DOMINION RESOURCES, INC., DOMINION NUCLEAR CONNECTICUT, INC., AND VIRGINIA ELECTRIC AND POWER COMPANY v. UNITED STATES
2009-5031, -5032
United States Court of Appeals for the Federal Circuit
April 25, 2011
MOORE, Circuit Judge.
Appeals from the United States Court of Federal Claims in case Nos. 04-CV-083 and 04-CV-084, Senior Judge Eric G. Bruggink.
LISA L. DONAHUE, Trial Attorney, Civil Division, United States Department of Justice, of Washington, DC, argued for the defendant-appellant. With her on the brief were
Before NEWMAN, GAJARSA and MOORE, Circuit Judges.
Opinion for the court filed by Circuit Judge MOORE. Circuit Judge GAJARSA concurs-in-part and dissents-in-part.
MOORE, Circuit Judge.
In this spent nuclear fuel (SNF) case, the United States appeals two narrow issues underlying the Court of Federal Claims’ award of damages to Dominion Nuclear Connecticut, Inc. (Dominion) for partial breach of contract. First, the government appeals the trial court‘s holding that the Assignment of Claims Act does not prohibit the assignment of existing contract claims to Dominion. Because the Nuclear Waste Policy Act (NWPA),
The general factual background surrounding the SNF cases appears in the trial court‘s opinions and in earlier opinions by this court. See Neb. Pub. Power Dist. v. United States, 590 F.3d 1357, 1359 (Fed. Cir. 2010) (en banc); Carolina Power & Light Co. v. United States, 573 F.3d 1271, 1273 (Fed. Cir. 2009); Dominion Res., Inc. v. United States, 77 Fed. Cl. 151 (2007); Dominion Res., Inc. v. United States, 84 Fed. Cl. 259 (2008). We recount here only the facts pertinent to this appeal.
The NWPA authorizes the United States Department of Energy (DOE) to enter into contracts with utility companies for the disposal of the utilities’ high-level nuclear waste and spent nuclear fuel (SNF).
Assignment of Claims
In 1983, Dominion‘s predecessor, Northeast Utilities, executed three Standard Contracts for the disposal of SNF from its three nuclear power plants at the Millstone Power Station near New London, Connecticut. When Northeast Utilities sold Millstone to Dominion in 2001, it also assigned the three Standard Contracts to Dominion. Dominion, 84 Fed. Cl. at 261. The assignment stated that Northeast transferred to Dominion, along with title to the SNF, “all rights of the Sellers . . . under the DOE Standard Contracts (including all rights to any claims of Sellers related to DOE defaults thereunder).” J.A. 1613.
In the instant suit, Dominion claimed $52.0 million in interim storage costs, including $12.1 million incurred by Northeast prior to Dominion‘s acquisition of the Millstone facility. Dominion, 84 Fed. Cl. at 263, 285. The Court of Federal Claims determined that approximately $200,000 of the pre-acquisition damages lacked sufficient evidentiary support and another $1 million was not recoverable because Dominion was unable to demonstrate that the costs incurred were caused by the government‘s breach. Id. at 284-85. After also disallowing some of the claimed post-acquisition damages, the trial court awarded Dominion approximately $42.7 million, of which $10.9 million was incurred prior to Dominion‘s acquisition of Millstone. Id. at 263; Appellee‘s Br. 2.
At issue here is the pre-acquisition portion of the damages awarded to Dominion. The government does not dispute Dominion‘s entitlement to the interim storage costs for the SNF which it incurred after it acquired Millstone. The government also does not dispute its responsibility for
The Claims Act generally prohibits the assignment of a claim against the government until “after [the] claim is allowed, the amount of the claim is decided, and a warrant for payment of the claim has been issued.”
