Stathis v. United States

In the United States Court of Federal Claims

No. 14-61C

Filed: April 1, 2015

* * * * * * * * * * * * * * * *

PAULINE M. STATHIS, et al., *

*

Plaintiffs, *

v. * Partial Summary Judgment;

* Settlement Agreement; Contract

UNITED STATES, * Interpretation.

*

Defendant. *

*

* * * * * * * * * * * * * * * *

Patrick James Attridge, King & Attridge, Rockville, MD, for plaintiffs.

Ryan M. Majerus, Trial Attorney, Commercial Litigation Branch, Civil Division,

United States Department of Justice, Washington, D.C., for defendant. With him were

Robert E. Kirschman, Jr., Director, Commercial Litigation Branch and Benjamin C.

Mizer, Acting Assistant Attorney General, Civil Division.

OPINION

Plaintiffs1 filed a complaint in this court, and subsequently filed an amended

complaint, alleging breach of contract of a settlement agreement entered into with the

United States to settle a medical malpractice claim. Plaintiffs allege that the United States

breached a settlement agreement it had entered into with Pauline M. Stathis and Gus J.

Stathis, individually, and as parents for Christina Stathis, which included in its award to

plaintiffs a $90,000.00 yearly payment to be provided through an annuity purchased to

“result in a distribution on behalf of the United States.” Plaintiffs allege that “[t]he United

States promised that as of January 2014 (i.e., more than twenty-six (26) years after the

purchase of the annuity), yearly payments in the amount of $90,000 ‘will be paid to’

Plaintiffs for the remainder of the natural life of Christina Stathis.” According to the

complaint, defendant breached its contract when the 2014 payment was reduced to

$38,151.00. Defendant argues that “the undisputed material facts show that the United

States under the settlement agreement only agreed to purchase the annuity . . . [and] did

1Plaintiffs include Pauline M. Stathis, individually and as guardian for Christina M. Stathis,

and Gus J. Stathis and Pauline M. Stathis, trustees of the Christina M. Stathis Special

Needs Trust.

not agree to guarantee all future payments to be made by that annuity.” Neither party

denies that a binding contract was entered into by plaintiffs and defendant; the dispute is

about the terms of the agreement. The parties each filed a motion for partial summary

judgment. Plaintiffs ask the court to find the defendant in breach of the settlement

agreement. Defendant asks the court to dismiss plaintiffs’ complaint.

FINDINGS OF FACT

In 1981, plaintiff Christina Stathis suffered severe injuries during her birth at Walter

Reed Army Medical Center. In 1984, Christina’s parents, Gus and Pauline Stathis, filed a

complaint in the United States District Court for the District of Columbia under the Federal

Tort Claims Act (FTCA), 28 U.S.C. §§ 1346, 2671–80 (1982), alleging medical

malpractice. According to the complaint, on or about December 13, 1985, the United

States government entered into a settlement agreement with plaintiffs, “wherein in

exchange for a release and discharge of the United States, the Stathises accepted

monetary awards from the United States.” In addition to paying a sum of $245,000.00,

the government agreed to purchase an annuity from an insurance company, having an

A+ financial rating in Class XI or higher, according to the A.M. Best Company, through

JMW Settlements, Inc. The government drafted the settlement agreement, which

provides that “[t]he annuity will be owned solely and exclusively by the UNITED STATES,

and will result in a distribution on behalf of the UNITED STATES according to the following

specified plan.” (capitalization in original). The payment plan included in the settlement

agreement provides that the following amounts “will be paid”: five yearly payments of

$40,000.00 commencing one year after purchase of the annuity; five yearly payments of

$50,000.00 commencing six years after purchase; five yearly payments of $60,000.00

commencing eleven years after purchase; five yearly payments of $70,000.00

commencing sixteen years after purchase; five yearly payments of $80,000.00

commencing twenty-one years after purchase; and “[c]ommencing twenty-six (26) years

after the purchase of the annuity, yearly payments in the amount of ninety thousand and

00/100 Dollars ($90,000.00) per year will be paid . . . for the remainder of the natural life

of Christina Stathis.” The settlement agreement reads:

In consideration of the purchase of the annuity, and payment of the lump

sum . . . , Claimants hereby release and forever discharge the UNITED

STATES, its officers, agents, and employees from all liability, claims, and

demands of whatsoever nature arising from the care and treatment of

Pauline M. Stathis and Christina Stathis at Walter Reed Army Medical

Center, and claimants agree to indemnify and save harmless the UNITED

STATES from any and all other claims, actions, or proceedings which may

hereafter be asserted or brought by or on behalf of Claimants, their heirs,

executors, administrators, assigns or successors in interest, or any other

person or organization, to recover for personal injuries or death, or for

contribution or indemnity, arising out of or related to the care and treatment

of Pauline M. Stathis and Christina Stathis at Walter Reed Army Medical

Center.

2

(capitalization in original). In a Stipulation of Dismissal agreed to by the parties and

entered by the United States District Court for the District of Columbia, the parties

“adopt[ed] all of the terms of the Settlement Agreement.”

Defendant purchased an annuity from Executive Life Insurance Company of New

York (ELNY) on or about January 14, 1986 by issuing a check for $675,851.00, payable

to JMW Settlements, Inc.2 As required by the settlement agreement, ELNY had an A+

rating at the time of purchase. The United States District Court for the District of Columbia

filed a “RECEIPT,” (capitalization in original) signed by JMW Settlements, Inc.,

acknowledging receipt of a check from the government in the amount of $675,851.00,

“which, pursuant to the Court’s Order and Settlement Agreement filed December 16,

1985, fully discharges the defendant’s obligation to plaintiffs for payment of money in

consideration of the Order and the Agreement.” Plaintiffs received the annual payments

as outlined in the settlement agreement from January 15, 1987 until January 15, 2013.

The settlement agreement was amended on May 7, 2000 to provide for payments

to be made to the Christina M. Stathis Special Needs Trust, instead of directly to Gus and

Pauline Stathis, and was signed by plaintiffs and defendant. This “AMENDMENT TO

ORIGINAL SETTLEMENT AGREEMENT” (capitalization in original) stated:

IT IS HEREBY STIPULATED AND AGREED that the United States of

America, as owner of the annuity contract under which the requisite periodic

payments will be made, shall cause the future periodic payments to be

redirected to the Christina M. Stathis Special Needs Trust . . .

IT IS FURTHER AGREED AND UNDERSTOOD that this Amended

Settlement Agreement does not alter the parties’ obligations or overall

payment amounts as reflected in the original Settlement Agreement, and

does not replace the original Settlement Agreement.

Provider [sic] further, that as consideration for the amended terms reflected

herein, Pauline M. Stathis will indemnify and hold harmless the United

States of America, its authorized agents and employees, for any claims that

may arise out of, or on account of, the redirection of the payments to the

Christina M. Stathis Special Needs Trust.

(capitalization in original).

