Fredrickson v. Tollette et al

MOTION to Dismiss Case for Failure to State a Claim , MOTION to Dismiss for Lack of Jurisdiction

E.D. Okla.April 3, 2017

Page 1 of 7 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF OKLAHOMA SUSAN FREDRICKSON § § Plaintiff, § § v. § 17-CV-111-RAW § DAN TOLLETTE of DUNCAN § ROOFING & SIDING CO., and § UNITED STATES DEPARTMENT § OF AGRICULTURE RURAL § DEVELOPMENT, § § Defendants. § UNITED STATES DEPARTMENT OF AGRICULTURE RURAL DEVELOPMENT’S MOTION TO DISMISS AND BRIEF IN SUPPORT COMES NOW, the UNITED STATES OF AMERICA, on behalf of the United States Department of Agriculture, acting by and through the Rural Housing Service, an agency of the United States Department of Agriculture, by and through Douglas A. Horn, Acting United States Attorney for the Eastern District of Oklahoma and Cheryl R. Triplett, Assistant United States Attorney, and files this Motion to Dismiss and Brief in Support. I. Introduction The UNITED STATES OF AMERICA (“US”) moves for an order dismissing SUSAN FREDRICKSON’s (“Plaintiff”) claims against it for failure to state a claim upon which relief can be granted and for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) and (6). A. Grounds for Motion: The grounds for this motion are that Plaintiff has sued the wrong entity and pled only state-law claims for which the US has not waived sovereign immunity. Amendment would be futile because Plaintiff’s claims against the US are founded in contract. Jurisdiction over Plaintiff’s contract claims lies exclusively in the Court of Federal Claims. This Court lacks subject matter jurisdiction over Plaintiff’s remaining claim because the US has not waived sovereign immunity over that cause of action. 6:17-cv-00111-RAW Document 5 Filed in ED/OK on 04/03/17 Page 1 of 7 Page 2 of 7 B. Nature of the Case: On February 16, 2017, Plaintiff filed her Petition for Breach of Contract, Breach of Implied Duty of Good Faith and Fair Dealing, Breach of Fiduciary Duty, Fraud, Negligence and Unjust Enrichment in the District Court of Wagoner County, Oklahoma. (“Petition”). Plaintiff named Dan Tollette of Duncan Roofing & Siding Co. (“Tollette”) and the United States Department of Agriculture Rural Development (“USDA”) as Defendants. Plaintiff asserts breach of contract, breach of implied duty of good faith and fair dealing, fraud, negligence, and unjust enrichment against Tollette. Plaintiff asserts breach of fiduciary duty, fraud, negligence, and unjust enrichment against the USDA. Plaintiff served USDA by mail to the local USDA office. Plaintiff served the United States Attorney by mail on March 7, 2017. On March 27, 2017, the US removed the case to this Court. C. Factual Background: The USDA is a department within the executive branch of the government of the United States of America. One of the agencies through which the USDA acts is the Rural Housing Service. Rural Development is not an agency, department or other entity. Rather, it is a mission area of the USDA. On March 4, 2014, the United States of America, acting through the United States Department of Agriculture Rural Housing Service, made a loan in the amount of $14,750.00 and a grant in the amount of $7,500.00 to Plaintiff. Exhibits 1 and 2, attached hereto. To secure payment of that loan, Plaintiff gave a mortgage to the US covering real property, including Plaintiff’s home. Exhibit 3, attached hereto. The purpose of the loan and grant was to allow Plaintiff to pay for repairs to her home. The most expensive repairs to be completed were a new roof and new flooring. Exhibit 4, attached hereto. Plaintiff’s monthly payment on this loan is $67.84 per month. See Exhibit 1. After obtaining bids from at least two other contractors, Plaintiff chose Tollette to complete the work. Plaintiff acknowledged by her signature that she chose the contractor for this project herself. Exhibit 5, attached hereto. Plaintiff entered into a contract with Tollette on March 11, 2014. Exhibit 6, attached hereto. The form of the contract was provided by the US, but the US is not a party to this contract. Id. This form contract is used by the US nationwide. On June 6, 2014, Plaintiff and the US signed an Inspection Report, which stated that the work was complete, and the homeowner was satisfied with the work. Exhibit 7, attached hereto. However, Plaintiff now claims that the work was not complete. 