Blue Fox Inc. v. Small Business Administration

Blue Fox appeals from a summary judgment in favor of the Small Business Administration and the Department of the Army. *1359 Blue Fox was a subcontractor which worked on a construction project at an Army Depot. After the prime contractor failed to pay Blue Fox in full, Blue Fox sought an equitable lien against funds held by the Army and Small Business Administration which has since been distributed to the prime contractor. Contrary to the district court, we hold that the Administrative Procedure Act permits Blue Fox’s equitable lien claim against the Army because an action for specific performance for the payment of money is not an action for money damages. We affirm the district court’s decision that a lien cannot be enforced against the Small Business Administration because that agency never possessed nor controlled the contract fund.

I. FACTUAL BACKGROUND

Section 8(a) of the Small Business Act, 15 U.S.C. § 637 (a), established a business development program for firms deemed to be socially and economically disadvantaged. The purpose of the 8(a) program is to help small businesses owned and controlled by socially and economically disadvantaged individuals and economically…

concurring in part and dissenting in part:

Never before has a court held that a subcontractor may sue an agency of the United States, which has not agreed to be sued, for contract monies that the prime contractor should have paid to the subcontractor but *1364 didn’t. It has been the law for decades that subcontractors cannot enforce a lien on government property unless the government has waived sovereign immunity. Yet, the majority now says that a district court has jurisdiction to consider a subcontractor’s claim for an equitable lien under the Administrative Procedure Act, because it is not an action for money damages but “an action for specific performance for the payment of money.” Maj. op. at 1358. However, no matter how you slice Blue Fox’s claim, it seeks funds from the treasury to compensate for the Army’s failure to require Verdan to post a bond. Since the law is well settled that this may not be done unless the contracting agency has agreed to be sued, I dissent.

Congress chose to protect those who work on government property (who would otherwise have materialmen’s and workmen’s liens for work on non-government property) primarily through the Miller Act, by requiring…