1

The Honorable Lawrence L. Piersol, Chief Judge, United States District Court

for the District of South Dakota, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 00-3147

___________

Audio Odyssey, Ltd., an Iowa *

Corporation, Dogan A. Dincer, and *

Ann M. Dincer, *

*

Appellants, * Appeal from the United States

* District Court for the Southern

v. * District of Iowa.

*

United States of America and the *

United States Small Business *

Administration, *

*

Appellees. *

_____________

 Submitted: April 10, 2001

Filed: July 5, 2001

_____________

Before BOWMAN and FAGG, Circuit Judges, and PIERSOL1

, District Judge.

_____________

PIERSOL, District Judge.

This appeal revolves around a loan that was made by Brenton First National

Bank (the Bank) to Audio Odyssey, Ltd., a retail electronics store owned by Dogan and
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Ann Dincer (Audio Odyssey and the Dincers are referred to collectively as Audio

Odyssey). The loan was guaranteed by the Small Business Administration (SBA).

After the Bank filed a writ of replevin and seized Audio Odyssey’s inventory, Audio

Odyssey brought this action against the United States and the SBA, alleging negligence,

breach of contract, and tortious interference with contract. The district court granted

summary judgment to the government. We affirm in part, reverse in part, and remand

for further proceedings.

I

One of the policies underlying the Small Business Act states that the government

should “aid, counsel, assist, and protect, insofar as is possible, the interests of smallbusiness concerns.” 15 U.S.C. § 631(a). The SBA helps to accomplish this, in part,

through agreements to participate in loans made by private lending institutions. 15

U.S.C. § 636(a). In 1978, the SBA and the Bank signed a “Loan Guaranty Agreement”

which allowed the Bank to make loans to small businesses with the SBA as the

guarantor of those loans (1978 Guaranty Agreement). 

In 1991, pursuant to the 1978 Guaranty Agreement, the Bank made a loan to

Audio Odyssey that the SBA guaranteed. On October 3, 1991, in connection with this

loan, the Dincers executed an SBA Note which stated:

This promissory note is given to secure a loan which SBA

is making or in which it is participating and, pursuant to Part

101 of the Rules and Regulations of SBA (13 C.F.R.

101.1(d)), this instrument is to be construed and (when SBA

is the Holder or a party in interest) enforced in accordance

with applicable Federal law.

The next day the Dincers and the SBA also executed an “Authorization and Loan

Agreement.” The Authorization and Loan Agreement provides that it is subject to the

provisions of the 1978 Guaranty Agreement. In addition, the Authorization and Loan
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Agreement requires Audio Odyssey to perform its payment obligations and keep

current with all tax obligations. The loan was secured with, among other things, a

security interest in Audio Odyssey’s accounts receivable, contract rights, inventory,

furniture, fixtures, machinery, and equipment, and a guaranty by the Dincers secured

by mortgages on property they owned personally. 

On July 12, 1995, John Bradley, a loan officer at the Bank, called Roger

Hoffman at the SBA, who was responsible for managing the SBA’s guaranteed loan

program in the eastern 29 counties of Iowa. Bradley informed Hoffman that Audio

Odyssey had failed to pay the loan installments for June and July, that it had fallen

behind on paying its employee withholding taxes, and that it was overdrawn on its

checking account. Bradley also told Hoffman that Audio Odyssey was going to hold

a sale that weekend and Bradley feared that the profits would be applied to the

withholding tax Audio Odyssey owed rather than to the loan from the Bank. According

to Hoffman’s deposition testimony, Bradley explained that the Bank representatives

were going to meet with Mr. Dincer and that the Bank would give Audio Odyssey until

5:00 p.m. the next day – July 13, 1995 – to bring everything current. If that failed, the

Bank was going to take possession of the collateral. Hoffman agreed. 

