Global Freight Systems Co. W.L.L v. United States

In the United States Court of Federal Claims
No. 15-378C
(Filed: December 29, 2016)1
*************************
* Fifth Amendment Taking;
GLOBAL FREIGHT SYSTEMS CO. *
Breach of Contract; Third-Party
W.L.L., *
* Beneficiary; 28 U.S.C. § 1502;
Plaintiff, * Discovery.
*
v. *
*
THE UNITED STATES, *
*
Defendant. *
*
*************************
Paul A. Debolt, Dismas N. Locaria, and Nathaniel S. Canfield, Venable LLP, 575 7th
Street, N.W., Washington, D.C. 20004-1601, for Plaintiff.
Benjamin C. Mizer, Robert E. Kirschman, Jr., Douglas K. Mickle, Scott A. MacGriff,
and Renée A. Burbank, U.S. Department of Justice, Civil Division, Commercial Litigation
Branch, P.O. Box 480 Ben Franklin Station, Washington, D.C. 20044, for Defendant.
_____________________________________________________
OPINION AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS
PLAINTIFF’S SECOND AMENDED COMPLAINT
_____________________________________________________
WILLIAMS, Judge.
Plaintiff, Global Freight Systems Co. W.L.L. (“Global Freight”), was a subcontractor
providing services on a Navy base in Djibouti, Africa between 2011 and 2014. Plaintiff claims
that between February and April 2014, the Navy effected a Fifth Amendment taking of its
1
On November 30, 2016, the Court issued this opinion under seal and directed the parties
to file any proposed redactions by December 21, 2016. Plaintiff proposed limited redactions of
information contained in nonparty emails containing proprietary legends and directives so as not
to violate the prohibitions against disclosure in the legends. Defendant objected to Plaintiff’s
proposed redactions. The Court will resolve the issue of these redactions after affording the
nonparty an opportunity to be heard. In the meantime, the Court reissues this Opinion indicating
redactions by asterisks “[***].”
property by directing Plaintiff to move its vehicles from the protected confines of Camp
Lemonnier – the Navy base – into Djiboutian jurisdiction, thereby enabling the Djiboutian
Government to seize Plaintiff’s vehicles. Plaintiff alleges that Defendant took this action with
the knowledge that “Djiboutian officials had been actively disrupting the work of numerous
contractors that were supporting the Navy’s mission at Camp Lemonnier.” Second Am. Compl.
¶¶ 38-42.
Alternatively, Plaintiff alleges that by engaging in this same conduct the Navy breached
its Prime Contract with Kellogg Brown & Root Services, Inc. (“KBR”). Plaintiff claims it was a
third-party beneficiary of the KBR Prime Contract and that this Contract afforded Plaintiff
protections of the United States Government’s Base Access Agreement with Djibouti. Plaintiff
alleges that the Navy’s directive to move the vehicles outside Camp Lemonnier and its failure to
invoke the disputes mechanism of the Base Access Agreement constituted a breach of contract.
Id. at 54.
This matter comes before the Court on Defendant’s motion to dismiss Plaintiff’s second
amended complaint.2 Defendant asserts that Plaintiff has failed to state a cognizable takings
claim, that this Court lacks jurisdiction over Plaintiff’s contract claim, and that Plaintiff has
failed to sufficiently allege its third-party beneficiary status.
For the reasons stated below, Defendant’s motion to dismiss Plaintiff’s second amended
complaint is DENIED.
Background3
Camp Lemonnier, the only official and permanent United States naval base in Africa, is
located in Djibouti. Second Am. Compl. Ex. 6a. The camp “serves as the headquarters of
Combined Joint Task Force-Horn of Africa, which is focused on countering violent extremists in
Somalia and around the Horn of Africa” and has been the “launching site for key elements of the
Obama Administration’s counterterrorism strategy in East Africa and Yemen.” Id. at Exs. 6a,
6c. The base supports approximately 4,000 United States and allied military and civilian
personnel as well as an additional 1,100 local and third country nationals. Id. at Ex. 6a.
2
On October 13 2015, Defendant filed a motion to dismiss Plaintiff’s amended complaint.
ECF No. 17. The Court deferred consideration of this motion pending further development of
the record. On June 13, 2016, following Plaintiff’s receipt of complete copies of the pertinent
prime contracts, Plaintiff filed its second amended complaint. ECF No. 29. The counts in
Plaintiff’s amended complaint and second amended complaint are identical, and Plaintiff’s
second amended complaint amplifies its discussion of relevant provisions of the KBR prime
contract. The parties agreed that Defendant’s pending motion to dismiss should be deemed to
address Plaintiff’s second amended complaint. Briefing on this motion was completed on
August 15, 2016.
3
This background is derived from Plaintiff’s second amended complaint and Exhibits A, B
and C to Defendant’s Proposed Findings of Fact and Conclusions of Law Related to Defendant’s
Motion to Dismiss Plaintiff’s Amended Complaint.
