Ware v. U.S., 79-1031

• Decision Date: 02 October 1980
• Docket Number: No. 79-1031,79-1031
• Citation: 626 F.2d 1278
• Parties: Cyrus R. WARE, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1278

626 F.2d 1278

Cyrus R. WARE, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 79-1031.

United States Court of Appeals Fifth Circuit.

Oct. 2, 1980.

James R. Warncke, San Antonio, Tex., for plaintiff-appellant.

Leonard Schaitmen, Linda Jan S. Pack, Dept. of Justice, Civ. Div., Washington, D. C., for defendant-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before TJOFLAT, POLITZ and HATCHETT, Circuit Judges.

HATCHETT, Circuit Judge:

Appellant, Cyrus R. Ware, appeals a district court order dismissing his $331,607.89 claim against the United States. Ware brought his claim under the Federal Tort Claims Act (hereinafter F.T.C.A.), 28 U.S.C. §§ 1346(b), 2674, ¹ and under the Tucker Act, 28 U.S.C. §§ 1346(a)(2), 1491, ² as an alternate, pendent claim. We find that Ware's F.T.C.A. claim is not barred by the misrepresentation exception in the F.T.C.A. or the statute of limitations. We also find that the district court does not have pendent jurisdiction over Ware's Tucker Act claim. We, therefore, affirm in part and reverse in part.

FACTS

Ware operates a dairy farm near San Antonio, Texas. On five occasions between December, 1970, and August, 1975, agents of the Department of Agriculture tested Ware's dairy herd for tuberculosis, diagnosed 246 of the cattle as tubercular, and killed them. The government compensated Ware on the basis of the value of diseased cattle. Ware asserts that he later learned that the government misdiagnosed 243 of the 246 cattle, and that only three of the cattle were diseased. The following chart reveals the dates of the government tests and the number of cattle diagnosed as tubercular, and the number killed by the government.

Upon learning of the misdiagnosis, Ware filed an administrative claim with the Department of Agriculture on or about April 1, 1977. In June of 1977, the Department of Agriculture denied the claim. Five months later, Ware filed the present action, contending that the government was negligent in misdiagnosing his cattle and therefore liable under the F.T.C.A. Ware also asserted an alternative pendent claim under the Tucker Act for the loss of his cattle. Under both acts, Ware sought the actual cash market value of the 243 healthy cattle, plus compensation for lost milk production and damage to his dairy's business. In his complaint, Ware asserted liability under the F.T.C.A. in these words:

(t)he Defendant's agents when destroying the Plaintiff's aforesaid cattle, represented to Plaintiff that those head of cattle actually destroyed were tubercular upon which representation the Plaintiff relied and the action of Defendant's agents in destroying the cattle, Plaintiff acquiesced, relying on the representation that the cattle were all indeed diseased.

The basis of the Tucker Act claim is not clearly articulated, but appears to be a Fifth Amendment allegation of taking of property without just compensation.

The government moved to dismiss the complaint. The government claimed that Ware's F.T.C.A. complaint was barred by the "misrepresentation exception" to the F.T.C.A. If the F.T.C.A. claim was not barred entirely by the misrepresentation exception, the claim for 203 of the 243 cattle was barred under 28 U.S.C. §§ 2401(b), 2675(a), ³ because Ware failed to file an administrative claim within two years of the accrual of the claim. The government further alleged that the district court lacked jurisdiction over Ware's pendent Tucker Act claim since the amount in controversy exceeded $10,000, the statutory limit of the district court in an original Tucker Act case.

Initially, the district court granted the government's motion as to the Tucker Act claim, holding that exclusive jurisdiction lay in the Court of Claims. The district court, however, concluded that neither the misrepresentation exception nor the statute of limitations barred Ware's F.T.C.A. claim. Both parties moved the court to reconsider its ruling and, on reconsideration, the district court, for jurisdictional reasons not fully explained, dismissed Ware's entire case. This appeal results.

