United States v. State of Oklahoma , 184 F. App'x 701 ( 2006 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
June 12, 2006
FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
U N ITED STA TES O F A M ER ICA,
Plaintiff-Appellee,
v. No. 05-5098
(D.C. No. 98-CV -521-E)
STA TE OF O K LA H O MA ; (N.D. Okla.)
OK LAH OM A W ATER RESOU RCES
B OA RD ,
Defendants-Appellants.
OR D ER AND JUDGM ENT *
Before PO RFILIO, B AL DOC K , and EBEL, Circuit Judges.
The State of O klahoma and the O klahoma W ater Resources Board
(collectively “the Board”) appeal from the district court’s decision granting
summary judgment in favor of the United States on its breach of contract claim.
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. The court generally disfavors the citation of orders and
judgments; nevertheless, an order and judgment may be cited under the terms and
conditions of 10th Cir. R. 36.3.
On appeal, the Board argues that the district court erred in its decision because:
(1) there are questions of fact as to whether the Board breached the contract; and
(2) even if the money judgment against the Board were appropriate, it was error
to grant an injunction against the Board. W e review de novo the district court’s
grant of summary judgment in favor of the United States, applying the same
standard as the district court. See Simms v. Oklahoma ex rel. Dep’t of M ental
Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999). W e
affirm.
I
In 1974, the United States, through the Army Corps of Engineers, entered
into a contract with the W ater Conservation Storage Commission of the State of
Oklahoma, the legal predecessor to the Board, for the building of Clayton Lake
(the name was later changed to Sardis Lake). The contract provided that the
Corps w ould build the lake for the purpose of present and future use water supply
storage. In return, the Board agreed to repay the Corps for building the lake in
fifty consecutive annual payments and to pay future operating costs of the lake.
The contract was approved by the Oklahoma Attorney General, Larry Derryberry.
The Board made six annual payments under the contract. After M arch of
1990, the Board made only two partial payments. The United States ultimately
sued the Board for breach of contract. The parties filed cross-motions for
summary judgment and the district court granted summary judgment in favor of
-2-
the United States. The district court’s judgment included an award of money
damages, declaratory relief and injunctive relief. This appeal followed.
II
The Board’s main argument on appeal is that the district court erred
because there are material questions of fact regarding whether the Board breached
the water supply contract. 1 “As to materiality, the substantive law will identify
which facts are material. Only disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude the entry of summary
judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also
M iles v. Denver Public Sch., 944 F.2d 773, 775 (10th Cir. 1991). Although the
Board concedes that the contract is valid, it argues that the contract is not
enforceable under Oklahoma law until the legislature appropriates funds to pay
the contract. The Board contends that it is authorized to sell its water storage
rights and could use those proceeds to pay the United States, but the Board claims
that the United States cannot sue for those funds until the Board actually sells
those rights. The B oard argues that because the United States has not shown
either that the legislature has appropriated the funds to pay the debt, or that the
1
The Board presents as separate issues the question of whether the district
court erred in granting summary judgment in favor of the United States and in
denying the Board’s cross-motion for summary judgment. The arguments for
these two issues are virtually identical; therefore, we will treat them as one issue
on appeal.
-3-
Board has sold its water storage rights, the district court erred when it granted
summary judgment in favor of the United States.
The Board’s assertion that the district court erred in granting summary
judgment in favor of the United States is based on the erroneous premise that
Oklahoma law controls the United States’ contract claim. In United States v.
Indep. Sch. Dist. No. 1, 209 F.2d 578, 580-81 (10th Cir. 1954), we determined
that Oklahoma law did not limit the United States’ ability to recover
overpayments made to a subdivision of the State in conjunction with a valid
contract for the establishment of a community lunch school program. Among
other arguments based on Oklahoma law, the plaintiffs in Independent School
District No. 1 argued, like the Board does here, that the Oklahoma Constitution
precluded the United States from recovering in the absence of a valid prior
appropriation by the Oklahoma legislature. Id. at 580. Relying on Clearfield
Trust Company v. United States, 318 U.S. 363 (1943), we concluded that the right
of the U nited States to recover the overpaid funds was controlled by federal law,
not O klahoma law. Id. W e explained,
The funds which the government seeks to recover were disbursed to a
subdivision of the state under authority of federal law and in the
exercise of a constitutional function. And they were paid under
conditions and circumstances w hich raise a duty or an obligation to
repay that which was mistakenly disbursed. In the performance of the
constitutional function there is no express or implied disposition to
subordinate correlative federal rights to state law, and no reason is
suggested or apparent for conditioning the government’s rights or
remedies upon state law. W hether, therefore, the asserted remedy be
-4-
for money had and received or restitution for unjust enrichment, the
right to recover under controlling federal law is plain.
