UP State Fed. Credit Union v. Walker

• Decision Date: 01 August 1999
• Docket Number: Docket No. 99-6061
• Citation: 198 F.3d 372
• Parties: (2nd Cir. 1999) UP STATE FEDERAL CREDIT UNION, 1916 BLACK RIVER BLVD., ROME, NY, Plaintiff-Appellant, v. ROBERT M. WALKER, As Acting Secretary of the Army of the United States of America, Defendant-Appellee
• Court: U.S. Court of Appeals — Second Circuit

Page 372

198 F.3d 372 (2nd Cir. 1999)

UP STATE FEDERAL CREDIT UNION, 1916 BLACK RIVER BLVD., ROME, NY, Plaintiff-Appellant, v. ROBERT M. WALKER, As Acting Secretary of the Army of the United States of America, Defendant-Appellee.

Docket No. 99-6061

August Term, 1999

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

Argued: Nov. 10, 1999

Decided: Dec. 23, 1999

Appeal from a judgment of the United States District Court for the Northern District of New York (Howard G. Munson, Senior Judge), granting appellee's motion to dismiss for lack of subject matter jurisdiction.

Affirmed.

JOHN A. NASTO, JR., Rome, NY, for plaintiff-appellant.

CHARLES ROBERTS, Assistant United States Attorney, Syracuse, NY (Daniel J. French, United States Attorney for the Northern District of New York, on the brief) for defendant-appellee.

Before: CARDAMONE, SOTOMAYOR, and KATZMANN, Circuit Judges.

PER CURIAM:

Plaintiff-appellant Up State Federal Credit Union ("the Credit Union") brings this appeal claiming that the district court erred in dismissing its action against defendant-appellee, the United States Army ("the Army") for lack of subject matter jurisdiction. We agree with the district court that the Contract Disputes Act, 41 U.S.C. 601-613 (1994 & Supp. 1999) (as amended by the Tucker Act, 28 U.S.C. 1346(a)(2) & 1491 (1994 & Supp. 1999)), ¹. provides the sole basis for jurisdiction for this action because the Credit Union's claim essentially arises from a contract with the Army. Accordingly, jurisdiction resides exclusively in the Court of Federal Claims. We write only to address the narrow issue of when a claim against the government "at its essence" arises from a contract.

BACKGROUND

The Credit Union alleges the following facts, which on a motion to dismiss we take as true. In 1989, the Army and the Up State Federal Credit Union agreed that the credit union would furnish services to the troops stationed at Fort Drum in LeRay, New York. The parties entered into an agreement authorizing the Credit Union to construct, own and operate a building for this purpose on a 2.9-acre plot of Fort Drum land. Once the building was substantially completed, the Army directed the Credit Union to obtain a building permit and certificate of occupancy from the town of LeRay. The Credit Union objected, on the ground that if it were required to obtain the requested documentation from the town of LeRay, the Credit Union would become liable for payment of local property taxes. The Credit Union also took the position that, had it been aware of this requirement prior to starting construction, it might have modified the scope of its project in order to minimize its tax liability.

After protracted negotiations, the Army agreed that if the Credit Union obtained the requested documentation, the Army would enter into a one-year land lease with the Credit Union, pursuant to which the Credit Union would own the building and lease the land from the Army. According to the Credit Union, the Army also pledged that 1) it would take title to the building at the end of the one-year land lease; and 2) pursuant to Army Regulation 210-135, it would give the Credit Union first choice at that time to continue occupying the building under a facility lease. ². At the end of the one-year land lease term, therefore, the Credit Union would no longer own the building but would merely lease it from the Army in order to continue offering credit union services at Fort Drum.

The one-year land lease commenced on August 30, 1991, and ended on August 29, 1992. During this period, the Credit Union obtained the requested building permit and certificate of occupancy from the town and paid real property taxes to it. When the term of the land lease expired, the Army did not take title to the building as it had allegedly promised, but rather asked the Credit Union to renew its lease for the land. The Credit Union refused, asserting that the Army had agreed to take title to the building and thereafter lease the building to the Credit Union under a facility lease. The parties failed to reach an agreement regarding title to the building or the lease of the land and building, and the Army subsequently served the Credit Union with a notice to vacate the premises as of April 30, 1997.

On January 28, 1998, the Credit Union brought this action seeking an injunction directing the Army to execute the facility lease for the building, a declaratory judgment that the Army is the title owner of the building, reimbursement for legal fees and real property taxes the Credit Union paid, and substantial monetary damages, of which $20 million would serve as an alternative to equitable relief. The Army moved to dismiss the complaint for lack of subject matter jurisdiction, asserting that because the Credit Union was seeking specific performance of a contract with the United States, jurisdiction over the action rested exclusively in the Court of Federal Claims. On February 8, 1999, the United States District Court for the Northern District of New York (Howard G. Munson, Senior Judge) granted the Army's motion to dismiss. The Credit Union now appeals.

