Court Opinion

ID: 6930639
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:58:05.119393+00
Date Added: 2024-06-11T16:07:09.925540
License: Public Domain

MAYER, Circuit Judge,
concurring in part and concurring in the judgment.
I join the court’s opinion insofar as it explains why the bank prevails. I also agree that the government’s claims against Bianchi should have been dismissed, but write separately because I do not believe the Court of *386Federal Claims had jurisdiction to reach the merits of those claims. I share the reluctance to reach constitutional questions, but the court impermissibly assumed there is jurisdiction where there is none.
The Court of Federal Claims based its jurisdiction over Bianchi on 41 U.S.C. § 114(b) (Supp. IV 1992), which says that court may “summon any and all persons with legal capacity to be sued to appear as a party or parties in any suit or proceeding of any nature whatsoever pending in said court to assert and defend their interests____” More specifically, section 114(b) authorizes the Court of Federal Claims to hear the government’s “claims and contingent claims for the recovery of money hereafter paid by the United States in respect of the transaction or matter which constitutes the subject matter” of the pending suit. Id.
This court has said that under section 114(b) the Court of Federal Claims may render judgment against a third party on claims by the government in two situations: first, where that party also asserts a claim against the United States; and second, where a plaintiff sues the government for money that the government has disbursed to the third party under a mistake of fact or law. United States v. Rush, 804 F.2d 645, 647 (Fed.Cir.1986); Bowser Inc. v. United States, 420 F.2d 1057, 1062, 190 Ct.Cl. 441 (1970). By its language, section 114(b) apparently applies to these government claims, which seek return of the settlement payment, the subject of the bank’s suit. The question thus becomes whether the grant of jurisdiction over the government’s claims is constitutionally permissible.
Bianchi’s constitutional attack on section 114(b) arises from Article III of the Constitution, which provides that
[t]he judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated times, receive for their Services, a Compensation, which shall not be diminished diming their Continuance in Office.
U.S. Const., Art. Ill, § 1. The Court of Federal Claims is established under Article I not Article III. 28 U.S.C. § 171(a) (Supp. IV 1992) (“The Court is declared to be a court established under Article I of the Constitution of the United States”).
The Supreme Court tells us that “Article III, § 1, serves both to protect ‘the role of the independent judiciary within the constitutional scheme of tripartite government,’ and to safeguard litigants’ ‘right to have claims decided before judges who are free from potential domination by other branches of government.’” Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 848, 106 S.Ct. 3245, 3255, 92 L.Ed.2d 675 (1986) (citations omitted). When examining congressional action for impermissible intrusions upon the integrity of the judiciary, the Court has declined to adopt fixed rules, fearing undue restrictions on Congress’ Article I powers. Id. at 851, 106 S.Ct. at 3257. The task is to consider both the nature of the right to be adjudicated and the concerns that led Congress to deviate from Article III in this statutory scheme. Id.
Some disputes, especially those arising between the government and others over the performance of the constitutional functions of the political branches, have historically been subject to resolution exclusively by those branches. Northern Pipeline Co. v. Marathon Pipe Line Co., 458 U.S. 50, 67, 102 S.Ct. 2858, 2869, 73 L.Ed.2d 598 (1982) (plurality opinion). Because such disputes could be resolved without resort to the judicial power of the United States, Congress is free to assign their adjudication to administrative agencies or Article I courts. See Thomas v. Union Carbide Agric. Prod., 473 U.S. 568, 589, 105 S.Ct. 3325, 3337, 87 L.Ed.2d 409 (1985). These cases are said to involve “public rights”; by contrast, “private rights” cases — those that fall outside the traditional realm of the political branches — must be heard under the auspices of Article III. Northern Pipeline, 458 U.S. at 70, 102 S.Ct. at 2871.
Government contract disputes are classic public rights matters. Historically, government contracts provided that the decision of *387a contracting officer was final on any question under the contract, and not subject to Article III review. Seaboard Lumber Co. v. United States, 903 F.2d 1560, 1564 (Fed.Cir.1990). These provisions withstand constitutional scrutiny because, under the concept of sovereign immunity, the government could always decline to be sued by aggrieved contractors. When Congress later created a right of action on the contract in the Court of Claims, and then in the Article I Court of Federal Claims, it was free to attach conditions to the new right, including the waiver of the right to a jury trial or to an Article III forum. Id. at 1563.
This court applied these principles to reject a constitutional challenge to section 114(b) in United States v. Rush, 804 F.2d 645, 647 (Fed.Cir.1986). We determined that the dispute between the government and a third party contractor turned on public rights — that is, it arose “between the government and persons subject to its authority in connection with the constitutional functions of the executive and legislative branches and ... historically could have been determined exclusively by those branches.” Rush, 804 F.2d at 647. See Northern Pipeline, 458 U.S. at 67, 102 S.Ct. at 2869. Rush went no further; resolution of the case before us, however, requires an examination of why Rush was a public rights dispute.*
Rush contracted with the Air Force to construct a shopping center on the grounds of Arnold Air Force Station. Because the contract was one for the procurement of services by the government, it was necessarily controlled by the provisions of the Contract Disputes Act (CDA). 41 U.S.C. § 602(a) (1988); Seaboard Lumber Co., 903 F.2d at 1565. Under the CDA, the government waived its right to assert sovereign immunity against Rush’s contractual claims in return for the contractor’s waiver of his right to an Article III trial of government claims against him. 903 F.2d at 1567. Thus, the government could cross-claim against Rush in the Court of Federal Claims seeking return of an alleged overpayment that was the subject of a surety’s suit against the government in that court.
Like the contract in Rush, Bianchi’s DLA contracts were governed by the CDA, so Bianchi waived his rights under Article III by entering into them. When the government terminated the contracts, Bianchi complied with the CDA and sought relief before the Board of Contract Appeals. The parties then settled the dispute.**
Now the government seeks to recover the money it paid Bianchi under the voluntary settlement, a joint action to fully and finally terminate the prior ease. It is not itself a contract for the procurement of goods or services that falls under the CDA, so the terms of that Act do not apply. Cf. Coastal Corp. v. United States, 713 F.2d 728, 730 (Fed.Cir.1983) (rejecting theory that CDA applies to “contracts tangentially connected with government procurement of goods and services”). Absent the controlling provisions of the CDA, there is no historical basis for *388resolution of the government’s claims against Bianehi by the legislative or executive branches. This is not a case involving a right created by Congress or one assigned by the Constitution or tradition to the political branches. Indeed, if the government had sought to recover the settlement payment absent this precipitative suit by the bank, it would have had to sue in the district court. Whatever rights the government may have to recover its officers’ allegedly erroneous payments, see United States v. Wurts, 303 U.S. 414, 415, 58 S.Ct. 637, 638, 82 L.Ed. 932 (1938), it is not necessarily entitled to advert to an Article I forum.
Nor does Bianchi’s waiver of his Article III rights under the DLA contracts extend to the settlement. Under the settlement agreement, he accepted a single payment in full satisfaction of his claims under the terminated contracts. The parties agreed that the settlement would be final, and waived any right to reconsideration or appeal to this court. The government was completely discharged from all obligations under the contracts, and, given the broad language of the agreement, Bianchi’s obligations, including his contractual duty to submit to Article I jurisdiction, were likewise discharged. The settlement extinguished the prior relationship under the contracts. Cf. Brock & Blevins Co. v. United States, 343 F.2d 951, 954, 170 Ct.Cl. 52 (1965). Thus, what was a matter of public rights — a contractual relationship controlled by the CDA — became a private rights dispute after the settlement. The government’s concern that it might be subject to inconsistent judgments cannot overcome the demands of Article III where the government so clearly had the ability to protect its rights, but surrendered them. The government’s claims against Bianehi should have been dismissed for lack of jurisdiction.

