United States v. The City of Palm Beach Gardens
635 F.2d 337
5th Cir.
1981
Check Treatment

*2 VANCE, Before HATCHETT and AN- DERSON, Judges. Circuit HATCHETT, Judge: Circuit parties In this case the disagree as to the time within which the United States must bring Act, suit under the Hill-Burton 291i, recovery for the of federal § funds used the construction of a non- profit hospital sold to a or- ganization. We reverse the decision of the trial court holding the United time- seeking barred from such recovery follow- ing the federally-supported transfer of a hospital from public private to ownership. Appellee, City of Palm Beach Gar- dens, Florida, received 1964 under the program to as- sist publicly-owned construction of a hospital. In fully- sold its constructed private, profit- making corporation. The Hill-Burton Act provides that any the transfer of hos- Schaitman, Leonard Marleigh Dover pital constructed under program this Lang, Kimmel, Staff, Michael Appellate profit making organization, the federal Div., Dept, Civil of Justice Washington, D. government may sue either the transferor C., for plaintiff-appellant. or the transferee for a share of the value of Lowell, Fla., Petersburg, David R. St. hospital. Appellant, 29H.1 Nelson. this action in Wood, Lucksinger Epstein, & Bill R. 1976 against of a Bludworth, Houston, Tex., Robert E. Ven- price share of the sale of the Palm Beach Miami, Fla., ney, for Palm Beach Gardens Gardens The district court held Community Hospital et al. that the United States was time-barred Baldwin, Park, Fla., year Brant & Lake the six applica- Ber- of limitations Duco, Jr., Houston, Tex., nard ble to recovery money suits for diverted Palm Beach Gardens. from grant program. a federal 28 U.S.C. provides, 1. operates Title 42 section li nonprofit hospi- association which tal . . .”] any facility respect If with to which funds paid have been under section 29If of this title the United States shall be entitled to recover [“Payment shall, any for construction .. . at ”] from either the transferor or the transferee . . . twenty years completion time within after the bearing an amount the same ratio to the then of construction- facility value ... of so much of the as consti- fa) any person, be sold or transferred to approved project projects, tuted an or as the agency, organization (1) qual- or which is not participation amount of the Federal bore to the ified to file an under section 29 le cost of the construction or modernization un- e., State, political of this title “a subdivi- [i. project projects. der such or sion, public agency corporation or or ... a or argues neither summary entered that 2415(b).2 The court this apply because of Palm Beach Gar- judgment for neither suit stems from the diversion of appeals. dens. The United States con- federal funds nor breach of what limitations tract. that must determine The United States claims We solely suit from the of action derives cause period applies *3 granted Hill-Burton Act. This Act Act, by the Hill-Burton under the United States period. contains limitations The United no funds used in the of federal for that no States contends included non-profit hospital construction of a the time it to allow limitation because wanted organization. sold to country the citizens of our to tax-paying City argues prop- the trial court The that by the through recover funds suit grant 2415(b) which to 28 erly looked government any at the federal time after governs any by suit the United States to hospital private sale of a grant money pro- from a recover diverted organization. agree. We the that court gram. The contends It is well established that Con viewed 1968 sale as a correctly the gress right of without may create action private, prof- of federal funds diversion within restricting right the time which the view, this the it-making group. Under must be Occidental Life Insur exercised. prescribed by period limitations EEOC, 355, ance Co. v. 432 97 S.Ct. U.S. prior 2415(b) expired to the have 2447, (1977); 53 402 L.Ed.2d United States this in 1976. of action institution Sellers, (5th 1973). v. 487 F.2d 1268 Cir. City argues the alternative that The Moreover, long courts have held that the six-year period forth in 28 the set by any United is not limita States bound 2415(a)3 bars this action. This statute of period Congress explicitly tions di unless applies by suit the to United rects v. Guaranty otherwise. Trust Co. express implied or founded on an States 785, 126, United 304 U.S. 58 82 