Wells v. United States

United States Court of Appeals for the Federal Circuit

04-5127

JOHN JACOB WELLS,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Michael H. Saul, of Marietta, Georgia, argued for plaintiff-appellant.

Kenneth M. Dintzer, Senior Trial Counsel, 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, Stuart E. Schiffer, Deputy Assistant Attorney General, and David M. Cohen,
Director.

Appealed from: United States Court of Federal Claims

Judge Lawrence M. Baskir
 United States Court of Appeals for the Federal Circuit

04-5127

JOHN JACOB WELLS,

Plaintiff- Appellant,

v.

UNITED STATES,

Defendant-Appellee.

_______________________

DECIDED: July 29, 2005
_______________________

Before LOURIE, Circuit Judge, ARCHER, Senior Circuit Judge, and GAJARSA, Circuit
Judge.

Opinion for the court filed by Senior Circuit Judge ARCHER. Dissenting opinion filed by
Circuit Judge LOURIE.

ARCHER, Senior Circuit Judge.

John Jacob Wells (“Wells”) challenges monthly deductions from his Navy

retirement pay as contrary to the express provisions of 5 U.S.C. § 5514(a)(1). The

statute prohibits monthly deductions greater than 15% of Wells’ disposable pay. Since

1991, following his conviction on federal drug charges, the government has deducted

more than 15% of Wells’ monthly retirement pay to defray his costs of incarceration. On

May 1, 2003, Wells filed this action in the United States Court of Federal Claims,

seeking to recover the illegal deductions. The trial court dismissed the action as time-

barred under 28 U.S.C. § 2501. Wells appeals, arguing that his § 5514 challenge is

properly analyzed as a continuing claim, and that in any event § 2501 should be
equitably tolled in view of his various habeas corpus and § 2255 petitions. Because we

agree that this action calls for application of the continuing claim analysis, we reverse

and remand. We hold, however, that Wells has failed to allege facts sufficient to

support his equitable tolling argument, and thus conclude that any challenge to

deductions before May 1, 1997, are time-barred under § 2501.

I

Wells retired from the Navy before 1990 and thereafter received a gross monthly

pension of $1,756.00. On May 16, 1991, Wells was convicted on drug-related charges

in federal court in Florida. In addition to his 384-month prison sentence, the court

imposed a $1,000 monthly cost-of-incarceration fine. On September 13, 1991, the

United States Attorney asked the Navy Finance Center to provide that $1,000 as a

monthly deduction from Wells’ retirement pay. In due course the Navy complied with

the request and garnished Wells’ retirement pay.

Wells appealed his conviction and sentence, and the Eleventh Circuit affirmed.

United States v. Norman, 3 F.3d 368, 369-70 (11th Cir. 1993). The court disagreed,

however, with the cost-of-incarceration fine and thus vacated that portion of Wells’

sentence and remanded for re-sentencing. On February 17, 1994, the district court

entered an amended judgment. In it, the court imposed a $25,000 punitive fine to be

paid from monies previously collected. The district court also noted in the amended

judgment that the $25,000 punitive fine would be paid in full by June 1994. Thereafter,

the court ordered, Wells “shall begin paying cost of imprisonment at the rate of $500.00

per month.” The judgment had no provision for attaching Wells’ Navy pension, either to

pay the punitive fine or the remaining costs of incarceration.

04-5127 2
 In April 1994, the United States Attorney wrote the general counsel for the

Defense Finance and Accounting Service (“DFAS”) regarding Wells’ pension. That

letter stated that the $25,000 fine was “to be paid with Wells’ retirement pay until June

1994.” After outlining the $500 monthly costs of incarceration, the United States

Attorney further “encourage[d]” DFAS “to continue making payments as delineated

above until the court orders otherwise.” The Defense Department complied with the

Justice Department’s request.

Following his re-sentencing Wells filed a series of 28 U.S.C. § 2255 petitions

challenging the sentence. The government concedes that in those petitions Wells

“addressed the incarceration fine, although he never sought to recoup the money

already paid.”