2 The $675,851.00 payment from the government was broken down as follows:

$424,861.33 paid for the ELNY annuity; $245,000.00 allocated as an upfront payment,

composed of a $77,534.67 payment to plaintiffs and $167,465.33 to be paid in attorney’s

fees; and $5,990.67 to be refunded to the government as an overpayment. The allocation,

described in a letter from JMW Settlements, Inc. to the United States General Accounting

Office, does not quite add up. The sum of the sub-amounts equals $675,852.00.

3

On April 16, 2012, ELNY was found to be insolvent by the Supreme Court of the

State of New York (Nassau County), which issued a Memorandum Decision and Order

of Liquidation and Approval of the ELNY Restructuring Agreement. A letter from the New

York Liquidation Bureau, sent to Christina Stathis on May 18, 2012, enclosed the court

documents and stated:

[t]he Court has directed the New York Superintendent of Financial Services

to liquidate ELNY’s business and affairs in substantially the manner

provided in the Restructuring Agreement, about which you were previously

informed. At such time as the Superintendent implements the Restructuring

Agreement, the obligation to pay benefits under your ELNY annuity contract

at the benefit level described in the December 7, 2011 letter will be

transferred from ELNY to Guaranty Association Benefits Company.

The letter also informed Christina of her eligibility “to apply for financial assistance from

the $100 million ELNY Hardship Fund (“Fund”), a voluntary initiative of the life insurance

industry created to assist ELNY payees who will experience a reduction in benefit

payments upon implementation of the Restructuring Agreement.”

A December 10, 2013 letter from the Guaranty Association Benefits Company

(GABC) to Pauline Stathis, on behalf of Christina Stathis, informed the Stathis family of a

change in benefits under the settlement agreement. They would “receive the following

payment annually: $38,151.00 with benefit due on 01/15/2013 [sic] and then on the 15th

of each January for your lifetime.”3 Plaintiffs sent defendant letters through counsel dated

December 6, 2013 and December 17, 2013, alerting the government to the anticipated

$51,849.00 shortfall. In a December 30, 2013 letter to plaintiffs’ counsel from Larry Eiser,

Senior Trial Counsel with the United States Department of Justice, Civil Division, Torts

Branch, the United States denied any obligation to make up the shortfall. On or about

January 15, 2014, plaintiffs received a $38,151.00 payment from GABC. Thereafter,

plaintiffs filed suit against defendant in this court, claiming breach of contract, and

requesting relief in the amount of $51,849.00, to compensate for the 2014 payment

shortfall, plus a lump sum amount equal to the present value of the future annuity

shortfalls. Plaintiffs and defendant each filed a motion for partial summary judgment.

Plaintiffs argue that the government should be found liable for breach of contract.

Defendant asks the court to dismiss plaintiffs’ complaint and enter judgment in favor of

the government.

DISCUSSION

Rule 56 of the Rules of the United States Court of Federal Claims (RCFC) (2014)

is similar to Rule 56 of the Federal Rules of Civil Procedure in language and effect. Both

3 The court notes that “01/15/2013” seems to be an error, given that the letter informing

Pauline Stathis of the benefit information was dated December 10, 2013, approximately

eleven months after the purported start date. Moreover, plaintiffs acknowledge that the

$38,151.00 payments to the family began “[o]n or about January 15, 2014.”

4

rules provide that “[t]he court shall grant summary judgment if the movant shows that

there is no genuine dispute as to any material fact and the movant is entitled to judgment

as a matter of law.” RCFC 56(a); Fed. R. Civ. P. 56(a) (2014); see also Alabama v. North

Carolina, 560 U.S. 330, 344 (2010); Hunt v. Cromartie, 526 U.S. 541, 549 (1999);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Adickes v. S. H. Kress &

Co., 398 U.S. 144, 157 (1970); Biery v. United States, 753 F.3d 1279, 1286 (Fed. Cir.),

reh’g and reh’g en banc denied (Fed. Cir. 2014); Ladd v. United States, 713 F.3d 648,

651 (Fed. Cir. 2013); Minkin v. Gibbons, P.C., 680 F.3d 1341, 1349 (Fed. Cir. 2012);

Noah Sys., Inc. v. Intuit Inc., 675 F.3d 1302, 1309-10 (Fed. Cir. 2012); Advanced Fiber

Techs. (AFT) Trust v. J & L Fiber Servs., Inc., 674 F.3d 1365, 1372 (Fed. Cir.), reh’g and

reh’g en banc denied (Fed. Cir. 2012); Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1325

(Fed. Cir.), reh’g denied (Fed. Cir. 2010); Consol. Coal Co. v. United States, 615 F.3d

1378, 1380 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2010), cert. denied, 131

S. Ct. 2990 (2011); 1st Home Liquidating Trust v. United States, 581 F.3d 1350, 1355

(Fed. Cir. 2009); Arko Exec. Servs., Inc. v. United States, 553 F.3d 1375, 1378 (Fed. Cir.

2009); Casitas Mun. Water Dist. v. United States, 543 F.3d 1276, 1283 (Fed. Cir. 2008),

reh’g and reh’g en banc denied, 556 F.3d 1329 (Fed. Cir. 2009); Moden v. United States,

404 F.3d 1335, 1342 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2005); Am.

Pelagic Fishing Co., L.P. v. United States, 379 F.3d 1363, 1370-71 (Fed. Cir.), reh’g en

banc denied (Fed. Cir. 2004), cert. denied, 545 U.S. 1139 (2005); Mata v. United States,

114 Fed. Cl. 736, 744 (2014); Leggitte v. United States, 104 Fed. Cl. 315, 317 (2012);

Arranaga v. United States, 103 Fed. Cl. 465, 467-68 (2012); Cohen v. United States, 100

Fed. Cl. 461, 469 (2011); Boensel v. United States, 99 Fed. Cl. 607, 610 (2011).

A fact is material if it will make a difference in the result of a case under the

governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; see also Marriott

Int’l Resorts, L.P. v. United States, 586 F.3d 962, 968 (Fed. Cir. 2009) (quoting Anderson

v. Liberty Lobby, Inc., 477 U.S. at 248); Mata v. United States, 114 Fed. Cl. at 744;

Arranaga v. United States, 103 Fed. Cl. at 467-68; Thompson v. United States, 101 Fed.

Cl. 416, 426 (2011); Cohen v. United States, 100 Fed. Cl. at 469. Irrelevant or

unnecessary factual disputes do not preclude the entry of summary judgment. See

Anderson v. Liberty Lobby, Inc., 477 U.S. at 247-48; see also Scott v. Harris, 550 U.S.

372, 380 (2007); Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1257 (Fed. Cir.

2001); Gorski v. United States, 104 Fed. Cl. 605, 609 (2012); Walker v. United States, 79

Fed. Cl. 685, 692 (2008); Curtis v. United States, 144 Ct. Cl. 194, 199, 168 F. Supp. 213,

216 (1958), cert. denied, 361 U.S. 843 (1959), reh'g denied, 361 U.S. 941 (1960).

