SUBURBAN MORTGAGE ASSOCIATES, INC., Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Alphonso Jackson, Secretary of Housing and Urban Development, Federal Housing Administration and John Weicher, Assistant Secretary for Housing/FHA Commissioner, Defendants-Appellants.
No. 06-1207
United States Court of Appeals, Federal Circuit.
March 12, 2007.
In United States v. Anderson, 38 C.M.R. 582, 586, 1967 WL 4454 (Army Rev. Bd.1967), the Army Review Board observed that “a state of war has existed in the geographic area designated by Executive Order 11216.” Other federal statutes have recognized this statutory designation of combat zone. For example,
The principles of
With the corroborating information in the government‘s possession, it is seriously wrong to insulate the government from the obligation to bring it forward. I would hold that service in a combat zone is prima facie service in combat, whereby the burden of production and proof shifts to the government. No such contrary evidence is in the record of this appeal, nor any contradiction of Mr. Stone‘s account of his service in Vietnam. Absent adequate rebuttal, he is entitled to the evidentiary benefits of
Mark R. Freeman, Attorney, Appellate Staff, Civil Division, United States Department of Justice, of Washington, DC, argued for defendants-appellants. With him on the brief were Peter D. Keisler, Assistant Attorney General, and Michael S. Raab, Attorney.
Before RADER, Circuit Judge, PLAGER, Senior Circuit Judge, and LINN, Circuit Judge.
PLAGER, Senior Circuit Judge.
This case requires us to reexamine the jurisdictional boundary between the Tucker Act and the Administrative Procedure Act, as that boundary is understood in the light of the Supreme Court‘s decision in Bowen v. Massachusetts.1 The case began as a dispute between plaintiff Suburban Mortgage Associates, Inc. (“Suburban“), and defendants, the United States Department of Housing and Urban Development (“HUD“) et al. (“Government“),2 with regard to a contract for insurance. Plaintiff sued the Government in the United States District Court for the District of Columbia. The suit was cast in part as an action for specific performance of the contract and in part as a declaratory judgment action. The relief sought was to require the Government to perform its contract obligations so that Suburban Mortgage could get the money allegedly due it under the insurance agreement.
The action quickly morphed into a dispute over what court had been authorized by Congress to hear the case: was it the district court (the plaintiff‘s choice) or was it the United States Court of Federal Claims (the Government‘s choice)? The Government forced the issue by moving in the district court to have that court either dismiss the entire case or transfer it from the district court to the Court of Federal
Litigation over where to litigate is the unfortunate consequence of the complex of statutes and courts that comprise the federal system. “Nothing is more wasteful than litigation about where to litigate, particularly when the options are all courts within the same legal system that will apply the same law.” Bowen, 487 U.S. at 930 (Scalia, J., dissenting). This court plays a role in such litigation. When a district court denies a motion to transfer an action to the Court of Federal Claims as provided by
For the reasons we shall explain, and despite Suburban‘s valiant effort to frame the suit as one for declaratory or injunctive relief, this kind of litigation should be understood for what it is. At bottom it is a suit for money for which the Court of Federal Claims can provide an adequate remedy, and it therefore belongs in that court. The district court‘s determination to the contrary is reversed, and the matter is remanded to that court with instructions to either dismiss the suit in its entirety or transfer it to the Court of Federal Claims.
