Lea v. United States , 120 Fed. Cl. 440 ( 2015 )

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No. 14-1070C
FILED
(Filed: March 9, 2015) MAR - 9 2015
************************************* U.S. COURT OF
FEDERAL CLAIMS
COREY LEA, *
*
Plaintiff, * Motion to Dismiss; RCFC 12(b)(l); Motion
* to Stay Proceedings; Jurisdictional
v. * Discovery; Fifth Amendment Takings; Due
* Process; Unjust Enrichment; Conspiracy;
THE UNITED STATES, * Duplicative Claims in Two Pending Cases
*
Defendant. *
*************************************
Corey Lea, Portland, TN, pro se.
Michael A Rodriguez, United States Department of Justice, Washington, DC, for defendant.
OPINION AND ORDER
SWEENEY, Judge
Plaintiff Corey Lea, appearing pro se and seeking leave to proceed in forma pauperis,
contends that the United States, in its role as guarantor, is responsible for the damages he
sustained as a result of foreclosure proceedings. Defendant moved to dismiss plaintiffs
complaint for lack of jurisdiction, and in response, plaintiff moved to stay proceedings on
defendant's motion to allow for discovery on the issue of jurisdiction. Because discovery would
not reveal any evidence that would establish jurisdiction over plaintiffs noncontractual claims,
and because plaintiffs contractual claims are currently being heard by another judge of this
court, the court denies plaintiffs motion, grants defendant's motion, and dismisses plaintiffs
complaint. The court also grants plaintiffs application to proceed in forma pauperis.
I. BACKGROUND
In 2007, plaintiff obtained a loan from Farmers National Bank to purchase a farm in
Warren, Kentucky. 1 Plaintiffs loan was guaranteed by the Farm Service Agency, which is part
1
The court derives the factual and procedural history from the complaint in this case and
the following documents from, or related to, an earlier suit brought by plaintiff that remains
pending in this court: plaintiffs complaint, the court's ruling on defendant's motion to dismiss,
and the decision of the United States Court of Appeals for the Federal Circuit ("Federal Circuit")
of the United States Department of Agriculture ("USDA"). As a result of the loan and the loan
guarantee, Farmers National Bank held a first mortgage and the Farm Service Agency held a
second mortgage on plaintiffs property.
In December 2007, plaintiff secured a loan from Independence Bank to refinance his
existing loan and fund the construction of a new house on his property. However, the USDA
denied his request for a loan subordination because it appraised the value of plaintiffs property
at $18,035 less than the amount of debt that plaintiff would incur with the new loan. The
USDA's denial led plaintiff to file a complaint with the USDA alleging racial discrimination.
In February 2009, Farmers National Bank initiated foreclosure proceedings against
plaintiff due to plaintiffs failure to make payments on the loan guaranteed by the Farm Service
Agency. However, in June 2009, the USDA's Office of Civil Rights directed the Farm Service
Agency to suspend all foreclosure proceedings against plaintiff due to plaintiffs pending
discrimination complaint. Notwithstanding this directive, Farmers National Bank obtained a
foreclosure judgment against plaintiff in October 2009.
Plaintiff filed a number of lawsuits in the United States District Court for the Western
District of Kentucky challenging the foreclosure of his property, all of which were dismissed.
Then, in January 2014, plaintiff filed suit in the United States Court of Federal Claims ("Court of
Federal Claims"). In his complaint, plaintiff alleged that the foreclosure of his property was
improper, and set forth two claims for relief: breach of a contract to which he was a third-party
beneficiary (the loan guarantee executed by Farmers National Bank and the Farm Service
Agency) and tortious interference with his contracts to build a bio diesel plant on his property. In
his request for relief, plaintiff sought an injunction prohibiting the sale or encumbrance of his
foreclosed property, compensatory and punitive damages, attorney's fees, costs, and any other
legal or equitable relief to which he was entitled.
