Court Opinion

ID: 167606
Source: CourtListenerOpinion
Date Created: 2010-08-14 09:59:34+00
Date Added: 2024-06-11T17:24:53.453442
License: Public Domain

F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                      UNITED STATES CO URT O F APPEALS
                                                                      June 12, 2006
                            FO R TH E TENTH CIRCUIT                Elisabeth A. Shumaker
                                                                       Clerk of Court

    U N ITED STA TES O F A M ER ICA,

              Plaintiff-Appellee,

     v.                                                  No. 05-5098
                                                   (D.C. No. 98-CV -521-E)
    STA TE OF O K LA H O MA ;                            (N.D. Okla.)
    OK LAH OM A W ATER RESOU RCES
    B OA RD ,

              Defendants-Appellants.

                             OR D ER AND JUDGM ENT *

Before PO RFILIO, B AL DOC K , and EBEL, Circuit Judges.

          The State of O klahoma and the O klahoma W ater Resources Board

(collectively “the Board”) appeal from the district court’s decision granting

summary judgment in favor of the United States on its breach of contract claim.

*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. The court generally disfavors the citation of orders and
judgments; nevertheless, an order and judgment may be cited under the terms and
conditions of 10th Cir. R. 36.3.
On appeal, the Board argues that the district court erred in its decision because:

(1) there are questions of fact as to whether the Board breached the contract; and

(2) even if the money judgment against the Board were appropriate, it was error

to grant an injunction against the Board. W e review de novo the district court’s

grant of summary judgment in favor of the United States, applying the same

standard as the district court. See Simms v. Oklahoma ex rel. Dep’t of M ental

Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999). W e

affirm.

                                          I

      In 1974, the United States, through the Army Corps of Engineers, entered

into a contract with the W ater Conservation Storage Commission of the State of

Oklahoma, the legal predecessor to the Board, for the building of Clayton Lake

(the name was later changed to Sardis Lake). The contract provided that the

Corps w ould build the lake for the purpose of present and future use water supply

storage. In return, the Board agreed to repay the Corps for building the lake in

fifty consecutive annual payments and to pay future operating costs of the lake.

The contract was approved by the Oklahoma Attorney General, Larry Derryberry.

      The Board made six annual payments under the contract. After M arch of

1990, the Board made only two partial payments. The United States ultimately

sued the Board for breach of contract. The parties filed cross-motions for

summary judgment and the district court granted summary judgment in favor of

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the United States. The district court’s judgment included an award of money

damages, declaratory relief and injunctive relief. This appeal followed.

                                          II

      The Board’s main argument on appeal is that the district court erred

because there are material questions of fact regarding whether the Board breached

the water supply contract. 1 “As to materiality, the substantive law will identify

which facts are material. Only disputes over facts that might affect the outcome

of the suit under the governing law will properly preclude the entry of summary

judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also

M iles v. Denver Public Sch., 944 F.2d 773, 775 (10th Cir. 1991). Although the

Board concedes that the contract is valid, it argues that the contract is not

enforceable under Oklahoma law until the legislature appropriates funds to pay

the contract. The Board contends that it is authorized to sell its water storage

rights and could use those proceeds to pay the United States, but the Board claims

that the United States cannot sue for those funds until the Board actually sells

those rights.   The B oard argues that because the United States has not shown

either that the legislature has appropriated the funds to pay the debt, or that the

1
       The Board presents as separate issues the question of whether the district
court erred in granting summary judgment in favor of the United States and in
denying the Board’s cross-motion for summary judgment. The arguments for
these two issues are virtually identical; therefore, we will treat them as one issue
on appeal.

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Board has sold its water storage rights, the district court erred when it granted

summary judgment in favor of the United States.

      The Board’s assertion that the district court erred in granting summary

judgment in favor of the United States is based on the erroneous premise that

Oklahoma law controls the United States’ contract claim. In United States v.

Indep. Sch. Dist. No. 1, 209 F.2d 578, 580-81 (10th Cir. 1954), we determined

that Oklahoma law did not limit the United States’ ability to recover

overpayments made to a subdivision of the State in conjunction with a valid

contract for the establishment of a community lunch school program. Among

other arguments based on Oklahoma law, the plaintiffs in Independent School

District No. 1 argued, like the Board does here, that the Oklahoma Constitution

precluded the United States from recovering in the absence of a valid prior

appropriation by the Oklahoma legislature. Id. at 580. Relying on Clearfield

Trust Company v. United States, 318 U.S. 363 (1943), we concluded that the right

of the U nited States to recover the overpaid funds was controlled by federal law,

not O klahoma law. Id. W e explained,

      The funds which the government seeks to recover were disbursed to a
      subdivision of the state under authority of federal law and in the
      exercise of a constitutional function. And they were paid under
      conditions and circumstances w hich raise a duty or an obligation to
      repay that which was mistakenly disbursed. In the performance of the
      constitutional function there is no express or implied disposition to
      subordinate correlative federal rights to state law, and no reason is
      suggested or apparent for conditioning the government’s rights or
      remedies upon state law. W hether, therefore, the asserted remedy be

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      for money had and received or restitution for unjust enrichment, the
      right to recover under controlling federal law is plain.