2
Between 2011 and 2014, Plaintiff served as a subcontractor providing base operation and
support services on Camp Lemonnier. Id. at ¶¶ 11, 25, 38. Initially, Plaintiff provided
subcontractor services to PAE, Inc., (“PAE”), and upon expiration of PAE’s contract, to KBR.
Id. at ¶ 25.
Base Access Agreement
For the time period relevant to this dispute, the “Agreement Between the Government of
the United States of America and the Government of the Republic of Djibouti On Access to and
Use of Facilities in the Republic of Djibouti” (“Base Access Agreement”) governed the
sovereignty of each country on Camp Lemonnier. Id. at ¶ 14, Ex. 1. The Base Access
Agreement provided the terms and conditions for the movement of U.S. personnel, contractors
and property operated by or for U.S. forces into and out of Camp Lemonnier and Djibouti and set
forth dispute resolution procedures between the United States and Djibouti. Id. at Ex. 1. Both
the PAE and KBR Prime contracts contained references to the Base Access Agreement.
The Base Access Agreement included a provision regarding general access to and use of
Camp Lemonnier and other facilities in Djibouti:
The Government of the United States of America . . . is authorized access to and
use of Camp Lemonnier and such other facilities and areas in the Republic of
Djibouti as may be mutually agreed. Such access and use will be through
procedures mutually agreed by the Executive Agents of the Parties. U.S.
personnel and U.S. contractors and vehicles, vessels, and aircraft operated by or
for U.S. forces may use and have unimpeded access to these facilities and areas
for training, transit, support and related activities, refueling of aircraft,
maintenance of vehicles, vessels and aircraft, accommodation of personnel,
communications, staging of forces and materiel, and for such other purposes or
activities as the Parties or their Executive Agents may agree.
Id.The Base Access Agreement included the following pertinent provisions related to
taxation:
1. The Government of the Republic of Djibouti shall exempt from taxation any
income received from the United States or from sources outside the Republic
of Djibouti by U.S. personnel and by U.S. contractors and contractor
employees, other than nationals of the Republic of Djibouti.
2. Articles and services acquired in the Republic of Djibouti by or on behalf of
U.S. personnel shall not be subject to any taxes or similar charges by the
Government of the Republic of Djibouti or its instrumentalities.
3. U.S. personnel, U.S. contractors and their employees, other than nationals of
the Republic of Djibouti, shall not be liable to pay any tax or similar charges
on the ownership, possession, use or transfer amongst themselves on their
tangible movable property imported into the Republic of Djibouti or acquired
3
while in the territory of Djibouti for personal use during the term of this
Agreement.
Id.The Base Access Agreement also addressed the import/export of equipment, supplies,
material, or services as follows:
1. The U.S. forces and U.S. contractors may import into the Republic of Djibouti
any equipment, supplies, material or services required for their operations in
the Republic of Djibouti.
* * *
3. The importation and re-exportation of any articles brought into the Republic
of Djibouti, in accordance with this Agreement, shall not be subject to any
taxes, customs, duties, license, or other restrictions by the Government of
Djibouti or its instrumentalities.
4. The U.S. forces, U.S. personnel, U.S. contractors and their employees shall
retain title to all removable property that they have imported into or acquired
while in the territory of the Republic of Djibouti . . . .
Id.The Base Access Agreement also governed the movement of aircraft, vessels, and
vehicles within Djibouti:
1. Aircraft, vessels and vehicles operated by or for U.S. forces may enter, exit,
and move freely within the territory of the Republic of Djibouti.
2. The access and movement of such aircraft, vessels, and vehicles shall be free
of landing and parking fees, port, pilotage, navigation and overflight charges,
tolls, overland transit fees and similar charges while in the Republic of
Djibouti; however U.S. forces will pay reasonable charges for services
requested and received. Such aircraft, vessels and vehicles shall be free from
inspection.
Id.Finally, the Base Access Agreement contained a dispute resolution clause, stating:
Any dispute that may arise from the application, implementation or interpretation
of [the Base Access] Agreement shall be resolved by consultation between [the
United States and Republic of Djibouti] or their Executive Agents, including, as
necessary, through diplomatic channels, and will not be referred to any national or
international tribunal or any third party for settlement.
Id.4
PAE Subcontracts
Between February 2011 and June 2013, Global Freight entered into a series of
subcontracts with PAE under PAE’s Prime Contract with the Navy for base operations and
support on Camp Lemonnier. Pursuant to its subcontracts with PAE, Global Freight furnished
“all necessary personnel, labor, facilities, equipment, materials, and supplies in coordination and
under the administrative supervision of [PAE] to provide operational and repair services and
maintenance in support of the [] prime contract.” Id. at ¶ 11 (alterations in original) (internal
quotation marks omitted). The Base Access Agreement was incorporated into Section J – the
Performance of Work Statement of the PAE Prime Contract. Id. at ¶ 18; see also Def.’s
Proposed Findings Ex. B, at PAE000197.
On March 14, 2013, pursuant to its Prime Contract, PAE issued Global Freight Purchase
Order No. 25011128 for the lease of vehicles. Second Am. Compl. ¶ 12. Pursuant to another
PAE Prime Contract, PAE and Global Freight entered into another subcontract lease agreement,
on October 8, 2013, for similar services.4 Id. These PAE subcontracts did not refer to the Base
Access Agreement.
