Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-08-07102/USCOURTS-ca10-08-07102-0/pdf.json

Parties Involved:
U.S. Army Corps of Engineers
Appellant
Union Pacific Railroad Company
Appellee

Document Text:

FILED

United States Court of Appeals

Tenth Circuit

January 5, 2010

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNION PACIFIC RAILROAD

COMPANY,

Plaintiff - Appellee,

v. No. 08-7102

UNITED STATES OF AMERICA, ex

rel. U.S. ARMY CORPS OF

ENGINEERS,

Defendant - Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF OKLAHOMA

(D.C. NO. 6:06-CV-00094-KEW)

Sarang V. Damle, Attorney, Appellate Staff, Civil Division (Michael F. Hertz,

Acting Assistant Attorney General, Sheldon J. Sperling, United States Attorney,

Thomas M. Bondy, Attorney, Appellate Staff, Civil Division, with him on the

briefs), Washington, D.C., for Defendant - Appellant.

George R. Mullican (Robert D. Hart and Christopher D. Wolek, with him on the

brief), Gibbs Armstrong Borochoff Mullican & Hart, P.C., Tulsa, Oklahoma, for

Plaintiff - Appellee.

Before MURPHY, EBEL, and HARTZ, Circuit Judges.

HARTZ, Circuit Judge.

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On May 23, 2003, a train owned and operated by the Union Pacific

Railroad Company derailed when metal culverts beneath the tracks collapsed. 

The train had been traveling along the shoreline of Lake Eufaula, a man-made

lake in eastern Oklahoma created as part of a United States Army Corps of

Engineers project (the Project). Construction of the Project had required the

relocation of existing railroad tracks and rail facilities belonging to the MissouriKansas-Texas Railroad Company, Union Pacific’s predecessor-in-interest. Under

a contract (the Contract) between the railroad and the government to execute the

relocation, the railroad gave the government certain land and rights-of-way, and

the government agreed to build new rails and rail facilities, including the culverts

at issue in this case. A clause in the Contract (the Exculpatory Clause) stated that

the railroad would hold harmless and release the United States from any liability

arising out of the construction, operation, or maintenance of the Project.

In March 2006 Union Pacific filed suit against the United States in the

United States District Court for the Eastern District of Oklahoma under the

Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 2671 et seq. Union

Pacific’s complaint blamed the government for the derailment. It claimed (1) that

the government negligently breached the Contract by installing metal culverts,

which were prone to erosion, rather than culverts made of more durable

reinforced concrete; and (2) that the government had negligently failed to inspect

and maintain the culverts, contributing to their collapse. The government moved

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to dismiss the suit, arguing that the case fell under the exclusive jurisdiction of

the United States Court of Federal Claims under the Tucker Act, 28 U.S.C.

§ 1491(a)(1), because the action sounded in contract rather than tort. The district

court denied the government’s motion. 

A bench trial was conducted in October 2007. The district court ruled that

because the government had constructed the culverts with metal rather than

reinforced concrete, it had “breached the duty established under Oklahoma law

which it owed to Union Pacific through its predecessor to perform the contract

with due care and engineering skill.” Union Pac. R.R. Co. v. United States ex rel.

U.S. Army Corps of Eng’rs, No. CIV-06-094-KEW, 2008 WL 3926395, at *8

(E.D. Okla. Aug. 26, 2008). It also ruled that the government owned the land on

which the culverts were constructed and therefore “had a duty to maintain the

property it owned such that the railroad’s operation was not affected.” Id. at *11. 

It found that the government had breached this duty by failing to inspect or

maintain the culverts. Finally, the court held that the Exculpatory Clause was

unenforceable because it violated Oklahoma public policy, and it awarded Union

Pacific $4,456,606.70 in damages.

We reverse. The Tucker Act deprived the district court of jurisdiction over

the negligent-breach-of-contract claim because it was a contract claim under the

exclusive jurisdiction of the Court of Federal Claims. And the negligentAppellate Case: 08-7102 Document: 01018342164 Date Filed: 01/05/2010 Page: 3
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inspection-and-maintenance claim was barred by the Exculpatory Clause, which

did not violate Oklahoma public policy. 

