B-183576, AUG 26, 1977

B-183576, AUG 26, 1977

WHERE FEDERAL TORT CLAIMS ACT JUDGMENT AWARDED MORE THAN $100,000 TO NAMED PLAINTIFFS AND ALSO MADE AWARDS OF LESS THAN $100,000 TO NAMED PLAINTIFFS ON BEHALF OF THEIR CHILDREN, LESSER AWARDS WERE CORRECTLY PAID UNDER 31 U.S.C. 724A, AND ORDINARILY INTEREST WOULD BE DISALLOWED SINCE TRANSCRIPT OF JUDGMENT WAS NOT FILED WITH GENERAL ACCOUNTING OFFICE (GAO) AS REQUIRED BY SECTION 724A. HOWEVER, GAO HAS DUTY TO PAY INTEREST HERE IN COMPLIANCE WITH SPECIFIC TERMS OF FINAL JUDGMENT.

PAYMENT OF JUDGMENT - FELDER V. UNITED STATES:

THIS DECISION RESPONDS TO A REQUEST FOR RECONSIDERATION OF THE DISALLOWANCE BY OUR CLAIMS DIVISION OF INTEREST ON PART OF A JUDGMENT AWARDED AGAINST THE UNITED STATES IN FELDER V. UNITED STATES, INFRA, UNDER THE CIRCUMSTANCES SET FORTH BELOW.

FELDER V. UNITED STATES WAS A WRONGFUL DEATH ACTION BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA UNDER THE FEDERAL TORT CLAIMS ACT, 28 U.S.C. 1346(B), 2671-2680(1970). THE SUIT RESULTED FROM THE CRASH OF A SMALL AIRPLANE AND THE DEATHS OF ITS THREE OCCUPANTS. THE THREE SURVIVING SPOUSES-- GLORIA FELDER, BETTY ANN HENSCHEN, AND LYNDA M. BURNS-- JOINED TO BRING SUIT IN THEIR OWN RIGHT AND ON BEHALF OF THEIR MINOR CHILDREN. THE DISTRICT COURT AWARDED JUDGMENT TO PLAINTIFFS ON NOVEMBER 29, 1974.

THE UNITED STATES APPEALED. ON SEPTEMBER 29, 1976, THE COURT OF APPEALS OF THE 9TH CIRCUIT AFFIRMED THE JUDGMENT ON THE ISSUE OF LIABILITY BUT MODIFIED THE AWARD OF DAMAGES. 543 F.2D 657. THE CASE WAS REMANDED TO THE DISTRICT COURT WITH INSTRUCTIONS TO ENTER A MODIFIED JUDGMENT. THE MANDATE OF AFFIRMANCE FURTHER SPECIFIED: "INTEREST ALLOWED AT THE STATUTORY RATE OF 4% ON THE MODIFIED AWARD TO EACH RESPECTIVE PLAINTIFF * * * FROM NOVEMBER 29, 1974."

ON DECEMBER 15, 1976, THE DISTRICT COURT ISSUED ITS AMENDED JUDGMENT, WHICH READS AS PERTAINS TO PLAINTIFF BURNS:

"IT IS FURTHER ORDERED, ADJUDGED, AND DECREED THAT THE PLAINTIFF LYNDA M. BURNS * * * HAVE AND RECOVER JUDGMENT AGAINST THE UNITED STATES OF AMERICA THE SUM OF FIVE HUNDRED NINETY THOUSAND DOLLARS ($590,000.00) ALLOCATED TO AND FOR THE USE AND BENEFIT OF THE FOLLOWING HEIRS AND DEPENDENTS ENTITLED TO RECOVER, TO-WIT: LYNDA M. BURNS, SURVIVING SPOUSE, $500,000.00; AND TIMOTHY BURNS, $90,000.00, WITH INTEREST THEREON AT THE STATUTORY RATE OF FOUR PERCENT (4%) PER ANNUM FROM NOVEMBER 29, 1974."