When reaching a summary judgment determination, the judge’s function is not to

weigh the evidence and determine the truth of the case presented, but to determine

whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S.

at 249; see, e.g., Schlup v. Delo, 513 U.S. 298, 332 (1995); Ford Motor Co. v. United

States, 157 F.3d 849, 854 (Fed. Cir. 1998) (“Due to the nature of the proceeding, courts

do not make findings of fact on summary judgment.”); TigerSwan, Inc. v. United States,

118 Fed. Cl. 447, 451 (2014); Dana R. Hodges Trust v. United States, 111 Fed. Cl. 452,

455 (2013); Cohen v. United States, 100 Fed. Cl. at 469-70; Boensel v. United States, 99

Fed. Cl. at 611; Macy Elevator, Inc. v. United States, 97 Fed. Cl. 708, 717 (2011); Dick

Pacific/GHEMM, JV ex rel. W.A. Botting Co. v. United States, 87 Fed. Cl. 113, 126 (2009);

5

Johnson v. United States, 49 Fed. Cl. 648, 651 (2001), aff’d, 52 F. App’x 507 (Fed. Cir.

2002), published at 317 F.3d 1331 (Fed. Cir. 2003). The judge must determine whether

the evidence presents a disagreement sufficient to require submission to fact finding, or

whether the issues presented are so one-sided that one party must prevail as a matter of

law. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 250-52; Jay v. Sec’y of Dep’t of

Health and Human Servs., 998 F.2d 979, 982 (Fed. Cir.), reh’g denied and en banc

suggestion declined (Fed. Cir. 1993); Leggitte v. United States, 104 Fed. Cl. at 316. When

the record could not lead a rational trier of fact to find for the nonmoving party, there is no

genuine issue for trial, and the motion must be granted. See, e.g., Matsushita Elec. Indus.

Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Advanced Fiber Techs. (AFT) Trust

v. J & L Fiber Servs., Inc., 674 F.3d at 1372; Marriott Int’l Resorts, L.P. v. United States,

586 F.3d at 968; Am. Seating Co. v. USSC Grp., Inc., 514 F.3d 1262, 1266 (Fed. Cir.),

reh’g en banc denied (Fed. Cir. 2008); Rothe Dev. Corp. v. U.S. Dep’t of Def., 262 F.3d

1306, 1316 (Fed. Cir. 2001); Hall v. Aqua Queen Mfg., Inc., 93 F.3d 1548, 1553 n.3 (Fed.

Cir. 1996). In such cases, there is no need for the parties to undertake the time and

expense of a trial, and the moving party should prevail without further proceedings.

In appropriate cases, summary judgment:

saves the expense and time of a full trial when it is unnecessary. When the

material facts are adequately developed in the motion papers, a full trial is

useless. “Useless” in this context means that more evidence than is already

available in connection with the motion for summary judgment could not

reasonably be expected to change the result.

Dehne v. United States, 23 Cl. Ct. 606, 614-15 (1991) (quoting Pure Gold, Inc. v. Syntex,

(U.S.A.) Inc., 739 F.2d 624, 626 (Fed. Cir. 1984)), vacated on other grounds, 970 F.2d

890 (Fed. Cir. 1992) (citation omitted); see also Vivid Techs., Inc. v. Am. Sci. & Eng'g,

Inc., 200 F.3d 795, 806 (Fed. Cir. 1999) (“The purpose of summary judgment is not to

deprive a litigant of a trial, but to avoid an unnecessary trial when only one outcome can

ensue.”); Metric Constr. Co., Inc. v. United States, 73 Fed. Cl. 611, 612 (2006).

Summary judgment, however, will not be granted if “the dispute about a material

fact is ‘genuine,’ that is, if the evidence is such that a reasonable [trier of fact] could return

a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; see

also Long Island Sav. Bank, FSB v. United States, 503 F.3d 1234, 1244 (Fed. Cir.), reh’g

and reh’g en banc denied (Fed. Cir. 2007), cert. denied, 555 U.S. 812 (2008); Eli Lilly &

Co. v. Barr Labs., Inc., 251 F.3d 955, 971 (Fed. Cir.), reh’g and reh’g en banc denied

(Fed. Cir. 2001), cert. denied, 534 U.S. 1109 (2002); Gen. Elec. Co. v. Nintendo Co., 179

F.3d 1350, 1353 (Fed. Cir. 1999); TigerSwan, Inc. v. United States, 118 Fed. Cl. at 451;

Stephan v. United States, 117 Fed. Cl. 68, 70 (2014); Gonzales-McCaulley Inv. Group,

Inc. v. United States, 101 Fed. Cl. 623, 629 (2011). In other words, if the nonmoving party

produces sufficient evidence to raise a question as to the outcome of the case, then the

motion for summary judgment should be denied. Any doubt over factual issues must be

resolved in favor of the party opposing summary judgment, to whom the benefit of all

presumptions and inferences runs. See Ricci v. DeStefano, 557 U.S. 557, 586 (2009);

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. at 587-88; Yant v. United

6

States, 588 F.3d 1369, 1371 (Fed. Cir. 2009), cert. denied, 131 S. Ct. 69 (2010);

Dethmers Mfg. Co. v. Automatic Equip. Mfg. Co., 272 F.3d 1365, 1369 (Fed. Cir. 2001),

reh’g and reh’g en banc denied, 293 F.3d 1364 (Fed. Cir. 2002), cert. denied, 539 U.S.

957 (2003); Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d at 1257; Wanlass v.

Fedders Corp., 145 F.3d 1461, 1463 (Fed. Cir.), reh’g denied and en banc suggestion

declined (Fed. Cir. 1998); see also Am. Pelagic Co. v. United States, 379 F.3d at 1371

(citing Helifix Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339, 1345-46 (Fed. Cir. 2000)); Dana R.

Hodges Trust v. United States, 111 Fed. Cl. at 455; Boensel v. United States, 99 Fed. Cl.

at 611 (“‘The evidence of the nonmovant is to be believed, and all justifiable inferences

are to be drawn in his favor.’” (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 255)

(citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. at 587-88; Casitas

Mun. Water Dist. v. United States, 543 F.3d at 1283; Lathan Co. Inc. v. United States, 20

Cl. Ct. 122, 125 (1990))); see also Am. Seating Co. v. USSC Grp., Inc., 514 F.3d at 1266-

67; Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d at 807. “However, once a moving

party satisfies its initial burden, mere allegations of a genuine issue of material fact without

supporting evidence will not prevent entry of summary judgment.” Republic Sav. Bank,

F.S.B. v. United States, 584 F.3d 1369, 1374 (Fed. Cir. 2009); see also Anderson v.

Liberty Lobby, Inc., 477 U.S. at 247-48.

The initial burden on the party moving for summary judgment to produce evidence

showing the absence of a genuine issue of material fact may be discharged if the moving

party can demonstrate that there is an absence of evidence to support the nonmoving

party’s case. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); see also Riley &

Ephriam Constr. Co. v. United States, 408 F.3d 1369, 1371 (Fed. Cir. 2005); Crown

Operations Int’l Ltd. v. Solutia Inc., 289 F.3d 1367, 1377 (Fed. Cir.), reh’g denied (Fed.