II. DISCUSSION

A. Subject-Matter Jurisdiction/Negligent-Breach-of-Contract Claim

The United States is immune from suit except when it expressly consents. 

See United States v. Mitchell, 445 U.S. 535, 538 (1980). Two specific waivers of

sovereign immunity are relevant in this case: the FTCA, which waives the

government’s immunity for tort claims, and the Tucker Act, which waives the

government’s immunity for, among other things, contract claims. 

Union Pacific contends that jurisdiction over its claims is proper under the

FTCA. The FTCA permits the United States to be sued in federal district court

for damages 

caused by the negligent or wrongful act or omission of any employee

of the Government while acting within the scope of his office or

employment, under circumstances where the United States, if a

private person, would be liable to the claimant in accordance with the

law of the place where the act or omission occurred.

28 U.S.C. § 1346(b)(1). There is no dispute about the exercise of FTCA

jurisdiction over Union Pacific’s negligent-inspection-and-maintenance claim. 

But the government asserts that the district court lacked jurisdiction over the

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Union Pacific contends that in district court the government conceded

jurisdiction over this claim under the FTCA and is therefore judicially estopped

from challenging jurisdiction on appeal. The government denies that it conceded

jurisdiction, but resolution of this dispute is unnecessary. The conduct of the

parties cannot confer subject-matter jurisdiction where it is lacking, either as a

matter of consent or estoppel. See Ins. Corp. of Ireland, Ltd. v. Compagnie des

Bauxites de Guinee, 456 U.S. 694, 702 (1982). 

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negligent-breach-of-contract claim. That claim, the government argues, must be

brought in the Court of Federal Claims under the Tucker Act. We agree.1

The federal district courts and the Court of Federal Claims have concurrent

jurisdiction over claims up to $10,000 “against the United States . . . founded . . .

upon any express or implied contract with the United States.” Id. § 1346(a)(2). 

But under the Tucker Act, the Court of Federal Claims has exclusive jurisdiction

over such claims exceeding $10,000. See id. § 1491(a)(1); Normandy Apartments,

Ltd. v. U.S. Dep’t of Hous. & Urban Dev., 554 F.3d 1290, 1295 (10th Cir. 2009).

Because Union Pacific’s claim exceeds $10,000, the question before us is

therefore whether Union Pacific’s negligent-breach-of-contract claim is founded

upon a contract (in which case jurisdiction would be proper only in the Court of

Federal Claims) or should be considered a tort claim coming under the FTCA (in

which case jurisdiction would be proper in federal district court). Union Pacific

has pleaded its claim as one of negligence, characterizing it as a tort claim. But

we are not bound by Union Pacific’s characterization. See Burkins v. United

States, 112 F.3d 444, 449 (10th Cir. 1997) (“the Court of Federal Claims’

exclusive jurisdiction may not be avoided by” artful framing of a complaint); Hall

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v. United States, 274 F.2d 69, 71 (10th Cir. 1959) (plaintiff could not avoid the

jurisdictional limits of the FTCA by characterizing his claim as one for

negligence when it was really a claim for misrepresentation, which is excluded

from the FTCA); LaPlant v. United States, 872 F.2d 881, 882 (9th Cir. 1989)

(“[T]he language of appellants’ complaint, which casts its claim for relief in

terms of tort rather than contract, cannot be determinative in our inquiry.”),

withdrawn, replaced on reh’g, 916 F.2d 1377 (9th Cir. 1989); Putnam Mills Corp.

v. United States, 432 F.2d 553, 554 (2d Cir. 1970) (per curiam) (“Plaintiff’s

attempt to classify his cause of action as a prima facie tort does not suffice to

avoid the jurisdictional inhibitions on claims in deceit or contract.”). 