Hoffman also received a call from Mr. Dincer on July 12, 1995. Hoffman

believes the call came after he had spoken to Bradley. Mr. Dincer asked Hoffman to

extend the 5:00 p.m. deadline for 30 days which would allow Audio Odyssey to

become current on the loan and would give Mr. Dincer time to negotiate a payment

plan with the IRS on his tax liability. Hoffman advised Mr. Dincer that he would have

to discuss this workout proposal with Bradley. Mr. Dincer claims he called Bradley

several times on July 13 but that his calls were not returned. 

According to Mr. Dincer, on July 13 he went to the Bank with a large sum that

would cover the missed June and July payments. Mr. Dincer instructed the teller to

apply the funds to those loan payments. It is not clear from the record if those funds
2

 For an extended discussion of the facts of this case, many of which are not

pertinent to the issues presented here, see this Court’s opinion in a related case, Audio

Odyssey, Ltd. v. Brenton First Nat’l Bank, 245 F.3d 721 (8th Cir. 2001).

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were credited to the loan payments. On July 14, the Bank delivered a letter to Audio

Odyssey at 8:50 a.m. which stated that the Bank was accelerating the loan and that the

entire balance of approximately $126,000 was due in 10 minutes at 9:00 a.m. Later

that day the Bank filed for and was granted a writ of replevin. According to Mr.

Dincer, the Sheriff arrived with Bradley and closed down the store, taking possession

of the inventory. Hoffman claims that he was not aware of the events that took place

on July 13 and 14 until several days later.2

II

A district court’s grant of summary judgment is subject to de novo review on

appeal. Do v. Wal-Mart Stores, 162 F.3d 1010, 1012 (8th Cir. 1998); Thomas v. First

Nat’l Bank of Wynne, 111 F.3d 64, 65 (8th Cir. 1997).

A. NEGLIGENCE CLAIM

1. Discretionary Function Exception

In its Complaint, Audio Odyssey claims the SBA, through Hoffman, was

negligent because it did not follow mandatory procedures outlined in its own

regulations before allowing the Bank to proceed with the liquidation. Specifically,

Audio Odyssey claims that the SBA was negligent in: (1) authorizing the Bank to sue

Audio Odyssey without written consent in violation of the 1978 Guaranty Agreement;

(2) failing to inform the Bank that it was to take no action, including making a demand

on the borrower, or file suit without written approval; (3) failing to arrange for a field

visit as required by the Standard Operating Procedure Manual (SOP); (4) failing to

submit the required Form 327 to obtain approval for not following the SOP; (5) failing

to obtain and review a written liquidation plan from the Bank in violation of the SOP
3

 Neither party takes issue with the district court’s finding that Iowa law would

provide Audio Odyssey with a remedy against a private party in similar circumstances.

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and 13 C.F.R. § 120.512; (6) failing to ensure that all guarantors were notified of the

acceleration of the loan; (7) failing to follow federal regulations and the SOP in general;

and (8) failing to act as a “reasonable prudent lender.” 

Audio Odyssey’s claims of negligence are governed by the Federal Tort Claims

Act (FTCA). “The Federal Tort Claims Act is a limited waiver of sovereign immunity,

making the Federal Government liable to the same extent as a private party for certain

torts of federal employees acting within the scope of their employment.” United States

v. Orleans, 425 U.S. 807, 813 (1976).3 Although the FTCA generally waives sovereign

immunity with respect to tort claims, its waiver does not extend to claims “based upon

the exercise or performance or the failure to exercise or perform a discretionary

function or duty on the part of a federal agency or an employee of the Government,

whether or not the discretion involved be abused.” 28 U.S.C. § 2680(a). 

