dissenting:
My colleagues have concluded that when a party files an action against the United States in a federal district court for the tort of breach of the duty of good faith and fair dealing under state law, we must re-characterize the pleading as a contract action within the jurisdiction of the claims court under the Tucker Act, notwithstanding the fact that the plaintiffs have not purported to allege a violation of any express or implied-in-fact promise. The result of this curious analysis is that if this tort action is refiled in the Claims Court as required under the majority’s holding, it will promptly be dismissed as frivolous because the plaintiffs do not claim that the government breached any express or implied-in-fact provision of its loan agreements. I cannot concur in this extraordinary result.
The LaPlants filed this tort action in the district court under the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 2671-2680. The LaPlants alleged in their complaint that the Farmers Home Administration (FmHA) breached the duty of good faith and fair dealing imposed by Montana law on all contracting parties. They alleged that the amount in controversy exceeded $10,000 and sought damages of $100,000 for emotional and physical distress and punitive damages in an amount to be determined at trial.
A district court has jurisdiction under the FTCA for
... injury or loss of property ... caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.
28 U.S.C. § 1346(b). Thus, under the plain language of section 1346(b), a tort claim may be filed against the United States if the alleged act or omission would be a tort under the law of the forum state. Under Montana law, a person is liable in a tort action for breach of the duty of good faith and fair dealing at least where the parties bargain from unequal positions. Darko v. United States, et. al., 646 F.Supp. 223, 224-225 (D.Mont.1986); Weber v. Blue *886Cross, 196 Mont. 454, 643 P.2d 198 (1982); First National Bank in Libby v. Twombly, 213 Mont. 66, 689 P.2d 1226 (1984); Tribby v. Northwestern Bank of GF, 217 Mont. 196, 704 P.2d 409 (1985); Nicholson v. United Pac. Ins. Co., 219 Mont. 32, 710 P.2d 1342 (1985). The LaPlants allege that after entering into a loan agreement, the FmHA breached its duty of good faith and fair dealing by pressuring them into selling their land at a loss and failing to inform them of their right to debt rescheduling.
The majority does not argue that the district court had no jurisdiction because a private person in Montana would not be liable in tort for a breach of the duty of good faith and fair dealing. Instead, the majority acknowledges that under Montana law a breach of the duty of good faith and fair dealing “is considered a tort independent of breach of contract.” (Majority Opinion, page 883.) Having set forth these clearly correct major and minor premises, the majority should have completed its analytical syllogism by concluding that the district court had jurisdiction over the La-Plants’ cause of action sounding in tort.1 Instead, the majority ignores the express terms of the FTCA and proceeds to hold that the district court lacked jurisdiction under the Tucker Act. 28 U.S.C. § 1346.
The Tucker Act is inapplicable to the LaPlants’ tort cause of action. The Tucker Act applies to contract and other claims against the United States “not sounding in tort.” 28 U.S.C. § 1491(a)(1) (emphasis added). The Tucker Act provides in pertinent part as follows: “The United States Claims Court shall have jurisdiction to render judgment ... 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). Thus, the Court of Claims has no jurisdiction under the Tucker Act over tort claims such as breach of the duty of good faith and fair dealing.
The majority begins its Tucker Act analysis with the comment that “the law to be applied in construing and enforcing government contracts is federal, not state law.” (Majority Opinion, page 882.) (emphasis added). The quoted passage by the majority expresses the flaw in its analysis of this case. A determination whether FmHA breached its duty of good faith and fair dealing does not involve construction or enforcement of a government contract. As set forth above, the LaPlants do not contend that FmHA breached an express or an implied-in-fact term of the loan agreements. Instead, they allege that FmHA violated the legal duty imposed under Montana law that parties to a contract deal with each other fairly and in good faith. Whether FmHA acted in good faith or dealt fairly with the LaPlants in pressuring them to sell some of their lands at a loss to pay off the loan agreement and to prevent foreclosure, and in failing to inform them that they could reschedule their deal pursuant to federal statutes and regulations, does not require interpretation or enforcement of any express or implied-in-fact term of the loan agreements.
The majority correctly paraphrases a portion of our discussion in Woodbury v. United States, 313 F.2d 291 (9th Cir.1963) for the proposition that “government contracts are to be given a uniform interpretation and application under federal law, rather than being given different interpretations and applications depending upon the vagaries of the laws of fifty different states.” Id. at 295. A determination whether FmHA’s alleged conduct constitutes a breach of the duty of good faith and fair dealing will not require an interpretation or *887enforcement of the loan agreements under Montana’s law of contracts. No issue of contract law is presented in the LaPlants’ complaint. Thus the majority’s conclusion that this court can “ignore the state law characterization of the claim” (Majority Opinion, page 883) is unfounded under either FTCA or the Tucker Act.
