Court Opinion

ID: 773605
Source: CourtListenerOpinion
Date Created: 2012-04-18 11:31:20+00
Date Added: 2024-06-11T09:00:50.789984
License: Public Domain

252 F.3d 1336 (Fed. Cir. 2001)
FURASH & COMPANY,   Plaintiff-Appellant,v.UNITED STATES,  Defendant-Appellee.
00-5084
United States Court of Appeals for the Federal Circuit
DECIDED: June 13, 2001

Appealed from: United States Court of Federal Claims Judge John P. Wiese [Copyrighted Material Omitted]
Jed Lloyd Babbin, Tighe, Patton & Babbin, PLLC, of Washington, DC, argued for plaintiff-appellant. With him on the brief was Sharon L. Babbin.
Armando O. Bonilla, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were David M. Cohen, Director; and Bryant G. Snee, Assistant Director. Of counsel on the brief was John C. Mantini, Senior Attorney Advisor, Office of General Counsel, Federal Housing Finance Board, of Washington, DC.
Before MAYER, Chief Judge, RADER, and BRYSON, Circuit Judges.
BRYSON, Circuit Judge.

1
Furash & Company appeals the decision of the United States Court of Federal  Claims dismissing its contract suit against the United States for lack of  jurisdiction. Furash & Co. v. United States, 46 Fed. Cl. 518 (2000).  Because we conclude that the non-appropriated funds doctrine bars the Court  of Federal Claims from exercising jurisdiction in this case, we affirm.

2
* In 1997, Furash entered into a contract with the Federal Housing Finance  Board ("Finance Board"). Under the contract, Furash was to provide  consulting services directed toward assessing the value that federal home  loan banks perceive in belonging to the federal home loan bank system,  which the Finance Board administers. After a dispute developed over  Furash's timely completion of its report, the Finance Board terminated the  contract for default.

3
Furash then filed suit against the United States in the Court of Federal  Claims, seeking to have the default termination converted to a termination  for the convenience of the government. In addition, Furash contended that  it was entitled to retain progress payments previously made and to be paid  for additional work performed at the Finance Board's direction. The  government moved to dismiss Furash's complaint on the ground that the  Finance Board is a non-appropriated funds instrumentality ("NAFI") and that  the Court of Federal Claims lacks jurisdiction over claims arising from  contracts entered into by the Finance Board. The court agreed and dismissed  the action, holding that the non-appropriated funds doctrine precluded the  court from exercising jurisdiction under either the Tucker Act, 28 U.S.C. §  1491, or the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-613 ("CDA").  This appeal followed.

II

4
Furash argues that the trial court erred when it concluded that the non-  appropriated funds doctrine bars the court from exercising jurisdiction  under the Tucker Act. Through the Tucker Act, Congress waived the federal  government's sovereign immunity and defined the jurisdiction of the Court  of Federal Claims with respect to claims "against the United States founded  either upon the Constitution, or any Act of Congress or any regulation of  an executive department, or upon any express or implied contract with the  United States." 28 U.S.C. § 1491; see United States v. Mitchell, 463 U.S.  206, 212 (1983).

5
The jurisdictional grant in the Tucker Act is limited by the requirement  that judgments awarded by the Court of Federal Claims must be paid out of  appropriated funds. 28 U.S.C. § 2517. Based on that requirement, it has  been held that absent some specific jurisdictional provision to the  contrary the Court of Federal Claims lacks jurisdiction over actions in  which appropriated funds cannot be used to pay any resulting judgment. See  L'Enfant Plaza Props., Inc. v. United States, 668 F.2d 1211 (Ct. Cl. 1982);  Kyer v. United States, 369 F.2d 714 (Ct. Cl. 1966); see also United States  v. Hopkins, 427 U.S. 123, 125-26 (1976) (recognizing the jurisdictional  limitation for non-appropriated fund instrumentalities, but holding that  disputes over contracts with military exchanges could be adjudicated by the  Court of Claims because of a specific grant of jurisdiction).

