Bianchi v. United States

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United States Court of Appeals for the Federal Circuit

06-5042

MAURICE L. BIANCHI,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Scott Michael Cantor, Graziadei & Cantor, Ltd., of Las Vegas, Nevada, argued
for plaintiff-appellant.

Timothy P. McIlmail, Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for defendant-
appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General;
David M. Cohen, Director; and Donald E. Kinner, Assistant Director. Of counsel on the
brief was Kathleen Hallam, Office of Counsel, Defense Supply Center, Philadelphia, of
Philadelphia, Pennsylvania.

Appealed from: United States Court of Federal Claims

Judge Marian Blank Horn
 United States Court of Appeals for the Federal Circuit

06-5042

MAURICE L. BIANCHI,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

__________________________

DECIDED: January 29, 2007
__________________________

Before BRYSON and PROST, Circuit Judges, and SARIS, District Judge.∗

PROST, Circuit Judge.

Plaintiff-Appellant, Maurice L. Bianchi, appeals the judgment of the United States

Court of Federal Claims, which dismissed his suit for lack of subject matter jurisdiction.

Bianchi v. United States, 68 Fed. Cl. 442 (2005). Because we hold that the court had

jurisdiction over one of Bianchi’s two claims, we affirm-in-part and reverse-in-part. With

respect to the claim over which the court had jurisdiction, we remand with instructions to

enter judgment in favor of the government.

∗
Honorable Patti B. Saris, District Judge, United States District Court for
the District of Massachusetts, sitting by designation.
 I. BACKGROUND

This case has a long and tortuous history. In 1979 and 1980, the government

awarded Bianchi three contracts to produce military clothing. To finance his

performance of the contracts, Bianchi borrowed money from Bank of America (the

“Bank”) and assigned the proceeds and rights associated with each contract to the Bank

as security for the loan. The Bank properly notified the government of its assignments

under the Assignment of Claims Act. 31 U.S.C. § 3727; 41 U.S.C. § 15. Thereafter, the

Bank received payments from the government of the money due under the contracts. In

1980 and 1981, the Bank loaned Bianchi additional money to fund performance of the

contracts. These additional loans were guaranteed by the Small Business

Administration (“SBA”) and the collateral for the loans included a third lien on all

receivables, including contract rights.

A dispute then arose between Bianchi and the government regarding Bianchi’s

performance under the contracts and the government terminated two of the contracts

for default. Shortly thereafter, Bianchi defaulted on his loans from the Bank. The Bank

applied to the SBA for payment on the guaranteed loans. In exchange for payment, the

Bank assigned its interest in the guaranteed loans to the SBA.

In 1981, Bianchi brought a series of claims on the contracts before the Armed

Services Board of Contract Appeals (“ASBCA”). In 1988, the government and Bianchi

entered into an agreement to settle the ASBCA claims (“1988 settlement agreement”).

The agreement provided, in pertinent part (emphases added):

The parties to the [ASBCA] appeals agree to stipulate to the following
decision by the Board:
(1) The parties agree that Mr. Maurice Bianchi, as the successor to
M. Bianchi of California, is entitled to recover $617,500.00 on his claims in

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 the following appeals: ASBCA Nos. 26362, 26363, 26364, 26365, 26366,
26505, 26506, 26513, 26642, 29932, 29933, and 29934; that the
government is entitled to take nothing on its claims in the following
appeals: ASBCA Nos. 26362, 26363, 26364, 26365, 26366, 26505,
26506, 26513, 26642, 29932, 29933, and 29934; that Mr. Bianchi is
entitled to interest computed in accordance with Clauses L78 (Disputes
(1979 MAR)) of the contracts, at the rates prescribed by the Secretary of
the Treasury, under the Renegotiation Act, Public Law 92-41, on the
principal amount of $617,500, such interest to run from June 19, 1981 until
the date of payment; and that the parties waive their rights to seek
reconsideration of this stipulated decision of the Board or to appeal that
stipulated decision;
(2) This settlement is without prejudice to Mr. Bianchi’s right to
pursue any and all Value Engineering Change Proposal Claims under his
contracts with DPSC; and
(3) This settlement is without prejudice to Mr. Bianchi’s right to
pursue an application under the Equal Access to Justice Act to recover
whatever legal fees and litigation expenses to which he may be entitled in
connection with these claims and appeals. The parties stipulate that the
issues of prevailing party and substantial justification will be decided on
the basis of the record made at the first trial. The parties agree that the
application for legal fees and litigation expenses under the Equal Access
to Justice Act will be submitted within thirty days of receipt by appellant of
the agreed-upon settlement payment.
Except as noted, above, [Mr. Bianchi] and the government agree to
stipulate to the dismissal of these appeals with prejudice.