To determine whether an action by a government official was discretionary, we

employ a two-part test defined by the Supreme Court in Berkovitz v. United States, 486

U.S. 531, 536-37 (1988). First, we must determine if the “challenged governmental

action [is] the product of ‘judgment or choice.’” Dykstra v. United States Bureau of

Prisons, 140 F.3d 791, 795 (8th Cir. 1998) (internal citations omitted). To do this, we

must determine whether the “statute, regulation, or policy mandates a specific course

of action.” Id. If there is a mandate there is no discretion. Second, if the government

action is the product of judgment or choice, it must be “based on ‘considerations of

public policy.’” Id. This requires the Court to determine if the judgment is “grounded

in social, economic or political policy.” Id. When the policy allows government agents

to exercise discretion, “‘it must be presumed that the agent’s acts are grounded in

policy when exercising that discretion.’” Id. at 795-96. This presumption may be

rebutted. Id. at 796.
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We agree with the district court that the decision to place a loan in liquidation

is discretionary. The SOP provides “automatic” and discretionary means for placing

an account in liquidation. See SOP 50 51 1 ¶ 4(a) (lists situations which will

automatically place an account in liquidation); SOP 50 51 1 ¶ 4(b) (entitled “Non

Automatic Situations (Judgmental),” it lists situations that will “ordinarily” trigger

liquidation). The liquidation decision here was evidently based on the perceived threat

to the collateral which is a “non-automatic” situation (that “ordinarily” triggers

liquidation) expressly provided for in SOP 50 51 1 ¶ 4(b). See SOP 50 51 1 ¶ 4(b)(3).

This does not end the inquiry, however, because once a loan is “in liquidation” the SOP

provides certain mandatory steps that must be taken during the liquidation process. 

According to SOP 50 51 1 ¶ 2(b)(1), the “mandatory parts of the SOP are

identified through the use of the words ‘shall,’ ‘will,’ and ‘must.’” Several of the steps

that Audio Odyssey claims the SBA failed to take are written in mandatory language.

For example, SOP 50 51 1 ¶ 44(a) states that when the guaranteed lender notifies the

SBA of a delinquency or situation that may lead to liquidation, “[d]uring the

conversation, the SBA spokesperson will arrange for the required field visit and advise

the lender that no action, including making demand on the borrower, is to be taken

without SBA’s written approval.” Audio Odyssey claims that Hoffman failed to inform

the Bank that it was to take no action, including making a demand on the borrower, or

file suit without written approval. 

Similarly, Audio Odyssey claims that the SBA was negligent in authorizing the

Bank to sue without written consent in violation of the 1978 Guaranty Agreement.

SOP 50 51 1 ¶ 1(c) states that, while the SOP “is applicable in its entirety to all SBA

participation loans,” the SOP is applied within the constraints of the terms of any “Loan

Guaranty Agreement” and any applicable “Rules and Regulations.” In 1995, 13 C.F.R.

§ 120.201-1 stated that “[t]he holder of the note shall not, without the prior written

consent of the other participant: . . . (d) Sue: Sue upon any loan instrument.” The 1978

Guaranty Agreement also states that the “[h]older of the note (Lender or SBA) shall
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not, without prior written consent of the other: . . . (c) accelerate the maturity of any

note; (d) sue upon any Loan Instrument.” 

Audio Odyssey claims that the SBA failed to obtain a written liquidation plan or

arrange for a field visit as mandated by the SOP. In Chapter Two entitled

“Correspondence, Report and Control Systems,” SOP 50 51 1 ¶ 19 states: “Upon the

classification of a loan as in liquidation, a liquidation plan must be developed by the

liquidation officer and approved by the line supervisor.” A liquidation plan “consists

of several parts, starting with a review of factual data to determine the present situation,

and leading to a realistic and effective action plan for timely resolution of the debt.”

SOP 50 51 1 ¶ 19(a). As discussed more fully below, the SBA argues that a liquidation

plan was not necessary because the Bank handled the liquidation, not the SBA. Even

if the lender handles the liquidation, SOP 50 51 1 ¶ 6(b) provides that the loan will be

“classified as accounts ‘in liquidation’ and the provisions of this SOP will apply,

including the requirements for a Liquidation Plan.” Similarly, after the SBA has notice

of a liquidation event, SOP 50 51 1 ¶ 44(c) provides: “The borrower’s premises will

be visited by lender and/or SBA representative within ten working days following

knowledge of any condition(s) which create(s) an ‘in liquidation’ situation.” The

language in these provisions, as defined by the SOP, is mandatory.