6
Congress addressed the non-appropriated funds doctrine in 1970, when  proposals were made to abolish the doctrine by legislation. Rather than  abolish the doctrine altogether, however, Congress chose to create a narrow  exemption from the doctrine for certain entities, the military post  exchanges and the exchange councils of the National Aeronautics and Space  Administration. See McDonald's Corp. v. United States, 926 F.2d 1126, 1129-  33 (Fed. Cir. 1991). Accordingly, Congress amended the Tucker Act and the  "judgment fund" statute, 31 U.S.C. § 1304, to give the Court of Federal  Claims jurisdiction over actions against those non-appropriated fund  instrumentalities. Pub. L. 91-350, 84 Stat. 449 (1970). The legislative  history of the 1970 Act makes clear that Congress intended to leave the  doctrine intact for all other non-appropriated fund instrumentalities  unrelated to the post exchanges and exchange councils. See McDonald's  Corp., 926 F.2d at 1132-33; Swiff-Train Co. v. United States, 443 F.2d  1140, 1142-43 (5th Cir. 1971). As explained in the House report on the  legislation,

7
complete removal of sovereign immunity for all nonappropriated fund  activities would be undesirable . . . . Clearly, Congress ought not to  expose the Federal Government to liability for all nonappropriated  fund activities unless [data regarding potential liability] is  assembled. Under the [bill as enacted] the sovereign immunity of the  United States would be removed only with respect to the post exchange  types of operations which are conducted within the Defense Department  and the National Aeronautics and Space Administration.

8
H.R. Rep. No. 91-933 (1970), reprinted in 1970 U.S.C.C.A.N. 3477, 3478-79.

9
In applying the non-appropriated funds doctrine, this court has held that  the Court of Federal Claims must exercise jurisdiction absent a clear  expression by Congress that it intended to separate the agency from general  federal revenues. See L'Enfant Plaza, 668 F.2d at 1212. To establish  jurisdiction, the plaintiff need not show that appropriated funds have  actually been used for the agency's activities, but only that "under the  agency's authorizing legislation Congress could appropriate funds if  necessary." Thus, the fact that an agency such as the Finance Board has  been financially self-sufficient is not dispositive. Instead, "Congress  must have intended that the activity resulting in the claim was not to  receive or be funded from appropriated funds"; that is, there must be a  "firm indication by Congress that it intended to absolve the appropriated  funds of the United States from liability for acts" of the agency. Id.

10
We agree with the trial court that there has been a clear expression by Congress that the Finance Board's operations are to be funded through  assessments against federal home loan banks, not from general fund  revenues, and that the Court of Federal Claims therefore lacks Tucker Act  jurisdiction over this case. The Finance Board's assessment authority is  granted at 12 U.S.C. § 1438(b), which provides:

11
(1) In general

12
The Board may impose a semiannual assessment on the Federal Home Loan  Banks, the aggregate amount of which is sufficient to provide for the  payment of the Board's estimated expenses for the period for which  such assessment is made.

13
(2) Deficiencies

14
If, at any time, amounts available from any assessment for any  semiannual period are insufficient to cover the expenses of the Board  incurred in carrying out the provisions of this chapter during such  period, the Board may make an immediate assessment against the Banks  to cover the amount of the deficiency for such semiannual period.

15
(3) Surpluses.

16
If, at the end of any semiannual period for which an assessment is  made, any amount remains from such assessment, such amount will be  deducted from the assessment on the Banks by the Board for the  following semiannual period.

17
To be sure, section 1438 does not expressly prohibit congressional  appropriation of funds to the Finance Board. The absence of such an express  statement in the authorizing statute, however, does not end the inquiry.  Under the test set forth in L'Enfant Plaza, what matters is whether the  agency's authorizing legislation makes clear that Congress intends for the  agency-or the particular activity that gave rise to the dispute in  question-to be separated from general federal revenues.