The government paid Bianchi over $1.1 million pursuant to paragraph one of the 1988

settlement agreement ($617,500 plus interest from June 1981).

Two years later, the Bank filed suit against the government in the United States

Claims Court arguing that, as Bianchi’s contract assignee, it should have been paid the

$1.1 million. The government, in turn, filed a third-party claim against Bianchi to recover

the $1.1 million it had paid him. On appeal, this court held that the Bank, as Bianchi’s

contract assignee, was entitled be paid the amount awarded to Bianchi under the 1988

settlement agreement. Bank of Am. Nat’l Trust & Sav. Assoc. v. United States, 23 F.3d

380, 384 (Fed. Cir. 1994) (“Bianchi I”). The court further held that the SBA’s security

interests in the contracts were subordinate to the Bank’s rights under the assignments,

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and that the Assignment of Claims Act prohibited the government from setting off

Bianchi’s debts to the SBA against the money owed to the Bank. Id. at 384-85.

With respect to the government’s third-party complaint against Bianchi, the court

acknowledged that the terms of the 1988 settlement agreement barred the government

from challenging its settlement with Bianchi. Accordingly, the court held that the

government could not recover by way of a third-party complaint the $1.1 million it paid

Bianchi under paragraph one of the 1988 settlement agreement. Id. at 383-84 (“The

government’s right to recoup erroneously paid funds cannot be invoked by the

government as a means to circumvent a legal obligation.”).

Meanwhile, before the Bank sued the government, Bianchi pursued a claim for

Equal Access to Justice Act (“EAJA”) legal fees as permitted by paragraph three of the

1988 settlement agreement. In September 1990, the ASBCA awarded Bianchi

$475,724.51 in EAJA fees. The government, however, refused to pay. As a result,

Bianchi filed a complaint in the nature of a writ of mandamus in the United States

District Court for the District of Nevada seeking to compel payment. The case was

eventually appealed to the Ninth Circuit. Bianchi v. Perry, 140 F.3d 1294 (9th Cir. 1998)

(“Bianchi II”). On appeal, the government argued that it was entitled to set off the

mistaken payment to Bianchi against the award of EAJA legal fees. The Ninth Circuit

disagreed, holding that the government could not attempt to recover the erroneously

paid funds by way of a setoff against Bianchi’s EAJA award. Id. at 1299.

In addition to pursuing EAJA legal fees, Bianchi also pursued Value Engineering

Change Proposal (“VECP”) claims under the contracts, as permitted by paragraph two

of the 1988 settlement agreement. In February 1993, the ASBCA awarded Bianchi

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VECP royalties for one of the original contracts in the amount of $58,613.03 plus

interest (“VECP I royalties”). Once again, Bianchi filed a complaint in the nature of a

writ of mandamus in the District of Nevada seeking to compel payment by the

government. The government interpleaded the Bank in order to avoid liability to both

Bianchi and the Bank. The district court held that the Bank, as Bianchi’s contract

assignee, was entitled to the VECP I royalties, and the Ninth Circuit affirmed. Bianchi v.

Walker, 163 F.3d 564 (9th Cir. 1998) (“Bianchi III”). Subsequently, the government paid

the Bank $110,339.94 ($58,613.03 plus interest from November 1987).

One of Bianchi’s arguments on appeal to the Ninth Circuit was that this court’s

holding in Bianchi I established that he was entitled to recover the VECP I royalties

under the terms of the 1988 settlement agreement regardless of whether the

government also owed those royalties to the Bank. The Ninth Circuit, however, held

that the district court did not have jurisdiction to entertain this argument because it was,

in essence, a breach of contract claim against the United States—the contract being the

1988 settlement agreement. Id. at 569 (“Because Bianchi seeks damages totaling more

than $10,000 based on the [1988] settlement agreement, the complaint for a writ of

mandamus should have been filed in the Court of Federal Claims.”).

