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B-199679 L/M, AUG 6, 1980

B-199679 L/M Aug 06, 1980
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APPELLATE STAFF: THIS IS IN REPLY TO YOUR LETTER OF JULY 16. OUR RECOMMENDATION IS THAT THE APPEAL SHOULD BE TAKEN. ENCLOUSRES (1) AND (2) ARE MR. THERE WAS NO INDICATION THAT THERE HAD BEEN ANY APPELLATE ACTION IN EITHER CASE. NOR WAS THERE ANY FURTHER EXPLANATION OF THE APPARENT DELAY BETWEEN THE DATE OF THE JUDGMENTS AND THE REQUEST FOR PAYMENT CERTIFICATION. THIS IS INCONSISTENT WITH THE FIRST PROVISO OF 31 U.S.C. " WHICH IS EXPRESSLY PROHIBITED BY 28 U.S.C. OUR NORMAL PROCEDURE IN SUCH CASES IS TO RETURN THE JUDGMENT TO THE JUSTICE DEPARTMENT WITH A RECOMMENDATION THAT APPROPRIATE MODIFICATION BE SOUGHT. ENCLOSURES (3) AND (4) ARE OUR CERTIFICATES OF SETTLEMENT IN THE DRISCOLL AND ATLANTIC AVIATION CASES.

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B-199679 L/M, AUG 6, 1980

SUBJECT: ATLANTIC AVIATION CORP. V. U. S., BETTY JANE DRISCOLL V. U. S., D. DEL., NO. 75-146.

ALICE DANIEL; DEPARTMENT OF JUSTICE:

ATTENTION: ROBERT E. KOPP, ESQ., ACTING DIRECTOR, APPELLATE STAFF:

THIS IS IN REPLY TO YOUR LETTER OF JULY 16, 1980 (YOUR REF. AD:REK:HSSCHER:CEF 157-12C-638), REQUESTING OUR COMMENTS AS TO WHETHER THE UNITED STATES SHOULD TAKE AN APPEAL FROM THE DISTRICT COURT'S DENIAL OF THE GOVERNMENT'S MOTION CONCERNING THE AWARD OF INTEREST IN THE SUBJECT CASES. FOR THE REASONS THAT FOLLOW, OUR RECOMMENDATION IS THAT THE APPEAL SHOULD BE TAKEN.

FACTS

ON JANUARY 15, 1980, ASSISTANT UNITED STATES ATTORNEY JOHN DENNEY, DISTRICT OF DELAWARE, SUBMITTED THE DISTRICT COURT JUDGMENTS IN THE DRISCOLL AND ATLANTIC AVIATION CASES TO OUR CLAIMS GROUP FOR PAYMENT CERTIFICATION. ENCLOUSRES (1) AND (2) ARE MR. DENNEY'S TRANSMITTAL LETTERS. BOTH LETTERS REFER TO A PRIOR REQUEST WHICH HAD APPARENTLY BEEN LOST, BUT THERE WAS NO INDICATION THAT THERE HAD BEEN ANY APPELLATE ACTION IN EITHER CASE, NOR WAS THERE ANY FURTHER EXPLANATION OF THE APPARENT DELAY BETWEEN THE DATE OF THE JUDGMENTS AND THE REQUEST FOR PAYMENT CERTIFICATION.

UPON REVIEWING THE JUDGMENTS, OUR CLAIMS GROUP DISCOVERED THAT BOTH INCLUDED AWARDS OF INTEREST WHICH SEEMED LEGALLY QUESTIONABLE. THE DRISCOLL JUDGMENT ORDERED THAT "THE JUDGMENTS SHALL ACCRUE INTEREST AS THE RATE OF FOUR PERCENT FROM THE DATE OF THE ENTRY OF JUDGMENT UNTIL PAID." THIS IS INCONSISTENT WITH THE FIRST PROVISO OF 31 U.S.C. SEC. 724A (1976 AND SUPP. I 1977). THE ATLANTIC AVIATION JUDGMENT AWARDED THE SUM OF $17,866.08 "WITH INTEREST FROM MAY 16, 1974," WHICH IS EXPRESSLY PROHIBITED BY 28 U.S.C. SEC. 2674.

