Stewart v. Mabus ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ALEXANDER E. STEWART,
Plaintiff,
v. Civil Action No. 15-576{GK)
RAY MABUS,
Defendant.
AMENDED MEMORANDUM OPINION
This is a sad case. A distinguished, award-winning doctor who
has served the Navy for more than 24 years, whose undergraduate
education, medical studies, and advanced medical education were
paid for by the United States Government, and who received regular
salary increases in exchange for agreeing to remain in the military
for a specific number of years, is suing the Government because it
miscalculated the years he was required to serve. Because of that
miscalculation, which the Government does not deny, the doctor
signed agreements to remain with the Navy until 2015. The
Government now claims that he must remain on active duty until
2018 -- a difference of three years.
****
Plaintiff Captain Alexander E. Stewart ("Plaintiff" or
"Stewart") brings this action against Secretary of the Navy Ray
Mabus ("Defendant," "the Government," or "the Navy") seeking
review of certain determinations by the Board for Correction of
Naval Records ("the Board") regarding the period of Stewart's
obligation to remain on active duty in the Navy in exchange for
substantial educational and financial benefits. See generally
Compl. [Dkt. No. 1].
In exchange for Special Pay offered to naval physicians,
Stewart executed several contracts, which, by their written terms,
extended his active duty obligation to the Navy to at least 2015.
When the Navy discovered that the service obligation dates
specified in the contracts had been miscalculated and failed to
account for pre-existing service obligations, it amended its
records and the contracts with Stewart to reflect a later service
obligation date of 2018. Stewart petitioned the Board to reverse
these amendments, and the Board denied Stewart's request. Stewart
then appealed the Board's decision to this Court.
This matter is currently before the Court on the Government's
Motion to Dismiss or, in the Alternative, Motion for Summary
Judgment [Dkt. No. 12] and Plaintiff's Cross Motion for Summary
Judgment [Dkt. No. 16] . For the reasons that follow, the
Government's Motion to Dismiss shall be denied, the Government's
Motion for Summary Judgment shall be granted, and Plaintiff's Cross
Motion for Summary Judgment shall be denied.
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I . BACKGROUND
A. Factual Background1
1. Stewart's Early Career
Captain Stewart has had a long and distinguished career in
the United States Navy. He has served for over twenty-four years
in the Navy's Medical Corps as a physician and has received
numerous awards for his academic, research, and professional
accomplishments. See~, AR 117.
Stewart's career with the Navy began in 1987 when he
matriculated at the United States Naval Academy ("USNA"). Stewart
graduated from the USNA in 1991 and, in exchange for his studies,
incurred an obligation to serve in the Navy for five years.
10 U.S.C. § 6959(a); AR 6; Compl. ~ 8.
From 1991 to 1995, Stewart attended medical school at the
Uniformed Services University of Health Sciences ("USUHS").
Because Stewart remained in school, he did not accrue credit toward
his initial five-year service obligation while at USUHS. When
1 Because this matter is an appeal from final agency action, see
5 U.S.C. § 704, the Court relies upon the facts in the
Administrative Record ("AR") [ Dkt. No. 32] before the Board when
it reached its decision, 5 U.S.C. § 706. IMS, P.C. v. Alvarez, 129
F.3d 618, 623 (D.C. Cir. 1997) ("If a court is to review an agency's
action fairly, it should have before it neither more nor less
information than did the agency when it made its decision.").
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Stewart graduated from USUHS in May of 1995, he incurred an
additional seven-year service obligation to the Navy to be served
consecutively with his existing five-year obligation. 10 U.S. C.
§ 2114 (c); AR 10; Fontana v. White, 334 F.3d 80, 86 (D.C. Cir.
2003).
Thus, upon receipt of his medical degree in 1995, Stewart had
a 12-year service obligation, requiring that he engage in
qualifying service in the Navy until at least May of 2007. In other
words, May 2007 constituted Stewart's approximate obligated
service date ("OSD"), which is the time at which a service member
may leave active duty in the Navy without having to complete
additional required service or pay back money or other benefits
received from the Government. See e.g., 37 U.S.C. § 302 (f) ("An
officer who does not complete the period for which the payment was
made under [relevant subsections] shall be subject to the repayment
provisions of section 303a(e) of [title 37] .").