In concluding that the provisions of the SOP are discretionary, the SBA and the

district court rely on language from SOP 50 51 1 ¶ 44 which states: “Few liquidations

are the same, and, for that reason, no ‘absolute’ procedure can be mandated. The

following steps, set forth in a ‘usual’ sequence, can vary as circumstances dictate.”

The “usual” steps include notice and a field visit. The SBA acknowledges that the

provisions regarding the liquidation plan and field visit do use mandatory language but

argues that the mandatory language must be read in light of the discretionary language

found in paragraph 44. We agree that these mandatory provisions must be read in

conjunction with the discretionary language in paragraph 44 but do not agree that the

language in paragraph 44 transforms mandatory provisions into discretionary ones. The
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introductory language in paragraph 44 suggests that the sequence in which these

mandatory steps are taken may be altered as circumstances dictate, and therefore, “no

‘absolute’ procedure can be mandated.” The introductory language in paragraph 44

does not mean, however, that any one of these steps need not be taken. Read in

conjunction with the mandatory language elsewhere in the SOP, this one line in

paragraph 44 does not negate the mandatory nature of all the other provisions in the

SOP that require a liquidation plan and a field visit.

The SBA also argues that under SOP 50 51 1 ¶ 46, a liquidation plan was not

necessary. SOP 50 51 1 ¶ 46 states:

When it appears that the lender may perform as the

liquidating agent on the loan, the decision to proceed on that

course may be made on an event-by-event basis, or it may

be for the complete liquidation. Proceeding on an event-byevent basis is usually appropriate when using a lender for

specific tasks or in complex cases when events may take

any of several twists. When the lender is to handle the

entire liquidation, an overall liquidation plan must be

approved in advance.

The SBA claims that the Bank was only authorized to perform a liquidation event –

taking possession of the inventory. As a result, the SBA claims, an overall liquidation

plan was not necessary. SOP 50 51 1 ¶ 43 makes clear that the SBA’s decision to

involve the lender in the liquidation is discretionary but paragraph 43 also states that

all actions taken under that SOP “must be in conformance with applicable statutes,

SBA’s published Rules and Regulations, and this SOP.” Thus, even if the Bank was

only involved in the liquidation on an event-by-event basis, the SBA would still have

to comply with SOP 50 51 1 ¶ 19, which requires a liquidation plan. The language in

paragraph 46 does not negate the general requirement of a liquidation plan just because

the lender may be involved in executing parts of that plan. It merely makes express the

requirement that the liquidation plan be approved in advance when the lender handles

the entire liquidation.
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Because the SOP does prescribe a mandatory course of action for proceeding

with loans in liquidation, we do not find Appley Brothers. v. United States, 164 F.3d

1164 (8th Cir. 1999) to be inapposite as the district court did. In Appley Brothers, the

plaintiff claimed it was damaged as a result of the U.S.D.A.’s failure to conduct a

proper investigation at the grain warehouse where the plaintiff delivered its grain.

Appley Brothers, 164 F.3d at 1167-69. Appley Brothers claimed that the U.S.D.A.’s

regulations required its inspector to investigate previously reported out-of-condition

grain and that this investigation, which was not done, would have uncovered the

problem that led to Appley Brothers’s damages. Id. This Court held that the

discretionary function exception did not apply because, while the U.S.D.A. inspector

had discretion in how he would investigate the out-of-condition corn, he did not have

the discretion to forgo the investigation altogether. Id. at 1172-73. The same is true

here. As discussed below, the Bank and the SBA may have had some discretion in

how they executed the mandatory requirements of the SOP, but they did not have the

discretion to eliminate those steps in the liquidation process entirely. To the extent

Audio Odyssey is alleging that the SBA was negligent for a complete failure to

undertake certain mandatory procedures, the discretionary function exception does not

apply and the district court has jurisdiction to address those claims.