BACKGROUND
Suburban is a commercial mortgage3 lender based in Maryland. In 1998 Suburban made a loan, secured by a mortgage on the subject property, to Hillside Nursing Home (“Hillside“), a now defunct nursing home and assisted living facility in Rhode Island.4 To encourage development of such facilities for the elderly, Congress has authorized HUD to underwrite such loans, that is, to guarantee payment of the mortgage loan. See
The agreement with HUD means that, should the borrower (Hillside) default on the underlying loan and the lender (Suburban) consequently incur loses, HUD will reimburse the lender pursuant to the terms of the insurance agreement. In order to collect the insurance proceeds when there has been a default by the borrower, the lender must first transfer its interest in the mortgage and mortgaged property to HUD. The lender has the option of foreclosing and taking title to the property, then transferring the property to HUD,
In this case, the nursing home (Hillside) defaulted on its mortgage loan. Thereafter,
An extensive period of negotiation between the parties proved fruitless. Suburban then sued HUD in the District Court for the District of Columbia, asserting jurisdiction under
The first count, entitled “Declaratory Judgment: for HUD to comply with its obligations pursuant to § 232 of the NHA,” asked the district court to declare HUD‘s actions unlawful and to order HUD to perform its duties under the agreement, specifically, to accept assignment of the loan with ultimate reimbursement of the loan balance to Suburban. Echoing the language of the APA, Suburban alleged that the Government, by denying its assignment, acted arbitrarily, capriciously, and in violation of Suburban‘s due process rights under the Fifth Amendment. The second count, entitled “Breach of Contract: Request for Specific Relief under § 702 of the APA,” asked the court for “specific relief in the form of payment of the insured loan amount” and reimbursement of certain taxes and fees as losses plaintiff suffered because the Government allegedly did not perform its duties under the insurance contract.
The Government moved in the district court to dismiss the suit for lack of subject matter jurisdiction on the grounds that the suit was basically a contract action, and therefore can only be heard in the Court of Federal Claims under the Tucker Act,
In ruling on the motion, the district court looked for guidance to the precedent of its regional circuit, the United States Court of Appeals for the District of Columbia
With regard to Count II of the complaint, the district court viewed that as a contract claim asking for “essentially ‘the classic contractual remedy of specific performance.‘” Id. at *8 (citing Spectrum Leasing Corp. v. United States, 764 F.2d 891, 894 (D.C. Cir. 1985)). The court read the relevant precedent as precluding it from hearing contract claims against the Government, whether for money damages or specific relief, because the Tucker Act “impliedly forbids” (as that term is used in the APA) any such relief by district courts. Id. (citing Transohio, 967 F.2d at 609; Sharp v. Weinberger, 798 F.2d 1521, 1524 (D.C. Cir. 1986)). Applying this case law, the district court concluded that the APA did not waive sovereign immunity for Count II, and accordingly that Count II was outside of its jurisdiction.
The district court viewed Count I differently. With regard to the first exception limiting the APA‘s waiver of sovereign immunity, the district court cited Bowen v. Massachusetts for the proposition that a claim for money is not necessarily a claim for “money damages” as that term is used in the APA. Citing Maryland Department of Human Resources v. Department of Health and Human Services, 763 F.2d 1441, 1446 (D.C. Cir. 1985), the court drew a distinction based on the purpose behind the payment sought: is the plaintiff seeking money damages “to substitute for a suffered loss,” or is the plaintiff seeking specific relief in the form of money, i.e., “the very thing to which he was entitled“? Suburban Mortgage, 2005 WL 3211563, at *6. Although Suburban characterized its requested relief in injunctive terms, the court recognized that Suburban would recover money from HUD if it prevailed. Nevertheless, the court concluded that any such recovery would be money that HUD was obligated to pay under the agreement. Suburban therefore was seeking specific relief in the form of money to which it was entitled, rather than money damages.
Turning to the second exception, the district court determined that Suburban Mortgage did not have an adequate remedy in the Court of Federal Claims. While some of plaintiff‘s claimed losses could be reduced to a monetary sum, the district court concluded that concerns about possible bankruptcy, loss of reputation, and lost future profits could only be addressed through injunctive relief.
Finally, the district court held that Count I did not seek relief expressly or impliedly forbidden by the Tucker Act. The Government had argued that the claim was a disguised contract claim and therefore, like Count II, could not be adjudicated in district court. But the court concluded that plaintiff‘s allegations regarding HUD‘s arbitrary refusal to accept assignment because of unproven fraud suspicions found their source in the statutes
In the same order, the district court granted Suburban‘s motion to require HUD to file with the court a copy of the administrative record on which it relied in making its determination with respect to the election of assignment. Since an APA suit basically challenges an agency‘s actions, the agency‘s administrative record of what it has done is the record on which the court bases its decision. The effect of filing the agency‘s administrative record in the matter would be to provide Suburban with what amounts to discovery of the Government‘s case, i.e., whatever information the Government may have for suspecting fraud. The Government, however, would not have an equal opportunity for discovery of the facts known to Suburban, the kind of discovery that could be had in a normal civil suit, including a contract dispute in the Court of Federal Claims.
