Nesselrode v. United States , 127 Fed. Cl. 421 ( 2016 )

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No. 16-26C FILED
(Filed: July 13,2016)
JUL I 3 2016
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GREGORYP.NESSELRODE, * U.S. COURT OF
:f FEDERAL CLAIMS
Plaintifl :r
TuckerAct;28 U.S.C. $ 1491; Pro Se
'r Plaintiff; Motion to Dismiss; RCFC
rrf l2(b)(1); RCFC 12(bX6); Res Judicata;
* Civil Fraudl Student Loan Default
THE UNITED STATES, :i
*
Defendant. *
* !t :1. * * * * * * *'t * * :+ * * * * *'1. * * * + * * * * * * * * * * * * *
Gregory P. Nesselrode, Columbus, OH, pfs._sg.
Vito Solitro, United States Department of Justice, Washington, DC, for defendant.
OPINIONAND ORDER
SWEENEY, Judge
Before the court are (l) plaintiff s application to proceed in forma pauperis (.'IFP'),
(2) plaintiff s motion for judgment, (3) defendant's motion to dismiss plaintiffls first amended
complaint, (4) plaintiff s motion to strike defendant's motion to dismiss plaintiff s first amended
complaint, and (5) plaintiff s motion for leave to file a second amended complaint. For the
reasons set forth below, the court grants plaintiff s IFP application and defendant's motion to
dismiss plaintifPs first amended complaint. In addition, the court denies plaintiff s motion for
leave to file a second amended complaint and denies, as moot, the remaining motions.
I. BACKGROUND
A. Factual History
Neither the facts nor the allegations in plaintilfs first amended complaint are clearly
articulated. However, from the appendix to plaintiff s original complaint,t the court gleaned the
following facts: ( I ) ftom 1992 to 2013 , plaintiff bonowed various sums of money from the
I
The court deems the appendix as having been refiled with plaintiffs first amended
comnlaint.
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federal govemment to finance his education at several institutions,2 App., Ex. E; (2) at some
point, plaintifFs student loans were financed by Direct Loans, Sallie Mae, and Navient, id. at
Exs. A-C; (3) according to plaintiffs credit report, as ofNovember 22,2015, he had outstanding
debts of $16,068 and $49,456, id. at Ex. D; and (4) according to plaintiffs federal student aid
summary, as of November 26,2015, he had two outstanding loans-the first, a direct
consolidated unsubsidized loan of$12,844, made on September 18, 2000, and the second, a
direct consolidated subsidized loan of$39,574, made on September 18, 2000, id. at Ex. E.3
Furthermore, it appears that the gravamen of plaintiff s complaint is that the United
States Department of Education erroneously claims that he defaulted on two of his loans. Am.
Compl. 6-7. Finally, it appears that plaintiff alleges various statutory violations by defendant, as
well as fraud and breach ofcontract claims, id. at 6-7, wtd seeks both injunctive and monetary
relief, id. at 19-20.
B. Procedural History
In2013, plaintiff sued the United States Department of Education in the United States
District Court for the Westem District of Washington ("Washington District Court"). App., Ex.
L. On August 6,2014,the Washington District Court granted defendant's motion for summary
judgment, finding that it lacked jurisdiction over plaintifPs claim that defendant wrongfully
accused him of defaulting on two consolidated school loans. Id. at 2. On April l4,20l5,the
United States Court of Appeals for the Ninth Circuit ("Ninth Circuit") held "that the questions
raised in [plaintiffs] appeal are so insubstantial as not to require further argument'" App., Ex. M
at 1. On [:ur;te22,2015, the Ninth Circuit denied plaintiff s motion for reconsideration en banc
and on July l, 2015, it issued a mandate. Id. aI2-3.
Plaintiff filed his original complaint and IFP application on January 7, 201 6. Two
months later, on March 7,2016, defendant frled a motion to dismiss. Shortly thereafter, on
March22,2016, plaintifffiled a motion to amend his complaint. That motion was granted, asof
right, the next day. On April 22,2016, plaintifffiled a motion for judgment and on May 3,2016,
defendant again filed a motion to dismiss. On May 12,2016, plaintiffmoved to strike the
motion to dismiss and on June 17,2016, plaintiff moved, for the second time, to amend his
comolaint.
2 Disbursements of federal loan monies were made to (1) Front Range Community
College-Westminster Campus, (2) Colorado State University, (3) Linn-Benton Community
College, (4) The University of Montan4 and (5) Montana State University Bozeman. App., Ex.
E.
3 In his first amended complaint, plaintiff refers to the two loans as loan number
15 and
loan number 16, presumably because they appear on lines 15 and 16 of his federal student aid
summary.
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II. LEGALSTANDARDS
A. Pro $9 Plaintiffs
The United States Court of Federal Claims ("Court of Federal Claims") holds pleadings
of a nro se plaintiffto less stringent standards than those of litigants represented by counsel.