18
Denkler v. United States, 782 F.2d 1003 (Fed. Cir. 1986), provides an  example of an agency that was held to be a non-appropriated funds  instrumentality even though its separation from appropriated funds was not  made explicit. In that case, the court held the Board of Governors of the  Federal Reserve System to be a non-appropriated fund instrumentality after  concluding that Congress intended the Board to be self-sufficient and not  to use appropriated funds to defray its expenses. Although the Board's  authorizing statute contained no express statement that appropriated funds  could not be used to support the Board's operations, the court found a  "clear expression" to separate the Board from general federal revenues in  light of "the combination of designation of assessments on banks as the  source of funds for salaries, and the absence of the conventional language  authorizing funds to be appropriated." 782 F.2d at 1005. See also Research  Triangle Inst. v. Bd. of Governors of the Fed. Reserve Sys., 132 F.3d 985,  988 (4th Cir. 1997) (similarly concluding that the Board of Governors of  the Federal Reserve System is a non-appropriated fund instrumentality to  which Tucker Act jurisdiction does not apply).

19
The same analysis applies to the closely parallel language in the  authorizing legislation for the Finance Board. Section 1438 provides a  scheme that includes not only a standard assessment but also an immediate  assessment that may be used to make up deficiencies. Absent statutory  amendment, there is therefore no situation in which appropriated funds  would be used to make up a deficiency. The Finance Board's funds are  similarly isolated from general fund revenues in the event that the  assessments result in a surplus, as the statute provides that any surplus  will be credited to the assessed banks rather than to the general fund of  the Treasury.

20
The scheme set out in section 1438 distinguishes this case from L'Enfant  Plaza. In that case, the authorizing legislation did not provide a means  for the Comptroller of the Currency to make special assessments in response  to financial deficiencies, and Congress had periodically financed the  Comptroller's operations through appropriation when the funds received by  the Comptroller from regulated banks were insufficient to cover expenses.  668 F.2d at 1212. The funding mechanism for the Finance Board is also  distinguishable from the funding mechanism at issue in South Louisiana  Grain Services, Inc. v. United States, 1 Cl. Ct. 281 (Cl. Ct. 1982), on  which Furash relies. The court in that case held the non-appropriated funds  doctrine inapplicable because, although Congress clearly wanted the agency  to be as self-supporting as possible, the authorizing legislation  recognized that appropriated funds would be needed for the agency to  function properly, and provision was made for the authorization of such  funds. Id. at 287.

21
The conclusion that the non-appropriated funds doctrine applies in this  case is further supported by 12 U.S.C. § 1422b(c), which addresses the  character of the funds received by the Finance Board:

22
Receipts of the Board derived from assessments levied upon the Federal  Home Loan Banks and from other sources . . . shall be deposited in the  Treasury of the United States. Salaries of the directors and other  employees of the Board and all other expenses thereof may be paid from  such assessments or other sources and shall not be construed to be  Government Funds or appropriated monies, or subject to apportionment  for the purposes of chapter 15 of Title 31, or any other authority.

23
That statute not only directs that Finance Board funds are to be maintained  distinct from general funds even when deposited with the Treasury, but also  adds the proviso that the funds are not to be construed as appropriated  monies. We do not agree with Furash's argument that the reference to  "appropriated monies" means only that the funds used to pay the Board's  expenses are not considered appropriated monies for apportionment purposes.  Rather, we read the statutory language, particularly in light of the use of  a comma and the word "or" before the words "subject to apportionment," to  mean that the funds used to pay the Board's expenses are (1) not construed  to be government funds or appropriated monies; and (2) not subject to the  apportionment rules in chapter 15 of title 31 of the United States Code.

24
Finally, the Finance Board's authorizing statute contains a specific  exception to the scheme under which Finance Board expenses are not paid by  appropriated funds. In 12 U.S.C. § 1438a, the statute provides that studies  or investigations directed by law or requested by Congress "shall be  considered as nonadministrative expenses." As the trial court explained,  that means that those costs will be paid for from appropriated funds. We  agree with the trial court that that statute does not alter the status of  the Finance Board as a non-appropriated fund instrumentality. Instead, it  confirms that, except with respect to that specific activity, which is not  at issue in this case, the Finance Board's expenses are not expected to be  defrayed by appropriated funds.

