Free Motion to Dismiss - Rule 12(b)(6) - District Court of Federal Claims - federal

Case 1:05-cv-00881-VJW

Document 7

Filed 11/10/2005

Page 1 of 5

IN THE UNITED STATES COURT OF FEDERAL CLAIMS COMMERCE FUNDING CORPORATION, Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

Nos. 05-881C (Judge Wolski)

DEFENDANT'S PARTIAL MOTION TO DISMISS Pursuant to Rule 12(b)(6) of the United States Court of Federal Claims ("RCFC"), defendant, the United States, respectfully requests that this Court dismiss the portion of Commerce Funding's complaint that concerns payments seized by the United States Treasury for failure to state a claim upon which relief may be granted.1 In support of this motion, we rely upon the complaint and the following brief. QUESTIONS PRESENTED Whether the portion of plaintiff's complaint seeking relief regarding payments allegedly seized by the Department of the Treasury states a claim upon which relief can be granted. STATEMENT OF FACTS On September 17, 2002, the Department of Health and Human Services ("HHS") awarded contract number GS-35F-4761G to ICES, Ltd..2 Complaint ("Compl.") ¶¶ 1-7. Payment under this contract was made through invoices submitted by ICES. On May 25, 2004,
1

Should this Court deny this motion, the Government respectfully requests 30 days from the date of denial to file a response to the complaint. For the purposes of this motion to dismiss, we rely upon all allegations as stated in plaintiff's complaint. See Harbuck v. United States, 58 Fed. Cl. 266, 267 (2003). However, we do not admit the truth of any of its allegations and reserve the right to dispute Commerce Funding's assertions not addressed in the accompanying answer, if necessary, at a later date.
2

Case 1:05-cv-00881-VJW

Document 7

Filed 11/10/2005

Page 2 of 5

pursuant to 48 C.F.R. § 32.8, ICES executed an Instrument of Assignment whereby it assigned future contract payments to Commerce Funding Corporation. Id. at ¶ 9. Commerce Funding forwarded a Notice of Assignment to Ms. Dorothy M. Parker, the contracting officer, who received the notice on August 9, 2004. Id. at ¶ 10. On August 17, 2004, Commerce Funding confirmed that the Director of the Division of Accounting Operations for the section of HHS that was involved in the contract had received a copy of the Notice of Assignment. Id. at ¶ 11. On March 2, 2005, after having directed at least four invoices to Commerce Funding pursuant to the assignment, HHS made a payment for invoice number 20 directly to ICES. Id. at ¶ 13. Commerce Funding contacted the payment office, but never received payment for invoice number 20. Id. at ¶ 14. Beginning in April 2005, Commerce Funding began receiving invoice payments that had been reduced for offsets by the Department of the Treasury for debts that ICES owed the Government. Id. at ¶¶ 15-19. On June 9, 2005, Commerce Funding wrote a letter to the contracting officer, Ms. Parker, concerning these invoices numbered 21 through 23. Id. at ¶ 20, Ex. F. Commerce funding received no response. Id. On August 12, 2005, Commerce Funding filed its complaint initiating this lawsuit. ARGUMENT Plaintiff Has Failed To State A Claim As To The Treasury Department's Offset Deductions From Invoices That HHS Paid To Commerce Funding Pursuant to RCFC 12(b)(6), the Court must accept as true the facts alleged in the complaint. David v. Monroe County Bd. of Educ., 526 U.S. 629, 633 (1999). However, a defendant is entitled to dismissal pursuant to RCFC 12(b)(6) "when the facts asserted by the claimant do not entitle [it] to a legal remedy . . . accept[ing] all well-pleaded factual allegations

2

Case 1:05-cv-00881-VJW

Document 7

Filed 11/10/2005

Page 3 of 5

as true and draw[ing] all reasonable inferences in the claimant's favor." Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002); accord Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Commerce Funding has alleged that it filed a notice of assignment with HHS, and that payments for invoices beginning with invoice 21 were paid to it subject to an offset by the Department of the Treasury. However, Commerce Funding's complaint does not mention or consider that 31 C.F.R. § 285.5e(6) specifically provides that "[a]n assigned payment will [ ] be subject to offset [by the Department of the Treasury] to collect delinquent debts owed by the assignor . . . ." The regulation states several exceptions. Pursuant to 31 C.F.R. § 285.5(e)(6)(ii), the only exceptions are A) if the contract contained a prohibition on reduction of payments due to contractor debts, B) if the offset was made in satisfaction of a debt owed to the assignee by the agency seeking the offset of payments to the contractor, or C) if the assignment was properly made and the contractor's indebtedness to the agency arose after the assignment became effective. Commerce Funding, however, does not allege that any of these exceptions applies. Commerce Funding's complaint with regard to the offset that started with invoice number 21 focuses solely upon the fact that money was taken from payments that were assigned to it. However, its complaint has not demonstrated any reason that such an offset would not be allowed by 31 C.F.R. § 285.5(e), which clearly provides for such offsets. For these reasons, with regards to the Treasury Department offsets from its assigned payments, Commerce Funding has not stated a claim upon which this Court may grant relief.

3

Case 1:05-cv-00881-VJW

Document 7

Filed 11/10/2005

Page 4 of 5

CONCLUSION For these reasons, we respectfully request that this Court dismiss the those portions of the complaint alleging a claim based upon invoices 21 through 23 pursuant to RCFC 12(b)(6).

Respectfully submitted, PETER D. KEISLER Assistant Attorney General

DAVID M. COHEN Director s/ Patricia M. McCarthy PATRICIA M. McCARTHY Assistant Director s/ James D. Colt JAMES D. COLT Trial Attorney Department of Justice Civil Division Commercial Litigation Branch 1100 L. Street, NW Attn: Classification Unit 8th Floor Washington, D.C. 20530 Tel: (202) 514-7300 Fax: (202) 307-0972 November 10, 2005 Attorneys for Defendant

4

Case 1:05-cv-00881-VJW

Document 7

Filed 11/10/2005

Page 5 of 5

CERTIFICATE OF SERVICE I hereby certify that on this 10th day of November, 2005, 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 of record by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ James D. Colt