Court Opinion

ID: 8929266
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:56:48.838005+00
Date Added: 2024-06-11T17:09:28.706166
License: Public Domain

JERRE S. WILLIAMS, Circuit Judge,
concurring in part and dissenting in part:
I concur in all of my brother Brown’s opinion for the Court in this case with the exception of IV(a) in which he concludes that the conditional grant in aid program did not create a contract between the federal government and the local governmental entities. This conclusion is contrary to a long line of established Supreme Court authority. The 1866 Supreme Court case of McGee v. Mathis, 71 U.S. (4 Wall.) 143, 155, 18 L.Ed. 314 said: “It is not doubted that the grant by the United States to the State upon conditions, and the acceptance of the grant by the State constituted a contract. All the elements of a contract met in the transaction — competent parties, proper subject-matter, sufficient consideration, and consent of minds. This contract was binding upon the State.” In our own controlling case on this issue, United States v. Marion County School Dist., 625 F.2d 607 (5th Cir.1980), we quoted the McGee case at 609 n. 4. The Marion County case involved contractual assurances by the school district of compliance with the prohibitions against racial discrimination in the Civil Rights Act in the operation of federally funded schools. At p. 609, our ruling was specific:
As the Supreme Court has long recognized, the United States may attach conditions to a grant of federal assistance, the recipient of the grant is obligated to perform the conditions, and the United States has an inherent right to sue for enforcement of the recipient’s obligation in court. E.g., Rex Trailer Co. v. United States, 350 U.S. 148, 151, 76 S.Ct. 219, 221, 100 L.Ed. 149 (1956); United States *1129v. San Francisco, 310 U.S. 16, 31, 60 S.Ct. 749, 757, 84 L.Ed. 1050 (1940); Cotton v. United States, 52 U.S. (11 How.) 229, 231, 13 L.Ed. 675 (1850); Dugan v. United States, 16 U.S. (3 Wheat.) 172, 181, 4 L.Ed. 362 (1818).
The same principle is stated in Penn-hurst State School & Hospital v. Halder-man, 451 U.S. 1, 17, 101 S.Ct. 1531, 1540, 67 L.Ed.2d 694 (1981), the case relied upon by the majority opinion for the contrary result. In the paragraph immediately preceding the paragraph quoted in the majority opinion, the Supreme Court gives the following recognition to the nature of a conditional grant as a contract:
Unlike legislation enacted under § 5, however, legislation enacted pursuant to the spending power is much in the nature of a contract: in return for federal funds, the States agree to comply with federally imposed conditions. The legitimacy of Congress’ power to legislate under the spending power thus rests on whether the State voluntarily and knowingly accepts the terms of the “contract.” See Steward Machine Co. v. Davis, 301 U.S. 548, 585-598, 57 S.Ct. 883, 890-896, 81 L.Ed.2d 1279 (1937); Harris v. McRae, 448 U.S. 297, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980).
The conditions the United States Government placed upon the grant in this case were clear and precise. Obviously the government knew that it was undertaking large financial obligations in supplying flood insurance to the citizens of the Parishes. It insisted upon conditions which would substantially cut down on that liability. The conditions which the Parishes were alleged to have breached were two in number. First, they failed to implement and enforce the specific land use and control requirements which they had obligated themselves to enforce. As a result, a number of buildings were built below the flood level elevation requirements which the Parishes promised to meet. Second, even more specifically, the Parishes failed to carry out unequivocal promises concerning the establishment of adequate drainage systems involving pumps, canals, levies, and culverts. The United States further charges that the Parishes failed to keep drainage pumps in proper repair so that they would operate in situations involving flood emergencies.
These failures had to do with specific promises which the Parishes were required to make to be entitled to obtain for themselves and their citizens the flood insurance protections under the National Flood Control Act and the Flood Disaster Protection Act. I concede, of course, that the Court in Pennhurst did state that Congress must intend to impose clearly and unambiguously the conditions on the grant. Of course, the clearness and certainty come from the administrative requirements established under congressional authorization rather than requirements in the statute itself. Virtually all conditional grants by the federal government occur through an administrative process that establishes the specific conditions and creates the contract under the general grant of authority from the Congress. Congress does not write the contract, nor does it sign it. The administrator writes the contract and signs it on behalf of the government.
It cannot be said in this case, in the words of Pennhurst, that a local governmental entity was “unaware of the conditions or [was] unable to ascertain what [was] expected of it.” The conditions were clear and precise, and a contract was created under this conditional flood insurance program. A contract is the normal and usual outgrowth of a conditional grant of federal largesse, and there is no reason to treat this case as an exception.
Admittedly the more serious question is not whether a contract was created, but whether the local government bodies can be held liable for the consequential damages arising from their failures to carry out the contract provisions. These failures ultimately resulted in the federal government having to pay large flood insurance claims which, the federal government asserts, would not have arisen if the Parishes had carried out their contract obligations. *1130Of course, upon trial the federal government would have to prove that the failure of the Parishes to carry out these contract obligations caused the damages. But there is absolutely nothing in the law of contracts, governmental or otherwise, giving the Parishes any privileged position with respect to liability for consequential damages for breach of contract. If the government can establish the link in causation, the Parishes are liable under the most elementary common-law principles. 5 Corbin, CONTRACTS §§ 997, 998.
The fact that federal monies were not paid directly to the Parishes but were paid through flood insurance claims to the citizens of the Parish does not alter the nature of the case. In Grove City College v. Bell, - U.S. -, 104 S.Ct. 1211, 1216, 79 L.Ed.2d 516 (1984), the Supreme Court recognized that the College benefitted by a federal aid program even though all funds were paid directly to the students. The Court found that the College, therefore, was subject to the conditions attached to the receipt by the students of the federal financial assistance under the Civil Rights Act. The Court specifically recognized that the federal disbursements to the students benefitted the College through relieving it of financial burdens which it would otherwise have to bear in the absence of the federal assistance. Precisely the same considerations are applicable where it was to the obvious benefit of the Parish to obtain federal flood control insurance for its citizens. The contract existed, and its legal consideration from the point of view of the Parish was the interest of the Parish in obtaining for its citizens the subsidized federal flood control program.
Finally, I stress that I am in full agreement with the conclusion of the Court, in IV(c) of the opinion, that the government is not entitled to specific performance to enforce the contract in the future. The contract was without duration. The sanction for continuing violation of the contract by the Parishes was suspension from the program. 24 C.F.R. § 1909.24. The Parishes are not required by law to continue in the program. They can drop out at any time. See Guardians Ass’n v. Civil Service Comm. of the City of New York, 463 U.S. 582, 103 S.Ct. 3221, 3229, 77 L.Ed.2d 866 (1983). Thus there is no legal right to force them through a specific performance decree to continue to abide by the contract. This conclusion, however, does not in any way affect the liability of the Parishes for damages to the United States Government while the contract has been in effect. The federal government is entitled to undertake to prove its case with respect to those damages. The district court erred in granting a partial summary judgment against such federal claims. I must dissent because this Court affirms the partial summary judgment which was erroneously granted on this issue.