B-82167, DECEMBER 20, 1948, 28 COMP. GEN. 374

B-82167, DECEMBER 20, 1948, 28 COMP. GEN. 374

LEASES - DAMAGES - GOVERNMENT'S LIABILITY FOR JUDGMENTS OBTAINED AGAINST LESSEE THE PROVISION IN A LEASE BETWEEN THE GOVERNMENT AS LESSOR AND A MUNICIPAL HOUSING AUTHORITY AS LESSEE PROVIDING THAT THE LESSOR SHALL PAY ANY LOSSES WHICH RESULT FROM COMPLIANCE BY THE LESSEE WITH THE REQUIREMENTS ESTABLISHED BY THE LESSOR FOR THE OPERATION, ETC., OF THE HOUSING PROJECT MAY NOT BE REGARDED AS IMPOSING ANY LIABILITY UPON THE GOVERNMENT TO PAY JUDGMENTS WHICH MAY BE OBTAINED AGAINST THE LESSEE FOR DAMAGES SUFFERED AS A RESULT OF THE " VANPORT FLOOD," NOR IS THERE ANY OTHER PROVISION IN THE LEASE IMPOSING LIABILITY UPON THE GOVERNMENT FOR LOSSES RESULTING FROM THE NEGLIGENCE OF THE LESSEE.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, DECEMBER 20, 1948:

I HAVE YOUR LETTER OF DECEMBER 13, 1948, REQUESTING A DECISION AS TO WHETHER THE FEDERAL GOVERNMENT WOULD BE LIABLE TO REIMBURSE THE HOUSING AUTHORITY OF PORTLAND, OREGON, UNDER THE TERMS OF A CERTAIN LEASE DATED FEBRUARY 17, 1944, FOR ANY JUDGMENTS OBTAINED AGAINST THE SAID HOUSING AUTHORITY FOR PERSONAL INJURIES OR DEATH IN EXCESS OF ITS INSURANCE POLICY LIMITS, OR FOR ANY JUDGMENTS OBTAINED AGAINST IT FOR PROPERTY DAMAGE, IN ANY MANNER CONNECTED WITH OR ARISING OUT OF THE " VANPORT FLOOD" ON THE COLUMBIA RIVER, WHICH FLOOD OCCURRED DURING THE MONTH OF MAY OF THIS YEAR.

THE LEASE REFERRED TO, NO. HA (ORE-35021) MPH/102, WAS ENTERED INTO ON FEBRUARY 17, 1944, EFFECTIVE AS OF JANUARY 1, 1944, BETWEEN THE UNITED STATES, ACTING THROUGH THE FEDERAL PUBLIC HOUSING AUTHORITY, AND THE HOUSING AUTHORITY OF PORTLAND, OREGON, HEREINAFTER REFERRED TO AS THE HOUSING AUTHORITY. THE PURPOSE OF THE LEASE WAS TO PROVIDE FOR THE OPERATION OF A HOUSING PROJECT FOR VARIOUS WORKERS AT THE KAISER SHIPYARDS AT VANCOUVER, WASHINGTON, AND PORTLAND, OREGON. THE TERM OF THE LEASE WAS FOR THE PERIOD BEGINNING JANUARY 1, 1944, AND ENDING JUNE 30, 1945, WITH A PROVISION FOR AUTOMATIC RENEWALS FOR SUCCESSIVE TERMS OF ONE YEAR THEREAFTER AS THEREIN PROVIDED. THE VARIOUS PROVISIONS OF THE LEASE OBLIGATED THE HOUSING AUTHORITY TO OPERATE, ADMINISTER, MANAGE, AND MAINTAIN THE PROJECT; TO COLLECT ALL INCOME AND REVENUES FROM ANY SOURCE; TO ARRANGE, IN ACCORDANCE WITH THE STANDARDS AND INSTRUCTIONS FURNISHED BY THE LESSOR, FOR THE OPERATION OF COMMERCIAL FACILITIES; TO ENGAGE ALL PERSONNEL; AND TO PROVIDE ALL EQUIPMENT, MATERIALS, AND SUPPLIES AND SERVICES NECESSARY FOR THE PROPER MANAGEMENT AND OPERATION OF THE PROJECT IN ACCORDANCE WITH THE APPROVED CURRENT OPERATING BUDGET AND MANAGEMENT PROGRAM. THE LEASE PROVIDED FOR THE PAYMENT OF RENT BY THE HOUSING AUTHORITY ON A QUARTERLY BASIS AS OF THE 15TH DAY OF APRIL, JULY, OCTOBER, AND JANUARY, WITH A FURTHER PROVISION THAT SUCH RENTAL WAS TO BE EQUAL TO THE AMOUNT BY WHICH THE TOTAL REVENUES OF THE HOUSING AUTHORITY DERIVED FROM THE OPERATION, ADMINISTRATION, AND MANAGEMENT OF THE PROJECT EXCEEDED THE TOTAL EXPENSES INCURRED IN SUCH OPERATION, ADMINISTRATION, AND MANAGEMENT FOR THE IMMEDIATELY PRECEDING QUARTER. IN ADDITION, THE LEASE (PARAGRAPH 10) OBLIGATED THE HOUSING AUTHORITY TO OBTAIN VARIOUS KINDS OF INSURANCE INCLUDING OWNERS-, LANDLORDS-, AND TENANTS' PUBLIC LIABILITY WITH LIMITS OF NOT LESS THAN $50,000/$100,000 AGAINST CLAIMS ARISING OUT OF ACCIDENTS AND PROPERTY DAMAGE, WITH A MINIMUM OF $5,000.