In close cases, whether to characterize a claim as one in tort or as founded

on contract will depend on the purpose served by the characterization. Our

analysis in this case must therefore be informed by an understanding of how and

why contract claims against the government are processed differently than tort

claims in the federal courts. Under the FTCA not only are tort claims handled in

the various federal district courts, but also the applicable law may vary widely

because the government’s liability is determined under state law—the law “of the

place where the act or omission occurred.” 28 U.S.C. § 1346(b)(1). In contrast,

contract claims are handled in a more uniform manner. To begin with, state law

is not relevant to the interpretation of a federal contract; the court applies federal

contract law rather than state law to determine the government’s liability. See

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United States v. City of Las Cruces, 289 F.3d 1170, 1186 (10th Cir. 2002) (“‘The

obligations to and rights of the United States under its contracts are governed

exclusively by federal law.’” (quoting Boyle v. United Techs. Corp., 487 U.S.

500, 504 (1988))); 14 Charles Alan Wright et al., Federal Practice and Procedure

§ 3657 & n.30 (3d ed. 1998); 17A James Wm. Moore et al., Moore’s Federal

Practice ¶ 124.42 (3d ed. 2008). Moreover, decision-making authority in contract

disputes is more concentrated within the judicial system. All substantial claims

(those exceeding $10,000) must be litigated in the Court of Federal Claims. See

28 U.S.C. §§ 1491(a)(1), 1346(a)(2). And even though Congress has permitted

claims under $10,000 to be brought in the federal district courts so that plaintiffs

with these lesser claims are not burdened by having to litigate in the District of

Columbia (where the Court of Federal Claims sits), see United States v. Hohri,

482 U.S. 64, 67 n.1 (1987), those claims are reviewed on appeal only in the

Federal Circuit, which also hears all appeals from the Court of Federal Claims,

see 28 U.S.C. § 1295(a)(2), (3); Hohri, 482 U.S. at 68. This centralization of

judicial authority in Tucker Act cases has an obvious purpose—uniformity. See

Hohri, 482 U.S. at 73 (noting Congress’s “strong expressions of the need for

uniformity in” Tucker Act claims). As a result, the federal government can use

the same language in its contracts throughout this nation and be confident that it

will have the same contractual rights and obligations everywhere. 

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With this understanding, we turn to the specific cause of action alleged by

Union Pacific. It claims that the United States committed the Oklahoma tort of

negligent performance of a contract. The Oklahoma Supreme Court has explained

this tort as follows: “Accompanying every contract is a common-law duty to

perform . . . with care, skill, reasonable experience and faithfulness the thing

agreed to be done, and a negligent failure to observe any of these conditions is a

tort, as well as a breach of contract.” Keel v. Titan Constr. Corp., 639 P.2d 1228,

1232 (Okla. 1981). It is essential to recognize the intimate connection between

the tort and the contract. As stated in Keel, tortious negligent breach of contract

is also a breach of the contract. If there is no breach of the contract, there is no

tort. One cannot say that a contracting party has committed the tort of negligent

breach of contract by failing to perform a particular act if the contract, properly

construed, does not require the party to perform that act. 

Given the nature of the tort of negligent breach of contract, it is apparent

that recognizing this cause of action as a tort claim under the FTCA would

undermine the Tucker Act’s policy in favor of uniform construction of federal

contracts. If one who contracts with the United States government can sue for

negligent breach of contract under the FTCA, which applies state substantive law,

then the government’s duties under its contracts will be governed, at least in part,

by state law rather than by uniform federal law. For example, under a particular

contract entered into by the government, federal law may say that the government

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does not have to do X; but if state law says that doing X is required as part of the

government’s “duty to perform the contract with care, skill, reasonable experience

and faithfulness,” then the private party to the contract could sue the government

for negligent breach of contract under the FTCA for failure to do X. Of course,

the government could then modify its contracts to specify explicitly that it need

not do X and thereby avoid such a lawsuit in the future (recall that there can be

no tort suit for negligent breach of contract if there is no breach of the contract). 

But the whole point of having a uniform (federal) interpretation of government

contracts is to avoid the necessity of having to consider disparate state laws when

devising contract language. See Woodbury v. United States, 313 F.2d 291, 295

(9th Cir. 1963) (noting “the long established policy that government contracts are

to be given a uniform interpretation and application under federal law, rather than

being given different interpretations and applications depending upon the vagaries

of the laws of fifty different states”).