In December 2000, the ASBCA awarded Bianchi VECP royalties for a second of

the original contracts in the amount of $16,574.74 plus interest (“VECP II royalties”). In

June 2002, the government paid the Bank $44,807.02 ($16,574.74 plus interest from

March 1988).

Bianchi filed this case in the Court of Federal Claims on March 18, 2004, alleging

that he was entitled to payment of the VECP I and VECP II awards under the terms of

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the 1988 settlement agreement. Both sides moved for summary judgment. On October

31, 2005, the court dismissed the case for lack of subject matter jurisdiction. Bianchi,

68 Fed. Cl. at 468. Although the court acknowledged that a settlement agreement is a

contract and that it has jurisdiction over a contract dispute between a citizen and the

government, it nevertheless characterized Bianchi’s suit as an improper attempt to

enforce ASBCA awards in the Court of Federal Claims. Id. at 450. In addition, the court

held that it lacked jurisdiction over Bianchi’s claim for payment of the VECP I royalties

because that claim was time-barred. Id. at 452. Finally, the court addressed the merits

of the case and stated that even if it had jurisdiction over Bianchi’s claims, the

government would be entitled to summary judgment. Id. at 464-68. Bianchi timely

appealed to this court. We have jurisdiction under 28 U.S.C. § 1295(a)(3).

II. DISCUSSION

Bianchi makes three arguments on appeal. First, he argues that because his

claims are based upon a breach of the 1988 settlement agreement, the Court of Federal

Claims erred in holding that it lacked jurisdiction. Second, he argues that the court

erred in holding that his VECP I claim was time-barred. Finally, he takes issue with the

court’s determination that even if it had jurisdiction, summary judgment should be

entered in favor of the government.

We review de novo whether the Court of Federal Claims properly dismissed the

case for lack of jurisdiction. Bowen v. United States, 292 F.3d 1383, 1385 (Fed. Cir.

2002). Contract interpretation is also reviewed de novo. NVT Techs. v. United States,

370 F.3d 1153, 1159 (Fed. Cir. 2004). Summary judgment is appropriate “if the

pleadings, depositions, answers to interrogatories, and admissions on file, together with

06-5042 6
the affidavits, if any, show that there is no genuine issue as to any material fact and that

the moving party is entitled to a judgment as a matter of law.” R. Ct. Fed. Cl. 56(c).

A

Bianchi’s first argument is that because his suit is based upon the government’s

breach of the 1988 settlement agreement, which is an express contract with the

government, the Court of Federal Claims improperly dismissed the case for lack of

jurisdiction. In response, the government acknowledges that the Court of Federal

Claims has jurisdiction over a suit alleging a breach of contract. Nevertheless, the

government argues that Bianchi’s complaint is not well pled in that it makes no mention

of a breach of contract theory. Instead, the government alleges, Bianchi’s claim is really

an improper attempt to enforce decisions of the ASBCA.

With respect to the government’s contention that Bianchi’s complaint is

insufficient, “[a]ll that Rule 8(a)(2), [R. Ct. Fed. Cl.] (comparable to Rule 8(a)(2), Fed. R.

Civ. P.), requires ‘is a short and plain statement of the claim that will give the defendant

fair notice of what the plaintiff’s claim is and the grounds upon which it rests.’” Gould v.

United States, 935 F.2d 1271, 1276 (Fed. Cir. 1991) (quoting Conley v. Gibson, 355

U.S. 41, 47 (1957)). Here, Bianchi’s complaint sets forth the language of the 1988

settlement agreement and states that his claims for payment of the VECP awards “arise

under” that agreement. The complaint also cites the Ninth Circuit’s opinion in Bianchi III

and states that “the Court of Appeals [for the Ninth Circuit] held that only the Court of

Federal Claims can resolve the issue as to whether or not the United States

Government is liable to pay Bianchi for his Value Engineering Change Proposal

awards.” Although the remainder of the complaint is hardly a model of clarity, we view

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the above-quoted statements as sufficient to support Bianchi’s breach of contract claim

under a notice pleading standard.

