Postels v. Peters

Full title: DOUGLAS G. POSTELS v. F. WHITTEN PETERS, SECRETARY, UNITED STATES AIR FORCE

Court: United States District Court, E.D. Louisiana

Date published: Mar 15, 2000

Civ. No. 99-2369, SECTION: "R" (5) (E.D. La. Mar. 15, 2000)

Opinion

Civ. No. 99-2369, SECTION: "R" (5).

March 15, 2000.

ORDER AND REASONS

SARAH S. VANCE, United States District Judge.

Defendant, F. Whitten Peters, Secretary of the United States Air Force, moves the Court to dismiss this action pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6) and, alternatively, for summary judgment under Rule 56. For the following reasons, defendant's Rule 56 motion is GRANTED, and the Court orders this action dismissed without prejudice for failure to exhaust administrative remedies.

I. BACKGROUND

This litigation arises out of a Health Profession Scholarship (HPSP) Contract entered into between plaintiff, Douglas G. Postels, and the United States Air Force on February 4, 1984. In return for scholarship funds to finance his medical school education, Postels incurred a four-year active duty service commitment and a three-year minimum duty service commitment to the Air Force. In his HPSP contract, Postels also agreed to "exhaust his . . . available administrative remedies prior to seeking judicial review" should any dispute arise over the terms or conditions of the contract. ( See Def.'s Ex. 1, at 1.) Postels acknowledged that "[e]xhaustion of the Air Force Board for the Correction of Military Records (AFBMCR) remedy (AFR 31-3 and 10 U.S.C. § 1552) shall be mandatory in every case." ( See id.)

After completing medical school in June 1988, Postels was assigned to perform his residency at the Wilford Hall Medical Center in San Antonio, Texas. He remained at Wilford Hall until 1991, when the Air Force granted him a deferment to pursue a civilian fellowship in pediatric neurology in St. Louis, Missouri.

Postels underwent a physical examination to re-enter the Air Force on October 22, 1993 and resigned from his fellowship program on December 20, 1993. As a result of statements made in his physical examination that he had suffered from depression and was being treated with Prozac, the Air Force notified Postels by mail on April 22, 1994 that he had been found medically disqualified for continued worldwide duty and that an administrative discharge proceeding was pending against him. ( See Pl.'s Ex. 3.) Postels tendered his resignation from the Air Force on the same day. ( See Def.'s Ex. 1, at 17.) The Consultant to the Surgeon General for Psychiatry subsequently recommended that Postels be retained on active duty and, on July 13, 1994, Postels was informed that the Secretary of the Air Force had declined to accept his resignation. ( See Pl.'s Exs. 4 5; Def.'s Ex. 1, at 19.) Despite this reversal in position, the Air Force advised Postels by mail on September 30, 1994 that, after additional review, the Secretary had accepted his resignation. ( See Def.'s Ex. 1, at 20.) Although an internal Air Force memorandum indicated that Postels would be required to reimburse the United States for funds expended on his medical education on a prorated basis, the letter sent to Postels stated that he was indebted to the United States in the full amount of $62,974.49. ( See Pl.'s Exs. 6 7.) The Air Force Institute of Technology thereafter notified Postels to pay the total amount due no later than December 1, 1994. ( See Def.'s Ex. 2.). This notification advised Postels to inform the AFIT in writing immediately if he had information that the debt was incorrect and that he had the right to have his indebtedness reviewed, although review would not delay the collection process. ( See id.)

By letter dated November 10, 1994, Postels advised the AFIT that "payment [would] not be made pending legal review and actions." (Pl.'s Ex. 8.) On December 28, 1994, he wrote to Frederick L. Ratliff, Chief of the Personnel Programs Division at the Air Reserve Personnel Center, stating that he was "applying for correction of my supposed indebtedness to the Air Force." ( Id. Ex. 9.) Postels' counsel also sent a letter to Mr. Ratliff, dated February 14, 1995, objecting to the indebtedness and stating:

If it is necessary to prosecute an appeal through administrative channels, then I must ask you to provide me with definitive information on the appellate process and to advise me what steps must be taken to exhaust Dr. Postel's administrative remedies so as to give him access to the courts if he cannot find relief administratively. In particular, please provide information as to proceedings before the Air Force Board for the Correction of Military Records, referred to in the Contract.