Defendant moved to dismiss plaintiffs January 2014 complaint pursuant to Rule 12(b) of
the Rules of the United States Court of Federal Claims ("RCFC"). In particular, defendant
sought the dismissal of all of plaintiffs noncontractual claims for lack of jurisdiction pursuant to
RCFC 12(b)(l), and the dismissal of plaintiffs breach-of-contract claim for failure to state a
claim upon which relief could be granted pursuant to RCFC l 2(b)(6). The trial judge granted
defendant's motion and dismissed plaintiffs complaint. On appeal, the Federal Circuit affirmed
the dismissal of all of plaintiffs noncontractual claims for lack of jurisdiction. However, it
vacated the dismissal of plaintiffs breach-of-contract claim, holding that the trial judge applied
an incorrect standard for determining whether plaintiff had standing to sue as a third-party
beneficiary of the loan guarantee. Thus, the Federal Circuit remanded the breach-of-contract
claim for further proceedings. These proceedings remain ongoing.
on plaintiffs appeal of the court's ruling. See generally Lea v. United States, No. 14-44C, 2014
WL 2101367 (Fed. Cl. May 19, 2014), affd in part, vacated in part, No. 2014-5100, 2014 WL
5786662 (Fed. Cir. Nov. 7, 2014) (unpublished decision).
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On November 3, 2014, four days before the Federal Circuit issued its ruling, plaintiff
initiated the instant suit by filing a complaint and an application to proceed in forma pauperis.
Plaintiff filed an amended complaint the following day, and the court permitted plaintiff to file a
second amended complaint on December 1, 2014. In his second amended complaint, plaintiff
asserts the following noncontractual claims for relief: regulatory and "contractual" Fifth
Amendment takings, violations of his right to due process, unjust enrichment, and conspiracy.
Plaintiff also asserts several breach-of-contract claims, including breach of a contract for which
he is a third-party beneficiary, breach of an implied-in-fact contract, breach of an express
contract, and breach of the covenant of good faith and fair dealing. In his prayer for relief,
plaintiff requests $3,000,000 in damages.
Defendant moved to dismiss plaintiffs second amended complaint for lack of
jurisdiction. In response, plaintiff moved to stay proceedings on defendant's motion to allow for
jurisdictional discovery. The parties have fully briefed the latter motion. The court finds that
further briefing or oral argument are unnecessary.
II. DISCUSSION
A. Jurisdiction
Both motions filed by the parties concern the court's jurisdiction. Whether the court has
jurisdiction to decide the merits of a case is a threshold matter. See Steel Co. v. Citizens for a
Better Env't, 523 U.S. 83, 94-95 (1998). "Without jurisdiction the court cannot proceed at all in
any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function
remaining to the court is that of announcing the fact and dismissing the cause." Ex parte
McCardle, 74 U.S. (7 Wall.) 506, 514 (1868). The parties or the court sua sponte may challenge
the court's subject matter jurisdiction at any time. Arbaugh v. Y & H Corp., 546 U.S. 500, 506
(2006).
The ability of the Court of Federal Claims to entertain suits against the United States is
limited. "The United States, as sovereign, is immune from suit save as it consents to be sued."
United States v. Sherwood, 312 U.S. 584, 586 (1941). The waiver of immunity "cannot be
implied but must be unequivocally expressed." United States v. King, 395 U.S. 1, 4 (1969).
The Tucker Act, the principal statute governing the jurisdiction of this court, waives
sovereign immunity for claims against the United States that are founded upon the Constitution,
a federal statute or regulation, or an express or implied contract with the United States. 28
U.S.C. § 149l(a)(l) (2012). However, the Tucker Act is merely a jurisdictional statute and "does
not create any substantive right enforceable against the United States for money damages."
United States v. Testan, 424 U.S. 392, 398 (1976). Instead, the substantive right must appear in
another source of law, such as a "money-mandating constitutional provision, statute or regulation
that has been violated, or an express or implied contract with the United States." Loveladies
Harbor, Inc. v. United States, 27 F.3d 1545, 1554 (Fed. Cir. 1994) (en bane).
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During the initial stage of proceedings, the court assumes that the allegations in the
complaint are true and construes those allegations in the plaintiffs favor. Henke v. United
States, 60 F.3d 795, 797 (Fed. Cir. 1995). However, if the defendant challenges the factual basis
of the court's jurisdiction, contested allegations in the complaint are not controlling. Shoshone
Indian Tribe of Wind River Reservation, Wyo. v. United States, 672 F.3d 1021, 1030 (Fed. Cir.
