Court Opinion

ID: 2962348
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:56:43.853627+00
Date Added: 2024-06-11T11:37:18.005872
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1416                           VICTOR ZELMAN and BETTY ZELMAN,                               Plaintiffs, Appellants,                                          v.             RICHARD L. GREGG, COMMISSIONER OF THE PUBLIC DEPT., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                     [Hon. D. Brock Hornby, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                                Cyr, Boudin and Stahl,                                   Circuit Judges.                                   ______________                                 ____________________            Victor Zelman and Betty Zelman on brief pro se.            _____________     ____________            Stuart E.  Schiffer, Acting  Assistant  Attorney  General, Jay  P.            ___________________                                        _______        McCloskey, United States Attorney, Barbara  C. Biddle and Deborah Ruth        _________                          __________________     ____________        Kant on brief for appellees.        ____                                 ____________________                                  February 17, 1994                                 ____________________                 BOUDIN, Circuit Judge.  This is a suit by the owners  of                         _____________            federal savings bonds that were allegedly stolen and redeemed            without the owners' permission.  The district court dismissed            the suit on the ground that it had been brought in  the wrong            court.  With certain clarifications, we affirm.                                          I.                 In this case Victor and Betty Zelman, a husband and wife            residing in  Maine, brought  suit pro  se  in district  court                                              _______            against the Secretary of the Treasury and the Commissioner of            the Public Debt.   Their complaint alleged that  six series E            bonds issued to  one or both of the  Zelmans, currently worth            (in total) more  than $10,000, had been stolen  from them and            that  the government was now refusing to issue replacements.1            Claiming  that the  government had  breached the  contractual            rights   reflected  in  the  bonds,  the  Zelmans  sought  an            injunction to require the issuance of replacements.                   Prior  to  bringing  suit,  the  Zelmans  had  requested            replacements from the Bureau of Public Debt which administers            the  savings bond  program for  the Treasury.   In  reply the            Bureau told  the Zelmans  the following:   first,  government            records showed the bonds to  have been redeemed more than ten                                            ____________________                 1The series E  bonds assertedly stolen from  the Zelmans            appear  to  have  been registered  bonds  rather  than bearer            bonds.  See 31 C.F.R.   315.5 ("Savings bonds are issued only                    ___            in  registered form. . . .  The registration is conclusive of            ownership,  except as  provided  in     315.49  [relating  to            correction of error in registration].").                                         -2-                                         -2-            years   ago;   second,   government  regulations   create   a            presumption that redeemed bonds have been properly paid if no            claims have been  filed within ten  years of redemption;  and            third,  since the  government now  retains  no other  records            after ten years has elapsed following redemption, "no details            regarding .  . .  redemption [of the  Zelmans' bonds]  can be            furnished."                 Broadly  speaking   and  with   certain  qualifications,            government  bonds  are   viewed  as  contracts  between   the            government and the owners, whose terms are fixed by statutes,            regulations  and  offering  circulars.   Estate  of  Curry v.                                                     _________________            United States,  409 F.2d 671,  675 (6th Cir. 1969);  Wolak v.            _____________                                        _____            United States,  366 F.  Supp. 1106,  1111-12 (D.  Conn. 1973)            _____________            (collecting and quoting numerous cases).  In response  to the            Zelmans' suit, which explicitly alleged a breach of contract,            the U.S.  Attorney asserted  that the  district court  lacked            subject matter jurisdiction  over the suit.  This  is so, the            U.S. Attorney argued in a motion to dismiss, because contract            claims  against the United States for amounts of over $10,000            may  be  brought only  in  the Claims  Court.   28  U.S.C.               1346(a)(1), 1491(a)(1).                   The district  court agreed with the  government, stating            that "since this is an action for breach of contract and more            than $10,000  is  at  stake, the  Tucker  Act  provides  that            jurisdiction exists only in the  . . . Claims  Court . . . ."                                         -3-                                         -3-            Noting that no request for such a transfer had been made, see                                                                      ___            28 U.S.C.    1631, the district court dismissed  the case for            want of jurisdiction and without prejudice to a new action in            a court with jurisdiction.  The Zelmans have sought review in            this court, arguing that the dismissal was improper  and that            redress apart from damages should be afforded to them.                                         II.                 On appeal, the Zelmans first argue that each bond should            be treated  as a  separate contract  and that,  individually,            each such claim  in this case is under $10,000 and within the            jurisdiction  of the district court.  