( Id. Ex. 10.) (emphasis added). The Defense Finance and Accounting Service sent Postels three demand letters before referring the debt to a collection agency. The agency informed Postels that it would assume the debt's validity unless he notified the agency within 30 days that the debt was disputed. ( See id. Ex. 11.) By affidavit, Postels states that he protested the debt in writing. ( See id. Ex. 2 ¶ 14, at 2.) On April 15, 1999, the United States seized Postels' 1998 federal income tax return in the amount of $8,067.00 to begin repayment of the debt owed to the Air Force. ( See Def.'s Ex. 3., Anders Aff.)

Postels filed suit against F. Whitten Peters, Secretary of the United States Air Force, in this Court on August 3, 1999. Postels alleges that defendant, through his agents and employees, violated his Fifth Amendment right to due process. ( See Compl. ¶ IV § 20.) In particular, Postels alleges, inter alia, that the Secretary wrongfully, arbitrarily and capriciously: (1) coerced him into resigning from the Air Force; (2) prevented him from living up to and performing his contractual obligations pursuant to the HPSP; (3) concluded that he was obligated to reimburse the United States in full for funds expended for his medical education; (4) denied him an administrative hearing whereby he could dispute or contest the reimbursement costs claimed by the United States Air Force; and, (5) seized his 1993 income tax refund without an administrative hearing. ( See id. § 21.) As a result, Postels asks this Court to (1) enjoin defendant from seizing or attempting further seizure of his funds; (2) compel defendant to refund his 1998 federal income tax refund; (3) declare that the aforementioned practices violate the Fifth Amendment's Due Process Clause; (4) enter judgment in his favor, and against defendant, finding that defendant committed the aforementioned wrongs; and, (5) declare that (a) the contract entered into between plaintiff and defendant is a contract of adhesion and, therefore, not enforceable; and (b) defendant is estopped from attempting to enforce, and, in fact enforcing, the terms and provisions of the contract against him. ( See id. ¶ V.)

Defendant now moves for dismissal on the grounds that this Court lacks subject matter jurisdiction because the Tucker Act, 428 U.S.C. § 1346(a)(2) and 1491 vests exclusive jurisdiction over this matter in the Court of Federal Claims and because Postels has failed to exhaust his administrative remedies. In the alternative, defendant moves to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6) or for summary judgment under Rule 56.

II. DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure 12(b)(1) governs challenges to a court's subject matter jurisdiction. The party asserting jurisdiction bears the burden of proof on a Rule 12(b)(1) motion. 45 F. Supp.2d 558, 565 (citations omitted). A district court may dismiss an action for lack of subject matter jurisdiction by reference to any one of the following: (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. See Williamson v. Tucker, 645 F.2d 404, 413 (5^th Cir. 1981); see also Robinson v. TCI/US West Communications Inc., 117 F.3d 900, 904 (5^th Cir. 1997) (citations omitted). In contrast to a Rule 12(b)(6) motion, the court is not limited on a Rule 12(b)(1) motion to considering undisputed material facts but may "decide for itself the factual issues which determine jurisdiction." Id. at 413. However, if the factual findings regarding subject matter jurisdiction are intertwined with the merits, as is often the case when the statute providing for jurisdiction also establishes the cause of action, the court should not dismiss the case for lack of subject matter jurisdiction unless the alleged claim is "immaterial or is wholly insubstantial and frivolous." Clark v. Tarrant County, Texas, 798 F.2d 736, 742 (5^th Cir. 1986) ( citing Williamson, 645 F.2d at 413).

Defendant's motion to dismiss for failure to exhaust administrative remedies is properly addressed under Rule 12(b)(6), not Rule 12(b)(1). The Fifth Circuit recently noted that dismissal under Rule 12(b)(1) for failure to exhaust administrative remedies would be improper because exhaustion is not a prerequisite to a federal court's jurisdiction. See Hager v. NationsBank N.A., 167 F.3d 245, 248 n. 3 (5^th Cir. 1999) ( citing Chailland v. Brown Root, Inc., 45 F.3d 947, 950 n. 6 (5^th Cir. 1995); Painter v. Golden Rule Ins. Co., 121 F.3d 436, 441 (8^th Cir. 1997), cert. denied, 523 U.S. 1074, 118 S.Ct. 1516 (1998)).