25
The statutory provisions governing the funding of the Finance Board's  operations thus make clear that, with the single narrow exception discussed  above, Congress intended the Finance Board to be a financially self-  sufficient instrumentality designed to operate without the benefit of  general appropriated funds. Accordingly, the Tucker Act does not give the  Court of Federal Claims jurisdiction over this case.

III

26
Furash next argues that even if jurisdiction under the Tucker Act is barred  by the non-appropriated funds doctrine, the Court of Federal Claims still  has jurisdiction under the CDA. The CDA applies "to any express or implied  contract (including those of the non-appropriated fund activities described  in sections 1346 and 1491 of title 28) entered into by an executive agency  for- . . . (2) the procurement of services." 41 U.S.C. § 602. The parties  agree that the Finance Board is an executive agency as defined by the CDA.  Accordingly, Furash argues, the Court of Federal Claims has jurisdiction  over the dispute in this case even if the Finance Board is a non-  appropriated fund instrumentality.

27
In support of its argument, Furash relies on a passage from this court's  decision in United States v. General Electric Corp., 727 F.2d 1567, 1570  (Fed. Cir. 1984), in which the court stated that "[n]othing in the Contract  Disputes Act of 1978 limits its application to appropriated funds." While  it is true that the CDA contains no express provision limiting it to  agencies supported by appropriated funds, we do not interpret General  Electric to mean that the non-appropriated funds doctrine, as developed  under the Tucker Act, is inapplicable to cases brought under the CDA.  Indeed, immediately following the passage cited by Furash, the court  recited the principle, developed in Tucker Act cases, that "[t]he non-  appropriated funds doctrine applies only if the activity was `specifically  intended to operate without using appropriated funds.'" Id. (quoting Hughes  Aircraft Co. v. United States, 534 F.2d 889, 907 (Ct. Cl. 1976)). The court  in General Electric went on to analyze the case under the conventional non-  appropriated funds doctrine, applying L'Enfant Plaza and similar cases, and  ultimately concluded that the Claims Court had jurisdiction because "[i]t  is clear that [the agencies in question] have authority to use appropriated  funds to the extent appropriated, and `that is sufficient to avoid the non-  appropriated funds exclusion.'" General Electric, 727 F.2d at 1570 (quoting  McCarthy v. United States, 670 F.2d 996, 1002 (Ct. Cl. 1982)).  Accordingly, we interpret General Electric to mean that for CDA  jurisdiction to be foreclosed, Congress must make clear that the activity  in question was intended to operate without appropriated funds, the same  standard that is used under the Tucker Act.

28
That conclusion is consistent with other court and Board of Contract  Appeals decisions holding the non-appropriated funds doctrine applicable to  CDA cases. See Research Triangle Inst. v. Bd. of Governors of the Fed.  Reserve Sys., 132 F.2d 985, 988 & n.15 (4th Cir. 1997); Wolverine Supply,  Inc. v. United States, 17 Cl. Ct. 190 (1989); Trent-Jones, Inc., 99-1  B.C.A. (CCH) ¶ 30,196 (Ag. B.C.A. 1998); Frontlook Promotions, Inc., 99-1  B.C.A. (CCH) ¶ 30,175 (A.S.B.C.A. 1998); Computer Valley Int'l, Ltd., 94-1  B.C.A. (CCH) ¶ 26,297 (A.S.B.C.A. 1994). It is also consistent with the  language and legislative history of the CDA itself, which make clear that  Congress did not intend for the CDA to obviate the non-appropriated funds  doctrine, but instead intended for the CDA to be subject to the principle  set forth in 28 U.S.C. § 2517, that unless otherwise provided, all  judgments of the Court of Federal Claims are to be paid from appropriated  funds.