At trial, the government argued that the NWPA waives the provisions of the Contracts Act but not those of the Claims Act, thus preventing the transfer of any claim for pre-assignment damages from Northeast Utilities to Dominion. Dominion, 84 Fed. Cl. at 286. The government also argued that pursuant to Ginsberg v. Austin, 968 F.2d 1198, 1199 (Fed. Cir. 1992), Congress must, but did not, expressly waive the Claims Act as to existing breach of contract claims. Dominion, 84 Fed. Cl. at 286. The trial court disagreed, ruling that the NWPA provides a statutory waiver to the Claims Act and that the agreement assigning the Standard Con-
We review the CFC‘s statutory interpretation and legal conclusions de novo and its factual findings for clear error. Heisig v. United States, 719 F.2d 1153, 1158 (Fed. Cir. 1983). We begin our interpretation with the statutory language. Consumer Prod. Safety Commʼn v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). The relevant portion of the NWPA states: “The rights and duties of a party to a contract entered into under this section may be assignable with transfer of title to the spent nuclear fuel or high-level radioactive waste involved.”
As it did at trial, the government argues on appeal that Congress waived the Contracts Act but not the Claims Act by stating in the NWPA that “[t]he rights and duties of a party to a contract” are assignable. Relying on Ginsberg, the government argues that the Claims Act requires a specific, express waiver for existing claims, and asserts that the NWPA does not provide one. The government also asserts that Congress’ use of the word “contract” but not “claim” in the NWPA draws a distinction between the assignment of an existing contract and the assignment of an existing claim for damages, and because the Claims Act and the Contracts Act are separate statutes, assignments of contracts and assignments of claims must be treated differently. Citing Tuftco, 614 F.2d at 744, the government argues that “the conceptual difference” between the statutes is that the Claims Act “pertains to claims for work already done” and the Contract Act “is more concerned with continu-
The issue before us is whether the language which permits assignment of “the rights and duties of a party to a contract” includes the right to assign existing damages stemming from a breach of contract claim. Does this language allow the transfer of the damages claim for breach along with the transfer of the contract? We conclude that it does. The statutory language is broad and allows for transfer of not just the contract, but transfer of “the rights and duties of a party to a contract.” One of the rights of a party to a contract is the right to bring a claim for damages resulting from breach. The government‘s reading of the NWPA modifies its plain language in one of two ways: it either reads into the NWPA the word continuing (i.e., only continuing rights and duties may be assigned); or it reads out “the rights and duties of a party” (i.e., only a contract may be assigned). The “rights and duties of a party to a contract” encompass not just the party‘s continuing rights and duties under the contract, but also the party‘s existing right to enforce the contract for an ongoing breach and to collect damages that have been incurred. See, e.g., Restatement (Second) of Contracts § 346 (“The injured party has a right to damages for any breach by a party against whom the contract is enforceable. . . .“). Although the Claims Act and the Contracts Act are separate statutes, the Tuftco court recognized that the “concerns of the two statutes and the legal concepts involved in their applicability are the same.” Tuftco, 614 F.2d at 744 n.4. The plain language of the NWPA provision states that all rights of a party to a contract are assignable. In this case, it is undisputed that in its transfer of Millstone, Northeast Utilities intended to assign its claim for interim storage fees. We see no reason to read
While it is certainly true that the bare assignment of a contract does not transfer all accrued claims, here, Congress’ intent is manifest in the plain language of the NWPA: a party to the Standard Contract may assign its rights. This includes the party‘s right to collect damages incurred due to an existing, ongoing breach. Ginsberg, a case decided under state property laws pertaining to real property is not to the contrary. Ginsburg recites no requirement that the transfer of an existing breach of contract cause of action requires a separate, specific, express designation of the claim in the assigning document. On the contrary, Ginsburg states that a contract assignment may “specifically or impliedly designate” accrued causes of action. 968 F.2d at 1201. We conclude Congress permitted just such a designation in the NWPA.
The government further argues that our conclusion subverts the purpose of the Claims Act, which “allow[s] the government to deal solely with the original contractor,” protects the government‘s ability to defend itself by ensuring availability of evidence, and reduces the possibility of multiple payments of claims. As an initial matter, these policy arguments do not trump the plain language of the statute. Moreover, these policy concerns are not implicated here. This is not a case where there is any confusion over whether the parties intended to transfer the right to sue for pre-acquisition interim storage fees – it is undisputed that they did. A party to a standard contract cannot transfer its rights and duties to another party without also transferring title to the SNF. Hence, the party who is suing for interim
Northeast Utilities and Dominion complied with the requirements of the Standard Contracts and the NWPA when they executed the purchase agreement, which assigned to Dominion along with title to the SNF, “all rights . . . under the DOE Standard Contracts (including all rights to any claims of [Northeast Utilities] related to DOE defaults thereunder).” J.A. 1613. Accordingly, Dominion has the right to collect pre-assignment damages for the government‘s ongoing partial breach of Dominion‘s Standard Contracts.