6:17-cv-00111-RAW Document 5 Filed in ED/OK on 04/03/17 Page 2 of 7 Page 3 of 7 II. Dismissal Is Proper Under Federal Rule of Civil Procedure 12(b)(6) A. Plaintiff Has Sued the Wrong Entity The USDA is a department of the United States within the executive branch. See 7 U.S.C. § 2201 et seq. There is no statute authorizing suit against the USDA in its own name. Id. Therefore, the USDA is not a suable entity. Any suit naming the USDA as a defendant must be dismissed because the Court lacks jurisdiction to entertain such a suit. United States Department of Agriculture v. Hunter, 171 F.2d 793 (5th Cir. 1949) (The USDA is not empowered to sue or be sued.); Fricton v. Oconto Cty. ASCS, USDA, 723 F. Supp. 1312, 1315 (E.D. Wis. 1989) (Because there is no explicit authority permitting a party to sue the U. S. Department of Agriculture, the claim against the Department was dismissed.); Westcott v. United States Department of Agriculture, 611 F. Supp. 351, 353-54 (D. Neb. 1984), aff'd 765 F.2d 121 (8th Cir. 1985) (The USDA was dismissed as a defendant because Congress had not given it authority to sue or be sued.); Conyugal P'ship v. Gracia, 331 F. Supp. 521, 522 (D.P.R. 1971) (The District Court lacked jurisdiction of a suit against the U. S. Department of Agriculture and the Farmers Home Administration because they are nonsuable governmental agencies.) Plaintiff can amend her petition to properly sue the United States. However, amending the petition would ultimately be futile for the reasons described below. B. Plaintiff’s Pleading Fails to Establish Federal Subject Matter Jurisdiction or Identify an Express Waiver of Sovereign Immunity Even if Plaintiff were to add the US as a proper party, Plaintiff’s Petition fails to state a claim against the US upon which relief can be granted and must be dismissed pursuant to Fed. R. Civ. P. 12(b)(6). When the US is a defendant, a plaintiff must meet three threshold requirements to state a viable claim for relief in its pleadings: 1) it must establish federal subject matter jurisdiction; 2) it must identify an express waiver of sovereign immunity; and 3) it must state a cause of action. Flute v. United States, 808 F.3d 1234, 1239–40 (10th Cir. 2015), cert. denied, 137 S. Ct. 146, 196 L. Ed. 2d 45 (2016) Plaintiff alleges four state-law causes of action against the US: breach of fiduciary duty, fraud, negligence, and unjust enrichment. She makes no mention of any statute establishing federal subject matter jurisdiction and fails to identify any express waiver of sovereign immunity. The 6:17-cv-00111-RAW Document 5 Filed in ED/OK on 04/03/17 Page 3 of 7 Page 4 of 7 Petition fails to meet the threshold requirements to state a claim upon which relief can be granted. Plaintiff can amend her pleading to properly state a claim, but amendment would ultimately be futile for the reasons described below. III. Dismissal Is Proper Under Federal Rule of Civil Procedure 12(b)(1) Even if Plaintiff were to amend her pleadings to assert claims against the US for which the US has waived sovereign immunity, this Court would still lack subject matter jurisdiction. Plaintiff claims the US breached its fiduciary duty, committed fraud, was negligent and has been unjustly enriched. There are two express waivers of sovereign immunity available on the facts of this case: the Federal Tort Claims Act (“FTCA”) and the Tucker Act. The FTCA waives sovereign immunity for tort claims and the Tucker Act waives sovereign immunity for contract claims. 