Cloud v. United States

Revised January 29, 2002
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_________________________
No. 01-20079
_________________________
LAWRENCE H. RAMMING,
Plaintiff,
versus
UNITED STATES OF AMERICA,
Defendant.
------------------------------------------------------
JOHN THOMAS CLOUD,
Plaintiff-Appellant,
versus
UNITED STATES OF AMERICA,
Defendant-Appellee.
______________________________________
Appeals from the United States District Court
for the Southern District of Texas
______________________________________
December 19, 2001
Before SMITH and EMILIO M. GARZA, Circuit Judges, and CUMMINGS, District Judge.1
PER CURIAM:
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District Judge of the Northern District of Texas, sitting by designation.
John Thomas Cloud (“Appellant”) appeals the district court’s dismissal of Appellant’s
action against the United States (“Appellee”) for malicious prosecution and other prosecutorial
misconduct as time-barred. We AFFIRM.
I. BACKGROUND
In 1994, a federal jury indicted Appellant and several co-defendants on a 27-count
indictment for bank fraud, wire fraud, and other offenses. The case was tried in a non-jury
proceeding from November 1995 through January 1996. On January 12, 1996, the United States
District Court for the Southern District of Texas, Kenneth M. Hoyt, J., granted Appellant’s and
co-defendants’ motion for acquittal and dismissal on the basis of prosecutorial misconduct citing,
inter alia, the following litany of misconduct in support thereof:
• the government failed in its duty to be forthright in the
disclosure of Brady materials;
• the government failed to produce . . . questionable materials
so that the . . . rights of the defendants could be protected;
• the government intentionally failed or refused to comply
with the law;
• the failing of the government, in its duty under the federal
Constitution to not violate the Sixth Amendment rights of
the defendants to a fair and open trial;
• the government made misrepresentations of facts to the
Court. . . . At the very least, this conduct was reckless. At
most, it was intended as a fraud on the Court;
• transcripts of the Grand Jury testimony . . . was [sic]
wrought with statements that both supported the
defendants’ theory of the case and foiled that of the
government;
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• the testimony . . . supports the defendants’ claim of
innocence;
• the government’s contentions of equal access, neutral
evidence, that the defendants were aware of the information
possessed by the Grand Jury, that the testimony was merely
impeachment, and that they acted in good faith, is
incredible. Only a person blinded by ambition or ignorance
of the law and ethics would have proceeded down this
dangerous path.
United States v. Ramming, 915 F. Supp. 854, 867-68 (S.D. Tex. 1996).
On November 26, 1997, Appellant filed a voluntary Chapter 11 bankruptcy petition, and
on September 9, 1999, Appellant’s plan of reorganization was confirmed by the bankruptcy court.
On March 18, 1999, Appellant presented his administrative claim of malicious prosecution against
Appellee and also presented a supplemental claim on November 1, 1999. On October 20, 1999,
Appellant’s administrative claim was denied.
On December 30, 1999, Appellant filed his prosecutorial misconduct action against
Appellee in federal court. The District Court for the Southern District of Texas, Vanessa D.
Gilmore, J., dismissed Appellant’s claim under Rules 12(b)(1) and 12(b)(6) of the Federal Rules
of Civil Procedure. Judge Gilmore held that Appellant’s claim was time-barred under the Federal
Tort Claims Act (“FTCA”), 28 U.S.C. § 2401(b).
Judge Gilmore’s order of December 30, 1999, also rejected Appellant’s argument that
Appellant was entitled to a two-year extension of the FTCA limitations period as of the date of his
November 26, 1997, bankruptcy filing pursuant to 11 U.S.C. § 108(a) of the Bankruptcy Code.
In rejecting Appellant’s argument, Judge Gilmore held that Appellant was entitled to the sixty-day
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extension of the limitations period available under 11 U.S.C. § 108(b), but, in any event, the sixty-
day period had also expired prior to the time Appellant filed his malicious prosecution suit.
II. STANDARD OF REVIEW
This Court evaluates de novo the district court’s grant of Appellee’s Rules 12(b)(1) and
12(b)(6) motion for dismissal applying the same standard used by the district court. Hebert v.
United States, 53 F.3d 720, 722 (5th Cir. 1995).
Motions filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure allow a party to
challenge the subject matter jurisdiction of the district court to hear a case. FED. R. CIV. P.