Haines v. Kemer,404 U.S. 519,520 (1972). Courts have "strained ltheir] proper role in
adversary proceedings to the limit, searching . . . to see ifplaintiffhas a cause ofaction
somewheredisplayed." Rudererv.UnitedStates,4l2F.2dl2SS,1292(Ct.Cl. 1969)' Although
plaintiff s pleadings are held to a less stringent standard, such leniency "witi respect to mere
formalities does not relieve the burden to meet judsdictional requiremcnts." Minehan v. United
States, 75 Fed. Cl. 249, 253 (2007); see also Kelley v. Sec'y. U.S. Deo't of Labor'812F.2d
1378, 1380 (Fed. Cir. 1987) C'tAl court may not similarly take a liberal view of that
jurisdictional requirement and set a different rule for pro se litigants only."); Bemard v. United
States, 59 Fed. Cl. 497,499 (noting that plq re plaintiffs are not excused from sadsrying
jurisdictional requirements), afPd, 98 F. App'x. 860 (Fed. Cir. 2004). As the Court of Federal
Claims stated in Demes v. United States, "[w]hile a court should be receptive to p!Q-!g plaintiffs
and assist them, justice is ill-served when ajurist crosses the line from finder of fact to
advocate." 52 Fed. Cl. 365,369 (2002).
B. Subject Matter Jurisdiction
Whether the court possesses 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); see also
Matthews v. United States,72Fed. C\.274,278 (2006) (stating that subject matter jurisdiction is
"an inflexible matter that must be considered before proceeding to evaluate the merits ofa
case"). "Without jurisdiction the court caffiot 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 j urisdiction
at any time. Arbaugh v. Y & H Com., 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, 3i2 U.S. 584, 586 (1941). The waiver of immunity'tannot be
implied but must be unequivocally expressed." United States v' King, 395 U.S. 1,4 (1969)'
Further, "[w]hen waiver legislation contains a statute of limitations, the limitations provision
constitutea a condition on the waiver of sovereign immunity." Block v. North Dakota ex rel. Bd.
ofUniv. & Sch. Lands,461 U.S. 273,287 (1983).
The Tucker Act, the principal statute goveming the jurisdiction of this court, waives
sovereign immunity for claims against the United States, not sounding in tort, that are founded
upon thi Constitution, a federal statute or regulation, or an express or implied contract with the
United States. 28 U.S.C. $ 1a91(aXl) (2012). However, the Tucker Act is merely a
jurisdictional statute and "does not create any substantive right enforceable against the United
States for money darnages." UnitedStatesv. Testan,424lJ.S.392,398 (1976). Instead, the
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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 expless or implied
contract with the United States.'{ Loveladies Harbor. Inc. v. United States ,27 F .3d' 1545, 1554
(Fed. Cir. 1994) (en banc).
"A statute or regulation is money-mandating for jurisdictional purposes if it can fairly be
interpreted as mandating compensation for damages sustained as a result of the breach ofthe
duties it imposes." Ferreirc v. United States, 501 F.3d 1349, 1351-52 (Fed. Cir. 2007) (citations
and intemal quotation marks omitted). Such a determination is made pwsuant to a two-part test:
First, the court determines whether any substantive law imposes
specific obligations on the Govemment. If that condition is met,
then the court proceeds to the second inquiry, "whether the
relevant source of substantive law can be fairly interpreted as
mandating compensation for damages sustained as a result ofa
breach of the duties the goveming law imposes."
Samish Indian Nation v. United States, 657 F.3d 1330, 1335 (Fed. Cir. 201 1) (quoting United
States v. Navajo Nation, 556 U.S. 287,290-91 (2009) (intemal quotation marks omitted)). In
other words, "to satisfu the jurisdictional requirements of the Tucker Act, the plaintiff must point
to an independent, substantive source of law that mandates payment from the United States for
the injury suffered." Johnson v. United States, 105 Fed. Cl.85,91 Q0I2).
In addition, to fall within the court's jurisdiction, any claim against the United States filed
in the Court of Federal Claims must be "frled within six years after such claim first accrues." 28
U.S.C. $ 2501; see also John R. Sand & Gravel Co. v. United States, 552 U.S' 130' 133-35
(2008) (providing that the limitations period set forth in 28 U.S.C. $ 2501 is an "absolute" limit
on the ability of the Court of Federal Claims to reach the merits of a claim).
C. Motions to Dismiss
In the instant action, defendant seeks the dismissal ofplaintiffs case on two grounds.
First, defendant contends that this court lacks subject matter jurisdiction pursuant to RCFC
12(bX1). Second, defendant contends that plaintiff fails to state a claim upon which relief may
be granted pursuant to RCFC 12(bX6).