Id. at 580-81.

      It is now well-settled that “the ‘obligations to and rights of the United

States under its contracts are governed exclusively by federal law .’” United

States v. City of Las Cruces, 289 F.3d 1170, 1186 (10th Cir. 2002) (quoting Boyle

v. United Techs. Corp., 487 U.S. 500, 504 (1988)). Here, the contract itself was

authorized by two federal laws, the W ater Supply Act of 1958, 43 U.S.C. § 390b,

and the Flood Control Act of 1962, 42 U.S.C. § 1962d-5b. The W ater Supply Act

recognizes that it is the states’ primary responsibility to develop their own water

supplies, but that the federal government should participate and cooperate in

developing such supplies. See 43 U.S.C. § 390b(a). These laws provide that the

state or non-federal interest must pay for the cost of any water resources project

and must enter into a written contract reflecting such agreement. See id. at

§ 390b(b); 42 U.S.C. § 1962d-5b(a).

      Consistent with these federal laws, when the Board entered into the

contract, it agreed to the following statement: “[the Board] is empowered . . . to

contract with the Government and is vested with all necessary powers for

accomplishment of the purposes of this contract, including those required by

Section 221 of the Flood Control Act of 1970 (42 USC 1962d-5b).” Aplt. App. at

18. In another part of the contract, the Attorney General certified that: “It is my

                                         -5-
opinion that this contract is within the authority of the contracting agency and in

reaching this conclusion I have considered the effect of Section 221 of the Flood

Control Act of 1970 (42 USC 1962d-5b).” Id. at 27. In addition to the

requirement of a w ritten agreement, the Flood Control Act requires that the Board

“be a legally constituted public body with full authority and capability to perform

the terms of its agreement and to pay damages, if necessary, in the event of

failure to perform.” 42 U.S.C. § 1962d-5b(b). The Flood Control Act also

provides that, “every agreement entered into pursuant to this section shall be

enforc[ea]ble in the appropriate district court of the United States.” Id.

§ 1962d-5b(c).

      Because federal law governs the United States’ contract claim, the facts the

Board asserts are in dispute– that the legislature has not made any appropriations

and the Board has not sold any water storage rights– are not material. The

material facts are undisputed. The Board admitted in its Answer that it entered

into a water supply contract with the United States pursuant to the W ater Supply

Act of 1958 and Section 221 of the Flood Control Act of 1970 and that it was

duly authorized to enter into the contract. The contract, which the Board admits

is valid, requires the Board to make fifty consecutive annual payments. The

Board admitted in its Answer that it has not made any payments under the

contract since September 1997. Accordingly, the district court properly found

that the contract is valid, the Board is legally required to perform its obligations

                                          -6-
under the contract, and the contract is enforceable in federal court. The district

court therefore did not err in granting summary judgment in favor of the United

States on its breach of contract claim.

                                          III

      In its second issue on appeal, the Board argues that, even if the contract is

enforceable, the district court erred in granting the United States’ request for

injunctive relief: (1) requiring the Board to make all future payments under the

water supply contract within ninety days of receiving notice that a payment is

due; and (2) prohibiting the Board from taking any other action that would result

in a breach of the water supply contract. The district court’s injunctive relief is

essentially an order for the B oard to specifically perform the contract, which w e

review for abuse of discretion. See Koch v. Koch, 903 F.2d 1333, 1335-36

(10th Cir. 1990). An abuse of discretion will be found only where the district

court makes “an arbitrary, capricious, whimsical, or manifestly unreasonable

judgment.” FDIC v. Oldenburg, 34 F.3d 1529, 1555 (10th Cir. 1994) (quotation

omitted).

      The Board argues that the district court is in effect requiring the legislature

to appropriate monies to make the annual payment within ninety days of receipt

of notice from the U nited States and that this is unlawful under In the M atter of

the Application of the Oklahoma Capitol Improvement Authority, 958 P.2d 759

(O kla. 1988). The Board acknowledges, however, that it has the authority to

                                          -7-
acquire funds from at least one source other than legislative appropriations by

selling its water storage rights. The district court’s order therefore does not force

the O klahoma legislature to appropriate the funds. M oreover, the Board’s

argument that it will suffer hardship if it is required to make its future annual

payments w ithin ninety days of receiving notice that a payment is due is entirely

speculative at this point, and is not a basis for finding that the district court

abused its discretion in granting relief. See In re Carpenter, 205 F.3d 1249, 1252

n.2 (10th Cir. 2000) (rejecting argument that specific performance would frustrate

purpose of decree or make it inequitable as speculative; in the event decree

became inequitable in the future, the party could seek relief from judgment

pursuant to Federal Rule of Civil Procedure 60(b)).

      The judgment of the district court is AFFIRMED.

                                                       Entered for the Court

                                                       John C. Porfilio
                                                       Circuit Judge

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