The case before us well illustrates the point. The negligent breach of

contract alleged by Union Pacific is the government’s failure to construct the

culverts out of reinforced concrete rather than metal. A judgment under the

FTCA in favor of Union Pacific would necessarily be based upon a determination

that Oklahoma law would interpret the Contract to require reinforced-concrete

construction. Perhaps application of federal law would result in the same

interpretation of the Contract. But perhaps it would require the contrary

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interpretation. If so, permitting Union Pacific to pursue its negligent-breach-ofcontract tort claim under the FTCA would lead to a result that contradicts federal

contract law. Classifying Union Pacific’s negligent-breach-of-contract claim as a

contract claim avoids this result. 

We find support for this analysis in decisions by other circuits that have

similarly treated contract-based tort claims. The Ninth Circuit’s decision in

Woodbury is illustrative. Woodbury’s corporation, which was constructing

housing in Alaska, obtained from the federal Housing and Home Finance Agency

(HHFA) a construction loan guaranteed by Woodbury. See Woodbury, 313 F.2d

at 293. After HHFA initiated foreclosure proceedings, Woodbury sued the

government under the FTCA for breach of fiduciary duty, a tort, alleging that the

government had refused to adopt a long-term strategy for the benefit of all parties

with an interest in the project. See id. at 294. Although the court assumed that

the HHFA’s contracts created the asserted fiduciary duty, it said that the alleged

tort was “based entirely upon breach by the government of a promise made by it

in a contract, so that the claim is in substance a breach of contract claim, and only

incidentally and conceptually also a tort claim.” Id. at 295. The court observed

that permitting Woodbury to sue in tort under state law (1) would defeat the

policy of giving government contracts uniform interpretation and application

under federal law, see id. at 295–96, and (2) would defeat the policy of construing

“‘the entire statutory system of remedies against the Government to make a

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workable, consistent and equitable whole,’” id. at 296 (quoting Feres v. United

States, 340 U.S. 135, 139 (1950)). Because Woodbury’s claim was essentially

one for breach of contract, it had to be brought under the Tucker Act. See id.

The Fifth Circuit followed Woodbury in Blanchard v. St. Paul Fire &

Marine Insurance Co., 341 F.2d 351 (5th Cir. 1965). Blanchard sued the

government under the FTCA on a claim that the government had negligently and

tortiously interfered with his company’s performance of a contract to construct

dormitories on a military base. See id. at 357. The alleged tortious acts included

insisting on installation of certain materials in the latrines and requiring that

metal lockers be installed in a certain way. See id. n.3. The Fifth Circuit held

that the claim should have been brought under the Tucker Act. It observed that

“the sole relationship between Blanchard and the United States was wholly

contractual in character” and that his claims “relate[d] exclusively to the manner

in which various government officials . . . performed their responsibilities with

respect to the execution of the contract.” Id. at 359. Agreeing with Woodbury, it

said that “[i]t is settled that claims . . . founded upon an alleged failure to perform

explicit or implicit contractual obligations . . . are not deemed ‘tort’ claims for the

purposes of the division between Tort Claims Act and Tucker Act jurisdiction.” 

Id. at 358.

Similarly, the Second Circuit cited Woodbury with approval in Putnam

Mills Corp., 432 F.2d at 554. The plaintiff supplied nylon to a manufacturer of

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parachutes for the government. The manufacturer obtained a loan from the Small

Business Administration (SBA), and the plaintiff alleged that the SBA had agreed

to hold the loan funds in escrow to guarantee payment to the plaintiff in case the

manufacturer defaulted. When the plaintiff was not paid, it sued under the FTCA

to have the SBA declared escrowee of the loan proceeds to the extent of the

amount owed the plaintiff and to have the SBA pay the plaintiff the balance owed

it. See id. The court, citing Woodbury, concluded that the plaintiff could not

circumvent the Tucker Act by characterizing its cause of action (which might

“well entitle it to recovery in contract”) as one for prima facie tort. Id. 

