Fidelity & Guaranty Insurance Underwriters, Inc. v. United States
2015 U.S. App. LEXIS 19390
| Fed. Cir. | 2015Background
- In 1984 the U.S. Postal Service contracted with Gibbs Construction to remove asbestos; Gibbs subcontracted the asbestos work to LTI.
- The Postal Service amended the contract (by letter) to indemnify Gibbs and its agents for claims arising from the asbestos removal; Gibbs continued and completed the work.
- USF&G issued general liability policies to Gibbs covering 1985–1988; LTI’s insurer would not renew in 1985, prompting Gibbs to seek relief from the Postal Service leading to the indemnity letter.
- In 2010 a former Postal Service officer sued Gibbs alleging mesothelioma from the asbestos work; Gibbs demanded defense and indemnity from the Postal Service, which refused.
- USF&G (Gibbs’s insurer) defended and settled the suit, paying $1,031,250 in settlement and $529,333.34 in legal costs; Gibbs’s contracting officer later denied Gibbs’s indemnity claim.
- USF&G sued in the Court of Federal Claims under the Tucker Act asserting it was equitably subrogated to Gibbs’s contract claim; the Court of Federal Claims dismissed for lack of Tucker Act jurisdiction, and USF&G appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tucker Act jurisdiction exists for an insurer suing as equitable subrogee of a prime contractor | USF&G: Aetna and ICW show waivers of sovereign immunity cover subrogees; the Tucker Act waives immunity for "claims, not particular claimants" so insurer may sue as subrogee | Gov: Tucker Act waiver requires privity or an established exception (e.g., Miller Act surety); USF&G never stepped into contractor’s shoes or assumed contract obligations | Court: No Tucker Act jurisdiction; general liability insurer that did not assume contractor duties is not an equitable subrogee for contract claims |
| Whether ICW broadly authorizes all subrogees to invoke the Tucker Act | USF&G: ICW extended Aetna’s reasoning to the Tucker Act, permitting subrogees generally to sue | Gov: ICW is limited to Miller Act sureties that step into contractor’s shoes; Blue Fox limits equitable remedies for subcontractors | Court: ICW upheld subrogation only where subrogee assumed contractor’s contractual role (e.g., Miller Act surety); it does not create a broad exception for insurers |
Key Cases Cited
- United States v. Aetna Cas. & Sur. Co., 338 U.S. 366 (1949) (FTCA waiver extended to insurers suing as equitable subrogees on tort claims)
- Insurance Co. of the W. v. United States, 243 F.3d 1367 (Fed. Cir. 2001) (Tucker Act waiver applies to subrogees who step into contractor’s shoes; discusses Aetna and Blue Fox)
- Dept. of the Army v. Blue Fox, Inc., 525 U.S. 255 (1999) (APA does not waive sovereign immunity for equitable liens; reaffirms that subcontractors generally cannot recover directly from the government)
- Balboa Ins. Co. v. United States, 775 F.2d 1158 (Fed. Cir. 1985) (Miller Act surety equitably subrogated to contractor’s claims after assuming performance/default notice)
- United States v. Atlantic Mut. Ins. Co., 298 U.S. 483 (1936) (Supreme Court decisions indicating the Tucker Act’s waiver can extend to subrogees)