28 U.S.C. § 2674 and 28 U.S.C. § 1491(a)(1). All of Plaintiff’s claims against the US are contract claims for which exclusive jurisdiction lies in the Court of Federal Claims. A. Plaintiff’s Claims Can Only Be Heard by the Court of Federal Claims. Plaintiff’s claims are contract claims under the Tucker Act. Breach of fiduciary duty, fraud, and negligence claims all require that the defendant owe a duty to the plaintiff. Here, Plaintiff specifically pled that her relationship with the US arises from a contract she alleges was formed on February 26, 2014. Dkt. 2.1, p. 1 at ¶ 2. Plaintiff has no other grounds to impose any duty on the US which could form the basis for her claims. The Tenth Circuit thoroughly analyzed the issue of whether to characterize a claim against the government as one in tort or one founded on contract in Union Pac. R. Co. v. U.S. ex rel. U.S. Army Corps Of Engineers, 591 F.3d 1311, 1314-17 (10th Cir. 2010). The plaintiff filed suit against the United States alleging negligent breach of contract under the Federal Tort Claims Act. The court held that the analysis depends on the purpose served by the characterization. Specifically, tort claims are determined by the law of the state where the incident occurred, while contract claims are determined in a more uniform manner to ensure that contracts with the United States are held to contain the same rights and obligations throughout the nation. Id. In the instant case, Plaintiff claims injury for acts or omissions which are alleged to have occurred in Oklahoma, but which arise out of an alleged contractual relationship between Plaintiff 6:17-cv-00111-RAW Document 5 Filed in ED/OK on 04/03/17 Page 4 of 7 Page 5 of 7 and the US. The Court will have to determine the rights and obligations imposed by the form documents used by the US throughout the nation. A judgment under the FTCA in this case would necessarily turn on Oklahoma state law, while a court in a different state could interpret the same language under its own state law and reach a different judgment. The Tenth Circuit in Union Pac. R. Co. went on to analyze the source of the duty imposed on the government, holding as follows: Accordingly, we believe that when a state-law cause of action (be it constitutional, statutory, regulatory, or common-law) amounts to the imposition on the government of an implied contractual duty—a duty that arises out of, and exists only because of, the contract between the plaintiff and the government—the cause of action should be characterized as one “founded ... upon [an] express or implied contract with the United States.” 28 U.S.C. § 1491(a)(1). 591 F.3d 1311, 1320 (10th Cir. 2010) In this case, the US has no relationship with Plaintiff outside of the two contracts Plaintiff alleges she entered into with the US. See Dkt. 2.1, pp. 1-2. The only duty that could be imposed on the US exists solely because of these alleged contracts. Plaintiff’s claims should be characterized as claims founded on an express or implied contract with the United States. The US has waived sovereign immunity for such claims under the Tucker Act. 28 U.S.C. § 1491(a)(1). However, exclusive jurisdiction over Tucker Act claims for money damages of more than $10,000 rests in the Court of Federal Claims. Id. Because Plaintiff claims more than $10,000 in damages, the Court of Federal Claims has exclusive jurisdiction over Plaintiff’s claims. B. Plaintiff’s Fraud Claim is Barred by Sovereign Immunity. In the alternative, if the Court finds that the fraud claim is not a contract claim under the Tucker Act, the fraud claim should be dismissed for lack of jurisdiction. All claims of fraud of any type are excluded from the waiver of sovereign immunity in the Federal Tort Claims Act. 28 U.S.C. § 2680(h). This exclusion has been broadly construed to include all claims of fraud of any type, whether actual, constructive, intrinsic or extrinsic, or any other species of deceit or false representation. Hall v. United States, 274 F.2d 69 (10th Cir. 1959); Jones v. United States, 207 F.2d 563 (2d Cir.1953), cert. denied 347 U.S. 921, 74 S.Ct. 518, 98 L.Ed. 1075, reh. denied 347 U.S. 940, 74 S.Ct. 627, 98 L.Ed. 1089. There is no other waiver of sovereign immunity for a fraud 6:17-cv-00111-RAW Document 5 Filed in ED/OK on 04/03/17 Page 5 of 7 Page 6 of 7 claim involving these facts. The Court should dismiss this claim. C. Plaintiff’s Unjust Enrichment Claim is Barred by Sovereign Immunity. Plaintiff’s claim for unjust enrichment should be dismissed. Unjust enrichment is an equitable remedy and an equitable, quasi-contract claim under Oklahoma state law. Dinwiddie v. Suzuki Motor of Am., Inc., 111 F. Supp. 3d 1202, 1217 (W.D. Okla. 2015). There is no specific waiver of sovereign immunity for unjust enrichment claims. The Federal Tort Claims Act does not waive sovereign immunity for equitable remedies. 