Crown Coat Front Co., Inc. v. United States

ANDERSON, Circuit Judge, with whom Judges KAUFMAN, HAYS, and FEINBERG concur

(dissenting):

I dissent. I do, however, agree with the majority that the period of limitations began to run on the date of the alleged breach of the contract. The claim for breach accrued at the latest on December 14, 1956, the date of the final delivery, which was more than six years prior to the commencement of this action. The Supreme Court decided in McMahon v. United States, 342 U.S. 25 , 72 S.Ct. 17 , 96 L.Ed. 26 (1951) that a seaman’s claim for injuries accrued at the date of the injury, and not at the date when his claim was rejected by administrative officers. 1 A similar result has been reached in our own circuit in States Marine Corporation of Delaware v. United States, 283 F.2d 776, 778 (2d Cir. 1960), and more recently by the Third Circuit in Northern Metal Co. v. United States, 350 F.2d 833 (3d Cir. 1965).

I am of the opinion, however, that the decision below should be reversed because the limitations period was tolled during the pendency of the administrative proceedings required by the disputes clause.

As the Supreme Court stated in Burnett v. New York Cent. R. Co., 380 U.S. 424, at 426 , 85 S.Ct. 1050, at 1053 , 13 L.Ed.2d 941 (1965),

“The basic question to be answered in determining whether, under a given set of facts, a statute of limitations is to be tolled, is one ‘of legislative intent whether the right shall be enforceable * * * after the prescribed time.’ ”

The Court went on to say at 427, 85 S.Ct. at 1054 ,

“In order to determine congressional intent, we must examine the purposes and policies underlying the limitation provision, the Act itself, and the remedial scheme developed for the enforcement of the rights given by the Act.”

The statutes of limitations are statutes of repose, designed to put an end to litigation.

“The primary consideration underlying such legislation is undoubtedly one of fairness to the defendant. There comes a time when he ought to be secure in his reasonable expectation that the slate has been wiped clean of *415 ancient obligations, and he ought not to be called on to resist a claim when ‘evidence has been lost, memories have faded, and witnesses have disappeared.’” Note, 63 Harv.L.Rev. 1177, at 1185 (1950).

See Order of Railroad Telegraphers v. Railway Express Agency, Inc., 321 U.S. 342, at 348-349 , 64 S.Ct. 582, at 586 , 88 L.Ed. 788 (1944).

“This policy of repose, designed to protect defendants, is frequently outweighed, however, where the interests of justice require vindication of the plaintiff’s rights.”

Burnett v. New York Cent. R. Co., supra, 380 U.S. at 428 , 85 S.Ct. at 1055 . Thus courts have engrafted numerous exceptions upon statutory periods of limitations. See, e. g., Urie v. Thompson, 337 U.S. 163 , 69 S.Ct. 1018 , 93 L.Ed. 1282 (1949); Bailey v. Glover, 88 U.S. (21 Wall.) 342 , 22 L.Ed. 636 (1874). The otherwise mechanical results, to which the unbated application of the limitations periods would lead, have thus been mitigated by familiar principles such as the one that a period of limitations is tolled until fraud is discovered. Bailey v. Glover, supra. Similarly it is accepted that,

“Where the plaintiff is prevented from finding timely suit by force of law, it is manifestly unjust to penalize him by barring the suit.” 63 Harv.L.Rev. at 1233.

And in Urie v. Thompson, supra, the Supreme Court recognized that a claim for an injury caused by a slow and continuing process was not barred if brought within three years of discovery of the ailment. Finally, in other instances it is recognized that the principles of estoppel may prevent a defendant from raising the defense of the statute of limitations, “when his representations or conduct have induced the plaintiff to forbear from prosecuting his known cause of action, and the limitations period has expired while the plaintiff continues to forbear.” 63 Harv.L.Rev. at 1222. The application of these principles should not depend upon whether the statute of limitations involved is one which may be characterized as “substantive” or “procedural.” Nor does the fact that a newly created right of action sprang from a waiver of sovereign immunity render the statute of limitations impervious to the application of those same mitigating considerations. In every case inquiry should be directed to the basic question of “legislative intent.” Burnett v. New York Cent. R. Co., supra. By making the administrative proceedings a mandatory prerequisite to the seeking of relief in such cases from the courts, Congress did not intend that the statute of limitations would run during the pendency of those administrative hearings and deliberations.