On May 1, 2003, Wells filed this action in the Court of Federal Claims, arguing

that the $500 monthly deduction violates his rights under 5 U.S.C. § 5514(a)(1) and the

Fifth Amendment. The statute prohibits monthly deductions from military pay in excess

of 15% of disposable income or, in Wells’ case, roughly $263, without written consent.

In his complaint Wells also alleges that his third § 2255 petition, filed in August 2000

and not a part of the record here, sought “relief from the fines.”

The trial court dismissed the action as time-barred under 28 U.S.C. § 2501.

Wells v. United States, No. 03-871 C, slip op. at 6 (Fed. Cl. June 2, 2004). Wells

appeals, and this court has jurisdiction under 28 U.S.C. § 1295(a)(3).

II

We review the legal aspects of a determination by the Court of Federal Claims

that the appellant’s claim was barred by the statute of limitations without deference.

04-5127 3
Caldwell v. United States, 391 F.3d 1226, 1233 (Fed. Cir. 2004) (citing Applegate v.

United States, 25 F.3d 1579, 1581 (Fed. Cir. 1994)).

III

In Brown Park Estates-Fairfield Development Co. v. United States, 127 F.3d

1449 (Fed. Cir. 1997), we articulated when the continuing claim doctrine applies:

In order for the continuing claim doctrine to apply, the plaintiff's claim must
be inherently susceptible to being broken down into a series of
independent and distinct events or wrongs, each having its own
associated damages. . . . However, a claim based upon a single distinct
event, which may have continued ill effects later on, is not a continuing
claim.

Id. at 1456.

Our predecessor court has held the continuing claim doctrine is applicable where

“[e]ach wrong constitute[d] an alleged violation of a statute or regulation that occurred

when that particular wrong occurred, independent of the accrual of other wrongs.” Id.

In Burich v. United States, 366 F.2d 984 (Ct. Cl. 1966), for example, Burich asserted

that he was entitled to hourly-computed overtime rather than the premium payments he

had received for his overtime work. Because compensation was due and payable

periodically, we found that a claim arose each time the government allegedly failed to

pay the proper amount of overtime pay and ruled that the continuing claim doctrine was

available. Id. at 986-87; see also Beebe v. United States, 640 F.2d 1283, 1293 (Ct. Cl.

1981) (noting that a separate cause of action accrued each time overtime compensation

was excluded from plaintiff’s pay).

Similar findings were made in Batten v. United States, 597 F.2d 1385 (Ct. Cl.

1979). Batten involved a claim for periodic installments of back pay allegedly owed

civilian employees of the Navy due to an hourly wage increase. While not needing to

04-5127 4
reach the issue of the statute of limitations, we specifically noted that such facts gave

rise to “a continuing claim involving multiple causes of action, each one arising at the

time the Government fail[ed] to make the payment alleged to be due.” Id. at 1387 n.10.

On the other hand, if there was only a single alleged wrong, even though the

wrong caused later adverse effects, our case law has said the continuing claim doctrine

is not applicable. Hart v. United States, 910 F.2d 815 (Fed. Cir. 1990), for example,

involved a suit by the widow of a retired Air Force sergeant seeking annuity benefits

allegedly due her since the date of her husband’s death. She claimed that the

government had violated a statute that required it to notify her of her husband’s election

not to participate in the survivor plan. We rejected Hart’s assertion that a new claim

accrued each time she was to be paid under the annuity and stated “[b]ecause all

events necessary to her benefits claim had occurred when her husband died, we

conclude that plaintiff’s claim for . . . annuity benefits is not a ‘continuing’ claim.” Id. at

818.

Similarly, in Lane v. United States, 208 Ct. Cl. 955 (1975), our predecessor court

considered Lane’s claim that he was illegally discharged from the Army and that he was

therefore entitled to active duty pay from the date of discharge. The court held that it

was barred by the statute of limitations, because the claim “accrue[d] all at once” upon

Lane’s discharge and he could not file suit more than six years from that date. Id. at

955-56.