OUR NORMAL PROCEDURE IN SUCH CASES IS TO RETURN THE JUDGMENT TO THE JUSTICE DEPARTMENT WITH A RECOMMENDATION THAT APPROPRIATE MODIFICATION BE SOUGHT, AND TO DEFER CERTIFICATION OF THE JUDGMENT FOR PAYMENT UNTIL THE INTEREST QUESTION HAS BEEN RESOLVED. IN THE SUBJECT CASES, HOWEVER, IN VIEW OF THE DELAYS THAT HAD ALREADY OCCURRED, OUR CLAIMS GROUP DECIDED TO CERTIFY THE DAMAGE AWARDS FOR PAYMENT IMMEDIATELY, AND THEN SEPARATELY SEEK RESOLUTION OF THE INTEREST AWARDS. ENCLOSURES (3) AND (4) ARE OUR CERTIFICATES OF SETTLEMENT IN THE DRISCOLL AND ATLANTIC AVIATION CASES, RESPECTIVELY. THE CERTIFICATE OF SETTLEMENT (GAO FORM 39) IS THE FORM BY WHICH THE COMPTROLLER GENERAL CERTIFIES THE JUDGMENT TO THE TREASURY DEPARTMENT FOR PAYMENT. EACH CERTIFICATE CONTAINED A STATEMENT THAT PAYMENT OF INTEREST WAS BEING SUSPENDED PENDING CLARIFICATION OF THE LEGALITY OF THE AWARD OF INTEREST.

AFTER THE JUDGMENTS WERE PAID, THE CLAIMS GROUP SENT LETTERS TO ASSISTANT U. S. ATTORNEY DENNEY IN EACH CASE. ENCLOSURE (5) IS THE ATLANTIC AVIATION LETTER. ENCLOSURE (6) IS THE DRISCOLL LETTER. THE DRISCOLL LETTER ITSELF INCLUDED A NUMBER OF ENCLOSURES, AND THESE ARE MARKED 6-1, 6-2, ETC.

WE UNDERSTAND FROM INFORMAL DISCUSSIONS WITH MEMBERS OF YOUR DIVISION THAT THE U. S. ATTORNEY'S OFFICE TOOK NO ACTION IN RESPONSE TO OUR LETTERS UNTIL AFTER THE PLAINTIFFS HAD FILED THEIR MOTION TO COMPEL PAYMENT OF INTEREST, WHICH THE COURT GRANTED.

DISCUSSION

A. DRISCOLL V. UNITED STATES

(1) COURTS HAVE NO AUTHORITY TO AWARD INTEREST AGAINST THE UNITED STATES UNLESS EXPRESSLY PROVIDED IN THE RELEVANT STATUTE OR CONTRACT. UNITED STATES EX REL. ANGARICA V. BAYARD, 127 U.S. 251 (1888); UNITED STATES V. ALCEA BAND OF TILLAMOOKS, 341 U.S. 48 (1951); UNITED STATES V. N. Y. RAYON IMPORTING CO., INC., 329 U.S. 654 (1947).

PRIOR TO 1956, JUDGMENTS UNDER THE FEDERAL TORT CLAIMS ACT REQUIRED SPECIFIC CONGRESSIONAL APPROPRIATIONS FOR PAYMENT. DURING THIS TIME, INTEREST ON SUCH JUDGMENTS WAS GOVERNED BY 28 U.S.C. SEC. 2411(B), UNDER WHICH INTEREST WAS PAYABLE FROM THE DATE OF THE JUDGMENT TO NOT LATER THAN THIRTY DAYS AFTER THE DATE OF THE APPROPRIATION WHICH PROVIDED FOR ITS PAYMENT. IN 1956, CONGRESS ENACTED SECTION 1302 OF THE SUPPLEMENTAL APPROPRIATION ACT OF 1957, 31 U.S.C. SEC. 724A, WHICH PROVIDED A PERMANENT INDEFINITE APPROPRIATION FOR THE PAYMENT OF CERTAIN JUDGMENTS AGAINST THE UNITED STATES, INCLUDING JUDGMENTS UNDER THE FEDERAL TORT CLAIMS ACT, NOT IN EXCESS OF $100,000. THE FIRST PROVISO OF 31 U.S.C. SEC. 724A MODIFIED 28 U.S.C. SEC. 2411(B) BY RESTRICTING INTEREST ON JUDGMENTS "TO WHICH THE PROVISIONS OF SECTION 2411(B) OF TITLE 28 APPLY" (E.G., TO FEDERAL TORT CLAIMS ACT JUDGMENTS NOT IN EXCESS OF $100,000) ONLY TO CASES WHERE THE GOVERNMENT APPEALS AND LOSES, AND THEN ONLY FROM THE DATE A COPY OF THE JUDGMENT IS FILED WITH THE GENERAL ACCOUNTING OFFICE TO THE DATE OF THE MANDATE OF AFFIRMANCE.