12(b)(1). Lack of subject matter jurisdiction may be found in any one of three instances: (1) the
complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or
(3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.
Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996).
The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting
jurisdiction. McDaniel v. United States, 899 F. Supp. 305, 307 (E.D. Tex. 1995). Accordingly,
the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist. Menchaca v.
Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980).
When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court
should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits.
Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977) (per curiam). This requirement
prevents a court without jurisdiction from prematurely dismissing a case with prejudice. Id. The
court’s dismissal of a plaintiff’s case because the plaintiff lacks subject matter jurisdiction is not a
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determination on the merits and does not prevent the plaintiff from pursuing a claim in a court that
does have proper jurisdiction. Id.
In examining a Rule 12(b)(1) motion, the district court is empowered to consider matters
of fact which may be in dispute. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981).
Ultimately, a motion to dismiss for lack of subject matter jurisdiction should be granted only if it
appears certain that the plaintiff cannot prove any set of facts in support of his claim that would
entitle plaintiff to relief. Home Builders Ass’n of Miss., Inc. v. City of Madison, Miss., 143 F.3d
1006, 1010 (5th Cir. 1998).
Motions to dismiss for failure to state a claim are appropriate when a defendant attacks
the complaint because it fails to state a legally cognizable claim. FED. R. CIV. P. 12(b)(6). The
test for determining the sufficiency of a complaint under Rule 12(b)(6) was set out by the United
States Supreme Court as follows: “[A] complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). See also
Grisham v. United States, 103 F.3d 24, 25-26 (5th Cir. 1997).
Subsumed within the rigorous standard of the Conley test is the requirement that the
plaintiff’s complaint be stated with enough clarity to enable a court or an opposing party to
determine whether a claim is sufficiently alleged. Elliott v. Foufas, 867 F.2d 877, 880 (5th Cir.
1989). Further, “[t]he plaintiff’s complaint is to be construed in a light most favorable to the
plaintiff, and the allegations contained therein are to be taken as true.” Oppenheimer v.
Prudential Sec. Inc., 94 F.3d 189, 194 (5th Cir. 1996). This is consistent with the well-
established policy that the plaintiff be given every opportunity to state a claim. Hitt, 561 F.2d at
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608. In other words, a motion to dismiss an action for failure to state a claim “admits the facts
alleged in the complaint, but challenges plaintiff's rights to relief based upon those facts.” Tel-
Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1137 (5th Cir. 1992). Finally, when
considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, the district court must
examine the complaint to determine whether the allegations provide relief on any possible theory.
Cinel v. Connick, 15 F.3d 1338, 1341 (5th Cir. 1994).
III. DISCUSSION
A. Accrual of Appellant’s Malicious Prosecution Cause of Action
The FTCA mandates that
[a] tort claim against the United States shall be forever barred
unless it is presented in writing to the appropriate Federal agency
within two years after such claim accrues or unless action is begun
within six months after the date of mailing . . . of notice of final
denial of the claim by the agency to which it was presented.
28 U.S.C. § 2401(b) (1994). Although phrased in the disjunctive, “this statute requires a claimant
to file an administrative claim within two years [of accrual] and file suit within six months of its
denial.” Houston v. United States Postal Serv., 823 F.2d 896, 902 (5th Cir. 1987) (emphasis in
original). See also Willis v. United States, 719 F.2d 608, 612 (2d Cir. 1983); Schuler v. United
States, 628 F.2d 199, 201 (D.C. Cir. 1980).
Here, the threshold issue is determining when Appellant’s claim accrued. Appellant
contends that his claim did not accrue at the time of his acquittal in January 1996 but only accrued
in December 1998 when one of his acquitted co-defendants discovered the contents of the grand
jury transcripts which had led to Appellant’s and his co-defendants’ original indictment. Appellee
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contends, however, that Appellant’s claim accrued, and the limitations period began to run, when
Appellant was acquitted.
Before a malicious prosecution claim can accrue, the underlying criminal proceeding must
terminate in the plaintiff’s favor. Heck v. Humphrey, 512 U.S. 477, 489 (1994). Based on the
repeated instances of prosecutorial misconduct enumerated by Judge Hoyt, Appellant and his co-
defendants were acquitted of all charges on January 12, 1996. Thus, the proceeding was
terminated in Appellant’s favor.