The SBA is protected by the discretionary function exception, however, to the

extent Audio Odyssey alleges the SBA was negligent in the way it executed these

mandatory procedures. While we do not interpret SOP 50 51 1 ¶ 44 to negate the

mandatory nature of certain procedures, we do agree with the district court that the

language in SOP 50 51 1 ¶ 44 which states that “no ‘absolute’ procedure can be

mandated” indicates that there is some discretion in how those mandatory procedures

are executed, particularly with regard to the sequence in which they are done.

Similarly, SOP 50 51 1 ¶ 44(c) mandates that a field visit is conducted but the SBA has

the discretion to direct that the field visit be done by the lender, a representative of the

SBA or both. Further, while a liquidation plan is mandated, neither paragraph 19 nor

paragraph 46 of SOP 50 51 1, mandates that the liquidation plan be processed in any
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particular way. For example, neither states that the plan must be written. Indeed, in

its brief Audio Odyssey admits “[a]n action against the SBA that they reviewed a

liquidation plan negligently or underestimated prior security interests, might well be

barred as discretionary.” 

The discretionary function exception only applies to Audio Odyssey’s claims of

negligence in the execution of mandatory procedures if the discretion was grounded in

considerations of policy. Dykstra, 140 F.3d at 795. As noted above, when a

government regulation allows an employee to exercise discretion, “‘it must be

presumed that the agent’s acts are grounded in policy when exercising that discretion.’”

Id. at 795-96. This presumption has not been rebutted by Audio Odyssey. As a result,

the discretionary function exception bars Audio Odyssey’s claims to the extent it

alleges that the SBA was negligent in the manner in which it carried out mandatory

procedures. 

2. Independent Contractor Exception

Under the FTCA, the United States may be sued for damages arising from the

negligent or wrongful acts or omissions of “any employee of the Government.” 28

U.S.C. § 1346(b)(1). Independent contractors are excluded from the definition of

employees of the government. Charlima, Inc. v. United States, 873 F.2d 1078, 1080

(8th Cir. 1989). The SBA argues that the Bank was an independent contractor and that,

therefore, under the FTCA, the SBA cannot be held liable for the Bank’s actions. This

argument was raised below but was not mentioned in the district court’s opinion. 

In all of the cases cited by the SBA, the plaintiffs sued the United States for the

actions of the independent contractor. See Orleans, 425 U.S. at 810 (plaintiff sued

government for alleged negligence of community action agency); Charlima, Inc., 873

F.2d at 1079 (plaintiff sued FAA for alleged negligence of independent, FAA approved

safety inspector); Hartje v. Federal Trade Comm’n, 106 F.3d 1406, 1407-08 (8th Cir.

1997) (plaintiff sued federal government and agencies for alleged negligence of court
4

 In addition,15 U.S.C. § 634(b)(1) allows the SBA to be sued without regard

to the amount in controversy.

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appointed receiver). In none of these cases did the plaintiffs allege that the

government’s actions were negligent. Rather, the plaintiffs asserted that the alleged

negligent parties were federal employees in order to bring the suits against the

government. Audio Odyssey’s Complaint, however, does not attempt to hold the SBA

liable for the acts of the Bank. Rather, the Complaint clearly alleges negligence on the

part of the SBA itself. As a result, Audio Odyssey’s negligence claims may not be

dismissed on this ground.

B. CONTRACT CLAIM

Audio Odyssey is also suing the SBA for breach of the 1978 Guaranty

Agreement. Audio Odyssey is not a party to the 1978 Guaranty Agreement but that

agreement is specifically referenced in the Authorization and Loan Agreement signed

by Audio Odyssey and the SBA. Under 28 U.S.C. § 1346(a)(2), federal district courts

have original jurisdiction over any civil action based “upon any express or implied

contract with the United States.”4 The government’s consent to be sued in contract

generally extends only to those “with whom it has privity of contract.” See First

Hartford Corp. Pension Plan & Trust v. United States, 194 F.3d 1279, 1289 (Fed. Cir.

