United States v. Delta Industries, Inc., Civ. A. No. C 65-84.

• Decision Date: 31 March 1966
• Docket Number: Civ. A. No. C 65-84.
• Citation: 275 F. Supp. 934
• Parties: UNITED STATES of America, Plaintiff, v. DELTA INDUSTRIES, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

275 F. Supp. 934

UNITED STATES of America, Plaintiff, v. DELTA INDUSTRIES, INC., et al., Defendants.

Civ. A. No. C 65-84.

United States District Court N. D. Ohio, E. D.

March 31, 1966.

Merle M. McCurdy, U. S. Atty., Robert S. Turoff, James L. Oakar, Asst. U. S. Attys., Walter R. Wertheim, Asst. Regional Counsel, Small Business Administration, Cleveland, Ohio, for plaintiff.

Thomas Paris, Donald Wolfson, Cleveland, Ohio, for defendants Delta Industries, Inc., Sahley Corp., Cleveland Designers & Consultants, Inc., National Materials Corp., Draftsmen, Inc., David and Sylvia Turner and Lloyd and Harriet Sahley.

Wm. B. Saxbe, Atty. Gen., T. S. Moulton, Asst. Atty. Gen., Columbus, Ohio, E. L. Sepessy, Asst. Atty. Gen., Cleveland, Ohio, for defendant State.

John T. Corrigan, Pros. Atty., Doris Brucker, Asst. Pros. Atty., Cleveland, Ohio, for defendant Treasurer of Cuyahoga County.

MEMORANDUM

GREEN, District Judge:

Plaintiff has moved for reconsideration of this Court's order of October 26, 1965 denying plaintiff's motion to dismiss defendants' counter-claim in this action. After carefully considering the issue presented herein the Court has concluded that the said motion should be granted, but not for the basic reason advanced by plaintiff.

In originally moving for dismissal of defendants' counter-claim plaintiff argued that 15 U.S.C. § 634(b) a "sue and be sued" clause as to the Administrator of Small Business Administration, was a waiver of sovereign immunity only as to amount and not as to subject matter, and thus other Federal statutes pertinent to suits against the United States apply. Plaintiff then argued that the counter-claim sounded in tort, and thus fell within the purview of 28 U.S.C. § 1346(b), (a part of what is commonly known as the Federal Tort Claims Act,) which provides for suits against the United States as a defendant for loss caused by the negligence of an employee of the Government acting within the scope of his employment.

Plaintiff then contended that the court lacked jurisdiction over the subject matter of the counter-claim, and that the counter-claim failed to state a claim upon which relief can be granted. The basis for that argument was that under 28 U.S.C. § 2680(a), there is denied a right of recovery under the Tort Claims Act, 28 U.S.C. § 1346, for any claim based on the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused, 28 U.S.C. § 2680(a); that under 28 U.S. C. § 2680(h) there is denied a right of recovery for any claim based on interference with contract rights; that under 28 U.S.C. § 1346(a) (2) the court's jurisdiction on claims arising from contract or not sounding in tort is limited to $10,000; that the allegations of the counter-claim came within this proscribed and/or restricted area, and hence could not be asserted herein.

In answer to this argument, defendants contended that when by act of Congress an agency of the United States is given authority to "sue and be sued" it is a general waiver of sovereign immunity and is not subject to the limitations of any special statutes, such as the Federal Tort Claims Act, and exemptions from liability thereunder which might be granted to the United States, citing Keifer and Keifer v. Reconstruction Finance Corp., 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784 (1939).

No reply brief was filed on behalf of the plaintiff discussing the applicability of the above authority to this action.

As this Court interpreted the decision in Keifer and Keifer v. Reconstruction Finance Corp., supra, the Supreme Court held that a specific waiver of sovereign immunity, without special limitation, imposes upon the Government a broad range of liability not limited by other statutes granting restricted rights of action against the United States generally. Based thereon, this Court denied plaintiff's motion to dismiss the counter-claim.

On this motion for reconsideration the Government advances a new theory in support of its motion for dismissal. It is contended that 15 U.S.C. § 634(b) is a waiver of immunity only as to the Administrator of the S.B.A. and does not authorize a counter-claim against the United States bringing suit as the real party in interest on a claim belonging to the S.B.A., United States v. Waylyn Corp., 130 F.Supp. 783 (D.C.P.R., 1955), aff'd Waylyn Corp. v. United States, 231 F.2d 544 (C.A. 1, 1956). This is quite different from the Government's original theory that the defendants' counter-claim could not be asserted herein because § 634(b) provided only a limited waiver of immunity. Plaintiff is now contending that § 634(b) is irrelevant to this action, being pertinent only to a suit against the Administrator of S.B.A., as the named party defendant.

Based on the Government's new premise that § 634(b) is irrelevant, plaintiff then contends that as the counter-claim presents a claim against the United States sounding in tort it must be based on 28 U.S.C. § 1346(b). It is then argued that the counter-claim is clearly based on alleged discretionary acts, and thus the United States is excused from liability under 28 U.S.C. § 2680(a).

The Court has determined that plaintiff is correct in contending that defendants' counter-claim is governed by the Federal Tort Claims Act, but not for the reason advanced by plaintiff. This Court believes that Title 28 U.S.C. § 2679(a), which was not cited by either counsel, is the controlling factor in this case.

Title 28 U.S.C. § 2679(a) provides:

The authority of any federal agency to sue and be sued in its own name shall not be construed to authorize suits against such federal agency on claims which are cognizable under section 1346(b) of this title, and the remedies provided by this title in such cases shall be exclusive. (Emphasis added).

As previously stated herein, 28 U.S.C. § 1346(b) provides for suits against the United States as the party defendant for loss caused by the negligent or wrongful act or omission of an employee of the Government acting within the scope of his employment.

The purpose and...