In ruling on motions to dismiss, the court assumes that the allegations in the complaint
are true and construes those allegations in the plaintifPs favor. Henke v. United States, 60 F.3d
795,797 (Fed. Cir. 1995). With respect to a motion to dismiss for lack of subject matter
jurisdiction pursuant to RCFC 12(b)(l), the plaintiffbears the burden ofproving, by a
preponderance ofthe evidence, that the court possesses subject matter jurisdiction. McNutt v'
Gen. Motors Acceptance Corp.,298 U.S. 178, 189 (1936); Trusted Inteeration. Inc. v. United
srates, 659 F.3d 1159, 1163 (Fed. Cir. 2011). Although complaints filed by plaintiffs proceeding
a The Rules of the Court of Federal Claims ("RCFc")-plaintiff cites RCFC 8(a)(2)'
9(b), 9(e), and 9(k)-are not a source of substantive rights for money damages.
ple-sg are held to "less stringent standards than formal pleadings drafted by lawyers," Haines,
404 U.S. at 520-21, a plaintiff proceeding p3q Se is not excused from meeting basic jurisdictional
requirements, Henke, 60 F .3d at 799. If the court finds that it lacks subject matter jurisdiction
over a claim, RCFC l2(hX3) requires the court to dismiss that claim.
A claim that survives ajurisdictional challenge remains subject to dismissal under RCFC
12(bX6) if it does not provide a basis for the court to gnnt relief. Lindsav v. United States, 295
F.3d 1252, 1257 (Fed. Cir.2002) ("A motion to dismiss . . . for failure to state a claim upon
which reliefcan be granted is appropriate when the facts asserted by the claimant do not entitle
him to a legal remedy."). To survive a motion to dismiss under RCFC l2(bx6), a plaintiffmust
include in the complaint "enough facts to state a claim to relief that is plausible on its face." Bell
Atl. Corp. v. Twombly, 550 U.S. 544,570 (2007). In other words, a plaintiff must "plead[ ]
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged." Ashcroft v. Iobal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp.,
550 U.S. at 556). "[O]nce a claim has been stated adequately, it may be suppo(ed by showing
any set of facts consistent with the allegations in the complaint." Bell Atl. Corp., 550 U.S. at
563. Indeed, "[t]he issue is not whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232,
236 (1974), ovem-rled on other grounds by Harlow v. Fitzeerald,457 U.S. 800, 814-19 (1982).
III. DISCUSSION
A. Dismissal Is Appropriate Under RCFC 12(bxl)
The court lacks subject matter jurisdiction over plaintiff s statutory claims, over
plaintiff s civil fraud claim, and over plaintiff s claims for equitable relief Dismissal of these
claims is therefore appropriate under RCFC 12(bX1).
1. The Court Lacks Subject Matter Jurisdiction Over Plaintiff s Statutory Claims
In his first amended complaint, plaintiff alleges that defendant violated a number of
provisions of the United States Code. The court addresses each of these provisions in tum.
a. 18 U.S.C. $ 103I
Section 1031 of title l8 of the United States Code is captioned "Major fraud against the
United States."s I 8 U.S.C. $ 103 I (2012). It is a stature that makes it a crime "to defraud the
United States," or "to obtain money or property by means offalse or fraudulent pretenses,
representations, or promises," with respect to "any grant, contract, subcontract, subsidy, loan,
guarantee, insurance, or other form ofFederal assistance" and states the penalties for such a
crime. Id. Not only is the statute not money-mandating, but as a criminal statute, is not
enforceable against the United States. See Joshua v. United States, l7 F.3d 378, 379 (Fed. Cir.
1994) ("[The Court ofFederal Claims] has no jurisdiction to adjudicate any claims whatsoever
under the federal criminal code." (intemal quotation marks omitted)).
5 Plaintiff cites this statute at pages ii, iv,2, 6, and 7 of his first amended complaint.
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b. 20 U.S.C. $ 1092(a)
Section 1092(a) oftitle 20 is captioned "lnformation dissemination activities."6 20
U.S.C. $ 1092(a) (2012). It is a section of the Higher Education Act C'HEA") that lists the tlpes
of information that eligible institutions that participate in certain student financial assistance
programs must have available for production to prospective and effolled students of that
institution. Id. It is not money-mandating. See Johnson, 105 Fed. Cl. at92 (noting that neither
the HEA nor its conesponding regulations are a "money-mandating source of law").
c. 20 U.S.C. S t22t-1
Section 1221- I oftitle 20 is captioned "National policy with respect to equal educational
opportunity."T 20 U.S.C. $ 1221-1. It states that it is "the policy of the United States of America
that every citizen is entitled to an education to meet his or her full potential without financial
barriers." Id. Statutory provisions merely reciting laudable goals are not money-mandating. See
Dziekonski v. United States, 120 Fed. Cl. 806, 810 (noting that a statute describing a "declared
policy" is not money-mandating).
d. 28 U.S.C. S rs00
Section 1500 oftitle 28 is captioned "Pendency of claims in other courts."8 28U.S.C.