As we explained in Brown Park Estates, these cases involve individuals who

really only pointed to one alleged wrong by the government, which
accrued all at once at one point in time, even though it may have had later
adverse effects. The plaintiffs’ alleged later ‘wrongs,’ such as nonpayment
of annuities or wages, were not independently accruing violations of any

04-5127 5
 statutes or regulations in themselves, but rather were merely damages
resulting from the single earlier alleged violation by the government – such
as lack of notification or wrongful discharge – that accrued outside the
statute of limitations period.

Brown Park Estates, 127 F.3d at 1457.

The facts of this case are analogous to those in cases in which we have found

the continuing claim doctrine applicable. Wells alleges that 5 U.S.C. § 5514 is violated

each month money is deducted from his retirement pay for the cost-of-incarceration

fine, because “the United States deduct[s] too much money from Mr. Wells’ retirement

pay.”1 (Amended Compl. At 2).

Section 5514(a)(1) expressly provides for monthly (or other periodic) deductions

from retirement pay to satisfy debts due the United States, but the amount that can be

deducted is strictly limited (unless otherwise provided by a written consent):

When the head of an agency or his designee determines that an
employee, member of the Armed Forces or Reserve of the Armed Forces,
is indebted to the United States for debts to which the United States is
entitled to be repaid at the time of the determination by the head of an
agency or his designee, or is notified of such a debt by the head of
another agency or his designee the amount of indebtedness may be
collected in monthly installments, or at officially established pay intervals,
by deduction from the current pay account of the individual. The
deductions may be made from basic pay, special pay, incentive pay,
retired pay, retainer pay, or in the case of an individual not entitled to basic
pay, other authorized pay. The amount deducted for any period may not
exceed 15 percent of disposable pay, except that a greater percentage
may be deducted upon the written consent of the individual involved.

5 U.S.C. § 5514(a)(1) (emphases added). “Disposable pay” is defined to be “that part of

pay of any individual remaining after the deduction from those earnings of any amounts

1
It should be noted that Wells does not contend that the court-imposed
cost-of-incarceration fine is erroneous or improper. He only asserts that the amount
deducted from his retirement pay each month exceeds the 15% limit set forth in the
statute as the maximum deduction. See 5 U.S.C. § 5514(a)(1).

04-5127 6
required by law to be withheld.” Id. § 5514(a)(5). Wells argues that each time the

government took the “wrong amount,” i.e., more than that permitted under

5 U.S.C. § 5514(a), “an independent wrong was committed,” and therefore the

continuing claim doctrine should be applicable. We agree.

Here Wells’ claim can be broken down into a series of independent and distinct

wrongs or events – deducting more than 15% of Wells’ retirement pay – each such

wrong or event having its own associated damages – the difference between the

amount permissible under section 5514(a)(1) and the actual deduction. Each alleged

wrong constituted an alleged violation of a statute or regulation – 5 U.S.C. § 5514(a) –

that accrued when that particular wrong occurred, independent of the accrual of other

wrongs.

The government argues that the United States Attorney’s Office’s request that

the Navy deduct money from Wells’ retirement pay each month to cover the cost-of-

incarceration fine should be viewed as a triggering event that ultimately led to action

causing the alleged harm, or, in the parlance of Brown Park Estates was a distinct event

which may have continued ill effects later on. This argument ignores the fact that each

time the money was withheld from Wells’ retirement pay the statute limiting that amount

was violated, thereby giving rise to a distinct claim.

Accordingly, the facts underlying Wells’ claim fall squarely within the criteria set

forth in Brown Park Estates describing situations in which the continuing claim doctrine

is available.

04-5127 7
 IV

In addition to his continuing claim argument, Wells also argues that the statute of

limitations, 28 U.S.C. § 2501, should be equitably tolled under the facts of this case.