The government responds            that  there  is  "some authority"  for  the  proposition that            separate  claims for under $10,000 should not be aggregated;2            but  it   says  that   the  district   court  still   "lacked            jurisdiction" to afford the only remedy sought by the Zelmans            in  this case, namely, an injunction directing re-issuance of            the bonds.   Indeed, we  have held that "[f]ederal  courts do            not  have  the power  to  order specific  performance  by the            United  States  of   its  alleged  contractual  obligations."            Coggeshall Development Corp.  v. Diamond, 884 F.2d  1, 3 (1st            ____________________________     _______            Cir. 1989).                                            ____________________                 2See e.g., Baker  v. United  States, 722  F.2d 517,  518                  ___ ____  _____     ______________            (9th  Cir. 1983);  United States  v.  Louisville &  Nashville                               _____________      _______________________            R.R., 221 F.2d 698, 701-03 (6th Cir. 1955); Sutcliffe Storage            ____                                        _________________            & Warehouse Co.  v. United States, 162 F.2d  849, 851-52 (1st            _______________     _____________            Cir. 1947);   see also 14 C.  Wright, A. Miller &  E. Cooper,                          ________            Federal Practice and Procedure,   3647 at 287 (2d ed. 1985).            ______________________________                                         -4-                                         -4-                 One  could argue  about  whether "jurisdiction"--a  term            with many shades of meaning--is  lacking if the complaint has            asserted  a  colorable claim  (in  this case,  for  breach of            contract) but named  an unavailable remedy.   But the Zelmans            did not  argue to the district  court that the claims  may be            disaggregated  (although  two sentences  in  their memorandum            hinted at such an argument)  and even now the government does            not quite  concede the point.   We are reluctant  to overturn            the district court in a  civil suit based on a disaggregation            theory not raised in that court.  Indeed, the government does            not confess error  on this issue and  may dispute or hope  to            distinguish the disaggregation precedents.                 Accordingly,  we  are  disposed to  affirm  the district            court but without  prejudice to the Zelmans' filing  of a new            suit  in the same district court if they wish to pursue their            disaggregation theory.  We say "if" because  the Claims Court            has unquestioned jurisdiction, assuming that the  Zelmans are            now prepared to accept damages  as their relief.  The Zelmans            might prefer to refile their suit in the Maine district court            or they might  conclude that the Claims  Court, although more            distant, is  a preferable  forum  in order  to avoid  another            possible round  of jurisdictional  controversy.   The initial            choice is theirs.                 But we  have something more  to say about the  course of            this matter.  The pages of correspondence between the Zelmans                                         -5-                                         -5-            and  the  Treasury's  Bureau  of  the  Public  Debt  will  be            familiar, at least as a prototype, to anyone who has ventured            to assert a money claim against a public  body.  Although the            Bureau's letters to the Zelmans  (and later to their senator)            may well  be accurate  in a literal  sense, most  lay readers            would  likely  believe  that the  Bureau  had  determined the            Zelmans' claim to be without merit.   The critical sentences,            repeated in several of the letters, are these:                      [T]he regulations governing savings bonds                      provide that bonds for which no claim has                      been  filed   within  10  years   of  the                      recorded  date  of   redemption  will  be                      presumed to have been properly paid.   At                      that  time, the  payment records  of such                      bonds  are  destroyed  and  from then  on                      there  is no  data  available from  which                      photographs  or  other  details regarding                      the redemption can be obtained.                 The  critical phrase,  "presumed  to have  been properly            paid,"  is   taken  verbatim   from   the  current   Treasury            regulations, 31 C.F.R.    315.29(b), although the  regulation            in question is not cited in the letters.  The word "presumed"            has more  than one  meaning but  it quite  often refers to  a            rebuttable presumption; that  is, when the predicate  fact is            proved  (here, that the  bonds were redeemed  by someone over            ten years ago), then  some other "presumed" fact (here,  that            the bonds were  redeemed by their real owners)  will be taken            to be true--unless and until the party disputing the presumed            fact offers substantial countervailing evidence.  See Fed. R.                                                              ___                                         -6-                                         -6-            Evid. 301; 2 J. Strong, McCormick on Evidence   342 (4th  Ed.                                    _____________________            1992).3                  Assuming for purposes of discussion that  the regulation            refers to  a rebuttable  presumption, then  quite likely  the            Zelmans have  the burden  of offering  evidence to  establish            that the  bonds were  stolen from them  and if  redeemed were            redeemed  without their permission.   