Between March 2011 and June 2013, Global Freight imported 22 vehicles into Djibouti,
including forklifts, vans, and trucks, for use at Camp Lemonnier pursuant to the PAE
Subcontracts. Id. at ¶ 21. Global Freight imported 21 of these vehicles without paying duties, as
the vehicles were imported with “Tax Exoneration Letters” issued by the Navy and accepted by
Djiboutian customs. Id. at Ex. 4. Global Freight paid the Djiboutian General Directorate of
Customs and Excise the required duty for the remaining vehicle that did not have a duty
exemption. Id. at ¶ 22.
On June 12, 2012, and December 6, 2012, respectively, Global Freight sold one imported
forklift and one imported tractor with tanker to a local Djiboutian resident. Id. at ¶¶ 23-24.
According to Plaintiff, both sales were made in accordance with the Base Access Agreement’s
provision that United States contractors “shall not be liable to pay any tax or similar charges on
the . . . transfer amongst themselves on their tangible movable property imported into the
Republic of Djibouti or acquired while in the territory of Djibouti for personal use during the
term of this Agreement.” Id. at Ex. 1.
KBR Prime Contract
Following the expiration of the PAE Prime Contract, the United States Government on
June 20, 2013, entered into a new contract with KBR for base operation and support services at
Camp Lemonnier (the “KBR Prime Contract”). The KBR Prime Contract contained references
to the contractor’s obligations related to its use of subcontractors. In particular, the Prime
Contract noted that “the contractor is responsible for performance of all contractor requirements
to include those performed by its subcontractors.” Def.’s Proposed Findings Ex. A, at A113,
A161-63.
4
PAE’s prime contracts with the U.S. Government are referred to collectively as the “PAE
Prime Contracts,” and the subcontracts between PAE and Global Freight are referred to
collectively as the “PAE Subcontracts.”
5
In addition, the KBR Prime Contract incorporated the questions and answers between the
Navy and potential offerors during the procurement process that resulted in KBR’s award of the
Prime Contract. The KBR Prime Contract incorporated by reference FAR 52.229-6, “Taxes –
Foreign Fixed Price Contracts – June 2003,” governing contracts involving the furnishing of
supplies or performances of services outside of the United States, stating in pertinent part:
(c) (1) Unless otherwise provided in this contract, the contract price includes all
applicable taxes and duties, except taxes and duties that the Government of
the United States and the government of the country concerned have agreed
shall not be applicable to expenditures in such country by or on behalf of
the United States.
Id. at A155; 48 C.F.R. § 52.229-6(c)(1) (2013).
The following questions related to provisions of the Base Access Agreement, regarding
the contractor’s obligations to pay taxes:
Question: Clause 52.229-6, Taxes – Foreign Fixed-Price Contracts.5 The
Agreement between the Governments of the US & Republic of Djibouti dated 19
Feb [2003] provides for no taxes of USG contractor or their employees. What, if
any, are the taxes levied by the government of Djibouti and its political
subdivisions upon any aspect of DOD support contracts? Are there any
supplemental agreements to the 19 Feb 2003 agreement?
Answer: The Government of Djibouti does not charge foreign USG contractors
(or contractor employees) income tax. Some local vendors sell products with a
7.5% value added tax (VAT). There are no supplemental agreements to the 19
Feb 2003 agreement that are relevant to BOS contractors.
Def.’s Proposed Findings Ex. A, at A8.
Question: Please identify all Djiboutian tax/withholding requirements such as
corporate and personal income, Local National social security and any others that
will apply to the Prime and/or Subcontractors.
Answer: There are no supplemental agreements to the 19 Feb 2003 agreement
that are relevant to BOS contractors.
Id. at A126.
The KBR Prime Contract incorporated by reference FAR 52.225-19(d)(1) and DFARS
Clause 252.225-7040. FAR 52.225-19(d)(1), “Contractor Personnel in a Designated Operational
Area or Supporting a Diplomatic or Consular Mission Outside the United States” provides:
(d) Compliance with laws and regulations. The Contractor shall comply with,
and shall ensure that its personnel in the designated operational area or
5
The KBR Prime Contract incorporated FAR Clause 52.229-6 by reference.
6
supporting the diplomatic or consular mission are familiar with and comply
with, all applicable – (1) United States, host country, and third country
national laws.
Id. A155; 48 C.F.R. § 52.225-19(d)(1) (2008). DFARS Clause 252.225-7040 contains
substantially identical requirements. Def.’s Proposed Findings Ex. A, at A153; 48 C.F.R. §
252.225 – 7040(d)(1)(i) (2015).
FAR 52.229-6, further provides that the contract price would be increased in the event the
contractor, through no fault of its own, was obligated to pay taxes specifically excluded from the
contract price, or decreased to reflect any tax relief received by the contractor, and that the
contractor was required to take reasonable action to seek exemption from or refund of any taxes
“which the governments of the United States and of the country concerned have agreed shall not
be applicable to expenditures in such country by or on behalf of the United States.” 48 C.F.R. §
52.229-6(d)(1),(e),(i).