1999) (internal citation omitted). The exception to this rule includes those parties that

are intended third-party beneficiaries of the government contract. Id. The district court

found that Audio Odyssey was not a third party beneficiary of the 1978 Guaranty

Agreement and that, therefore, the court did not have jurisdiction over the claim. 

In making this determination, the district court relied on Iowa law. Federal

common law applies, however, when “a federal agency is a party to the action and . . .

the outcome of the [the] case will directly affect substantial financial obligations of the

United States.” Holbrook v. Pitt, 643 F.2d 1261, 1270 n. 16 (7th Cir. 1981) (citing

United States v. Standard Oil Co., 332 U.S. 301 (1947); Clearfield Trust Co. v. United
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States, 318 U.S. 363 (1943)). Audio Odyssey is suing the United States directly on a

contract to which the government is a party. The government will be directly affected

by this suit as it will determine if the United States is liable under the 1978 Guaranty

Agreement. As a result, federal common law applies to the determination of Audio

Odyssey’s status as a third-party beneficiary. 

“The proper test for determining third-party beneficiary status is whether the

contract reflects the express or implied intention of the parties to benefit the third

party.” Schuerman v. United States, 30 Fed. Cl. 420, 433 (Fed. Cl. 1994). “The

intended beneficiary need not be specifically or individually identified in the contract,

but must fall within a class clearly intended to be benefitted thereby.” Montana v.

United States, 124 F.3d 1269, 1273 (Fed. Cir. 1997). Intent may be found if the

beneficiary was “reasonable in relying on the promise as manifesting an intention to

confer a right on him.” Id. If the third party was not intended to benefit from the

agreement, that third party will be considered an incidental beneficiary. Holbrook, 643

F.2d at 1270. Incidental beneficiaries have no “legally cognizable rights under the

contract.” Id.

The Seventh Circuit’s opinion in Holbrook is instructive. In that case, the

Department of Housing and Urban Development (HUD) was being sued by a class of

tenants in housing projects in Wisconsin. The tenants claimed they were third-party

beneficiaries to contracts made between HUD and the owners of housing projects that

were HUD-insured or subject to HUD mortgages. Id. at 1269. These contracts were

made pursuant to Section 8 of the Housing and Community Development Act and they

provided the terms under which HUD would disburse rent subsidies to the owners on

behalf of eligible tenants. Id. at 1268-69. Under these Section 8 contracts, the project

owners were responsible for certifying eligible tenants for HUD benefits. Id. at 1270.

In Holbrook, several months passed after the execution of the contract upon which the

named plaintiff sued before the eligible tenants were certified. Id. at 1266. As a result,
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there is no indication that the tenants are expressly named in the contracts between

HUD and the housing project owners. 

To determine if the tenants were third-party beneficiaries, the Seventh Circuit

looked to the underlying purpose of the contracts. The plaintiff tenants argued that the

purpose of the Section 8 contracts was to provide rental assistance to low income

families, while HUD claimed the contracts were meant to help financially troubled

housing projects. Id. at 1271. The court rejected HUD’s argument, noting that the

purpose of Section 8 was to provide rent subsidies to needy families. Id. at 1271.

Further, the criteria for entering into the contracts focused on the financial needs of the

tenants in a particular housing project and not the financial needs of the housing project

itself. Thus, the court found the contracts were made for the purpose of facilitating the

goals of Section 8. Id. at 1271-74. 

Neither Audio Odyssey nor any other recipient of a guaranteed loan from the

Bank is expressly identified in the 1978 Guaranty Agreement. Audio Odyssey,

however, is clearly part of a class intended to be benefitted by this agreement. Like the

Section 8 contracts in Holbrook, the 1978 Guaranty Agreement is a vehicle for

achieving the purposes underlying the Small Business Act. The declared policy of the

Small Business Act states that the security and economic well-being of the nation

cannot be realized “unless the actual and potential capacity of small business is

encouraged and developed.” 15 U.S.C. § 631(a). Thus, the purpose of the Small

Business Act is to “aid, counsel, assist, and protect, insofar as possible, the interests

of small-business concerns.” Id. 