Cir. 2002); Trilogy Commc’ns, Inc. v. Times Fiber Commc’ns, Inc., 109 F.3d 739, 741

(Fed. Cir.) (quoting Conroy v. Reebok Int’l, Ltd., 14 F.3d 1570, 1575 (Fed. Cir. 1994),

reh’g denied and en banc suggestion declined (Fed. Cir. 1995)), reh’g denied and en

banc suggestion declined (Fed. Cir. 1997); Lockwood v. Am. Airlines, Inc., 107 F.3d 1565,

1569 (Fed. Cir. 1997); Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d at 807; RQ

Squared, LLC v. United States, No. 12-527C, 2015 WL 170230, at *6 (Fed. Cl. Jan. 14,

2015). If the moving party makes such a showing, the burden shifts to the nonmoving

party to demonstrate that a genuine dispute regarding a material fact exists by presenting

evidence which establishes the existence of an element essential to its case upon which

it bears the burden of proof. See Celotex Corp. v. Catrett, 477 U.S. at 322; see also

Wavetronix LLC v. EIS Elec. Integrated Sys., 573 F.3d 1343, 1354 (Fed. Cir. 2009); Long

Island Sav. Bank, FSB v. United States, 503 F.3d at 1244; Florida Power & Light Co. v.

United States, 375 F.3d 1119, 1124 (Fed. Cir. 2004); Schoell v. Regal Marine Indus., Inc.,

247 F.3d 1202, 1207 (Fed. Cir. 2001); Am. Airlines, Inc. v. United States, 204 F.3d 1103,

1108 (Fed. Cir. 2000); Vivid Techs., Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d at 807;

Rasmuson v. United States, 109 Fed. Cl. 267, 271 (2013). However, “a non-movant is

required to provide opposing evidence under Rule 56(e) only if the moving party has

provided evidence sufficient, if unopposed, to prevail as a matter of law.” Saab Cars USA,

Inc. v. United States, 434 F.3d 1359, 1369 (Fed. Cir. 2006).

Even if both parties argue in favor of summary judgment and allege an absence of

genuine issues of material fact, the court is not relieved of its responsibility to determine

7

the appropriateness of summary disposition in a particular case, and it does not follow

that summary judgment should be granted to one side or the other. See Prineville Sawmill

Co. v. United States, 859 F.2d 905, 911 (Fed. Cir. 1988) (citing Mingus Constructors, Inc.

v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)); see also Marriott Int’l Resorts,

L.P. v. United States, 586 F.3d 962, 968–69 (Fed. Cir. 2009); B.F. Goodrich Co. v. U.S.

Filter Corp., 245 F.3d 587, 593 (6th Cir. 2001); Atl. Richfield Co. v. Farm Credit Bank of

Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000); Chevron USA, Inc. v. Cayetano, 224 F.3d

1030, 1037 n.5 (9th Cir. 2000), cert. denied, 532 U.S. 942 (2001); Bubble Room, Inc. v.

United States, 159 F.3d 553, 561 (Fed. Cir. 1998) (“The fact that both the parties have

moved for summary judgment does not mean that the court must grant summary

judgment to one party or the other.”), reh’g denied and en banc suggestion declined (Fed.

Cir. 1999); Allstate Ins. Co. v. Occidental Int’l, Inc., 140 F.3d 1, 2 (1st Cir. 1998); Massey

v. Del Labs., Inc., 118 F.3d 1568, 1573 (Fed. Cir. 1997); LewRon Television, Inc. v. D.H.

Overmyer Leasing Co., 401 F.2d 689, 692 (4th Cir. 1968), cert. denied, 393 U.S. 1083

(1969); Rogers v. United States, 90 Fed. Cl. 418, 427 (2009), subsequent determination,

93 Fed. Cl. 607 (2010); Consol. Coal Co. v. United States, 86 Fed. Cl. 384, 387 (2009),

aff’d, 615 F.3d 1378, (Fed. Cir.), and reh’g and reh’g en banc denied (Fed. Cir. 2010),

cert. denied, 131 S. Ct. 2990 (2011); St. Christopher Assocs., L.P. v. United States, 75

Fed. Cl. 1, 8 (2006), aff’d, 511 F.3d 1376 (Fed. Cir. 2008); Reading & Bates Corp. v.

United States, 40 Fed. Cl. 737, 748 (1998). The court must evaluate each party’s motion

on its own merits, taking care to draw all reasonable inferences against the party whose

motion is under consideration, or, otherwise stated, in favor of the non-moving party. See

First Commerce Corp. v. United States, 335 F.3d 1373, 1379 (Fed. Cir.), reh’g and reh’g

en banc denied (Fed. Cir. 2003); see also DeMarini Sports, Inc. v. Worth, Inc., 239 F.3d

1314, 1322 (Fed. Cir. 2001); Gart v. Logitech, Inc., 254 F.3d 1334, 1338–39 (Fed. Cir.),

reh’g and reh’g en banc denied (Fed. Cir. 2001), cert. denied, 534 U.S. 1114 (2002);

Oswalt v. United States, 85 Fed. Cl. 153, 158 (2008); Telenor Satellite Servs., Inc. v.

United States, 71 Fed. Cl. 114, 119 (2006).

Cross-motions are no more than a claim by each party that it alone is entitled to

summary judgment. The making of such inherently contradictory claims, however, does

not establish that if one is rejected the other necessarily is justified. See B.F. Goodrich

Co. v. United States Filter Corp., 245 F.3d at 593; Atl. Richfield Co. v. Farm Credit Bank

of Wichita, 226 F.3d at 1148; Allstate Ins. Co. v. Occidental Int’l, Inc., 140 F.3d at 2;

Rogers v. United States, 90 Fed. Cl. at 427; Reading & Bates Corp. v. United States, 40

Fed. Cl. at 748.

“Questions of law are particularly appropriate for summary judgment.” Oenga v.

United States, 91 Fed. Cl. 629, 634 (2010) (citing Dana Corp. v. United States, 174 F.3d

1344, 1347 (Fed. Cir. 1999) (“Summary judgment was appropriate here [in Dana Corp.]

because no material facts were disputed, many being stipulated, and the only disputed

issues were issues of law. Moreover, on each issue one party or the other is entitled to

judgment as a matter of law.”)); see also Santa Fe Pac. R.R. v. United States, 294 F.3d

1336, 1340 (Fed. Cir. 2002) (“Issues of statutory interpretation and other matters of law

may be decided on motion for summary judgment.”).

8

This court has jurisdiction to review settlement agreements in the nature of a

contract between a private citizen or business entity and the government because a

settlement agreement is a contract. See Cunningham v. United States, 748 F.3d 1172,

1176 (Fed. Cir. 2014) (“We have long held that disputes over settlement agreements are

governed by contract principles.”); Slattery v. Dep't of Justice, 590 F.3d 1345, 1349 (Fed.

