Lea v. United States , 592 F. App'x 930 ( 2014 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
COREY LEA,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
______________________
2014-5100
______________________
Appeal from the United States Court of Federal
Claims in No. 1:14-cv-00044-FMA, Judge Francis M.
Allegra.
______________________
Decided: November 7, 2014
______________________
COREY LEA, of Portland, Tennessee, pro se.
SHARI A. ROSE, Trial Attorney, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, of Washington, DC, for defendant-appellee. With
her on the brief were STUART F. DELERY, Assistant Attor-
ney General, ROBERT E. KIRSCHMAN, JR., Director, and
MARTIN F. HOCKEY, JR., Assistant Director.
______________________
2 LEA v. US
Before REYNA, CLEVENGER, and WALLACH, Circuit Judges.
PER CURIAM.
Pro se appellant Corey Lea brought claims against the
United States, Farmers National Bank, and various
individual defendants for fraud, breach of contract, and
tortious interference arising from the foreclosure of his
farm. He now appeals from a judgment of the Court of
Federal Claims dismissing his breach of contract claim
against the United States for failure to state a claim and
his other claims for lack of jurisdiction. Lea v. United
States, No. 14-44C, 2014 WL 2101367 (Fed. Cl. May 19,
2014).
We vacate the dismissal of Plaintiff’s contract claim
against the United States and remand for the application
of the correct law with regard to whether he was a third-
party beneficiary. As to all other claims, we affirm dis-
missal.
BACKGROUND
The Farm Service Agency of the United States De-
partment of Agriculture (USDA) offers a loan guarantee
program through which it helps farmers obtain funds for
use in purchasing and operating farms. Under this pro-
gram, private banks offer loans to individuals and the
Farm Service Agency guarantees a portion of each loan. 7
C.F.R. § 762 et seq.
Plaintiff Corey Lea is a farmer in Kentucky. In 2007,
acting as the since-dissolved corporation Corey Lea, Inc.,
he took out a loan from Farmers National Bank in order
to purchase and operate a farm. The Farm Service Agency
guaranteed this loan, as shown by a loan guarantee
agreement. Complaint at A1, Lea v. United States, No. 14-
44C (Fed. Cl. Jan. 17, 2014) (“Complaint”). As a result,
Farmers National Bank held a first mortgage on the
property, while the Farm Service Agency held a second
mortgage.
LEA v. US 3
Plaintiff secured a loan from Independence Bank, not
at issue here, which he used to refinance his outstanding
loans and construct a new house on the property. In
December 2007, he requested a loan subordination from
the USDA. It denied this request because its appraisal
valued his property at $18,035 less than the proposed
total debt. Mr. Lea then filed a complaint with the USDA
alleging that it had denied his loan because he is African
American. It appears the USDA received this complaint
on May 1, 2008. Id. at A6.
In February 2009, Farmers National Bank initiated
foreclosure on the farm property following Plaintiff’s
failure to make five months of payments. As of July 28,
2009, the Farm Service Agency Office of Adjudication was
processing Plaintiff’s discrimination complaint and,
accordingly, requested suspension of the foreclosure
action. Id. at A5. The record does not contain evidence of
the results of the complaint or whether the foreclosure
was suspended.
Farmers National Bank received a Judgment and Or-
der of Sale on October 5, 2009. Mr. Lea then filed multiple
suits in the United States District Court for the Western
District of Kentucky, seeking an injunction against the
farm’s foreclosure as well as damages for the USDA’s
alleged earlier discrimination. The district court dis-
missed these claims in favor of defendants on at least
three occasions. Lea v. United States Dep’t of Agric., No.
13-cv-00110-JHM (W.D. Ky. Mar. 7, 2014); Lea v. United
States Dep’t of Agric., No. 12-cv-00052-JHM (W.D. Ky.
July 11, 2013), aff’d, Nos. 13-5969, -6191 (6th Cir. June 4,
2014); Lea v. United States Dep’t of Agric., No. 10-cv-
4 LEA v. US
00029-JHM (W.D. Ky. Jan. 19, 2011), aff’d, No. 11-5969
(6th Cir. Aug. 7, 2013). 1
Mr. Lea filed a complaint in the Court of Federal
Claims on January 17, 2014. That court summarized his
allegations as being that “the USDA and Farmers Na-
tional Bank: (i) committed fraud and breaches of contract
related to Farmers National Bank’s foreclosure of his
property; (ii) conspired to commit the allegedly illegal act;
and (iii) tortiously interfered with Mr. Lea’s plans to set
up and operate a bio diesel plant on the property.” Lea at
*1. He sought as relief an injunction barring the sale or
encumbrance of the property, compensatory and punitive
damages, and “debt relief from the United States on the
subject property.” Id. (quoting Complaint at 8).
