Miree v. Kalb County, Georgia Phillips v. Kalb County, Georgia Fireman Fund Insurance Company v. Kalb County, Georgia Fields v. Kalb County, Georgia

• Citation: 97 S.Ct. 2490,53 L.Ed.2d 557,433 U.S. 25
• Decision Date: 21 June 1977
• Docket Number: Nos. 76-607,76-700 and 76-722,76-659,s. 76-607
• Parties: George Henson MIREE et al., Petitioners, v. DeKALB COUNTY, GEORGIA, et al. Judith Anita PHILLIPS, etc., Petitioner, v. DeKALB COUNTY, GEORGIA, et al. FIREMAN'S FUND INSURANCE COMPANY, Petitioner, v. DeKALB COUNTY, GEORGIA, et al. William Michael FIELDS, Petitioner, v. DeKALB COUNTY, GEORGIA, et al
• Court: United States Supreme Court

433 U.S. 25

97 S.Ct. 2490

53 L.Ed.2d 557

George Henson MIREE et al., Petitioners,

v DeKALB COUNTY, GEORGIA, et al.

Judith Anita PHILLIPS, etc., Petitioner,

v. DeKALB COUNTY, GEORGIA, et al.

FIREMAN'S FUND INSURANCE COMPANY, Petitioner,

v. DeKALB COUNTY, GEORGIA, et al.

William Michael FIELDS, Petitioner,

v. DeKALB COUNTY, GEORGIA, et al.

Nos. 76-607, 76-659, 76-700 and 76-722.

Argued April 27, 1977.

Decided June 21, 1977.

Syllabus

1. In petitioners' consolidated diversity actions against respondent county arising out of an aircraft crash at the county's airport, state rather than federal law held to apply to the resolution of petitioners' claim that, as, respectively, survivors of deceased passengers, the assignee of the aircraft owner, and a burn victim, they are the third-party beneficiaries of grant contracts between the county and the Federal Aviation Administration whereby the county agreed to restrict the use of land adjacent to or near the airport to activities compatible with normal aircraft operations, including landings and takeoffs; that the county breached these contracts by operating a garbage dump adjacent to the airport; and that the cause of the crash was the ingestion of birds swarming from the dump into the aircraft's jet engines shortly after takeoff. The rationale of Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838, that federal common law may govern in diversity cases where a uniform national rule is necessary to further the Federal Government's interest, is inapplicable, since only the rights of private litigants are at issue and no substantial rights or duties of the United States hinge on the outcome of the litigation. Pp. 28-33.

2. Petitioners' claim, argued in this Court, that the Airport and Airway Development Act of 1970 provides an implied civil right of action to recover for death or injury due to violation of the Act, will not be considered where it was neither pleaded, argued, nor briefed in the courts below. Pp. 33-34.

538 F.2d 643, vacated and remanded.

J. Arthur Mozley, Atlanta, Ga., and Alan W. Heldman, Birmingham, Ala., for petitioners.

F. Clay Bush, Atlanta, Ga., for respondents.

Mr. Justice REHNQUIST delivered the opinion of the Court.

These consolidated cases arise out of the 1973 crash of a Lear Jet shortly after takeoff from the DeKalb-Peachtree Airport. The United States Court of Appeals for the Fifth Circuit, en banc, affirmed the dismissal of petitioners' complaint against respondent DeKalb County (hereafter respondent), holding that principles of federal common law were applicable to the resolution of petitioners' breach-of-contract claim. We granted certiorari to consider whether federal or state law should have been applied to that claim; we conclude that the latter should govern.

I

Petitioners are, respectively, the survivors of deceased passengers, the assignee of the jet aircraft owner, and a burn victim. They brought separate lawsuits, later consolidated, against respondent in the United States District Court for the Northern District of Georgia.¹ The basis for federal jurisdiction was diversity of citizenship, 28 U.S.C. § 1332, and the complaints asserted that respondent was liable on three inde- pendent theories: negligence, nuisance, and breach of contract. The District Court granted respondent's motion to dismiss each of these claims. The courts below have unanimously agreed that the negligence and nuisance theories are without merit; only the propriety of the dismissal of the contract claims remains in the cases.

(1) Petitioners seek to impose liability on respondent as third-party beneficiaries of contracts between it and the Federal Aviation Administration (FAA). Their complaints allege that respondent entered into six grant agreements with the FAA. E. g., App. 15.² Under the terms of the contracts respondent agreed to

"take action to restrict the use of land adjacent to or in the immediate vicinity of the Airport to activities and purposes compatible with normal airport operations including landing and takeoff of aircraft." Id., at 19.

