Ivaldy v. United States

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FILED
No. 15-243C
(Filed: October 22, 2015) OCT 2 2 2015
U.S. COURT OF
) FEDERAL CLAIMS
PHIL IVALDY, )
)
Pro Se Plaintiff, )
) Pro Se; Motion to Dismiss; Lack of
v. ) Subject Matter Jurisdiction; RCFC
) 12(b )(1)
THE UNITED STATES, )
)
Defendant. )
````````~ )
ORDER GRANTING THE GOVERNMENT'S MOTION TO DISMISS
FIRESTONE, Judge.
I. Introduction
Pro se plaintiff Phil Ivaldy alleges that he and other members of informal groups
named the Loral Stockholder Protective Committee ("LSPC") and American Shareholder
Rights were shareholders of Loral Space and Communications Ltd. ("Loral"), which filed
for Chapter 11 bankruptcy protection in 2003 as part of an agreement to sell assets to
another company. See Pl.'s Resp. 5. Mr. Ivaldy seeks damages of $2,000,000,000 based
on actions of the United States Bankruptcy Court for the Southern District of New York
("the bankruptcy court") and the United States District Court for the Southern District of
New York ("the district court"), in connection with Loral' s bankruptcy proceeding. See
Compl. 1-2; Pl.'s Resp. 6. Mr. Ivaldy asserts that the bankruptcy court's and district
court's decisions resulted in a Fifth Amendment taking of his interest in the corporation
and deprived him of access to the federal courts in violation of his rights under the
Privileges and Immunities Clause of Article IV of the Constitution. See Compl. 1-2; Pl.'s
Resp. 6. Mr. Ivaldy also claims that the actions of the bankruptcy court and the district
court deprived him of his right to "uniform bankruptcy laws" and deprived him of his
constitutional due process rights, or that the entire bankruptcy court system is
unconstitutional. See Compl. 1-2. Mr. Ivaldy filed his original complaint on March 9,
2015 and filed an amendment to the complaint on March 13, 2015. 1
On May 5, 2015, defendant United States ("the government") filed a motion to
dismiss the complaint, as amended, pursuant to Rules 12(b)(l) and 12(b)(6) of the Rules
of the United States Court of Federal Claims ("RCFC"). The government argues that this
court lacks jurisdiction to hear Mr. Ivaldy's takings claim because it would require the
court to review the actions of other federal courts and this court does not have jurisdiction
to "entertain a taking claim that requires the court to 'scrutinize the actions of another
tribunal." Vereda, Ltda. v. United States, 271F.3d1367, 1375 (Fed. Cir. 2001) (quoting
Allustiarte v. United States, 256 F.3d 1349, 1352 (Fed. Cir. 2001)). The government
further argues that the other constitutional provisions cited by Mr. Ivaldy are not money
mandating. Specifically, the government points to Federal Circuit precedent holding that
1
In the cover sheet for his original complaint, Mr. lvaldy notes that this case is related to five
cases that appear to have been heard in the bankruptcy court and the district court for the
Southern District of New York: "03-41710-RDD," "04-CIV-8645-RPP," "05-7975-VM," "06-
3720-BK," and "08-510."
2
neither the Due Process Clause nor the Privileges and Immunities Clause provide for the
payment of money. See May v. United States, 534 F. App'x 930, 933 (Fed. Cir. 2013).
In the alternative, the government argues that Mr. Ivaldy fails to allege facts showing that
the actions of the bankruptcy court or the district court constitute a taking of Mr. Ivaldy's
property or a violation of Mr. Ivaldy's constitutional rights, requiring the court to dismiss
the amended complaint for failure to state a claim upon which relief can be granted
pursuant to RCFC 12(b)(6).
In his response, filed August 5, 2015, Mr. Ivaldy repeats the allegations in his
amended complaint and states that he "does not seek to overturn the District Court'[s]
order" confirming Loral's plan of reorganization. Pl.'s Resp. ,-r 23. Instead, Mr. Ivaldy
seek[s] to hold the United States Federal Government accountable for
depriving the Plaintiff of access to the Federal Courts under the Privileges
and Immunities Clause of Article IV, Section 2 of the United States
Constitution and for depriving the Plaintiff of his shareholder assets under
the Fifth Amendment taking clause of the United States Constitution that
existed at the time the Bankruptcy Court issued its Order Confirming
[Loral' s plan of reorganization].
