MARGARET M. SWEENEY, Judge.
Plaintiffs in this action seek payment under an insurance policy issued by the government. Defendant moves to dismiss the claims of one of the plaintiffs for lack of jurisdiction pursuant to Rule 12(b)(1) of the Rules of the United States Court of Federal Claims ("RCFC"). Because some of defendant's arguments touch upon the merits of one of those claims, the court treats that merits discussion as a motion to dismiss for failure to state a claim upon which the court could grant relief pursuant to RCFC 12(b)(6). For the reasons set forth below, the court grants in part and denies in part defendant's motion.
This case concerns an insurance policy issued by the Federal Aviation Administration ("FAA") as part of its aviation insurance program. Under this program, which is set forth in chapter 443 of title 49 of the United States Code ("chapter 443"), the FAA "may provide insurance and reinsurance against loss or damage arising out of any risk from the operation of an" aircraft if the FAA "decides that the insurance cannot be obtained on reasonable terms from an insurance carrier," 49 U.S.C. § 44302(a) (2006 & Supp. V 2012), and if the President has determined that "the continued operation of the . . . aircraft to be insured or reinsured is necessary in the interest of air commerce or national security or to carry out the foreign policy of the United States Government,"
On April 29, 2013, an aircraft operated by plaintiff National Air Cargo Group, Inc. d/b/a National Airlines ("National Air Cargo") crashed at Bagram Air Base, Afghanistan. At the time of the crash, the aircraft was transporting military vehicles and other military cargo pursuant to a contract with the United States Transportation Command ("USTRANSCOM"). The crash resulted in the deaths of the seven individuals on board the flight and the total loss of the aircraft.
As required by its contract with USTRANSCOM, National Air Cargo was a carrier in good standing participating in the Civil Reserve Air Fleet. Pursuant to its Civil Reserve Air Fleet contract, National Air Cargo was required to apply for nonpremium aviation insurance from the FAA. National Air Cargo complied with this provision, and on September 28, 2011, the FAA issued National Air Cargo a nonpremium hull and liability war risk insurance policy ("nonpremium war risk policy"). This policy covered physical loss or damage to the aircraft resulting from a war risk occurrence, up to $40,000,000.
In letters dated May 30, 2013, and June 6, 2013, National Air Cargo notified the FAA that it had a claim under the nonpremium war risk policy arising from the crash at Bagram Air Base. The FAA denied National Air Cargo's claim on June 19, 2013. In the meantime, National Air Cargo and its lenders submitted a claim for their loss under a separate insurance policy issued by plaintiff Commerce and Industry Insurance Company ("Commerce"), which provided coverage for physical damage to the aircraft. Commerce ultimately paid National Air Cargo and its lenders $42,153,003 to settle their claim for the loss of the aircraft. Under the terms of the Commerce policy, Commerce is subrogated to National Air Cargo's rights of recovery against the FAA.
As a result of the FAA's denial of National Air Cargo's claim under the nonpremium war risk policy, National Air Cargo and Commerce filed suit in the United States Court of Federal Claims ("Court of Federal Claims"). Their complaint contains three counts. In the first count, captioned "Breach of Contract — National Air Cargo," National Air Cargo alleges that the FAA's failure to pay it for the loss of its aircraft constitutes a breach of the nonpremium war risk policy. In the second count, captioned "Breach of Contract — Commerce and Industry Insurance Company," Commerce also alleges, in its role as subrogee, that the FAA breached the nonpremium war risk policy by failing to pay for the loss of the aircraft. In the third count, plaintiffs seek a declaratory judgment. Plaintiffs collectively request damages of no more than $45,000,000, interest, attorney's fees and costs, and a declaration of the FAA's obligations under the nonpremium war risk policy.
In response to plaintiffs' complaint, defendant filed a partial answer and a motion to dismiss. With the latter submission, defendant seeks the dismissal of the claims asserted by Commerce for lack of jurisdiction. The motion has been fully briefed, and the court heard argument on June 25, 2014.
Defendant moves to dismiss Commerce's claims for lack of jurisdiction pursuant to RCFC 12(b)(1). In ruling on a motion to dismiss, the court assumes that the allegations in the complaint are true and construes those allegations in the plaintiff's favor.