The court granted the government’s motion to dis-
miss, finding that it lacked subject matter jurisdiction as
to all but the claim against the United States for breach of
contract, and that the complaint failed to state a claim for
breach of contract. Id. at *2–4. On appeal, Plaintiff chal-
lenges the court’s dismissal of his fraud and contract
claims. 2
DISCUSSION
I
We first consider the Court of Federal Claims’ rulings
that it lacked subject matter jurisdiction over Plaintiff’s
claims against defendants other than the United States,
1 Plaintiff appealed the last-cited case to this court,
which transferred to the Sixth Circuit. Lea v. United
States Dep’t of Agric., No. 14-1283 (Fed. Cir. June 13,
2014).
2 Plaintiff also advances a Fifth Amendment takings
claim. Because this claim was not before the trial court, it
was waived and cannot now be raised on appeal.
LEA v. US 5
his requests for injunctive and declaratory relief, and his
claims for fraud and tortious interference with contract.
We affirm as to each.
This court reviews the Court of Federal Claims’ dis-
missal for lack of subject matter jurisdiction de novo.
Brandt v. United States, 710 F.3d 1369, 1373 (Fed. Cir.
2013). The plaintiff bears the burden of establishing
jurisdiction by a preponderance of the evidence. Id.
The Court of Federal Claims is a court of limited ju-
risdiction whose authority comes primarily from the
Tucker Act. LeBlanc v. United States, 50 F.3d 1025, 1028
(Fed. Cir. 1995). The Tucker Act grants that court “juris-
diction to render judgment upon any claim against the
United States founded either upon the Constitution, or
any Act of Congress or any regulation of an executive
department, or upon any express or implied contract with
the United States, or for liquidated or unliquidated dam-
ages in cases not sounding in tort.” 28 U.S.C. § 1491(a)
(2011). “The Supreme Court has interpreted this language
to mean that a plaintiff who seeks redress in the Court of
Federal Claims must present a claim for ‘actual, presently
due money damages from the United States.’” Terran v.
Sec’y of Health & Human Servs., 195 F.3d 1302, 1309
(Fed. Cir. 1999) (quoting United States v. King, 395 U.S.
1, 3 (1969)).
The Court of Federal Claims has jurisdiction only over
claims against the United States. United States v. Sher-
wood, 312 U.S. 584, 588 (1941). It may not hear claims
against private parties, id., or individual federal officials,
Brown v. United States, 105 F.3d 621, 624 (Fed. Cir.
1997). It therefore lacked jurisdiction over Plaintiff’s
claims against all defendants but the United States, and
those claims were properly dismissed.
Further, the Tucker Act enables the Court of Federal
Claims to grant equitable relief only under limited cir-
cumstances not applicable here. 28 U.S.C. § 1491(b)(2). To
6 LEA v. US
the extent Plaintiff’s complaint sought injunctive or
declaratory relief, the court lacked jurisdiction to grant
him those remedies, and dismissal of those claims was
also proper.
We next address Plaintiff’s tort claims. “The plain
language of the Tucker Act excludes from the Court of
Federal Claims jurisdiction claims sounding in tort.”
Rick’s Mushroom Serv., Inc. v. United States, 521 F.3d
1338, 1343 (Fed. Cir. 2008). Both fraud and tortious
interference with contract are torts. See Brown, 105 F.3d
at 623 (affirming dismissal of fraud claim for lack of
jurisdiction). The court below therefore correctly conclud-
ed that it lacked jurisdiction to hear Plaintiff’s tort claims,
including those for fraud and tortious interference with
contract.
The contract claim against the United States remains.
The Tucker Act grants the Court of Federal Claims juris-
diction over claims based upon “any express or implied
contract with the United States.” 28 U.S.C. § 1491(a)(1).
Because Plaintiff alleges an express contract with the
United States, his claim for breach of contract is within
the Court of Federal Claims’ subject matter jurisdiction.
Gould, Inc. v. United States, 67 F.3d 925, 929 (Fed. Cir.
1995) (finding complaint alleging express contract suffi-
cient to confer jurisdiction on the Court of Federal
Claims).
II
Having found subject matter jurisdiction over Plain-
tiff’s breach of contract claim against the United States,
the court below dismissed it for failure to state a claim. It
reached this conclusion because it found Plaintiff had not
shown he was either a party or a third-party beneficiary
to the only contract alleged. Lea at *3.
Although the court did not describe it in these terms,
this raises the jurisdictional question of Plaintiff’s stand-
LEA v. US 7
ing to bring his claim for breach of contract. To have
standing to sue the United States on a contract claim, a
plaintiff must be in privity with it. Sullivan v. United
States, 625 F.3d 1378, 1379–80 (Fed. Cir. 2010). This
means that the plaintiff must either be a party to the
contract or “stand[] in the shoes of a party within privity”
as a third-party beneficiary. Id. (quoting First Hartford
Corp. Pension Plan & Trust v. United States, 194 F.3d
1279, 1289 (Fed. Cir. 1999)).