The court has determined that oral argument is not necessary. For the reasons that
follow, the government's motion to dismiss pursuant to RCFC 12(b)(l) is GRANTED. 2
2
Because the court does not have jurisdiction, it does not reach the goverrunent' s alternative
grounds for dismissal pursuant to RCFC 12(b)(6).
3
II. Legal Standards
A pro se complaint is held "to less stringent standards than formal pleadings
drafted by lawyers." Matthews v. United States, 750 F.3d 1320, 1322 (Fed. Cir. 2014)
(quoting Haines v. Kerner, 404 U.S. 519, 520-21 (1972)). However, a prose plaintiff
must nevertheless meet jurisdictional requirements. Mora v. United States, 118 Fed. Cl.
713, 715 (2014) (citing Kelley v. U.S. Dep't of Labor, 812 F.2d 1378, 1380 (Fed. Cir.
1987); Bernard v. United States, 59 Fed. Cl. 497, 499 (2004)).
The plaintiff bears the burden of establishing subject matter jurisdiction and must
do so by a preponderance of the evidence. Estes Express Lines v. United States, 739 F.3d
689, 692 (Fed. Cir. 2014) (citing Reynolds v. Army & Air Force Exch. Serv., 846 F.2d
746, 748 (Fed. Cir. 1988)). In deciding a motion to dismiss for lack of subject matter
jurisdiction, the court accepts as true all uncontroverted factual allegations in the
complaint, and construes them in the light most favorable to the plaintiff. See Cedars-
Sinai Med. Ctr. v. Watkins, 11F.3d1573, 1583-84 (Fed. Cir. 1993). However, ifa
motion to dismiss for lack of jurisdiction challenges the truth of the alleged jurisdictional
facts, a court is not restricted to the face of the pleadings and may review extrinsic
evidence in order to establish the predicate jurisdictional facts. Id. at 1584; see also
Banks v. United States, 741 F.3d 1268, 1277 (Fed. Cir. 2014).
The Tucker Act, 28 U.S.C. § 1491, grants this court jurisdiction over claims
against the government that are founded on the Constitution, laws, treaties, or contracts of
the United States. See, e.g., Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir.
2005) (en bane in relevant part). However, the Tucker Act does not creates substantive
4
rights; it only waives sovereign immunity for claims premised on other sources of law,
such as statutes or contracts, that "can fairly be interpreted as mandating compensation by
the Federal Government for the damages sustained." Jan's Helicopter Serv., Inc. v. FAA,
525 F.3d 1299, 1306 (Fed. Cir. 2008) (quoting United States v. Mitchell, 463 U.S. 206,
216-17 (1983)).
III. Discussion
Mr. Ivaldy's claims arise from Loral's Chapter 11 bankruptcy proceeding. See
Compl. l; Pl.'s Resp. 5. Mr. Ivaldy alleges that the bankruptcy court undervalued Loral's
assets, causing the bankruptcy court to find that Loral's liabilities were greater than its
assets and approve a plan of reorganization that resulted in Mr. Ivaldy's stock losing
value. See Comp. 3; Pl. 's Resp. 5-6. 3 Mr. Ivaldy further alleges that after the bankruptcy
court confirmed Loral's plan of reorganization, the district court improperly denied
LSPC's appeals. See Comp. 4-5; Pl.'s Resp. 3-4. 4 Mr. lvaldy also notes that he
unsuccessfully appealed the district court's decision to the United States Court of
Appeals for the Second Circuit and the United States Supreme Court. See Comp. 5; Pl.'s
3
See generally In re Loral Space & Commc'ns, Ltd., No. 04-CIV-8645, 2004 WL 2979785
(S.D.N.Y. Dec. 23, 2004) (reversing bankruptcy court's denial of the LSPC's motion to appoint
an examiner, In re Loral Space & Commc'ns Ltd., 313 B.R. 577 (Bankr. S.D.N.Y. 2004), and
remanding for the bankruptcy court to appoint a qualified independent examiner).