See also Boswell v. Dep't of Treasury, 979 F. Supp. 458, 462 n. 1 (N.D. Tex. 1997) (noting that Rule 12(b)(1) "may not represent the most appropriate vehicle for dismissing a claim on the ground that the plaintiff failed to exhaust administrative remedies" because many courts consider exhaustion a condition precedent not a jurisdictional prerequisite) ( citing Greenlaw v. Garrett, 59 F.3d 994, 997 n. 8 (9^th Cir. 1995); Vinieratos v. United States, Dep't of Air Force, 939 F.2d 762, 768 n. 5 (9^th Cir. 1991); Waiters v. Parsons, 729 F.2d 233, 236 (3^rd Cir. 1984)). Accordingly, to the extent defendant seeks to dismiss this action for failure to exhaust administrative remedies, the motion is properly considered under Rule 12(b)(6). See Gates v. City of Dallas, 1997 WL 405144, at *1 (N.D. Tex. July 15, 1997). Because matters outside of the pleadings have been presented to and considered by the Court, however, the Rule 12(b)(6) motion is converted into one for summary judgment under Rule 56. See FED. R.CIV.P. 12(c).

Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986). A court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, "that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Lavespere v. Niagara Mach. Tool Works, Inc., 910 F.2d 167, 178 (5^th Cir. 1990), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511 (1986). The moving party bears the burden of establishing that there are no genuine issues of material fact.

B. Tucker Act Jurisdiction

The Tucker Act provides that the Court of Federal Claims has exclusive jurisdiction over non-tort claims against the United States seeking monetary relief in excess of $10,000. See 28 U.S.C. § 1346(a)(2); § 1491(a)(1). Three conditions must be satisfied to vest subject matter jurisdiction exclusively in the Court of Federal Claims: (1) the action is against the United States; (2) the action is founded upon the Constitution, federal statute, executive regulation, or government contract; and (3) the action seeks monetary relief in excess of $10,000. See Amoco Production Co. v. Hodel, 815 F.2d 352, 359 (5^th Cir. 1987) ( citing Portsmouth Redevelopment Housing Auth. v. Pierce, 706 F.2d 471, 473 (4^th Cir. 1983)). Postels does not dispute that his claims are founded upon a government contract, the HPSP, and the action is one against the United States. Accordingly, the Court's inquiry is limited to whether Postels seeks monetary relief in excess of $10,000.

It is well established that a plaintiff cannot avoid the exclusive jurisdiction of the Court of Federal Claims merely by characterizing his suit as one seeking declaratory or injunctive, rather than monetary, relief. Id. at 361. See also Portsmouth, 706 F.2d at 474 ( citing Hoopa Valley Tribe v. United States, 596 F.2d 435, 436 (Ct.Cl. 1979)). However, the Court of Federal Claims likewise does not "possess exclusive jurisdiction simply because a suit for nonmonetary relief may form the basis for a later money judgment." Amoco, 815 F.2d at 365 ( quoting Tennessee ex rel. Leech v. Dole, 749 F.2d 331, 336 (6^th Cir. 1984) (citations omitted)). See also Hahn v. United States, 757 F.2d 581, 589 (3^rd Cir. 1985) (no Tucker Act jurisdiction when "[d]etermination of the nonmonetary claims may or may not determine whether plaintiffs are entitled to monetary relief, and clearly will not determine the amount of such relief") (internal quotations and citation omitted).

The Fifth Circuit has held that the determination of whether an action is one seeking monetary relief in excess of $10,000 for Tucker Act purposes involves a search for the "essence" of the claim. See Amoco, 815 F.2d at 362. The court must look beyond the face of the pleadings to the actual nature of the relief requested. See id.; Fryar v. Kemp, 774 F. Supp. 1033, 1034-35 (W.D. La. 1991); 3433 Tulane Avenue v. United States, 1995 WL 234543, at *3 (E.D. La. April 19, 1995). Exclusive jurisdiction will lie in the Court of Federal Claims if the plaintiff's "primary objective" or "ultimate aim" is to obtain money from the federal government, the actual relief resulting from a determination in plaintiff's favor would be monetary, and the injunctive and declaratory relief which the plaintiff seeks does not have significant prospective effect or considerable value apart from determining that the government owes plaintiff money. See Amoco, 815 F.2d at 361 ( citing Hahn, 757 F.2d at 590).