$ 1500. It is ajurisdictional statute that simply states that this court lacks jurisdiction over a
claim "ifthe plaintiffhas another suit for or in respect to that claim pending against the United
States or its agents." United States v. Tohono O'Odham Nation, 563 U.S.307,311 (2011). This
jurisdictional limitation, imposed on the court by Congress, is not money-mandating.
e. 31 U.S.C. $ 1304
Section 1304 of title 31 is captioned "Judgments, awards, and compromise settlements."e
31U.S.C. $ 1304(2012). Although it relates to the appropriation of federal firnds for the
payment of"final judgments, awards, compromise settlements, and interest and costs specified in
the judgments or otherwise authorized by law" in suits brought against the United States, id., it,
standing alone, is not money-mandating. See Samish Indian Nation,657 F.3d at 1334 (afftrming
the trial court's determination that an appropriation is "merely a budgetary mechanism . . . [and]
could not impose a money-mandating duty on the Govemment.").
Plaintiffcites this statute at pages 4 and 10 of his first amended complaint.
Plaintiffcites this statute at pages 4 and l0 ofhis first amended complaint.
Plaintiffcites this statute at page 5 of his first amended complaint.
Plaintiff cites this statute at pages ii,v,2,9, and 12 of his first amended complaint.
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f. 44 U.S.C. S 3102
Section 3102 oftitle 44 is captioned "Establishment ofprogram management."ro 44
U.S.C. $ 3102 (2012). Its purpose is to provide for the management offederal agency records
and consequently is not money-mandating.
g. 44 U.S.C. SS 3601-3606
Finally, plaintiff relies on notjust one section but an entire chapter within a title, arguing
that chapter 36 of title 44,11 captioned "Management and Promotion of Electronic Government
Services," 44 U.S.C. $$ 3601-3606, provides a basis for the govemment's liability. The chapter
provides for the "development and enhancement" of"the use by the Government of web-based
Intemet applications and other information technologies [to] enhance the access to and delivery
of Govemment information and services to the public, other agencies, and other Govemment
entities; or . . . bring about improvements in Govemment operations that may include
effectiveness, efficiency, service quality, or transformation." Id. $$ 3601,3605. Clearly, the
chapter is not money-mandating.
2. The Court Lacks Subject Matter Jurisdiction Over Plaintiff s Civil Fraud Claim
In addition to alleging a violation of a criminal fraud statute, plaintiffclaims that
defendant fraudulently or mistakenly stated that he defaulted on two of his loans. Am. Compl.
1 3. In support of his argument, plaintiff relies on RCFC 9(b). Id.
Pursuant to RCFC 9(b), plaintiffmust plead "the circumstances constituting fraud . . .
with particularity." The purpose of pleading fraud with particularity is to allow formulation of a
responsive pleading and guard parties fiom baseless claims. Tyger Constr. Co. v. United States,
28 Fed. CI.35,53 (1993). "Fraud allegations should contain references to time, place, and
manner of the fraud." Id. A "heightened fact pleading of specifics," is not required, "only
enough facts to state a claim to reliefthat is plausible on its face." Bell Atl. Corp.,550U.S.at
570. If a plaintiff fails to meet the requirements of RCFC 9(b), the Court of Federal Claims may
dismiss the complaint without prejudice or allow the deficiency to be "cured by a later
disclosure." Jana. Inc. v. United States,41 Fed. Cl,735,741 (1998).
In the present case, inespective ofwhether plaintiff has met his burden under RCFC 9(b),
his fraud claim would not be remediable in the Court of Federal Claims. A claim of fraud
sounds in tort, Bro\rn v. United States, 105 F.3d 62I,623 (Fed. Cir. 1997), and the Court of
Federal Claims does not possess jurisdiction to entertain claims sounding in tort, 28 U.S.C.
$ 1a9l(aXl). Rather, under the Federal Tort Claims Act, 28 U.S.C. $$ 1346(bX1), 2671-80,
jurisdiction over tort claims lies exclusively in United States disftict courts. See Brown, 105
F .3d at 623 (holding that because the plaintiffs' fraudulent assessment and fraudulent takings
claims sounded in tort, the court lacked jurisdiction). The only exception to that mle is for a tort
t0
Plaintiff cites this statute at pages I 1, 13, and 14 of his first amended complaint.
ll Plaintiff cites this statute at pages 12 and 14 of his first amended complaint.