2012). Rather, the plaintiff must come forward with a preponderance of evidence in support of
its jurisdictional allegations. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189
(1936). Plaintiffs proceeding pro se are not excused from meeting basic jurisdictional
requirements, Henke, 60 F.3d at 799, even though the court holds their complaints to "less
stringent standards than formal pleadings drafted by lawyers," Haines v. Kerner, 404 U.S. 519,
520-21 (1972). If the court finds that it lacks subject matter jurisdiction over a claim, RCFC
12(h)(3) requires the court to dismiss that claim.
B. Plaintiff's Motion to Stay Proceedings
The court first considers plaintiffs motion to stay proceedings on defendant's motion to
dismiss to allow for jurisdictional discovery. As plaintiff correctly notes, when an opposing
party challenges a jurisdictional fact alleged in a complaint, the court may allow the parties to
conduct discovery to resolve the factual dispute. See Oppenheimer 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."); Fairholme Funds, Inc. v. United States,
114 Fed. Cl. 718, 721 (2014) ("[I]t is 'well established that when a motion to dismiss challenges
a jurisdictional fact alleged in a complaint, a court may allow discovery in order to resolve the
factual dispute."' (quoting Samish Indian Nation v. United States, No. 02-1383L, 2006 WL
5629542, at *4 (Fed. Cl. July 21, 2006))). 2 Believing that such a factual dispute exists in this
case, plaintiff requests discovery to establish that Farmers National Bank and its employees were
acting as agents or instrumentalities of the United States, that Farmers National Bank and its
employees were acting with the consent of the United States, and that he was a third-party
beneficiary of the loan guarantee executed by Farmers National Bank and the Farm Service
Agency.
Jurisdictional discovery is not necessary to ascertain whether Farmers National Bank and
its employees were acting on behalf of the United States (under any theory) because, as explained
below, even if the court assumed such a relationship and that the United States was therefore
responsible for the actions of the bank and its employees, the court would still lack jurisdiction to
entertain plaintiffs noncontractual claims. Furthermore, as also explained below, the court
declines to consider plaintiffs breach-of-contract claims because those claims are currently
pending before another judge of this court. Accordingly, the court denies plaintiffs motion.
2
The Federal Circuit cited both Fairholme Funds, Inc. and Oppenheimer Fund, Inc. in
commenting that plaintiff may be entitled to discovery in his January 2014 suit to assist him in
establishing his standing as a third-party beneficiary of the loan guarantee executed by Farmers
National Bank and the Farm Service Agency. See Lea, 2104 WL 5786662, at *4.
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C. Defendant's Motion to Dismiss
Plaintiff moved to stay proceedings on defendant's motion to dismiss in lieu of
responding to the substance of defendant's motion. However, the court concludes that a response
from plaintiff to defendant's motion is unnecessary due to the indisputable nature of the
jurisdictional and procedural deficiencies in plaintiffs second amended complaint. Accordingly,
the court addresses whether it possesses jurisdiction to consider plaintiffs claims without further
briefing or oral argument.
1. The Court Lacks Jurisdiction to Entertain Plaintiff's Noncontractual Claims
Plaintiff first argues that the United States has taken his property in violation of the Fifth
Amendment to the United States Constitution. The Fifth Amendment prohibits the federal
government from taking private property for public use without paying just compensation. U.S.
Const. amend. V. The Court of Federal Claims possesses jurisdiction to entertain Fifth
Amendment takings claims against the United States. See Morris v. United States, 392 F.3d
1372, 1375 (Fed. Cir. 2004) ("Absent an express statutory grant of jurisdiction to the contrary,
the Tucker Act provides the Court of Federal Claims exclusive jurisdiction over takings claims
for amounts greater than $10,000."). However, to bring suit in the Court of Federal Claims, a
plaintiff "must concede the validity of the government action which is the basis of the taking
claim .... " Tabb Lakes, Ltd. v. United States, 10 F.3d 796, 802-03 (Fed. Cir. 1993); accord
Reg'l Rail Reorg. Act Cases, 419 U.S. 102, 126-27 & n.16 (1974) ("[T]he Government action
must be authorized. 'The taking of private property by an officer of the United States for public
use, without being authorized, expressly or by necessary implication, to do so by some act of
Congress, is not the act of the government,' and hence recovery is not available in the Court of
Claims." (quoting Hooe v. United States, 218 U.S. 322, 336 (1910))). In this case, plaintiff does
not concede the validity of the purported taking of his property. Rather, he argues that the
foreclosure proceedings for which the United States purportedly bore responsibility were carried
out in violation of federal regulations. Accordingly, the court lacks jurisdiction to consider
plaintiffs Fifth Amendment takings claim.