On June 19, 2013, pursuant to the KBR Prime Contract, KBR entered into the SUD0429
Subcontract with Global Freight. Second Am. Compl. ¶ 29. On June 30, 2013, KBR and Global
Freight entered into another subcontract, MADX143. Id. Under the MADX143 Subcontract,
Global Freight was to provide leased vehicles and related services to KBR at Camp Lemonnier
for a base period from June 30, 2013 through June 19, 2014. Id. at Ex. 5a. The MADX143
Subcontract also anticipated three option periods, potentially extending the subcontract to June
19, 2017. Id. This Subcontract provided that Global Freight was “[i]n accordance with the
[General Contractor’s] instructions and the Sublet Work, . . . [to] furnish all labor, equipment,
materials, supervision, insurance, freight, overhead and all other services necessary to provide
Vehicle Leasing Services for KBR Security Department.” Id. On October 18, 2013, KBR issued
MADX145, replacing Global Freight’s initial KBR subcontract, SUD0429. Id.6
Under the KBR Subcontracts, between June 20, 2013 and January 2014, Global Freight
imported nine vehicles for use at Camp Lemonnier and “paid duty to Djiboutian customs on
these nine (9) vehicles.” Id. at ¶ 32.
Seizure of Global Freight’s Vehicles by the Djiboutian Government
Between February 17, 2014 and April 10, 2014, the United States Government and the
Djiboutian Government were negotiating the terms of a new Base Access Agreement, which
would eventually include an increase in the United States Government’s annual lease payment.
Id.While negotiations for a new Base Access Agreement were ongoing, Djiboutian customs
officials seized 29 of Global Freight’s vehicles as part of a customs enforcement action. Id. at ¶
37. On February 26, 2014, [***], informed Global Freight that [***]. Id. at Ex. 7a. On March
9, 2014, [***], forwarded Global Freight an email he had received, stating that [***]. Id. at Ex.
7b. On April 8, 2014, [***] again emailed Global Freight informing it that [***]. Id. at Ex. 7c.
6
The MADX143 and MADX145 Subcontracts between KBR and Global Freight are
collectively referred to as the “KBR Subcontracts.”
7
The email went on to request that [***]. Id. Following the Navy’s direction, Plaintiff moved the
vehicles to its villa outside Camp Lemonnier. Id. at ¶ 38.
Djiboutian customs officials and Gendarmerie seized eight of Global Freight’s vehicles
from Global Freight’s villa located outside Camp Lemonnier, and the Djiboutian police seized
the remaining 21 of Global Freight’s vehicles on March 1, 11, and April 10, 2014. Id.In May 2014, the Djiboutian government alleged that Plaintiff had sold two items of
equipment within Djibouti, but failed to pay taxes on the transactions, a violation of Djiboutian
law. Id. at Ex. 8b. Global Freight disputed this allegation.
The United States and Djibouti finalized a new Base Access Agreement on or about May
5, 2014. Id. at ¶ 36, Ex. 6c.
On January 12, 2015, Global Freight and the Management of Djibouti’s Customs and
Indirect Duties executed an agreement to recover the confiscated vehicles. Id. at ¶ 47, Ex. 8b.
Global freight paid 25 million Djiboutian francs ($140,000) to “The Management of Djibouti’s
Customs and Indirect Duties,” for the return of its vehicles. Id. at ¶ 47. On January 26, 2015, the
Djiboutian Government returned Global Freight’s confiscated vehicles. Id. at ¶ 44.
Discussion
Defendant seeks dismissal of Plaintiff’s Fifth Amendment taking claim for failure to state
a claim upon which relief can be granted. Defendant asserts that Plaintiff has not sufficiently
alleged that its property was appropriated due to a United States governmental action. Defendant
also argues that Djibouti’s seizure of Plaintiff’s property cannot constitute a taking because
Djibouti’s actions were done in the context of customs enforcement. Def.’s Mot. 7-12.
Defendant seeks dismissal of Plaintiff’s alternative contract claim on the ground that this
Court lacks jurisdiction over that claim pursuant to 28 U.S.C. § 1502, because Plaintiff’s breach
of contract claim “grow[s] out of or [is] dependent upon” an agreement between the United
States and another sovereign state. Id. at 15-16. In addition, Defendant submits that Plaintiff has
failed to sufficiently allege it was a third-party beneficiary of the KBR Prime Contract. Id. at 18-
21.
Subject Matter Jurisdiction
The Tucker Act, 28 U.S.C. § 1491, grants jurisdiction to the Court of Federal Claims over
“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.” 28 U.S.C. § 1491(a)(1) (2012). Where the basis for invoking the
Court’s Tucker Act jurisdiction is an alleged breach of contract, a plaintiff not in privity with the
Government may establish jurisdiction by demonstrating that it is an intended third-party
beneficiary of the Government contract. See Guardsman Elevator Co., Inc. v. United States, 50
Fed. Cl. 577, 580 (2001) (citing Glass v. United States, 258 F.3d 1349, 1354 (Fed. Cir. 2001)).