1
claim that arises from a breach-of-contract claim. See Awad v. United States, 301 F.3d 1367,
1372 (Fed. Cir.2002) ("[W]here a tort claim stems from a breach of contract, the cause ofaction
is ultimately one arising in contract, and thus is properly within the exclusive jurisdiction ofthe
Court of Federal Claims[.]"); Olin Jones Sand Co. v. United States,225 Ct. CI.741,745 (1980)
("Where . . . a claim is based on breach of contract it is properly within the jurisdiction ofthis
court even though it also alleges that defendant engaged in tortious conduct in breaching the
contmct."). As discussed below, plaintiff fails to state claims for breach of contmct. See infra
Sections IILB. 1-2. Thus, to the extent that plaintiff is alleging a claim of fraud based on a
breach of contract, the court lacks jurisdiction to entertain it.
3. The Court Lacks Subject Matter Jurisdiction Over Plaintilfs Claims for Equitable
Relief
Next, plaintiff seeks the following equitable relief from this court: (1) a declaration that
he is not in default on his two federal student loans, (2) the consolidation of all ofhis outstanding
federal student loans, (3) the removal from his credit report ofaay reference to the two defaulted
federal student loans, and (4) removal of two loan amounts-an April25,2013 loan of $ 3,362
and an October 24,2013 loan of 26,870, which total $30,232-from his federal student loan
records. Am. Compl. 20.
Generally, the Court of Federal Claims lacks the ability to award equitable relief. See
Bowen v. Massachusetts, 487 U.S. 879,905 (1988) (holding that the Court of Federal Claims
lacks "the general equitable powers ofa district court to grant prospective relief'); Brown, 105
F.3d at 624 (holding that the Tucker Act does not provide independent reliefthrough declaratory
judgments); Stephanatos v. United States, 8l Fed. Cl. 440,445 (2008) (explaining that the court
"has no authority to grant equitable relief'unless it is tied and subordinate to a money
judgment"' (quoting James v. Caldera, 159F.3d 573,580 (Fed. Cir. 1998))). However, the
Tucker Act does authorize the court to grant equitable relief under limited circumstances:
To provide an entire remedy and to complete the relief afforded by
the judgment, the court may, as an incident ofand collateral to any
such j udgmen! issue orders directing restoration to office or
position, placement in appropriate duty or retirement status, and
conection ofapplicable records, and such orders may be issued to
any appropriate official of the United States. In any case within its
jurisdiction, the court shall have the power to remand appropriate
matters to any administrative or executive body or official with
such direction as it may deem proper andjust.
28 U.S.C. $ 1a9l(a)(2); see also id. $$ 1492(bX2) (providing the court with jurisdiction to award
declaratory and injunctive relief in bid protests), 1507 (providing the court with jurisdiction to
issue a declaratory judgment under 26 U.S.C. S 7428). Here, as explained below, plaintiff fails
to state a breach-of-contract claim upon which relief, in the form ofmoney damages, may be
granted. See infra Sections III.B. 1-2. Thus, the equitable reliefplaintiff seeks does not arise as
"an incident of and collateral to" a money judgment. Accordingly, the Court of Federal Claims
lacks the authority to grant equitable relief in this case.
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As to plaintiff s remaining claims, although they are properly before this court, plaintiff
fails to state claims upon which relief may be granted.
B. Dismissal Is Appropriate Under RCFC 12(bX6)
Plaintiff fails to state a claim under the Contract Disputes Act of 1978 ('CDA"), 41
U.S.C. $$ 7101-09 (2012). Plaintiffalso fails to state a breach-of-contmct claim. Dismissal of
these claims is therefore appropriate under RCFC 12(bX6).
l. Plaintiff Fails to State a CDA Claim
In his first amended complaint, plaintiff cites several sections of the CDA, which is a
money-mandating statute that permits the Court of Federal Claims to entertain suits arising from
govemment procurement contracts.12 See U.S. Sur. Co. v. United States, 83 Fed. Cl. 306, 309
(2008) ("The Contract Disputes Act of1978 . . . is such a money-mandating statute. It
authorizes this Court to adjudicate a claim for monetary damages arising from 'any express or
implied contract . . . entered into by an executive agency for. . . the procurement of construction,
alteration, repair or maintenance ofreal property' filed within twelve months ofa contracting
offrcer's final decision concerning the claim."). However, plaintiff does not claim, nor can he, to
have entered into a procurement contract with the United States, such that recourse in this court
pursuant to the CDA is appropriate. Thus, he fails to state a claim upon which relief can be
granted.
2. Plaintiff tr'ails to State a Breach-of-Contract CIaim
In addition to alleging a violation of the CDA, plaintiff claims that defendant breached
the Master Promissory Note C'MPN'). Am. Compl. 9-13. In support of his breach-of-contract
claim, plaintiff attaches a blank MPN to his first amended complaint. App., Ex. K. The MPN is
a United States Department ofEducation form captioned "Direct Loans."13 It "is used in
connection with many student loans across the country," and "incolporates the [HEA] and its
associated regulations." Bible v. United Student Aid Funds. Inc. ,799 F.3d 633, 638 (7th Cir.