The Government resisted producing the administrative record under the circumstances and promptly took an interlocutory appeal of the Count I jurisdictional issue to this court, as it is entitled to do pursuant to
DISCUSSION
A.
Sovereign immunity—the notion cherished by the medieval English Kings and Queens that they could do no wrong, at least no wrong correctable in their own courts—is a privilege still granted by the federal courts to the Royals’ successor, the United States Government. One consequence of this doctrine is that, absent a Constitutional grant of authority, if one wishes to sue the United States for a wrong committed by one of its agents (and agencies), one must find an appropriate Act of Congress that waives the Government‘s immunity from suit for that particular wrong.
If the suit is a civil action, other than in tort, there are two general statutes that waive sovereign immunity. One is the Tucker Act, the origins of which go back to the late 1800s.7 In the Tucker Act, Congress recognized that for a variety of reasons it was in the Government‘s interest to waive immunity and to allow people to bring suit against the Government for money they believed was owed to them. For one thing, it relieved Congress of the hassle of having to enact special bills to resolve run-of-the-mill disputes. For another, in the absence of such a waiver, the Government‘s cost of doing business would be greater since parties contracting with the Government would understand that they had to factor in the costs of arbitrary bureaucratic behavior for which, absent the waiver, no judicial remedy would be available. The Tucker Act both waives sovereign immunity for, and grants the Court of Federal Claims exclusive jurisdiction over, actions for money damages of more than $10,000.
Congress reconciled these two general statutory waivers by providing in the APA the three specific limitations noted by the trial court: (1) a suit under the APA can only seek relief other than “money damages,”
In 1988 the barrier sprang a leak, a leak that has threatened to become a gusher. Bowen v. Massachusetts, 487 U.S. 879 (1988), is the source of the leak. In that case, the Commonwealth of Massachusetts brought suit challenging a decision by the Secretary of Health and Human Services refusing to reimburse the state for certain Medicaid expenditures. Under the Medicaid program, the Government makes quarterly advance payments to the state in anticipation of future reimbursable costs. When the Secretary disallowed costs as not covered by the program, the result was a withholding of funds from future advances to compensate for past overpayments and to preclude future overpayments.
Massachusetts filed suit in federal district court requesting declaratory and injunctive relief setting aside the Secretary‘s decision. The state invoked federal question jurisdiction pursuant to
The Supreme Court agreed with the district court and the First Circuit that the APA provided a waiver of sovereign immunity for the state‘s claim and that the case was properly before the district court. In its opinion, the Court first analyzed whether the claim was one for “money damages,” which would take it outside the purview of the APA under
The Court next addressed the Government‘s argument that the state‘s APA claim was barred under
B.
As the dissent predicted, the Bowen case has generated much confusion regarding the jurisdiction of the courts, as well as adverse commentary.12 In 1988, the same year Bowen was decided, Congress attempted to bring some order to the process. It enacted a statute providing that, when a district court order grants or denies a motion to transfer a suit against the Government to the Court of Federal Claims, an interlocutory appeal can be taken by either plaintiff or the Government.
One consequence of the Bowen case has been to create a sort of cottage industry among lawyers attempting to craft suits, ultimately seeking money from the Government, as suits for declaratory or injunctive relief without mentioning the money. If successful, a plaintiff could have the case heard under the APA in one or another district court, with appeal to a regional circuit, rather than in the Court of Federal Claims, where money claims against the Government are routinely heard and decided, with appeal in the Federal Circuit. This court has had several opportunities to deal with such attempts, and to interpret and apply Bowen.