THE AWARDS TO PLAINTIFFS FELDER AND HENSCHEN ARE WORDED SIMILARLY. EACH CASE THE AMOUNT ALLOCATED TO THE SURVIVING SPOUSE WAS IN EXCESS OF $100,000 AND THE AMOUNT ALLOCATED TO EACH OF THE MINOR CHILDREN WAS LESS THAN $100,000. THE AWARD OF INTEREST HAD BEEN MADE PURSUANT TO 28 U.S.C. 2411(B)(1970), WHICH PROVIDES THAT ON ALL FINAL JUDGMENTS RENDERED AGAINST THE UNITED STATES UNDER THE FEDERAL TORT CLAIMS ACT--

" * * * INTEREST SHALL BE COMPUTED AT THE RATE OF 4 PER CENTUM PER ANNUM FROM THE DATE OF THE JUDGMENT UP TO, BUT NOT EXCEEDING, THIRTY DAYS AFTER THE DATE OF APPROVAL OF ANY APPROPRIATION ACT PROVIDING FOR PAYMENT OF THE JUDGMENT."

ON FEBRAURY 4, 1977, THE JUSTICE DEPARTMENT CERTIFIED THE JUDGMENTS AS FINAL, GROUPING THE AWARDS INTO TWO CATEGORIES: THOSE IN EXCESS OF $100,000 AND THOSE LESS THAN $100,000. THE AWARDS OF LESS THAN $100,000 WERE PRESENTED TO THE GENERAL ACCOUNTING OFFICE (GAO) FOR SETTLEMENT PURSUANT TO 31 U.S.C. 724A, THE PERMANENT INDEFINITE APPROPRIATION FOR PAYMENT OF JUDGMENTS, WHICH PROVIDED IN PART AT THAT TIME:

"THERE ARE APPROPRIATED * * * SUCH SUMS AS MAY * * * BE NECESSARY FOR THE PAYMENT * * * OF FINAL JUDGMENTS, AWARDS, AND COMPROMISE SETTLEMENTS (NOT IN EXCESS OF $100,000 * * * IN ANY ONE CASE) WHICH ARE PAYABLE IN ACCORDANCE WITH THE TERMS OF SECTIONS * * * 2414 OF TITLE 28 * * * PROVIDED, THAT, WHENEVER A JUDGMENT OF A DISTRICT COURT TO WHICH THE PROVISIONS OF SECTION 2411(B) OF TITLE 28 APPLY, IS PAYABLE FROM THIS APPROPRIATION, INTEREST SHALL BE PAID THEREON ONLY WHEN SUCH JUDGMENT BECOMES FINAL AFTER REVIEW ON APPEAL OR PETITION BY THE UNITED STATES, AND THEN ONLY FROM THE DATE OF THE FILING OF THE TRANSCRIPT THEREOF IN THE GENERAL ACCOUNTING OFFICE TO THE DATE OF THE MANDATE OF AFFIRMANCE * * * .

SINCE THE AWARDS TO THE THREE SURVIVING SPOUSES EACH EXCEEDED THE $100,000 LIMITATION THEN APPLICABLE UNDER 31 U.S.C. 724A, THESE PORTIONS OF THE JUDGMENT WERE SUBMITTED TO THE CONGRESS FOR SEPARATE APPROPRIATION. THE AWARDS TO THE SURVIVING SPOUSES WERE PROVIDED FOR IN THE SUPPLEMENTAL APPROPRIATIONS ACT, 1977, PUB. L. NO. 95-26 (MAY 4, 1977), 91 STAT. 61, 96, AND THEY HAVE BEEN PAID WITH FOUR PERCENT INTEREST FROM THE DATE OF THE ORIGINAL JUDGMENT AS AUTHORIZED BY 28 U.S.C. 2411(B), SUPRA. /1/

/1/ PUB. L. NO. 95-26 ALSO REPEALED THE $100,000 LIMITATION ON JUDGMENTS PAYABLE FROM THE PERMANENT APPROPRIATION MADE BY 31 U.S.C. 724A, BUT DID NOT OTHERWISE CHANGE THE REQUIREMENTS OF THAT SECTION FOR PURPOSES RELEVANT HERE.