YOU STATE THAT THE VANPORT CITY PROJECT CONTINUED IN THE MANAGEMENT OF THE HOUSING AUTHORITY OF PORTLAND UNTIL THE " COLUMBIA RIVER FLOODS IN MAY OF THIS YEAR, AT WHICH TIME THE HOUSING PROJECT, WHICH THEN CONSISTED OF SOME 6,000 UNITS, HOUSING APPROXIMATELY 19,000 PEOPLE, WAS COMPLETELY DESTROYED WHEN THE DIKES BROKE, FLOODING THE PROJECT," AND THAT,"AS A RESULT OF THE FLOODING OF THE AREA, AT LEAST FOURTEEN PERSONS LOST THEIR LIVES AND THERE WAS MILLIONS OF DOLLARS IN PROPERTY DAMAGE AS WELL AS OTHER PERSONAL INJURY DAMAGES.' IT IS FURTHER STATED THAT YOUR AGENCY HAS RECEIVED A NUMBER OF CLAIMS FROM TENANTS AND OTHER WHO SUFFERED DAMAGE AS A RESULT OF THE FLOOD AND THAT IT IS YOUR UNDERSTANDING THAT AT LEAST ONE SUIT HAS BEEN FILED AGAINST THE UNITED STATES ALLEGING NEGLIGENCE ON THE PART OF THE GOVERNMENT; AND THAT, IN ADDITION, THERE HAVE BEEN FILED AGAINST THE HOUSING AUTHORITY A NUMBER OF SUITS FOR AMOUNTS GREATLY IN EXCESS OF ITS PUBLIC LIABILITY INSURANCE POLICIES. THE GIST OF SUCH ACTIONS FILED AGAINST THE HOUSING AUTHORITY IS SAID TO CENTER AROUND CERTAIN NOTICES GIVEN TO THE TENANTS WITH REGARD TO THE PROGRESS OF THE FLOOD AND THE LIKELIHOOD OF HAVING TO EVACUATE AND ASSURANCE THAT THE OCCUPANTS WOULD BE GIVEN TIMELY WARNING SO THAT THEY WOULD HAVE AMPLE TIME TO LEAVE THE PREMISES. THE OPINION IS EXPRESSED THAT, ALTHOUGH THESE ASSURANCES WERE GIVEN AFTER CONSULTATION WITH ARMY ENGINEERS AND OTHERS WHO WERE HANDLING THE FLOOD SITUATION--- THUS INDICATING AMPLE CARE ON THE PART OF THE HOUSING AUTHORITY IN INFORMING ITSELF, TO THE BEST OF ITS ABILITY UNDER THE CIRCUMSTANCES, OF THE POSSIBILITIES THAT WERE INVOLVED-- - IT IS IMPOSSIBLE TO PREDICT WHAT THE OUTCOME OF THE CASE WOULD BE IF THE PLAINTIFFS WERE ABLE TO REACH A JURY. ALSO, THE OPINION IS EXPRESSED THAT THE DAMAGE IN THE AREA WILL RUN INTO MILLIONS OF DOLLARS AND THAT, IF THERE IS LIABILITY ON THE HOUSING AUTHORITY TO REIMBURSE PROPERTY OWNERS AND INDIVIDUALS FOR THE LOSSES, THE RECOVERY WOULD BANKRUPT THE HOUSING AUTHORITY UNLESS IT IS PROTECTED BY THE UNITED STATES.