S.Ct. express to the City points The contract. (1938); L.Ed. v. 93 1224 United States HEW concern- contract between itself and 1965), (2d F.2d 386 Corp., Court 350 Cir. grant money which the ing the United 984, denied, 560, cert. 15 382 U.S. 86 S.Ct. seeks to recover. The also States Borin, (1966); L.Ed.2d 473 implied the contract claims existence of an Cir.), denied, (5th F.2d 348 cert. which the received federal funds under 821, 33, (1954). U.S. 75 S.Ct. L.Ed. it maintain its hos- upon the condition that passage The doctrine the mere of time that pital non-profit facility. The as a rights cannot the of the United foreclose this suit as an action for breach of views princi from the common law States derives prevention implied this contract and for of ple immunity periods that from limitations unjust following receipt sovereignty. enrichment its of prerogative is an essential of Blackstone, (1783). This price the sale Commentaries 247 28, 2415(a) pertinent provides, provides, 3. Title 2. Title section section part: provisions Subject Subject provisions of section 2416 of the 2416 of to of section commencing commencing this title actions [“Time title [“Time States-Exclusions”], brought States-Exclusions”], by the United except provided by by except provided and as otherwise Con- and as otherwise Con- gress, damages gress, money damages action for every action for brought by the or an or brought officer by or the United States or an officer agency thereof which is founded a tort upon any agency an is thereof which founded complaint be barred unless the is filed fact, shall express or in law or contract years right three of within after the action complaint shall the is filed be barred unless Provided, first accrues: That ... action years right after the action ac- within six of recover for diversion of crues . . . program may six ... be within years . after of action accrues . . tal; today doctrine remains viable because it the United States does not allege an objective public policy pro- furthers the of improper diversion of the construction tecting rights government vested in the provided We, funds under program. therefore, benefit of all from the inadvertence of 2415(b) inappli- hold 28 U.S.C. § agents upon which the government cable. necessarily rely. explained by must As City argues in the alternative Court, Supreme justification for this that the six-year period set doctrine forth in 28 U.S.C. should apply great public “is to be in the policy found this case. That statute gov of limitations preserving public rights, revenues, by erns suits government which loss, property injury and from and are upon any “founded express contract or negligence public officers.” . . . [T]he implied in reject law or fact.” We applica rule supportable is now because its bene- tion of this statute because we do not view *4 advantage fits and extend to citi- this action resting upon any as form of zen, including the defendant .... contract. Guaranty States, Trust Co. v. United 304 126, 132, 785, 788, question, Without the U.S. 58 terms of the S.Ct. 82 L.Ed. hospital (1938) grant City (quoting Hoar, 1224 of Palm United States v. Beach (C.C.D.Mass.) expressed 26 329 Gardens are (1821) F.Cas. a contract (Story, be J.)). tween City the and HEW. The claim of the though, contractual, United is not principles apply These to the case before but statutory. An action derives from con us. The grants Hill-Burton Act the federal only tract when a contract “contains an action, government a cause of but contains undertaking thing ‘to do the for the nonper period. no limitations We must therefore ” formance of which the brought.’ action is Congress conclude that intended to allow Trucks, Mack Inc. v. Bendix-Westinghouse bring States to an action under Co., 18, Automotive Air Brake 372 F.2d 21 the Act at time City unless the can (3d 1966), denied, Cir. 930, cert. 387 87 U.S. demonstrate that intended one of 2053, (1967) S.Ct. 18 L.Ed.2d 992 (quoting independent, general its statutes of limita- Gulf Life Insurance Co. v. Hillsborough apply tions to to suits under the Act. 72, County, 75, 98, 176 So. 129 Fla. 104 The accepted trial court argu the (1937)). grant The contract between the ment City 2415(b) of the that 28 U.S.C. § City obligates and HEW neither City the apply. should provides This statute a six- hospital maintain the non-profit as a facili year period the ty, provides federal in the “to recover for diversion of event of its profit-making transfer money paid grant