Under Montana law “the implied covenant of good faith and fair dealing is not an obligation arising from a contract.” Nicholson v. United Pac. Ins. Co., 219 Mont. 32, 710 P.2d 1342, 1348 (1985). The Montana Supreme Court has also stated that “the duty to exercise good faith is imposed by law rather than the contract itself.” First Nat’l Bank in Libby v. Twombly, 689 P.2d 1226, 1230, 213 Mont. 66 (1984). In Gates v. Life of Mont., 205 Mont. 304, 668 P.2d 213 (1983), the Montana Supreme Court explained the duty of good faith and fair dealing “exists apart from, and in addition to, any terms agreed to by the parties.” Id. 668 P.2d at 214. Thus, a proper application of Montana law to this tort action would require examination of FmHA’s conduct apart from, and in addition to any express or implied-in-fact terms of the loan agreements. The majority states that in Woodbury we determined that “a suit challenging the government’s breach of an allegedly implied fiduciary duty arising out of a contractual relationship was a ‘contract’ action falling within the exclusive jurisdiction of the Claims Court.” Majority Opinion, page 883. This characterization of our holding in Wood-bury is inaccurate. Our holding in Wood-bury is as follows:
Many breaches of contract can also be treated as torts. But in cases such as this, where the “tort” complained of is based entirely upon breach by the government of a promise made by it in a contract, so that the claim is in substance a breach of contract claim, and only incidentally and conceptually also a tort claim, we do not think that the common law or local state law right to “waive the breach and sue in tort” brings the case within the Federal Torts Claims Act.
Woodbury, 313 F.2d at 295 (emphasis added).
Woodbury is readily distinguishable from the matter before us. First, the tort complained of by the LaPlants is not based entirely upon a breach of FmHA of a promise made by it in the loan agreement. In fact, the LaPlants do not allege a breach of the loan agreement. The LaPlants’ claim is not “only incidentally and conceptually also a tort claim.” Id. The LaPlants readily concede they have no contract cause of action. Thus, they are not in a legal position to waive a breach of the loan agreements to sue in tort. To prevail on their claim, the LaPlants must, under Montana law, prove conduct apart from and in addition to FmHA’s performance of its promises under the loan agreement.
In Woodbury we also commented as follows:
We do not mean that no action will ever lie against the United States under the Tort Claims Act if a suit could be maintained for a breach of contract based upon the same facts. We only hold that where, as in this case, the action is essentially for breach of a contractual undertaking, and the liability, if any, depends wholly upon the government’s alleged promise, the action must be under the Tucker Act, and cannot be under the Federal Tort Claims Act.
Id. at 296 (emphasis added). Because this action as pleaded by the LaPlants is not essentially for breach of a contractual undertaking, and FmHA’s liability is not dependent upon proof that it breached a promise contained in the loan agreement, I would hold that consistent with our analysis in Woodbury, this action must be brought under the FTCA and not the Tucker Act.
My analysis of the holding in Woodbury is consistent with this court’s decision in Martin v. United States, 649 F.2d 701 (9th Cir.1981). In Martin we held that the district court has jurisdiction under the FTCA in an action based on “tortious breach of a contractual duty to repair the premises and make them habitable.” Id. at 702. Before *888this court, the government argued that because the claim was contractual in nature, the district court lacked subject matter jurisdiction under the FTCA.2 Id. at 704. We disposed of this argument in the following language: “[T]o deny jurisdiction in the district court merely because one element of the case is based on a contractual relationship would not further the statutory distinction between those cases to be brought in the Court of Claims and those to be brought in the district court.” Id. at 705. In a later passage in Martin, we characterized the plaintiff’s claim as “a personal injury action arising from breach of a duty of care arising out of a contract.” Id. We also noted in Martin that “the plaintiff did not merely seek compensation for loss of profit or other purely economic losses.” Id. In the instant matter the LaPlants seek damages for “emotional and physical distress suffered by plaintiffs.” 3 As we stated in Martin, “[I] see no reason under these circumstances to deny [the La-Plants] the forum of the district court for [their] claim in tort.” Id.
