St. Bernard Parish Gov't v. United States

• Citation: 916 F.3d 987
• Decision Date: 15 February 2019
• Docket Number: 2018-1204
• Parties: ST. BERNARD PARISH GOVERNMENT, Plaintiff-Appellant v. UNITED STATES, Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

916 F.3d 987

ST. BERNARD PARISH GOVERNMENT, Plaintiff-Appellant
v.
UNITED STATES, Defendant-Appellee

2018-1204

United States Court of Appeals, Federal Circuit.

Decided: February 15, 2019

William Martin McGoey, Civil Division, St. Bernard Parish District Attorney's Office, Chalmette, LA, argued for plaintiff-appellant.

Reta Emma Bezak, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Kenneth Dintzer, Robert Edward Kirschman, Jr., Joseph H. Hunt.

Before Lourie, Bryson, and Wallach, Circuit Judges.

Bryson, Circuit Judge.

St. Bernard Parish in Louisiana ("St. Bernard") has appealed from an order of the Court of Federal Claims dismissing its breach of contract claim for lack of jurisdiction. We affirm.

I

On April 17, 2009, the U.S. Department of Agriculture’s Natural Resources Conservation Service ("NRCS") entered into a "Cooperative Agreement" with St. Bernard under the authority of the Federal Grant and Cooperative Agreement Act ("FGCAA"), 31 U.S.C. §§ 6301 – 08. The agreement provided that, under the provisions of the Emergency Watershed Protection ("EWP") Program, the NRCS was "authorized to assist [St. Bernard] in relieving hazards created by natural disasters that cause a sudden impairment of a watershed."¹

The agreement provided for certain debris and sediment removal work to be performed in 16 watershed areas, among them the Bayou Terre Aux Boeufs in southeast Louisiana. For the 16 watershed areas, the estimated cost of the work was $ 4,318,509.05.

The Cooperative Agreement stated that St. Bernard would arrange for a contractor to perform the work, pay the contractor, provide technical services, be responsible for all administrative expenses, and take responsibility for and necessary action to deal with any and all contractual and administrative issues. The NRCS agreed to "provide 100 percent ($ 4,318,509.05) of the actual costs of the emergency watershed protection measures," and to "[m]ake payment to the [Parish] covering NRCS’s share of the cost, upon receipt and approval [of St. Bernard’s formal request for reimbursement] with supporting documentation."

In March 2010, St. Bernard entered into a contract with Omni Pinnacle, LLC ("Omni") in which Omni agreed to remove the sediment in Bayou Terre Aux Boeufs for $ 4,290,300.00. St. Bernard contracted with All South Consulting Engineers ("All

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South") to manage and inspect the Bayou Terre Aux Boeufs project.

The price of the contract was predicated on the removal of an estimated 119,580 cubic yards of sediment. After Omni completed its pre-construction survey, it revised the estimated amount of sediment to be removed downward by approximately 59 percent.

In September 2010, Omni completed the Bayou Terre Aux Boeufs project. Despite having removed only 49,888.69 cubic yards of sediment, Omni submitted an invoice to St. Bernard for $ 4,642,580.58. In light of the 59 percent decrease in the amount of sediment to be removed, the NRCS determined that it would reimburse St. Bernard only in the amount of $ 2,849,305.60.

All South reviewed Omni’s invoice and, after noting certain concerns and price markups, recommended that St. Bernard pay Omni $ 1,758,548.94. On July 13, 2011, St. Bernard paid that amount to Omni, and the NRCS reimbursed St. Bernard in full for that payment, after an adjustment for an unrelated debt owed by St. Bernard to the Environmental Protection Agency.

St. Bernard and Omni continued to dispute the amount remaining to be paid to Omni. Then, on January 17, 2014, Omni and St. Bernard executed a change order that adjusted the contract price from $ 4,642,580.58 to $ 3,243,996.37. St. Bernard paid Omni $ 1,463,447.43, which equaled the remaining contractual amount due minus liquidated damages owed by Omni because of project delays.