4
See generally In re Loral Space & Commc'ns, Ltd., 342 B.R. 132 (S.D.N.Y. 2006) (dismissing
LSPC's appeal of the Bankruptcy Court's confirmation order, and an order denying a motion of
the Official Committee of Equity Security Holders for leave to prosecute a fraudulent
conveyance claim, as moot after Loral' s reorganization plan had been substantially
consummated, noting that LSPC had not attempted to stay the reorganization plan); see also In re
Loral Space & Commc'ns Ltd., 346 B.R. 71 (S.D.N.Y. 2006) (denying motion for
reconsideration).
5
Resp. 4. 5 In this court, Mr. Ivaldy states that he does not seek to overturn the bankruptcy
court's order confirming Loral's plan of reorganization but does seek to hold the federal
government accountable for violations of his constitutional rights and for taking his
shareholder assets that existed at the time the bankruptcy court issued the confirmation
order. See Pl.'s Resp. 6. He is seeking $2,000,000,000 for these claims.
A. Mr. Ivaldy's Fifth Amendment Takings Claim would Require this
Court to Review the Actions of the Bankruptcy Court and the District
Court.
The court agrees with the government that it lacks jurisdiction to hear Mr. Ivaldy's
takings claim because doing so would require the court to review the actions of the
bankruptcy court and the district court. While Mr. Ivaldy argues that he does not seek to
overturn the bankruptcy court's and the district court's approval ofLoral's plan of
reorganization, Mr. Ivaldy contends that the actions of the bankruptcy court and the
district court in confirming the plan of reorganization deprived him of shareholder assets
in violation of the Fifth Amendment's Takings Clause. In support of this claim, Mr.
Ivaldy alleges that the bankruptcy court, in approving Loral's plan of reorganization,
failed to properly value Loral's assets and that, as a result, Mr. Ivaldy's shares lost value.
Therefore, it was the bankruptcy court's and the district court's approval of the plan of
reorganization that caused the taking.
5
See generally In re Loral Space & Commc'ns Ltd., 266 F. App'x 52 (2d Cir. 2008) (affirming
the district court's denial of motion for reconsideration and finding that the underlying issue,
whether the district court properly dismissed LSPC's appeal as moot, had been waived), cert.
denied sub nom., Ivaldy v. Loral Space & Commc'ns Ltd., 555 U.S. 1126 (2009), reh'g denied,
556 U.S. 1122 (2009).
6
The Federal Circuit has consistently held that this court cannot hear a takings
claim that requires review of another court's decision. As noted above, in Vereda, Ltda.
v. United States, the Federal Circuit concluded that this court cannot '"scrutinize the
actions of another tribunal." 271 F.3d at 1375 (quoting Allustiarte, 256 F.3d at 1352);
see also Joshua v. United States, 17 F.3d 378, 380 (Fed. Cir. 1994) ("[T]he Court of
Federal Claims does not have jurisdiction to review the decisions of district courts.").
Similarly, in Allustiarte v. United States, the Federal Circuit held that this court lacks
jurisdiction over challenges to the actions of bankruptcy courts and trustees. See 256
F.3d at 1351-52. As the Federal Circuit explained in Allustiarte, plaintiffs who are
dissatisfied with a bankruptcy court decision may appeal to a district court and then to a
court of appeals; "[t]o permit collateral attacks on bankruptcy court judgments would
'seriously undercut[] the orderly process of the law."' Id. at 13 52 (citing Celotex Corp.
v. Edwards, 514 U.S. 300, 313 (1995)). In this case, it is impossible to consider Mr.
Ivaldy's takings claim without reviewing the alleged errors in the valuation ofLoral's
assets and liabilities by the bankruptcy court and the district court. Mr. Ivaldy's takings
claim would be based on this court's disagreement with the bankruptcy court's
valuation. 6 In sum, Mr. Ivaldy's options for challenging that valuation was limited to
6
Compare Alley's of Kingsport, Inc. v. United States, 103 Fed. Cl. 449, 452 (2012), and
Colonial Chevrolet Co. v. United States, 103 Fed. Cl. 570, 572 (2012), where the plaintiff
Chrysler and GM automobile dealerships alleged that Fifth Amendment takings occurred when
the government advised Chrysler and GM to terminate the dealerships' franchise agreements in
bankruptcy proceedings as part of obtaining financial assistance under the Troubled Asset Relief
Program (TARP). The court rejected the government's analogy to Allustiarte because the court
was "not asked to review bankruptcy court rulings in the administration of a bankruptcy .... "
Alley's, 103 Fed. Cl. at 451; Colonial, 103 Fed. Cl. 572. Instead, the Alley's and Colonial
plaintiffs claimed that "the [g]overnment' s alleged control of the TARP restructuring process
7
appeals to the district court, the Court of Appeals, and the Supreme Court. The
bankruptcy court's valuation cannot be reviewed in this court.
