Free Motion to Dismiss - Rule 12(b)(1) - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

SITCO GENERAL TRADING AND CONTRACTING CO., W.W.L., a Kuwait Corporation, Plaintiff, v. THE UNITED STATES, Defendant.

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No. 07-226C (Judge Hodges)

DEFENDANT'S MOTION TO DISMISS Defendant, the United States, respectfully requests this Court to dismiss the complaint of Plaintiff Sitco General Trading and Contracting Co., W.W.L. ("Sitco") for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Rules of this Court ("RCFC"). QUESTION PRESENTED 1. Whether this Court lacks subject matter jurisdiction to adjudicate the plaintiff's claims against the United States under the Reciprocity Act, 28 U.S.C. § 2502. 2. Whether this Court lacks subject matter jurisdiction to adjudicate the plaintiff's claims against the United States, which are not cognizable under the Tucker Act, 28 U.S.C. § 1491(a). STATEMENT OF FACTS1 Sitco alleges that it is a corporation organized under the laws of Kuwait with its principal place of business in Kuwait. Compl. ¶ 2. According to Sitco, it entered into a contract with the

For the sole purpose of this motion, we will treat the allegations in the plaintiff's complaint as true. The documents attached to Sitco's complaint will be referred to as "Pl. Ex. _."

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Department of the Army ("Army") under which Sitco would provide the Army with 2700 "Alaska Barriers" as well as "related supplies and services."2 Compl. ¶ 4. According to Sitco, the contract price was $3,510,000. Compl. ¶ 4; see also Pl. Ex. A. According to the documents attached to Sitco's complaint, the contract required that Sitco "provide all labor, supervision, tools, materials, equipment, transportation, and management necessary to repair and operate associated equipment necessary for the delivery of items requested." Pl. Ex. A, Sched. ¶ C.2 ("General Requirements"). Under the contract, Sitco was to deliver the 2700 Alaska Barriers to Camp Taji, Iraq by July 7, 2004. Pl. Ex. A, Sched. ¶ F.1 ("Delivery Information"). The contract specified that the 2700 Alaska Barriers were to be delivered "FOB." Pl. Ex. A, Sched. ¶ B.1. According to Sitco, it transported to Camp Taji "an entire ready mix [concrete] factory which SITCO continued to own." Compl. ¶ 6. Sitco's employee, Luis Suarez, allegedly operated the factory. Compl. ¶ 7A.3 Sitco alleges that on October 8, 2005, after the performance of the contract, the Army asked Sitco to remove its cement factory from Camp Taji. Compl. ¶ 7B. According to Sitco, in order to remove the factory, Sitco was required to disassemble it. Compl. ¶ 9. Disassembly in turn required the personal presence of Mr. Suarez to supervise the disassembly. Compl. ¶ 9. Sitco's complaint states that the Army breached its contract with Sitco by denying Mr. Suarez "without excuse or cause," the credentials needed to travel to and remain on Camp Taji during the disassembly and removal of the factory. Compl. ¶ 10.

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"Alaska Barriers" are large concrete barriers.

Sitco's complaint contains two paragraphs identified as paragraph 7. For ease of reference, we will refer to the first of these paragraphs (beginning "It was operated . . .") as paragraph 7A, and the second (beginning "On October 8, 2005") as paragraph 7B. -2-

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Sitco alleges that as a "proximate result" of the alleged breach of contract, the factory was disassembled and transported by "inexperienced and unsupervised movers." Compl. ¶ 11. According to Sitco, the factory arrived in Kuwait in an "unusable condition." Compl. ¶ 11. Sitco alleged that it has suffered "losses, expenses, and damages" of approximately $31,000,000. Compl. ¶ 12. Sitco's complaint sets forth a second claim for relief regarding printer cartridges. Compl. ¶¶ 13-15. Sitco alleges that it purchased certain printer cartridges for the Army under a purchase order, and was never paid. Id. Sitco seeks $6,275.35 in damages for the Army's failure to pay Sitco's invoice regarding the printer cartridges. Compl. ¶ 15. Sitco alleges that this Court possesses jurisdiction to entertain Sitco's claims pursuant to the Tucker Act, 28 U.S.C. § 1491(a)(1) "inasmuch as it is a claim against the United States for damages on an express contract." Compl. ¶ 1. ARGUMENT I. Applicable Legal Standard A. Motion To Dismiss For Lack Of Subject Matter Jurisdiction

It is axiomatic that if this Court lacks subject matter jurisdiction over the claims in the complaint, the complaint must be dismissed. RCFC 12(b)(1). The plaintiff bears the burden of showing that the Court possesses jurisdiction over his claims. McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189 (1936); Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988). Furthermore, the plaintiff must carry this burden by a preponderance of the evidence. Reynolds, 846 F.2d at 748.