ISSUES

This court must decide:

1. whether the misrepresentation exception to the F.T.C.A. bars Ware's tort claim;

2. whether Ware's failure to file an administrative claim within two years of the date the government told him the cattle were tubercular bars his claim for 203 of the 243 cattle; and,

3. whether the district court has jurisdiction over Ware's Tucker Act claim.

I

The government argues that Ware's tort claim is barred by 28 U.S.C. § 2680(h), the misrepresentation exception to the F.T.C.A. Section 2680(h) provides, in pertinent part, that:

(t)he provisions in this chapter and section 1346(b) of this title shall not apply to

(h) Any claim arising out of . . . misrepresentation deceit, or interference with contract rights. . . . (Emphasis added.)

The government relies on United States v. Neustadt, 366 U.S. 696, 81 S.Ct. 1294, 6 L.Ed.2d 614 (1961), for the proposition that the misrepresentation exception bars claims arising out of negligent misrepresentation. In Neustadt, a couple purchased a home that they would not have purchased had they not relied on a negligent inspection and appraisal of the home made for mortgage and insurance purposes by the Federal Housing Administration. The government maintains that Ware's complaint reveals that the basis of his action is the tort of negligent misrepresentation, for which, under Rey v. United States, 484 F.2d 45 (5th Cir. 1973), there is no recovery.

In Rey, the plaintiffs filed an amended complaint against the United States under the F.T.C.A., alleging that a Department of Agriculture veterinarian negligently tested or diagnosed their hogs. This government employee erroneously and negligently notified the plaintiffs that the hogs were infected with hog cholera, and plaintiffs then administered a vaccine which killed the hogs. In affirming the district court's dismissal of the amended complaint, this court held that the misrepresentation exception to the F.T.C.A. barred recovery because:

Whatever the additional allegations of negligence in the defendant United States' operations, the negligently erroneous transmission of misinformation is the crucial element in the chain of causation from defendant's negligence to plaintiffs' damages. It is the key fact to be established, the sine qua non, of the theory of the amended complaint. . . . Misrepresentation, although asserted in terms of negligence, is the tortious act now relied on for recovery.

484 F.2d at 49.

The government also relies on a Tenth Circuit case cited in Rey, Hall v. United States, 274 F.2d 69 (10th Cir. 1959), where a cattleman sued the government under the F.T.C.A. for the alleged negligent testing of his cattle for brucellosis. There, government agents told the cattleman that one or more of his cattle were infected, and he subsequently suffered a loss by selling the cattle at a price less than the full market value for healthy cattle. The Hall court affirmed the dismissal of the complaint on the basis of the misrepresentation exception, focusing on the essence of the claim, rather than the language of the complaint. The court reasoned that:

Plaintiff's loss came about when the government agents misrepresented the condition of the cattle, telling him they were diseased when, in fact, they were free from disease. The claim is that this misrepresentation caused plaintiff to sell his cattle at a loss. This stated a cause of action predicated on a misrepresentation. Misrepresentation as used in the exclusionary provision of the statute was meant to include negligent misrepresentation.

274 F.2d at 71.

While we agree that the United States is not liable under the F.T.C.A. for a claim for negligent misrepresentation, we do not agree with the government that this is a misrepresentation case. We base our holding on the fact that the tort of negligent misrepresentation demands some act, the result of justifiably relying on the misrepresentation. Following Neustadt, we must construe negligent misrepresentation according to "the traditional and commonly understood legal definition of the tort." 366 U.S. at 706, 81 S.Ct. at 1300. Referring, as did the Supreme Court in Neustadt, to the American Law Institute's definition of negligent misrepresentation, we find some act or transaction necessary to complete the tort.

RESTATEMENT (SECOND) OF TORTS, § 552. Information Negligently Supplied for the Guidance of Others.

(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information if he fails to exercise reasonable care or competency in obtaining or communicating the information.

(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to the loss suffered

(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.

(3) The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them. (Emphasis added.)

The basis of Ware's tort claim is that the government negligently diagnosed his cattle as being tubercular and then destroyed them, to his damage. The government, not Ware, destroyed the cattle and caused the damage. Ware suffered damage, not through any action he took based on any...