IN MARCH 1977 OUR CLAIMS DIVISION HAD ISSUED SETTLEMENTS FOR PAYMENT OF THE AWARDS OF LESS THAN $100,000 TO THE MINOR CHILDREN PURSUANT TO 31 U.S.C. 724A, AND THE AWARDS HAVE SINCE BEEN PAID. HOWEVER, INTEREST ON THESE AWARDS WAS DISALLOWED BECAUSE A TRANSCRIPT OF THE JUDGMENT HAD NOT BEEN FILED WITH GAO AS REQUIRED BY THE FIRST PROVISO OF SECTION 724A, SUPRA.

THE ATTORNEY FOR PLAINTIFF BURNS, ON BEHALF OF ALL PLAINTIFFS IN THE ACTION, NOW ASKS US TO RECONSIDER THE DISALLOWANCE OF INTEREST ON THE AWARDS OF LESS THAN $100,000. HE CONTENDS THAT THE JUSTICE DEPARTMENT AND OUR CLAIMS DIVISION ERRED IN TREATING THESE AWARDS AS SEPARATE JUDGMENTS PAYABLE UNDER 31 U.S.C. 724A. RATHER, HE ASSERTS THAT THE AMOUNTS AWARDED TO EACH SURVIVING SPOUSE AND HER CHILDREN CONSTITUTED A SINGLE JUDGMENT, SO THAT THE JUDGMENT IN EACH CASE EXCEEDED $100,000. HE RELIES ON NUNEZ V. NUNEZ, 25 ARIZ.APP. 558, 545 P.2D 69(1976), IN WHICH THE ARIZONA COURT OF APPEALS STATED THAT UNDER THE ARIZONA WRONGFUL DEATH STATUTE--

"* * * THERE IS 'ONE ACTION' FOR DAMAGES OCCASIONED BY A WRONGFUL DEATH. THERE IS ALSO BUT ONE PLAINTIFF, ONE OF THE PERSONS DESIGNATED BY STATUTE, AND THEREFORE THERE IS BUT ONE JUDGMENT, THE PROCEEDS OF WHICH ARE HELD BY THE STATUTORY PLAINTIFF AS TRUSTEE FOR THE PERSONS ON WHOSE BEHALF THE SUIT WAS BROUGHT. * * * " 545 P.2D AT 73.

BASED ON THIS PREMISE, THE ATTORNEY MAINTAINS THAT SETTLEMENT OF THE ENTIRE AMOUNT AWARDED TO EACH NAMED PLAINTIFF SHOULD HAVE BEEN EFFECTED THROUGH THE SEPARATE APPROPRIATION ACT. HAD THIS BEEN DONE, THE AWARDS OF LESS THAN $100,000 TO THE CHILDREN WOULD NOT HAVE BEEN PAYABLE UNDER, OR SUBJECT TO THE REQUIREMENTS OF 31 U.S.C. 724A WITH RESPECT TO THE PAYMENT OF INTEREST. INTEREST ON THESE AMOUNTS WOULD THEN ALSO HAVE BEEN ALLOWED UNDER 28 U.S.C. 2411(B) AT 4 PERCENT PER ANNUM FROM NOVEMBER 29, 1974.

WE BELIEVE THAT THE JUSTICE DEPARTMENT AND OUR CLAIMS DIVISION HAD AUTHORITY TO SEPARATE OUT THE AWARDS HERE IN QUESTION AND TO PAY THESE AWARDS UNDER 31 U.S.C. 724A. THIS APPROACH WAS CONSISTENT WITH PRIOR DECISIONS OF OUR OFFICE AND OF THE COURTS. SEE 40 COMP.GEN. 307(1960); UNITED STATES V. STATE OF MARYLAND, 349 F.2D 693 (D.C. CIR. 1965); UNITED STATES V. VARNER, 400 F.2D 369 (5TH CIR. 1968).