From 1995 to 1996, Stewart completed a one-year medical
internship, during which time his 12-year service obligation was
stayed. 10 U.S.C. § 2114(d). Accordingly, when Stewart completed
his medical internship in 1996, his twelve-year obligation
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remained, committing him to remain in the Navy -- and extending
his OSD -- until at least 2008. 2
From 1996 to 1999, Stewart served as a flight surgeon, which
satisfied three years of his 12-year active duty service
obligation. Upon completion of his tour of duty in 1999, Stewart
owed nine years of service, and his OSD remained at 2008.
From 1999 to 2004, Stewart completed a medical residency in
otolaryngology. This period of further training again stayed his
service obligation to the Navy. 10 U.S.C. § 2114(d). Upon
completion of the residency in 2004, Stewart still owed nine years
of service, and his OSD was moved up to 2013. 3
2·The sources in the Administrative Record and the Parties' briefs
are generally not precise with respect to the exact date of
Stewart's OSD. They often state that the OSD falls in a particular
month in a particular year or simply state the year of the OSD.
Because resolution of this case does not require any more precision
than reference to a particular year, the Court follows the Record
and the Parties' practice.
3 Stewart did incur an additional service obligation by entering
the residency program; however, Department of Defense regulations
allow service members to fulfill obligations generated by medical
residencies conducted in military facilities concurrently with
obligations incurred by undergraduate studies and medical school.
Magnusson Deel. at Id.
This error was included in the first MSP agreement itself,
which states, "Pursuant to [cited authority], [Stewart's first MSP
request] is approved for Otolaryngology, for two years, at $12,000
per year, effective 27 July 2004. [Stewart's] new obligated service
date, as computed on enclosure (2) [the OSD calculation worksheet]
is July 2010." AR 40.
After having received one annual payment of $12,000 under the
first MSP agreement, Stewart decided to request a new MSP
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agreement. In a request dated November 8, 2004, Stewart requested
that his first MSP agreement be terminated in favor of a longer,
four-year MSP agreement ("the second MSP agreement") with more
attractive annual payments of $25, 000. In his request, Stewart
acknowledged that the "obligation [under the new MSP agreement]
shall be for a period of 4 years beyond any existing active
military service obligation for education or training." AR 54.
Stewart also acknowledged that he would "repay the unearned portion
of [the July 2004] MSP contract[.]" Id.
Stewart's second MSP agreement was approved on December 10,
2004. AR 51. The second MSP agreement had a retroactive effective
date of October 1, 2004 and served to terminate Stewart's first
MSP agreement as of September 30, 2004. Id. In calculating
Stewart's new OSD pursuant to the second MSP agreement, the Navy
again included its previous error. AR 56. Failing to account for
Stewart's five-year USNA obligation, the Navy set Stewart's
pre-MSP OSD in July 2008, added two months for the period that the
first MSP agreement was in force, and added an additional four
years to account for the second MSP agreement. Id. 4 Accordingly,
4 The typed portion of the calculation table at AR 56 purports to
add three months for the period the first MSP agreement was in
force; however, the agreement appears to have been in force only
from July 27, 2004 to September 30, 2004 (i.e., just over two
months) . AR 56. That apparent arithmetic error appears to have
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the second MSP agreement reflects a new OSD of "September 2012."
AR 51.
On October 20, 2005, Stewart requested a third MSP agreement
("the third MSP agreement") with even more favorable terms than
the last: $33,000 per year in lump-sum payments for four years. AR
63. In his request, Stewart stated that he would undertake an
additional service obligation "of 4 years beyond any existing
active military service obligation for education or training."
AR 63. As before, this third MSP agreement would terminate and
replace the then-existing second MSP agreement. Id.
On November 9, 2005, Stewart's third MSP agreement request
was approved, establishing the third MSP agreement. AR 62. The
third MSP agreement had a retroactive effective date of ~ctober 1,
2005 and terminated the second MSP agreement effective September
30, 2005. AR 62.
Again, the Navy included its initial failure to account for
Stewart's five-year USNA service obligation. It set Stewart's OSD
prior to the second MSP agreement at September 30, 2008. 5 AR 69.
been corrected by hand and is not reflected in the MSP agreement
itself. AR 51, 56.
