The Administrative Procedure Act (APA) waives the government’s sovereign immunity for suits against federal agencies that seek "relief other than money damages." 5 U.S.C. § 702. The respondent in this case, a subcontractor on a government construction project at an Army depot, sought an equitable lien against contract funds held by the Department of the Army and the Small Business Administration, which had already been distributed to the prime contractor, after the prime contractor on the project failed to pay the respondent in full. The district court granted the Army’s motion for summary judgment, finding that it did not have jurisdiction over the respondents’s claim because the APA did not constitute a waiver of sovereign immunity in this case.
The Ninth Circuit reversed the district court, holding that sovereign immunity did not bar the respondent’s equitable lien claim against the Army. The district court had jurisdiction over the respondent’s claim because it sought the very thing to which the respondent was entitled under the contract, a form of specific relief, not compensatory damages for any consequential losses suffered beyond the contract price. Applying the Supreme Court’s holding in Bowen v. Massachusetts, 487 U.S. 879 (1988), the Ninth Circuit held that the APA’s waiver of immunity applied because a party does not need to seek specific relief derived from a statute in order to obtain federal jurisdiction under the APA. According to the Ninth Circuit, the respondent’s equitable lien claim was not barred under the APA simply because the respondent could not seek relief under the Miller Act, since the APA’s waiver of immunity is not limited to suits brought under another federal statute. Further, because the respondent’s equitable lien claim was not an action for money damages (since a subcontractor has equitable rights against the government when the subcontractor was not paid by the prime contractor), the claim was allowed by the APA’s waiver of immunity under 5 U.S.C. § 702. The fact that the Army had already paid out funds to the prime contractor before the respondent brought its claim was of no consequence to the court of appeals, since the Army had received notice that the respondent had not been fully paid before it paid the prime contractor.
The Supreme Court unanimously reversed on 1/20/99. It ruled that sovereign immunity bars creditors from enforcing liens on Government property. Any waiver of the government’s immunity must be clear, and courts will strictly construe such waivers if they are not.