The Federal Circuit is in accord. The plaintiff in Wood v. United States,

961 F.2d 195 (Fed. Cir. 1992), attended an auction of airplanes forfeited to the

government. The auctioneers, who were agents of the government, assured the

plaintiff that two of the airplanes had FAA airworthiness certificates. See id. at

196. He won the bid on one of the planes and was assigned the winning bid on

the other, but an airworthiness certificate was not provided for either plane. The

plaintiff sued the government in federal district court, alleging, in addition to

several contract claims, tort claims under the FTCA for negligence, conversion,

and replevin. The district court, relying on the Tucker Act, found subject-matter

jurisdiction lacking and transferred the case to the United States Claims Court

(the prior name of the Court of Federal Claims, see Delay v. Gordon, 475 F.3d

1039, 1041 n.5 (9th Cir. 2007)). See id. at 197. On appeal from the district court,

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the Federal Circuit affirmed, noting that the tort claims “arise from the same facts

as the contractual claims and in fact, are mere surplusage,” and that the “primary

thrust” of the plaintiff’s claim was breach of contract. Id. at 198. It adopted from

Woodbury the proposition that if a “claim is ‘essentially for breach of a

contractual undertaking, and the liability, if any, depends wholly on the

government’s alleged promise, the action must be under the Tucker Act, and

cannot be under the Federal Tort Claims Act.’” Id. (quoting Woodbury, 313 F.2d

at 296). 

More recently, the Federal Circuit took the same approach in Awad v.

United States, 301 F.3d 1367 (Fed. Cir. 2002). The plaintiff reached an oral

agreement with the U.S. Attorney to testify against a terrorist in exchange for

U.S. citizenship and a U.S. passport. Under the agreement the plaintiff gave up

his Swiss/Lebanese passport and entered a witness-protection program. After

testifying, the plaintiff was unable to get his old passport back, and he obtained

U.S. citizenship only later and “largely through his own efforts.” Id. at 1370. He

sued in federal district court for breach of contract and on a number of tort causes

of action, including false imprisonment (because he could not leave the United

States without his old passport until he became a citizen), intentional infliction of

emotional distress, bad-faith breach of contract, negligence, and conversion. 

Although he “use[d] terminology appropriate for a tort claim,” id. at 1374, and

contended that his tort claims were “completely independent from any contractual

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relationship,” id. at 1373, the court held that he could not bring his claims under

the FTCA. Following Wood, it said that “‘if an action arises primarily from a

contractual undertaking, jurisdiction lies in the Court of Federal Claims

regardless of the fact that the loss resulted from the negligent manner in which

defendant performed its contract.’” Id. at 1374 (quoting Wood, 961 F.2d at 198)

(brackets and further internal quotation marks omitted). And it cited Wood,

Blanchard, and Woodbury in support of the proposition that “where a tort claim

stems from a breach of contract, the cause of action is ultimately one arising in

contract, and thus is properly within the exclusive jurisdiction of the Court of

Federal Claims to the extent that damages exceed $10,000.” Id. at 1372; cf. id. at

1371–72 (noting statement in Bowen v. Massachusetts, 487 U.S. 879, 910 n.48

(1988), that Tucker Act jurisdiction is exclusive “to the extent that Congress has

not granted any other court authority to hear the claims.”).

Union Pacific claims to have contrary authority supporting its position, but

we are not persuaded. One case in which a circuit court rejected the

government’s argument that a contract-related claim could not be brought under

the FTCA is Aleutco Corp. v. United States, 244 F.2d 674 (3d Cir. 1957). The

facts in that case are interesting. Aleutco purchased surplus war property in the

Navy’s custody in Alaska. The contract required removal of the property by

November 1948, and provided that if Aleutco did not remove the property by the

required date, the government, upon 15 days’ written notice, could treat the

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property as abandoned and sell it. See id. at 675. The deadline, however, was

extended to October 1949, and in March 1951 the Navy granted permission for

Aleutco to send a ship to pick up the remaining property purchased. See id. at

676. Later communications also suggested that the property could still be picked

up; but in July 1952 the Navy, without notifying Aleutco that it intended to treat

the property as abandoned, shipped the property to California and sold it. See id.

at 676–77, 680. Aleutco sued for conversion under the FTCA. See id. at 677. 