5 This OSD already included two months governed by the very first
MSP agreement executed in July of 2004.
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The Navy then added one year to the OSD for the payment received
under the second MSP agreement and four years for the anticipated
payments under the newly executed third MSP agreement. Id. This
calculation yielded an OSD of September 2013, AR 69, which is
reflected in the third and final MSP agreement, AR 62. 6
3. Rhinology Fellowship
From July 2009 to July 2010, Stewart participated in a
graduate medical education ("GME") rhinology fellowship. By
participating in the program, Stewart incurred an additional one-
year service obligation. This obligation was to be served
consecutively with Stewart's -Obligations incurred by the Navy's
6 The Administrative Record shows that Stewart made efforts to
understand the implications of entering into each of the three MSP
agreements and posed several clarifying questions to Karen M.
Gaston, Assistant Program Director for Navy Medical Special Pays,
and Bill Marin, Director of Navy Medical Special Pays. AR 84-96.
Several e-mails suggest Stewart's desire to not incur any service
obligations that would require him to stay in the Navy beyond 2015,
see AR 88, 94, 103, and on at least one occasion, Stewart noted
that he "went to the Naval Academy and then to the Uniformed
Services University[,]" AR 103. Although on several occasions, Ms.
Gaston and Mr. Marin confirmed the incorrect OSDs reflected in the
MSP agreements, "no one person or officer within the Navy Medicine
[was] responsible for ensuring the accuracy of DOW physicians'
overall OSD. ." AR 89, 92, 101.
None of Stewart's e-mails caused the Navy to recognize its
mistake. However, there is no evidence in the Administrative Record
that Stewart kept his own tally of the obligations he incurred nor
that he ever challenged the Navy's calculation of his OSD before
entering into any of the three MSP agreements.
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sponsorship of his undergraduate and medical education, AR 77-78,
but could be served concurrently with obligations incurred through
MSP agreements, AR 86.
In order to formalize Stewart's participation in the
rhinology fellowship, the Navy prepared a GME agreement, which
stated that upon completion of his fellowship, Stewart would owe
a five-year obligation to the Navy. AR 78 ("When I complete this
GME, my total [active duty service obligation] will be: 5 years").
Ironically, the worksheet used to calculate this obligation
actually includes Stewart's five-year obligation incurred by his
attendance at the USNA, but omits any reference to service
obligations incurred through Stewart's multiple MSP agreements.
AR 75.
The worksheet notes that as of July 2004, Stewart still had
an obligation to serve nine additional years to account for his
remaining USNA and USUHS obligations. Id. It accounts for five
years of creditable service performed between July 2004 and July
2009. Id. The worksheet then notes the stay of Stewart's
obligations during the fellowship, and adds a year of additional
service for the fellowship, arriving at an OSD of July 2015. Id.
This OSD could not have been correct given the lack of any
reference to obligations incurred under the MSP agreements.
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The Government ·asserts that the .GME agreement worksheet was
not meant to account for MSP obligations and that "anyone familiar
with the acronyms MSP and MISP [Multi-year Incentive Special Pay]
should have known that these obligations were not included in the
OSD calculation of 2015." Gov't's Reply at 3.
4. Recapitulation
For the sake of clarity, the Court will sum up what would
have happened if Stewart had made each of the same three MSP
requests and the Navy had correctly calculated his OSD in each MSP
agreement. As of July 2004, Stewart still owed nine years of
service in exchange for his education at the USNA and USUHS, and
thus, had an OSD of July 2013. He entered a two-year MSP agreement
(the first MSP agreement), which would have moved his OSD to July
2015. However, that first MSP agreement was terminated after just
two months in favor of a four-year MSP agreement (the second MSP
agreement). Under the second MSP agreement, Stewart's OSD would
have been September 2017 (a date which takes account of the two
months under the first MSP agreement and four years under the
second). Finally, after just a year under the second agreement,
Stewart signed a third MSP agreement, terminating the second MSP
agreement. Thus, Stewart's OSD should have been adjusted again to
September 2018 (beginning at July 2013, adding two months for the
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first MSP agreement, one year for the second MSP agreement, and
four years for the third and final MSP agreement) .