OUR DECISION POINTED OUT THAT THE PRIMARY PURPOSE OF 31 U.S.C. 724A "WAS TO PROVIDE FOR THE PROMPT PAYMENT OF JUDGMENTS AND TO THEREBY ELIMINATE OR GREATLY REDUCE THE COSTS OF INTEREST THEREON." ID. AT 308.

THE QUESTION OF SEVERABILITY OF JUDGMENTS FOR PURPOSES OF 31 U.S.C. 724A WAS ALSO ADDRESSED IN UNITED STATES V. STATE OF MARYLAND, 349 F.2D 693 (D.C. CIR. 1965). IN THAT CASE A WRONGFUL DEATH ACTION HAD BEEN BROUGHT AGAINST THE UNITED STATES IN THE NAME OF THE STATE OF MARYLAND ON BEHALF OF THE DECEDENT'S WIDOW AND CHILDREN. THE JUDGMENT AWARDED VARIOUS SUMS TO THE WIDOW AND EACH CHILD. EACH OF THE AMOUNTS AWARDED WAS LESS THAN $100,000, ALTHOUGH THE AGGREGATE OF THE INDIVIDUAL AWARDS EXCEEDED THAT AMOUNT. OBSERVING THAT ONLY ONE ACTION WOULD LIE UNDER THE MARYLAND WRONGFUL DEATH STATUTE, THE DISTRICT COURT HAD HELD THAT THERE WAS ONLY ONE JUDGMENT, EVEN THOUGH THE JUDGMENT DIRECTED PAYMENT OF SPECIFIC SUMS TO THE VARIOUS DEPENDENTS. THE DISTRICT COURT THEREFORE CONCLUDED THAT THE JUDGMENT WAS NOT SUBJECT TO 31 U.S.C. 724A AND ITS INTEREST PROVISIONS. 229 F.SUPP. 280 (D.D.C. 1964).

THE COURT OF APPEALS REVERSED, HOLDING THAT THE JUDGMENT WAS PAYABLE UNDER SECTION 724A, AND THAT INTEREST WAS BARRED BY FAILURE TO FILE A TRANSCRIPT OF THE JUDGMENT WITH GAO. INITIALLY THE COURT OF APPEALS POINTED OUT THAT THE STATE WRONGFUL DEATH STATUTE WAS NOT RELEVANT IN DETERMINING THE APPLICABILITY OF SECTION 724A:

"THE FEDERAL INTEREST STATUTE * * * IS TO BE CONSTRUED AND APPLIED ACCORDING TO ITS OWN PURPOSES AND MEANING. THE JUDGMENT IS NOT NECESSARILY TO BE CONSTRUED AS 'IN ANY ONE CASE' BECAUSE ONLY ONE ACTION FOR EACH DEATH WAS FILED ACCORDING TO MARYLAND LAW. THIS REQUIREMENT OF MARYLAND HAS NO PURPOSE RELATED TO THE LIABILITY OF THE UNITED STATES FOR INTEREST. ITS PURPOSE IS RELATED TO THE CONVENIENCE OF LITIGATION IN MARYLAND." 349 F.2D AT 695.

THE COURT WENT ON TO CONCLUDE THAT SEVERANCE OF THE JUDGMENT WAS PROPER UNDER THE "IN ANY ONE CASE" LANGUAGE OF SECTION 724A:

