United Services Auto v. United States ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED SERVICES AUTOMOBILE
ASSOCIATION; CHARLENE COZART,
Plaintiffs-Appellants,
No. 96-1080
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, District Judge.
(CA-95-1114-A)
Argued: December 5, 1996
Decided: January 28, 1997
Before HALL and NIEMEYER, Circuit Judges, and DAVIS,
United States District Judge for the District of Maryland,
sitting by designation.
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Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Hall and Judge Davis joined.
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COUNSEL
ARGUED: Stephen Paul Zachary, MARTELL, DONNELLY, GRI-
MALDI & GALLAGHER, P.A., Washington, D.C., for Appellants.
Edward Roy Hawkens, Appellate Staff, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellee. ON BRIEF: Frank W. Hunger, Assistant Attorney General,
Helen Fahey, United States Attorney, Robert S. Greenspan, Appellate
Staff, Civil Division, UNITED STATES DEPARTMENT OF JUS-
TICE, Washington, D.C., for Appellee.
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OPINION
NIEMEYER, Circuit Judge:
This case involves an insurance company's effort to obtain reim-
bursement from the United States for its pre-litigation settlement of
a claim made against its insured for a tort allegedly committed within
the scope of her federal employment. Because we agree with the dis-
trict court that the insurance company's failure to comply with the
requirements of the Federal Tort Claims Act deprives the court of
subject matter jurisdiction, we affirm the court's ruling dismissing the
complaint filed on the employee's behalf.
I
On Sunday, September 26, 1993, Charlene Cozart, a White House
employee, was requested to report to work to conduct a special White
House tour for visiting dignitaries, despite the fact that she never
worked previously on a Sunday. On her way from her church in Fair-
fax, Virginia, she collided with a Chrysler minivan driven by John T.
Niehoff. The minivan's rear door latch failed and two young Niehoff
children were thrown from the van, killing one and seriously injuring
the other. The Niehoffs subsequently expressed their intention to sue
Cozart and the Chrysler Corporation as joint tortfeasors.
Cozart's insurer, United States Automobile Association ("USAA"),
contacted the United States Department of Justice, asserting that
under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2671 et
seq., Cozart was within the scope of her employment at the time of
the accident and was, therefore, immune from suit and that the United
States should be substituted as a defendant in any future tort action
filed by the Niehoffs. Justice Department attorneys, however,
expressed informally their belief that at the time of the accident
2
Cozart was going to work and, therefore, was outside the scope of her
employment. They advised USAA accordingly that the government
would, if formally requested, most likely deny the certification under
the FTCA that Cozart was acting within the scope of her employment.
USAA attorneys attempted to negotiate an agreement with the
Department of Justice for reimbursement by the United States if
Cozart settled the Niehoffs' claim, but no such agreement was
reached. Nonetheless, USAA kept the United States apprised of its
settlement negotiations with the Niehoffs.
The Niehoffs took the position that they would consider settlement
only if an offer were made before they filed a complaint. Faced with
the possibilities that the government would deny Cozart a scope-of-
employment certification under the FTCA and that an eventual court
judgment in favor of the Niehoffs would exceed Cozart's policy lim-
its, USAA negotiated a settlement with the Niehoffs for $375,000.
While the government did not participate in the negotiations, it sup-
plied USAA with a release form that included a release of the United
States.
After the settlement with the Niehoffs was approved by the Circuit
Court for the City of Alexandria, USAA and Cozart filed this action
against the United States under the FTCA, seeking reimbursement for
the $375,000 settlement on the ground that Cozart was acting within
the scope of her employment at the time of the accident. The United
States moved to dismiss the complaint under Federal Rule of Civil
Procedure 12(b)(1), asserting that the district court lacked subject
matter jurisdiction and that at the time of the accident Cozart was not
within the scope of her employment. Relying on both reasons given
by the government, the district court dismissed the complaint.1 This
appeal followed.
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1 The court explained that the FTCA made no provision for government
reimbursement of a prior settlement by a federal employee. It added that
Cozart was, in any event, acting outside the scope of her employment
under Virginia's "going to or from work" rule because she was commut-
ing to work at the time of the accident. See Smith v. Landmark Communi-
cations, Inc., 431 S.E.2d 306, 307-08 (Va. 1993); Sentara Leigh Hosp.
v. Nichols, 414 S.E.2d 426, 427 (Va. App. 1992) (en banc).
3
II
"The United States, as sovereign, is immune from suit save as it
consents to be sued, and the terms of its consent to be sued in any
court define that court's jurisdiction to entertain the suit." United
States v. Sherwood, 312 U.S. 584, 586 (1941) (citations omitted).
Although the Federal Tort Claims Act "waives the immunity of the
United States[,] . . . we should not take it upon ourselves to extend
the waiver beyond that which Congress intended." Smith v. United
States, 507 U.S. 197, 203 (1993).
