647 F.2d 1082 | Ct. Cl. | 1981
delivered the opinion of the court:
Plaintiff seeks judgment in this court from the United States for its contract price, asserting that the Air Force acted negligently and failed to comply with the requirements of the Miller Act, thus creating an equitable lien in United’s favor on contract retainages (or other funds which should have been but were not retained by defendant). Defendant has moved to dismiss the petition, saying that the subcontractor has no claim within this court’s jurisdiction.
The obvious difficulty for plaintiff is that the full court has already decided, in a comparable context, that we cannot entertain a subcontractor’s claim which the prime
The USF&G issue which is now critical concerns the last of these holdings — the right of subcontractors to sue the United States directly for their compensation. Relying on precedent from this court as well as the Supreme Court, we ruled specifically that such a right does not exist. This en banc holding is of course, binding on this panel.
Kennedy is quite different from both USF&G and the present case on a crucial point. In Kennedy the Postal Service, rather than the United States, was the defendant. The Postal Service is an independent establishment with the general capacity (given it by Congress) to "sue and be sued,” see 39 U.S.C. § 401,
USF&G is a different case from that at bar. We do not have a standing question. Our suit is against an independent establishment having the power to sue and be sued. [508 F.2d at 959.]
The broad, unlimited legislative declaration that the Postal Service could "be sued” left the Tenth Circuit free to apply doctrines applicable to private persons, including principles of restitution, tort-law, and "contracts implied in law,” and thereby to conclude that the equities of that subcontractor were paramount to those of the Postal Service, and that "[i]n like circumstances a private enterprise could not take
The foundation of USF&G, to the contrary, is that suit here against the United States under 28 U.S.C. § 1491 is not unlimited and does not put the United States on the same plane, in all respects, as if it were a private entity. The controlling axiom is that the United States may be sued only to the extent that it allows its sovereign immunity to be waived. Through 28 U.S.C. § 1491, the United States has consented to be sued for money damages in certain restricted circumstances, the only relevant one being on the basis of a contract (either express or implied-in-fact) between the United States and the claimant.
We recognized in USF&G that there was a possible contradiction between Munsey and the later Supreme Court statement in Pearlman v. Reliance Insurance Co., 371 U.S. 132 (1962), on the standing question. In Pearlman the contractor defaulted and the surety paid the laborers and materialmen. Both the surety and the contractor’s trustee in bankruptcy sought to obtain the contract retainages. Pearlman recognized an equitable obligation of the Government to see that laborers and materialmen are paid.
We therefore hold in accord with the established legal principles stated above that the Government had a right to use the retained fund to pay laborers and material-men; that the laborers and materialmen had a right to be*242 paid, out of the fund; that the contractor had he completed his job and paid his laborers and materialmen, would have been entitled to the fund; and that the surety; having paid the laborers and materialmen, is entitled to the benefit of all these rights to the extent necessary to reimburse it. [371 U.S. at 141 (emphasis added).]
The tension between Munsey and Pearlman emerges from the assertion in Munsey that "nothing is more clear than that laborers and materialmen do not have enforceable rights against the United States for their compensation,” 332 U.S. at 241, and the different Pearlman language that "laborers and materialmen had a right to be paid out of the fund,” a right which the surety "is entitled to the benefit of * * * to the extent necessary to reimburse it,” 371 U.S. at 141. What concerned us in USF&G about these two positions is that "[i]t is a short step from Pearlman to infer that if the subcontractors have rights to which the surety may be subrogated, then the subcontractors should be able to assert their rights directly * * *.” 201 Ct. Cl. at 10, 475 F.2d at 1382. But to allow that would result in a conflict with Munsey. Id. at 10, 475 F.2d at 1382. See also, Pearlman, supra, 371 U.S. at 142 (concurring opinion of Justice Clark).
We reconciled the Munsey and Pearlman comments when we said that
the Court in Pearlman stated that the surety was entitled to the benefit of all the rights of the laborers and materialmen whose claims it paid and those of the contractor whose debts it paid. The surety then is subrogated to the rights of the contractor who could sue the Government since it was in privity of contract with the United States. The surety is likewise subrogated to the rights of the laborers and materialmen who might have superior equitable rights to the retainage but no right to sue the defendant. [Id. at 10, 475 F.2d at 1382 (emphasis in original).]
Under this interpretation, Pearlman does not conflict with Munsey because, while the surety gains equitable rights from its subrogation to the subcontractors’ claims, its standing to sue (its ability to enforce those rights and others) comes from the fact that it is also subrogated to, and stands in the shoes of, the contractor, an entity which is clearly in privity of contract with the Government. Id. at
We continue to see our position in USF&G as a reasonable reading of the somewhat ambiguous language in Pearlman. As USF&G pointed out, while the Supreme Court and prior lower court cases dealt with questions of priority to funds held by the Government,
[n]one have involved a plaintiff-subcontractor directly asserting a claim to money held by the Government. The subcontractors do possess equitable rights to the retained funds vis-a-vis other claimants to the money, but their rights * * * do not necessarily include or imply a right in the subcontractor itself to sue the Government. [Id. at 10-11, 475 F.2d at 1382 (emphasis added).]