Because we hold that the continuing claim doctrine applies to the § 5514(a)(1) claims

for the six year limitation period preceding the filing of the complaint herein, equitable

tolling is only relevant to Wells’ § 5514(a)(1) claims before May 1, 1997.

In Irwin v. Department of Veterans Affairs, 498 U.S. 89, 96 (1990), the Supreme

Court suggested that equitable tolling would apply “where the claimant has actively

pursued his judicial remedies by filing a defective pleading during the statutory period”

or “where the complainant has been induced or tricked by his adversary’s misconduct

into allowing the filing deadline to pass.” Wells argues that “types of defective claims

that equitably toll the statute of limitations include the filing of an incorrect type of claim,

or the filing of a claim in the wrong Court,” citing Perez v. United States, 167 F.3d 913,

918 (5th Cir. 1999) (citing Burnett v. N.Y Cent. R.R. Co., 380 U.S. 424 (1965) (“[T]he

basic inquiry is whether congressional purpose is effectuated by tolling the statute of

limitations in given circumstances.”)).

We have yet to determine whether Congress intended equitable tolling to apply

to the limitations period in 28 U.S.C. § 2501. See Martinez v. United States, 333 F.3d

1295, 1318 (Fed. Cir. 2003); Frazer v. United States, 288 F.3d 1347, 1353 (Fed. Cir.

2002). We decline to decide this question today, because Wells has not made a

sufficient factual showing to invoke equitable tolling in this case.

Wells has not “demonstrated that he ‘did not sleep on his rights,’ but rather

actively pursued his claims before the statute of limitations had run.” Specifically, Wells

04-5127 8
claims that the various petitions and motions he filed in the Georgia and Florida federal

courts and the Eleventh Circuit sought the same relief that is being sought in this action.

Those petitions and motions do not appear in the record below, and Wells has not

pointed us to any relevant portion of the record on appeal supporting this contention.

Instead, Wells simply makes the unsupported conclusory statement that he “continued

his efforts to have a court rule on whether the United States was unlawfully deducting

too much money from his pension.”

In reviewing “a motion to dismiss for lack of jurisdiction, we accept as true the

complaint’s undisputed factual allegations.” Massie v. United States, 166 F.3d 1184,

1187 (Fed. Cir. 1999). Even under that standard, however, the factual allegations in

this action are insufficient. The complaint alleges only that Wells filed habeas petitions

seeking relief from “the fines” imposed with his sentence. See, e.g., Compl. ¶ 18. None

of the allegations in the complaint point to substantive provisions of the habeas petitions

that Wells relies upon for his tolling argument, nor are facts alleged that would form the

predicate for a tolling argument under Irwin. Further Wells has not shown that he

“actively pursued his judicial remedies by filing a defective pleading during the statutory

period.” Irwin, 498 U.S. at 457-58.2

2
The only indicator that Wells may have tried to challenge the deductions
from his retirement pay is a brief statement in a November 19, 2002 opinion issued by
the Eleventh Circuit. Nothing in the record suggests, however, that he diligently
pursued his position that the deductions from his retirement pay were a violation of
section 5514(a)(1).

04-5127 9
 Thus, even assuming that 28 U.S.C. § 2501 is subject to equitable tolling, we

have nothing but attorney argument that tolling is warranted here. Accordingly, none of

Wells’ § 5514(a)(1) claims are saved by the theory of equitable tolling.3

V

Because the continuing claim doctrine is available on the facts of this case, the

trial court’s dismissal of Wells’ complaint is reversed with respect to those claims

accruing within six years of the date he filed suit in the trial court, and the case is

remanded for proceedings consistent with this opinion.

REVERSED AND REMANDED.

3
To the extent Wells raised an issue of due process during oral argument,
this issue could only be considered if equitable tolling were applicable. Since we have
held Wells has not produced evidence sufficient to support equitable tolling, we do not
reach this issue.

04-5127 10
United States Court of Appeals for the Federal Circuit

04-5127

JOHN JACOB WELLS,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

LOURIE, Circuit Judge, dissenting.