St. Bernard then sought reimbursement from the NRCS for that amount. The NRCS responded by requesting additional information regarding the invoiced work. St. Bernard provided some of the requested information in a letter dated August 26, 2014. Subsequently, on September 29, 2014, the NRCS reimbursed St. Bernard in the amount of $ 1,107,581.22, which was $ 355,866.21 less than St. Bernard claims it is due.² In a letter dated February 23, 2015, the NRCS explained that it had withheld the remainder of the requested funds because it had not received "the actual documentation that went into the calculation to determine the adjusted cubic yard rate." The letter stated, "We are simply requesting clear, specific, organized documentation of the actual documents that All South relied on in order to determine the rates to be charged and a specific accounting of the figures used to determine the amount due and owing." The letter concluded, "Until such time as the NRCS receives the supporting documentation relied on by All South in their cubic yard rate calculations ... the NRCS cannot address the acceptability of the increased rates to substantiate payment of more than what has already been reimbursed."

St. Bernard took the position that it had "submitted sufficient back-up and supporting documentation to be reimbursed the full amount it requested," Complaint ¶ 34, and on June 19, 2015, St. Bernard filed this action in the Court of Federal Claims to recover the remaining sum from the government.

Invoking the Court of Federal Claims’ jurisdiction under the Tucker Act, 28 U.S.C. § 1491(a)(1), St. Bernard alleged that the government had breached the Cooperative Agreement by not reimbursing it for all the funds it had paid in connection with the Bayou Terre Aux Boeufs project. The government filed a motion to dismiss

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for lack of subject matter jurisdiction, arguing that the Cooperative Agreement was not a contract, but rather a "Cooperative Agreement" that did not create an enforceable obligation on the part of the federal government.

The Court of Federal Claims granted the government’s motion to dismiss for two reasons. First, the court found that an implied right to damages does not arise from a cooperative agreement such as the one in this case. St. Bernard Par. Gov’t v. United States , 134 Fed.Cl. 730, 734–36 (2017). Second, the court found that the Cooperative Agreement between St. Bernard and the NRCS was not an enforceable contract, because the government received no consideration in the form of a direct benefit to the United States. Id. at 735–76.

II

On appeal to this court, St. Bernard argues that the trial court erroneously concluded that the agreement between St. Bernard and the NRCS was not a binding contract enforceable in money damages against the United States in the Court of Federal Claims. We do not reach that issue, because we conclude that Congress has barred claims such as St. Bernard’s from being adjudicated in the Court of Federal Claims, and instead has provided for such claims to be addressed first in administrative review proceedings before the Department of Agriculture, followed by judicial review in a federal district court.

A

In the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994, Pub. L. 103-354, Congress created a detailed and comprehensive statutory scheme providing private parties with the right of administrative review of adverse decisions made by particular agencies within the Department of Agriculture. See 7 U.S.C. §§ 6991 – 99. The specified agencies included the NRCS. 7 U.S.C. § 6991(2)(F).

The 1994 statute established the National Appeals Division ("NAD") in the Department of Agriculture to conduct formal administrative appeals in the case of disputes covered by the statute. 7 U.S.C. §§ 6991 - 7002.³ The statute provided for formal appeals as well as informal hearings. See id. §§ 6994–96. The statute set out, in some detail, the procedures to be followed in appeals before the NAD, including the right to a hearing before a hearing officer, id. § 6997, and the right to review of any decision of a hearing officer by the Director of the Division, id. § 6998.

Importantly, the 1994 statute contains a provision requiring aggrieved parties to exhaust their administrative remedies prior to obtaining judicial review. That provision, which is entitled "Exhaustion of administrative appeals," states:

Notwithstanding any other provision of law, a person shall exhaust all administrative appeal procedures established by the Secretary or required by law before the person may bring an action in a court of competent jurisdiction against—

(1) the Secretary;

(2) the Department; or

(3) an agency, office, officer, or employee of the Department.

7 U.S.C. § 6912(e).

Finally, in section 6999, the statute granted a right to judicial review of the

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agency’s final administrative decision. That provision states:

A final determination of the Division shall be reviewable and enforceable by any United States district court of competent jurisdiction in accordance with chapter 7 of Title 5 [the Administrative Procedure Act].

7 U.S.C. § 6999.

Following the enactment of the 1994 statute, the Department of...