The one-year obligation incurred as a result of Stewart's
rhinology fellowship could be served concurrently with any
obligation incurred under an MSP agreement. Because any MSP
agreement necessarily increased Stewart's OSD by at least a year,
37 U.S.C. § 302 (c) (1), participation in the fellowship program
would not have affected Stewart's OSD.
If the Navy had never made its initial error, and Stewart had
entered into MSP agreements of the same duration, his OSD clearly
would be in September of 2018, not September of 2013 as the third
MSP agreement states, AR 62, nor July 2015 as the GME worksheet
states, AR 75.
5. Error Correction Letters
In 2010, the Chief of Naval Personnel became concerned that
many contracts with Navy medical officers contained incorrectly
calculated OSDs and requested that the Naval Audit Service perform
a review. See Pl.'s Ex. 1 [Dkt. No. 16-2]. The auditors identified
eight Navy physicians affected by OSD computation errors,
including Stewart. Pl.'s Ex. 1; Compl. ~ 29.
On February 9, 2011, the Navy notified Stewart that it had
discovered that his MSP contracts failed to account for his five-
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year USNA service obligation. AR 80. The letter notes the
inaccurate pre-MSP OSD of July 2008, id., which had been the
baseline for the calculation of Stewart's OSD in his very first
MSP agreement, AR 42, and states that his OSD had been adjusted to
August 2013, AR 80. The letter goes on to warn that "[a]s a result
of this OSD adjustment, it is possible any Multiyear Special Pay
(MSP) agreement you entered into may be affected." Id.
A second letter arrived two days later on February 11, 2011.
That letter again noted the original OSD calculation error, and
correctly identified its source as Stewart's "initial MSP
agreement executed July 27, 2004." AR 82. In order to correct the
error, the Navy stated that it would amend the OSD contained in
Stewart's third and final MSP agreement from September 2013 to
October 2018. AR 82. 7
7 Given that the third MSP agreement lists an OSD of "September
2013," AR 62, and the Navy's correction letters of February 9 and
11, 2011 purport to add Stewart's five~year USNA service obligation
to his OSD, AR 80 & 82, it is not immediately clear why Stewart's
.amended OSD should be October 2018 rather than September 2018.
However, the worksheet appended to the third MSP agreement shows
an OSD of "2013/09/30," AR 69, so any difference may just be a
matter of a single day. Moreover, the Parties' briefs and the
Administrative Record do not consistently track shifts in
Stewart's OSD by days. Instead, they generally measure changes to
his OSD in months or even just years. Finally, Plaintiff has not
raised this issue, so the Court will treat the difference between
a September 2018 and an October 2018 OSD as de minimis and will
not address it further.
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Both letters advised Stewart that he could "submit a request
to the Board for Correction of Naval Records (BCNR) to dispute
[the] decision." AR 82; accord AR 80.
B. Procedural Backg~ound
Nearly three years later, on January 12, 2014, Stewart did
petition the Board to overturn the amendments referred to in the
two letters of February 9 and 11, 2011. Compl. ~ 36. Specifically,
he requested that the Navy reinstate his pre-MSP OSD as July 2008
and recognize as binding the OSD of July 27, 2015 reflected in the
worksheet accompanying the GME agreement Stewart executed before
beginning his rhinology fellowship. AR 18-19.
On July 16, 2014, in response to Stewart's petition, the Board
requested an advisory opinion from the Navy Medicine Professional
Development Center, AR 27, and on September 15, 2014, the Navy's
Bureau of Medicine and Surgery responded, recommending disapproval
of Stewart's petition, AR 24. On November 7, 2014, the Board denied
Stewart's petition. AR 3-4.
On April 16, 2015, Stewart filed his Complaint [Dkt. No. 1]
challenging the Board's denial of his petition. The Complaint
asserts three causes of action, all under the Administrative
Procedure Act, 5 U.S.C. §§ 702, 706(2) (A). Compl. `` 40-79.
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Stewart's first claim alleges that it was contrary to law for
the Navy to amend I his OSD to a date different from the date
contained in his third and final MSP agreement. Compl. `` 40-53.
Stewart's second claim alleges that it was contrary to law for the
Navy to amend Stewart's OSD to a date different f ram the date
contained in the GME agreement executed before he began his
rhinology fellowship. Compl. `` 54-67. Finally, Stewart's third
claim alleges that the Navy's amendments of Stewart's OSD were
arbitrary, capricious, and an abuse of discretion. Compl. `` 68-
7 9.