I respectfully dissent from the majority’s conclusion that the periodic deductions

from Wells’ retirement pay constituted continuing claims, such that the statute of

limitations had not run on his suit for refund of those deductions made within six years

of the filing of the suit. In my opinion, the Court of Federal Claims was correct in holding

that one event—the 1994 decision by the Defense Department to deduct part of Wells’

incarceration costs—occurred and caused all of the deductions from his retirement pay.

Thus, since that event occurred more than six years before suit was filed in that court,

28 U.S.C. § 2501 bars any recovery for Wells.

The majority opinion sets out the relevant case law concerning the “continuing

claim” doctrine. Most recently, we decided Brown Park Estates-Fairfield Development

Co. v. United States, which makes the distinction between a claim “inherently

susceptible to being broken down into a series of independent and distinct events” and

one “based upon a single distinct event, which may have continued ill effects later on.”

127 F.3d 1449, 1456 (Fed. Cir. 1997). Wells’ claim here is based on a single distinct
event, the decision by the Defense Department to deduct part of Wells’ retirement pay,

not a series of independent events. That event set in train the continued ill effects of

subsequent deductions.

Other relevant cases have led to mixed results on varied facts, but they support

the conclusion of the Court of Federal Claims, even though they do not draw a clear line

in distinguishing between continued ill effects arising from a single event versus a series

of independent events, each having its own associated damages. For example, Hart v.

United States, 910 F.2d 815 (Fed. Cir. 1990), and Lane v. United States, 208 Ct. Cl.

955 (1975), both involved assertions that a new claim arose each time that an annuity

or payment was not made. In those cases, this court and its predecessor court held

that the claim accrued upon the occurrence of an initial triggering event or a

governmental act that served to fix the liability of the government, and they accordingly

denied the applicability of the continuing claim doctrine. Hart, 910 F.2d at 818

(“Because all events necessary to her benefits claim had occurred when her husband

died, we conclude that plaintiff’s claim for . . . annuity benefits is not a ‘continuing’

claim.”); Lane, 208 Ct. Cl. at 955-56 (“A claim for active duty pay must be brought in this

court within six years of the discharge date. A claim based upon an illegal discharge is

not, as plaintiff suggests, a continuing claim, but rather ‘accrues all at once’ upon the

claimant’s removal.” (citations omitted)).

In Batten v. United States, 597 F.2d 1385 (Ct. Cl. 1979), which also involved a

claim for periodic installments of back pay, the Court of Claims stated, in dictum, that a

claim arose each time the government failed to make a payment alleged to be due. Id.

at 1387 n.10. That case is distinguishable by the fact that the court never reached the

04-5127 2
statute of limitations issue. Id. at 1387. Burich v. United States involved overtime pay,

which presumably was variable and therefore had to be determined for each pay period,

and the Court of Claims, citing the “erratic and irregular” nature of overtime work, held

that a new claim arose each time the proper overtime payment was not made. 366 F.2d

984, 988 (Ct. Cl. 1966). The fact that the overtime payment varied depending upon the

amount of overtime worked distinguishes that case as well. Those were distinct events.

I thus conclude that, when a statute of limitations issue is involved, leading to all

the subsequent consequences, and one determination of the amount of the benefit

payable has been made, our cases hold that the continuing claim doctrine does not

apply. I believe they govern here.

The majority here bootstraps its conclusion by emphasizing Wells’ assertion that

the deductions from his pay were in violation of 5 U.S.C. § 5514. However, that is a

merits issue, and, unless Wells can overcome the limitations problem through the

continuing claim doctrine, he cannot contest a merits issue such as the statutory

violation claim. He cannot assert a merits claim that he is not entitled to litigate as the

means to pry open the courtroom door that is barred to him on the merits claims.

Accordingly, I respectfully dissent from the court’s application of the continuing

claim doctrine to permit Wells to litigate a claim that accrued more than six years before

he filed suit in the Court of Federal Claims. I therefore would affirm the judgment of that

court.

04-5127 3