FROM 1956 TO MAY, 1977, JUDGMENTS UNDER $100,000 WERE GOVERNED BY THE FIRST PROVISO OF 31 U.S.C. SEC. 724A, WHILE JUDGMENTS IN EXCESS OF $100,000 CONTINUED TO REQUIRE SPECIFIC CONGRESSIONAL APPROPRIATIONS AND THEREFORE WERE STILL GOVERNED BY 28 U.S.C. SEC. 2411(B). ON MAY 4, 1977, CONGRESS REMOVED THE $100,000 LIMITATION IN 31 U.S.C. SEC. 724A (PUB. L. NO. 95-26, 91 STAT. 96) AND SINCE THAT DATE, THE FIRST PROVISO HAS BEEN APPLICABLE REGARDLESS OF THE AMOUNT OF THE JUDGMENT.

THE MEANING AND APPLICABILITY OF THE FIRST PROVISO OF 31 U.S.C. SEC. 724A ARE CLEAR, AS SET FORTH IN THE FOLLOWING SOURCES:

(A) THE STATUTORY LANGUAGE (ENCLOSURE 6-1). (B) LEGISLATIVE HISTORY (ENCLOSURE 6-2). (C) NUMEROUS DECISIONS OF THE COURTS (ENCLOSURE 6-3). (D) DECISIONS OF THE COMPTROLLER GENERAL OF THE UNITED STATES, THE OFFICER RESPONSIBLE UNDER LAW FOR CERTIFYING JUDGMENTS AGAINST THE UNITED STATES FOR PAYMENT (ENCLOSURE 6-5).

A NUMBER OF THE CASES LISTED ON ENCLOSURE 6-3 CONCLUDE THAT AN AWARD OF INTEREST AT VARIANCE WITH 31 U.S.C. SEC. 724A MUST BE MODIFIED TO CONFORM WITH THE STATUTE. E.G., KELLEY V. UNITED STATES, 568 F.2D 259, 268 (2ND CIR. 1978); UNITED STATES V. CULP, 346 F.2D 35 (5TH CIR. 1965).

SINCE NO ONE HAD FILED A COPY OF THE JUDGMENT WITH THE GENERAL ACCOUNTING OFFICE PRIOR TO THE SUBMISSION FOR PAYMENT CERTIFICATION, WE CONCLUDED THAT THE AWARD OF INTEREST WAS UNAUTHORIZED. IN ANY EVENT, AWARDING INTEREST FROM THE DATE OF JUDGMENT WAS CONTRARY TO THE FIRST PROVISO OF 31 U.S.C. SEC. 724A WHICH AUTHORIZES INTEREST ONLY FROM THE DATE A TRANSCRIPT OF THE JUDGMENT IS FILED WITH THE GENERAL ACCOUNTING OFFICE. ACCORDINGLY, WE MADE OUR RECOMMENDATION TO THE UNITED STATES ATTORNEY'S OFFICE AS OUTLINED ABOVE.

