National Air Cargo Group, Inc. v. United States

In the United States Court of Federal Claims
No. 13-764C
(Filed: June 26, 2014)

*************************************
NATIONAL AIR CARGO GROUP, INC., *
d/b/a NATIONAL AIRLINES et al., *
*
Plaintiffs, * Motion to Dismiss; Aviation Insurance, 49
* U.S.C. ch. 443; Jurisdiction; Joinder;
v. * Declaratory Judgment Act
*
THE UNITED STATES, *
*
Defendant. *
*************************************

Jessica C. Abrahams and Mark A. Dombroff, Washington, DC, for plaintiffs.

Sheryl L. Floyd and Barbara E. Thomas, United States Department of Justice, Washington, DC,
for defendant.

OPINION AND ORDER

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.

I. BACKGROUND

A. Aviation Insurance

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,” id. § 44302(c). The FAA may waive the premium for this insurance so long
as the Secretary of Defense or another designated official agrees to indemnify the FAA “against
all losses covered by the insurance.” Id. § 44305(b).

B. Factual and Procedural History

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

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$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.

II. DISCUSSION

A. RCFC 12(b)(1) Motions to Dismiss

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. Henke v. United
States, 60 F.3d 795, 797 (Fed. Cir. 1995). However, the plaintiff bears the burden of proving, by
a preponderance of the evidence, that the court possesses subject matter jurisdiction. McNutt v.
Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Reynolds v. Army & Air Force Exch.
Serv., 846 F.2d 746, 748 (Fed. Cir. 1988). If the court finds that it lacks subject matter
jurisdiction over a claim, RCFC 12(h)(3) requires the court to dismiss that claim.

B. Subject Matter Jurisdiction

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.” United States v. Sherwood, 312 U.S. 584, 586 (1941). The waiver of immunity “cannot
be implied but must be unequivocally expressed.” United States v. King, 395 U.S. 1, 4 (1969).

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.” United States v. Testan, 424 U.S. 392, 398 (1976). Instead, the
substantive right must appear in another source of law, such as a “money-mandating
constitutional provision, statute or regulation that has been violated, or an express or implied
contract with the United States.” Loveladies Harbor, Inc. v. United States, 27 F.3d 1545, 1554
(Fed. Cir. 1994) (en banc). In their complaint, plaintiffs assert that the court possesses
jurisdiction to entertain Commerce’s monetary claim pursuant to 49 U.S.C. § 44309(a), as well

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as jurisdiction to entertain Commerce’s nonmonetary claim under the Declaratory Judgment Act,
28 U.S.C. §§ 2201-2202 (2012).1 See Compl. ¶ 6.

C. 49 U.S.C. § 44309

1. Jurisdiction

In asserting that the court possesses jurisdiction over Commerce’s monetary claim,
plaintiffs rely on 49 U.S.C. § 44309(a), which provides:

(1) ACTIONS AGAINST UNITED STATES.–A person may bring a civil action
in a district court of the United States or in the United States Court of Federal
Claims against the United States Government when–

(A) a loss insured under [chapter 443] is in dispute; or

(B)(i) the person is subrogated under a contract between the person and a
party insured under this chapter (other than section 44305(b)) to the rights
of the insured party against the United States Government; and

(ii) the person has paid to the insured party, with the approval of the
Secretary of Transportation, an amount for a physical damage loss that the
Secretary has determined is a loss covered by insurance issued under
[chapter 443] (other than section 44305(b)).

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, id. § 44309(a)(1). Defendant disagrees, arguing that
no provision in chapter 443 requires the payment of money. Rather, defendant asserts, chapter
443 merely “authorize[s] the payment of claims under insurance polices that may be issued by
the Government, but do not establish the criteria that will determine whether such claims will be
paid; the policies themselves must define those criteria.” Reply 8 (relying on Roberts v. United
States, 745 F.3d 1158 (Fed. Cir. 2014), which addresses when a statute that uses the word “may”
mandates the payment of money). Neither party is correct.

1
Commerce’s monetary claim is captioned as a claim for breach of contract, and breach-
of-contract claims against the United States for money damages normally fall within the confines
of the Tucker Act. As explained below, however, plaintiffs’ breach-of-contract claims are more
appropriately considered in conjunction with chapter 443.