"JUDGMENT 'IN ANY ONE CASE' DOES NOT NECESSARILY MEAN IN ONE LAW SUIT WITHOUT REGARD TO THE CHARACTER OF THE JUDGMENT AS IT BEARS ON THE PROBLEM OF INTEREST. WE SHOULD GIVE THE LANGUAGE A MEANING, IF THE WORDS WILL BEAR IT, WHICH CARRIES OUT THE PURPOSES OF THE STATUTE, EVEN THOUGH THIS IS NOT THE LITERAL MEANING OF THE WORDS WHEN CONSIDERED IN ISOLATION. * * * THE OBVIOUS PURPOSES OF THE FEDERAL STATUTE ARE (1) TO ENABLE ONE WHO HAS A JUDGMENT NOT IN EXCESS OF $100,000, OBTAINED UNDER THE TORT CLAIMS ACT, TO RECEIVE PROMPT PAYMENT WITHOUT AWAITING A SPECIAL APPROPRIATION, AND (2) TO RELIEVE THE UNITED STATES OF THE OBLIGATION OF PAYING INTEREST, OR OF A BAD CONSCIENCE AS IT WERE FOR NOT DOING SO, WHILE THE PRINCIPAL REMAINS UNPAID. AS TO THE PURPOSES AS THEY APPEAR FROM LEGISLATIVE HISTORY SEE H.R. REP. NO. 2638, 84TH CONG., 2D SESS. 72 (1957); AND SEE HARUE HAYASHI, 40 COMP.GEN. 307(1960); CHICAGO, ROCK ISLAND & PAC. R.R. V. UNITED STATES, 206 F.SUPP. 795 (S.D.IA. 1962). THESE PURPOSES ARE SERVED BY PERMITTING EACH INDIVIDUAL WHO RECOVERS A SEVERABLE AND DISTINCT AMOUNT NOT IN EXCESS OF $100,000 TO BE PAID UNDER SECTION 724A. EACH SUCH CLAIMANT HAS A SEVERABLE AND SPECIFIC AWARD IN THE FINAL JUDGMENT. EACH AWARD MAY THEREFORE BE CONSIDERED A JUDGMENT 'IN ANY ONE CASE' AS THAT EXPRESSION IS USED IN THE STATUTE. EACH INDIVIDUAL THUS AWARDED NO MORE THAN $100,000 COULD HAVE COMPLIED WITH THE STATUTE BY FILING A TRANSCRIPT OF THE JUDGMENT; EACH WOULD THEN HAVE BEEN ENTITLED TO RECEIVE PAYMENT WITH THE INTEREST AUTHORIZED BY SECTION 724A; AND EACH INDEED WOULD HAVE BEEN PAID. SEE HARUE HAYASHI, SUPRA AT 309." ID.

FINALLY, UNITED STATES V. VARNER, 400 F.2D 369 (5TH CIR. 1968), CONCERNED AN ACTION UNDER THE FEDERAL TORT CLAIMS ACT IN WHICH PLAINTIFF JAMES VARNER RECOVERED A JUDGMENT AGAINST THE UNITED STATES FOR PERSONAL INJURIES AND HIS WIFE, ALSO A PLAINTIFF, RECOVERED $25,000 FOR LOSS OF CONSORTIUM. THE DISTRICT COURT HAD AWARDED INTEREST ON THESE AMOUNTS AT 4 PERCENT FROM THE DATE OF THE JUDGMENT, BUT THE PLAINTIFFS HAD NOT FILED A TRANSCRIPT OF THE JUDGMENT WITH GAO. THE COURT OF APPEALS HELD THAT THE AWARD OF INTEREST WAS ERRONEOUS UNDER 31 U.S.C. 724A, STATING IN PART:

" * * * IN UNITED STATES V. STATE OF MARYLAND FOR USE OF MEYER, 1965, 121 U.S. APP. D.C. 258, 349 F.2D 693, THE COURT HELD THAT 'ONE CASE' WITHIN 31 U.S.C. 724A MEANS 'ONE CLAIMANT,' SO THAT EACH INDIVIDUAL PARTY CAN OBTAIN PROMPT PAYMENT OF HIS CLAIM IF IT DOES NOT EXCEED $100,000, AND THUS IS ONLY ENTITLED TO INTEREST FROM THE DATE OF THE FILING OF THE TRANSCRIPT. THE COURT REASONED THAT EACH CLAIMANT HAS A SEVERABLE AND SPECIFIC AWARD IN THE FINAL JUDGMENT, AND THEREFORE EACH AWARD SHOULD BE CONSIDERED A JUDGMENT 'IN ANY ONE CASE.' THE COMPTROLLER GENERAL REACHED THE SAME CONCLUSION. SEE 40 COMP.GEN. 307, 309(1960)." 400 F.2D AT 372.