2015). Plaintiff s blank MPN contains the following seven sections: (1) "Section A: Borrower
Information"; (2) "Section B: School Information"; (3) "Section C: Borrower Request,
Certification, Authorizations, and Understandings"; (4) "Section D: Promise to Pay"; (5)
"Section E: MPN Terms and Conditions"; (6) "Section F: Important Notices"; and (7) "Section
G: Instructions for Completing the MPN." App., Ex. K. Id. According to plaintiff, who relies
on a subsection of the MPN captioned "Acceleration and Default," defendant failed to
consolidate plaintiff s loans as mandated under 20 U.S.C. $ 1092(a). Am. Compl. 10.
12
Plaintiff cites to the CDA at pages ii, iv-v, 2, 9- 10, and 12- 13 of his first amended
complaint.
13
The form is also captioned (1) "Federal Direct Stafford/Ford Loan," (2) "Federal
Direct Unsubsidized Stafford/Ford Loan," (3) "Master Promissory Note," and (4) "William D.
Ford Federal Direct Loan Program." App., Ex. K.
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Plaintiff cannot prevail on his breach-of-conFact claim because he has not established
that the United States was obligated to consolidate his loans. There is nothing within the text of
the MPN that imposes a duty on the United States to consolidate a borrower's loans. And, as
noted above, the section of the HEA that plaintiff relies on-20 U.S.C. $ 1092(afmerely lists
the types of information that institutions participating in the United States Department of
Education's financial assistance programs must have available for prospective or enrolled
students. It does not provide that the United States must consolidate borrowers' loans. Indeed,
other sections ofthe HEA provide that loan consolidation is optional. See. e.e., 20 U.S.C. $$
1087i-2(a) ("Temporary loan consolidation authority'); 1099d(bx3XL) ("Consolidation"). In
the absence ofany duty ofthe United States to consolidate plaintiffs loans, plaintiff fails to state
a claim for breach of contract upon which reliefcan be granted.
C. Consideration of PlaintifPs First Amended Complaint Is Barred by the Doctrine of Res
Judicata
Ultimately, the doctrine of res judicata bars this court's consideration of plaintiff s first
amended complaint. See Camoos v. OPM, 636 F. App'x 798,799 (Fed. Cir. 2016) (unpublished
per curiam decision) ("[E]ven though, in a later suit, a party might present the court with new
evidence that calls into question the original judgment, res judicata does not permit the court to
reopen thatjudgment."). Res judicata, as the term is commonly used, encompasses the related
concepts of claim preclusion and issue preclusion. Nasalok Coatine Com. v. Nylok Com., 522
F.3d 1320, 1323 (Fed. Cir. 2008); Sham Kabushiki Kaishav. Thinksharp. Inc.,448 F.3d 1368,
1370 (Fed. Cir. 2006). "Claim preclusion refers to the effect ofajudgment in foreclosing
litigation ofa matter that never has been litigated, because ofa determination that it should have
been advanced in an earlier suit. Claim preclusion therefore encompasses the law of merger and
bar." Miera v. Wanen Citv Sch. Dist. Bd. of Educ., 465 U.S. 75,77 n.l (1984). In contrast,
"[i]ssue preclusion refers to the effect ofajudgment in foreclosing relitigation ofa matter that
has been litigated and decided. This effect also is refened to as direct or collateral estoppel." Id.
(citation omitted).
For claim preclusion to apply, "there must be (1) an identity of parties or their privies, (2)
a final judgment on the merits of the prior claim, and (3) the second claim must be based on the
same transactional facts as the first and should have been litigated in the prior case." Sham
Kabushiki Kaisha,448 F.3d at 1370 (citing Parklane Hosierv Co. v. Shore, 439 U.S. 322,327 n.5
(1979)); see also Nevada v. United States,463 U.S. 110,129-30 (1983) ("[T]he doctrine ofres
judicata provides that when a final judgment has been entered on the merits of a case, '[i]t is a
finality as to the claim or demand in controversy, concluding parties and those in privity with
them, not only as to every matter which was offered and received to sustain or defeat the claim
or demand, but as to any other admissible matter which might have been offered for that
purpose. "' (quoting Cromwell v. County of Sac, 94 U.S. 351,352 (1876))), quoted in
Phillips/May Corp. v. United States, 524 F.3d 1264, 1267 -68 (Fed. Cir. 2008); Do-Well Mach.
Shop. Inc. v. United States ,870 F .2d 637 , 640 (Fed. Cir. 1989) (noting that while a "dismissal on
the merits canies resjudicata effect," a "dismissal for want ofjurisdiction does not").
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For issue preclusion to apply, the following four elements must be satisfied:
(1) the issue is identical to one decided in the first action; (2) the
issue was actually litigated in the first action; (3) resolution of the
issue was essential to a final judgment in the first action; and (4)
plaintiffhad a full and fair opportunity to litigate the issue in the
first action.