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In determining whether it possesses subject matter jurisdiction, this Court is to treat the allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995). The Court may, however, take into account "evidentiary matters outside the pleadings" in making this determination. Indium Corp. Of America v. Semi-Alloys, Inc., 781 F.2d 879, 884 (Fed. Cir. 1985); Thomas v. United States, 34 Fed. Cl. 619, 621 (1995). In addition, where a plaintiff has attached materials to his complaint, these materials may be considered as part of the complaint on a motion to dismiss. Pennington Seed, Inc. v. Produce Exchange No. 299, 457 F.3d 1334 1342 n. 6 (Fed. Cir. 2006). B. Limitations On The Jurisdiction Of The Court Of Federal Claims

The jurisdiction of this Court is limited; Congress has only granted this Court jurisdiction over claims where the United States has waived its sovereign immunity from suit. United States v. Testan, 424 U.S. 392, 399 (1972); Booth v. United States, 990 F.2d 617, 619 (Fed. Cir. 1993). The Tucker Act, 28 U.S.C. § 1491, governs the United States' waiver of sovereign immunity from suit in this Court: This statute confers jurisdiction on the Court of Federal Claims, and a corresponding waiver of the government's sovereign immunity from suit, when the constitutional provision, statute, or regulation in question expressly creates a substantive right enforceable against the federal government for money damages. LeBlanc v. United States, 50 F.3d 1025, 1028 (Fed. Cir. 1995). Because the Tucker Act is merely a jurisdictional statute, however, it creates no substantive right to relief in suits against the United States. Accordingly, a plaintiff in this Court must identify a contract or money-mandating constitutional provision, statute, or regulation that entitles him to relief.

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Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir. 1997); Sanders v. United States, 34 Fed. Cl. 75, 78 (1995). This Court does not possess jurisdiction to entertain claims by a plaintiff who is a foreign national unless that plaintiff shows that United States citizens possess a reciprocal right to sue the government of the plaintiff in that country's courts. 28 U.S.C. § 2502 (Reciprocity Act). See El-Shifa Pharmaceutical Industries Co. v. United States, 55 Fed. Cl. 751, 756 (2003); Humphries v. United States, 51 Fed. Cl. 35, 35 (2001); Pottawatomi Nation in Canada v. United States, 27 Fed. Cl. 388, 390 (1992); Aktiebolaget Imo-Industri v. United States, 54 F.Supp. 844, 847-848 (1944) (under predecessor reciprocity provision). See generally Ferreiro v. United States, 350 F.3d 1318, 1320-1322 (Fed. Cir. 2003) (discussing the reciprocity requirement). Demonstrating this reciprocity is the plaintiff's burden. El-Shifa Pharmaceutical Industries Co., 55 Fed. Cl. at 756; Humphries, 51 Fed. Cl. at 35. C. Contract Claims Against The Government

In order to state a breach of contract claim against the Government, a plaintiff must plead the existence of an express contract or an implied-in-fact contract embodying the obligation at issue. The elements of an implied-in-fact contract mirror those of an express contract, namely: "1) mutuality of intent to contract; 2) consideration; and, 3) lack of ambiguity in offer and acceptance." City of El Centro v. United States, 922 F.2d 816, 820 (Fed. Cir. 1990) (citing Russell Corp. v. United States, 210 Ct. Cl. 596, 609, 537 F.2d 474, 482 (1976)). In addition, a plaintiff bringing a breach of contract claim must allege actual authority on the part of a Government representative to bind the Government in contract. City of El Centro, 922 F.2d at 820 (quoting Juda v. United States, 6 Cl. Ct. 441, 452 (1984)).

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The Contract Disputes Act ("CDA") governs disputes regarding contracts with the Government for procurement of goods and services. 41 U.S.C. § 602(a). A plaintiff bringing a claim based upon a contract that is subject to the CDA must comply with the CDA's mandatory exhaustion requirements "by first submitting a `claim' to and obtaining a `final decision' from the contracting officer." Sarang Corp. v. United States, 76 Fed. Cl. 560, 564 (2007). A "claim" consists of a "written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract." 48 C.F.R. § 2.101. Furthermore, a "claim," for the purposes of the CDA, is more than an invoice that is undisputed when submitted. 48 C.F.R. § 2.101 ("A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim."). And if the claim exceeds $100,000, the contractor must also certify it in accordance with the CDA. See 41 U.S.C. § 605(c)(1). The United States Court of Appeals for the Federal Circuit has enforced the strict limits of the CDA as jurisdictional prerequisites to any suit in the Court of Federal Claims, and has held that this Court lacks jurisdiction to entertain an action unless the contractor's claim is first presented to the contracting officer. England v. The Swanson Group, 353 F.3d 1375, 1379 (Fed. Cir. 2004); Sarang Corp., 76 Fed. Cl. at 565. Sitco has failed to meet its burden to show that this Court possesses jurisdiction over its claims. Sitco has not demonstrated that it meets the reciprocity requirements of 28 U.S.C. §2502. In addition, with respect to both claims for relief, Sitco has failed to allege that it submitted a claim to the contracting officer in accordance with the requirements of the CDA.