THE COURT ALSO OBSERVED:

"THE INACCURACY OF THE INTEREST PROVISION WAS RAISED BY THE GOVERNMENT FOR THE FIRST TIME ON ORAL ARGUMENT BEFORE THIS COURT. THIS MAY HAVE CONTRIBUTED TO THE VARNERS' FAILURE TO FILE THEIR TRANSCRIPT OF THE TRIAL COURT'S JUDGMENT IN THE GENERAL ACCOUNTING OFFICE AND THUS FROM EARNING LEGAL INTEREST FROM THAT DATE UNTIL THE MANDATE OF AFFIRMANCE. HOWEVER, IN A CASE ALSO INVOLVING 31 U.S.C. 724A, THIS COURT SAID, AS IF SPEAKING TO THE OVERSIGHT OF GOVERNMENT COUNSEL IN THE INSTANT CASE,

'SINCE BOTH THE TIME FROM WHICH INTEREST CAN RUN AND THE RATE OF INTEREST ARE FIXED BY STATUTE, WE DO NOT CONSIDER IT APPROPRIATE TO CHANGE EITHER OF THESE PROVISIONS BY A SPECIES OF ESTOPPEL.'

"UNITED STATES V. CULP, 5TH CIR. 1965, 346 F.2D 35, 37. SEE ALSO UNITED STATES V. JACOBS, 5TH CIR. 1962, 308 F.2D 906. BEING UNABLE TO HOLD THAT THE GOVERNMENT IS ESTOPPED FROM RAISING THIS MATTER ON APPEAL AND FINDING THAT THE MEANING OF THE STATUTE IN THIS KIND OF CASE HAS BEEN CLEARLY INTERPRETED, WE HOLD THAT THE COURT ERRED IN AWARDING INTEREST FROM THE DATE OF THE JUDGMENTS IN FAVOR OF JAMES VARNER AND HIS WIFE SINCE EACH JUDGMENT WAS FOR LESS THAN $100,000 AND THUS WAS GOVERNED BY 31 U.S.C. 724A." ID.

SINCE WE BELIEVE THAT THE AWARDS OF LESS THAN $100,000 WERE SUBJECT TO 31 U.S.C. 724A, INTEREST ON THESE AWARDS WOULD ORDINARILY BE BARRED BY THE FAILURE TO FILE A TRANSCRIPT OF THE JUDGMENT WITH GAO AS REQUIRED BY THE FIRST PROVISO OF SECTION 724A. HOWEVER, AS NOTED PREVIOUSLY, THE AMENDED DISTRICT COURT JUDGMENT IN FELDER SPECIFICALLY ORDERED THE PAYMENT OF INTEREST ON THE TOTAL AWARD TO "EACH PLAINTIFF," CONSISTENT WITH THE COURT OF APPEALS' MANDATE. NO APPEAL WAS TAKEN FROM THE AMENDED JUDGMENT. THESE CIRCUMSTANCES, WE HAVE A MINISTERIAL DUTY TO COMPLY WITH THE SPECIFIC TERMS OF THE JUDGMENT. HIGGINSON V. SCHOENEMAN, 190 F.2D 32 (D.C. CIR. 1951); 38 COMP.GEN. 12(1958). FOR THE REASONS STATED ABOVE, INTEREST MUST BE ALLOWED ON THE AWARDS OF LESS THAN $100,000 IN THIS PARTICULAR CASE, AS SPECIFIED IN THE FINAL JUDGMENT, I.E., 4 PERCENT PER ANNUM FROM NOVEMBER 29, 1974, UNTIL SEPTEMBER 29, 1976, THE DATE OF THE MANDATE OF AFFIRMANCE, AS SPECIFIED IN 31 U.S.C. 724A. OUR CLAIMS DIVISION WILL ISSUE A REVISED SETTLEMENT ACCORDINGLY.