A cause of action under federal law accrues within the meaning of § 2401(b) “when the
plaintiff knows or has reason to know of the injury which is the basis of the action.” Brown v.
Nationsbank Corp., 188 F.3d 579, 589-90 (5th Cir. 1999) (internal quotes and citations omitted),
cert. denied, 530 U.S. 1274 (2000). In FTCA cases,
[a] plaintiff . . . armed with the facts about the harm done to him,
can protect himself by seeking advice in the medical and legal
community. To excuse him from promptly doing so by postponing
the accrual of his claim would undermine the purpose of the
limitations statute, which is to require the reasonably diligent
presentation of tort claims against the Government.
United States v. Kubrick, 444 U.S. 111, 123 (1979).
Ascertaining Appellant’s awareness of the existence of a possible cause of action has two
elements: “(1) [t]he existence of the injury; and (2) causation, that is, the connection between the
injury and the defendant’s actions.” Piotrowski v. City of Houston, 51 F.3d 512, 516 (5th Cir.
1995). As to causation, Appellant
need not have knowledge of fault in the legal sense for the statute
to begin to run, but [Appellant] must have knowledge of facts that
would lead a reasonable person (a) to conclude that there was a
causal connection . . . or (b) to seek professional advice, and then,
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with that advice, to conclude that there was a causal connection
between [Appellee’s acts] and [Appellant’s] injury.
Id. (internal quotes and citations omitted).
Certainly, Judge Hoyt’s unequivocal iteration of examples of prosecutorial misconduct
leaves little doubt that, at the time of Appellant’s acquittal, Appellant had ample evidence of
essential facts which would support the possible existence of a claim for malicious prosecution.
At the very least, Appellant was in a position “to seek professional advice” from a lawyer or other
expert, and “then, with that advice, to conclude that there was a causal connection between
[Appellee’s acts] and [Appellant’s] injury.” Id. See also Brown v. United States, 653 F.2d 196,
199 (5th Cir. 1981) (holding that, in a malicious prosecution action under Texas law, malice may
be inferred from the lack of probable cause or the conclusion that the government acted in
reckless disregard of an individual’s rights). Further, the “requirement of diligent inquiry imposes
an affirmative duty on the potential plaintiff to proceed with a reasonable investigation in response
to an adverse event.” Pacheco v. Rice, 966 F.2d 904, 907 (5th Cir. 1992).
The difficulty here is that Appellant did not conduct an inquiry, diligent or otherwise, even
though Appellant knew or had reason to know of the injury forming the basis of a possible
malicious prosecution claim as of January 12, 1996. We are not free to construe § 2401(b) so as
to defeat its obvious purpose of encouraging the prompt presentation of claims, Kubrick, 444
U.S. at 118, and we discern no sound reason for visiting the consequences of Appellant’s
investigative omission upon Appellee by delaying the accrual of Appellant’s claim. Id. at 124.
Therefore, because Appellant knew or should have known of his injury and the causal connection
between his injury and Appellee’s conduct as of the date of Appellant’s acquittal, this Court finds
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that Judge Gilmore did not err in holding that Appellant’s claim for malicious prosecution accrued
on January 12, 1996.
B. Tolling of Limitations Period
Having determined that the accrual date of Appellant’s claim was January 12, 1996, we
now turn to Appellant’s argument that the FTCA limitations period was tolled for two years as of
the filing of his Chapter 11 bankruptcy petition on November 26, 1997. Appellant bases his
contention on § 108(a) of the Bankruptcy Code which provides:
(a) If applicable nonbankruptcy law, an order entered in a nonbankruptcy
proceeding, or an agreement fixes a period within which the debtor may
commence an action, and such period has not expired before the date of the
filing of the petition, the trustee may commence such action only before the
later of–
(1) the end of such period, including any suspension of such
period occurring on or after the commencement of the case;
or
(2) two years after the order for relief.
11 U.S.C. § 108(a) (1993).
Appellant argues that his March 18, 1999, FTCA claim presentment was timely because
§ 108(a) extends the limitations period to “commence an action” for two years after the order for
relief, i.e., November 26, 1997, to November 26, 1999. Alternatively, Appellant argues that
tolling is appropriate because the bankruptcy court ordered on September 9, 1999, that “all
limitations periods for any other claims under applicable law are tolled and extended until this case
is closed or a final decree is entered.”