Id. at 580-81.
It is now well-settled that “the ‘obligations to and rights of the United
States under its contracts are governed exclusively by federal law .’” United
States v. City of Las Cruces, 289 F.3d 1170, 1186 (10th Cir. 2002) (quoting Boyle
v. United Techs. Corp., 487 U.S. 500, 504 (1988)). Here, the contract itself was
authorized by two federal laws, the W ater Supply Act of 1958, 43 U.S.C. § 390b,
and the Flood Control Act of 1962, 42 U.S.C. § 1962d-5b. The W ater Supply Act
recognizes that it is the states’ primary responsibility to develop their own water
supplies, but that the federal government should participate and cooperate in
developing such supplies. See 43 U.S.C. § 390b(a). These laws provide that the
state or non-federal interest must pay for the cost of any water resources project
and must enter into a written contract reflecting such agreement. See id. at
§ 390b(b); 42 U.S.C. § 1962d-5b(a).
Consistent with these federal laws, when the Board entered into the
contract, it agreed to the following statement: “[the Board] is empowered . . . to
contract with the Government and is vested with all necessary powers for
accomplishment of the purposes of this contract, including those required by
Section 221 of the Flood Control Act of 1970 (42 USC 1962d-5b).” Aplt. App. at
18. In another part of the contract, the Attorney General certified that: “It is my
-5-
opinion that this contract is within the authority of the contracting agency and in
reaching this conclusion I have considered the effect of Section 221 of the Flood
Control Act of 1970 (42 USC 1962d-5b).” Id. at 27. In addition to the
requirement of a w ritten agreement, the Flood Control Act requires that the Board
“be a legally constituted public body with full authority and capability to perform
the terms of its agreement and to pay damages, if necessary, in the event of
failure to perform.” 42 U.S.C. § 1962d-5b(b). The Flood Control Act also
provides that, “every agreement entered into pursuant to this section shall be
enforc[ea]ble in the appropriate district court of the United States.” Id.
§ 1962d-5b(c).
Because federal law governs the United States’ contract claim, the facts the
Board asserts are in dispute– that the legislature has not made any appropriations
and the Board has not sold any water storage rights– are not material. The
material facts are undisputed. The Board admitted in its Answer that it entered
into a water supply contract with the United States pursuant to the W ater Supply
Act of 1958 and Section 221 of the Flood Control Act of 1970 and that it was
duly authorized to enter into the contract. The contract, which the Board admits
is valid, requires the Board to make fifty consecutive annual payments. The
Board admitted in its Answer that it has not made any payments under the
contract since September 1997. Accordingly, the district court properly found
that the contract is valid, the Board is legally required to perform its obligations
-6-
under the contract, and the contract is enforceable in federal court. The district
court therefore did not err in granting summary judgment in favor of the United
States on its breach of contract claim.
III
In its second issue on appeal, the Board argues that, even if the contract is
enforceable, the district court erred in granting the United States’ request for
injunctive relief: (1) requiring the Board to make all future payments under the
water supply contract within ninety days of receiving notice that a payment is
due; and (2) prohibiting the Board from taking any other action that would result
in a breach of the water supply contract. The district court’s injunctive relief is
essentially an order for the B oard to specifically perform the contract, which w e
review for abuse of discretion. See Koch v. Koch, 903 F.2d 1333, 1335-36
(10th Cir. 1990). An abuse of discretion will be found only where the district
court makes “an arbitrary, capricious, whimsical, or manifestly unreasonable
judgment.” FDIC v. Oldenburg, 34 F.3d 1529, 1555 (10th Cir. 1994) (quotation
omitted).
The Board argues that the district court is in effect requiring the legislature
to appropriate monies to make the annual payment within ninety days of receipt
of notice from the U nited States and that this is unlawful under In the M atter of
the Application of the Oklahoma Capitol Improvement Authority, 958 P.2d 759(O kla. 1988). The Board acknowledges, however, that it has the authority to
-7-
acquire funds from at least one source other than legislative appropriations by
selling its water storage rights. The district court’s order therefore does not force
the O klahoma legislature to appropriate the funds. M oreover, the Board’s
argument that it will suffer hardship if it is required to make its future annual
payments w ithin ninety days of receiving notice that a payment is due is entirely
speculative at this point, and is not a basis for finding that the district court
abused its discretion in granting relief. See In re Carpenter, 205 F.3d 1249, 1252
n.2 (10th Cir. 2000) (rejecting argument that specific performance would frustrate
purpose of decree or make it inequitable as speculative; in the event decree
became inequitable in the future, the party could seek relief from judgment
pursuant to Federal Rule of Civil Procedure 60(b)).
The judgment of the district court is AFFIRMED.
Entered for the Court
John C. Porfilio
Circuit Judge
-8-