IN OUR RECOMMENDATION, WE DID NOT ATTEMPT TO SPECIFY THE MEANS OF OBTAINING MODIFICATION. WE UNDERSTAND THAT RULE 60(B) MOTIONS HAVE BEEN SUCCESSFULLY USED IN THE PAST. HOWEVER, WE NOTE THAT A RULE 60(A) MOTION MIGHT ALSO BE POSSIBLE. IF, AS STATED IN MANY OF THE CASES, AN INTEREST AWARD AT VARIANCE WITH 31 U.S.C. SEC. 724A REQUIRES MODIFICATION OF THE JUDGMENT, THEN THE INCLUSION OF SUCH AN AWARD MIGHT, AT LEAST ARGUABLY, BE DEEMED "CLERICAL ERROR." WE ARE NOT AWARE OF ANY INSTANCES WHERE A RULE 60(A) MOTION WAS ATTEMPTED IN THIS CONTEXT, BUT THE DISTRICT COURT FOR THE DISTRICT OF COLUMBIA HAS RULED THAT THE FAILURE TO AWARD INTEREST TO THE UNITED STATES WHERE INTEREST WAS AWARDABLE AS A MATTER OF RIGHT WAS CORRECTABLE AS A CLERICAL MISTAKE UNDER RULE 60(A). UNITED STATES V. SUN OIL CO. OF PENNSYLVANIA, D.D.C., CA NO. 78-0952 (MEM. OP. DATED APRIL 4, 1979). SEE ALSO GLICK V. WHITE MOTOR CO., 317 F. SUPP. 42, 44-45 (E.D. PA. 1970), AFF'D 458 F.2D 1287, 1293-94 (3D CIR. 1972) (CITED BY THE COURT IN THE SUN OIL CASE).

(2) THE FIRST PROVISO OF 31 U.S.C. SEC. 724A IS A LIMITATION ON THE USE OF AN APPROPRIATION.

ARTICLE I, SEC. 9 OF THE CONSTITUTION PROVIDES THAT NO MONEY SHALL BE DRAWN FROM THE TREASURY EXCEPT PURSUANT TO AN APPROPRIATION MADE BY LAW. COURTS HAVE STATED THAT, UNDER THIS PROVISION, NO OFFICER OF THE GOVERNMENT IS AUTHORIZED TO PAY A DEBT DUE FROM THE UNITED STATES, WHETHER OR NOT REDUCED TO JUDGMENT, UNLESS AN APPROPRIATION HAS BEEN MADE FOR THAT PURPOSE. REESIDE V. WALKER, 52 U.S. (11 HOW) 272, 291 (1850); HUGHES AIRCRAFT CO., V. UNITED STATES, 534 F.2D 889, 906 (CT.CL. 1976).

31 U.S.C. SEC. 724A IS AN APPROPRIATION. IT IS, AS NOTED ABOVE, THE APPROPRIATION FROM WHICH FEDERAL TORT CLAIMS ACT JUDGMENTS, INTER ALIA, ARE PAID. CONGRESS HAS THE POWER TO PLACE A RESTRICTION OR CONDITION ON THE USE OF AN APPROPRIATION. SEE, E.G., UNITED STATES V. DICKERSON, 310 U.S. 554 (1940). THE FIRST PROVISO OF 31 U.S.C. SEC. 724A IS A DIRECT LIMITATION ON THE AVAILABILITY OF THE APPROPRIATION. THEREFORE, AN AWARD OF INTEREST AT VARIANCE WITH THIS PROVISO IS, IN EFFECT, AN ORDER TO PAY MONEY FROM THE TREASURY FOR WHICH THERE IS NO LAWFUL APPROPRIATION. CF. 31 U.S.C. SEC. 628, WHICH RESTRICTS APPROPRIATIONS TO THEIR INTENDED PURPOSES.

UNDER THE SEPARATION OF POWERS DOCTRINE, PRIOR TO THE ENACTMENT OF THE PERMANENT JUDGMENT APPROPRIATION, CONGRESS COULD HAVE REFUSED TO APPROPRIATE MONEY TO PAY ANY GIVEN JUDGMENT. SEE, E.G., 47 STAT. 28 FOR SUCH AN INSTANCE. FOR JUDICIAL RECOGNITION THAT SUCH A POSSIBILITY STILL EXISTS (I.E., WITH RESPECT TO JUDGMENTS NOT COVERED BY 31 U.S.C. SEC. 724A), SEE MISTER RALPHO V. BELL, 569 F.2D 636, 639 (D. C. CIR. 1977). THE SITUATION HERE IS SIMILAR. CONGRESS HAS APPROPRIATED THE FUNDS, ON A PERMANENT INDEFINITE BASIS, FOR THE PAYMENT OF FINAL JUDGMENTS AGAINST THE UNITED STATES UNDER THE FEDERAL TORT CLAIMS ACT, BUT HAS APPROPRIATED FUNDS TO PAY INTEREST ON SUCH JUDGMENTS ONLY IF THE CONDITIONS SPECIFIED IN THE FIRST PROVISO OF 31 U.S.C. SEC. 724A HAVE BEEN MET.

