Opinion
Case No. C 05-05219 RS.
May 17, 2006
KEVIN V. RYAN (SBN 118321), United States Attorney, Northern District of California, JOANN M. SWANSON (SBN 88143), Chief, Civil Division, CHARLES O'CONNOR (SBN 56320), Assistant United States Attorney, San Francisco, California. Attorneys for Cross-Defendant BUREAU OF RECLAMATION and UNITED STATES OF AMERICA.
THE UNITED STATES' REPLY MEMORANDUM OF POINTS AUTHORITIES IN SUPPORT OF SUMMARY JUDGMENT OF DISMISSAL
INTRODUCTION
Cross-Claimant Steven B. Petty ("Petty") has filed his Opposition to Cross-Defendant's Motion for Summary Judgment ("Petty Opposition" or "Opposition"), together with his declaration under oath ("Petty Declaration"). The United States submits the following points and authorities as its reply to the Petty Opposition and in support of it's motion for order granting summary judgment of dismissal of the complaint filed in this action.
LEGAL ARGUMENT
I. The "Procedural Anomalies" Alleged in the Petty Opposition Do Not Prevent Dismissal
Under the caption, "Procedural Anomalies," Petty suggests that the Court cannot grant summary judgment of dismissal if it lacks subject matter jurisdiction under F.R.Civ.P. Petty misunderstands the nature of the motion and misconstrues the procedural setting in making this argument.
The United States' post-answer Rule 12(b) motion, raising lack of subject matter jurisdiction, is properly before the court, "as a Rule 12(h)(3) suggestion of lack of subject matter jurisdiction." Augustine v. United States, 704 F.2d 1074, 1075, fn. 3). Thus, there is absolutely no procedural impediment to hearing and granting the United States' motion to dismiss at this time, as Petty argues.
Similarly, Petty's suggestion that he is entitled to discovery on the issue of jurisdiction is without merit and should not be taken seriously. Petty says he wants to discover "facts supporting the jurisdictional allegations of the complaint." However, the United States' challenge to subject matter jurisdiction does not challenge the factual basis for the jurisdictional allegations. Rather, it goes to the failure to allege a legal basis for this Court's jurisdiction. The United States' motion says that Petty's claims, as plead and without regard to their truth or falsity, are essentially all claims under a contract over which the U.S. District Court lacks subject matter jurisdiction. Thus, discovery of facts cannot assist Petty in establishing a basis for the jurisdiction of this Court over his claims, as plead. II. Petty Has Failed to Demonstrate Why the Complaint Should Not be Dismissed.
In its opening papers, the United States demonstrated that the Court lacks subject matter jurisdiction over Petty's Cross-Complaint. The Petty Opposition relies on a series of alleged facts and arguments based thereon to contend that this Court does have jurisdiction over the "causes of action" (hereafter "claims") alleged in the Cross-Complaint. Petty's arguments do not address the motion now before the Court which is based on the contents of and defects in the pleadings rather than the merits of the alleged claims. In sum, the United States' motion establishes that, true or not, the allegations of the Complaint fail to satisfy the jurisdictional requirements for hearing and resolution before this Court and must be dismissed.
A. Petty's "Conversion" Claim Arises Out of Contractual Relationships With the U.S. Bureau of Reclamation and This Court Lacks Subject Matter Jurisdiction to Hear It.
Petty continues to repeat that the designation of his claim in his Cross-Complaint is "conversion," as if that by repeating the title he will win the debate and convince the Court to retain jurisdiction over it.
Petty also suggests that because the United States removed this case to the U.S. District Court, pursuant to 28 U.S.C. 1441, it is somehow precluded from moving to dismiss for lack of subject matter jurisdiction. There is no authority for this proposition and Petty cites none. Petty also accuses the United States of "form (sic) shopping" without providing any evidence in support of that charge. As for alleged "forum shopping," it should be noted that the federal removal statutes provide for removal to the appropriate U.S. District Court, only, and not to any other federal court. Thus, the United States could not have "removed" the Cross-Complaint directly to another court, such as the U.S. Court of Federal Claims.