IT IS SUGGESTED THAT THE FEDERAL GOVERNMENT THROUGH ITS CONTRACT WITH THE HOUSING AUTHORITY "IS OBLIGATED, IN EFFECT, TO HOLD IT HARMLESS FROM ANY SUCH LIABILITY AS HERE DISCUSSED.' YOU ADVISE THAT DISCUSSIONS HAVE BEEN HAD WITH REPRESENTATIVES OF THE DEPARTMENT OF JUSTICE WITH RESPECT TO THE POSSIBILITIES OF HAVING THAT DEPARTMENT HELP IN THE DEFENSE OF THE LITIGATION, AND THAT THE QUESTION AS TO WHETHER SUCH DEPARTMENT CAN OR WILL TAKE PART IN THE LITIGATION MAY DEPEND UPON THE ASSURANCE WHICH THE FEDERAL GOVERNMENT CAN GIVE REGARDING REIMBURSING THE HOUSING AUTHORITY IN THE EVENT THE DEPARTMENT ENTERS THE CASE AND A JUDGMENT IS OBTAINED AGAINST THE HOUSING AUTHORITY, AND THAT, THEREFORE, IT IS NECESSARY IN COMPLETING SUCH ARRANGEMENTS TO HAVE THE DECISION OF THIS OFFICE AS TO THE LIABILITY OF THE FEDERAL GOVERNMENT UNDER THE SAID LEASE TO REIMBURSE THE SAID HOUSING AUTHORITY FOR ANY SUCH JUDGMENT THAT MIGHT BE OBTAINED AGAINST IT. IN THAT CONNECTION, YOU ADVISE FURTHER THAT THE ATTORNEY FOR THE HOUSING AUTHORITY HAS ASSURED YOU THAT, UNDER DECISIONS OF THE SUPREME COURT OF THE STATE OF OREGON, THE HOUSING AUTHORITY CAN SUCCESSFULLY DEFEND THE SUITS ON THE BASIS OF GOVERNMENTAL IMMUNITY FROM TORT LIABILITY ON THE GROUND THAT THE HOUSING AUTHORITY OPERATING THESE PROJECTS WAS ACTING IN ITS GOVERNMENTAL CAPACITY. YOU STATE, HOWEVER, THAT IF THE DEPARTMENT OF JUSTICE DEFENDS THE SUITS THAT WOULD LEAVE TO THE FEDERAL GOVERNMENT FOR DETERMINATION THE MATTER AS TO WHETHER THE HOUSING AUTHORITY SHOULD PLEAD THE DEFENSE OF GOVERNMENTAL IMMUNITY WHICH IT WILL DO IF NOT ASSURED OF BEING PROTECTED AGAINST THESE JUDGMENTS AND THAT SUCH DEFENSE "IS NOT AVAILABLE TO THE FEDERAL GOVERNMENT IN A SUIT AGAINST IT.' IN OTHER WORDS, IF I UNDERSTAND YOUR LETTER CORRECTLY, IT APPEARS TO BE THE VIEW OF YOUR AGENCY THAT IF THE FEDERAL GOVERNMENT IS LEGALLY LIABLE TO REIMBURSE THE HOUSING AUTHORITY ON TORT JUDGMENTS FOR DAMAGES CAUSED BY THE FLOOD, THE UNITED STATES SHOULD NOT HIDE BEHIND OR TAKE ADVANTAGE OF THE STATE GOVERNMENTAL IMMUNITY OF THE HOUSING AUTHORITY PARTICULARLY IN VIEW OF THE FEDERAL POLICY OF NONIMMUNITY CHARACTERIZED BY THE FEDERAL TORT CLAIMS ACT, 60 STAT. 842, 843.

VARIOUS REASONS ARE ADVANCED IN YOUR LETTER IN SUPPORT OF THE DESIRABILITY OF HOLDING THAT THE FEDERAL GOVERNMENT WOULD BE LIABLE TO REIMBURSE THE HOUSING AUTHORITY FOR THE AMOUNTS OF ANY JUDGMENTS WHICH MIGHT BE OBTAINED AGAINST THE SAID AUTHORITY UNDER THE FOREGOING CIRCUMSTANCES. HOWEVER, ANY SUCH LIABILITY PRESUMABLY WOULD HAVE TO BE PREDICATED UPON EXPRESS CONTRACTUAL CONDITIONS IN THE LEASE. IN THAT CONNECTION YOU CITE AND QUOTE THAT PART OF PARAGRAPH 13 OF THE LEASE WHICH PROVIDES AS FOLLOWS:

* * * THE LESSOR AGREES TO PAY ANY LOSSES INCURRED BY THE LESSEE IN THE OPERATION, ADMINISTRATION, OR MANAGEMENT OF THE PROJECT WHICH RESULT FROM COMPLIANCE BY THE LESSEE WITH THE STANDARDS OR REQUIREMENTS ESTABLISHED BY THE LESSOR FOR THE OPERATION, ADMINISTRATION, OR MANAGEMENT OF THE PROJECT IN ACCORDANCE WITH THE PROVISIONS OF THIS LEASE AND WHICH THE LESSOR SHALL DETERMINE ARE TRUE LOSSES.

IT SEEMS OBVIOUS THAT ANY JUDGMENTS AGAINST THE LESSEE FOR NEGLIGENCE IN NOT PROPERLY WARNING THE TENANTS OF IMPENDING DISASTER COULD NOT BE VIEWED AS LOSSES RESULTING FROM "COMPLIANCE BY THE LESSEE WITH THE STANDARDS OR REQUIREMENTS ESTABLISHED BY THE LESSOR" FOR THE OPERATION, ETC., OF THE PROJECT WITHIN THE MEANING OF SUCH PROVISION. THERE APPEARS NO OTHER PROVISION IN THE LEASE IMPOSING ANY LIABILITY UPON THE LESSOR FOR LOSSES RESULTING FROM THE NEGLIGENCE OF THE HOUSING AUTHORITY AS LESSEE. ACCORDINGLY, IN THE ABSENCE OF ANY CONTRACTUAL OR OTHER LIABILITY BEING ESTABLISHED, THIS OFFICE PERCEIVES NO LEGAL BASIS FOR AN AFFIRMATIVE ANSWER TO YOUR QUESTION.