Cuesta La Honda Guild, a California Corporation v. United States

Cuesta La Honda Guild (“the Guild”) is a nonprofit homeowners association that provides water to its members in a rural area of San Mateo County. The Guild asked the Soil Conservation Service of the United States Department of Agriculture (“SCS”) for aid in building a water storage dam and reservoir. The SCS surveyed possible sites, performed foundation analyses, and prepared a topographic survey. Based upon its investigation, the SCS recommended a site for the dam and reservoir. In addition, SCS made a design for the dam and reservoir and prepared construction plans and specifications.

The reservoir was built and filled, but the dam failed. SCS’s study concluded that the failure resulted from deficiencies in its underlying investigation and its resulting design plans and specifications. The reservoir is a complete loss and must be restored at considerable expense.

The Guild sued the United States which moved to dismiss on the ground that the misrepresentation exception of 28 U.S.C. § 2680 (h) barred the claim. The district court granted summary judgment for the United States on the basis of the misrepresentation exception. This appeal followed. The only issue is whether the…