In the context of his arguments to support jurisdiction in this Court, Petty injects a series of legal points pertaining to the jurisdiction of the Bankruptcy Court, rather than dealing with the issue at hand, i.e., whether this Court has subject matter jurisdiction over his contract claims. Petty cites Quality Tooling, Inc. v. U.S., 47 F.3d 1569 (CA Fed. 1995), in connection with this argument, but that case adds nothing to support the merits of Petty's assertion of jurisdiction in this Court. In Quality Tool, the Circuit Court said that the Bankruptcy Court and Court of Federal Claims have concurrent jurisdiction over contractual claims and remanded that case to the District Court to determine, in its discretion, which court should hear that matter, a point not in issue here. However, in its ruling, the Circuit Court had some advice for the District Court that also has application to the issue now before this Court.
See Opposition, at 10:19 to 11:5 (¶¶ A.-D.) These arguments are out of context and appear to go to the issues debated in a separate matter, a motion to transfer which also pending before this Court, but not involved in the instant motion.
We agree that "a bankruptcy court should defer a complicated, technical dispute to a specialized forum." Gary Aircraft Corp v. United States (In the matter of Gary Aircraft Corp.), 698 F.2d 775 (5th Cir.), cert. denied, 464 U.S. 820, 104 S.Ct. 82 (1983). . . . Government contract law is a specialized, even arcane, field. In many cases, bankruptcy courts should stay their proceedings while the contractual issues are resolved by the Court of Federal Claims, which is accustomed to the intricacies of government contracts.Quality Tool, at p. 1580. For some of the same reasons articulated in Quality Tool, this Court is not the appropriate forum for the matters presented in the Cross-Claim, and it should be dismissed, or in the alternative, transferred to the Court of Federal Claims.
Next, Petty says his claim for conversion is supported by the facts, because he alleges that "the Bureau has agreed the docks do not belong to the Bureau, etc." Opposition, 11:10. This is a very confusing and inaccurate assertion in view of the contents of the Petty Opposition's Statement of Genuine Factual Issues, which specifically references the record which shows that the Bureau claims the docks as "property of the United States Government." Opposition, at 9:11-21.
Regardless of Petty's factual arguments and the inconsistencies therein, as outlined above, the issue before the Court is not the factual merits of Petty's Cross-Complaint, but whether the claims, as alleged, establish the subject matter jurisdiction of this Court. This particular argument does not establish such jurisdiction because the Cross-Complaint discloses no ownership or possessory interest in the subject docks, as installed on the land of the United States, other than that emanating from either the PCRAMG Concession Contract or the DeLooze Concession Contract. Accordingly, resolution of Petty's claims requires adjudication of the rights of the parties under those contracts with the United States, and Petty's claim for money damages falls under the Tucker Act, and those matters are within the jurisdiction of the U.S. Court of Federal Claims, not this District Court. Therefore, Petty's first claim should be dismissed.
B. Notwithstanding the Curious and Inconsistent Factual Allegations Made by Petty, the Boat Docks and Relationships of the Parties are Subject to the Terms of the Concession Contracts
Petty attempts to avoid realities and implications of his pleadings by arguing that his claim of "unjust enrichment" is an "equitable claim" and presents a claim apart from the two contracts (the PCRAMG Concession Contract or the DeLooze Concession Contract). This is so, Petty says, because he was not a party to the contracts with the Bureau of Reclamation, in his individual capacity.
Even though Petty says he was not a party to the contracts, his Cross-Complaint references the boat docks and alleges the installation of same in connection with the PCRAMG Concession Contract (¶ 4). Moreover, the installation and alleged disputed ownership of the boat docks, are mentioned frequently with reference to the terms of and events surrounding the PCRAMG Concession Contract in Petty's own Declaration in Opposition to this motion. See Petty Declaration (¶¶ 9-16). In particular, in one of his many references to the PCRAMG Concession Contract, Petty states:
The docks which are the subject matter of this litigation are referred to on Exhibit 4 at page 4 of 24 in the third line entitled "Concessionaire Covered Dock 2 — south of covered dock".