They might  have such a            burden even  without the  presumption.   The  Zelmans may  be            hindered because  the  Bureau has apparently disposed  of the            records  of redemption  apart  from  recording  the  fact  of            redemption.    Still,  a factfinder  might  well  believe the            Zelmans, especially if they can corroborate the theft of  the            bonds.   Stolen bonds are  unlikely to have been  redeemed by            their rightful owner.                 If the Bureau regards the presumption as rebuttable, one            might expect  at least one of its letters  to say this to the            Zelmans  in plain  language and,  further, to tell  them what            process  (a review  board, a  court)  is available  to get  a            decision on the factual issue.   If instead the Bureau thinks                                            ____________________                 3Occasionally the term "presumption" is used to indicate            that  the  presumed  fact  is  conclusively  or  irrebuttably            presumed and  the opponent  will not be  allowed to  show the            contrary.  See e.g., Stanley  v. Illinois, 405 U.S. 645, 656-                       ___ ____  _______     ________            57  (1972) (voiding  irrebuttable  statutory presumption);  2            McCormick at 451.  And,  to make matters even more confusing,            _________            the term  is sometimes  used to refer  to a  mere permissible            inference.  See  County Court of Ulster County  v. Allen, 442                        ___  _____________________________     _____            U.S.  140, 157 (1979)  (referring to "an  entirely permissive            inference  or   presumption,  which   allows--but  does   not            require"--an inference of one fact from proof of another).                                         -7-                                         -7-            that  the regulation  creates an  irrebuttable presumption--a            kind  of mini-statute of  limitations--then it ought  to have            said so plainly  to the Zelmans.   To leave  the matter in  a            state of confusion is not an attractive posture for an agency            that must face this very issue with some frequency.                 The  government is  a huge  body  employing millions  of            people,  and  needs  to use  regulations,  routines  and form            letters.  It is also right  that its servants should be chary            about claims against the Treasury, claims that are often ill-            founded and sometimes dishonest.  But  it is not too much  to            ask that the Bureau of the Public Debt give a plain statement            of  its  position--and   even  useful  directions--to   those            citizens  who have lent the government money, seek repayment,            and have very little idea  how to navigate through the forest            of rules and procedures.                                         III.                 The Zelmans'  filings, both in the district court and in            this  court, argue variously that case law supports equitable            relief; that it  is a violation of the due  process clause to            apply regulation    315.29(b) as a statute  of limitations to            bonds  sold before the  regulation was promulgated;  and that            the  records concerning the  redemption should not  have been            destroyed since without  them the Zelmans cannot  prove their            case.    These arguments  do  not  alter  our view  that  the            district court should be affirmed.                                         -8-                                         -8-                 The  Zelmans' argument for equitable relief rests on the            ground that the  government had an obligation,  under the law            as  it  existed when  the  bonds were  purchased,  to replace                                                                  _______            stolen  bonds that  have  been  improperly  redeemed.    This            argument is  difficult to appraise  because the  text of  the            provisions relied  upon by the  Zelmans is not quoted  by the            Zelmans,  and the  statutes  and  regulations  to  which  the            Zelmans cite do not clearly set forth the obligation that the            Zelmans impute.4   Whether such an  obligation might be  made            out, however, is an issue we need not determine.                 On  the  Zelmans'   own  version  of  the   matter,  the            obligation  on which  they rely  existed  under statutory  or            regulatory language that  has since been repealed.   Although            their position is not clearly explained, they may  be arguing            that the  procedures and  remedies that  applied in 1968  and            1969 were incorporated into the bond contracts by implication            or by the offering circular (which is not, however, quoted or            cited).   See generally Wolak, 366  F. Supp. at  1113-14.  If                      _____________ _____            this is their argument, then  the Zelmans are back to arguing                                            ____________________                 4Former  31 U.S.C.   738a(a) provided that the Secretary            of  the  Treasury,  when  it   is  "clearly  proved  to   the            satisfaction of the Secretary" that non-bearer  securities of            the United  States have been lost or stolen, "shall" re-issue            a security "which  has not matured or  become redeemable" and            shall  make  payment  on  one  that "has  matured  or  become            redeemable."  This section was supplanted in 1971 by one that            said that  the Secretary  had authority to  grant relief  for            loss  or theft  of government  securities, 85  Stat.  74; the            current  comparable version  is  31  U.S.C.     3125(a)  (The            Secretary . . . may provide relief . . .)".                                         -9-                                         -9-            that  the government  has  breached  its  contract  and  that            equitable relief should be afforded for this breach.                 The  difficulty is  that it is  settled in  this circuit            that equitable relief  cannot be obtained on  contract claims            against the government, Coggeshall, 884 F.2d at 3,  with very                                    __________            narrow  statutory exceptions that are  not here relevant.  28            U.S.C.     1491(a)(2), (3).   This rule  may not  be followed            everywhere  and it  can  be especially  hard  to apply  where            contract claims are  mingled with other claims  not dependent            on  contract.  See, e.g., Transohio Savings Bank v. Director,                           ___  ____  ______________________    _________            Office of Thrift Supervision, 967  F.2d 598 (D.C. Cir. 1992).            ____________________________            However, the rule remains the law of this circuit and may not            normally be reconsidered except by the court en banc.5                                                         _______                 The  Zelmans'  next  argument is  that  it  violates due            process  for the  government  to  impose, through  regulation            315.29, a ten-year  statute of limitations (measured  from an            illegal  redemption)  on  requests  by  rightful  owners  for            replacement  or  payment  of their  stolen  bonds.   No  such            regulation  existed, say the  Zelmans, when their  bonds were            purchased; and (they  say) their bonds have  been extended by                                            ____________________                 5As already  noted, the Zelmans have not  pointed to any            law currently in  force that gives them a  statutory right to            re-issuance  of the  bonds (as  opposed to  damages based  on            breach of  contract).  Thus  we have no occasion  to consider            whether or  when--despite the  Tucker  Act--a district  court            might  be  able  to grant  injunctive  relief,  with monetary            implications, based on statute rather than contract.  Compare                                                                  _______            Esch  v. Yeutter,  876 F.2d  976  (D.C. Cir.  1989); Hahn  v.            ____     _______                                     ____            United States, 787 F.2d 581 (3d Cir. 1985).            _____________                                         -10-                                         -10-            the Treasury for thirty years past their original maturity so            the Zelmans had no earlier reason to inquire into their theft            or illegal redemption.                   It will be time enough for the courts to consider such a            constitutional  attack  on  the regulation  if  and  when the            government  endorses the  reading  of  the  regulation  as  a            statute of limitations and if and when the courts accept that            reading.   As we  have already noted,  the regulation  on its            face is  susceptible to  a quite  different reading,  namely,            that  it creates a rebuttable presumption (starting ten years            after  a redemption) that  the bonds were  lawfully redeemed.            This  in turn would  leave it open  to the rightful  owner to            show that the bonds were lost or stolen and were not redeemed            by the rightful owner.                   The Zelmans, appearing pro se, may misunderstand what is                                        ______            entailed in a  showing of this kind.   It would not  be their            automatic obligation to establish the details of the theft or            identify the party  who wrongfully redeemed  the bonds.   One            might expect them to shed some  light on where the bonds were            kept, how they might have been purloined, why it took so long            to discover  the loss, whether  the loss was reported  to the            police,  and what  investigations were  made;  but these  are            matters that  go to plausibility  and corroboration.   If the            Zelmans tell a plausible story, nothing prevents the trier of            fact from accepting it.                                         -11-                                         -11-                 As for the  details of the redemption, all  that a trier            of fact  would likely  demand from  the Zelmans  is testimony            that they did not redeem  the bonds, did not authorize anyone            to do so,  and have no  idea who did  redeem the bonds.   The            fact that  the government has  destroyed the records  is more            likely  to inconvenience it rather than the Zelmans, assuming            that they have a plausible story to tell.  Of course,  we are            proceeding on the arguendo premise that the regulation is not                              ________            a  statute  of  limitations;  but  if  it  is  a  statute  of            limitations,  the  destruction  of  the  records is  probably            irrelevant anyway.                   We  do not  know whether the  Zelmans will  refile their            contract claim lawsuit in the district court or in the Claims            Court.  But we trust that, once a  forum with jurisdiction is            chosen, government counsel will pay some mind to the question            whether the Zelmans have a valid claim against the government            or  how to  get this  issue  decided at  minimum expense  and            without further delay.  Thus far, this case is not much of an            advertisement for savings bonds.                 The judgment of  the district court is  affirmed without                                                         ________            prejudice to the filing of a  new suit for damages either  in            the  Claims  Court  or  in the  district  court  (subject  to            resolution of the disaggregation issue).  No costs.                                         -12-                                         -12-