As the court below found, the loan guarantee agree-
ment is the only contract alleged to be at issue here.
Although Plaintiff asserts he was a party to the loan
guarantee agreement, see Informal Brief of Appellant at
3, Lea v. United States, No. 2014-5100 (Fed. Cir. Aug. 25,
2014), this is unsubstantiated. The agreement shows
Farmers National Bank as lender, the Farm Service
Agency as guarantor, and Corey Lea, Inc. as borrower.
Complaint at A1. All of the obligations created by the
document in evidence are between the lender and guaran-
tor, consistent with the function of a loan guarantee
agreement in providing additional security for an existing
loan between lender and borrower. Id. Thus, Plaintiff has
not shown evidence of any contract with the United States
to which he is a party.
Plaintiff therefore lacks standing unless he was a
third-party beneficiary to the loan guarantee agreement.
The court below stated that a third party can enforce
claims as a beneficiary “only where a contract reflects the
intention among the parties to give the claimant a direct
right to compensation against the United States.” Lea at
*3. Because it found no evidence of such intent, “or any
other evidence” of intent to make Plaintiff a third-party
beneficiary, it dismissed for failure to state a claim. Id. at
*3–4.
The court below erred in failing to recognize that
Plaintiff need not prove the contracting parties’ intent to
8 LEA v. US
grant him a “direct right to compensation against the
United States” in order to be a third-party beneficiary,
and the government’s brief repeats its mistake. Id. at *3;
Defendant-Appellee’s Informal Brief & Appendix at 9, Lea
v. United States, No. 2014-5100 (Fed. Cir. Sept. 11, 2014)
(quoting lower court opinion and stating that it “applied
the correct law” in making this determination).
The language the court used comes from the second
prong of a two-prong test the Court of Federal Claims
announced in Baudier Marine Electronics v. United
States, 6 Cl. Ct. 246, 249 (1984). That court later found
Baudier’s second prong relevant only “in cases of general
government contracts benefitting the public at large.”
Schuerman v. United States, 30 Fed. Cl. 420, 430 (Fed. Cl.
1994). We adopted Schuerman’s conclusion in Montana v.
United States, 124 F.3d 1269, 1273 (Fed. Cir. 1997) (citing
id.) (“[T]he appropriate test for intended third-party
beneficiary status includes only the first prong of the
Baudier test . . . .”).
Following Montana, “[i]n order to prove third-party
beneficiary status, a party must demonstrate that the
contract not only reflects the express or implied intention
to benefit the party, but that it reflects an intention to
benefit the party directly.” Flexfab, L.L.C. v. United
States, 424 F.3d 1254, 1259 (Fed. Cir. 2005) (quoting
Glass v. United States, 258 F.3d 1349, 1354 (Fed. Cir.
2001)). Third-party beneficiary status is an “exceptional
privilege,” id., and the contracting parties’ intent to create
that status can generally be inferred if “the beneficiary
would be reasonable in relying on the promise as mani-
festing an intention to confer a right on him.” Id. (quoting
Montana, 124 F.3d at 1273).
Standing to sue on a contract is a jurisdictional ques-
tion, and Plaintiff contends that discovery on that point
would enable him to show that he has standing as an
intended third-party beneficiary to the loan guarantee
LEA v. US 9
agreement. See Appellant’s Reply Brief at 3, Lea v. United
States, No. 2014-5100 (Fed. Cir. Sept. 24, 2014) (“Discov-
ery will allow plaintiff to show that even the government
and the private bank recognized that Corey Lea, individ-
ual, had [a] vested interest in the contract . . . .”). As the
Court of Federal Claims has said, “‘when a motion to
dismiss challenges a jurisdictional fact alleged in a com-
plaint, a court may allow discovery in order to resolve the
factual dispute.’” Fairholme Funds Inc. v. United States,
114 Fed. Cl. 718, 720-21 (Fed. Cl. 2014); see also Oppen-
heimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n.13
(1978) (“[W]here issues arise as to jurisdiction or venue,
discovery is available to ascertain the facts bearing on
such issues.”).
It is not for us to decide whether any contested facts
going to Plaintiff’s standing as a third-party beneficiary
support granting discovery. We vacate and remand for the
trial court to determine the proper course of action under
the correct view of the law.
CONCLUSION
For the reasons stated above, we vacate and remand
the dismissal of Plaintiff’s contract claim against the
United States. We affirm the dismissal of all other claims
for lack of subject-matter jurisdiction.
AFFIRMED IN PART, VACATED IN PART, AND
REMANDED
COSTS
No costs.