 Like Bianchi, Rush challenged section 114(b) under both Article III and the Seventh Amendment. The Rush court cited Maryland Casualty Co. v. United States, 141 F.Supp. 900 (Ct.Cl.1956), on which the government relies here. Maryland Casualty upheld the validity of section 114(b) in the face of a Seventh Amendment challenge similar to Bianchi’s. But Maryland Casualty was decided by the Court of Claims, a court that sat without a jury, much like the present Court of Federal Claims, but one that was established under Article III. Glidden v. Zdanok, 370 U.S. 530, 584, 82 S.Ct. 1459, 1490, 8 L.Ed.2d 671 (1962); see Act of July 28, 1953, § 1, 67 Stat. 226, added to 28 U.S.C. § 171 (“Such court is hereby declared to be a court established under Article III of Constitution of the United States”). Maryland Casualty supports the Rush Seventh Amendment holding, but it does not constrain our analysis of section 114(b) under the broader scope of Article III.

 Under the settlement, the parties agreed that Bianchi "is entitled to recover $617,500.00 on his claims ...; that the Government is entitled to take nothing on its claims ...; that Mr. Bianchi is entitled to interest ...; and that the parties waive their rights to seek reconsideration of this stipulated decision of the Board or to appeal that stipulated decision____” Appeals of M. Bianchi of California, ASBCA Nos. 26362, 26363, 26364, 26365, 26366, 26505, 26506, 26513, 26642, 29932, 29933, and 29934 (September 29, 1988). Moreover, Bianchi was required to execute a Certificate of Finality, under which he agreed to accept the award as “a full discharge to the United States of all claims and demands arising out of the matters involved____" Certificate of Finality, ASBCA Nos. 26362, et al.