Vitti & Vitti & Associates, P.C. v. United States ( 2013 )

In the United States Court of Federal Claims
No. 13-459 C
Filed: December 9, 2013
NOT TO BE PUBLISHED
**************************************** Federal Tort Claims Act, 28 U.S.C.
* §§ 1346(b) & 2675;
* Jurisdiction, 28 U.S.C. § 1491(a)(1)
VITTI & VITTI & ASSOCIATES, P.C., * (Tucker Act);
* 28 U.S.C. § 1631 (Transfer).
Plaintiffs, *
*
v. *
*
THE UNITED STATES, *
*
Defendant. *
*
*
****************************************
Louis P. Vitti, Vitti & Vitti & Associates, P.C., Pittsburgh, Pennsylvania, Counsel for Plaintiffs.
Stuart F. Delery, United States Department of Justice, Assistant Attorney General, Washington,
D.C., Counsel for the Defendant.
MEMORANDUM OPINION AND FINAL ORDER
BRADEN, Judge.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY. 1
The Pennsylvania Housing Financing Agency (“PHFA”) has a contractual relationship
with the United States Department of Veteran’s Affairs (“VA”) to service mortgages guaranteed
by the VA. Am. Compl. ¶ 8. Pursuant to this contract, when a PHFA property becomes the
subject of a foreclosure, the VA purchases the property from the PHFA and sells it. Am. Compl.
¶ 12. If marketable title cannot be obtained, the VA’s purchase is “conditional” and the property
may be returned to the PHFA and the PHFA is required to refund the VA’s guarantee. Am.
Compl. ¶¶ 13–14.
Vitti & Vitti & Associates, P.C., 2 Louis P. Vitti and Edith Moen Vitti (hereinafter
“Plaintiffs”) represent the PHFA when foreclosure of these properties occurs. Am. Compl. ¶ 9.
1
The relevant facts discussed herein were derived from the July 22, 2013 Amended
Complaint, filed in the United States Court of Federal Claims.
Under a separate agreement between Plaintiffs and PHFA, if a property is returned to the
PHFA by the VA, Plaintiffs are required to indemnify the PHFA for any loss incurred. Am.
Compl. ¶ 15.
This case concerns a property located at 2116 Walton Avenue in Pittsburgh,
Pennsylvania, that was appraised at and purchased by the VA for $48,000. Am. Compl. ¶¶ 19–
20 Ex. A at 1 (Uniform Residential Appraisal Report). On October 10, 2009, the PHFA initiated
a foreclosure of this property that resulted in a sheriff’s sale. Am. Compl. ¶ 11. Because of a
title defect, the VA subsequently returned the property to the PHFA. Am. Compl. ¶ 17.
Thereafter, title was resolved and the property was reconveyed to the VA. Am. Compl. ¶ 18.
During the time the property was under the VA’s control, it was vandalized. Am. Compl. ¶ 33.
On May 24, 2012, the VA denied an administrative tort claim, concerning the property
damage, filed by Plaintiffs. Am. Compl. ¶ 34 & Ex. E.
On July 22, 2013, Plaintiffs filed an Amended Complaint in the United States Court of
Federal Claims 3 alleging that the VA negligently allowed the 2116 Walton Avenue to be
vandalized when it was subject to the VA’s care and control. Am. Compl. ¶¶ 37, 43. The VA
also failed properly to “exercise their duties and responsibilities” and as such breached its
contract with PHFA. Am. Compl. ¶ 43.
On September 20, 2013, the Government filed a Motion To Dismiss. On September 30,
2013, Plaintiffs filed a Response. On November 4, 2013, the Government filed a Reply.
II. DISCUSSION.
A. Jurisdiction.
The United States Court of Federal Claims has jurisdiction under the Tucker Act “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.” 28 U.S.C. § 1491(a)(1). The Tucker Act, however, is “a jurisdictional statute;
it does not create any substantive right enforceable against the United States for money
damages. . . . [T]he Act merely confers jurisdiction upon [the United States Court of Federal
Claims] whenever the substantive right exists.” United States v. Testan, 424 U.S. 392, 398
(1976).
Therefore, to pursue a substantive right under the Tucker Act, a plaintiff must identify
and plead an independent contractual relationship, Constitutional provision, federal statute,
and/or executive agency regulation that provides a substantive right to money damages. See
2
Successor in interest to Louis P. Vitti & Associates, P.C.
3
At the Plaintiffs’ request, the United States District Court for the Western District of
Pennsylvania transferred a March 12, 2013 Amended Complaint to this court, pursuant to 28
U.S.C. § 1631. ECF Docket No. 1 (July 5, 2013). The Government did not oppose the transfer.
2
Todd v. United States, 386 F.3d 1091, 1094 (Fed. Cir. 2004) (“[J]urisdiction under the Tucker
Act requires the litigant to identify a substantive right for money damages against the United
States separate from the Tucker Act . . . .”); see also Fisher v. United States, 402 F.3d 1167,
1172 (Fed. Cir. 2005) (en banc) (“The Tucker Act . . . does not create a substantive cause of
action; . . . a plaintiff must identify a separate source of substantive law that creates the right to
money damages. . . . [T]hat source must be ‘money-mandating.’”). Specifically, a plaintiff must
demonstrate that the source of substantive law upon which he relies “can fairly be interpreted as
mandating compensation by the Federal Government.” United States v. Mitchell, 463 U.S. 206,
216 (1983) (quoting Testan, 424 U.S. at 400). And, the plaintiff bears the burden of establishing
jurisdiction by a preponderance of the evidence. See Reynolds v. Army & Air Force Exch. Serv.,
846 F.2d 746, 748 (Fed. Cir. 1988) (“[O]nce the [trial] court’s subject matter jurisdiction [is] put
in question . . . . [the plaintiff] bears the burden of establishing subject matter jurisdiction by a
preponderance of the evidence.”).