Cir. 2010) (“Settlement agreement disputes are governed by contract principles.”); Musick

v. Dep't of Energy, 339 F.3d 1365, 1369 (Fed. Cir. 2003) (“A settlement agreement is a

contract, the interpretation of which is a question of law.”); Kasarsky v. Merit Sys. Prot.

Bd., 296 F.3d 1331, 1336 (Fed. Cir. 2002) (“Disputes involving settlement agreements

are governed by contract principles.”); Greco v. Dep't of the Army, 852 F.2d 558, 560

(Fed. Cir. 1988) (“It is axiomatic that a settlement agreement is a contract.”).

Contract interpretation is a question of law, which poses an appropriate question

for summary judgment resolution. See UPI Semiconductor Corp. v. Int’l Trade Comm’n,

767 F.3d 1372, 1377 (Fed. Cir. 2014) (stating that contract interpretation is a question of

law); First Annapolis Bancorp, Inc. v. United States, 644 F.3d 1367, 1373 (Fed. Cir. 2011),

cert. denied, 132 S. Ct. 2102 (2012); H.B. Mac, Inc. v. United States, 153 F.3d 1338, 1345

(Fed. Cir. 1998) (stating that matters of contract interpretation are questions of law); see

also Holland v. United States, 621 F.3d 1366, 1374 (Fed. Cir. 2010), cert. denied, 132 S.

Ct. 365 (2011); Dalton v. Cessna Aircraft Co., 98 F.3d 1298, 1305 (Fed. Cir.), reh’g denied

and en banc suggestion declined (Fed. Cir. 1996); Eden Isle Marina, Inc. v. United States,

113 Fed. Cl. 372, 483 (2013) (quoting Varilease Tech. Group, Inc. v. United States, 289

F.3d 795, 798 (Fed. Cir. 2002)); C.W. Over & Sons, Inc. v. United States, 54 Fed. Cl. 514,

520 (2002).

Contract interpretation starts with analysis of the language of the written

agreement. See Precision Pine & Timber, Inc. v. United States, 596 F.3d 817, 824 (Fed.

Cir. 2010), cert. denied, 131 S. Ct. 997 (2011); LAI Servs., Inc. v. Gates, 573 F.3d 1306,

1314 (Fed. Cir.), reh’g denied (Fed. Cir. 2009); Barron Bancshares, Inc. v. United States,

366 F.3d 1360, 1375 (Fed. Cir. 2004); Foley Co. v. United States, 11 F.3d 1032, 1034

(Fed. Cir. 1993); Eden Isle Marina, Inc. v. United States, 113 Fed. Cl. at 483–84;

Bell/Heery v. United States, 106 Fed. Cl. 300, 309 (2012), aff’d, 739 F.3d 1324 (Fed. Cir.

2014), reh’g and reh’g en banc denied (Fed. Cir. 2014); Sterling, Winchester & Long,

L.L.C. v. United States, 83 Fed. Cl. 179, 183 (2008), aff’d, 326 F. App’x 568 (Fed. Cir.

2009). The United States Court of Appeals for the Federal Circuit stated in Massie v.

United States:

In interpreting a contract, “[w]e begin with the plain language.” “We give the

words of the agreement their ordinary meaning unless the parties mutually

intended and agreed to an alternative meaning.” In addition, “[w]e must

interpret the contract in a manner that gives meaning to all of its provisions

and makes sense.’”

Massie v. United States, 166 F.3d 1184, 1189 (Fed. Cir. 1999) (quoting McAbee Constr.,

Inc. v. United States, 97 F.3d 1431, 1435, reh’g denied and en banc suggestion declined

(Fed. Cir. 1996); Harris v. Dep’t of Veterans Affairs, 142 F.3d 1463, 1467 (Fed. Cir. 1998)

(internal citations omitted)); Jowett, Inc. v. United States, 234 F.3d 1365, 1368 (Fed. Cir.

9

2000) (quoting McAbee Constr., Inc. v. United States, 97 F.3d at 1435; Harris v. Dep’t of

Veterans Affairs, 142 F.3d at 1467); see also Shell Oil Co. v. United States, 751 F.3d

1282, 1305 (Fed. Cir. 2014) (noting that a contract must be interpreted in context, giving

meaning to the document as a whole) (citing NVT Techs., Inc. v. United States, 370 F.3d

1153, 1159 (Fed. Cir. 2004); Metric Constructors, Inc. v. Nat’l Aeronautics & Space

Admin., 169 F.3d 747, 752 (Fed. Cir. 1999)); McHugh v. DLT Solutions, Inc., 618 F.3d

1375, 1380 (Fed. Cir. 2010); Giove v. Dep’t of Transp., 230 F.3d 1333, 1340–41 (Fed.

Cir. 2000) (“In addition, we must interpret the contract in a manner that gives meaning to

all of its provisions and makes sense. Further, business contracts must be construed with

business sense, as they naturally would be understood by intelligent men of affairs.”)

(citations omitted); Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991)

(indicating that a preferable interpretation of a contract is one that gives meaning to all

parts of the contract rather than one that leaves a portion of the contract “useless,

inexplicable, void, or superfluous”); Marquardt Co. v. United States, 101 Fed. Cl. 265, 269

(2011) (“In interpreting contractual language, the court must give reasonable meaning to

all parts of the contract and avoid rendering portions of the contract meaningless.”

(citation omitted)); Enron Fed. Solutions, Inc. v. United States, 80 Fed. Cl. 382, 393 (2008)

(“[C]ontext defines a contract and the issues deriving thereof.”); Hol-Gar Mfg. Corp. v.

United States, 169 Ct. Cl. 384, 388, 351 F.2d 972, 975 (1965) (The language of the

“contract must be given that meaning that would be derived from the contract by a

reasonable intelligent person acquainted with the contemporaneous circumstances.”).

“‘“In contract interpretation, the plain and unambiguous meaning of a written agreement

controls.” The contract must be construed to effectuate its spirit and purpose giving

reasonable meaning to all parts of the contract.’” Arko Exec. Servs., Inc. v. United States,

553 F.3d at 1379 (quoting Hercules Inc. v. United States, 292 F.3d 1378, 1380–81 (Fed.

Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2002) (quoting Craft Mach. Works, Inc. v.

United States, 926 F.2d 1110, 1113 (Fed. Cir. 1991))); see also LAI Servs., Inc. v. Gates,

573 F.3d at 1314; Gardiner, Kamya & Assocs., P.C. v. Jackson, 467 F.3d 1348, 1353

(Fed. Cir. 2006) (citations omitted); Medlin Constr. Grp., Ltd. v. Harvey, 449 F.3d 1195,

1200 (Fed. Cir. 2006) (reviewing the contract as a whole to determine the meaning of

relevant provisions); Hunt Constr. Grp., Inc. v. United States, 281 F.3d 1369, 1372 (Fed.