The district court held that it had jurisdiction and the Third Circuit affirmed. The

analysis of the appellate court was rather abbreviated. It failed to note any reason

why contract and tort claims should be treated differently in the federal courts. 

On the contrary, observing that as a result of the recent enactment of the FTCA

(in 1946) the “immunity of the United States to suit [no longer] depended upon

the distinction between tort and contract,” it reasoned that there was thus no need

for “strict enforcement of the distinction.” Id. at 679. It concluded that “there is

no policy in the law which requires that the forum of the district court be denied a

plaintiff who pleads and proves a classic case in tort.” Id. We would not adopt

this analysis because it ignores the policy reasons for uniform treatment of

contract claims against the government. Moreover, Aleutco is a closer case than

the one before us. As Woodbury noted, “[T]he contract [in Aleutco] was not the

essential basis of the claim—rather, it came into the case as a claimed defense on

behalf of the government, which asserted that [Aleutco], by breach of contractual

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arrangements with the government, had forfeited its right to the property.” 

313 F.2d at 296–97. The case before it was distinguishable from Aleutco, said the

Woodbury court, because (as with Union Pacific’s claim) Woodbury could not

prevail without proving a “wrongful breach” of “an express or implied promise by

the government.” Id. at 297. It is particularly telling that in a post-Aleutco case,

the Third Circuit quoted Woodbury at length in rejecting FTCA jurisdiction for a

claim that the government had wrongfully delayed in closing an agreed financing

of a construction project. See Petersburg Borough v. United States, 839 F.2d 161,

162 (3d Cir. 1988). We suspect that the Third Circuit would decide that a claim

like Union Pacific’s negligent-breach-of-contract claim could not be brought

under the FTCA.

The other appellate opinion to which Union Pacific directs our attention is

Love v. United States, 915 F.2d 1242 (9th Cir. 1990). In Love the Ninth Circuit

held that there was FTCA jurisdiction over the plaintiffs’ claim for breach of the

duty of good-faith performance of a contract, a tort under Montana law. Id. at

1247. Although we question whether we would adopt the full reasoning of Love,

we need not resolve that point here because the court reaffirmed its Woodbury

holding that the Tucker Act governs when “the ‘tort’ complained of is based

entirely upon a breach by the government of a promise made by it in a contract,”

id. at 1247 (quoting Woodbury, 313 F.2d at 295), which is the situation before us. 

Love distinguished Woodbury on the ground that the duty imposed by the

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Montana tort “exists apart from, and in addition to, any terms agreed to by the

parties.” Id. at 1247–48 (internal quotation marks omitted; emphasis added). 

Perhaps Love is saying that a tort claim under the FTCA can be based on a

contractual duty implied by law (rather than explicitly agreed to by the parties). 

If so, however, we disagree for the reasons already stated. Cf. Love v. United

States, 944 F.2d 632, 633–38 (9th Cir. 1991) (O’Scannlain, J., dissenting from

denial of rehearing en banc). Uniformity of interpretation of federal contracts

would be unattainable if contractual terms could be implied as a matter of state

law. See Blanchard, 341 F.2d at 358 (“It is settled that claims . . . founded upon

an alleged failure to perform explicit or implicit contractual obligations . . . are

not deemed ‘tort’ claims for the purposes of the division between Tort Claims Act

and Tucker Act jurisdiction.” (emphasis added)); Awad, 301 F.3d at 1372 (citing

Blanchard with approval on the same point). 

Our conclusion and reasoning are not inconsistent with our recent decisions

in Robbins v. U.S. Bureau of Land Management, 438 F.3d 1074 (10th Cir. 2006),

and Normandy Apartments, 554 F.3d 1290. As summarized in Normandy

Apartments, we held in those cases that 

when a party asserts that the government’s breach of contract is

contrary to federal regulations, statutes, or the Constitution, and

when the party seeks relief other than money damages, the APA’s

waiver of sovereign immunity applies and the Tucker Act does not

preclude a federal district court from taking jurisdiction. 

