Teton Historic Aviation Foundation v. United States Department of Defense ( 2010 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
TETON HISTORIC AVIATION )
FOUNDATION, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 09-0669 (RWR)
)
UNITED STATES DEPARTMENT )
OF DEFENSE, et al., )
)
Defendants. )
______________________________ )
MEMORANDUM OPINION AND ORDER
Plaintiffs Teton Historic Aviation Foundation and Teton
Avjet LLC (collectively “Teton”) brought this action against the
United States and the U.S. Department of Defense (“DOD”) seeking
injunctive and declaratory relief under the Administrative
Procedure Act, 5 U.S.C. § 706(2)(A), alleging that the defendants
have deprived them of airplane parts due to them under a contract
that they entered into with Government Liquidation, a non-
Governmental agency that sells surplus materials on behalf of the
United States. Defendants move to dismiss under Federal Rule of
Civil Procedure 12(b)(1), arguing that the United States Court of
Federal Claims has exclusive jurisdiction over this case because
it is a contract action against the United States. Because no
party asserts that plaintiffs are in privity of contract with the
government, the defendants’ motion to dismiss will be denied.
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BACKGROUND
The United States sells to private parties military aircraft
parts that it determines to be surplus or outdated. (Second Am.
Compl. (“Compl”) ¶¶ 18-19.) Materials which are not sold are
destroyed by the Aerospace Maintenance and Regeneration Group
(“AMARG”) operating under the auspices of the United States Air
Force. (Id. ¶ 17.) The Defense Reutilization and Marketing
Service (“DRMS”) handles the sales, which are overseen by DOD.
(Id. ¶ 16.) In order to facilitate sales, DRMS contracts with
Government Liquidation to solicit bids and arrange purchases.
(Id. ¶ 20.)
In 2008, Government Liquidation solicited bids for parts
from five surplus United States Navy and Marine Aircraft. (Id.
¶ 25.) Teton bid on the parts in hopes of either obtaining an
operable aircraft or, alternatively, acquiring parts to restore
aircraft of its own. (Id. ¶¶ 28-29.) Teton made the highest
bid, submitted a list of over 5,000 parts that it hoped to
receive, and subsequently paid for the parts. (Id. ¶¶ 36-41.)
Government Liquidation approved the release of 189 part numbers
for a total of 1,890 parts and subsequently informed Teton that
it was still awaiting AMARG’s final approval of the requested
parts. (Id. ¶¶ 43, 46.)
Several months later, Government Liquidation informed Teton
that AMARG would approve only 29 part numbers and that Teton
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would have to pay AMARG an hourly rate of $97.25 for the removal
of the parts. (Id. ¶¶ 47, 49.) Government Liquidation then
informed Teton that it would have one business day to decide
whether it wished to proceed with the contract. (Id. ¶ 51.) In
the following days, Teton learned that the Government had
destroyed all five of the aircraft covered by the contract. (Id.
¶ 59.) Government Liquidation notified Teton that it would
cancel the contract and repay any money Teton had expended under
the agreement. (Id. ¶ 60.)
Under the belief that DOD had acted in concert with
Government Liquidation to destroy the planes in question, Teton
brought suit alleging violations of the Administrative Procedure
Act, 5 U.S.C. § 706(2)(A), and seeking in part to require the
defendants to preserve certain aircraft as replacements for those
destroyed. (Id. ¶¶ 70-71, pp. 15-17.) Defendants have moved to
dismiss for lack of subject matter jurisdiction contending that
Teton’s claims are contractual in nature and, therefore, that the
Court of Federal Claims has exclusive jurisdiction over this
action.1
1
The defendants also assert that courts should “defer to
the exercise of discretion by military agencies in cases such as
these.” (Defs.’ Mem. of P. & A. in Supp. of Mot. to Dismiss
(“Defs.’ Mem.”) at 3.) However, the defendants’ discussion of
this issue is spare and fails to pinpoint the issue as to which
any deference is due. In any event, as the plaintiffs note,
judicial deference plays no role in analyzing a motion to dismiss
for lack of subject matter jurisdiction. See, e.g., Citizens
Awareness Network, Inc. v. United States, 391 F.3d 338, 345-48
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DISCUSSION
In reviewing a motion to dismiss for lack of subject matter
jurisdiction, a court “accepts as true all of the factual
allegations contained in the complaint . . . and may also
consider ‘undisputed facts evidenced in the record.’” Peter B.
v. CIA, 620 F. Supp. 2d 58, 67 (D.D.C. 2009) (quoting Coal. for
Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir.