On August 3, 2015, the Government filed its Motion to Dismiss
or, in the Alternative, Motion for Summary Judgment [Dkt. No. 12].
On August 31, 2015, Plaintiff filed his combined Memorandum in
Opposition and Cross Motion for Summary Judgment [Dkt. No. 16]. On
October 13, 2015, the Government filed its combined Reply to
Plaintiff's Opposition and Memorandum in Opposition to Plaintiff's
Cross Mot.ion for Summary Judgment [Dkt. No. 23]. On November 3,
2015, Plaintiff filed his Reply to the Government's Opposition
[Dkt. No. 26] .s
8 Plaintiff also filed a Motion for Leave to File a Surreply in
Opposition to Defendant's Motion to Dismiss or, in the Alternative,
Motion for Summary Judgment ("Pl.' s Mot. for Leave") [Dkt. No.
27]. On November 19, 2016, the Government filed its Opposition to
Plaintiff's Motion for Leave [Dkt. No. 28]. The Court denied
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II. STANDARD OF REVIEW
A. Motion to Dismiss for Lack of Jurisdiction
Under Fed. R. Civ. P. 12 (b) (1), "[t]he plaintiff bears the
burden of invoking the court's subject matter jurisdiction" to
hear his or her claims. Arpaio v. Obama, 797 F.3d 11, 19 (D.C.
Cir. 2015). In deciding whether to grant a motion to dismiss for
lack of jurisdiction, the Court must "accept all of the factual
allegations in [the] [C]omplaint as true[.]" Jerome Stevens
Pharm., Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 (D.C. Cir.
2005) (quoting United States v. Gaubert, 499 U.S. 315, 327 (1991))
(internal quotation marks omitted). However, "[w]here necessary to
resolve a jurisdictional challenge under Rule 12(b) (1), the court
may consider the complaint supplemented by undisputed facts
evidenced in the record, or the complaint supplemented by
undisputed facts plus the court's resolution of disputed facts."
Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1129 (D.C. Cir.
2015) (internal citation and quotation marks omitted).
B. Summary Judgment
Summary judgment may be granted only if the moving party has
shown that there is no genuine dispute of material fact and that
Plaintiff's Motion for Leave on February 2, 2016. Memorandum Order
of Feb. 2, 2016 [Dkt. No. 35].
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the moving party is entitled to judgment as a matter of law. See
Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991 (D.C.
Cir. 2002).
Plaintiff's challenge arises under the APA, 5 u.s.c.
§ 706 (a) (2), which provides that reviewing courts "shall
hold unlawful and set aside agency action, findings, and
conclusions found to be . . arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law[.]" Courts in
this Circuit routinely apply the APA's standards to the Board's
decisions. See Piersall v. Winter, 435 F.3d 319, 321 (D.C. Cir.
2006) ("These are not uncharted waters. We have many times reviewed
the decisions of boards for correction of military records in light
of familiar principles of administrative law." (internal quotation
marks omitted)).
When a district court reviews an administrative action,
"[t] he entire case on review is a question of law." Am. Bioscience,
Inc. v. Thompson, 269 F.3d 1077, 1083-84 (D.C. Cir. 2001) (internal
quotation marks omitted). "Summary judgment thus serves as the
mechanism for deciding, as a matter of law, whether the agency
action is supported by the administrative record and otherwise
consistent with the APA standard of review." Sierra Club v.
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Mainella, 459 F. Supp. 2d 76, 90 (D.D.C. 2006) (citing Richards v.
INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977)). Finally, the
Court's review on summary judgment is limited to the Administrative
Record. Holy Land Found. for Relief and Dev. v. Ashcroft, 333 F.3d
156, 160 (D.C. Cir. 2003) (citing Camp v. Pitts, 411 U.S. 138, 142
(1973)); Fund for Animals v. Babbitt, 903 F. Supp. 96, 105 (D.D.C.
1995) amended, 967 F. Supp. 6 (D.D.C. 1997) ("Summary judgment is
an appropriate procedure for resolving a challenge to a federal
agency's administrative decision when review is based upon the
administrative record.").