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554 F.3d at 1300 (emphasis added). Here, of course, we have a very different sort

of claim: Union Pacific is seeking only money damages and is not relying on any

duty created by federal law. We recognize that we said in those cases that “‘[t]he

classification of a particular action as one which is or is not “at its essence” a

contract action depends both on the source of the rights upon which the plaintiff

bases its claims, and upon the type of relief sought (or appropriate).’” Id. at 1299

(quoting Robbins, 438 F.3d at 1083). Perhaps one could assert that the “the

source of the right” of Union Pacific’s negligent-breach-of-contract claim is

Oklahoma tort law rather than the Contract. But we do not think that the quoted

language can assist Union Pacific. First, as noted above, under Oklahoma law

there can be a negligent breach of contract only if there is a breach of contract;

the source of Union Pacific’s negligent-breach-of-contract claim would therefore

seem to be Oklahoma contract law. Second, and perhaps more importantly, the

test that we applied in Robbins and Normandy was for distinguishing federal

contract claims from other federal-law claims. In that context there is no basis

for concern about having to apply the distinct laws of 50 states to determine the

federal government’s duties under one of its contracts. But when our task is

distinguishing a federal contract claim from a state-law claim, we must give due

weight to the strong policy in favor of construing federal contracts under uniform

federal law. Accordingly, we believe that when a state-law cause of action (be it

constitutional, statutory, regulatory, or common-law) amounts to the imposition

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on the government of an implied contractual duty—a duty that arises out of, and

exists only because of, the contract between the plaintiff and the government—the

cause of action should be characterized as one “founded . . . upon [an] express or

implied contract with the United States.” 28 U.S.C. § 1491(a)(1). We emphasize

that this proposition does not excuse the federal government from compliance

with all state law. Far from it. For example, as in this case, the federal

government is still subject to liability under the FTCA for violation of its duties

of care as a landowner. That duty is independent of any contractual relationship

between the government and Union Pacific.

In sum, because we conclude that Union Pacific’s negligent-breach-ofcontract claim is founded upon a contract, the district court lacked jurisdiction

under the FTCA to entertain this claim. As a contract claim seeking more than

$10,000 in damages, jurisdiction is proper only in the Court of Federal Claims

under the Tucker Act. 

B. The Negligent-Maintenance Claim

There remains Union Pacific’s claim for negligent inspection and

maintenance. The government argues that the claim is barred by the Contract’s

Exculpatory Clause. The clause provides that the railroad

release[s] and agree[s] to save and hold the Government harmless

from any and all causes of action, suits at law or equity, or claims or

demands, or from any liability of any nature whatsoever for and on

account of any damages to the lands conveyed and utilities relocated

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hereunder, or in any way growing out of the construction, operation

and maintenance of the Project.

Aplt. App. at A116. This language unambiguously encompasses “claims . . .

growing out of the . . . maintenance of the Project.” We agree with the

government that the clause bars Union Pacific’s claim. 

The district court did not question the scope of the clause’s language. Its

reason for refusing to enforce the clause was that it believed the clause to be

contrary to Oklahoma public policy. On appeal the government argues that

Oklahoma public policy is irrelevant because federal law governs the

interpretation and validity of the clause. But it failed to preserve this argument

for appellate review. Not only did the government not raise this issue in the

district court, but it argued in its trial brief that Oklahoma law applied to the

FTCA claim, without noting any limitations on that application. We therefore

decline to address the government’s argument that federal law governs. See

Ecclesiastes 9:10-11-12, Inc. v. LMC Holding Co., 497 F.3d 1135, 1141 (10th

Cir. 2007) (“This Court will not consider a new theory advanced for the first time

as an appellate issue, even a theory that is related to one that was presented to the

district court.”). 

