Court Opinion

ID: 9496060
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:17:12.959506+00
Date Added: 2024-06-11T17:57:21.117882
License: Public Domain

BRYSON, Circuit Judge,
concurring in part and dissenting in part.
I agree with the court in rejecting the government’s argument that Mr. Forman’s claim was barred by the statute of limitations. I also agree with the court that the agreement between Mr. Forman and the FBI did not require him to obtain express approval of any expenditure he made in the course of the undercover operation in order to be eligible for reimbursement for that expenditure. And I agree with the court’s implicit rejection of the government’s argument that in order to obtain reimbursement of expenses under the agreement Mr. Forman was required to obtain approval from officials at a level higher than the case agents and the Assistant United States Attorney.
In one important respect, however, I disagree with the court’s reading of the reimbursement agreement. Paragraph 5 of the agreement, the critical portion of the agreement for present purposes, provides:
The FBI shall reimburse FORMAN for expenses incurred by him which are deemed by the FBI to be reasonable and in furtherance of this investigation. FORMAN agrees that prior to incurring such expenses, he will consult with the FBI’s designated representative as to the nature and justification for incurring such expenses. The FBI has the right to direct FORMAN not to incur expenses which the FBI deems not to be in furtherance of its investigative goals.
The plain meaning of paragraph 5 is that the FBI agreed to reimburse Mr. Forman for all expenses that Mr. For-man incurred in furtherance of the investigation and that in order to protect his right to reimbursement, Mr. Forman was required to consult with the FBI before incurring any such expenses. The FBI reserved the right to direct him not to incur particular expenses if the FBI concluded that the particular expenses in question were not in furtherance of the investigation. The consequence of Mr. Forman’s disregard for such directions, although not spelled out in the agreement, would clearly be, at least, denial of the right to reimbursement for those unauthorized expenses.
Paragraph 5 seems to me to cover any expense that Mr. Forman incurred in the course of the undercover operation as long as Mr. Forman consulted with the FBI regarding the expense and the FBI did not advise him not to incur the expense or tell him that the FBI would not reimburse him for it. There is at least a disputed question of fact as to whether Mr. Forman consulted with the FBI or the Assistant *847United States Attorney in charge of the investigation with respect to a number of the expenses he incurred in the course of the undercover investigation, including the salary paid to Martin Reiser, the cost of the Sandel license, and certain marketing and travel costs incurred by Mr. Forman. In some instances, according to Mr. For-man, the agents and the Assistant United States Attorney directed him to incur those expenses. He asserts that in other instances he consulted with the agents or the Assistant United States Attorney and they did not direct him not to incur the expenses in question. Accepting Mr. For-man’s version of the facts for purposes of summary judgment, those expenses would therefore appear to be reimbursable under paragraph 5 of the agreement.
The court does not adopt this straightforward interpretation of the agreement between Mr. Forman and the FBI, but instead relies on a different paragraph of the agreement, paragraph 20, to qualify the FBI’s reimbursement obligations under paragraph 5. Paragraph 20 provides as follows:
It is further expressly understood that the FBI assumes no responsibility or liability for any business or income losses which may result to FORMAN and INDUSTRION as a result of his entry into this agreement.
The court interprets paragraph 20 as meaning that any “expenses related to the legitimate business operation of Pyro-Shield are beyond the scope of reimbursement.” The court then concludes that because Pyro-Shield would have had to conduct marketing and advertising, and would have had to purchase the Sandel license to engage in the business that served as a cover for the undercover operation, Mr. Forman was responsible for all those categories of expenses. As the court explains with respect to the travel, production and marketing, and advertising and seminar expenses, those expenses are “the types that would ordinarily be incurred within the ordinary course of any business that seeks a profit.”
I disagree with that reading of paragraph 20. That paragraph merely provides that the FBI would not be hable for Forman’s business losses. It does not provide that he was to be responsible for all expenses related in any way to his business, even if the FBI specifically directed him to incur those expenses, and even if he would not have incurred those expenses (or same amount of expenses) if he had not been directed to do so. It seems to me clear that paragraph 20 was intended to ensure that Mr. Forman would not attempt to hold the FBI liable for the destruction of the value of his business as a result of the undercover operation, or any loss of business that he would otherwise have been able to transact if he had not been involved in the undercover operation. It is quite a bit different — and, to me, unjustified by the language of paragraph 20 — to interpret that language as qualifying the obligations of paragraph 5 to free the FBI from having to reimburse Mr. Forman for any expense it required him to incur, as long as the expense was akin to one that a person in Mr. Forman’s position might have had to incur in running a legitimate business of the same kind.
To the extent there is any ambiguity in the agreement, that ambiguity should be resolved against the government as the drafter of the agreement. If the government had wished to have the agreement interpreted as the court interprets it today, it should have drafted it in that fashion, but it did not. Nor does this interpretation of the agreement leave the FBI vulnerable to excessive reimbursement obligations. Under the agreement, Mr. For-man was required to consult with the FBI *848with respect to all expenses as to which he planned to seek reimbursement, and the FBI was free to decline to authorize any expense that it regarded as furthering Mr. Forman’s legitimate business but not aiding the investigation.
In light of this interpretation of the agreement, I would hold that the government is not entitled to summary judgment with respect to any of the expenses as to which he consulted with the FBI or the Assistant United States Attorney. Thus, I would not affirm the grant of summary judgment to the government on Mr. For-man’s claims for travel expenses and related costs, the product marketing costs, the advertising and seminar expenses, the Sandel license, and Reiser’s salary. With respect to the Sandel license, Mr. Forman offered evidence that the Assistant United States Attorney directed him to obtain that license even though he was reluctant to do so. I therefore disagree with the court’s characterization of the license as having been obtained “not under pressure from the FBI.” Mr. Forman also offered evidence that the FBI instructed him to attend trade shows, seminars, and conventions at which he marketed Sandel. That evidence is sufficient to withstand the government’s motion for summary judgment, and I would therefore remand those claims for further proceedings.
I agree with the court, however, that the Ferziger loan was not reimbursable, because as I read the record there is no evidence that Mr. Forman consulted with the FBI or any other government official in advance of entering that transaction. Similarly, there is no evidence that Mr. Forman consulted with any government official with respect to any manufacturing costs to produce Sandel. Mr. Forman’s statement that he was told to create a functioning company and that manufacturing costs fall within that general direction is insufficient to support the required condition that he consult with government officials prior to incurring the expenditure. Moreover, Mr. Forman states that he and the FBI agreed that he would create a company to market Sandel. At that time, a company entirely unrelated to Mr. For-man was already manufacturing Sandel. It was not until much later that Mr. For-man decided to manufacture Sandel himself. He never alleged that the FBI directed him to undertake that activity, and he has failed to offer evidence of the requisite consultation with respect to expenses associated with Sandel production.
There are a number of facts in dispute between the parties, and it may be that after further factual development this case would have a very different look. Because the case was decided against Mr. Forman on summary judgment, however, we have to accept his version of the facts. And under that version of the facts, I cannot agree with the court that Mr. Forman is legally barred from recovering on any of his claims except the salary for Martin Reiser.
To that extent, I respectfully dissent.