Cir. 2002) (“We begin with the plain language when interpreting a contract . . . . The

contract must be considered as a whole and interpreted to effectuate its spirit and

purpose, giving reasonable meaning to all parts.” (citations omitted)). “‘[I]t has been a

fundamental precept of common law that the intention of the parties to a contract control[s]

its interpretation.’” Beta Sys., Inc. v. United States, 838 F.2d 1179, 1185 (Fed. Cir. 1988)

(quoting Firestone Tire & Rubber Co. v. United States, 444 F.2d 547, 551 (Ct. Cl. 1971));

Alvin, Ltd. v. United States Postal Serv., 816 F.2d 1562, 1565 (Fed. Cir. 1987) (“In the

case of contracts, the avowed purpose and primary function of the court is the

ascertainment of the intent of the parties.”); see also Flexfab, LLC v. United States, 424

F.3d 1254, 1262 (Fed. Cir. 2005) (“[I]ntent is determined by looking to the contract and, if

necessary, other objective evidence. In the absence of clear guidance from the contract

language, the requisite intent on the part of the government can be inferred from the

actions of the contracting officer....”).

In the above-captioned case, neither the parties nor the court have identified any

material facts in dispute. Rather, the parties’ cross-motions for summary judgment raise

10

questions of contract interpretation and statutory construction, which are questions of law

amenable to resolution through summary judgment.

Defendant makes several arguments to support its motion to dismiss. First, it

makes an argument based on the text of the settlement agreement. Next, the government

relies on a distinction between the above-captioned Stathis case, in which the medical

malpractice claim arose under the FTCA, 28 U.S.C. §§ 1346, 2671–80 (1982) and the

case of Massie v. United States, 166 F.3d 1184, in which the medical malpractice claim

arose under the Military Claims Act (MCA), 10 U.S.C. §§ 2731–38 (1994). Defendant cites

Helmandollar v. United States, 39 Fed. Cl. 302 (1997), which involved a tort claim arising

under the FTCA, to try to argue that the “will pay” language in the Stathis settlement

agreement does not constitute a government guarantee regarding the annuity payments.

Id. at 304 (“Upon examining the settlement agreement as a whole, we conclude that the

phrase ‘will pay’ is clearly a description of the type of annuity to be purchased and not a

guarantee of the amount of money that is actually paid out by the annuity.”).

Subsequently, however, the United States Court of Appeals for the Federal Circuit wrote

in Massie that this construction of the “will pay” language in a settlement agreement

should be rejected. The court explained:

The language specifying that the annuity “will result in distributions” and that

the disbursements “shall be paid” is unambiguously mandatory and says

unequivocally that the Massies must receive the payments. The

government urges an interpretation of these terms that is at odds with their

plain meaning. Because the payments are mandatory, the government

must be responsible for their payment; no one else is a party to the

Agreement. Although the government may delegate its duties under the

Agreement to another entity, such as Executive Life Insurance Company,

this delegation does not absolve it of its obligations.

Massie v. United States, 166 F.3d at 1190 (citing Olson Plumbing & Heating Co. v. United

States, 221 Ct. Cl. 197 (Ct. Cl. 1979)).

The government also tries to rely on Linebarger v. United States, 927 F. Supp.

1280, 1282 (N.D. Cal. 1996), a case which is not binding on this court, to argue that the

FTCA settlement agreement gave rise only to an obligation on the part of the government

to purchase an annuity, but the government had not “obligated itself to make up any

shortfalls in the periodic distributions when the annuity company . . . bankrupted.” In

response, plaintiffs also relied on a non-binding case, Hendrickson v. United States,

which suggests the opposite legal conclusion, by finding that: “the Government is

obligated to supplement the diminished payments now being received by the plaintiffs . .

. .” Hendrickson v. United States, No. 82–CV– 621T, 2014 WL 2112575, at *7 (W.D.N.Y.,

May 20, 2014).

Regarding interpretation of a settlement agreement, in Massie v. United States,

the United States Court of Appeals for the Federal Circuit found that when the government

purchases an annuity as part of a settlement agreement, the government’s responsibility

does not end with the initial purchase of the annuity, but the government has a continuing

11

obligation to ensure that future payments are made in accordance with the settlement

agreement. Massie v. United States, 166 F.3d at 1190 (“Although the government may

delegate its duties under the Agreement to another entity . . . this delegation does not

absolve it of its obligations.”); see also Annuity Transfers, Ltd. v. United States, 86 Fed.

Cl. 173, 180 (2009) (stating in dicta that if annuity payments being made pursuant to a

settlement agreement were to cease, the plaintiff could bring a claim against the

government) (citing Massie v. United States, 166 F.3d at 1190).

The facts of the Stathis case bear similarity to the facts in Massie. In both cases,

plaintiffs filed a breach of contract action against the government for failing to adhere to

the payment schedule established in a settlement agreement to compensate for injures

alleged to have been caused by medical malpractice at a military hospital during

childbirth. Massie v. United States, 166 F.3d at 1186. Additionally, the language of the

settlement agreement in the Stathis case concerning distributions of the agreed-to annuity

is almost identical to the language to the same effect in Massie. In Massie, the settlement

agreement states that the annuity “will result in distributions on behalf of the United

States” as detailed in the agreement in the form of monthly and lump sum payments.4 Id.

at 1186–87. In the Stathis case, the settlement agreement states “[t]he annuity will be

owned solely and exclusively by the UNITED STATES, and will result in a distribution on

behalf of the UNITED STATES according to the following specified plan[.]” (capitalization

in original). Additionally, both the Massie agreement and the agreement in the Stathis

case required the government to purchase the annuity from an insurance company rated

A+ by the A.M. Best Company. Massie v. United States, 166 F.3d at 1187. This court is

bound by the Federal Circuit’s ruling in Massie. Consequently, the government is not

absolved of its responsibilities for the dollar distribution amounts agreed to in the

settlement agreement it signed in order to resolve the then-pending litigation in the United

States District Court for the District of Columbia.

The government’s interpretation of its obligations under the settlement agreement,

and its conclusion that the defendant had satisfied its obligation by purchasing the

annuity, do not meet the requirements, nor the plain language of the agreement. The

Federal Circuit in Massie stated: “[t]he language specifying that the annuity ‘will result in

distributions’ and that the disbursements ‘shall be paid’ is unambiguously mandatory and

states unequivocally that the [plaintiffs] must receive the payments.” Massie v. United

States, 166 F.3d at 1190. In the Stathis case, the language in the settlement agreement

reads: “yearly payments in the amount of ninety thousand and 00/100 Dollars

($90,000.00) per year will be paid to Pauline Stathis and Christina Stathis, a minor, jointly

for the remainder of the natural life of Christina Stathis.” To distinguish this case from

Massie would be to ignore binding precedent and to contravene the intent of the

contracting parties when the settlement agreement was executed, which was to provide

4The agreement in Massie also describes some of the future payments under the annuity

as “deferred lump-sum payments.” Massie v. United States, 40 Fed. Cl. 151, 156 (1997),

rev’d, 166 F.3d 1184 (Fed. Cir. 1999).

12

“yearly payments” in specified amounts for “the remainder of the natural life of Christina

Stathis.”