2003)) (internal citation omitted). The plaintiff bears the
burden of establishing that the court has jurisdiction over a
claim. Public Warehousing Co. K.S.C. v. Def. Supply Ctr. Phila.,
489 F. Supp. 2d 30, 35 (D.D.C. 2007) (citing U.S. Ecology, Inc.
v. U.S. Dep’t of Interior, 231 F.3d 20, 24 (D.C. Cir. 2000)).
“[P]laintiff’s factual allegations in the complaint . . . will
bear closer scrutiny in resolving a 12(b)(1) motion than in
resolving a 12(b)(6) motion for failure to state a claim.” Id.(internal quotation marks omitted) (alteration in original).
“[T]he United States may not be sued without its consent[,]”
United States v. Mitchell, 463 U.S. 206, 212 (1983), and
“‘[j]urisdiction over any suit against the Government requires a
clear statement from the United States waiving sovereign immunity
. . . together with a claim falling within the terms of the
(1st Cir. 2004) (addressing judicial deference under the APA only
after establishing that subject matter jurisdiction exists).
Thus, the defendants’ argument on this issue merits no
discussion.
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waiver.’” Cartwright Int’l Van Lines, Inc. v. Doan, 525 F. Supp.
2d 187, 194 (D.D.C. 2007) (quoting United States v. White
Mountain Apache Tribe, 537 U.S. 465, 472 (2003)).
The APA contains a limited waiver of sovereign immunity.
Under the APA,
A person suffering legal wrong because of agency action
. . . is entitled to judicial review thereof. An
action in a court of the United States seeking relief
other than money damages and stating a claim that an
agency or an officer or employee thereof acted or
failed to act in an official capacity . . . shall not
be dismissed nor relief therein denied on the ground
that it is against the United States . . . .
5 U.S.C. § 702. In other words, the APA gives an individual who
has suffered a legal wrong because of agency action the right to
seek judicial review in federal court. See id. Judicial review
of a final agency action is limited to circumstances where there
is no other adequate remedy and where claims seeking relief are
not expressly or impliedly forbidden by another statute. Public
Warehousing Co. K.S.C., 489 F. Supp. 2d at 36; see 5 U.S.C.
§ 704.
The Tucker Act is a statute that forbids certain claims from
being brought in district courts. Albrecht v. Comm. on Employee
Benefits of Fed. Reserve Employee Benefits Sys., 357 F.3d 62, 67
(D.C. Cir. 2004) (citing 28 U.S.C. § 1491 (2000)). It vests in
the Court of Federal Claims original jurisdiction over civil
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actions against the United States founded upon “any express or
implied contract with the United States . . . .” 28 U.S.C.
§ 1491(a)(1).
[T]he Tucker Act impliedly forbids – in APA terms – not
only district court awards of money damages, which the
Claims Court may grant, but also injunctive relief,
which the Claims Court may not. . . . [T]he APA does
not waive sovereign immunity for contract actions
brought against the government in a federal district
court.
Albrecht, 357 F.3d at 68 (internal quotation marks and citation
omitted).
However, “[t]o maintain a cause of action pursuant to the
Tucker Act that is based on a contract, the contract must be
between the plaintiff and the government[.]” Cienega Gardens v.