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 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. See 42 U.S.C. § 300aa-12 (2012); accord Griglock v. Sec’y of HHS, 687 F.3d
1371, 1376 n.* (Fed. Cir. 2012). In addition, various statutes provide that copyright and patent
claims against the United States may be brought in the Court of Federal Claims. See 19 U.S.C.
§ 1337(l) (2012); 22 U.S.C. § 2356 (2012); 28 U.S.C. § 1498 (2012); 35 U.S.C. § 183 (2012).
See generally Zoltek Corp. v. United States, 672 F.3d 1309 (Fed. Cir. 2012) (en banc in part);
Constant v. United States, 617 F.2d 239 (Ct. Cl. 1980); Hughes Aircraft Co. v. United States,
534 F.2d 889 (Ct. Cl. 1976). And, other statutes provide that certain federal tax-related claims
may be brought in the Court of Federal Claims. See 28 U.S.C. §§ 1507-1508 (2012); accord
Salman Ranch Ltd. v. United States, 573 F.3d 1362, 1363 n.1 (Fed. Cir. 2009); Forrester v.
United States, 231 Ct. Cl. 1010, 1010 (1982). In all of these examples, Congress has waived
sovereign immunity and allowed suits to be brought in the Court of Federal Claims without
reference to or reliance on the Tucker Act’s waiver of sovereign immunity or grant of
jurisdiction. Similarly, in chapter 443, Congress has permitted the filing of civil actions in the
Court of Federal Claims against the government related to aviation insurance claims, 49 U.S.C.
§ 44309(a)(1), thereby waiving sovereign immunity for such actions and providing for
jurisdiction in this court.2 Accordingly, it is chapter 443, and not the Tucker Act, that governs
the jurisdictional grant in this matter. See also United States v. Bormes, 133 S. Ct. 12, 18 (2012)
(noting that “statutory schemes with their own remedial framework exclude alternative relief
under the general terms of the Tucker Act”).

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.” Testan, 424 U.S. at 398. Plaintiffs have done so here. Certainly, chapter 443 bears
some similarity to the Tucker Act–in some circumstances, the determination of the government’s
liability might require reference to a document external to the statute, i.e., an insurance policy.3
See 49 U.S.C. § 44309(a)(1). However, chapter 443 bears a stronger resemblance to the Contract
Disputes Act of 1978 (“CDA”), 41 U.S.C. §§ 7101-7109 (2012). Similar to chapter 443, the
CDA contains a provision expressly permitting a contractor who has asserted a claim against the

2
The statute also confers jurisdiction on federal district courts.
3
Based on the plain language of section 44309(a)(1), there appear to be some
circumstances in which reference to an insurance policy would not be necessary. For example,
under clause (B), a subrogee may bring a suit when the government has not reimbursed it for a
payment it made to an insured party despite having approved the payment and determined that
the loss was covered by the insurance it provided to the insured party. In these circumstances,
the government’s liability–and the subrogee’s cause of action–is defined by clause (B), and not
by an insurance policy.

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government to bring a suit on that claim in the Court of Federal Claims. Id. § 7104(b)(1). The
contractor’s claim is based on its contract with the government; the provisions of contract, not
the CDA standing alone, establish the criteria for determining whether the claim has merit. See
id. § 7103(a) (discussing claims “related to a contract”). The combination of the CDA and the
underlying contract provides the necessary substantive right for the contractor to pursue its claim
for money damages in the Court of Federal Claims. See Quality Tooling, Inc. v. United States,
47 F.3d 1569, 1576 (Fed. Cir. 1995) (“[The plaintiff] has a colorable claim to a substantive right
enforceable against the United States, a claim founded on its supply contract with the Army, and
for which the CDA expressly provides a remedy.”). As with the CDA, many, if not most, civil
actions that are authorized under section 44309(a)(1) can only be resolved with reference to the
insurance policy issued by the FAA to the insured party. Accordingly, it follows that chapter
443, in conjunction with National Air Cargo’s nonpremium war risk policy, the binding
contractual agreement between the FAA and National Air Cargo, supplies the necessary
substantive right to money damages enforceable against the United States.