We further hold that the Court of Federal Claims had jurisdiction over Bianchi’s

claims to the extent that they allege a breach of the 1988 settlement agreement by the

government. The Tucker Act confers jurisdiction upon the Court of Federal Claims for

“any claim against the United States founded either upon the Constitution, or any Act of

Congress or any regulation of an executive department, or upon any express or implied

contract with the United States, or for liquidated or unliquidated damages in cases not

sounding in tort.” 28 U.S.C. § 1491(a)(1). On appeal, the parties do not dispute that the

1988 settlement agreement is an express contract between Bianchi and the government

and that breach of the contract by the government gives rise to jurisdiction in the Court

of Federal Claims. We agree. See Massie v. United States, 166 F.3d 1184, 1188-89

(Fed. Cir. 1999) (upholding jurisdiction in the Court of Federal Claims for a suit alleging

breach of a settlement agreement by the United States). Thus, we conclude that the

Court of Federal Claims had jurisdiction to the extent that Bianchi alleges a breach of

the 1988 settlement agreement. Because we hold that the Court of Federal Claims had

jurisdiction over the breach claims, it is necessary to reach the court’s alternative

holdings with respect to the VECP I and VECP II awards.

B

Next, Bianchi argues that the Court of Federal Claims erred in holding that it did

not have jurisdiction over his claim for the VECP I royalties because it held that the

claim was time-barred. He argues that the government breached the 1988 settlement

agreement in 1999 when the government paid “his” VECP I royalties to the Bank after

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the Ninth Circuit’s decision in Bianchi III. Thus, he contends, his suit is timely because it

was filed in 2004, within six years of the government’s breach. We agree with the Court

of Federal Claims, however, and hold that Bianchi’s claim for the VECP I royalties is

time-barred.

Section 2501 of Title 28 states that “[e]very claim of which the United States

Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is

filed within six years after such claim first accrues.” The six-year statute of limitations

set forth in § 2501 is a jurisdictional requirement. Hopland Band of Pomo Indians v.

United States, 855 F.2d 1573, 1576-77 (Fed. Cir. 1988). “A cause of action cognizable

in a Tucker Act suit accrues as soon as all events have occurred that are necessary to

enable the plaintiff to bring suit, i.e., when ‘all events have occurred to fix the

Government’s alleged liability, entitling the claimant to demand payment and sue here

for his money.’” Martinez v. United States, 333 F.3d 1295, 1303 (Fed. Cir. 2003)

(quoting Nager Elec. Co. v. United States, 368 F.2d 847, 851 (Ct. Cl. 1966)).

With respect to Bianchi’s claim for the VECP I awards, all events had occurred to

fix the government’s alleged liability by 1993. In that year, the ASBCA determined the

amount of the VECP I royalties. Bianchi contends that his right to these royalties arises

under the settlement agreement executed in 1988. Thus, any entitlement Bianchi had

for payment of the VECP I royalties pursuant the 1988 settlement agreement had

accrued by 1993. Because Bianchi’s suit was filed in 2004, more than six years after

his claim accrued, the Court of Federal Claims properly held that Bianchi’s claim for the

VECP I royalties was barred under § 2501.

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 In so holding, we reject Bianchi’s contention that his claim for the amount of the

VECP I royalties did not arise until 1999, when the government paid these royalties to

the Bank after Bianchi III. In our view, it should not matter if the government paid the

Bank the money in 1993 or 1999 or never at all. Under Bianchi’s breach of contract

theory, he was entitled to be paid the money regardless of whether the government also

paid the Bank because his claim is necessarily premised on the argument that the

government amassed a dual liability to himself and the Bank as a result of the 1988

settlement agreement. Accordingly, the government’s payment to the Bank of the

VECP I royalties in 1999 had no bearing on Bianchi’s claim for these royalties under the

1988 settlement agreement. Thus, we hold that this claim is time-barred.1

C

Because we affirm the Court of Federal Claims’ determination that it lacked

jurisdiction over the VECP I claim, only Bianchi’s claim for the VECP II royalties

remains. Although the court dismissed this claim for lack of jurisdiction, it went on to

address the merits and determined that even if it had jurisdiction over Bianchi’s claim,

the government would be entitled to summary judgment. On appeal, both parties agree

that there are no material facts in dispute and the case need not be remanded back to

the Court of Federal Claims. Accordingly, we address Bianchi’s argument that the court

erred in determining that the government was entitled to summary judgment on his

VECP II claim.