United States, 194 F.3d 1231, 1239 (Fed. Cir. 1998) (internal
quotation marks omitted) (first alteration in original). “In
other words, there must be privity of contract between the
plaintiff and the United States.” Id. Exceptions to this rule
have included, for example, suits “brought against the government
in the Court of Federal Claims by an intended third-party
beneficiary, . . . by a subcontractor by means of a pass-through
suit when the prime contractor is liable to the subcontractor for
the subcontractor’s damages, . . . and by a Miller Act surety for
funds improperly disbursed to a prime contractor[.]” First
Hartford Corp. Pension Plan & Trust v. United States, 194 F.3d
1279, 1289 (Fed. Cir. 1999) (internal citations omitted).
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“[T]hird party beneficiaries of a Government contract are
generally assumed to be merely incidental [not intended]
beneficiaries, and may not enforce the contract absent clear
intent to the contrary.” Sealift Bulkers, Inc. v. Rep. of
Armenia, Civil Action No. 95-1293 (PLF), 1996 WL 901091, at * 4
(D.D.C. Nov. 22, 1996) (internal quotations marks omitted)
(second alteration in original).
Neither side here avers that it entered into an express or
implied contract with the other. (See Pls.’ Opp’n to Defs.’ Mot.
to Dismiss at 3 (“Plaintiffs never . . . entered into a contract
with any government entity[.]”); Defs.’ Mem. at 2 n.2 (“Defendant
does not admit that it entered into a contract with
Plaintiffs.”).) Rather, Teton seeks relief declaring that the
defendants’ decision to withhold the aircraft parts from Teton
was “arbitrary, capricious, an abuse of discretion and not in
accordance with law” and enjoining DOD from destroying or
endangering any replacements of the aircraft parts sought under
the contract. (Compl. at 15-17.) The defendants, though, argue
that the Court of Federal Claims must hear this case because,
despite the relief sought, this suit is based on a contractual
agreement between Teton and Government Liquidation. (Defs.’ Mem.
at 4-6.) However, the defendants have failed to establish that
plaintiffs’ contract with Government Liquidation of itself
satisfies or vitiates the requirement that a party bringing suit
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in the Court of Federal Claims based on contract be in privity of
contract with the government. See, e.g., First Hartford Corp.
Pension Plan & Trust, 194 F.3d at 1289. Moreover, the defendants
do not invoke any exception to the general rule of privity that
would place this case within the exclusive jurisdiction of the
Court of Federal Claims. Therefore, the defendants’ motion to
dismiss will be denied without prejudice.2
CONCLUSION AND ORDER
Because the opposing parties do not allege that they are in
privity of contract with each other and the defendants have
failed to invoke or substantiate one of the exceptions to the
privity of contract requirement which otherwise might place this
2
The plaintiffs also have filed a motion for leave to file
a third amended complaint, which the defendants oppose. Under
Rule 15(a), leave to amend shall be freely given “when justice so
requires.” Fed. R. Civ. P. 15(a)(2). Courts may “deny leave to
amend if the proposed [complaint] would not survive a motion to
dismiss . . . , merely restates the same facts as the original
complaint in different terms, reasserts a claim on which the
court previously ruled or fails to state a legal theory.” Morgan
v. F.A.A., 657 F. Supp. 2d 146, 154 (D.D.C. 2009). The
plaintiffs’ proposed complaint does not alter the nature of
plaintiffs’ Second Amended Complaint in any way that would affect
the disposition of defendants’ motion to dismiss, and the
complaint does include additional facts not previously asserted
in the First Amended Complaint. Cf. id. (denying motion to amend
the complaint because the amended complaint would be subject to
dismissal for the same reasons the original complaint was
dismissed). The plaintiffs’ motion for leave to file a third
amended complaint, then, will be granted.
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case in the exclusive jurisdiction of the Court of Federal
Claims, the defendants’ motion to dismiss will be denied without
prejudice. Accordingly, it is hereby
ORDERED that the defendants’ motion [22] to dismiss be, and
hereby, is DENIED without prejudice. It is further
ORDERED that the plaintiffs’ motion [32] for leave to file a
Third Amended Complaint be, and hereby, is GRANTED. The Clerk is
directed to docket as the Third Amended Complaint the exhibit so
named attached to the plaintiffs’ motion.
SIGNED this 26th day of February, 2010.
/s/
RICHARD W. ROBERTS
United States District Judge