28 U.S.C. 1346(b); see also Rehoboth McKinley Christian Healthcare Servs., Inc. v. U.S. Dep't of Health & Human Servs., 853 F. Supp. 2d 1107, 1115 (D.N.M. 2012). The Tucker Act does not authorize claims for equitable relief or for quasi- contract claims. Hercules Inc. v. United States, 516 U.S. 417, 423 (1996). There is no general waiver of sovereign immunity for unjust enrichment claims. See United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d 607 (1980) (noting that a waiver may not be implied but must be unequivocally expressed and that absent clear congressional consent to be sued in a particular court, there is no jurisdiction against the United States); Chem-Nuclear Sys., Inc. v. Arivec Chems., Inc., 978 F.Supp. 1105, 1110 (N.D.Ga. 1997) (dismissing the plaintiff’s unjust enrichment claim because the plaintiff failed to identify any waiver by the United States of its sovereign immunity for such claims.) This claim should be dismissed. III. CONCLUSION In summary, Plaintiff’s claims against the US should be dismissed. Plaintiff has sued the wrong entity. She failed to invoke any waiver of the US’ sovereign immunity. Even if she amends her pleading, this Court lacks subject matter jurisdiction over all of Plaintiff’s claims against the US because Plaintiff’s claims are founded in contract and exclusive jurisdiction rests in the Court of Federal Claims. Additionally, the US has not waived sovereign immunity from Plaintiff’s fraud and unjust enrichment claims. WHEREFORE, for the stated reasons, Defendant US’ Motion to Dismiss should be granted. 6:17-cv-00111-RAW Document 5 Filed in ED/OK on 04/03/17 Page 6 of 7 Page 7 of 7 DOUGLAS A. HORN Acting United States Attorney /s/CHERYL R. TRIPLETT______________ CHERYL R. TRIPLETT O.B.A. #15282 Assistant United States Attorney 520 Denison Avenue Muskogee, OK 74401 (918) 684-5111 CERTIFICATE OF MAILING I hereby certify that on April 3, 2017, I electronically filed the foregoing with the Clerk of Court using the ECF System. Based on the records currently on file, I hereby certify that a true and correct copy of the above foregoing was mailed postage prepaid, to the following: Tara G. Lemmon Legal Aid Services of Oklahoma 624 W. Broadway Muskogee, OK 74401 /s/CHERYL R. TRIPLETT______________ Cheryl R. Triplett Assistant United States Attorney 6:17-cv-00111-RAW Document 5 Filed in ED/OK on 04/03/17 Page 7 of 7 Exhibit 1 6:17-cv-00111-RAW Document 5-1 Filed in ED/OK on 04/03/17 Page 1 of 3 Exhibit 1 6:17-cv-00111-RAW Document 5-1 Filed in ED/OK on 04/03/17 Page 2 of 3 Exhibit 1 6:17-cv-00111-RAW Document 5-1 Filed in ED/OK on 04/03/17 Page 3 of 3 Exhibit 2 6:17-cv-00111-RAW Document 5-2 Filed in ED/OK on 04/03/17 Page 1 of 1 Exhibit 3 6:17-cv-00111-RAW Document 5-3 Filed in ED/OK on 04/03/17 Page 1 of 7 Exhibit 3 6:17-cv-00111-RAW Document 5-3 Filed in ED/OK on 04/03/17 Page 2 of 7 Exhibit 3 6:17-cv-00111-RAW Document 5-3 Filed in ED/OK on 04/03/17 Page 3 of 7 Exhibit 3 6:17-cv-00111-RAW Document 5-3 Filed in ED/OK on 04/03/17 Page 4 of 7 Exhibit 3 6:17-cv-00111-RAW Document 5-3 Filed in ED/OK on 04/03/17 Page 5 of 7 Exhibit 3 6:17-cv-00111-RAW Document 5-3 Filed in ED/OK on 04/03/17 Page 6 of 7 Exhibit 3 6:17-cv-00111-RAW Document 5-3 Filed in ED/OK on 04/03/17 Page 7 of 7 Exhibit 4 6:17-cv-00111-RAW Document 5-4 Filed in ED/OK on 04/03/17 Page 1 of 2 Exhibit 4 6:17-cv-00111-RAW Document 5-4 Filed in ED/OK on 04/03/17 Page 2 of 2 Exhibit 5 6:17-cv-00111-RAW Document 5-5 Filed in ED/OK on 04/03/17 Page 1 of 2 Exhibit 5 6:17-cv-00111-RAW Document 5-5 Filed in ED/OK on 04/03/17 Page 2 of 2 Exhibit 6 6:17-cv-00111-RAW Document 5-6 Filed in ED/OK on 04/03/17 Page 1 of 5 Exhibit 6 6:17-cv-00111-RAW Document 5-6 Filed in ED/OK on 04/03/17 Page 2 of 5 Exhibit 6 6:17-cv-00111-RAW Document 5-6 Filed in ED/OK on 04/03/17 Page 3 of 5 Exhibit 6 6:17-cv-00111-RAW Document 5-6 Filed in ED/OK on 04/03/17 Page 4 of 5 Exhibit 6 6:17-cv-00111-RAW Document 5-6 Filed in ED/OK on 04/03/17 Page 5 of 5 Exhibit 7 6:17-cv-00111-RAW Document 5-7 Filed in ED/OK on 04/03/17 Page 1 of 1