Air Force Exch. Serv., 846 F.2d 746, 747 (Fed.Cir.1988). "If these facts reveal any possible basis on which the non-movant might prevail," we must uphold the court's denial. W.R. Cooper Gen. Contractor, Inc. v. United States, 843 F.2d 1362, 1364 (Fed.Cir.1988).

The Tucker Act grants the Court of Federal Claims jurisdiction over actions "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 cases not sounding in tort." 28 U.S.C. § 1491. An agreement to pay an MCA claim presumptively satisfies the Tucker Act because "any agreement can be a contract within the meaning of the Tucker Act, provided that it meets the requirements for a contract with the Government, specifically: mutual intent to contract including an offer and acceptance, consideration, and a Government representative who had actual authority to bind the Government." Trauma Serv. Group v. United States, 104 F.3d 1321, 1326 (Fed.Cir.1997). Nevertheless, a contract will not fall within the purview of the Tucker Act if Congress has placed jurisdiction over it elsewhere. See Del-Rio Drilling Programs, Inc. v. United States, 146 F.3d 1358, 1367 (Fed.Cir.1998) ("There are, of course, instances in which courts find that Congress has displaced Tucker Act jurisdiction in favor of some other remedial scheme."); see also Matson Navigation Co. v. United States, 284 U.S. 352, 359-60, 52 S.Ct. 162, 76 L.Ed. 336 (1932) (holding that the Court of Claims lacked jurisdiction over a contract whose subject matter was covered by the Suits in Admiralty Act); Reed by and Through Reed v. United States, 891 F.2d 878, 880 (11th Cir.1990) (holding the Court of Federal Claims lacks jurisdiction over an agreement settling claims under the Federal Torts Claims Act because a district court's jurisdiction "includes the power to enforce a settlement resulting from the claim that provided the basis for jurisdiction").

The government argues that the MCA strips the Court of Federal Claims of jurisdiction over this contract because it is a complete and comprehensive statutory scheme pertaining to the payment of military claims. We agree that, under the statute, payment of a claim is discretionary with the Secretary of Defense and his decision is "final and conclusive." See 10 U.S.C. §§ 2733(a), 2735; Collins v. United States, 67 F.3d 284, 287-88 (Fed.Cir.1995). As a result, the decision to allow and the extent to which to allow a claim is not reviewable. See Collins, 67 F.3d at 287-88. But the MCA does not address the breach of agreements to pay MCA claims. Nor does its legislative history shed light on this issue. Therefore, the MCA itself does not deprive the court of jurisdiction to hear Massie's claim.

The government further argues that Amin v. Merit Systems Protection Board, 951 F.2d 1247 (Fed.Cir.1991), and Bobula v. United States Department of Justice, 970 F.2d 854 (Fed.Cir.1992), hold that the Court of Federal Claims lacks jurisdiction "over actions for breach of settlement agreements when the agreements ar[i]se from disputes which would have been litigated in other fora." We do not believe, however, that this principle applies in the MCA context.

An agreement to pay an MCA claim is more akin to a procurement contract than a settlement agreement. Both the contracting officer and the Secretary have authority to form contracts with bidders and MCA claimants, respectively. Like the Secretary's decision to pay an MCA claim, the contracting officer's decision to award a contract is discretionary. See Tidewater Management Servs., Inc. v. United States, 216 Ct.Cl. 69, 573 F.2d 65, 73 (Ct.Cl.1978) ("Procurement officers...