Nevertheless, we hold that the clause is enforceable in this case even under

Oklahoma law. “Whether the district court correctly interpreted the law and

public policy of Oklahoma . . . is a matter that we review de novo.” Horace

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Mann Ins. Co. v. Johnson, 953 F.2d 575, 576 (10th Cir. 1991). The Supreme

Court of Oklahoma has counseled that courts should void contract clauses on

public-policy grounds “rarely, with great caution and in cases that are free from

doubt.” Shephard v. Farmers Ins. Co., 678 P.2d 250, 251 (Okla. 1984). 

Generally, exculpatory clauses will be enforced if the following conditions are

met: (1) the clause “clear[ly] and unambiguous[ly]” exonerates the defendant

with respect to the claim; (2) there was “no vast difference” in the bargaining

power of the parties when they entered into the contract; and (3) enforcement of

the clause will not violate public policy. Schmidt v. United States, 912 P.2d 871,

874 (Okla. 1996) (emphases omitted).

Union Pacific does not dispute that the first two conditions were satisfied. 

It argues only that enforcement of the clause would violate public policy. Under

Oklahoma law, enforcement of an exculpatory clause would violate public policy

if the clause “patently would tend to injure public morals, public health or

confidence in the administration of the law[,] . . . [or] destroy the security of

individuals’ rights to personal safety or private property.” Id. at 875. Union

Pacific advances two arguments why this test is met. First, it argues that because

the culverts helped prevent flooding in the City of Eufaula, enforcing the clause

would let the government avoid liability to members of the public for any potential

flooding damages resulting from its negligence, thereby injuring public health. 

We disagree. Although the Exculpatory Clause states that Union Pacific

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“release[s],” Aplt. App. at A116, certain claims against the government (and

therefore cannot sue the government on such a claim), it does not bar members of

the public from suing the federal government. It provides only that Union Pacific

would have to hold the government harmless if such a suit were brought. Union

Pacific has not attacked the hold-harmless clause or argued that the

indemnification provision encourages the government to act without due care. Cf.

Elsken v. Network Multi-Family Sec. Corp., 838 P.2d 1007, 1011 (Okla. 1992)

(upholding a hold-harmless clause as consistent with Oklahoma public policy);

Fed. Rural Elec. Ins. Corp. v. Williams, Nos. 97,043 & 97,051, 2002 WL

31041863 at *4 (Okla. Civ. App. 2002) (same). In any event, enforcing the

Exculpatory Clause with respect to a claim by the railroad itself—the contracting

party—hardly upsets any public policy.

Union Pacific’s second argument is that two Oklahoma state statutes—the

Oklahoma Floodplain Management Act, Okla. Stat. tit. 82, § 1602 (2008), and the

Oklahoma Dam Safety Act, Okla. Stat. tit. 82, § 110.2 (2008)—have expressed a

strong public policy favoring flood prevention. But Union Pacific fails to identify

any reason why enforcing the Exculpatory Clause in this case would run counter to

the policies expressed in either of these statutes, and we cannot discern any. The

Floodplain Management Act, which “recognizes the personal hardships and

economic distress caused by flood disasters,” Okla. Stat. tit. 82, § 1602, “was

adopted in order to mitigate against the hazards caused by flooding and to qualify

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citizens for coverage under the Federal flood insurance program.” Wilkerson v.

City of Pauls Valley, 24 P.3d 872, 875 (Okla. Civ. App. 2001). And the Dam

Safety Act, which recognizes that “reasonable regulation of such construction,

operation and maintenance [of dams] is beneficial and necessary for the public

health and welfare and to protect lives and property,” was intended to “reaffirm

and clarify . . . the dam safety program of the Oklahoma Water Resources Board.” 

Okla. Stat. tit. 82, § 110.2. Given that the Exculpatory Clause does not affect the

public at large, Union Pacific has failed to convince us that this is a case where it

is “free from doubt” that we should invalidate the clause. Shephard, 678 P.2d at

251. The clause therefore bars relief on Union Pacific’s negligent-inspection-andmaintenance claim.

III. CONCLUSION

We REVERSE the judgment of the district court and REMAND (1) for

dismissal without prejudice of Union Pacific’s negligent-breach-of-contract claim

for lack of jurisdiction and (2) for entry of judgment in favor of the United States

on Union Pacific’s negligent-inspection-and-maintenance claim. 

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