III. ANALYSIS
A. Jurisdiction
"Federal courts have limited jurisdiction and may not presume
the existence of jurisdiction in order to decide a case on other
grounds." Morrison v. Sec'y of Def., 760 F. Supp. 2d 15, 17 (D.D.C.
2011) (citing Tuck v. Pan Am. Health Org., 668 F.2d 547, 549 (D.C.
Cir. 1981)). On its face, Plaintiff's Complaint seeks review of
the Board's failure to correct his OSD to follow his third MSP and
GME agreements as originally written, see Compl. `` 53, 67, 79,
rather than to enforce those agreements directly. Although this
distinction is subtle, it is critical to this Court's jurisdiction.
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Sovereign immunity ordinarily protects the federal government
from suit without its consent. See Trans-Bay Engineers & Builders,
Inc. v. Hills, 551 F.2d 370, 376 (D.C. Cir. 1976). In this case,
Plaintiff invokes § 702 of the APA, which partially waives
sovereign immunity for "action[s] seeking relief other than
money damages[.]" 5 U.S.C. § 702.
As already noted, judicial review of the Board's
determinations under the APA is well established. Piersall, 435
F.3d at 321. However, our Court of Appeals has also held that "the
waiver of sovereign immunity in the Administrative Procedure Act
does not run to actions seeking declaratory relief or specific
performance in contract cases[.]" Sharp v. Weinberger, 798 F.2d
1521, 1523 (D.C. Cir. 1986). The holding in Sharp rests on two
bases. First, "[the APA's] waiver [of sovereign immunity] is by
its terms inapplicable if 'any other statute that grants consent
to suit expressly or impliedly forbids the relief which is
sought[.]'" Id. (quoting 5 U.S.C. § 702). Second, "the Tucker Act
and Little Tucker Act" provide the exclusive remedies for any
alleged breach of contract by the federal government and thereby
"impliedly forbid" the federal courts' jurisdiction to grant
declaratory relief or specific performance in contract cases. Id.
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The Government contends that Plaintiff's case is effectively
one for breach of contract because he seeks to enforce the original
terms of his MSP and GME agreements. However, in construing Sharp,
our Court of Appeals has stated "that a federal district court may
accept jurisdiction over a statutory or constitutional claim for
injunctive relief even where the relief sought is an order forcing
the government to obey the terms of a contract--that is, specific
performance. The Sharp Court ruled that § 702 waived sovereign
immunity for [the plaintiff's] prayer for an injunction against
his transfer, an order, in other words, compelling the Defense
Department to abide by the terms of its agreement with [the
plaintiff]." Transohio Sav. Bank v. Dir., Office of Thrift
Supervision, 967 F.2d 598, 610 (D.C. Cir. 1992).
Plaintiff's Complaint follows the outline described in
Transohio. Stewart is not bringing a free-standing breach of
contract claim. Instead, he challenges the Board's failure to
correct the Navy's unilateral amendment of the OSD reflected in
his MSP and GME agreements. If Plaintiff were to prevail, the Navy
might be required to abide by the terms of the agreements as
written, but even so, that result would not transform Plaintiff's
case from one seeking administrative review into a breach of
contract claim. Id., 967 F. 2d at 610-11 ("The mere fact that a
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court may have to rule on a contract issue does not, by
triggering some mystical metamorphosis, automatically transform an
action based on trespass or conversion into one on the contract
and deprive the court of jurisdiction it might otherwise have."
(internal brackets, citation, and quotation marks omitted)); see
also Spectrum Leasing Corp. v. United States, 764 F.2d 891, 893
(D.C. Cir. 1985) ("A court will not find that a particular claim
is one contractually based merely because resolution of that claim
requires some reference to a contract." (emphasis in original)).
Accordingly, the Court holds that it has jurisdiction to hear
Plaintiff's claims and shall deny the Government's Motion to
Dismiss for lack of jurisdiction.
B. Merits
As described above, Stewart entered into a series of
agreements with the Navy entitling him to Special Pay in exchange
for promises to extend his term of active duty service. Those
agreements contained specific dates indicating when he would be
permitted to resign from naval service. By its own admission, the
Navy miscalculated the dates contained in its agreements with
Stewart, and upon ?iscovery of its error, took steps to
unilaterally alter Stewart's OSD. Stewart argues that his OSD
should be reset to conform to the written terms of his agreements
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with the Navy because the Navy's unilateral amendments are
arbitrary, capricious, and contrary to law.