See Petty Declaration, ¶ 16. Those various allegations and statements, when compared with Petty's position that he is not a party to the concessions contract which deals with ownership of the docks, raise serious questions as to whether Petty has any standing to bring any action, whatsoever, as an individual party. Regardless of Petty's standing and regardless of his assertion of his "individual" rights to damages in his Cross-Complaint, there can be no doubt that the referenced statements and documents demonstrate that the status and ownership, of the subject docks is controlled by the terms of the concession contract. Therefore, whether Petty's likes it or not, his alleged "equitable claim" for unjust enrichment can only be considered in the context of the PCRAMG Concession Contract. The appropriate forum for considering any of the issues in that contract is the Court of Federal Claims.
Petty's lack of standing to bring this action is the subject of a separate, supplemental motion for summary judgment wherein his lack of standing to bring the Cross-Complaint is discussed in greater detail.
As previously stated, the label that Petty attaches to his claim is not determinative of the jurisdictional question before this court. Doe v. Tenet, 329 F.3d 1135, 1141(D.C. Cir. 1982) (citations omitted) . That question turns on whether there has been any waiver of sovereign immunity by the United States that might provide a jurisdictional basis for this matter to be heard by this Court. It must be noted that any such "waiver of sovereign immunity is to be strictly construed, in terms of its scope, in favor of the sovereign." Dept. of the Army v. Blue Fox, Inc., 525 U.S. 255, 261, 119 S.Ct. 687, 691 (1999) (citations omitted). In Blue Fox, the U.S. Supreme Court considered whether a contractor could enforce an alleged "equitable" lien for unjust enrichment against the Army by bringing an action under provisions of the Administrative Procedure Act ("APA"), 5 U.S.C.A. § 702, which waives governmental immunity for actions seeking relief "other than money damages." The Court unanimously held that the "equitable" claim did not come within the waiver provisions of the APA since it was merely a means to the end of satisfying a claim for the recovery of money.
We accordingly hold that the sort of equitable lien sought by the respondent here constitutes a claim for "money damages"; its goal is to seize or attach money in the hands of the government as compensation for the loss resulting from the default of the prime contractor. As a form of substitute and not specific relief, respondent's action to enforce an equitable lien falls outside of § 702's waiver of sovereign immunity.Id., at 263 and 692.
Here, Petty denies that his claim "sounds in contract," and he seeks to cloak his claim for money damages as an equitable claim for unjust enrichment, just as the plaintiff in Blue Fox had attempted. Just as the Supreme Court ruled in Blue Fox, this Court should reject Petty's fictional characterization of his claim for money damages as an "equitable claim," and dismiss his Cross-Complaint.
C. Petty Cannot Support Jurisdiction in This Court for His Unfair Competition Claim by Attempting to "Borrow" Alleged Violations of Other Laws.
In an attempt to save his third claim from dismissal for failure to state a claim, Petty argues that this claim for damages "borrows violations of other laws and treats them as independently actionable. ( Premier Technical Sales v. Digital Equipment Corp, 11 F.Supp.2d 1156 (ND 1998))." Petty "borrows" a quote from Public Law 96-375, Section 5(b), which deals with the ownership of permanent facilities placed by concessionaires in the seven resorts at Lake Berryessa. Petty then states, without citing any authority, that "[t]his law takes precedence over the Concession Contract," apparently implying that he claims rights to the subject boat docks, pursuant to the provisions of Public Law 96-375.
The full citation for this case is Premier Technical Sales, Inc. v. Digital Equipment Corp., 11 F.Supp.2d 1156 (ND Cal 1998); Aff'd in part, Rev. in part, 202 F.3d 279 (9th Cir 1999). (Text in Westlaw, No. 98-16265, 98-16446). The United States notes that the part of Premier Technical, upon which Petty relies, was reversed by the 9th Circuit decision.
The Court should first note that Petty does not attempt to explain or reconcile this argument with his stated position that he is not party to any concession contract with the Bureau of Reclamation, and he says that his Cross-Claims do not rely on any such contract. If that is so, then clearly Petty is not a party to the PCRAMG Concession Contract, and there is no basis upon which he could claim any of the rights provided to concessionaires, pursuant to Public Law 96-375, Section 5(b), to "the permanent facilities placed by concessionaires." That is to say, because Petty denies being a party to any concession contract with the Bureau, he is not "a concessionaire," and he cannot claim entitlement to any of the facilities "placed by concessionaires," under Public Law 96-375, Section 5(b). In short, Petty cannot have it both ways.