Petitioners assert that respondent breached the FAA contracts by owning and maintaining a garbage dump adjacent to the airport, and that the cause of the crash was the ingestion of birds swarming from the dump into the jet engines of the aircraft.

Applying Georgia law, the District Court found that petitioners' claims as third-party beneficiaries under the FAA contracts were barred by the county's governmental immunity, and dismissed the complaints under Fed.Rule Civ.Proc. 12(b)(6). A divided panel of the Court of Appeals decided that under state law petitioners could sue as third-party beneficiaries and that governmental immunity would not bar the suit. Miree v. United States, 526 F.2d 679 (C.A.5 1976). The dissenting judge argued that the court should have applied federal rather than state law; he concluded that under the principles of federal common law the petitioners in this case did not have standing to sue as third-party beneficiaries of the contracts. Sitting en banc, the Court of Appeals reversed the panel on the breach-of-contract issue and adopted the panel dissent on this point as its opinion. Miree v. United States, 538 F.2d 643 (C.A.5 1976). Judge Morgan, who had written the panel opinion, argued for five dissenters that there was no identifiable federal interest in the outcome of this diversity case, and thus that federal common law had no applicability.

II

Since the only basis of federal jurisdiction alleged for petitioners' claim against respondent is diversity of citizenship, 28 U.S.C. § 1332, the case would unquestionably be governed by Georgia law. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), but for the fact that the United States is a party to the contracts in question, entered into pursuant to federal statute. See Airport and Airway Development Act of 1970, 84 Stat. 219, as amended, 49 U.S.C. § 1701 et seq. (1970 ed. and Supp. V). The en banc majority of the Court of Appeals adopted, by reference, the view that, given these factors, application of federal common law was required:

"Although jurisdiction here is based upon diversity, the contract we are interpreting is one in which the United States is a party, and one which is entered into pursuant to authority conferred by federal statute. The necessity of uniformity of decision demands that federal common law, rather than state law, control the contract's interpretation. United States v. Seckinger, 1970, 397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224; Smith v. United States, 5 Cir. 1974, 497 F.2d 500; First National Bank v. Small Business Administration, 5 Cir. 1970, 429 F.2d 280." Miree v. United States, 526 F.2d, at 686 (footnote omitted).

(2, 3) We do not agree with the conclusion of the Court of Appeals. The litigation before us raises no question regarding the liability of the United States or the responsibilities of the United States under the contracts. The relevant inquiry is a narrow one: whether petitioners as third-party beneficiaries of the contracts have standing to sue respondent. While federal common law may govern even in diversity cases ³ where a uniform national rule is necessary to further the interests of the Federal Government, Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943), the application of federal common law to resolve the issue presented here would promote no federal interests even approaching the magnitude of those found in Clearfield Trust :

"The issuance of commercial paper by the United States is on a vast scale and transactions in that paper from issuance to payment will commonly occur in several states. The application of state law, even without the conflict of laws rules of the forum, would subject the rights and duties of the United States to exceptional uncertainty. It would lead to great diversity in results by making identical transactions subject to the vagaries of the laws of the several states. The desirability of a uniform rule is plain." Id., at 367, 63 S.Ct., at 575.

But, in this case, the resolution of petitioners' breach-of-contract claim against respondent will have no direct effect upon the United States or its Treasury.⁴ The Solicitor General, waiving his right to respond in these cases advised us:

"In the course of the proceedings below, the United States determined that its interests would not be directly affected by the resolution of these issue(s) and there- fore did not participate in briefing or argument in the court of appeals. In view of these considerations, the United States does not intend to respond to the petitions unless it is requested to do so by the Court.

The operations of the United States in connection with FAA grants such as these are undoubtedly of considerable magnitude. However, we see no reason for concluding that these operations would be burdened or subjected to uncertainty by variant state-law interpretations regarding whether those with whom the United States contracts might be sued by third-party beneficiaries to the contracts. Since only the rights of private litigants are at issue here, we find the Clearfield Trust rationale inapplicable.

We think our conclusion that these cases do not fit within the Clearfield Trust rule follows from the Court's later decision in Bank of America National Trust & Savings Assn. v. Parnell, 352 U.S. 29, 77 S.Ct. 119, 1 L.Ed.2d 93 (1956), in which the Court declined to apply that rule in a fact situation analogous to this one. Parnell was a diversity action between private parties involving United States bonds. The Bank of America had sued Parnell to recover funds that he had obtained by cashing the bonds, which had been stolen from the bank. There were two issues: whether the bonds were "overdue" and whether Parnell had taken the bonds in good faith. The Court of Appeals, over a dissent, applied federal law...