The ability of the Court of Federal Claims to hear and decide suits against the United States is limited. "The United States, as sovereign, is immune from suit save as it consents to be sued."
The Tucker Act, the principal statute governing the jurisdiction of this court, waives sovereign immunity for claims against the United States, not sounding in tort, that are founded upon the Constitution, a federal statute or regulation, or an express or implied contract with the United States. 28 U.S.C. § 1491(a)(1) (2012). However, the Tucker Act is merely a jurisdictional statute and "does not create any substantive right enforceable against the United States for money damages."
In asserting that the court possesses jurisdiction over Commerce's monetary claim, plaintiffs rely on 49 U.S.C. § 44309(a), which provides:
Plaintiffs contend that section 44309(a)(1) provides for jurisdiction in the Court of Federal Claims pursuant to the Tucker Act. Specifically, they argue that the aviation insurance program set forth in chapter 443 is a money-mandating statutory scheme because it expressly authorizes the FAA to pay claims made pursuant to the insurance policies it issues, 49 U.S.C. § 44308(b)(2), and provides for a cause of action against the government in the Court of Federal Claims when an insured loss is in dispute,
Although the Tucker Act is the principal statute governing the jurisdiction of the Court of Federal Claims, it is not the only one. A number of other statutes waive the government's sovereign immunity and provide for jurisdiction in this court. For example, the National Childhood Vaccine Injury Act of 1986 vests the Court of Federal Claims with exclusive jurisdiction over proceedings on certain vaccine-related claims, which are defended by the government.
Nevertheless, parties seeking to invoke the jurisdiction of the Court of Federal Claims must still base their suit on a "substantive right enforceable against the United States for money damages."
Having concluded that chapter 443 waives sovereign immunity, provides for jurisdiction in the Court of Federal Claims, and, in conjunction with National Air Cargo's nonpremium war risk policy, supplies a substantive right to money damages enforceable against the United States, the court's jurisdictional inquiry with respect to that statute is complete. As instructed by the United States Court of Appeals for the Federal Circuit, when engaging in a jurisdictional analysis, the court must determine whether the plaintiff has alleged a right to recovery premised upon a money-mandating source of law.
Although defendant's motion is framed as a motion to dismiss for lack of jurisdiction, the bulk of the arguments proffered in defendant's motion pertain to whether Commerce's monetary claim falls within the ambit of section 44309(a)(1). Plaintiffs fully responded to defendant's arguments. Because neither party would be prejudiced, the court will now proceed to consider whether Commerce can assert a claim under section 44309(a)(1). In doing so, the court converts defendant's motion, in part, to a motion to dismiss for failure to state a claim upon which relief could be granted.
To a survive a motion to dismiss for failure to state a claim upon which the court can grant relief, a complaint must contain "enough facts to state a claim to relief that is plausible on its face."
The cardinal rule of statutory construction is that "courts must presume that a legislature says in a statute what it means and means in a statute what is says there."
Commerce premises its monetary claim on its allegations that it issued an insurance policy to National Air Cargo, paid a settlement to National Air Cargo and its lenders under that insurance policy for the loss of the aircraft, and, pursuant to the terms of that policy, is subrogated to National Air Cargo's right of recovery under the nonpremium war risk policy issued by the FAA. Assuming these allegations to be true, Commerce is foreclosed from pursuing its monetary claim under clause (B) of section 44309(a)(1). The plain language of that clause reflects that it applies only to aviation insurance policies for which premiums are paid, and clearly prohibits civil actions brought by a subrogee of a party insured under a nonpremium policy, i.e., a policy issued pursuant to section 44305(b). Plaintiffs, however, argue that Commerce is entitled to bring its monetary claim under clause (A) of section 44309(a)(1).
Section 44309(a)(1)(A) provides that "[a] person may bring a civil action in . . . the United States Court of Federal Claims against the United States Government when a loss insured under [chapter 443] is in dispute." This language is very broad; it does not require, on its face, that the person bringing the civil action be the person to whom the FAA issued the insurance policy. Nevertheless, defendant argues, clause (A) cannot be read in isolation. If Congress meant for clause (A) to apply to all subrogees, defendant contends, there would have been no reason for Congress to have included clause (B), a clause governing subrogee suits, in the statute.