Furthermore, even if the court were to find that the language in the settlement

agreement is ambiguous, which it does not, the court must construe the ambiguity against

the drafter, in this case, the government. If there is a latent ambiguity in the interpretation

of a contract, the doctrine of contra proferentem applies. According to the United States

Supreme Court, “as between two reasonable and practical constructions of an ambiguous

contractual provision . . . . the provision should be construed less favorably to that party

which selected the contractual language.” United States v. Seckinger, 397 U.S. 203, 216,

reh’g denied, 397 U.S. 1031 (1970). This doctrine of contra proferentem “‘pushes the

drafters toward improving contractual forms and it saves contractors from hidden traps

not of their own making.’” Fry Commc’ns, Inc. v. United States, 22 Cl. Ct. 497, 503 (1991)

(quoting Sturm v. United States, 190 Ct. Cl. 691, 697, 421 F.2d 723, 727 (1970)).

Similarly, according to the United States Court of Appeals for the Federal Circuit: “When

a dispute arises as to the interpretation of a contract and the contractor’s interpretation is

reasonable, we apply the rule of contra proferentem, which requires that ambiguous or

unclear terms that are subject to more than one reasonable interpretation be construed

against the party who drafted the document.” Turner Constr. Co. v. United States, 367

F.3d 1319, 1321 (Fed. Cir. 2004) (citing United States v. Turner Constr. Co., 819 F.2d

283, 286 (Fed. Cir. 1987)); see also States Roofing Corp. v. Winter, 587 F.3d 1364, 1372

(Fed. Cir. 2009); Gardiner, Kamya & Assocs. v. Jackson, 467 F.3d at 1352; HPI/GSA-3C,

LLC v. Perry, 364 F.3d 1327, 1334 (Fed. Cir. 2004).

Next, the government attempts to distinguish Massie, brought under the MCA, from

the Stathis case, brought under the FTCA, relying on the theory that the FTCA raises

sovereign immunity concerns, not raised with the MCA. Defendant argues that the MCA

is a not a waiver of the government’s sovereign immunity because “[i]t merely confers

discretion upon the Secretaries of military departments to settle and pay certain claims

under regulations prescribed by those Secretaries . . .” and “[t]here is also no ‘claim’ for

a plaintiff to release in MCA cases because a claimant has no right to litigate a MCA

claim . . . .” Defendant further argues that because the FTCA is a limited waiver of the

government’s sovereign immunity, a settlement agreement under the FTCA must be “final

and conclusive” as to the claimant, and this finality extends to “continuing obligations like

future periodic payments.” In support, defendant points to case law from several federal

courts, but not to decisions issued by the United States Court of Appeals for the Federal

Circuit. See, e.g., Cibula v. United States, 664 F.3d 428, 431 (4th Cir. 2012); Hull by Hull

v. United States, 971 F.2d 1499, 1505 (10th Cir. 1992), cert. denied, 507 U.S. 1030

(1993). Plaintiffs respond that the cases cited by the defendant are not on point. In Hull

by Hull v. United States, the United States Court of Appeals for the Tenth Circuit reviewed

a decision by the district court to award damages to a plaintiff and place the damages in

a trust. Hull by Hull v. United States, 971 F.2d 1499. Before reaching the issue of whether

the trust could be fully reversionary, the Tenth Circuit in Hull addressed the relevant

jurisdictional statute for cases brought under the FTCA. Id. at 1504. The court indicated

that other courts had interpreted the jurisdictional statute, 28 U.S.C. § 1346, as providing

that a judgment imposed by a court in a FTCA case could not be structured as ongoing

payments. Id. at 1504–05 (citing Frankel v. Heym, 466 F.2d 1226 (3d Cir. 1972)). The

13

Hull court relied on Frankel v. Heym when it reasoned: “(1) the federal waiver of sovereign

immunity under the FTCA incorporates the traditional common law principle that awards

in civil suits must take the form of common law money judgments, and (2) lump sum

money judgments are preferable to judgments that would impose a continuing burden

upon the judiciary to supervise the award.” Id. at 1504 (citing Frankel v. Heym, 466 F.2d

at 1229) (internal citations omitted). The Hull court then took this reasoning one step

further, concluding that “courts cannot subject the government to ongoing obligations like

the continuing payments proposed in Frankel.” Id. at 1505. In Cibula, in which the

government sought to pay the entire award as a lump sum, the court cited Hull, stating,

“courts cannot subject the United States to continuing obligations like periodic

payments . . . .” Cibula v. United States, 664 F.3d at 431. However, Hull, Cibula, and this

line of reasoning involving up front, lump sum payments are not dispositive in the case

currently before the court, in which the court is not imposing a payment structure on the

parties, but rather, is enforcing a contract in which the parties voluntarily established

structured settlement payments in a settlement agreement. Case law regarding what

constitutes a permissible judgment for a court to unilaterally enter during a bench trial is

not determinative in situations involving payments that were not structured by the court,

but rather, as here, were agreed to by the parties by contract. Further, the Hull, Cibula

case law speaks to an instance when the government has agreed to and has paid an

entire obligation up front and no structured, future payment schedule to be paid for the

plaintiff’s “natural life” is included in the judgment. Hull by Hull vs. United States, 971 F.2d

at 1505. In the Stathis case, the parties did not determine the entire amount to be paid

out under the annuity in future years up front. Moreover, the future payments making up

the annuity shortfalls are essential as “deferred lump sum payments,” which arguably

have deferred the waiver of sovereign immunity until the payments are made, until the

end of Christina’s life, with the bargained for agreement that plaintiffs will file no further

suits on behalf of Christina regarding the underlying tort case.

The government also attempts to bootstrap its sovereign immunity argument and

distinction from the Massie case with a textual interpretation of the FTCA, but this is not

supported by the plain meaning of the statute. The government points to section 2672 of

the FTCA: “Payment of any award, compromise, or settlement in an amount in excess of

$2,500 made pursuant to this section or made by the Attorney General in any amount

pursuant to section 2677 of this title shall be paid in a manner similar to judgments and

compromises in like causes.” 28 U.S.C. § 2672. Defendant argues that it cannot enter

into a contract that would require future payments because payments made pursuant to

the FTCA must be made in a manner similar to the way judgments are paid, and

judgments must be made as one-time payments. Defendant argues that “[u]nless the

FTCA expressly permits the United States to pay for such a settlement in future

installments, the United States must accomplish payment in a fixed, lump sum at the time

of settlement [and that] [t]he United States cannot pay for a FTCA settlement in future

installments because Congress has never authorized paying FTCA judgments or

settlements in this manner.” (emphasis in original).

Defendant argues that “in an FTCA action, the United States can agree to a

settlement including a schedule of periodic payments only if the United States’ obligations

are discharged in full by payment of a fixed, ascertainable lump sum at the time the

14

settlement is finalized.” A few pages later in the same brief, defendant argues that

“[b]ecause no judgment in an FTCA case may be paid periodically or in future

installments, the United States cannot agree to itself make or guarantee future periodic

payments as part of an FTCA settlement without contravening federal law.” (emphasis in

original) Furthermore, defendant asserts that when the FTCA refers to “compromises in

like causes,” it necessarily is referring to other FTCA causes of action because “the only

‘like cause’ to an FTCA cause of action is an FTCA cause of action — no other statutory

waiver of immunity and cause of action exists for a tort claim against the United States.”