Seeking to offset damages, the government also appeals the trial court‘s dismissal of certain counterclaims and defenses. Specifically, the government asserts that because Dominion‘s one-time fee is not yet payable because of the government‘s breach, Dominion may have profited by having use of that money in the meantime. Thus, the government reasons, it is entitled to discovery into any economic benefit obtained by Dominion by deferring payment of the one-time fee until the government finally performs.
Within two years of execution of a Standard Contract, a contracting utility is required to select one of three options for the payment of a one-time fee for the disposal of SNF generated before April 7, 1983:
(a) Option 1 -- The Purchaser‘s financial obligation for said fuel shall be prorated evenly over forty (40) quarters. . . .
(b) Option 2 -- The Purchaser‘s financial obligation shall be paid in the form of a single payment anytime prior to the first delivery . . . and shall consist of the fee plus interest on the outstanding fee balance. Interest is to be calculated from April 7, 1983, to the date of the payment based upon the 13-week Treasury bill rate . . . .
(c) Option 3 -- The Purchaser‘s financial obligation shall be paid prior to June 30, 1985, or prior to two (2) years after contract execution, whichever comes later. . . .
Standard Contract, art. VIII.B.2. No one-time fee is payable for Millstone Unit Three because it did not generate any
According to the government, Dominion (or its predecessor) would have paid the one-time fee by 1998 had the government timely performed under the Standard Contract. The government asserts that it should be allowed to investigate if Dominion has received any economic benefit from having the use of that money in the meantime by investing, financing other projects, or avoiding the need to obtain loans. The Court of Federal Claims disagreed, and noted that the “one-time fee is simply not yet due under the Standard Contract, and the parties have contracted for how much interest accrues in the interim.” 77 Fed. Cl. at 157. The court concluded that “[u]ntil the one-time fee becomes due, the government does not have a claim for early payment.” Id. Nonetheless, the government asserts on appeal that Dominion should not be put into a better position or receive a windfall because of the government‘s breach.
The government previously argued a variant of this theory before us in another SNF case. See Yankee Atomic Elec. Co. v. United States, 536 F.3d 1268, 1280 (Fed. Cir. 2008). In that case, we found that the utility had no obligation to pay the one-time fee that was not yet due according to the terms of Option 2. Id. Our holding in Yankee Atomic forecloses the government‘s arguments in this case. Because the injured utilities are not relieved by the government‘s partial breach from their obligation to pay the fee with interest when it comes due, the government is not entitled to an offset for any damages awarded. Id. Indeed, in our analysis Yankee Atomic, we quoted the case on appeal before
[The utilities] still have the SNF, the government still has the obligation to pick it up, and plaintiffs still have to pay the one-time fee when it becomes due. The only thing that is different from the contract scenario is that [the utilities‘] claim to have been forced to absorb unnecessary interim storage costs. If the government reimburses such costs, it hardly puts plaintiffs in a better position.
Yankee Atomic Elec. Co. v. United States, 536 F.3d 1268, 1281 (Fed. Cir. 2008) (quoting 77 Fed. Cl. at 156).
We see no merit whatsoever to the government‘s argument that Dominion may have benefited from the government‘s breach. Moreover the parties agreed ex ante, expressly in the contract that the utility would pay the one-time fee with interest accruing from April of 1983 at the thirteen-week Treasury bill rate.2 Dominion cannot ask for increased damages should its investment of the one-time fee return less than the thirteen-week rate, and the government
For the forgoing reasons, we affirm the Court of Federal Claims’ award of damages to Dominion, including its dismissal of the government‘s defenses and counterclaims regarding the one-time fee.
AFFIRMED
Two statutory provisions,
I.