8
“The Tucker Act itself does not create a substantive cause of action . . . .” Fisher v.
United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005). If a claim is to fall within the Court’s
Tucker Act jurisdiction, “a plaintiff must identify a separate source of substantive law that
creates the right to money damages.” Aviation & Gen. Ins. Co., Ltd. v. United States, 121 Fed.
Cl. 357, 361-62 (2015) (citing Fisher, 402 F.3d at 1172). Further, the substantive law the
plaintiff identifies must be “money-mandating.” Id. (citing United States v. Mitchell, 463 U.S.
206, 217 (1983)). “It is well- established that the Takings Clause of the Fifth Amendment is a
money-mandating source of law for purposes of Tucker Act jurisdiction.” Id. at 362 (citing Jan’s
Helicopter Serv. Inc. v. Fed. Aviation Admin., 525 F.3d 1299, 1309 (Fed. Cir. 2008)).
Plaintiff must first establish subject-matter jurisdiction before the Court may proceed to
the merits of the action. Hardie v. United States, 367 F.3d 1288, 1290 (Fed. Cir. 2004). The
Court must dismiss the action if subject-matter jurisdiction is found to be lacking. Adair v.
United States, 497 F.3d 1244, 1251 (Fed. Cir. 2007). The Court assumes all factual allegations
as true, and will construe the complaint in a manner most favorable to the plaintiff when ruling
on a motion to dismiss pursuant to Rule 12(b)(1). Pennington Seed, Inc. v. Produce Exch. No.
299, 457 F.3d 1334, 1338 (Fed. Cir. 2006). A plaintiff must establish subject-matter jurisdiction
by a preponderance of the evidence. See Reynolds v. Army & Air Force Exch. Serv., 846 F.2d
746, 748 (Fed. Cir. 1988); Tindle v. United States, 56 Fed. Cl. 337, 341 (2003).
Failure to State a Claim
Pursuant to Rule 8(a)(2), a pleading must contain a “short and plain statement of the
claim showing that the pleader is entitled to relief.” RCFC 8(a)(2); see Ashcroft v. Iqbal, 556
U.S. 662, 677-78 (2009) (construing Rule 8 of the Federal Rules of Civil Procedure, which is
identical to RCFC 8). The Government, as movant, must establish that the facts asserted by, and
construed in favor of, the pleader do not entitle the pleader to a legal remedy. Lindsay v. United
States, 295 F.3d 1252, 1257 (Fed. Cir. 2002); E&E Enters. Glob., Inc. v. United States, 120 Fed.
Cl. 165, 171 (2015).
It is well settled that a complaint should be not be dismissed under Rule 12(b)(6) when a
complaint contains facts sufficient to “state a claim to relief that is plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “While a complaint attacked by a 12(b)(6)
motion to dismiss does not need detailed factual allegations, . . . [the] factual allegations must be
enough to raise a right to relief above the speculative level” and cross the line “from conceivable
to plausible.” Id. at 555, 570 (internal citations omitted). “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. This plausibility
standard “is not akin to a probability requirement,” but requires more than a “sheer possibility”
that the defendant has violated the law. Id. (internal citation and quotation marks omitted). The
issue is “not whether a plaintiff is likely to prevail ultimately, but whether [it] . . . is entitled to
offer evidence to support the claims.” L-3 Commc’ns Integrated Sys., L.P. v. United States, 79
Fed. Cl. 453, 466 (2007) (alterations in original) (internal citation and quotation marks omitted).
9
Whether Plaintiff Has Asserted a Cognizable Takings Claim
The Takings Clause of the Fifth Amendment of the Constitution provides that “private
property [shall not] be taken for public use, without just compensation.” U.S. Const. amend. V.
For a takings claim to survive a 12(b)(6) motion to dismiss, a plaintiff must allege sufficient facts
to establish that it has a cognizable interest in the relevant property and that the property interest
was “taken.” Aviation & Gen. Ins. Co., 121 Fed. Cl. at 362. Further, the property must have
been taken for public use. See Skip Kirchdorfer, Inc. v. United States, 6 F.3d 1573, 1583 (Fed.
Cir. 1993) (concluding that maintenance of order on a military base satisfied the public purpose
element of a Fifth Amendment takings claim).
Plaintiff alleges that the Navy directed Global Freight, through KBR, to “move the
vehicles from the protected confines of Camp Lemonnier to Djiboutian jurisdiction, even though
the Navy was well aware that Djiboutian officials had been actively disrupting the work of
numerous contractors that were supporting the Navy’s mission at Camp Lemonnier.” Second
Am. Compl. ¶ 38. Plaintiff attached to its second amended complaint a series of email
communications between KBR and Global Freight, in which KBR communicated the Navy’s
instruction that Global Freight move its vehicles outside the confines of Camp Lemonnier. Id. at
Exs. 7a-d.
“‘A taking can occur simply when the Government by its actions deprives the owner of
all or most of his interest in his property, and [t]here can be a taking if the Government makes it
possible for someone else to obtain the use or benefit of another person’s property.’”
