In its September 4, 2013 opinion in Ecco Plains v. United States, the US Court of Appeals for the Tenth Circuit looked at the gravamen of certain claims, rather than how they were labeled, to determine whether the claims qualified for an exception to the Federal Tort Claims Act (FTCA).

High Plains LLC and Doug English formed a limited liability company (LLC) to raise cattle for sale, each receiving separate financing to support capital contributions to the venture. They agreed that High Plains would receive the return of its capital contribution before English would receive any of his capital contribution. The bank that loaned the money to finance both contributions subsequently became insolvent and the Federal Deposit Insurance Corporation (FDIC) was appointed receiver. The FDIC, however, acted in contravention to the members' agreement and applied all of the proceeds from the sale of cattle belonging to the LLC to English's loan instead of to High Plains, and then sold the loan to third parties.

High Plains brought conversion and negligence claims against the US under the FTCA for wrongful disbursement of proceeds. The FTCA provides that the US shall be liable, to the same extent as a private party, for injury or loss of property caused by the negligent or wrongful act or omission of any government employee while acting within the scope of employment. However, there is an exception to this waiver of immunity for, among other things, interference with contract rights. If a claim falls within the exception, it must be dismissed for lack of jurisdiction.

In the instant case, although conversion and negligence technically fall within the FTCA's scope, the government nonetheless relied on the interference with contract exception arguing that the real nature of the complaint was that the FDIC interfered with the contractual rights of the LLC members. The Tenth Circuit agreed. The court held that despite the labels placed on the claims (conversion and negligence), the crux of the complaint was that the FDIC negligently paid out proceeds contrary to the parties' agreement, thereby interfering with their contract. The Tenth Circuit also looked at Colorado case law to conclude that the complaint did satisfy the elements of an interference with contract claim. The district court therefore lacked jurisdiction over the conversion and negligence claims because they fell within the interference with contract exception to the FTCA and the government was immune from suit. The Tenth Circuit reversed the district court's dismissal for failure to state a claim and remanded the case to the district court to dismiss for lack of jurisdiction.

When invoking the FTCA to sue the government, counsel should be mindful that the Tenth Circuit will look beyond the labels designated to a claim to determine whether or not it falls within the scope of the FTCA.