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Appellee argues, however, that presentment of an administrative claim does not constitute
an “action” within the meaning of § 108(a) and, therefore, Appellant’s limitations period is
controlled by the sixty-day extension contained in § 108(b). Section 108(b) provides:
(b) Except as provided in subsection (a) of this section, if applicable
nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an
agreement fixes a period within which the debtor or an individual protected
under section 1201 or 1301 of this title may file any pleading, demand,
notice, or proof of claim or loss, cure a default, or perform any other
similar act, and such period has not expired before the date of the filing of
the petition, the trustee may only file, cure, or perform, as the case may be,
before the later of–
(1) the end of such period, including any suspension of such
period occurring on or after the commencement of the case;
or
(2) 60 days after the order for relief.
11 U.S.C. § 108(b) (1993). Appellee contends that Appellant’s March 1999 administrative claim
qualifies as “any pleading, demand, notice or proof of claim or loss, . . . or [] any other similar
act” as required by § 108(b). Thus, Appellee argues that under § 108(b) Appellant had until on or
about January 26, 1998, sixty days after his Chapter 11 filing, to present his administrative claim.
The resolution of this issue is controlled by this Court’s binding precedent set forth in TLI,
Inc. v. United States, 100 F.3d 424 (5th Cir. 1996). In TLI, this Court held that the filing of an
administrative claim does not constitute the commencement of an “action” under § 108(a). Id. at
427 (citing In re Carter, 125 Bankr. 832, 836 (D. Kan. 1991); In re Howard Indus., Inc., 170
Bankr. 358, 361-62 (S.D. Ohio 1994)). The term “commencement of an action” in § 108(a)
applies only to “the bringing of suit in court” and not to administrative proceedings that may
precede such a suit. Id. This Court reasoned that “an action in its usual legal sense means a
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lawsuit brought in a court; a formal complaint brought within the jurisdiction of a court of law.”
Id. (quoting BLACK’S LAW DICTIONARY 28 (6th ed. 1990)). See also FED. R. CIV. P. 3 (defining
“Commencement of Action” as follows: “A civil action is commenced by filing a complaint with
the court”).
Although Appellant’s March 1999 administrative “claim” was an essential legal
prerequisite to his malicious prosecution action filed in federal court, Appellant’s “action” was not
commenced until December 30, 1999, when Appellant filed suit in federal court. At that time, not
only had the two-year FTCA claim presentment limitations period expired, i.e., January 12, 1996,
to January 12, 1998; but, even if § 108(a) applied as argued by Appellant, the two-year
“commencement of the case” limitations period after the order for relief under § 108(a) had also
expired, i.e., November 26, 1997, to November 26, 1999.
Appellant suffers a similar fate under application of § 108(b), which allows only a sixty-
day extension after the order for relief. Under § 108(b), Appellant was required to present his
FTCA administrative claim sixty days after November 26, 1997, i.e., by January 25, 1998.
Consequently, Appellant’s March 18, 1999, presentment of claim was also time-barred.
Similarly inconsequential is Appellant’s argument urging us to give effect to the
bankruptcy court’s September 9, 1999, order tolling “all limitations periods for all other claims
under applicable law” until the bankruptcy case was closed or a final decree was entered. We
agree with Appellee that the bankruptcy court had no jurisdiction on September 9, 1999, to order
the tolling of a limitations period which had expired approximately twenty months earlier, i.e.,
January 13, 1998.
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Limitations periods in statutes waiving sovereign immunity are jurisdictional, and a court
exercising its equitable authority may not expand its jurisdiction beyond the limits established by
Congress. Houston, 823 F.2d at 898, 902. The FTCA also acts to waive the immunity of the
United States; and this Court, in construing the statute of limitations which is a condition of that
waiver, “should not take it upon [itself] to extend the waiver beyond that which Congress
intended.” Kubrick, 444 U.S. at 118. We find that the bankruptcy court’s order of September 9,
1999, did not resurrect its jurisdiction and that said order is of no force or effect in tolling any
limitations periods applicable to this matter.
IV. CONCLUSION
For the reasons set forth above, the lower court’s dismissal of Appellant’s action for
malicious prosecution and other prosecutorial misconduct as time-barred under the FTCA is
AFFIRMED.
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