Defendant claims that this language, therefore, precludes an interpretation that a payment

could be made in any way other than as a lump sum judgment payment. Plaintiffs respond

that “[j]udgments and compromises are not synonymous and should be viewed

independently [and that] [t]he statute clearly indicates that the Attorney General (or

designee) can approve settlements paid in a similar manner to ‘compromises in like

causes.’”

Plaintiff’s interpretation of the FTCA is in accordance with its plain meaning. A

“compromise of like cause” can be read to refer to a compromise arising under the MCA

or under any common law tort action. Additionally, the payment language of the FTCA

does not define a “compromise of like cause” as referring only to a “cause” of action for

which sovereign immunity to litigate in court is waived. The phrase, “in a manner similar

to judgments and compromises in like causes,” also can be understood to signal that the

source of payment is similar, rather than that the method of payment is similar. See, e.g.,

U.S. Gov’t Accountability Office, 14 GAO-RB pt. C, s. 3, Office of the General Counsel,

Principles of Federal Appropriations Law, Claims against and by the Government, Claims

against the Government, Whom and What to Pay (3d ed. 2008), 2008 WL 6969344, at *17

(“Where the applicable statute provides for payment from the Judgment Fund ‘in a

manner similar to judgments and compromises in like causes,’ or ‘in accordance with the

procedures provided by’ section 1304, or pursuant to some other similar language, the

procedures of section 3728 will apply.”) In accordance with this interpretation, the MCA

does not specify the method or frequency of payment, but rather signals the source of

payments: “Appropriations available to the Department of Defense for operation and

maintenance may be used for payment of claims authorized by law to be paid by the

Department of Defense . . . .” 10 U.S.C. § 2732. Defendant suggests that Congress

indicated its intent for the payment language to refer to the timing language by

harmonizing the fund from which judgments and settlements would be paid. In this

context, however, Congress also allowed for the payment language in the FTCA to refer

to the source of payments.

In addition to the arguments described above, defendant also contends that “the

Government purchases an annuity to accomplish periodic payments as part of an FTCA

settlement,” which ends its obligation. The Massie case made clear, however, that an

annuity only can be a solution for as long as it functions. When the annuity solution falls

short, the government still must adhere to its obligations under the settlement agreement.

The plaintiffs relied on the calculated amounts in consenting to the settlement agreement,

and likely, in making subsequent financial decisions. Here, the annuity premium did not

result in the total amount of the settlement to be paid. The agreement clearly states that

“[c]ommencing twenty-six (26) years after the purchase of the annuity, yearly payments

15

in the amount of ninety thousand and 00/100 Dollars ($90,000.00) per year will be paid

to Pauline Stathis and Christina Stathis, a minor, jointly for the remainder of the natural

life of Christina Stathis. Said annual payments will continue to be paid during the natural

life of Christina Stathis.” In both the Stathis settlement agreement and the Massie

settlement agreement, the government did not state the total amount to be awarded under

the agreement.5 Even though the total amount owed by the government was not

established in the Stathis agreement, because it was tied to Christina M. Stathis’ natural

life, the $90,000.00 per year payments are included, as guaranteed, and the government

should not be able to claim that it is no longer responsible for the future payments.6

Both parties agree that the settlement agreement in this case was amended in May

2002, following the government’s authorization to do so. Defendant argues that even

though the government’s consent was required to change the annuity beneficiary from

Pauline and Gus Stathis to the Christina M. Stathis Special Needs Trust, the United

States’ retainment of ownership was unrelated to a responsibility for making future

payments. Defendant argues that, instead, “[r]etaining ownership of the annuity prevents

the plaintiff from altering the terms of the settlement and directing that payments be made

to someone else without the Government’s consent.” Plaintiffs argue that the logical

conclusion of the government’s argument in this respect leads to an absurd result: “all of

Defendant’s obligations under the agreement would be fulfilled once the annuity contract

was purchased, yet once purchased, defendant, as sole owner, could change the

beneficiary.” Although neither party points to the relevant language of the settlement

agreement, there is clear indication in the settlement agreement of the contracting parties’

intent for continued responsibility for future payments:

IT IS HEREBY STIPULATED AND AGREED that the United States of

America, as owner of the annuity contract under which the requisite periodic

payments will be made, shall cause the future periodic payments to be

redirected to the Christina M. Stathis Special Needs Trust at such address

or financial institution account as may be provided from time to time.

(capitalization in original)

Finally, the government argues that an FTCA settlement must be “final and

conclusive” as to the claimant, and that the “FTCA’s terms and conditions, including those

5 Defendant cites several sources, including a United States Court of Appeals for the

District of Columbia case and the Government Accountability Office Redbook on

Principles of Federal Appropriations Law, in support of its assertion that “‘the amount paid

. . . should represent the government’s maximum obligation and should not exceed the

cost of a reasonable fixed settlement.’”

6 Under different circumstances, namely those in which no settlement agreement is

reached between the parties and, instead, damages are determined during a trial, the

parties agree that “a judgment for damages after a trial against the United States under

the FTCA, or for breach of contract under the Tucker Act, cannot be structured unilaterally

as a series of future payments.” (emphasis in original).

16

governing how judgments and settlements must be paid, cannot be expanded by courts

or Executive branch officers and employees.” While the settlement is final and conclusive

as to the tort claims arising out of the alleged medical malpractice, defendant argues

plaintiffs seek to enforce the terms of the settlement agreement contract entered into with

the government, which fall outside “the final and conclusive” language. The argument that

the terms and conditions “cannot be expanded by courts or Executive branch officers and

employees” is not dispositive because here, this court is not “expanding” the terms and

conditions, but interpreting the contract as a matter of law and enforcing the settlement

agreement, contract terms.

Thus, the United States is obligated to meet the terms of the settlement agreement

it entered into under the original December 16, 1985 settlement agreement, as amended

on May 7, 2002, to ensure future payments are made for the natural life of Christina

Stathis. The government breached the agreement when plaintiffs did not receive

$90,000.00 in 2014 and indicated that plaintiffs will continue not to receive $90,000.00

annually thereafter. Plaintiffs, however, should not be entitled to double recovery. With

this understanding, the parties are to determine whether plaintiff is entitled to, or is

currently receiving, any funds from the $100 million ELNY Hardship Fund, referenced in

the May 18, 2012 letter from the New York Liquidation Bureau, and jointly submit the

appropriate damages amount to the court, so that the court can enter judgment in the

case.

CONCLUSION

For the foregoing reasons, plaintiffs’ motion for partial summary judgment on the

issue of contract liability is GRANTED and defendant’s cross-motion for partial summary

judgment is DENIED.

IT IS SO ORDERED.

s/Marian Blank Horn

MARIAN BLANK HORN

Judge

17