Defendant argues that this action qualifies as one seeking monetary relief in excess of $10,000 against the United States for Tucker Act purposes because Postels ultimately attempts to have more than $50,000 in educational debt owed to the government dismissed by this Court. The Court disagrees. Nowhere in the complaint does Postels ask for monetary damages. Moreover, the injunctive and declaratory relief he requests would not compel the government to pay him any money from the public treasury. Rather, a judgment in his favor would merely allow Postels to avoid refunding the educational funds expended on his behalf by the Air Force. In construing its own jurisdiction under similar circumstances, the Court of Federal Claims held that jurisdiction did not exist under the Tucker Act. See Betz v. United States, 40 Fed. Cl. 286, 291 (1998) (complaint seeking declaratory judgment of nonliability for federal income taxes); see also Pentax Corp. v. Myhra, 72 F.3d 708 (9^th Cir. 1995) (no money claim for Tucker Act purposes in action to avoid payment of customs duties). Finally, it is well established that the Court of Federal Claims does not have jurisdiction over claims asserting due process violations under the Fifth Amendment because such violations do not obligate the federal government to pay money damages. See Womack v. United States, 34 Fed. Cl. 755, 762 n. 6 (1996); Noel v. United States, 16 Cl. Ct. 166, 169 (1989) (citations omitted); JL Janitorial Servs., Inc. v. United States, 231 Ct. Cl. 837 (1982) ( citing Carruth v. United States, 627 F.2d 1068 (1980); Mack v. United States, 635 F.2d 828 (1980)). See also Quailes v. United States, 25 Cl. Ct. 659, 664 (1992), aff'd, 979 F.2d 216 (Fed. Cir. 1992) (no jurisdiction over Navy serviceman's claim that discharge violated Fifth and Fourteenth Amendment guarantees of due process and equal protection because these claims do not obligate United States to pay money damages and therefore do not trigger Tucker Act jurisdiction). Because the relief Postels seeks would not obligate the United States to pay money damages, the Tucker Act does not vest exclusive jurisdiction over this case in the Court of Federal Claims. Accordingly, the Court rejects defendant's motion to dismiss on this ground.

C. Reviewability

At the heart of the action before this Court is the claim that defendant wrongfully coerced Postels into resigning from the Air Force, thereby preventing Postels from fulfilling his contractual obligations under the HPSP. ( See Compl. ¶ IV §§ 21(a)-(c).) Postels' contract with the Air Force expressly designates exhaustion of the Air Force Board for Correction of Military Records [AFBCMR] remedy as mandatory in every case regarding a dispute over the terms of the contract or in which the student seeks discharge from military service. ( See Def.'s Ex. 1, at 1.) The Fifth Circuit has required exhaustion of administrative remedies before a federal court may review a military decision. See Mindes v. Seaman, 453 F.2d 197, 201 (5^th Cir. 1971); see also Von Hoffburg v. Alexander, 615 F.2d 633, 637 (5^th Cir. 1980); Hodges v. Callaway, 499 F.2d 417, 420 (5^th Cir. 1974). It is undisputed that Postels did not appeal his discharge to the AFBCMR prior to instituting this suit.

It is true that there are limited exceptions to the exhaustion requirement. See Von Hoffburg, 615 F.2d at 638 (exhaustion not required when (1) available remedies provide no real opportunity for adequate relief; (2) irreparable injury may occur without immediate judicial review; (2) administrative appeal would be futile; (4) plaintiff has raised substantial constitutional question). Plaintiff does not contend, however, and this Court does not find, that any of the established exceptions to the exhaustion requirement apply in this case. The AFBCR, established pursuant to 10 U.S.C. § 1552 and 32 C.F.R. § 865, et seq., is empowered to "correct any military record . . . when [the Secretary] considers it necessary to correct an error or remove an injustice." 10 U.S.C. § 1552(a)(1). The AFBCMR can grant Postels full relief for any injury he may have suffered from wrongful discharge. See Guitard v. U.S. Secretary of Navy, 967 F.2d 737, 741 (2d Cir. 1992) ( citing Knehans v. Alexander, 566 F.2d 312, 315 (D.C. Cir. 1977)); Hodges, 499 F.2d at 422. That the Secretary of the Air Force ordered Postels' discharge does not render the exhaustion requirement an exercise in futility. See Hodges, 499 F.2d at 422-23 (noting action of Board for Correction of Military Records, 10 U.S.C. § 1552, subject to judicial reversal as arbitrary, capricious, unsupported by substantial evidence, or erroneous in law) (citations omitted). See also 32 C.F.R. § 865.4(k) (AFBCR will not deny application solely because issue already decided by Secretary in another proceeding). Finally, the Court finds that Postels would not suffer any irreparable injury if he is compelled to pursue his administrative remedies, nor does his case raise a substantial constitutional question. See Guitard, 967 F.2d at 742 (requiring exhaustion of due process and racial and sexual discrimination claims and noting that injuries generally attending military discharge do not constitute irreparable harm). For the foregoing reasons, Postels is not excepted from the exhaustion requirement, and this Court cannot review his claims.