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. Fisher v. United States, 402 F.3d 1167, 1173 (Fed. Cir.
2005) (en banc portion). “If the court’s conclusion is that the [source of law] meets the money-
mandating test, the court shall declare that it has jurisdiction over the cause, and shall then
proceed with the case in the normal course.” Id.; accord Jan’s Helicopter Serv., Inc. v. FAA, 525
F.3d 1299, 1309 (Fed. Cir. 2008). “Only after this initial inquiry is completed and the Court of
Federal Claims takes jurisdiction over the case does it consider the facts specific to the plaintiff’s
case to determine ‘whether on the facts [the plaintiff’s] claim f[alls] within the terms of the
statutes.’” Greenlee Cnty., Ariz. v. United States, 487 F.3d 871, 876 (Fed. Cir. 2007) (quoting
Fisher, 402 F.3d at 1172); accord Yant v. United States, 85 Fed. Cl. 264, 269 (2009) (“Subject
matter jurisdiction is determined independently of analyzing whether a plaintiff might ultimately
succeed on the merits.”).

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. See Nicolas v. United States, 35 Fed. Cl. 387, 388 (1996) (“Since defendant’s
motion strikes at the merits of plaintiff’s claim, rather than at the court’s power to decide the
claim, it is properly classified as a motion to dismiss for failure to state a claim . . . . Therefore,
we treat defendant’s motion as one to dismiss for failure to state a claim and proceed on that

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basis.” (citation omitted)); id. at 388 n.1 (“Because both parties have taken advantage of the
opportunity to address the substantive issue of law before the court, re-classifying defendant’s
motion by correcting its title occasions no prejudice to either party.”); see also Anaheim Gardens
v. United States, 444 F.3d 1309, 1315 (Fed. Cir. 2006) (“The trial court may dismiss sua sponte
under Rule 12(b)(6), provided that the pleadings sufficiently evince a basis for that action.”).

2. Merits

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.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In other words, a plaintiff must
“plead[] factual content that allows the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell
Atl. Corp., 550 U.S. at 556). In its motion, defendant argues that both the text and the legislative
history of section 44309(a)(1) preclude Commerce’s monetary claim.

a. Statutory Construction–Plain Meaning

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.” Conn. Nat’l Bank v.
Germain, 503 U.S. 249, 253-54 (1992). Thus, when determining congressional intent, a court
begins its inquiry by examining the text of the statute. Lamie v. United States Trustee, 540 U.S.
526, 534 (2004). When the statutory language is clear, a court’s inquiry is complete. Conn.
Nat’l Bank, 503 U.S. at 254.

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).

b. Statutory Construction–Ambiguity

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

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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.” Davis v.
Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989); accord King v. St. Vincent’s Hosp., 502 U.S.
215, 221 (1991) (following “the cardinal rule that a statute is to be read as a whole, since the
meaning of statutory language, plain or not, depends on context” (citation omitted)). Moreover,
specific statutory provisions govern general statutory provisions, such that when a specific and a
general provision exist side by side, the specific provision must be given effect, and the general
provision is used only when the specific provision is inapplicable. RadLAX Gateway Hotel,
LLC v. Amalgamated Bank, 132 S. Ct. 2065, 2071 (2012) (citing United States v. Chase, 135
U.S. 255, 260 (1890)).

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. See
Diamond v. Chakrabarty, 447 U.S. 303, 315 (1980) (noting that in construing a statute, a court’s
“obligation is to take statutes as [it] find[s] them, guided, if ambiguity appears, by the legislative
history and statutory purpose”); Hart v. United States, 585 F.2d 1025, 1028 (Ct. Cl. 1978)
(“Ambiguity in a statute . . . , necessitating resort to legislative history and other extrinsic aids,
normally means two or more alternative readings, all having some claim to respect and none
leading to absurd results.”).

c. Legislative History Assists in Resolving the Ambiguity

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

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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. Id. § 1302(a). War risk insurance could be provided without a premium so
long as the Secretary of Defense or another agency designated by the President agreed to
indemnify the Secretary of Commerce “against all losses covered by the insurance . . . .” Id.
§ 1304(b). Further, if there was a “disagreement as to a loss insured” under a government-issued
war risk insurance policy, a “claimant” could maintain a suit against the United States in federal
district court. Id. § 1310. Thus, as reflected by the purpose of the legislation and the text of the
enacted statute, when the war risk insurance program was first established, there was no
expectation that a commercial insurer would have any reason to bring suit against the United
States because the only insurance that would have covered a war-related loss was the insurance
provided by the Secretary of Commerce.