Langenegger v. United States, 756 F.2d 1565, 1570 (Fed. Cir. 1985) (alteration in original)
(quoting Aris Gloves, Inc. v. United States, 420 F.2d 1386, 1391 (1970)). The United States
may be held responsible for a taking under the Tucker Act, when the “final act of expropriation
is by the hand of a foreign sovereign.” Id. at 1571. Where the “final act of expropriation” is
committed by a foreign government, the relevant inquiry becomes “whether the United States’
involvement was sufficiently direct and substantial to warrant its responsibility under the fifth
amendment.” Id. (emphasis in original) (citing Porter v. United States, 496 F.2d 583, 591 (Ct.
Cl. 1974)). And the determination of whether the Government was “substantially involved” and
its actions were “sufficiently direct” depends upon two factors: 1) the nature of the United
States’ activity and 2) the level of the benefit the United States derived. Id.The Nature of the Government’s Actions
The Court’s inquiry into whether Defendant is liable for a taking is focused on the nature
of the U.S. Government’s actions, not the actions of others. Id. at 1571 (“When considering a
possible taking, the focus is not on the acts of others, but on whether sufficient direct and
substantial United States involvement exists.”). In assessing Government action in this context,
the Federal Circuit has noted, “[d]iplomatic persuasion among allies . . . as a matter of law,
cannot be deemed sufficiently irresistible to warrant a finding of direct and substantial
involvement, however difficult refusal may be as a practical matter.” Id. (finding “[s]uch
‘nebulous forms of United States influence . . . are insufficient to make defendant constructively
responsible for the taking alleged.’” (quoting Porter, 496 F.2d at 592)).
10
In its motion to dismiss, Defendant argues that the nature of the Navy’s activity here and
the “level of the benefit the United States has derived” cannot be considered “sufficiently direct
and substantial enough that [the Djiboutian Government’s actions] may be attributed to the
United States.” Def.’s Mot. 8-10. Plaintiff alleges that the expropriation of its vehicles was
“only accomplished due to the Navy’s direct and substantial involvement because, but for the
Navy’s direction, the vehicles would have remained on Camp Lemonnier free from unwarranted
seizure by the Djiboutian authorities.” Second Am. Compl. ¶ 40.
As the Court of Claims noted, “[t]he question of whether there is a fifth amendment
taking cannot turn simply on general principles of law; it must be based on the particular
circumstances of each case.” Aris Gloves, 420 F.2d at 1391 (citing United States v. Cent.
Eureka Mining Co., 357 U.S. 155, 168 (1958)). The inquiry into the nature of the Government’s
action, and whether the Government’s action rises to the level of a taking, is largely a factual
one. The circumstances surrounding the Navy’s directive and the level of United States
Government involvement that lead to the Djiboutian Government’s seizure of Plaintiff’s vehicles
are not sufficiently clear from the truncated record before the Court. Nor is it clear how
“Djiboutian officials had been actively disrupting the work of numerous contractors that were
supporting the Navy’s mission at Camp Lemonnier” and what either the context of this
disruption or the effect on the Navy’s contractors was. Second Am. Compl. ¶ 38. The nature of
the United States Government’s alleged conduct and knowledge has not been sufficiently
developed.
As the Supreme Court has recognized, “‘[m]utual knowledge of all relevant facts
gathered by both parties is essential to proper litigation.’” Dobyns v. United States, 91 Fed. Cl.
412, 426 (2010) (alteration in original) (quoting Hickman v. Taylor, 329 U.S. 495, 507 (1947)).
Thus, “where one of the litigants is a government agency that has privileged access to
information – a claimant must not be required ab initio, to aver all or nearly all the facts
subservient to its claims.” Id. at 426-27 (internal citation and footnote omitted). The pleading
standard does not “collapse discovery, summary judgment and trial into the pleading stages of a
case.” Id. at 427 (quoting Petro-Hunt, LLC v. United States, 90 Fed. Cl. 51, 71 (2009)). A
determination of whether the Navy’s directive here falls within the ambit of nebulous conduct
such as “diplomatic persuasion among allies” or of “direct and substantial involvement” requires
a factual assessment which cannot be made on the basis of the allegations at this early stage of
litigation.
The Level of Benefit the United States Government Received
Defendant further asserts that Plaintiff has failed to sufficiently allege that the taking
benefited the United States. Defendant posits that the confiscation of Plaintiff’s vehicles “arose
as part of a customs fraud investigation against Global Freight and not in furtherance of any
public purpose or benefit to the United States.” Def.’s Mot. 10. However, Plaintiff did directly
link the Navy’s conduct in releasing its vehicles from Camp Lemonnier with a Government
benefit – the Government’s interest in negotiating a lease for a permanent military base in Africa.
