Opinion ID: 364165
Heading Depth: 1
Heading Rank: 1

Heading: Liability for acts of CRUV

Text: 6 The district court was correct in holding that CRUV, on the facts presented, was not a federal agency within the meaning of the Federal Tort Claims Act. The court properly relied on three Supreme Court decisions, United States v. Orleans, 425 U.S. 807, 96 S.Ct. 1971, 48 L.Ed.2d 390 (1976), Logue v. United States, 412 U.S. 521, 93 S.Ct. 2215, 37 L.Ed.2d 121 (1973), and Maryland v. United States, 381 U.S. 41, 85 S.Ct. 1293, 14 L.Ed.2d 205 (1965). Under these cases, whether a government contractor is a federal agency is determined by the power of the Federal Government 'to control the detailed physical performance of the contractor' , Orleans, 425 U.S. at 814, 96 S.Ct. at 1976, Citing Logue, 412 U.S. at 528, 93 S.Ct. 2215. The issue, is not whether the (alleged tortfeasor) receives federal money and must comply with federal standards and regulations, but whether its day-to-day operations are supervised by the Federal Government. Orleans, 425 U.S. at 815, 96 S.Ct. at 1976. 7 In Maryland, a member of the Maryland National Guard who received his pay from the United States and had to meet federal requirements was held not to be a United States employee, in part because state authorities appointed and exercised immediate control over him. 4 381 U.S. at 48-49, 85 S.Ct. 1293. In Logue, the United States was exonerated from liability for the negligence of a county jail in caring for a federal prisoner. The jail was required to meet federal standards of treatment, and the United States had  'the right to enter the institution . . . at reasonable hours for the purpose of inspecting the same and determining the conditions under which federal offenders are housed.'  But, as the United States had no authority to physically supervise the conduct of the jail's employees, 412 U.S. at 530, 93 S.Ct. at 2220, the jailkeeper was not a federal employee. 5 Finally, in Orleans the Court held that the United States was not liable for the alleged negligence of employees of a community action agency funded by the United States Officer of Economic Opportunity (OEO) pursuant to the Economic Opportunity Act of 1964, 42 U.S.C. §§ 2781-2837 (EOA). The agency had been created to carry out the community action programs of the EOA, it received funds exclusively from the OEO, it conducted only programs 'formulated and funded by the federal government,'  and it and its activities were closely supervised by the OEO. 425 U.S. at 811, 96 S.Ct. at 1974. It was required to comply with extensive regulations which include employment policies and procedures . . . accounting and inspection procedures, expenditure limitations, and programmatic limitations and application procedures. . . . 425 U.S. at 817-18, 96 S.Ct. at 1977. 6 Nevertheless, the federal funding was given in response to private initiatives and left control of the community action agencies in private, local hands. 425 U.S. at 817, 96 S.Ct. 1971. The Court said that neither establishing guidelines nor supplying federal aid, advice and oversight in order to ensure that federal funds are not diverted to unauthorized purposes gives the government the day-to-day control over funded organizations that is a prerequisite to its liability under the Federal Tort Claims Act. 425 U.S. at 818, 96 S.Ct. 1971. 8 Viewed in light of these principles, the record before us indicates that the United States cannot be liable for the negligence if any of CRUV. The information as to HUD's control over CRUV showed only that HUD, like OEO, was a financier with particular goals that recipients of its funds were expected to share, and that CRUV, although required to meet certain federal specifications, was fully responsible for the design and construction of the project. It was CRUV who proposed and requested financing for Llorens Torres. It and HUD's Puerto Rican office then agreed to a development program, which established the cost and basic design of the project in accordance with minimum federal standards. After this was approved by Washington, they signed an Annual Contributions Contract. Although this contract contained provisions covering the construction and eventual management of the project, it was primarily a financing agreement. 7 It required CRUV to hire qualified architects and engineers to design and supervise construction of the project, and to include certain employment benefits in its contracts with its construction crews. After the project's completion, CRUV was to be responsible for its maintenance, and was to repair any parts that became unsafe or unsanitary. 9 The Annual Contributions Contract gave HUD the right to review all work, materials, pay rolls, records of personnel, conditions of employment, and other relevant data and records, and to inspect, to the extent it deems necessary, the construction work and equipment in order to check compliance with the construction contracts . . . and this Contract. HUD was to inform CRUV of any noncompliances it observed, but was not to deal directly with any of CRUV's contractors. HUD monitored and inspected the project to ensure that it was built according to specifications, that federal funds were not misused, and that it did not exceed its budget. It reserved the right to enter and repair the project if the local authorities failed to do so. 10 The Annual Contributions Contract did not go beyond ensuring that public housing funds would be used for their intended purpose and would not be spent wastefully or diverted to other ends. The provisions dealing with the construction and maintenance of the project were no more than additional insurance that it would be completed and would remain viable. 8 It was CRUV who designed, built, and managed Llorens Torres. HUD's only contractual agreement was with CRUV, and it had no direct contact with or supervision over CRUV's architects or contractors. This arrangement is comparable to those in Orleans, Logue and Maryland, where federal funding and federal specifications were also present, and where direct supervision over the employees of the funded organization was also lacking. 11 The plaintiffs argue that a material issue as to the government's control was created by the deposition testimony of Mr. Servaites, a former HUD employee who had been with HUD's Puerto Rican office when Llorens Torres was built. Mr. Servaites testified that a government inspector was present at Llorens Torres all the time. This would appear to conflict with the government's position, reflected in its answer to the plaintiffs' interrogatories, that only bi-weekly inspections of the project were conducted. Considering the evidence as a whole, however, we feel that this discrepancy does not create a genuine issue as to any material fact sufficient to preclude the use of summary judgment. Fed.R.Civ.P. 56(c). The inspector's function at the site under either version was to protect HUD's financial interests and the integrity of the public housing program. The on-site inspector was not responsible for supervising the architects or construction crews; indeed, he was prohibited by contract from dealing with them directly. Nor was he responsible for the plans for Llorens Torres, which had been drafted by CRUV architects and approved by HUD on meeting federal specifications. Thus whether he was there all the time or only intermittently is not determinative of whether HUD had such close, detailed, day-to-day supervision and control over CRUV that CRUV should be considered a federal agency. 9