B. This Court Lacks Jurisdiction to Hear Mr. Ivaldy's Remaining Claims
because the Cited Constitutional Provisions are not Money Mandating.
This court also does not have jurisdiction to hear Mr. Ivaldy's claims based on the
Fifth Amendment's Due Process Clause and Article IV's Privileges and Immunities
Clause, and Mr. Ivaldy's claims challenging the application of the bankruptcy laws or the
constitutionality of the bankruptcy courts, because the provisions Mr. Ivaldy cites are not
money mandating.
Mr. Ivaldy asserts that this court has jurisdiction to hear his case under the Tucker
Act, 28 U.S.C. § 1491, because he claims money damages "aris[ing] from the United
States Constitution, Federal Statutes, and executive regulations." Compl. 2. However,
the Tucker Act provides a waiver of sovereign immunity but not a substantive right to
money damages. See, e.g., Jan's Helicopter Serv., 525 F .3d at 1306. The Federal Circuit
has identified three types of underlying monetary claims: claims alleging the existence of
a contract between the plaintiff and the government; claims where "the plaintiff has paid
money over to the Government, directly or in effect, and seeks return of all or part of that
sum"; and claims where "money has not been paid but the plaintiff asserts that he is
nevertheless entitled to a payment from the treasury." Ontario Power Generation, Inc. v.
resulted in a Fifth Amendment taking .... " Alley's, 103 Fed. Cl. at 452; Colonial, 103 Fed. Cl.
at 573; see also A & D Auto Sales v. United States, 748 F.3d 1142, 1156 (Fed. Cir. 2014) (on
appeal, finding that bankruptcy court's findings on good faith did not estop plaintiffs from
arguing in this litigation that the government coerced the automakers into action).
8
United States, 369 F.3d 1298, 1301 (Fed. Cir. 2004) (quoting Eastport S.S. Corp. v.
United States, 372 F.2d 1002, 1007-08 (Ct. Cl. 1967)). Mr. Ivaldy's claims fall into the
third category, which are "commonly referred to as claims brought under a 'money-
mandating' statute." Id. However, claims in this category "require that the 'particular
provision of law relied upon grants the claimant, expressly or by implication, a right to be
paid a certain sum."' Id. (quoting Eastport S.S., 372 F.2d at 1007). In this connection,
"neither the Fifth Amendment Due Process Clause ... nor the Privileges and Immunities
Clause provides a basis for jurisdiction in this court because the Fifth Amendment is not
a source that mandates the payment of money to plaintiff." McCullough v. United States,
76 Fed. Cl. 1, 4 (2006) (citing Crocker v. United States, 125 F.3d 1475, 1476 (Fed. Cir.
1997); LeBlanc v. United States, 50 F.3d 1025, 1028 (Fed. Cir. 1995)). Additionally, the
authority to establish "uniform Laws on the subject of Bankruptcies throughout the
United States," under Article I, Section 8 cannot fairly be interpreted as mandating
compensation by the federal government. Cf. Struck v. United States, No. 15-788, 2015
WL 4722623, at *2 (Fed. Cl. Aug. 7, 2015) (finding that the list of congressional powers
in Article I, Section 8 is not money mandating). Therefore, this court lacks jurisdiction to
hear Mr. Ivaldy's remaining constitutional claims.
IV. Conclusion
For these reasons, the government's motion to dismiss Mr. Ivaldy's complaint for
lack of subject matter jurisdiction pursuant to RCFC 12(b)(l) is GRANTED. The Clerk
is directed to enter judgment accordingly. No costs.
9
IT IS SO ORDERED.
10