Second Am. Compl. ¶ 41. The timing and context of these negotiations support Plaintiff’s claim
that the Navy’s directive was made to benefit the United States’ ability to continue to operate the
base. Plaintiff alleged that Djibouti’s seizure of its vehicles took place while Camp Lemonnier
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was “engulfed in unrest due to Djiboutian dissatisfaction with KBR’s plan to reduce support
staffing at Camp Lemonnier” and while “Djiboutian air traffic controllers . . . were openly hostile
to Americans . . . and refusing to engage with American consultants hired to help improve
controller performance.” Id. at ¶¶ 34-35, Ex. 6b. Plaintiff further alleged that the Djiboutian
government “used these actions [open hostility to Americans and refusal to engage American
consultants] to force the [United States] to increase the price it paid to lease Camp Lemonnier”
from $38 million to $63 million for the next 10 years. Id. at ¶ 36, Ex. 6c. Finally, Plaintiff
alleged that during this period of unrest, while negotiations regarding the Base Access
Agreement were ongoing, the Navy “directed the removal of [Plaintiff’s] vehicles from the
protected confines of Camp Lemonnier to appease the Djiboutian Government, so as not to
jeopardize the United States Government’s ongoing and expanding operations in Djibouti.” Id.
at ¶¶ 37-41.
As Plaintiff posits, “[a]bsent discovery, a reasonable inference can be drawn that the
Navy ordered Global Freight’s vehicles from Camp Lemonnier to appease the Djiboutian
government in an effort not to disrupt the ongoing negotiations between the United States and
Djibouti regarding the terms of the United States’ use of Camp Lemonnier.” Pl.’s Proposed
Findings ¶ 16. In sum, Plaintiff has asserted a plausible Fifth Amendment taking claim, and it
would be premature at this stage of litigation for the Court to draw factual conclusions about the
nature of the United States Government’s activity and the benefit received by the United States.7
Plaintiff’s Third-Party Beneficiary Claim
In the alternative, Plaintiff alleges that Defendant breached the KBR Prime Contract
under which Plaintiff was a third-party beneficiary. Plaintiff alleges that the Navy breached the
KBR Prime Contract in directing Plaintiff to move its vehicles outside the confines of Camp
Lemonnier and failing to invoke the disputes clause of the Base Access Agreement. Specifically,
because the Navy did not invoke the disputes clause of the Base Access Agreement, Plaintiff
asserts that it was forced to accept an agreement with the Management of Djibouti’s Customs
and Indirect Duties to recover its confiscated vehicles in exchange for 25 million Djiboutian
francs. Second Am. Compl. ¶ 47.
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Defendant also asserts that “[e]ven if Djibouti’s actions could be attributed to the United
States, those actions do not give rise to a takings claim” because they essentially constituted a
seizure under Djibouti’s customs laws. Def.’s Mot. 10. Defendant reasons that because under
United States forfeiture law government seizures do not constitute a taking, Djibouti’s acts,
enforcing its own laws, also cannot constitute a taking. Id. (citing Acadia Tech., Inc. v. United
States, 458 F.3d 1327, 1331-32 (Fed. Cir. 2006)). In so arguing, Defendant improperly attempts
to shift the focus to the Djiboutian government’s conduct in seizing the vehicles. However, that
is not the governmental conduct Plaintiff challenges here. Plaintiff alleges that it was the Navy’s
conduct in releasing its vehicles into Djiboutian territory, knowingly putting the vehicles at risk
to facilitate maintaining a base in Djibouti that constituted the taking. Where a third party is
responsible for the final expropriation of a plaintiff’s property, the Court’s inquiry is focused on
the nature of the United States Government actions rather than those of the third party. See
Langenegger v. United States, 756 F.2d 1565, 1571 (Fed. Cir. 1985).
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Defendant contends that 28 U.S.C. § 1502 divests this Court of jurisdiction over
Plaintiff’s third-party beneficiary breach of contract claim because Plaintiff’s claim grows out of
or depends on the terms of the Base Access Agreement. Def.’s Mot. 12. Section 1502 provides
that “[e]xcept as otherwise provided by Act of Congress, the United States Court of Federal
Claims shall not have jurisdiction of any claim against the United States growing out of or
dependent upon any treaty entered into with foreign nations.” 28 U.S.C. § 1502 (2012). The
parties do not dispute that the Base Access Agreement falls within the court’s broad
interpretation of the term “treaty” under § 1502. See Hughes Aircraft Co. v. United States, 534
F.2d 889, 903 n.17 (Cl. Ct. 1976). As the Claims Court explained:
[T]his court has in the past equated international executive agreements with
treaties for purposes of Section 1502. The reason for this equation is that the
fundamental separation-of-powers policy underlying [section] 1502, i.e., to avoid
undue judicial interference (e.g., by construction of particular treaty terms and
provisions) with the Executive Branch’s conduct of foreign relations, is equally
applicable to both forms of international compact.
Id. (internal citations omitted).
The Court is then left to examine whether Plaintiff’s third-party beneficiary claim “grows
out of” or is “dependent upon” the Base Access Agreement. Section 1502 divests the Court of
jurisdiction where “the right itself, which the petition makes to be the foundation of the claim . . .
[has] its origin – derive[s] its life and existence – from some treaty stipulation.” United States v.