D. Equitable Estoppel

Postels argues that defendant should be estopped from asserting the exhaustion of administrative remedies requirement because defendant's "intentional misdirection" prevented him from complying with the HPSP contract requirement. In particular, Postels argues that defendant ignored and/or disregarded his efforts to seek administrative relief as set forth in two letters to the ATIF by Postels and his counsel. This argument lacks merit.

Equitable estoppel rarely applies to the United States government. See United States v. Bloom, 112 F.3d 200, 205 (5^th Cir. 1997) ( citing Heckler v. Community Health Servs. of Crawford County, Inc., 467 U.S. 51, 60-63, 104 S.Ct. 2218, 2224-25 (1984); United States v. Marine Shale Processors, 81 F.3d 1329, 1349 (5^th Cir. 1996)). In order to prevail, the party asserting estoppel against the government must establish the traditional elements of the doctrine and show some affirmative misconduct by the government. See id.; see also Rider v. United States Postal Service, 862 F.2d 239, 241 (9^th Cir. 1988); Chien-Shih Wang v. Attorney General of U.S., 823 F.2d 1273, 1276 (8^th Cir. 1987); Melrose Assocs., L.P. v. United States, 45 Fed. Cl. 56, 59 (1999); United States v. Swick, 836 F. Supp. 442, 445-46 (S.D. Ohio 1993) ( citing Office of Personnel Management v. Richmond, 496 U.S. 414, 421, 110 S.Ct. 2465, 2469 (1990)). The elements of estoppel are:

(1) that the party to be estopped was aware of the facts; (2) that the party to be estopped intended his act or omission to be acted upon; (3) that the party asserting estoppel did not have knowledge of the facts; and (4) that the party asserting estoppel reasonably relied on the conduct of the other to his substantial injury.

Moody v. United States, 783 F.2d 1244, 1246 (5^th Cir. 1986); accord Bloom, 112 F.3d at 205.

The Court finds nothing in record to indicate that the defendant Secretary's agents or employees misled Postels through affirmative misconduct. That defendant failed to respond to Postels' letters does not show affirmative misconduct. See Bloom, 112 F.3d at 206 (assertions of inaction do not constitute misconduct). Moreover, the Court will not allow Postels, a highly educated individual, to invoke estoppel on the grounds that the Air Force did not advise him how to pursue his administrative remedies. See, e.g., Callaway v. Stetson, 448 F. Supp. 575, 576 (N.D. Fla. 1978) (rejecting servicewoman's estoppel argument against Air Force when "true facts were readily available to plaintiff in the Air Force regulations"). Postels' HPSP contract expressly references Air Force regulation 31-3 and 10 U.S.C. § 1552 as his mandatory administrative remedies. A cursory review of the regulations implementing 10 U.S.C. § 1552 reveals the Air Force's application procedures for seeking review of a military discharge. See 32 C.F.R. § 865.3. Pastels was represented by counsel from the earliest stages of his dispute with the government. His lawyer could have easily obtained information on how to seek administrative review from the Code of Federal Regulations. Further, while his attorney claims that he asked the Air Force for information about the appellate process, rather than undertaking elemental legal research, his letter of February 14, 1995 asks for information only "[i]f it is necessary to prosecute an appeal." It was not incumbent on the Air Force to determine if Postels ultimately found it necessary to appeal.

The doctrine of estoppel does not prevent application of the exhaustion of administrative remedies requirement here. Accordingly, because Postels failed to exhaust the available military channels for relief following his allegedly wrongful and coerced resignation, the Court must dismiss his entire complaint without prejudice.

III. CONCLUSION

For the foregoing reasons, the Court grants defendant's motion to dismiss for failure to exhaust administrative remedies and dismisses this action without prejudice.

New Orleans, Louisiana, this 15^th day of March, 2000.