In re Freeman,30 F.3d 1459, 1465 (Fed. Cir.1994). "The underlying rationale ofthe doctrine
. . . is that a party who has litigated an issue and lost should be bound by that decision and cannot
demand that the issue be decided over again." Id. The doctrine therefore "protects [the party's]
adversaries from the expense and vexation attending multiple lawsuits, conserves judicial
resources, and fosters reliance onjudicial action by minimizing the possibility of inconsistent
decisions." Montana v. United States, 440 U.S. 147 , 153-54 (1979).
The instant case is plaintiffs second attempt to secure legal redress for alleged wrongs
regarding his student loans. As noted above, plaintifPs first attempt was in Washington District
Court. In that case, the court granted defendant's motion for summary judgment. Specifically,
the court held that (1) 20 U.S.C. $ 1092(c),14 the statute relied upon by plaintiff, "does no1
require disparate and independent entities to coordinate their monthly statements or collection
procedures"; (2) plaintiff failed to present any evidence that reports submitted by defendant to
credit reporting agencies were "fraudulent or even incorrect"; (3) plaintiff failed to present any
evidence that "defendant's gamishment of his 2012 tax refund was unauthorized" in light ofhis
having defaulted on his student loans; (4) it lacked the authority to gant plaintilfs request for
injunctive relief in the form ofan order directing defendant to consolidate loans held by the State
of Colorado Collections Department with defendant's loans; and (5) plaintifffailed to present
any evidence that defendant owed him a fiduciary duty.ls AFp., Ex.Lat2-5.
Here, all three of the claim preclusion factors have been met. First, there is no dispute
that the parties are identical to those in the prior litigation-in both cases, plaintiff sued the
ra ln the instant action, plaintiff relies on subsection (a) rather than subsection (c) of 20
u.s.c. $ 1092.
Is To the extent that plaintiff is seeking this court's review of the decisions ofthe
Washinglon District Court and the Ninth Circuit, this court lacks jurisdiction to do so. See
generally U.S. Bancorp Mortg. Co. v. Bonner Mall P'ship, 513 U.S. 18,27 (1994) ("Congress
has prescribed a primary route, by appeal as ofright and certiorari, through which parties may
seek relief from the legal consequences ofjudicial judgments. To allow a party who steps off the
statutory path to employ . . . [a] collateral attack on the judgment would-1uite apart from any
considerations of faimess to the parties--{isturb the orderly operation of the federal judicial
system."); Joshua, 17 F.3d at 380 ("[T]he Court ofFederal Claims does not have jurisdiction to
review the decisions ofdistrict courts . . . relating to proceedings before those courts.").
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United States.16 Second, it cannot be disputed that the claims in both cases are based on the
same transactional facts: plaintiffs application for and receipt of federal student loan monies
between 1992 and 2013, and defendant's declaration that plaintiff was in default on a direct
consolidated unsubsidized loan of$12,844 and a direct consolidated subsidized loan of$39,574,
both made on September 18, 2000. Third, it is undisputed that the prior litigation, wherein the
court resolved a motion for summary judgment, resulted in a judgment on the merits. See
Kunkes v. United States, 78 F.3d 1549, 1550 n.2 (Fed. Cir. 1996) ("Unlike a Rule l2(b)(6)
motion, a summary judgment motion does not simply test the sufficiency of the complaint; it
involves examination of material outside the complaint, and determines whether on the
undisputed facts presented in that material, the movant is entitled to judgment as a matter of law.
. . . Accordingly, for purposes ofthe appeal we treat the matter not as a dismissal but as an entry
ofjudgment . . . ."); Indium Com. of Am. v. Semi-Allovs. Inc.,781F.2d 879, 883 (Fed. Cir.
1985) (noting that a motion for summary judgment pusuant to Rule 56 of the Federal Rules of
Civil Procedure "seeks a judgment on the merits ofa case"). Having determined that plaintiffs
current complaint is baned by the doctrine ofclaim preclusion, the court need not consider the
effect of issue preclusion.
D. PlaintifPs Motion to File a Second Amended Complaint Is Futile
Despite the fatal deficiencies in plaintiffs first amended complaint, the court concludes
that plaintiffls motion to file a second amended complaint is futile. On June I7,2016, after
briefing on defendant's motion to dismiss the first amended complaint was complete, plaintiff
sought leave to file a second amended complaint. In support of his motion, plaintiff claims that
he is now in possession of evidence-tle MPN-that was not previously considered by the
Washington District Court before it rendered its decision.
