Fidelity and Guaranty Insurance Underwriters, Inc. v. United States
119 Fed. Cl. 195
Fed. Cl.2014Background
- USF&G seeks reimbursement as Gibbs’s equitable subrogee for defense and settlement costs paid related to an USPS indemnity addendum in an asbestos removal contract.
- USPS obligated to indemnify Gibbs and its agents per a 1987 addendum; Gibbs contracted for asbestos removal and sought coverage for related liabilities.
- Gibbs’s mesothelioma suit against Gibbs/LTI triggered defense/indemnity demands; USPS refused, Gibbs paid $1,375,000 and USF&G paid $1,560,583.34.
- USF&G brings Tucker Act action in the Court of Federal Claims alleging breach of contract and improper disbursement by USPS.
- USF&G argues equitable subrogation allows it to sue the United States despite lack of privity with the government.
- The government moves to dismiss for lack of subject matter jurisdiction (RCFC 12(b)(1)) arguing no privity and no established subrogee exception at issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is USF&G’s Tucker Act claim barred by lack of privity? | USF&G argues equitable subrogation allows standing. | Government asserts no privity and no applicable exception. | Yes, the complaint dismissed for lack of jurisdiction. |
| Does ICW permit a general liability insurer to sue under Tucker Act without full privity or surety-like status? | ICW broadens waiver to assignees by operation of law. | ICW does not expand privity beyond surety-like situations; GC lacks full substitution. | No broad expansion; privity requirement remains. |
| Can equitable subrogation extend to a general liability insurer in this contractor-privity framework? | Insurer claims subrogation rights to sue for indemnity. | Subrogation does not create privity; insurer is not contractor and not in contract with government. | No; insurer cannot sue under Tucker Act via equitable subrogation. |
Key Cases Cited
- Balboa Ins. Co. v. United States, 775 F.2d 1160 (2d Cir. 1985) (surety ties to government contract; subrogation rights and privity focus)
- Lumbermens Mut. Cas. Co. v. United States, 654 F.3d 1305 (Fed. Cir. 2011) (subrogation and stepping into contractor’s shoes concept)
- ICW v. United States, 243 F.3d 1367 (Fed. Cir. 2001) (reaffirms Balboa; discusses scope of Tucker Act waivers for subrogees)
- Federal Insurance Co. v. United States, 29 Fed. Cl. 302 (1993) (rejects broad equitably subrogated standing for general liability insurer)
- Travelers Cas. & Sur. Co. of Am. v. United States, 103 Fed. Cl. 101 (2012) (limits expansion of privity in Tucker Act context)
- First Hartford Corp. Pension Plan & Trust v. United States, 194 F.3d 1279 (Fed. Cir. 1999) (limits exceptions to privity for Tucker Act contracts)