To thwart such attempted forum shopping, our cases have emphasized that in determining whether a plaintiff‘s suit is to be heard in district court or the Court of Federal Claims, we must look beyond the form of the pleadings to the substance of the claim. We have cautioned litigants that dressing up a claim for money as one for equitable relief will not remove the claim from Tucker Act jurisdiction and make it an APA case. See, e.g., Christopher Vill., L.P. v. United States, 360 F.3d 1319, 1328 (Fed. Cir. 2004) (“A party may not circumvent the Claims Court‘s exclusive jurisdiction by framing a complaint in the district court as one seeking injunctive, declaratory or mandatory relief where the thrust of the suit is to obtain money from the United States.” (quoting Rogers v. Ink, 766 F.2d 430, 434 (10th Cir. 1985))); Consol. Edison Co. of N.Y., Inc. v. United States, 247 F.3d 1378, 1385 (Fed. Cir. 2001) (“This court and its sister circuits will not tolerate a litigant‘s attempt to artfully recast its complaint to circumvent the jurisdiction of the Court of Federal Claims.“); Brazos Elec. Power Coop., Inc. v. United States, 144 F.3d 784, 787 (Fed. Cir. 1998) (“Court of Federal Claims jurisdiction cannot be circumvented by such artful pleading and, accordingly, we customarily look to the substance of the pleadings rather than their form.“); Nat‘l Ctr. for Mfg. Scis. v. United States, 114 F.3d 196, 199 (Fed. Cir. 1997) (“NCMS“) (“Notwithstanding the imprecision of the complaint, we therefore ‘look to the true nature of the action in determining the existence or not of jurisdiction.‘” (quoting Katz v. Cisneros, 16 F.3d 1204, 1207 (Fed. Cir. 1994))); Kanemoto v. Reno, 41 F.3d 641, 646 (Fed. Cir. 1994) (“‘A party may not avoid the [Court of Federal Claims‘] jurisdiction by framing an action against the federal government that appears to seek only equitable relief when the party‘s real effort is to obtain damages in excess of $10,000.‘” (quoting Marshall Leasing, Inc. v. United States, 893 F.2d 1096, 1099 (9th Cir. 1990))).
Once we discern the true nature of a plaintiff‘s claim as a claim for money, because of Bowen we still must determine whether the claim is excluded from APA jurisdiction by the limitations in
Our cases, and Congress‘s purpose in giving this court jurisdiction over these interlocutory appeals, dictate that the better course is to ask first whether the cause is one over which the Court of Federal Claims has jurisdiction under the Tucker Act. The analysis begins, then, with the question raised by
One reason for beginning the analysis with the “adequate remedy” issue is that its resolution often will be dispositive. If the suit is at base a claim for money, and the relief available through the Court of Federal Claims under the Tucker Act—a money judgment—will provide an adequate remedy, the inquiry is at an end. There is no need to address the
Another reason it is preferable to start with the
However, even if the plaintiff escapes the
In sum, when the plaintiff‘s claims, regardless of the form in which the complaint is drafted, are understood to be seeking a monetary reward from the Government, then, for the reasons explained, a straightforward analysis calls for determining whether the case falls within the jurisdiction of the Court of Federal Claims. If that court can provide an adequate remedy—if a money judgment will give the plaintiff essentially the remedy he seeks—then the proper forum for resolution of the dispute is not a district court under the APA but the Court of Federal Claims under the Tucker Act. There is no need at that point to even address the other APA limitations, the “money damages” and the “expressly or impliedly forbids” provisions. The three limitations function in the disjunctive; the application of any one is enough to deny a district court jurisdiction under the APA.
C.
Applying these concepts to the case before us, it is clear that the proper forum for Suburban‘s claim is the Court of Federal Claims. In Count I of the complaint, Suburban seeks a declaration that HUD acted unlawfully when it refused to accept assignment of the mortgage and defaulted loan. Though the claim is styled as one for declaratory relief, Suburban in essence is seeking to obtain the financial benefit of a prior contract-based obligation that allegedly has not been honored by the Government. Suburban contracted with HUD for mortgage insurance. Suburban filed a claim under the insurance policy; HUD refused to pay the claim. Suburban‘s ultimate goal now is to recover the insurance proceeds. We therefore agree with the Government that despite the form of the complaint, Suburban‘s claim is in substance a contract-based action asking for monetary relief from the Government.
