Quality Tooling, Inc. v. United States

47 F.3d 1569, 1995 WL 36241
CourtCourt of Appeals for the Federal Circuit
DecidedJune 16, 1995
Docket93-1234
StatusPublished
Cited by36 cases

This text of 47 F.3d 1569 (Quality Tooling, Inc. v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Quality Tooling, Inc. v. United States, 47 F.3d 1569, 1995 WL 36241 (Fed. Cir. 1995).

Opinions

PLAGER, Circuit Judge,

with whom PRATT, Senior Circuit Judge, joins.

This case requires us to reconcile the jurisdiction of the United States Court of Federal [1571]*1571Claims over contract disputes to which the Federal Government is party with the power of the United States District Court, sitting in bankruptcy, to bring all matters affecting the bankrupt’s estate into one proceeding. This is a case of first impression in this court.

The District Court for the Northern District of Alabama, sitting in bankruptcy, determined that it possessed subject matter jurisdiction to entertain a complaint seeking declaratory and monetary relief based upon a contract in a dispute otherwise governed by the exclusive provisions of the Contract Disputes Act of 1978, Pub.L. No. 95-563, 92 Stat. 2388 (1978) (CDA). The District Court then denied the Government’s motion to transfer the cause to the Court of Federal Claims. The United States has taken this appeal pursuant to 28 U.S.C. § 1292(d)(4)(A),1 which permits appeals to this court from interlocutory orders of a district court denying, in whole or in part, a motion to transfer an action to the Court of Federal Claims under 28 U.S.C. § 1631 (dealing with transfers to cure want of jurisdiction).

We conclude that in a case such as this, Congress gave concurrent jurisdiction to both the District Court, under the Bankruptcy Act of 1978, Pub.L. No. 95-598, 92 Stat. 2549, codified as amended as Title 11 of the United States Code (Bankruptcy Act), and the Court of Federal Claims, under the Contract Disputes Act. The initial decision as to which is the proper forum to resolve a particular contract dispute is for the District Court, applying the proper standards. The cause is remanded to the District Court with instructions to reconsider its denial of the transfer motion in light of these standards.

BACKGROUND

The United States Army (Army) contracted with Quality Tooling, Inc. (Quality) for the manufacture of certain parts required by the Army for a missile system. The parties to the contract had a falling out over Quality’s performance (or lack of it), and were unable to settle the dispute amicably. The Army terminated the contract for default on October 11, 1990, and informed Quality that it owed the Government for losses that, the Army alleged, had been caused by Quality’s default.

Quality then brought suit against the Government in the Court of Federal Claims2 pursuant to the Tucker Act, 28 U.S.C. § 1491, and the Contract Disputes Act of 1978, 41 U.S.C. § 609 (CDA), one of the established routes for resolution of a government contract dispute. In its suit Quality alleged that the Army had in fact terminated the contract for the convenience of the government, that the Army was therefore not entitled to recover damages as a result of a default, and that Quality was due money both under the termination for convenience clause and for incidental expenses.3 While the contract dispute was pending before the Court of Federal Claims, Quality petitioned the District Court of the District of Columbia for protection under Chapter 11 of the Bankruptcy Act. At Quality’s request, Quality’s bankruptcy case was subsequently transferred to the District Court for the Northern District of Alabama, where Quality is located. After a series of moves and countermoves by the parties, Quality’s contract claim against the United States, pending in the Court of Federal Claims,, ended up in the hands of the District Court for the Northern District of Alabama, sitting in bankruptcy.

The Government then moved, pursuant to 28 U.S.C. § 1631, to transfer the contract dispute back to the Court of Federal Claims, arguing that the District Court, sitting in bankruptcy, was without jurisdiction to try [1572]*1572the issue, and that the proper forum for resolution of the contractual claims was the Court of Federal Claims. The District Court denied the Government’s motion. The Government duly appealed the denial to this court pursuant to 28 U.S.C. § 1292(d)(4), which establishes this court’s jurisdiction over interlocutory appeals from the grant or denial of a motion to transfer a case from a district court to the Court of Federal Claims.

DISCUSSION

I. The transfer from the Court of Federal Claims to the District Court for the Northern District of Alabama.

As a preliminary matter, the Government argues that this case was improperly transferred under 28 U.S.C. § 1452 from the Court of Federal Claims to the District Court in Alabama sitting in bankruptcy. In the Government’s view, that provision permits transfer only from state courts to a bankruptcy court, and a transfer from a federal court of nationwide jurisdiction to a district court is not authorized. In support of the Government’s argument, it is noted that § 1452 is the last of a number of sections codified in chapter 89 under the title: “District Courts: Removal of Cases from State Courts,” and each of the other sections — 1441 through 1451' — deals expressly with actions commenced in state courts.

But § 1452 does not refer to actions commenced in state courts. It states simply that “[a] party may remove any claim or cause of action in a civil action” to a district court sitting in bankruptcy. There are two stated exceptions: (i) the proceeding may not be before the United States Tax Court; and (ii) the claim may not be a civil action by a governmental unit to enforce the unit’s police or regulatory power.

The specific exclusion of transfers from the United States Tax Court hardly would be necessary if § 1452 dealt only with transfers from state courts. Had Congress wanted to exclude other federal courts, including the Court of Federal Claims, it could have said so. The Tax Court and the Court of Federal Claims are both Article I courts of nationwide jurisdiction. The Government’s argument — that the terms of the statute suffice to exclude courts of national jurisdiction — would make the express exclusion of the Tax Court superfluous.

Enacted as part of the 1984 amendments to the Bankruptcy Act, Bankruptcy Amendments of 1984, Pub.L. No. 98-353, title I, § 103(a), 98 Stat. 333, 335 (1984), section 1452 is designed to address removal of claims related to bankruptcy eases, and to provide for transfer of such claims to the district courts sitting in bankruptcy. Nothing in the language of the section suggests a limit on the courts from which transfer is authorized, other than the two specific exceptions noted, neither of which applies to the case of Quality.4

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Bluebook (online)
47 F.3d 1569, 1995 WL 36241, Counsel Stack Legal Research, https://law.counselstack.com/opinion/quality-tooling-inc-v-united-states-cafc-1995.