Opinion ID: 447593
Heading Depth: 2
Heading Rank: 1

Heading: The First Cause of Action

Text: 11 The third-party complaint's first cause of action was asserted against the sovereign and thus was properly before the district court only if there existed both a valid waiver of sovereign immunity and a grant of subject matter jurisdiction. S.S. Silberblatt, Inc. v. East Harlem Pilot Block--Building 1 Housing Development Fund Co., 608 F.2d 28, 35 (2d Cir.1979); Marcus Garvey Square, Inc. v. Winston Burnett Construction Co., 595 F.2d 1126, 1132 (9th Cir.1979); Ghent v. Lynn, 392 F.Supp. 879, 880-81 (D.Conn.1975). Since the existence of such a waiver and grant depend partly upon the nature of the cause of action before the court, we begin our analysis by examining the substance of the first cause of action. HUD--third-party defendant--contends that the first cause of action sounds in contract, and that only the Court of Claims may hear such cases against the United States when the amount at issue exceeds $10,000. This argument is based on the Tucker Act, 28 U.S.C. Secs. 1346, 1491, which provides both subject matter jurisdiction and a waiver of sovereign immunity for contract claims against the United States. The Tucker Act, however, permits such suit in the district court only when the amount in controversy is $10,000 or less; if a greater amount is involved, suit is permitted only in the Court of Claims. On the other hand, the City and URA--defendants and third-party plaintiffs--maintain that their claim is not for breach of contract, in the traditional sense, but is a claim that HUD would breach obligations it owed to the City and URA under the [Federal Housing Act of 1949 as amended] if it evaded liability for an integral part of the project costs. Brief for Defendant and Third-Party Plaintiff-Appellant City at 12; accord Brief for Defendant and Third-Party Plaintiff-Appellant URA at 11-16. 12 We find the argument of the City and URA unpersuasive. 3 No implied cause of action under Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) is alleged, nor is there any evidence that Congress intended a cause of action to be implied from the Act. Cf. Marcus Garvey Square, Inc., 595 F.2d at 1130 (no cause of action implied in the National Housing Act). Based on our review herein, we are of the opinion that this cause of action sounds in contract. In the absence of contracts between HUD and the City and URA, it is likely that no cause of action would exist at all. While not determinative of the issue, we note that the third-party complaint stated that if the City and URA were found liable, HUD will have breached its contracts. Our holding does not compel the conclusion reached by the district court and now argued by HUD--that the action can be brought only in the Court of Claims. It does mean that the City and URA cannot rely on the Tucker Act for a waiver of sovereign immunity or grant of jurisdiction; both of these prerequisites must be sought elsewhere. See Ghent, 392 F.Supp. at 881. 13 The case before us was removed to the district court under 28 U.S.C. Sec. 1442(a)(1) (1982), which authorizes removal by a federal official sued in his official capacity. It seems clear that, in addition to conferring a right of removal upon the defendant, this statute grants subject matter jurisdiction to the district court. 4 Willingham v. Morgan, 395 U.S. 402, 406, 89 S.Ct. 1813, 1815, 23 L.Ed.2d 396 (1969); S.S. Silberblatt, Inc., 608 F.2d at 35; Bor-Son Building Corp. v. Heller, 572 F.2d 174, 181-82 (8th Cir.1978); see Bennett Construction Co. v. Allen Gardens, Inc., 433 F.Supp. 825, 832 (W.D.Mo.1977). 14 We next turn to the question whether a waiver of sovereign immunity exists that would permit the district court to entertain this cause of action. The City and URA argue that such a waiver is found in 42 U.S.C. Sec. 1456(c)(1) (1982), which authorizes the Secretary to sue and be sued on claims arising out of the Act. 5 There is some case law within this Circuit to the effect that section 1456(c)(1) constitutes at least a limited waiver of sovereign immunity. See English v. Town of Huntington, 335 F.Supp. 1369, 1373 (E.D.N.Y.1970). Such sue and be sued waivers, however, apply only to suits against the specific entity whose immunity was waived and have no application to suits against the United States generally. See Federal Housing Administration, Region No. 4 v. Burr, 309 U.S. 242, 250-51, 60 S.Ct. 488, 492-493, 84 L.Ed. 724 (1940) (construing the National Housing Act); S.S. Silberblatt, Inc., 608 F.2d at 35-36 (same); Marcus Garvey Square, 595 F.2d at 1131 (same); Bor-Son Building Corp., 572 F.2d at 179-81 (same). The validity of the waiver of sovereign immunity claimed by the City and URA therefore depends upon whether the suit is in reality against HUD or is in fact against the United States. 15 Whether this suit is against the United States or against HUD depends, in turn, upon whether recovery on the claim would come from funds in the control of HUD, severed from Treasury funds and Treasury control, Federal Housing Administration, Region No. 4, 309 U.S. at 250, 60 S.Ct. at 492, or would come from general treasury revenue. 6 In the latter case, the suit in reality is against the United States. Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 1006, 10 L.Ed.2d 15 (1963) (quoting Land v. Dollar, 330 U.S. 731, 738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209 (1947)); S.S. Silberblatt, Inc., 608 F.2d at 36; Marcus Garvey Square, 595 F.2d at 1131. 16 The crucial determination, then, is whether a judgment for damages in this cause of action would be satisfied from funds under HUD's control, or from general treasury revenue. In the former instance, a valid waiver of sovereign immunity may be found to exist, and since, as discussed, the court had subject matter jurisdiction under section 1442, the first cause of action was properly before it. If the judgment is to be satisfied from general treasury revenue, however, there is no waiver of sovereign immunity beyond the Tucker Act, which waives immunity only to the extent of permitting suit in the Court of Claims. Because no finding was made as to the source of the monies that would be used to satisfy any judgment in this case, we remand to the trial court with instructions to determine this question and, accordingly, its jurisdiction over this cause of action.