With that in mind, we must decide whether the Court of Federal Claims can provide Suburban with an “adequate remedy” within the meaning of
Suburban relies on Bowen to support its contention that a money judgment from the Court of Federal Claims will not be adequate. But, as we have noted elsewhere, Bowen turned on the “complexity of the continuous relationship between the federal and state governments administering the Medicaid program,” Consol. Edison, 247 F.3d at 1383, and the Court “linked its judgment to a specific set of circumstances” that are not present in most cases, Id. at 1384. These circumstances include: Bowen was a dispute between two sovereigns—a state government and the federal government—implicating federalism issues; the dispute centered on the administration of a major federal grant, the Medicaid program, involving enormous sums of money and complex interactions between the governments and the beneficiaries; at issue were the institutional arrangements between these two governments; the governments were locked into a fabric of long-term administration of the program; and the money involved in the uncovered education services was a small fraction of the total reimbursement the state received each year for its Medicaid costs under the program. In addition, the Court‘s focus was on the statutory requirements set forth in this complex grant program—nowhere in Bowen did the Court make reference to the existence of any specific contract or express agreement defining the relationship between the parties.
Furthermore, unlike Bowen, this case does not involve a complex, ongoing relationship between plaintiff and the Government in which the plaintiff seeks declaratory or injunctive relief to modify the Government‘s future obligations under the program. Suburban does not seek to change any long-term future conduct by the Government. Even if we were to discount the point made by the dissent in Bowen, that a money judgment against the Government can impact on its future behavior through doctrines such as collateral estoppel, a judgment ordering prospective relief would not be necessary or appropriate.
The thrust of Suburban‘s claim is that HUD breached the insurance contract when it refused to accept assignment of the mortgage and pay Suburban the insurance proceeds. Accordingly, “[e]very legal issue that [Suburban] seeks to resolve in the district court could be . . . decided in a suit before the Court of Federal Claims.” Consol. Edison, 247 F.3d at 1385. Nor are Suburban‘s concerns about possible bankruptcy, loss of reputation, and lost future profits a basis for saying that there is not an adequate remedy in the Court of Federal Claims. Those concerns can be alleged by any claimant seeking money from the Government for an allegedly wrongful failure to pay a claim; to the extent they have merit in a given case, money usually can assuage the wrong.14
We have considered the other arguments raised by Suburban, including its argument that it has been denied due process and that that alone entitles it to APA review in the district court. We agree
D.
The district court in making its determination in this case sought guidance from and relied heavily on decisions from its regional circuit. The Government seemed to shape its case for dismissal on the same basis, arguing that because Suburban‘s claim arose out of a contract, there was no APA jurisdiction. The source for that argument is a line of cases in other courts of appeals, including the Court of Appeals for the District of Columbia, holding that claims based on contracts can only be brought in the Court of Federal Claims. See Transohio, 967 F.2d at 609-10; Sharp, 798 F.2d at 1523-24; Spectrum Leasing, 764 F.2d at 893–94; N. Side Lumber Co. v. Block, 753 F.2d 1482, 1485-86 (9th Cir. 1985); Megapulse, Inc. v. Lewis, 672 F.2d 959, 967 (D.C. Cir. 1982). The basis for this rule is the third limitation on the APA‘s waiver of sovereign immunity—waiver is not available “if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.”
Finally, the regional circuits are of course free to provide such guidance as they choose to the district courts in their circuits, and when the question of jurisdiction comes up outside of these interlocutory appeals, the district courts properly may look to the law of their circuit for guidance. But guidance from and reliance upon regional circuit law must take into account two considerations. First, since 1988 and the Bowen decision, there has been considerable development regarding this jurisdictional issue. The regional circuit court cases may be older cases, and indeed, as was the case here, some may have been decided before Bowen.
Second, and of equal if not greater importance, for almost twenty years this court has been tasked by Congress to be the exclusive arbiter of the issue when it is brought to us in these interlocutory appeals. We of course are bound to follow our own circuit law. District courts, as well as counsel for the parties, would be better able to predict the outcome of such appeals if they follow the same law.
CONCLUSION
The judgment of the district court is reversed. The matter is remanded with instructions to either dismiss Count I of
REVERSED and REMANDED.