B. ATLANTIC AVIATION CORP. V. UNITED STATES

THE JUDGMENT IN THIS CASE AWARDED PRE-JUDGMENT INTEREST IN DIRECT CONTRAVENTION OF 28 U.S.C. SEC. 2674. THE COURT'S LETTER OF JUNE 27, 1980, DENYING THE GOVERNMENT'S MOTION, DID NOT MAKE REFERENCE TO 28 U.S.C. SEC. 2674.

THE JUDGMENT DID NOT SPECIFY WHETHER THE INTEREST WAS TO RUN TO THE DATE OF THE JUDGMENT OR TO THE DATE OF PAYMENT. IF IT IS CONSTRUED AS RUNNING TO THE DATE OF THE JUDGMENT, THEN THERE IS NO EXPRESS AWARD OF POST- JUDGMENT INTEREST AND 28 U.S.C. SEC. 2674 IS THE ONLY ISSUE. IF, HOWEVER, AS APPEARS TO BE THE COURT'S READING, IT IS CONSTRUED AS RUNNING TO THE DATE OF PAYMENT, THEN THE ISSUES DISCUSSED ABOVE WITH RESPECT TO DRISCOLL ARE ALSO RELEVANT.

IN ADDITION, THERE IS AMPLE CASE LAW TO THE EFFECT THAT COURTS ARE NOT AUTHORIZED TO AWARD INTEREST AGAINST THE UNITED STATES ON THE BASIS OF EQUITY OR BECAUSE PAYMENT HAS BEEN UNREASONABLY DELAYED. UNITED STATES V. N. Y. RAYON IMPORTING CO., 329 U. S. 654 (1947); UNITED STATES V. JAMES, 301 F. SUPP. 107, 132 (W.D. TEX. 1969); ECONOMY PLUMBING AND HEATING CO. V. UNITED STATES, 470 F.2D 585, 594 (CT.CL. 1972).

FINALLY, WE WOULD SUGGEST THAT HIGGINSON V. SCHOENEMAN, 190 F.2D 32 (D.C. CIR. 1951), CITED BY THE COURT IN ITS JUNE 20, 1980, MEMORANDUM OPINION, IS NOT CONTROLLING. THE PLAINTIFF IN THAT CASE HAD FILED SUIT IN A DISTRICT COURT FOR AN ORDER TO COMPEL PAYMENT OF CERTAIN INTEREST ON A COURT OF CLAIMS JUDGMENT. THE DEFENDANT (COMMISSIONER OF INTERNAL REVENUE) HAD APPARENTLY NOT ATTEMPTED TO OBTAIN MODIFICATION OF THE JUDGMENT EXCEPT IN RESPONSE TO PLAINTIFF'S DISTRICT COURT ACTION. BARRING COLLATERAL ATTACK ON THE JUDGMENT, THE COURT IN SCHOENEMAN DID NOT PURPORT TO BAR AN ATTEMPT TO MODIFY THE JUDGMENT LODGED WITH THE COURT THAT RENDERED THE JUDGMENT. SEE 190 F.2D AT 34 AND 35, FINAL PARAGRAPH. ALSO, SCHOENEMAN DID NOT INVOLVE THE APPROPRIATION RESTRICTION FOUND IN THE FIRST PROVISO OF 31 U.S.C. SEC. 724A.

FOR THE FOREGOING REASONS, WE RECOMMEND APPEAL.

DIGEST

DISTRICT COURT AWARDED POST-JUDGMENT INTEREST ON FEDERAL TORT CLAIMS ACT JUDGMENTS IN BETTY JANE DRISCOLL V. U. S. AND ATLANTIC AVIATION CORP. V. U. S., AND SUBSEQUENTLY DENIED GOVERNMENT'S MOTION UNDER RULE 60(B), FEDERAL RULES OF CIVIL PROCEDURE, TO HAVE JUDGMENTS MODIFIED. GAO RECOMMENDS APPEAL FROM DENIAL OF MOTION BECAUSE (A) INTEREST AWARDS ARE INCONSISTENT WITH FIRST PROVISO OF 31 U.S.C. SEC. 724A, AND (B) INTEREST PROVISO OF 31 U.S.C. SEC. 724A IS A DIRECT RESTRICTION ON THE AVAILABILITY OF THE APPROPRIATION. TO ASST. ATTY. GEN.

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