29
Section 2517, by its terms, applies to all judgments of the Court of  Federal Claims "[e]xcept as provided by the Contract Disputes Act of 1978."  In the CDA, as in the Tucker Act, Congress did not create a general  exception for non-appropriated fund instrumentalities, but instead  incorporated the language from the Tucker Act that created an exception for  the post exchange non-appropriated fund instrumentalities that were the  subject of the 1970 Tucker Act amendments. Thus, in 41 U.S.C. § 602,  Congress provided that the Act applied to any express or implied contract  "including those of the nonappropriated fund activities described in [the  Tucker Act]."

30
The provenance of that limited exception to the non-appropriated funds  doctrine strongly supports the government's argument that the doctrine  applies in the same fashion to the CDA as it does to the Tucker Act.  Furash argues that the purpose of the parenthetical language in section 602  of the CDA was not to identify non-appropriated fund instrumentalities  covered by the CDA, but rather to identify non-executive agencies that are  so covered. The more natural reading of the text, however, suggests that  the parenthetical language was intended to make an exception to the non-  appropriated funds limitation and not to the executive agency limitation.  The parenthetical language describes the military exchanges as "the  nonappropriated fund activities described in [the Tucker Act]," which  implies that other non-appropriated fund activities are not included.

31
The language of the CDA supports the government's position in another  respect as well. The CDA provides that judgments entered under the Act will  be paid in accordance with the provisions of 31 U.S.C. § 1304, the  "judgment fund" statute. 41 U.S.C. § 612(a). That statute, in turn,  provides that the judgment fund can be used to pay judgments arising from  contracts with the military exchanges and NASA exchange councils, but that  those entities must reimburse the government for the amount paid from the  judgment fund. 31 U.S.C. § 1304(c). The CDA has a similar reimbursement  provision, but it applies only to "agencies whose appropriations were used  for the contract," 41 U.S.C. § 612(c), which would not apply to non-  appropriated fund instrumentalities. Thus, under Furash's interpretation of  the CDA, reimbursement of the judgment fund would be required of all  appropriated fund instrumentalities and those non-appropriated fund  instrumentalities specifically identified in the Tucker Act, but not other  non-appropriated fund instrumentalities. That result is so anomalous that  it seems plain that the CDA was not intended to reach non-appropriated fund  instrumentalities other than the military exchanges and the NASA exchange  councils.

32
Any lingering doubt on this score is dispelled by the legislative history  of the CDA, which makes clear that Congress did not intend for the CDA to  apply to non-appropriated fund instrumentalities except for those  specifically identified in the Act. As explained in the Senate report:

33
The bill expressly states its applicability to those nonappropriated  fund activities over which the courts presently have jurisdiction  under 28 U.S.C. 1346 and 1491. Consideration was given to including  all nonappropriated fund activities. However, since the court's  present jurisdiction over nonappropriated fund contracts is limited to  certain post exchanges, and as there appears to be no problem with  remedies relating to other nonappropriated fund activities, it was  deemed unnecessary to include all or any additional nonappropriated  fund activities within the scope of the bill.

34
S. Rep. No. 95-1118, at 18 (1978), reprinted in 1978 U.S.C.C.A.N. 5235,  5252. That language is squarely contrary to Furash's position. Based on the  language of the statute, as explicated by the legislative history, we  regard it as inescapable that Congress was aware of the non-appropriated  funds doctrine and that it did not intend for the CDA to expand the court's  jurisdiction to reach non-appropriated fund activities other than those  specifically identified in the Tucker Act and incorporated by reference in  the CDA.

35
In sum, we agree with the government that the statutes governing the  Finance Board's funding make it clear that Congress intended the Finance  Board to operate free from appropriated funds. Accordingly, the Court of  Federal Claims properly concluded that it lacks jurisdiction under either  the Tucker Act or the CDA to adjudicate Furash's claims in this case.

36
AFFIRMED.