Looking to the scheme of the Tucker Act, 28 U.S.C. § 1346 (a) (2) (1964 ed.), and the liberal purpose which it evinces, to permit suits based upon contract claims to be brought against the Government, it would be anomalous to hold that the Government, through its power to make regulations, could require the inclusion in all of its thousands of procurement contracts of a mandatory provision that claims must first be processed through its administrative channels, and, by proceedings long drawn out, effectively defeat the rights of claimants to present their claims to a court of law. There is, of course, no doubt that the appellant was-, required first to proceed with, and exhaust, its administrative remedies before it could sue under the Tucker Act. See, e. g., United States v. Joseph A. Holpuch Co., 328 U.S. 234 , 66 S.Ct. 1000 , 90 L.Ed. 1192 (1946); and Northern Metal Co. v. United States, supra, 350 F.2d at 839 , which says,

“Since the Government through its contracting officer and the Armed Services Board of Contract Appeals 1 , not only was aware of the claim but 1 was engaged in deciding its merits, it would be harsh and out of harmony-with the purpose and intention of Congress to hold that the statutory time ran during the pendency of the administrative proceedings.”

*416 In this kind of case many of the factors which usually provide the basis for the rationale of the limitations periods are absent. By bringing its claim to the contracting officer within six years of its accrual, the appellant effectively gave the Government all the notice to which it was entitled. The administrative proceedings which were held had the effect of recording and preserving all of the relevant evidence. There is, therefore, none of the dangers against which the time bars are designed to protect. The Government is not being called upon to defend a claim after “evidence has been lost, memories have faded, and the witnesses have disappeared.” Order of Railroad Telegraphers v. Railway Express Agency, Inc., supra, 321 U.S. at 349 , 64 S.Ct. at 586 . Indeed, prejudice will result only if the suit is not permitted, in the event of which the party to suffer will be the plaintiff. It is my opinion that States Marine Corporation of Delaware v. United States, 283 F.2d 776 (2d Cir. 1960), which in cases of this kind operates harshly and unjustly, should be overruled.

I do not believe that the contractor’s ability to bring a protective suit is a satisfactory solution to the problem. Such a procedure would inevitably lead to the defeat of many legitimate claims in the cases of claimants who are unaware of the need for bringing such protective actions. Furthermore, it would have the unfortunate effect of increasing the burden of the district courts by causing still more crowding of already crowded dockets with lawsuits which will languish for years during the pendency of administrative proceedings, and which in all probability will never come up for trial. Therefore, as a matter of sound judicial administration the requirement that a protective suit be commenced within the period of limitations has little to commend it.

The statutory period of limitations ( 28 U.S.C. § 2401 (a) (1964 ed.)), which is applicable to the Tucker Act, should be held to be tolled during the pendency of the administrative proceedings required by the “disputes” clause. 2 This does not mean that a contractor may indefinitely put off the time of suit. “On the contrary, the time would run during the contractor’s delay in presenting the dispute and would be tolled only during its pend-ency before the contracting officer and the Armed Services Board of Contract Appeals, a period which is in the control of the Government’s employees and not of the contractor.” Northern Metal Co. v. United States, supra, 350 F.2d at 839 . Because the appellant commenced its administrative petition within the six year period and because its suit, if allowance be made for a tolling of the statute during the administrative proceedings, was brought within the statutory period, the present action was timely brought. “ * * * [Pjlaintiff has not slept on his rights but, rather, has been prevented from asserting them.” Burnett v. New York Cent. R. Co., supra, 380 U.S. at 429 , 85 S.Ct. at 1055 .

. In McMahon the Supreme Court left open the question of whether the statutory period there in question had been tolled, since a decision on that point would not have affected the result. 342 U.S. at 28 , 72 S.Ct. at 19 .

. Cf. Carnation Co. v. Pacific Westbound Conference, 3S3 U.S. 213, S6 S.Ct. 781, 15 L.Ed.2d 709, 851 (1966), where, in another context, the Supreme Court, in a dictum stating that it wras error to dismiss an action which the Court of Appeals had decided should have been presented first to an administrative tribunal, noted that:

“Such claims are subject to the Statute of Limitations and are likely to be barred by the time that the * * * [administrative agency] acts. Therefore, we believe that the Court of Appeals should have stayed the action instead of dismissing it.” 383 U.S. at 223 , 86 S.Ct. at 787 .

While the subject matter in Carnation is certainly different from the one which is now before our court, nevertheless the same considerations apply and dictate that the Statute of Limitations should be tolled during the pendency of the administrative proceedings before the ASBCA.