1
Although Bianchi raised tolling arguments below, the court rejected these
arguments. Bianchi has not raised any tolling arguments on appeal.

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 The essence of Bianchi’s argument on appeal is that both this court’s holding in

Bianchi I and the Ninth Circuit’s holding in Bianchi II are res judicata. He argues that

these prior cases conclusively established that the 1988 settlement agreement required

the government to pay any VECP awards obtained under the original contracts to

Bianchi personally. We disagree.

Bianchi I dealt with paragraph one of the 1988 settlement agreement, which

states that “Mr. Maurice Bianchi . . . is entitled to recover $617,500.00 [plus interest] on

his claims.” In that case, this court held that it would be an impermissible attack on the

settlement agreement for the government to recoup the money it had paid Bianchi

under paragraph one of that agreement. Bianchi I, 23 F.3d at 383-84. Unlike Bianchi I,

this appeal relates to paragraph two of the settlement agreement, which states that

“[the] settlement is without prejudice to Mr. Bianchi’s right to pursue any and all Value

Engineering Change Proposal Claims under his contracts.” The meaning of this

paragraph was not decided in Bianchi I. Accordingly, we reject Bianchi’s argument that

Bianchi I is res judicata. See Bianchi III, 163 F.3d at 569 (“Bianchi’s contention that the

Government was required to pay the money due on the VECP claims was not

presented to the Court of Federal Claims or the Federal Circuit in [Bianchi I]. Therefore,

Bianchi’s reliance on the doctrine of res judicata is misplaced.”).

Bianchi’s reliance on Bianchi II is also misplaced. In Bianchi II, the Ninth Circuit

dealt with paragraph three of the settlement agreement and held that the government

could not use its mistaken payment to Bianchi as a setoff against Bianchi’s EAJA legal

fees. 140 F.3d at 1299. In so holding, the Ninth Circuit stated: “Any honest and

competent lawyer would understand this settlement agreement in the same way. It

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means Bianchi gets $617,500 plus interest, plus whatever he can win on his ‘Value

Engineering Change Proposal claims,’ plus whatever he can win on his Equal Access to

Justice Act claim.” Id. at 1297. Bianchi latches on to this language from Bianchi II to

argue that Bianchi II conclusively determined his personal entitlement to any VECP

awards obtained under the original contracts.

The above-quoted language from Bianchi II, however, must be read in context.

Bianchi II did not determine Bianchi’s personal entitlement to VECP awards under

paragraph two of the 1988 settlement agreement. Instead, that case dealt with

Bianchi’s entitlement to EAJA legal fees, which Bianchi was permitted to pursue under

paragraph three of the agreement. Moreover, Bianchi II was about setoff: there, the

Ninth Circuit held that the government could not set off its mistaken payment to Bianchi

against Bianchi’s EAJA legal fees award. This case, in contrast, is not about setoff:

here, the government is not trying to set off its mistaken payment to Bianchi against the

VECP awards. Instead, the government argues that it paid Bianchi the VECP awards

when it paid the Bank, Bianchi’s designated contract assignee. Consequently, Bianchi II

is inapposite.

Paragraph two of the settlement agreement merely reserved Bianchi the right to

pursue VECP claims under the original contracts. Bianchi did pursue these claims and

won. Subsequently, the government paid Bianchi by paying the Bank, whom Bianchi

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had designated as his contract assignee.2 We see no basis for interpreting paragraph

two of the settlement agreement to require the government to also pay Bianchi

personally. We therefore remand with instructions to enter judgment in favor of the

government with respect to Bianchi’s VECP II claim.

III. CONCLUSION

For these reasons, the judgment of the Court of Federal Claims is affirmed-in-

part, reversed-in-part, and remanded.

AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED

2
Bianchi devotes much of his reply brief to arguing that the Bank’s
assignments had been discharged and that the government erroneously paid the VECP
awards to the Bank. Bianchi is precluded from relitigating this issue, however, because
it was litigated and decided in Bianchi III. There, the Ninth Circuit affirmed the district
court’s determination that the Bank’s assignments had not been discharged and the
Bank, as Bianchi’s contract assignee, was entitled to payment of the amount owed by
the government on Bianchi’s VECP claim. Bianchi III, 163 F.3d at 570.

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