Plaintiff next contends that the United States violated his constitutional right to due
process. However, the Court of Federal Claims lacks jurisdiction to entertain claims under the
Due Process Clauses of the Fifth and Fourteenth Amendments because those clauses do not
mandate the payment of money damages. Smith v. United States, 709 F.3d 1114, 1116 (Fed. Cir.
2013) ("The law is well settled that the Due Process clauses of both the Fifth and Fourteenth
Amendments do not mandate the payment of money and thus do not provide a cause of action
under the Tucker Act.").
In addition to his constitutional claims, plaintiff alleges that the United States was
unjustly enriched by its actions. The court lacks jurisdiction over claims of unjust enrichment.
Cleveland Chair Co. v. United States, 557 F.2d 244, 246 (Ct. Cl. 1977) ("Unjust enrichment
cannot in itself be the basis for a recovery here, for it lacks the consensual element needed to find
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a contract implied in fact, and only provides support for the remedial device known as a contract
implied in law, over which this court has no jurisdiction."). Plaintiff further contends that the
United States (and its employees) conspired with private parties to his detriment. But because
conspiracy claims sound in tort, the Court of Federal Claims lacks jurisdiction to entertain them.
Berdick v. United States, 612 F.2d 533, 536 (Ct. Cl. 1979) ("Clearly [conspiracy] claims sounds
in tort, and we have no jurisdiction to hear such claims."); see also 28 U.S.C. § 1491(a)(l)
(excluding claims sounding in tort from the jurisdiction of the Court of Federal Claims).
In sum, the court must dismiss plaintiffs constitutional, equitable, and tort claims for
lack of jurisdiction.
2. Plaintiff's Claims for Breach of Contract Are Duplicative
In addition to his noncontractual claims, plaintiff asserts several breach-of-contract
3
claims. First, he alleges that the United States breached an implied-in-fact contract that was
created by the federal regulations governing the process for foreclosing property in which the
Farm Service Agency holds an interest. However, as the court previously held in Lea, 2014 WL
2101367, at *3, federal regulations do not create contractual relationships between individuals
and the United States, Martinez v. United States, 48 Fed. Cl. 851, 862-63 (2001) (holding that a
federal regulation did not create privity of contract between the plaintiff and the government),
affd, 281 F.3d 1376 (Fed. Cir. 2002); Schuerman v. United States, 30 Fed. Cl. 420, 427 (1994)
(same). Thus, the court lacks jurisdiction over plaintiffs implied-in-fact contract claim.
Second, plaintiff alleges that the United States breached an express contract for which he
is a third-party beneficiary by allowing the foreclosure of his property to occur, and in doing so,
also breached the covenant of good faith and fair dealing. These claims relate to the loan
guarantee executed by Farmers National Bank and the Farm Service Agency; plaintiff has alleged
no other contract for which he can establish privity with the United States. Notably, plaintiff is
already pursuing his claim that the United States breached the loan guarantee in his earlier-filed
case.
Federal courts have broad discretion to manage and control the litigation before them.
See, e.g., Link v. Wabash R.R. Co., 370 U.S. 626, 630-31 (1962) (remarking on "the control
necessarily vested in courts to manage their own affairs so as to achieve the orderly and
expeditious disposition of cases"); Amado v. Microsoft Corp., 517 F.3d 1353, 1358 (Fed. Cir.