RCFC 15(a) govems the amendment ofpleadings before trial and states that "[a] party
may amend its pleadings once as a matter of course within . . .21 days after service of tlte
pleading; or. . . if the pleading is one to which a responsive pleading is required,2l days after
service ofa responsive pleading or 21 days after service ofa motion under RCFC l2(b), (e), or
(f), whichever is earlier." Otherwise, "aputy may amend its pleading only with the opposing
party's written consent or the court's leave," which should be freely given "whenjustice so
requires." RCFC l5(a). In Foman v. Davis, the United States Supreme Court explained that the
mandate set forth in RCFC l5(a) "is to be heeded." 371 U.S. 178,182 (1962). It explained:
If the underlying facts or circumstances relied upon by a plaintiff
may be a proper subject ofrelief, he ought to be afforded an
opportunity to test his claim on the merits. In the absence of any
apparent or declared reason-such as undue delay, bad faith or
dilatory motive on the part ofthe movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice
to the opposing party by virtue of allowance of the amendment,
r6 Although defendant in the prior litigation is identified as the "Department of
Education," its full name is the United States Department of Education, which is an agency of
the United States sovernment.
ta
futility of amendment, etc.-the leave sought should, as the rules
require, be "freely given."
Id.
Whether a court grants or denies a motion for leave to amend the complaint falls within
its discretion, id., and a court "ought to exercise liberally its discretion to grant leave to amend,"
Wolfchild v. United States, 101 Fed. C|.54,64 (2011); see also Chitimacha Tribe of La. v. Harry
L. Laws Co., 690 F.2d ll57 , 1163 (5th Cir. 1982) (explaining that Rule 15 ofthe Federal Rules
of Civil Procedure "evinces a bias in favor of granting leave to amend"). Nevertheless, leave to
amend "should not be given automatically." Chitimacha Tribe of La.,609 F.2d at 1163. The
existence of"any one" of the reasons articulated in Foman may justify denial of a motion for
leaveto amend. Spaldine & Son. Inc. v. United States,22 Cl. Ct.678, 680 (1991); accord Hays
v. United States, l6 Cl. Ct. 770,772 (1989) (noting that the criteria set forth in Foman "are in the
disjunctive, i.e., satisfaction ofone is sufficient to deny the motion"); see also Te-Moak Bands of
W. Shoshone Indians of Nev. v. United States,948F.2d 1258,1261-64 (Fed. Cir. 1991)
(disallowing amendment of the pleadings due to delay and failure to cure deficiencies earlier).
Where amendment would be futile, it should not be allowed. See Leider v. United States, 301
F.3d 1290, 1299 n.10 (Fed. Cir. 2002) (holding that where the undisputed facts do not support
the addition of a new claim, amendment of the complaint is futile and should not be allowed);
Mitsui Foods. Inc. v. United States,867 F.2d l40l, 1403-04 (Fed. Cir. 1989) (holding that where
an additional prayer for relief would not change the outcome of the case, amendment of the
complaint is futile and should not be allowed); Ishler v. United States. 115 Fed. Cl. 530, 541
(2014) (holding that where plaintiff"fails to explain how amendment would cure any of the
jurisdictional defects in his complaint," amendment of the complaint is futile and should not be
allowed).
In this case, allowing plaintiff to amend his complaint for a second time is futile.
Plaintiff fails to put forth any new facts or legal argument that would cure the deficiencies in his
first amended complaint. In other words, nothing in plaintiffs proposed second amended
complaint would (1) alter this court's conclusion that it lacks subject matter jurisdiction over
plaintiff s non-money-mandating statutory claims, plaintiff s common law civil fraud claim, or
plaintiff s claims for equitable relief; (2) cure plaintiff s failure to state either a CDA or common
law breach-of-contract claim; or (3) alter this court's ability, under the doctrine of res judicata, to
review the claims already decided by the Washington District Court and the Ninth Circuit. Thus,
in an exercise of its discretion and because the interest ofjustice would not otherwise be served,
plaintiff s motion for leave to file a second amended complaint is denied.
E. Plaintiffs IFP Application Is Granted
Finally, as noted above, plaintiff filed, concurrent with his original complaint, an IFP
application. Pusuant to 28 U.S.C. $ 1915, courts of the United States are permitted to waive
filing fees and security under certain circumstances. See 28 U.S.C. $ 1915(a)(1). Plaintiffs
wishing to proceed IFP must submit an affidavit that (l) lists all oftheir assets, (2) declares that
they are unable to pay the fees or give the security, and (3) states the nature of the action and
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their belief that they are entitled to redress. Id. Here, plaintiff has satisfied all three
requirements. The court therefore grants plaintiffs application and waives his filing fee.
IV. CONCLUSION
As set forth above, the court GRANTS plaintiff s IFP application, DENIES as moot
plaintifFs motion for judgment, GRANTS defendant's motion to dismiss plaintiff s first
amended complaint, DENIES as moot plaintiff s motion to strike defendant's motion to dismiss
plaintiffs first amended complaint, and DENIES plaintiff s motion for leave to file a second
amended complaint. PlaintifPs first amended complaint is DISMISSED. The clerk is directed
to enter judgment accordingly and shall not award costs.
IT IS SO ORDERED.
MAR
1A