Weld, 127 U.S. 51, 57 (1888); Hughes Aircraft Co., 534 F.2d at 903-04 (“The test under § 1502
is whether plaintiff’s claim could conceivably exist independently of, or separate and apart from,
the subject treaty, or whether on the contrary, it derives its existence so exclusively and
substantially from certain express terms or provisions thereof, that consideration of the claim
would necessitate our construction of the treaty itself.”). As the Supreme Court noted, where
there is a “direct and proximate connection between the treaty and the claim” § 1502 divests the
Court of jurisdiction. Weld, 127 U.S. at 57.
Conversely, the Court retains jurisdiction where a claimant does not seek relief based
upon a treaty or the enforcement of a treaty provision, but rather asks that “the court exercise[]
its juridical power to construe” contract provisions “explicitly drafted to satisfy and incorporate
the international understanding.” See Per Aarsleff A/S v. United States, 121 Fed. Cl. 603, 622
(2015), rev’d on other grounds, 829 F.3d 1303 (Fed. Cir. 2016). Plaintiff contends that its claim
is predicated on the KBR Prime Contract.
Before tackling the thorny issue of whether Section 1502 divests this Court of
jurisdiction, the Court must first determine whether Plaintiff has established that it is a third-
party beneficiary of the KBR Prime Contract. Whether Plaintiff is a third-party beneficiary
presents a jurisdictional issue, because “[a]s a general rule, the Tucker Act does not provide the
court with jurisdiction to hear a claim brought directly against the federal government by a
subcontractor.” G4S Tech. LLC v. United States, 114 Fed. Cl. 662, 669 (2014), aff’d, 779 F.3d
1337 (Fed. Cir. 2015). However, an exception to this rule permits an intended third-party
beneficiary of a government contract to directly sue the federal government. Id. Thus, Plaintiff
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must show that it is a third-party beneficiary of the KBR Prime Contract for this Court to have
jurisdiction over Plaintiff’s breach of contract claim.
The Federal Circuit has recently addressed the requirements for establishing third-party
beneficiary status, stating:
A nonparty becomes legally entitled to a benefit promised in a contract . . . only if
the contracting parties so intend. This intent may be either express or implied,
and it must be fairly attributable to the contracting officer. In addition, the benefit
to the third party must be direct. The Supreme Court has recognized the
exceptional privilege that third-party beneficiary status imparts, and we have
accordingly cautioned that the privilege of third party beneficiary status should
not be granted liberally.
* * *
In the absence of clear guidance from the contract language, the requisite intent
on the part of the government can be inferred from the actions of the contracting
officer and circumstances providing the contracting officer with appropriate
notice that the contract provision at issue was intended to benefit the third party.
G4S, 779 F.3d at 1340 (alteration in original) (internal citations and quotation marks omitted).
Plaintiff contends that the questions and answers incorporated into the KBR Prime
Contract demonstrate “that the Navy expected KBR to perform the KBR Prime Contract in
accordance with the terms of the Base Access Agreement, and that KBR [and its subcontractors
were] entitled to rely upon the contractor protections [such as tax exemptions] secured by the
Base Access Agreement in that performance.” Pl.’s Proposed Findings ¶ 50. Plaintiff also
alleges that the Navy’s provision of tax exoneration letters congruent with the terms of the Base
Access Agreement, pursuant to the PAE Prime Contract and the Base Access Agreement’s
definition of U.S. Contractors, further demonstrates the Navy’s intent that the protections of the
Base Access Agreement extended to Plaintiff as KBR’s subcontractor. Id. at ¶ 51. Finally,
Plaintiff asserts that it was “reasonable in relying on the promise of the KBR Prime Contract
with respect to the protections of the Base Access Agreement as manifesting an intention to
confer a right on [Plaintiff],” because Plaintiff had availed itself of the protections of the Base
Access Agreement by obtaining from the Navy tax exoneration letters congruent with the terms
of the Agreement while serving as a subcontractor under the preceding PAE Prime Contract. Id.
at ¶ 52 (internal citations and quotation marks omitted).
In its opposition to Defendant’s motion to dismiss, Plaintiff asserts that it requires
discovery to provide the Court “a proper factual foundation” for the examination of Plaintiff’s
claim that it is a third-party beneficiary of the KBR Prime Contract. Pl.’s Opp’n 18. The Court
agrees that it is appropriate to permit discovery on this issue. Although “the appropriate test for
third party beneficiary status is a question of law,” the “underlying question of whether
[Plaintiff] is a third party beneficiar[y] to the alleged contract is a mixed question of law and
fact.” Glass v. United States, 258 F.3d 1349, 1353 (Fed. Cir. 2001).
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Conclusion
Defendant’s motion to dismiss Plaintiff’s second amended complaint is DENIED.
Defendant shall file an answer to Plaintiff’s second amended complaint by December 14,
2016, in accordance with RCFC 12(a)(4)(A)(i).
The Court will conduct a telephonic conference to discuss discovery and scheduling on
December 21, 2016, at 11:00 a.m. E.S.T. The Court will initiate the call.
s/Mary Ellen Coster Williams
MARY ELLEN COSTER WILLIAMS
Judge
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