Second, if Public Law 96-375, Section 5(b) does, indeed, apply to Petty Cross-Complaint, then this Court lacks jurisdiction and should dismiss the third claim or transfer it to the appropriate forum for determination, the U.S. Court of Federal Claims. Pursuant to 28 U.S.C. § 1491(a)(1),
The United States Court of Federal Claims shall have jurisdiction 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 damages in cases not sounding in tort. (Emphasis added.)
Thus, even if Petty is correct in his Public Law 96-375 argument in support of his third claim, which the United States does not concede, jurisdiction over that claim resides with the U.S. Court of Federal Claims, and this Court should dismiss this cross-claim for lack of subject matter jurisdiction, or in the alternative, transfer the Cross-Complaint to the Court of Federal Claims.
D. Regardless of However Petty Has Been Sued in the Complaint, the United States' Rights in the Subject Boat Docks are Contractual and Cannot be Determined by This Court.
Petty repeats his reliance on the argument that he is suing as an individual and argues that he personally entitled to money damages from the United States under his alternative theory of constructive trust. In support of this argument, Petty says that "[t]he Bureau has admitted that the docks belong to PCRAMG of which Petty is a 79% owner." This statement is both erroneous and inconsistent with Petty's announced status as an "individual" in his Cross-Complaint. First, the alleged admission of the Bureau is not factual. As pointed out in Part A, above, Petty Opposition's Statement of Genuine Factual Issues, specifically references the Bureau's claims to the docks as "property of the United States Government." Opposition, at 9:11-21. Second, Petty's claim of interest in the docks, as "a 79% owner" of PCRAMG, is inconsistent with the position he previously took in his Opposition, i.e., that his claims in this action are made as an individual, i.e., not derivative, as a member of PCRAMG. Yet, his "constructive trust" argument is founded on his alleged 79% ownership interest in PCRAMG, not on his alleged ownership as an individual claimant. Once again, the weakness of Petty's position and opposition arguments is exposed by his inaccurate allegations, repeated inconsistent positions, and other attempts to have it both ways.
Even if Petty's "constructive trust" argument were not so inherently flawed, his very theory lacks substance, as pointed out in the United States opening memorandum in support of its motion for summary judgment of dismissal. Moreover, as pointed out above, in Part C, Petty's alternative reliance on Public Law 96-375 as a basis for his asserted "non-contract" rights to the boat docks does not serve to overcome the jurisdictional defects in his Cross-Complaint and save it from dismissal for lack of subject matter jurisdiction. It is noted that Public Law 96-375 was not plead as a basis for relief in the Cross-Complaint, but even if the Court finds that it has application to the claims alleged by Petty, the Cross-Complaint must still be dismissed for lack of jurisdiction. Pursuant to 28 U.S.C. § 1491(a)(1), the U.S. Court of Federal Claims has jurisdiction over claims for damages against the United States which are founded upon an Act of Congress, such as Public Law 96-375. Therefore, the District Court lacks jurisdiction over Petty's cross-claim, even if he alternatively styles it as a claim pursuant to Public Law 96-375.
CONCLUSION
Nothing in Petty's Opposition papers serves to rebut the conclusion established by the United States' original moving papers, i.e., this Court lacks subject matter jurisdiction to hear and determine the Cross-Complaint because all rights therein originate under the terms of either the PCRAMG Concession Contract or the DeLooze Concession Contract. Petty's assertion of his alleged individual rights to damages regarding the subject boat docks seem to be founded solely on the allegations of his personal liability for a secured loan from the plaintiff, contained in the Complaint filed by Donald Lombardi, Jr. Those allegations are not in issue here, and they are irrelevant and immaterial to the United States' motion to dismiss Petty's Cross-Complaint for lack of subject matter jurisdiction. For these reasons, and all those detailed in the foregoing points and authorities, the United States respectfully asks the Court to dismiss the Cross-Complaint, or in the alternative, transfer the Cross-Complaint to the U.S. Court of Federal Claims for resolution.