See, also, Continental Casualty Co. v. United States, 164 Ct. Cl. 160 (1964), in which we said that "[t]he United States had the right to use the money in its hands to pay laborers and materialmen [citing Pearlman], but the laborers and materialmen could not force it to do so [citing Munsey].” Id. at 162-63. This analysis foreshadowed, in capsule form, our views in USF&G.
The Tenth Circuit’s Kennedy opinion questions the USF&G reconciliation of the Munsey and Pearlman statements:
More importantly the effort in USF&G to reconcile Munsey and Pearlman does not convince us. Munsey says that it does not decide whether subcontractors have any claim to retainage if both contractor and surety fail to pay. Pearlman says that Munsey held only that the Government could exercise its set-off right. Accordingly there is nothing to reconcile. [508 F.2d at 959 (citations omitted).]
The Kennedy court may have thought that we saw conflicting decisions in the two Supreme Court cases. But that was
We add that, even if our understanding in USF&G (and in the present opinion) of the Supreme Court’s statements is incorrect or unconvincing, that would make no difference in our ultimate conclusion which rests, at bottom, squarely on the limitations on this court’s jurisdiction imposed by 28 U.S.C. § 1491. See the discussion, supra. These restrictions have been recognized and implemented, not only in USF&G, but in the cases in this court declaring that subcontractors, without a contractual relationship with the Government, cannot sue either in general or specifically for contract retainages. See, e.g., Herfurth, supra, 89 Ct. Cl. at 127; Continental Casualty, supra, 164 Ct. Cl. at 162-63; Putnam Mills, supra, 202 Ct. Cl. at 8, 479 F.2d at 1337.
It follows that we have no reason to question USF&G, and that under it and established principles in this court United has no standing to sue the United States for recovery of its compensation.
Defendant’s motion to dismiss the petition is granted and the petition is dismissed.
While the surety has refused to make payment, it has not yet been judicially determined that the surety is free from liability to United. Plaintiff has filed suit against the surety which is now pending in U.S. District Court.
Plaintiff makes no attempt to distinguish USF&G and we discern no basis for doing so.
Section 401 granted the Postal Service a number of broad, general powers including the authority "to sue and be sued in its official name,” and "to enter into and perform contracts * * *." 39 U.S.C. § 401(1), (3).
It is plain that the Miller Act itself does not mandate compensation by the United States to a subcontractor within the coverage of 28 U.S.C. § 1491 (cf. United States v. Testan, 424 U.S. 392 (1976)) and that plaintiff has no claim directly under the Miller Act for relief from this court. Plaintiff makes no contrary contention.
This court has long followed the general rule that subcontractors (without a contractual arrangement with the Government) cannot themselves sue in this court on their contracts. See, e.g., H. Herfurth, Jr., Inc. v. United States, 89 Ct. Cl. 122, 127 (1939) (note 6, infra); Severin v. United States, 99 Ct. Cl. 435, 442 (1943), cert. denied, 322 U.S. 733 (1944).
Moreover, we have no original jursidiction over tort claims and we have no authority over so-called contracts implied-in-law which are based merely on equitable considerations. United States v. Minnesota Investment Co., 271 U.S. 212, 217 (1926). "The Tucker Act does not give a right of action against the United States in those cases where, if the transaction were between private parties, recovery could be had upon a contract implied in law.” Merritt v. United States, 267 U.S. 338, 341 (1925).
We held in Herfurth that "[i]t is apparent that the contract was between the defendant and Stetson (the prime contractor], and plaintiff was a subcontractor under a written contract with Stetson. * * ” There was no contractual right, expressed or implied, between the plaintiff and the defendant. Plaintiff possessed no privity of contract with the defendant.” 89 Ct. Cl. at 127.
The Supreme Court did not have to reach the issue of what claim the subcontractors would have had if both the surety and contractor failed to pay them, and specifically declined to decide that question. 332 U.S. at 242.
In holding for the surety in Pearlman, the Court invoked the pre-Munsey case of Henningsen v. United States Fidelity and Guaranty Co., 208 U.S. 404 (1908), which held that a surety, which had to pay materialmen on a payment bond as a result of the contractor’s default, had rights superior to those of an uninvolved third party (a bank which had loaned money to the contractor, the loan security being assignment of amounts due under the contract), because the surety had
paid the laborers and materialmen and thus released the contractor from his obligations to them, and to the same extent released the Government from all equitable obligations to see that laborers and supplymen were paid. [208 U.S. at 410.]
With respect to the issue of whether the holding in Henningsen had been overruled by Munsey. the Pearlman Court observed:
The point at issue in that case [Munsey] was whether the United States while holding a fund like the one in this case could offset against the contractor a claim bearing no relationship to the contractor’s claim there at issue. We held that the Government could exercise the well-established common law right of debtors to offset claims of their own against their creditors. This is all we held. * * * Munsey left the rule in * * * Henningsen undisturbed. [371 U.S. at 140-41.]
In USF&G the writer of the present opinion suggested separately, 201 Ct. Cl. at 18, 475 F.2d at 1387, that those subcontractor plaintiffs should be treated as noticed in as third-parties under Rule 41(a)(1), and granted recovery in that way. This position was not accepted by the court, and in any event such a solution is not available in the current case. Plaintiff United is the only suing party and there is no other plaintiff to whose presence we could hitch a third-party notice to plaintiff.