Plaintiff contends that the Court should employ the common
law of contracts to hold that the Navy's amendments to his OSD and
MSP agreements were contrary to law. The relief he seeks amounts
to reinstatement of the MSP and GME agreements 9 as initially
drafted. See Compl. pp. 17-18 (requesting, inter alia, that the
Court "[e]nforce the parties' November 9, 2005 [third] MSP
Agreement; [d]eclare [] Stewart's MSP OSD is November 1, 2015;
. . [p]ermanently enjoin the [Navy] . . from enforcing, applying,
or implementing . . . any obligation dates other than July 1, 2015
(GME) and November 1, 2015 (MSP) "). Thus, Plaintiff seeks to retain
the Special Pay and benefits . he received from the admittedly
inaccurate OSD reflected in his final MSP agreement and GME
agreement.
The Supreme Court has held that "[a] soldier's entitlement to
pay is depentjent upon statutory right." See Bell v. United States,
366 U.S. 393, 401 (1961). "The rights of . service members
must be determined by reference to the statutes and regulations
9 The Navy's letters of February 9 and 11, 2011 do not purport to
amend Stewart's GME agreement. AR 6, 7. Rather, they amend his OSD
itself, and the OSD as listed in his third and final MSP agreement.
Id.
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governing the [particular benefit], rather than to ordinary
contract principles." United States v. Larionoff, 4 31 U.S. 8 64,
869 (1997); see also Combs v. U.S., 50 Fed. Cl. 592, 605 (Fed. Cl.
2001) (rejecting plaintiff's argument that he should be paid at
E-6 pay rate when Air Force forms so indicated because statute
made clear that plaintiff was entitled to only E-1 pay rate).
Plaintiff contends that the Court can resolve this dispute
with reference only to ordinary contract law because "[t]o
determine whether the military has breached an enlistment contract
or whether an enlistment contract is invalid, courts apply general,
common law principles of contract law." Qualls v. Rumsfeld, 357 F.
Supp. 2d 274, 279-80 (D.D.C. 2005). It is true that "[m]any cases
hold that civilian courts may· apply traditional contract
principles in construing the rights and obligations arising under
enlistment contracts and, by analogy, active duty agreements."
Cinciarelli v. Carter, 662 F.2d 73, 78 (D.C. Cir. 1981). However,
Qualls acknowledges that cases "concern[ing] soldiers' entitlement
to pay" must be resolved according to statutory and regulatory
provisions, rather than ordinary contract law. Qualls, 357 F. Supp.
2d at 280 n.1.
This case unquestionably contains elements of pay
entitlements and service obligations; however, the relief
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Plaintiff requests depends upon the validity of his MSP and GME
agreements, and the validity of those agreements, in turn, depends
upon the statutory and regulatory provisions authorizing Special
Pay. Cf. United States v. Larionoff, 431 U.S. 864, 869 (1997)
(holding that plaintiffs' entitlement to "Variable Re-enlistment
Bonus" payments "must be determined by reference to the statutes
and regulations governing the [Bonuses], rather than to ordinary
contract principles.") . Thus, before the Court may consider
whether to enforce Stewart's agreements as written, it must first
consider whether the agreements comport with the statutes and
regulations that authorize their creation. Therefore, Plaintiff's
entitlement to the Special Pay he received and the validity of the
agreements he executed is governed by the statutory and regulatory
provisions underlying Special Pay agreements.
Section 302 ( c) ( 1) permits the payment of Special Pay or
Incentive Special Pay only when an "officer first executes a
written agreement in which the officer agrees to remain on active
duty for a period of not less than one year beginning on the date
the officer accepts the award of such special pay." 37 U.S. C.
§ 302 (c) (1).
Navy regulations further clarify that "[t] he active duty
service obligation for [Multi-year Special Pay and Multi-year
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Incentive Special Pay] begins after any preexisting obligation for
medical education and training or previous MSP agreement is
served." OPNAVINST 7220.17 at 250(2) (a) . 10 The same regulation at
251(1) requires the medical officer applying for Special Pay to
"execute[] a written agreement to remain on active duty for 2, 3,
or 4 years beyond any existing active duty service obligation for
medical education and training or a previous MSP agreement." Id.
at 251(1). Plaintiff acknowledges that these regulations are
binding. Pl.'s Reply at 2 ("USNA and USUHS obligations are required
to be served prior to any MSP obligations. See OPNAVINST 7220.17")
(emphasis added).