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. Id. at 1; H.R. Rep. 95-773, at 1, 11 (1977)
(Conf. Rep.). To implement this expansion of coverage, Congress removed all references to
“war risk” from the statute. Act of Nov. 9, 1977, Pub. L. No. 95-163, §§ 1-7, 91 Stat. 1278,
1278-80; H.R. Rep. No. 95-301, at 4-9. Thus, the FAA was permitted to “provide insurance and
reinsurance against loss or damage arising out of any risk from the operation of an aircraft” if the
FAA “determined that such insurance [could not] be obtained on reasonable terms and
conditions” from a commercial insurer and if the President determined that the continuation of
the aircraft operation to be insured was “necessary to carry out the foreign policy of the United
States.” Pub. L. No. 95-163, sec. § 2. The provision concerning judicial review of disputed
claims remained unchanged. See 49 U.S.C. App. § 1540 (1988 & Supp. V 1994).

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

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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.” Id. § 1(e), 108 Stat. at 1168 (enacting 49 U.S.C. § 44302). In addition, the FAA
remained able to provide insurance without a premium so long as the Secretary of Defense or the
head of another designated agency agreed to indemnify the FAA “against all losses covered by
the insurance.” Id. § 1(e), 108 Stat. at 1170 (enacting 49 U.S.C. § 44305). And, “when a loss
insured” under the aviation insurance program was “in dispute,” a “person” was still entitled to
“bring a civil action” against the United States in federal district court. Id. § 1(e), 108 Stat. at
1172 (enacting 49 U.S.C. § 44309).

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. Id.
The GAO recommended that Congress “[p]rovide a mechanism to ensure that there are sufficient
funds available to reimburse airlines for losses that exceed the amount in the FAA’s insurance
fund.” Id.

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. Id. § 1079(a), 110 Stat. at 2667. Because this
provision concerned the Secretary of Defense’s prompt indemnification of the FAA, its reach
was limited to insurance issued by the FAA without a premium pursuant to an indemnity
agreement with the Secretary of Defense. The provision did not affect nonpremium insurance
issued under indemnification agreements with the Secretary of State or premium insurance;
however, the number of flights covered by the unaffected insurance was very small. See S. Rep.
No. 105-140, at 2 (1997); H.R. Rep. No. 105-244, at 2-4, 7. Notably, Congress did not amend
the provision in chapter 443 concerning judicial review of disputed claims.

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-

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48 (1998).4 The insured party would receive payment for its claim from the commercial insurer,
who would then be subrogated to the insured party’s rights against the government under the
insurance policy issued by the FAA. S. Rep. No. 105-278, at 16-17; H.R. Rep. No. 105-639, at
47-48. Then, once the FAA had sufficient funds, it would reimburse the commercial insurer for
its payment to the insured party so long as the payment was for a loss covered by the insurance
provided by the FAA and the FAA had previously approved the payment. S. Rep. No. 105-278,
at 17; H.R. Rep. No. 105-639, at 48.

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.
Id.; S. Rep. No. 105-278, at 17. Congress included the proposed amendment in the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, 1999, under the heading
“Reimbursement of Insured Party’s Subrogee.” See Pub. L. No. 105-277, § 110(c)(1), 112 Stat.
2681, 2681-587 to -588 (1998) (codified at 49 U.S.C. § 44309(a) (2006)). Congress explained
that the amended statutory provision, which is the current statutory provision quoted above, both
“restate[d] existing law permitting an airline to sue the U.S. government when a loss insured
under the war risk program is in dispute” and “add[ed] a new provision permitting such lawsuits
by an insurance company when that company is subrogated to the rights of an airline and the
company has paid the airline for damage to an aircraft that is covered by premium insurance
under the war risk program.” H.R. Rep. No. 105-639, at 62.

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.

4
Senate Report 278 and House Report 639 pertained to bills that were not ultimately
enacted. See H.R. Rep. No. 106-2, at 2 (1999). However, as discussed below, the amendment to
section 44309(a) discussed in both reports was included, without change, in a subsequently
enacted appropriations bill. Id.