DISCUSSION

On an appeal from an order granting a motion to dismiss, we review the district court's factual findings for clear error and its legal conclusions de novo. See Woodward Governor Co. v. Curtiss-Wright Flight Sys., Inc., 164 F.3d 123, 126 (2d Cir. 1999). It is well established that in any suit in which the United States is a defendant, a waiver of sovereign immunity with respect to the claim asserted is a prerequisite to subject matter jurisdiction. See Presidential Gardens Assocs. v. United States, 175 F.3d 132, 139 (2d Cir. 1999) (citing United States v. Mitchell, 463 U.S. 206, 212 (1983)). Accordingly, to establish the jurisdiction of the district court in this case, the Credit Union must demonstrate that the government has waived its immunity to suit in district court with respect to the claims asserted here.

The court below found that the sole waiver of sovereign immunity in this case lies in the Contract Disputes Act (as amended by the Tucker Act, 28 U.S.C. 1346(a)(2) and 1491) ("the CDA"). See Up State Federal Credit Union v. Walker, 35 F. Supp. 2d 222, 224 (N.D.N.Y. 1999). The CDA waives sovereign immunity for contract disputes with the government and gives the Court of Federal Claims exclusive jurisdiction over such actions. See28 U.S.C. 1346(a)(2), 1491(a)(1). Because this case involves a contract with the government, the district court concluded that the Court of Federal Claims has exclusive jurisdiction over the dispute. The Credit Union, however, characterizes the case not as a contract dispute but rather as a challenge under 702 of the Administrative Procedure Act ("the APA"), 5 U.S.C. 702 (1994), which permits a party to bring an equitable claim challenging arbitrary and capricious action of an administrative agency in federal district court and waives the government's sovereign immunity with respect to such claims in that forum. ³. The Credit Union argues that because its claim alleges an agency's "failure of integrity and regularity of process" under the APA rather than a breach of contract claim under the CDA, the district court had subject matter jurisdiction over this suit. ⁴.

While the APA does create a general waiver of sovereign immunity as to equitable claims against government agencies, "nothing in the APA 'confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.'" Presidential Gardens, 175 F.3d at 143 (quoting 5 U.S.C. 702). The Tucker Act "'impliedly forbids'" relief other than remedies provided by the Court of Federal Claims for actions that "arise[] out of a contract" with the United States. Id. (quoting Estate of Watson v. Blumenthal, 586 F.2d 925, 933-34 (2d Cir. 1978)). Accordingly, if the Credit Union's claim "arises out of a contract," id., the Court of Claims has exclusive jurisdiction over the action.

The District of Columbia Circuit has developed a useful analysis for distinguishing contract claims from challenges to agency action. See Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir. 1982); see also A & S Council Oil Co. v. Lader, 56 F.3d 234, 240 (D.C. Cir. 1995) (citing Megapulse, 672 F.2d at 959); Ingersoll-Rand Co. v. United States, 780 F.2d 74, 76-77 (D.C. Cir. 1985) (same); Spectrum Leasing Corp. v. United States, 764 F.2d 891, 893 (D.C. Cir. 1985) (same). In Megapulse, the court held that the determination of whether an action is "'at its essence' a contract action [for purposes of sovereign immunity under the Tucker Act] depends both on the source of the rights upon which the plaintiff bases its claims, and upon the type of relief sought . . . ." 672 F.2d at 968. The dispute in Megapulse arose when the plaintiff, a government contractor, sought to enjoin the release of certain technical data it had given to the Coast Guard pursuant to a sale of navigational equipment, on the ground that such a release would deprive the contractor of its property without due process of law and would violate the federal Trade Secrets Act, 18 U.S.C. 1905 (1994). See Megapulse, 672 F.2d at 961-63. Concluding that district court properly exercised jurisdiction, the Court of Appeals found that the source of the contractor's rights was "ultimately based, not on breach of contract, but on an alleged governmental infringement of property rights and violation of the Trade Secrets Act." Id.at 969. Moreover, the injunctive relief the plaintiff sought arose from the Trade Secrets Act and not from the contract between the parties. See id. at 971 ("[T]he mere fact that an injunction would require the same governmental restraint that specific []performance might require in a contract setting is an insufficient basis to deny a district court the jurisdiction otherwise available . . . ."). The court thus held that the APA waived sovereign immunity...