The purpose of the 1978 Guaranty Agreement is to facilitate this goal. The 1978

Guaranty Agreement states that its purpose is to allow the Bank to “make and the SBA

to guarantee loans to small business concerns pursuant to the Small Business Act.” The

1978 Guaranty Agreement allows small businesses to get loans from the Bank that they

might not have gotten otherwise. Although the provisions of the 1978 Guaranty
5

 These provisions are nearly identical to the SBA’s regulations. 13 C.F.R. §

120.201-1 (1995).

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Agreement deal primarily with the terms of the relationship between the Bank and the

SBA, the overriding purpose of the contract was ultimately to benefit small businesses

in need of loans. Indeed, there would be no purpose for a loan guaranty agreement

were it not for the mission of the Small Business Act.

In addition, there are specific provisions in the 1978 Guaranty Agreement that

provide protection to the small business borrowing from the Bank. For example, under

paragraph six of the 1978 Guaranty Agreement, neither of the holders of the note – the

SBA and the Bank – may accelerate the maturity of the note or sue upon the note

without the written approval of the other.5 The Authorization and Loan Agreement,

which was signed by Audio Odyssey and the SBA, specifically states that the

Authorization is subject to the provisions of the 1978 Guaranty Agreement. As a

result, we find that Audio Odyssey is a third-party beneficiary of the provisions of the

1978 Guaranty Agreement which require written approval prior to acceleration of the

note or the institution of any suit upon it. 

C. TORTIOUS INTERFERENCE WITH CONTRACT

We affirm the finding of the district court that there is no jurisdiction for Audio

Odyssey’s claim of tortious interference with contract. It is true, as Audio Odyssey

claims, that under 15 U.S.C. § 634(b)(1), the SBA may “sue or be sued,” but this

waiver is limited by the FTCA with regard to tort claims. “In order to place torts of

‘suable’ agencies . . . upon precisely the same footing as torts of ‘nonsuable’ agencies,

. . . Congress, through the FTCA, limited the scope of sue-and-be-sued waivers . . .”

FDIC v. Meyer, 510 U.S. 471, 476 (1994) (internal quotation marks omitted). Section

2679(a) of the FTCA states:

The authority of any federal agency to sue and be sued in its

own name shall not be construed to authorize suits against
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such federal agency on claims which are cognizable under

section 1346(b) of this title, and the remedies provided by

this title in such cases shall be exclusive.

Therefore, for tort claims that may be brought under section 1346(b) against

government agencies, the FTCA provides the exclusive remedy.

Claims for tortious interference of contract are cognizable under section 1346(b)

because the SBA, if a private person, could be liable to Audio Odyssey under “the law

of the place where the act or omission occurred” – namely Iowa. 28 U.S.C. § 1346(b);

Hibbs v. K-Mart Corp., 870 F.2d 435, 439-40 (8th Cir. 1989) (citing the elements for

intentional interference with contractual relations under Iowa law). Since this claim is

cognizable under section 1346(b), the FTCA provides the exclusive remedy for Audio

Odyssey against the SBA pursuant to section 2679. But claims for “interference with

contract rights” are not within the scope of the FTCA. 28 U.S.C. § 2680(h).

Therefore, Audio Odyssey has no claim for tortious interference against the SBA.

III

The judgment of the district court is reversed to the extent that it bars Audio

Odyssey’s claim that the SBA was negligent in failing to perform mandatory

procedures and to the extent that it bars Audio Odyssey’s claim for breach of contract.

The judgment of the district court is affirmed in all other respects. The case is

remanded to the district court for further proceedings not inconsistent with this opinion.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.