The majority has rejected our holding in Martin and has, instead, adopted the reasoning of our dissenting colleague.4 In Martin, as in the instant matter, the cause of action was based on a breach of the duty of care owed by the United States arising out of the relationship created by the contract — not a breach of an express or implied-in-fact term of the contract. Martin, 649 F.2d at 703.
The majority has ignored our duty when faced with a decision of this circuit with which we disagree. “We are bound by decisions of prior panels” unless an en banc decision, Supreme Court decision, or subsequent legislation undermines those deci*889sions. Montana v. Johnson, 738 F.2d 1074, 1077 (9th Cir.1984).
I would reverse the district court’s judgment dismissing this action for want of subject matter jurisdiction.
ORDER STAYING MANDATE
The mandate is stayed until further order of the court.
This panel and another panel of this court (Love v. United States, 9th Cir., 871 F.2d 1488, filed 1989), have filed opinions that conflict on the issue of whether an action against the FmHA for breach of duty of good faith under Montana law sounds in tort or contract.
The parties shall have until June 1, 1989 to file simultaneous briefs on the issue. Briefs shall not exceed fifteen (15) pages in length. The court is interested in citation to any Court of Claims cases that have either accepted or denied jurisdiction in similar cases.
Any party seeking rehearing on any other issues should include a discussion of such additional issues. If the court wants responses to any such additional issues, it will enter a further order to that effect.
. The correct syllogism can be stated as follows: Major premise:
A federal district court has jurisdiction under the FTCA over a claim against the United States if the wrongful act or omission would be a tort if committed by a private person according to the law of the place where the conduct occurred.
Minor Premise:
In Montana a private person is liable in tort for breach of the duty of good faith and fair dealing.
Conclusion:
The United States District Court for the District of Montana has jurisdiction under the FTCA over a tort claim against the FmHA for a breach of its duty of good faith and fair dealing.
. Contrary to the assertion of the majority, the contractual relationship with the government was not "incidental to the plaintiffs cause of action.” (Majority Op. at 884). To the contrary, we stated unequivocally: "Martin's cause of action under the FTCA rests upon the existence of a duty of care owed by the Government to Martin and arising out of a contract to repair the bathtub spout and other plumbing fixtures.” Martin, 649 F.2d at 703. (emphasis added).
. In footnote 4 of the majority opinion, the suggestion that it does not matter that the La-Plants seek damages for emotional and physical distress is in direct conflict of the analysis of our decision in Martin. The majority in Martin stated:
The tort alleged here arises from an unsafe condition leading to a personal injury. It is a classic tort, (citation omitted). If the claim arising out of the breach of contract were for expectation damages, i.e. asking for the installation of a good spout, it would be more characteristic of a contractual action. However, this is a personal injury action arising from breach of a duty of care arising out of a contract. It would be improper to limit the plaintiff to a purely contract remedy. The cases that require such a limitation ... involve breaches in commercial relationships leading to loss of profit or other purely economic harm.
Id. at 705.
. Two examples will suffice to demonstrate the majority’s refusal to follow our decision in Martin. The majority in the instant matter states on page 11, "we think appellant’s action, which essentially seeks to imply a 'good faith’ term into a government contract by operation of state law, must be deemed contractual in nature.”
In his dissenting expression in Martin, Judge Ferguson argues: ”[W]hen a cause of action is founded solely upon the breach of an obligation created by contract suit can be brought only according to the dictates of the Tucker Act." Martin, 649 F.2d at 706 (Ferguson, C.J., dissenting). The majority in Martin, however, held that "this is a personal injury action arising from breach of a duty of care arising out of a contract. It would be improper to limit the plaintiff to a purely contract remedy." Martin, 649 F.2d at 705.
The majority in the matter sub judice observes in footnote 4 that "it does not matter that appellants in this case seek compensation for ‘emotional and physical distress’ resulting from the government’s alleged bad faith conduct.” Majority Opinion at 885, n. 4.
Judge Ferguson stated in Martin:
The majority attempts to avoid the result mandated by Woodbury and the jurisdictional section of the Tucker Act. First, it distinguishes Woodbury by pointing out that the plaintiff there suffered only economic harm, while in the instant case, the plaintiff has suffered a physical injury. Nothing in Woodbury, suggests such a distinction.
Martin, 649 F.2d at 706 (Ferguson, C.J., dissenting) (footnote omitted).
The majority in Martin, however, disagreed and held instead that ”[h]ere Mrs. Martin's complaint seeks damages for her personal injury from the negligent repair of a house and we see no reason to deny her the forum of the district court for her claim in tort.” Martin, 649 F.2d at 705 (emphasis added).