3
Under the Tucker Act, the court possesses jurisdiction to consider claims founded upon
express and implied contracts with the United States. 28 U.S.C. § 1491(a)(l). The court also
possesses jurisdiction to consider claims brought pursuant to the Contract Disputes Act of 1978
("CDA"). Id. § 1491(a)(2). Although plaintiff identifies the CDA as a basis for the court to
exercise jurisdiction over his claims in the "Jurisdiction" section of his second amended
complaint, he does not allege that he has satisfied any of the CD A's requirements. Accordingly,
the court disregards plaintiffs reference to the CDA.
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2008) (noting that federal district courts "are afforded broad discretion to control and manage
their dockets"). Thus, to promote judicial economy, "protect the parties from vexatious and
expensive litigation," and "serve the societal interest in bringing an end to disputes," a federal
court may dismiss a suit when it is duplicative of a suit already pending in federal court. Adams
v. Cal. Dep't of Health Servs., 487 F.3d 684, 692-93 (9th Cir. 2007), overruled on other grounds
l2y Taylor v. Sturgell, 553 U.S. 880 (2008); accorQ. Colo. River Water Conservation Dist. v.
United States, 424 U.S. 800, 817 (1976) ("As between federal district courts ... the general
principle is to avoid duplicative litigation."); Kerotest Mfg. Co. v. C-0-Two Fire Equip. Co., 342
U.S. 180, 183 (1952) (noting that "[w]isejudicial administration, giving regard to conservation
of judicial resources and comprehensive disposition of litigation, does not counsel rigid
mechanical solution of' problems created by "multiple litigation in the federal judicial system").
Moreover, "[t]he irrationality of tolerating duplicative litigation in the federal system is all the
more pronounced where" two federal judges sitting on the same court are "devoting scarce
judicial resources to the adjudication of the same charges by ... the same plaintiff[] against the
same defendant[]." Ridge Gold Standard Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 572 F.
Supp. 1210, 1213 (N.D. Ill. 1983).
To be considered duplicative, proceedings must, in general, involve the same parties, the
same subject matter, the same relief, and similar issues. See, e.g., Watson v. Jones, 80 U.S. 679,
715 (1871); Complaint of Bankers Trust Co. v. Chatterjee, 636 F.2d 37, 40 (3d Cir. 1980);
Calvert Fire Ins. Co. v. Am. Mut. Reins. Co., 600 F.2d 1228, 1233 (7th Cir. 1979); Walton v.
Eaton Corp., 563 F.2d 66, 70 (3d Cir. 1977). In both cases pending in this court, plaintiff asserts
claims against the United States for breach of contract arising from the foreclosure of his
property and, as a result of the United States' purported breach, requests money damages.
Accordingly, to promote judicial economy and conserve the parties' resources, the court
dismisses the breach-of-contract claims set forth in plaintiffs second amended complaint without
prejudice.
D. Plaintiff's Application to Proceed In Forma Pauperis
As previously noted, plaintiff filed, concurrent with his complaint, an application to
proceed in forma pauperis. Pursuant to 28 U.S.C. § 1915, the Court of Federal Claims may
waive its filing fee under certain circumstances. See 28 U.S.C. § 1915(a)(l); see also Hayes v.
United States, 71 Fed. Cl. 366, 366-67 (2006) (concluding that 28 U.S.C. § 1915(a)(l) applies to
both prisoners and nonprisoners alike). Plaintiffs wishing to proceed in forma pauperis must
submit an affidavit that lists all of their assets, declares that they are unable to pay the fees or
give the security, and states the nature of the action and their belief that they are entitled to
redress. 28 U.S.C. § 1915(a)(l). Here, plaintiff has substantially satisfied all three requirements.
Accordingly, the court grants plaintiffs application and waives his filing fee.
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III. CONCLUSION
For the reasons set forth above, the court GRANTS defendant's motion to dismiss.
Plaintiffs noncontractual claims and breach-of-an-implied-in-fact-contract claim are
DISMISSED for lack of jurisdiction, and plaintiffs remaining contractual claims are
DISMISSED as duplicative. Further, the court GRANTS plaintiffs application to proceed in
forma pauperis. No costs. The clerk is directed to enter judgment accordingly.
The clerk shall mail a copy of this decision to plaintiff at both addresses on file for him.
IT IS SO ORDERED.
Judge
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