As initially drafted, the third and final MSP agreement would
have obligated Stewart to remain on active duty until only
September 2013, despite the fact that he was already obligated to
remain on active duty until his UNSA and USUHS obligations were
met in July 2013. Thus, it is clear that the MSP agreement
conflicts with the requirements that officers receiving Special
Pay must agree to remain on active duty service for at least one
year, 37 U.S.C. § 302 (c) (1), and that active duty obligations
incurred through MSP agreements must follow the completion of
·10Available at
http://www.med.navy.mil/bumed/Special Pay/Documents/HomeLinks/Re
ferences/OPNAVINST%207220.17.pdf (last visited Feb. 12, 2016).
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pre-existing service commitments, OPNAVINST 7220.17 250(2) {a).
Given that Stewart's written agreements with the Navy would permit
him to keep five years' worth of Special Pay distributions and
leave military duty before completing five years of service beyond
his pre-existing obligations, those agreements are invalid. See
Larionoff, 431 U.S. at 869.
If enforced as written, Plaintiff's third and final MSP
agreement would violate the statutory and regulatory provisions
that authorize the creation of MSP agreements. By refusing to take
action that would violate those provisions, the Navy is obviously
not acting arbitrarily, capriciously, or contrary to law.
Next, the Court cannot enforce Stewart's GME agreement.
Plaintiff asks the Court to "[e]nforce the parties' December 12,
2008 GME agreement" and to "[d]eclare [that] Stewart's GME OSD is
July 1, 2015 [.]" Compl. p. 1 7. As an initial matter, Plaintiff's
GME agreement does not even contain the date July 1, 2015; that
date is contained only in the worksheet used to prepare the
agreement itself. AR 7 5. The agreement simply states "[w] hen I
complete this GME, my total ADO [active duty obligation] will be:
5 years[.]" AR 78. It is far from clear whether the "total ADO"
referred to in the GME agreement is intended to include active
duty oblig.ations incurred through MSP agreements or whether it is
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meant only to reflect the "total ADO" incurred through education
and training.
More importantly, however, enforcement of a July 1, 2015 OSD
would also conflict with 37 U.S.C. § 302(c) and OPNAVINST 7220.17
at 250 (2) (a) because Plaintiff would retain five years' worth of
Special Pay distributions without providing the required five
additional years of active duty service beyond July 2013. Again,
the Navy's effort to comply with the applicable statute and
regulation cannot be deemed arbitrary, capricious or contrary to
law.
In short, Stewart's GME and MSP agreements, as initially
drafted, violated 37 U.S.C. § 302(c) (1) and OPNAVINST 7220.17
250 (2) (a), and therefore could not be enforced as Plaintiff argues.
Finally, the practical reality is that Stewart wants to
terminate his service with the Navy which paid for his
undergraduate education, medical school, internship, medical
residency in the specialty of otolaryngology, and Special Pay of
annual lump-sum payments on top of his regular pay - without having
to pay for his end of the bargain - namely, provision of high
quality, specialized medical care to the Navy for the period of
time he agreed to. In sum, he would be unjustly enriched. As the
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Court said in Fontina v. White, 334 F.3d 80, 87 (D.C. Cir. 2003),
ruling in a similar situation,
Such a windfall would be inconsistent with one of the
Army's primary purposes, as stated in the regulations,
for requiring such obligations in exchange for
educational assistance: ensuring "a reasonable return to
the Army following the expenditure of public funds." AR
350-100, at P7 (a) (4); cf. Schaefer v. Cheney, 725 F.
Supp. 40 49, (D.D.C. 1989) (stating that "one of the
fundamental purposes of requiring" service obligations
is to provide the Army with "a fair quid pro quo for
[its] investment in personnel").
IV. CONCLUSION
For the forgoing reasons, the Government's Motion to Dismiss
shall be denied, the Government's Motion for Summary Judgment shall
be granted, and Plaintiff's Cross Motion for Summary Judgment shall
be denied.
February 24, 2016