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 3. Joinder

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)] initially or on motion of either party to the action.” 49 U.S.C.
§ 44309(b)(2) (emphasis added). The plain language of this provision reflects that any interested
person may join a suit at its outset, i.e., upon the filing of a complaint. Thus, the question is
whether Commerce, as National Air Cargo’s subrogee, qualifies as an interested person with
respect to National Air Cargo’s claim against the FAA.

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) Plaintiffs. Persons may join in one action as plaintiffs if:

(A) they assert any right to relief jointly, severally, or in the alternative
with respect to or arising out of the same transaction, occurrence, or series
of transactions or occurrences; and

(B) any question of law or fact common to all plaintiffs will arise in the
action.

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). See Haddon Hous. Assocs., LLC v. United States, 92 Fed. Cl. 8, 15 (2010) (noting
that where the party contracting with the government is authorized to pursue a claim against the
government and the court has jurisdiction to entertain that claim, “[t]he resulting question is
purely one of joinder,” not jurisdiction). But see Carlson v. Glenn L. Martin Co., 103 F. Supp.
153 (N.D. Ohio 1952) (“Joinder is contingent . . . on the new party being subject to the
jurisdiction of the court.”). So long as National Air Cargo is entitled to pursue its claim, an
interested person such as Commerce is entitled to join the suit as a plaintiff pursuant to section
44309(b)(2).5 Accordingly, the court will not dismiss Commerce’s monetary claim.

5
A different result might be reached if this suit had been brought under the Tucker Act.
See Cienega Gardens v. United States, 194 F.3d 1231, 1239 (Fed. Cir. 1998) (requiring “privity
of contract between the plaintiff and the United States” for breach-of-contract claims arising
under the Tucker Act). But see Ins. Co. of the W. v. United States, 243 F.3d 1367, 1375 (Fed.

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 D. 28 U.S.C. § 2201

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. See Nat’l Air Traffic Controllers Ass’n v. United States, 160 F.3d 714, 716-17
(Fed. Cir. 1998). Moreover, no provision in chapter 443 expressly permits an award of equitable
relief. Because there is no statutory basis for Commerce’s nonmonetary claim, it must be
dismissed for lack of jurisdiction. Moreover, for the same reasons, the court sua sponte
dismisses National Air Cargo’s claim for a declaratory judgment.6

III. CONCLUSION

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 DENIES
defendant’s motion with respect to Commerce’s monetary claim.7 However, the court lacks

Cir. 2001) (holding that a surety for a government contractor may step into the contractor’s shoes
and bring suit against the United States); First Hartford Corp. Pension Plan & Trust v. United
States, 194 F.3d 1279, 1289 (Fed. Cir. 1999) (enumerating exceptions to the privity rule: suits by
intended third-party beneficiaries, suits by subcontractors “by means of a pass-through suit when
the prime contractor is liable to the subcontractor for the subcontractor’s damages,” and suits by
government contract sureties “for funds improperly disbursed to a prime contractor”); id. (“[T]he
common thread that unites these exceptions is that the party standing outside of privity by
contractual obligation stands in the shoes of a party within privity.”). However, as noted above,
chapter 443, which both waives sovereign immunity and vests the Court of Federal Claims with
jurisdiction, is controlling in this matter.
6
The court notes that plaintiffs’ claim for a declaratory judgment would also be
dismissed under the Tucker Act. Under the Tucker Act, the court may only award equitable
relief in three statutorily defined circumstances. See 28 U.S.C. § 1491(a)(2) (providing the court
with jurisdiction to issue, “as incident of and collateral to” an award of money damages, “orders
directing restoration to office or position, placement in appropriate duty or retirement status, and
correction of applicable records”); id. (providing the court with jurisdiction to render judgment in
nonmonetary disputes arising under the CDA); id. § 1491(b)(2) (providing the court with
jurisdiction to award declaratory and injunctive relief in bid protests). None of those
circumstances is present in this case.
7
If, during the course of discovery, information comes to light suggesting that
Commerce is not an interested party under section 44309(b)(2), defendant may file the
appropriate motion upon the close of discovery.

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jurisdiction to entertain the parties’ claim for a declaratory judgment. Accordingly, the court
GRANTS defendant’s motion in part and DISMISSES this claim without prejudice.

IT IS SO ORDERED.

s/ Margaret M. Sweeney
MARGARET M. SWEENEY
Judge

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