While the FTCA provides that in general "[t]he United States shall
be liable, . . . relating to tort claims, in the same manner and to the
same extent as a private individual under like circumstances," 28
U.S.C. § 2674, it provides specific procedures that must be followed
both by the federal employee who has been sued and by the claimant.
A federal employee who has been sued must deliver the suit papers
to his superior or other designated person who, in turn, must furnish
copies to the appropriate United States attorney, to the Attorney Gen-
eral, and to the head of the employee's agency. See 28 U.S.C.
§ 2679(c). If the Attorney General certifies that the employee was act-
ing within the scope of his employment, the United States will be sub-
stituted as defendant. See 28 U.S.C. § 2679(d). If the Attorney
General refuses to certify that the employee was acting within the
scope of his employment,
the employee may at any time before trial petition the court
to find and certify that the employee was acting within the
scope of his office or employment. Upon such certification
by the court, such action or proceeding shall be deemed to
be an action or proceeding brought against the United
States.
28 U.S.C. § 2679(d)(3).
Once the United States has been substituted as defendant, the fed-
eral employee becomes immune from suit and the United States
retains the sole right to determine and follow the litigation strategy
that is in its best interest, including the assertion of all available
defenses, see 28 U.S.C. § 2674, or settlement of the case, see 28
4
U.S.C. § 2677 (authorizing the Attorney General to settle any claim
cognizable under 28 U.S.C. § 1346(b), "after commencement of an
action thereon") (emphasis added); 28 U.S.C.§ 2679(e) (cross-
referencing same). As the language of these provisions clearly indi-
cates, a federal employee seeking to receive the benefit of the FTCA
must wait until suit is filed and then comply with the FTCA's require-
ments.
In this case, Cozart chose not to follow the specified procedures.
USAA, as Cozart's insurer, realized that if it demanded that suit be
filed, it would risk foregoing the chance of settlement with the Nie-
hoffs and, in the event that scope-of-employment certification was
denied, exposing Cozart to liability in excess of her policy limits. The
fact, however, that the appellants were forced to choose between two
unappealing strategies cannot alter our analysis of the government's
liability. "Congress created a limited waiver of sovereign immunity
in the FTCA. This waiver permits suit only on terms and conditions
strictly prescribed by Congress. . . ." Gould v. U.S. Dept. of Health
and Human Services, 905 F.2d 738, 741 (4th Cir. 1990) (en banc),
(citations omitted). The appellants failed to follow the requirements
of 28 U.S.C. § 2679, and, in that failure, they not only bypassed the
conditions precedent to governmental liability but also denied the
United States its right to control the case. They thus converted a
potential tort claim into an indemnity claim for which the United
States has not waived its sovereign immunity. The FTCA does not
provide such a mechanism for a federal employee to transfer liability
to the United States for a claim made against the employee.2
The appellants rely on implications allegedly made in footnote 1 in
Uptagrafft v. United States, 315 F.2d 200 (4th Cir. 1963), to argue
that they are entitled to claim indemnity from the United States. Their
reliance, however, is misplaced. That footnote stands for nothing
more than the unremarkable proposition that if a person is injured by
a federal employee acting within the scope of his employment, the
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2 Had the Niehoffs chosen to take action directly against the United
States on a respondeat superior theory, they would have been obligated
to exhaust administrative remedies before filing suit, and the Attorney
General would have been authorized to settle their claim at the adminis-
trative level. See 28 U.S.C. §§ 2675, 2672.
5
plaintiff's only remedy is a suit against the United States. Indeed,
elsewhere in the opinion, we noted the unavailability of just the type
of indemnity action which USAA has pursued here:
[Exoneration] refers to the right to be reimbursed by reason
of having paid that which another should be compelled to
pay; [indemnity] . . . means compensation for loss already
sustained. This right is generally based upon contract,
express or implied. No basis exists in the [FTCA] or in Vir-
ginia law . . . for a claim for exoneration and/or indemnity
such as is made in the instant case.
Id. at 203 (citations omitted).
USAA made a strategic litigation decision, perhaps the best deci-
sion in the circumstances. But the difficulty of its dilemma does not
provide us with a basis for enlarging the government's consent to be
sued. "[Courts] are not free to enlarge that consent to be sued which
the government, through Congress, has undertaken so carefully to
limit [in the FTCA]." Gould, 905 F.2d at 747. It is a fundamental
command of the Appropriations Clause, U.S. Const. art. I, § 9, cl. 7,
that only Congress has the power to define the availability of relief
against the government and that "judicial use of the equitable doc-
trine[s] . . . cannot grant [a claimant] a money remedy that Congress
has not authorized." Office of Personnel Management v. Richmond,
496 U.S. 414, 426 (1990). By electing to settle before Cozart was
sued, USAA transformed the Niehoffs' tort claim, over which the
government would have had control, into a federal employee's indem-
nity claim, the amount of which was determined by the employee.
While Congress has provided governmental consent to be sued for the
former claim, it has not for the latter.
Finding no jurisdiction, we need not reach the scope-of-
employment issue.
AFFIRMED
6