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II.

Sitco Has Failed To Show That This Court Possesses Jurisdiction As It Does Not Allege Reciprocity As Required By Governing Law As a Kuwaiti national, Sitco must show reciprocity between the courts of the United

States and Kuwait in order to be permitted to sue the United States in this Court. See 28 U.S.C. § 2502. The law is explicit that foreign nationals must show that their government "accords to citizens of the United States the right to prosecute claims against their government in its courts." Id. Sitco bears this burden, and has failed to meet it. See El-Shifa Pharmaceutical Industries Co., 55 Fed. Cl. at 756; Humphries, 51 Fed. Cl. at 35. In its complaint, Sitco has not alleged that United States citizens are permitted to prosecute claims against the Kuwaiti government in Kuwaiti courts, and, in fact, has made no reference to the matter at all. Accordingly, both of its claims fail for lack of jurisdiction. III. This Court Lacks Jurisdiction To Entertain Sitco's Claims Because Sitco Has Failed To Allege Submission Of Its Claims To The Contracting Officer Sitco filed its complaint without submitting its claims to the contracting officer, thereby depriving this Court of jurisdiction. Sitco alleges that the Army breached its contract with Sitco by failing to permit Mr. Suarez access to Camp Taji in order that he might supervise the disassembly of Sitco's concrete factory. From the allegations in Sitco's complaint, it appears that Sitco did not submit this claim to the contracting officer, nor did it certify any such claim as required for claims over $100,000. See 41 U.S.C. § 605(c)(1). Similarly, it appears that Sitco never submitted a claim to the Army for the Army's alleged failure to pay for certain printer cartridges ordered pursuant to a Purchase Order.4

After receiving the complaint, the Army determined that the invoice at issue had been paid, and sent counsel for Sitco evidence of the same on July 31, 2007. A copy of the letter sent to counsel for Sitco is attached hereto in the Appendix at A1-12. Counsel for Sitco stated, via -7-

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A final decision from the contracting officer upon a properly submitted claim, or a "deemed denial" of a claim, is a jurisdictional prerequisite for the Court of Federal Claims to entertain a suit alleging breach of a procurement contract. 41 U.S.C. § 605(a)(1); Sharman Co. Inc. v. United States, 2 F.3d 1564, 1568-69 (Fed. Cir. 1993). Thus, absent a contracting officer decision determining liability, the Court of Federal Claims lack jurisdiction to consider a contractor's claim. Id. The contracts cited by Sitco are procurement contracts, and, pursuant to the CDA and the contract (which incorporated the Federal Acquisition Regulation Disputes Clause, 48 C.F.R. § 52.33-1), Sitco was required to submit claims to the contracting officer before filing suit. It failed to do so. Accordingly, both of Sitco's claims must be dismissed. CONCLUSION For the foregoing reasons, this Court should dismiss Sitco's complaint. Respectfully submitted, PETER D. KEISLER Assistant Attorney General JEANNE E. DAVIDSON Director /s Martin F. Hockey, Jr. by Franklin E. White, Jr. MARTIN F. HOCKEY, JR. Assistant Director

letter dated August 1, 2007, that Sitco would withdraw this claim as soon as counsel for Sitco obtained authority to do so. A copy of the letter sent by counsel for Sitco is attached hereto in the Appendix at A13. Because Sitco has not amended its complaint to delete this claim, we include it in our motion to dismiss. -8-

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Of Counsel: J. MACKEY IVES Litigation Attorney General Litigation Branch Army Litigation Center 901 N. Stuart Street, Suite 400 Arlington, VA 22203 Tel: (703) 696-1616 Fax: (703) 696-2532

s/ Maame A.F. Ewusi-Mensah MAAME A.F. EWUSI-MENSAH Trial Attorney Commercial Litigation Branch Civil Division Department of Justice 1100 L Street, N.W. Attn: Classification Unit 8th Floor Washington, D.C. 20530 Tel: (202) 353-0503 Fax: (202) 514-8624

October 5, 2007

Attorneys for Defendant

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CERTIFICATE OF FILING I hereby certify that on this 5th day of October 2007, a copy of the foregoing "DEFENDANT'S MOTION TO DISMISS" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. The parties may access this filing through the Court's system.

s/ Maame A.F. Ewusi-Mensah

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APPENDIX

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INDEX TO APPENDIX Letter from Maame A.F. Ewusi-Mensah to James J. Harrington (Jul. 31, 2007). . . . . . . . . . . . A1 Letter from James J. Harrington to Maame A.F. Ewusi-Mensah (Aug. 1, 2007) . . . . . . . . . . A13

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A1

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A2

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A3

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A4

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A5

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A6

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A7

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A8

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A9

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A10

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A11

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A12

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A13