program.” organization. It is the Hill-Burton Act 2415(b). Because we find that this grants which government the federal the case does not involve the diversion of con right to seek reimbursement. We therefore provided struction funds under the Hill- conclude that this action is not founded program, reject Burton we of upon express contract so as to fall within 2415(b). City The of Palm Beach Gardens purview 2415(a). the of 28 U.S.C. § properly used the under the program for the construction of its Nor do we six-year believe that the Later, ownership hospital was period trans of 28 U.S.C. ferred to a profit-making organization. apply should because of a “contract . . . program permits such in law or fact” between ownership, though transfers of it government. also al and the Admittedly, government lows the federal quasi-contractual to seek reim obligations may such Thus, bursement. conjunction statutory United States here arise even in with a alleges change ownership statutory right of a of “A of re action. properly-financed, fully-constructed hospi- covery may quasi-contractual be deemed if ANDERSON, III, R. LAINER upon not based Circuit legal obligation, it ‘is by compel ... agreement, enforced Judge, dissenting: [and] the value of that ling obligor to restore general I believe that the statute of limi- ” unjustly was enriched.’ by which he 2415(b)1 set in 28 ap- tations out 799, Limbs, F.2d suit, plies to bar the instant and therefore I Corbin, Quasi-Con 1975) (9th (quoting Cir. respectfully majority appar- dissent. The Obligations, 21 Yale L.J. tractual ently acknowledge would that the obligations (1912)). Quasi-contractual limitations contained section arise, however, party has only when one if the expense apply of Palm unjustly enriched at been alleges no un another. The United States Beach Gardens had diverted the actual con- just enrichment in this case. The was granted struction funds under the Hill-Bur- hospital its obligation under no to maintain Act expended ton before the funds were non-profit facility. recipi as a Unlike However, project. the construction the ma- case, funds in the Limbs ents of federal jority holds that there is no diversion of instance, obligation was under no here, construction funds and declines to govern to turn over to the federal undisputed hospi- treat diversion of the its ment the sale of part tal itself-which built in with the was organization. The Hill-Bur equivalent funds-as the of a diver- merely gives ton Act the United States respectfully disagree. sion of the funds. I seeking recovery following such a option of language I think the of the statute of limi- unjust sale. In the absence of enrichment *5 money paid tations-“diversion of under a recovery upon based there can be no grant program”-should not be read so nar- six-year contract. The 1245(a) inapplicable. rowly. interpret language is I period of 28 U.S.C. § themselves, mean diversion of the funds neither re- Because this action involves tangible diversion and assets which contract, covery recovery under a bought were with the funds. grant program, we diverted from periods hold that (b)

set forth in 28 and U.S.C. §§ brought

have no to an action Act, 42

under the Hill-Burton U.S.C. 291i. peri- this Act no limitations

Since contains

od,4 independent and no of limita- applies,

tions we conclude that

intended to allow the United to seek under the Act at time. We

therefore the trial reverse decision of dismissing

court this action as time-barred. appropriate proceedings.

We remand for AND REMANDED.

REVERSED 4. Title 42 Section 291i does contain one clear the United States or an officer or slightly agency limitation of a different sort: if a Hill- is thereof which founded tort Burton complaint is sold to a shall be barred unless the is filed group twenty years more than years after its con right within three after of action first struction, Provided, United States does not even have accrues: That an action to recover a cause of action under this See statute. damages resulting trespass from a on lands of language of 42 29 li set forth foot States; an action to recover dam- note 1. lands; ages resulting from fire to such an ac- tion to recover for diversion of 2415(b) provides 1. 28 U.S.C. grant program; and an action for con- may property version of of the United States be Subject provisions years section 2416 of of ac- within six after title, except provided by and as otherwise [Emphasis tion accrues .... added] Congress, money damages action for