"It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme."
As an initial matter, the parties have divergent interpretations of section 44309(a)(1)(B). According to plaintiffs, clause (B) only governs civil actions brought by subrogees of persons insured under aviation insurance policies for which premiums are paid. Thus, from their perspective, civil actions brought by subrogees of parties insured under nonpremium policies, such as Commerce, fall into the ambit of clause (A). Defendant, on the other hand, asserts that clause (B) governs civil actions brought by any subrogee of a person insured under an aviation insurance policy, and then specifically excludes that subset of civil actions brought by subrogees of parties insured under nonpremium policies. Accordingly, from defendant's viewpoint, civil actions brought by subrogees of parties insured under nonpremium policies, such as Commerce, are covered, and then excluded by, clause (B); clause (A) never applies. Neither interpretation is textually unreasonable. Therefore, in an attempt to ascertain the meaning of section 44309(a)(1)(B) intended by Congress, the court turns to the legislative history of the statute.
Prior to 1951, typical commercial aviation insurance policies excluded certain war risks, and commercial war risk insurance was "virtually useless" because its was expensive and subject to cancellation on forty-eight hours notice. H.R. Rep. No. 82-483, at 2-3 (1951); S. Rep. No. 82-128, at 2 (1951). Recognizing the increase in international commercial airline service and "the importance of air movement to [the country's] defense effort," Congress concluded that it was "most essential" that the government have the ability to provide war risk insurance in situations where commercial war risk insurance would be cancelled. H.R. Rep. No. 82-483, at 3; S. Rep. No. 82-128, at 3. Accordingly, Congress amended the Civil Aeronautics Act of 1938 to add a program for aviation war risk insurance. Act of June 14, 1951, Pub. L. No. 47, sec. 1, §§ 1301-1311, 65 Stat. 65, 65-69. Under this program, the Secretary of Commerce was authorized to "provide insurance and reinsurance against loss or damage arising out of war risks . . . whenever it [was] determined by the Secretary that such insurance adequate for the needs of the air commerce of the United States [could not] be obtained on reasonable terms and conditions" from commercial insurers.
Seven years later, the war risk insurance program was reenacted, without substantial change, as part of the Federal Aviation Act of 1958, Pub. L. No. 85-726, tit. XIII, 72 Stat. 731, 800-06 (repealed 1994). The duties of the Secretary of Commerce were transferred to the Secretary of Transportation in 1967. Department of Transportation Act, Pub. L. 89-670, § 6(a)(3)(C), 80 Stat. 931, 937 (1966). The Secretary of Transportation, in turn, delegated his authority over aviation war risk insurance to the FAA. Title 49-Transportation, Establishment of Subtitles and Renumbering of Chapter I, 32 Fed. Reg. 5606, 5607 (Apr. 5, 1967) (issuing 49 C.F.R. § 1.4(b)(1), which subsequently became 49 C.F.R. § 1.47(b)).
In 1975, Congress became aware that commercial insurers were adding exclusions to their all-risk insurance policies for occurrences not covered under the definition of "war risks." H.R. Rep. No. 95-301, at 2 (1977). Consequently, it amended the Federal Aviation Act of 1958 to "expand the types of risks" that could be insured.
Two decades later, in 1994, Congress revised, codified, and enacted, "without substantive change," the aviation insurance program. Act of July 5, 1994, Pub. L. 103-272, §§ 1, 6(a), 108 Stat. 745, 1167-73, 1378. Thus, the FAA retained the authority to "provide insurance and reinsurance against loss or damage arising out of any risk from the operation of an" aircraft if it determined that the insurance could not be "obtained on reasonable terms from an insurance carrier," and if the President determined that "the continued operation of the . . . aircraft to be insured or reinsured [was] necessary to carry out the foreign policy of the United States Government."
