U.S.C. § 255(c) (1982) provides explicitly that the government's lien on advance payments "shall be paramount to all other liens."
C. The SBA Is Not Liable For Any Breach of Regulatory or Statutory Duty
Koch contends that the SBA failed to abide by its regulations governing advance payments in not supervising properly the special bank account. 13 C.F.R. § 124.1-2 (1986). Koch maintains that the SBA is liable for its breach of fiduciary duty to Koch. ATC and Tidewater approach on a different tack, claiming that the SBA is liable to them under an "implied-in-law" contract pursuant to which the SBA must disgorge the monies it recovered through its offset, because the SBA's retention of such monies is inequitable, owing to the SBA's failure to apply strictly 13 C.F.R. § 124.1-2 (1986).
Although there are numerous cases holding that an agency cannot violate its own regulations where their underlying purpose is to protect personal liberties or interests, this is not such a case. See, e.g., United States v. Caceres, 440 U.S. 741, 755, 59 L. Ed. 2d 733, 99 S. Ct. 1465 (1979); Vitarelli v. Seaton, 359 U.S. 535, 545, 3 L. Ed. 2d 1012, 79 S. Ct. 968 (1959). An agency is not bound rigidly by its regulations where those regulations were not adopted to confer important procedural benefits upon individuals. American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 538-39, 25 L. Ed. 2d 547, 90 S. Ct. 1288 (1970). The advance payment statute and the regulations promulgated thereunder exist principally "to improve the ability of small business concerns to compete for Government awards without any increase in the cost to the Government." S. Rep. No. 2201, 85th Cong., 2d Sess. 3, reprinted in 1958 U.S. Code Cong. & Adm. News 4021, 4023; see also 41 U.S.C. § 255 (1982); 13 C.F.R. § 124.1-2 (1986). Conspicuously absent from the advance payment regulations and legislative history is any reference to the provision of payment guarantees to material men or suppliers. Id.
Accordingly, as a threshold matter, plaintiffs may not rely on the SBA's admittedly poor supervision of the special bank account to establish liability. Further, ATC's and Tidewater's attempt to establish an implied-in-law contract must fail. Such a claim requires a demonstration that (a) defendant was enriched, (b) at plaintiffs' expense, and (c) that defendant retained the benefit under inequitable circumstances. Chase Manhattan Bank v. Banque Intra, S.A., 274 F. Supp. 496, 499 (S.D.N.Y. 1967). Not only is the SBA shielded from this equitable claim by its sovereign capacity, supra at 13-16, but the SBA was not enriched unjustly at plaintiffs' expense. See United States v. Neidorf, 522 F.2d 916, 919 n.5 (9th Cir. 1975), cert. denied, 423 U.S. 1087, 47 L. Ed. 2d 97, 96 S. Ct. 878 (1976) (A claim for an implied-in-law remedy is, in essence, a claim for unjust enrichment.). Here, the SBA acted pursuant to proper authority to recover only the funds owed by Tri-Par to the SBA under the advance payment agreement. 41 U.S.C. § 255(c) (1982).
D. Koch Is Not a Third-Party Beneficiary
A claimant who seeks recovery as an alleged third-party beneficiary of a government contract must prove that the government's promises were made for the direct, specific benefit of the claimant. See, e.g., Ables v. United States, 2 Cl. Ct. 494, 500 (1983), aff'd, 732 F.2d 166 (Fed. Cir. 1984). Koch has submitted no evidence to indicate, even remotely, that the SBA extended the advance payment loan to Tri-Par for Koch's direct, specific benefit. See Celotex Corp. v. Catrett, 106 S. Ct. at 2553 (A nonmoving party to a summary judgment motion is required to "designate specific facts showing that there is genuine issue for trial."); see also H.F. Allen Orchards v. United States, 4 Cl. Ct. 601, 607 (1984) (Benefitting from the performance of a contract, by itself, does not make one a third-party beneficiary of the contract.).
Plaintiffs' attempt to hold the SBA liable for the losses they suffered in their dealings with Tri-Par is legally insufficient. Nevertheless, the facts indicate that the SBA's performance in this affair was less than satisfactory. See ATC/Tidewater's Exhibits 9, 18; Defendant's Exhibit 2. As one court has written, the SBA ". . . perhaps has an obligation to use due care to avoid causing harm to the interests of others, and at least as a matter of common courtesy and a desire to retain the confidence of the public in the integrity of the agency. . . ." Security Bank & Trust Co. v. United States, 2 Cl. Ct. 646, 650 (1983), aff'd, 731 F.2d 861 (Fed. Cir. 1984), cert. denied, 469 U.S. 1107, 105 S. Ct. 781, 83 L. Ed. 2d 776 (1985).
The aims and goals of the section 8(a) program are laudatory. The SBA must nurture carefully the confidence of those private parties that deal with section 8(a) contractors, if the section 8(a) program is to succeed ultimately in expanding the private enterprise system and strengthening the overall economy of the Nation. See 15 U.S.C. § 631 (1982). Trust cannot be appropriated or loaned; it can only be earned. An order is attached.
Upon consideration of defendant John C. Sanders, Administrator, Small Business Administration's motion for summary judgment; plaintiff Koch Fuels, Inc.'s ("Koch") opposition thereto and cross-motion; plaintiffs ATC Petroleum, Inc. ("ATC") and Tidewater Fuel, Inc.'s ("Tidewater") opposition to defendant's motion for summary judgment; defendant's replies and opposition to plaintiff Koch's cross-motion; plaintiff Koch's reply; plaintiff ATC's and Tidewater's additional reply; exhibits and affidavits; the entire record herein; and for the reasons set forth in the accompanying opinion, it is by the Court this 17th day of March 1987,
ORDERED that Koch's cross-motion for summary judgment is denied; it is further
ORDERED that defendant's motion for summary judgment is granted as to both cases; and it is further
ORDERED that these cases are dismissed.