Congress first restricted the assignment of claims against the United States in 1846. See An Act in Relation to the Payment of Claims, ch. 66, 9 Stat. 41 (1846). Initially of narrow scope, the restriction was subsequently extended to “all claims against the United States, whether allowed by special acts of Congress, or arising under general laws or treaties, or in any other manner whatever” following a series of fraudulent claims associated with the Mexican War. An Act to Prevent Frauds upon the Treasury of the United States, ch. 81, § 7, 10 Stat. 170, 171 (1853); see also H.R. Rep. 32-1 (1852). In doing so, Congress decreed
That all transfers and assignments hereafter made of any claim upon the United States, or any part or share thereof, or interest therein . . . shall be absolutely null and void, unless the same shall be freely made and executed . . . after the allowance of such claim, the ascertainment of the amount due, and the issuing of a warrant for the payment thereof.
10 Stat. at 170 (emphasis added). In its current form, the Claims Act provides, in relevant part, that
Despite the facially strict language of the Claims Act, the Supreme Court created an exception for transfers by operation of law. See United States v. Aetna Cas. & Sur. Co., 338 U.S. 366, 375-76 (1949). This exception grew out of the Court‘s decision in Erwin v. United States, which held that “[t]he passing of claims to heirs, devisees, or assignees in bankruptcy is not within the evil at which the statute aimed,” and therefore a claim against the United States could be transferred to the trustee of a bankrupt‘s estate. 97 U.S. 392, 397 (1878).
In contrast to transfers by operation of law, the Supreme Court has generally held that the Claims Act precludes voluntary assignments. E.g., United States v. Dow, 357 U.S. 17, 20 (1958); United States v. Shannon, 342 U.S. 288, 292 (1952); Spofford v. Kirk, 97 U.S. 484, 489 (1878); see also Aetna Cas., 338 U.S at 375 (“[T]he Court has always stated the flat exception of all transfers by operation of law, as distinguished from voluntary transfers.“). Indeed, the Court has recognized as exceptions to the broad sweep of the statute only two types of
II.
Here, the claim was voluntarily assigned, but it was neither ascertained nor allowed at the time of assignment. The assignment was therefore contrary to the requirements of the Claims Act. It does not fall within either of the recognized exceptions, and it clearly implicates the mischief that the Claims Act was intended to avoid: namely, forcing the United States to deal with multiple parties, including strangers to the original transaction, and the attendant litigation surrounding the assignment itself.2, 3 See, e.g., Shannon, 342 U.S. at 291-92 (one purpose was “to prevent possible multiple payment of claims, to make unnecessary the investigation of alleged assignments, and to enable the Government to deal only with the original claimant“). In my judgment, the assignment to Dominion was thus precluded by the Claims Act.
The NWPA provides:
The rights and duties of a party to a contract entered into under this section may be assignable with transfer of title to the spent nuclear fuel or high-level radioactive waste involved.
The rights and duties of the Purchaser may be assignable with transfer of title to the SNF and/or HLW involved; provided, however, that notice of any such transfer shall be made to DOE within ninety (90) days of transfer.
While I agree that claims resulting from a breach of contract can be conceptualized as a “right” under the contract, I am unwilling to interpret broadly that provision of the NWPA given Congress‘s history of explicitly waiving the Claims Act when it desires to do so. For example, Congress has said:
Hereafter the provisions of section thirty-four hundred and seventy-seven of the Revised Statutes shall not apply to payments for rent of post-office quarters made by postmasters to duly authorized agents of the lessors.
Act of May 27, 1908, ch. 206, 35 Stat. 406, 411 (referencing prior codification). And:
Notwithstanding the provision of section 3727 of Title 31, the Secretary is authorized to recognize validly executed assignments made by Regional Corporations of their rights to receive payments from the Alaska Native Fund.
My reticence is reinforced by the strong disfavor shown voluntary assignments of claims. E.g., Dow, 357 U.S. at 20; Shannon, 342 U.S. at 292-93. And the Restatement itself—the only source cited by the majority in support—appears to draw a distinction between rights under a contract and a claim for breach, with the latter being based on the former, but one step removed. Restatement (Second) of Contracts § 236 (“A claim for damages for partial breach is one for damages based on only part of the injured party‘s remaining rights . . . .“). I therefore conclude that the use of the phrase “rights and duties” in the NWPA and Standard Contract refers only to the immediate rights and duties associated with the contract itself, not an unascertained monetary claim for