B. Standard of Review for a Motion to Dismiss Pursuant to RCFC 12(b)(1).
A challenge to the United States Court of Federal Claims’ “general power to adjudicate in
specific areas of substantive law . . . . is properly raised by a [Rule] 12(b)(1) motion.”
Palmer v. United States, 168 F.3d 1310, 1313 (Fed. Cir. 1999); see also RCFC 12(b)(1)
(allowing a party to assert, by motion, “lack of subject-matter jurisdiction”). When considering
whether to dismiss an action for lack of subject matter jurisdiction, the court is “obligated to
assume all factual allegations [of the complaint] to be true and to draw all reasonable inferences
in plaintiff’s favor.” Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995).
C. The Government’s September 20, 2013 Motion to Dismiss.
1. The Government’s Argument.
The Government argues that the court does not have subject matter jurisdiction over the
claims alleged in Count I of the Amended Complaint (Negligence), as they sound in tort. Gov’t
Mot. 7. As to the allegations in Count II of the Amended Complaint (Breach of Contract),
Plaintiffs do not have privity with the United States, thereby depriving the court of jurisdiction.
Gov’t Mot. 8–9.
2. The Plaintiff’s Response.
Plaintiffs respond that the claims alleged in Count I of the July 22, 2013 Amended
Complaint are based on the Federal Tort Claims Act. 4 Pls. Resp. 11. In addition, Plaintiffs
respond that the breach of contract claims alleged in Count II of the Amended Complaint are
based on a contract with the Government, but none is cited. Pls. Resp. 11.
4
The Federal Tort Claims Act gives the United States District Courts “exclusive
jurisdiction” for losses caused by negligence on the part of an employee of the United States
acting “within the scope of his office or employment.” 28 U.S.C. § 1346(b)(1); see also 28
U.S.C. § 2675 (requiring that tort claims against the Government be first presented to the
appropriate agency).
3
3. The Court’s Resolution.
Count I of the July 22, 2013 Amended Complaint alleges that the VA was negligent in
maintaining the property at issue. Am. Compl. ¶ 37. The Federal Tort Claims Act, 28 U.S.C.
§ 1346(b)(1), provides that the Government can be sued for claims sounding in tort; the United
States Court of Federal Claims, however, does not have jurisdiction to adjudicate such claims.
See 28 U.S.C. § 1491(a)(1) (“The United States Court of Federal Claims shall have jurisdiction
to render judgment upon any claim . . . for liquidated damages . . . in cases not sounding in tort.”
(emphasis added)). Instead, United States District Courts are the proper forum. See 28 U.S.C. §
1346(b)(1). Accordingly, the claims alleged in Count I of the July 22, 2013 Amended Complaint
must be dismissed for a lack of jurisdiction. 5
As a matter of law, for the Government to be sued under the Tucker Act, there must be
privity of contract with a plaintiff. See Chancellor Manor v. United States, 331 F.3d 891, 899
(Fed. Cir. 2003) (“[The United States Court of Appeals for the Federal Circuit] has consistently
held that for the government to be sued on a contract pursuant to the Tucker Act, there must be
privity of contract[.]”) (citing Cienega Gardens v. United States, 194 F.3d 1231, 1239 (Fed. Cir.
1998)). When a third party is neither a party to the contract nor a third-party beneficiary, as a
matter of law, privity cannot be established. See Castle v. United States, 301 F.3d 1328, 1339
(Fed. Cir. 2002) (holding that parties who “neither negotiated with, nor promised any
performance to, the government” did not have standing to sue the Government under a contract
claim due to a lack of privity). In this case, the alleged contract is between the VA and the
PHFA. Am. Compl. ¶ 8. Plaintiffs, however, are not a party to that contract and therefore
privity cannot be established. Accordingly, the court does not have jurisdiction to adjudicate the
claims alleged in Count II of the July 22, 2013 Amended Complaint. 6
5
In Plaintiffs’ Response, they contend that the VA’s actions also violated a trust
relationship. Pls. Resp. 11 (“During the period of time when the Defendant was in possession of
the real estate . . . a trust relationship occur[ed].”) Assuming arguendo that this allegation is
true, that fact does not affect the jurisdiction of the United States Court of Federal Claims. See
Cleveland Chair Co. v. United States, 557 F.2d 244, 246 (Fed. Cir. 1977) (holding that breach of
fiduciary duty claim must be based on a contract for jurisdictional purposes).
6
Plaintiffs also request a declaratory judgment (Count III). Am. Compl. ¶¶ 44–47.
Because the court does not have jurisdiction to adjudicate the underlying claims, the court
similarly does not have jurisdiction over Count III.
4
III. CONCLUSION.
For these reasons, the court grants the Government’s September 20, 2013 Motion.
Accordingly, the Clerk will dismiss Count II of the July 22, 2013 Amended Complaint in the
United States Court of Federal Claims, without prejudice, and transfer Counts I and III of that
Complaint to the United States District Court for the Northern District of Pennsylvania for final
disposition, pursuant to 28 U.S.C. section 1631. 7
IT IS SO ORDERED.
s/ Susan G. Braden
SUSAN G. BRADEN
Judge
7
When a court determines that it does not have jurisdiction to hear an action or appeal,
section 1631 provides for transfer “to any other court in which the action or appeal could have
been brought at the time it was filed or noticed.” 28 U.S.C. § 1631.
5