Union Pacific Railroad v. United States

52 Fed. Cl. 730, 2002 U.S. Claims LEXIS 149, 2002 WL 1455808
CourtUnited States Court of Federal Claims
DecidedJune 28, 2002
DocketNo. 01-490C
StatusPublished
Cited by9 cases

This text of 52 Fed. Cl. 730 (Union Pacific Railroad v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Union Pacific Railroad v. United States, 52 Fed. Cl. 730, 2002 U.S. Claims LEXIS 149, 2002 WL 1455808 (uscfc 2002).

Opinion

ORDER

MILLER, Judge.

This contract case is before the court on defendant’s motion to dismiss under RCFC 12(b)(4) for failure to state a claim upon which relief can be granted. At issue is whether the Anti-Deficiency Act, 31 U.S.C. § 1341 (2000), precludes a claim predicated on the Government’s refusal to honor an indemnity clause. Argument is deemed unnecessary.

FACTS

The facts, viewed favorably to the pleader, are drawn from the complaint. Union Pacific Railroad Corporation (“plaintiff’) is a Delaware corporation operating as a common carrier by railroad. Until approximately 1970 the United States General Services Administration (“GSA”) owned property known as the Auburn General Depot in Auburn, Washington (the “Depot”). At that time GSA sold portions of-the Depot, but retained ownership of certain lead tracks.

On January 28, 1970, GSA entered into a Lead Track Agreement (the “LTA”) by which GSA granted plaintiff and three other railroad companies an easement over the lead tracks for switching purposes. The LTA recited GSA’s ownership of the lead tracks and responsibility for their maintenance. Under the LTA’s section 3, GSA agreed to keep the tracks clear and to indemnify plaintiff to the extent permitted by the Federal Tort Claims Act, 28 U.S.C. § 1346(b)(1) (2000) (the “FTCA”), for any violations of this duty. GSA also agreed to a general indemnification provision, codified in section 9 of the LTA (“Section 9”). Section 9 provides: “The GSA will indemnify the Railroads to the extent permitted by the Federal Tort Claims Act, against claims of third persons arising from the negligence or misconduct of employees of the United States of America.” The LTA was signed by representatives of the four railroads and by W.C. Brooks, Contracting Officer, Buildings Management Division, GSA.

On or about September 27, 1998, one of plaintiffs employees was injured when a gap in a lead track at the Depot caused a derailment. The employee sued both plaintiff and GSA in the United States District Court for the Western District of Washington. Plaintiff cross-claimed against GSA for contractual indemnification. On May 5, 2001, the district court dismissed the cross-claim after the parties agreed that jurisdiction for contractual indemnity lay with the United States Court of Federal Claims. On May 18, 2001, plaintiff settled with its employee for $101,830.00. GSA has refused to indemnify plaintiff.

Plaintiff now sues for breach of contract, seeking to recover the $101,830.00 settlement, prejudgment interest, attorneys’ fees, and costs. Defendant moves to dismiss under RCFC 12(b)(4), presenting several argu[732]*732ments to the effect that Section 9 of the LTA is unenforceable because it contravenes the Anti-Deficiency Act, 31 U.S.C. § 1341 (2000).

DISCUSSION

When a federal court reviews the sufficiency of the complaint, it follows “the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); accord New Valley Corp. v. United States, 119 F.3d 1576, 1579 (Fed.Cir.1997). Under RCFC 12(b)(4), the court must accept as true the facts alleged in the complaint, Davis v. Monroe County Bd. of Educ., 526 U.S. 629, 633, 119 S.Ct. 1661, 143 L.Ed.2d 839 (1999), and must indulge all reasonable inferences in favor of the nonmovant, Henke v. United States, 60 F.3d 795, 797 (Fed.Cir.1995). Therefore, a motion under RCFC 12(b)(4) must be denied if relief can be granted “under any set of facts that could be proved consistent with the allegations.” NOW v. Scheidler, 510 U.S. 249, 256, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994).

Defendant finds plaintiffs complaint lacking under each of five arguments: (1) The Anti-Deficiency Act, 31 U.S.C. § 1341(a)(1), bars a contracting officer from agreeing to open-ended indemnification provisions; (2) the courts will not enforce indemnification provisions that contravene the Anti-Deficiency Act’s plain language; (3) plaintiff has not identified a prior appropriation earmarked to cover the costs of indemnification, as required by the Anti-Deficiency Act; (4) a general ban exists against enforcement of open-ended indemnity clauses; and (5) plaintiff does not invoke an exception to the Anti-Deficiency Act, so that the contracting officer in this case did not lawfully bind the United States to an open-ended indemnification.

Although addressed as individual arguments, defendant’s motion to dismiss is grounded on the proposition that Section 9 is an open-ended and unenforceable indemnification clause that, by operation of the Anti-Deficiency Act, cannot form the basis of a legally cognizable claim against the United States. Pursuant to the Anti-Deficiency Act, 31 U.S.C. § 1341(a)(1):

An officer or employee of the United States Government or the District of Columbia government may not—
(A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation; [or]
(B) involve either government in a contract or obligation for the payment of money before an appropriation .is made unless authorized by law____

The statute prevents the executive branch from binding the Government to expenditures or liabilities beyond those contemplated and authorized by the legislative branch. See Sutton v. United States, 256 U.S. 575, 578-80, 56 Ct.Cl. 477, 41 S.Ct. 563, 65 L.Ed. 1099 (1921) (discussing predecessor statute); Public Works—Contracts, 21 Op. Atty, Gen. 244, 248 (1895) (same). The Anti-Deficiency Act thus “bars a federal employee or agency from entering into a contract for future payment of money in advance of, or in excess of, an existing appropriation.” Hercules, Inc. v. United States, 516 U.S. 417, 427, 116 S.Ct. 981,134 L.Ed.2d 47 (1996).

The cases cited by defendant instruct that the Anti-Deficiency Act proves an effective bar to causes of action predicated on the establishment of an implied-in-fact contract for indemnification. See Hercules, 516 U.S. at 427-28, 116 S.Ct. 981 (Anti-Deficiency Act is strong evidence that contracting officer would not agree to alleged indemnification); California-Pacific Util. Co. v.

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Bluebook (online)
52 Fed. Cl. 730, 2002 U.S. Claims LEXIS 149, 2002 WL 1455808, Counsel Stack Legal Research, https://law.counselstack.com/opinion/union-pacific-railroad-v-united-states-uscfc-2002.