A short time later, however, Congress revisited the substance of the aviation insurance program. A review of the program by what was then known as the General Accounting Office ("GAO") revealed a number of problems with the program. H.R. Rep. No. 105-244, at 3 (1997). Among other issues, the GAO found that because there was not enough money in the FAA's insurance fund, the FAA might be delayed in paying a claim while it pursued a congressional appropriation, making airlines reluctant to volunteer their services for military operations.
Congress addressed the GAO's concerns, in part, in the National Defense Authorization Act for Fiscal Year 1997, Pub. L. No. 104-201, 110 Stat. 2422 (1996). In that Act, Congress amended title 10 of the United States Code to require the Secretary of Defense, in situations where it had an indemnification agreement with the FAA, to "promptly indemnify" the FAA for the amount of the insured loss; prompt indemnification was defined as no later than thirty days after the FAA determined the claim to be payable.
Subsequent to the enactment of the National Defense Authorization Act for Fiscal Year 1997, Congress sought to address the lack of a prompt payment mechanism for claims brought under the small number of insurance policies issued by the FAA that the Act did not address. The solution it adopted was based on a proposal from the Secretary of Transportation. As contemplated by the Secretary, these insured parties would obtain prompt payment insurance from a commercial insurer. S. Rep. No. 105-278, at 16-17 (1998); H.R. Rep. No. 105-639, at 47-48 (1998).
To ensure that commercial insurers would issue prompt payment policies, the Secretary of Transportation suggested an amendment to section 44309(a), the provision concerning judicial review of disputed claims. H.R. Rep. No. 105-639, at 11, 48. The amendment was intended to clarify a commercial insurer's right to bring suit against the government to recover a payment that had been approved by the FAA for a loss covered by the insurance provided by the FAA.
The legislative history reveals that up until 1998, it was Congress's position that the judicial review provision of the aviation insurance program only permitted the party insured by the FAA to bring suit for a disputed loss. Indeed, there was no congressional expectation that a commercial insurer would have a cause of action against the government regarding a disputed loss because the insurance provided by the FAA only covered losses that were not covered by commercial aviation insurance; no commercial insurer would have made a payment on such a loss. It was not until the idea of prompt payment insurance was floated in 1998 that Congress sought to permit suits by subrogees. And, recognizing that prompt payment insurance was not necessary to backstop nonpremium insurance provided by the FAA because prompt payment for that insurance was statutorily guaranteed, Congress limited its new cause of action to subrogees of parties holding premium insurance from the FAA. In sum, the legislative history supports defendant's interpretation of section 44309(a)(1) that clause (B) precludes Commerce's monetary claim and that clause (A) should not be invoked. Commerce's independent monetary claim under section 44309(a)(1) is therefore barred.
The fact that Commerce does not possess a cause of action under section 44309(a)(1) does not, however, end the court's inquiry. Section 44309 also contains a joinder provision. Under that provision, "[a]n interested person may be joined as a party to a civil action brought under [section 44309(a)]
Chapter 443 does not define "interested person," but based on the plain language of section 44309, it is clear that an interested person must be a party other than the insured or a subrogee to a party insured under a premium insurance policy. For additional guidance, the court looks to its own permissive joinder rule, RCFC 20. That rule provides:
(1)
RCFC 20(a). Both National Air Cargo and Commerce assert a right to relief regarding the FAA's failure to pay National Air Cargo under the nonpremium war risk policy, and there are questions of law and fact common to National Air Cargo and Commerce. Therefore, Commerce should be considered an interested person pursuant to section 44309(b)(2). It makes no difference that Commerce is not entitled to pursue a civil action on its own accord under section 44309(a)(1).
Plaintiffs also contend that the court possesses jurisdiction to entertain Commerce's nonmonetary claim under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2201. Plaintiffs are mistaken. It is well settled that the Declaratory Judgment Act does not apply to the Court of Federal Claims.
As set forth above, the court possesses jurisdiction to entertain claims brought pursuant to 49 U.S.C. § 44309(a)(1). Although Commerce has failed to state a claim under that provision independent of National Air Cargo's claim, it is properly joined to this suit pursuant to 49 U.S.C. § 44309(b)(2). Commerce is a proper plaintiff in this action; the court therefore