Free Response to Motion - District Court of Federal Claims - federal

Case 1:05-cv-00608-ECH

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No. 05-608C

1. (Judge Hewitt)
____________________________________________________________________________________ IN THE UNITED STATES COURT OF FEDERAL CLAIMS FRANCISCO JAVIER RIVERA AGREDANO and ALFONSO CALDERON LEON, Plaintiffs,

v. UNITED STATES OF AMERICA Defendants. ____________________________________________________________________________________ TERESA TRUCCHI SBN# 135543 SUPPA, TRUCCHI, AND HENEIN, LLP 3055 India Street San Diego, CA 92103 Telephone: (619) 297-7330 Telefax : (619) 297-9658 Attorneys for PLAINTIFFS FRANCISCO JAVIER RIVERA AGREDANO and ALFONSO CALDERON LEON

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TABLE OF CONTENTS Page no. I INTRODUCTION II HISTORY OF PROCEEDINGS III STATEMENT OF FACTS IV STATEMENT OF SIMILAR CASES CERVANTES V. USA 4 4 4 7 7

RODRIGUEZ v. USA ET. AL. SOSA V. ALVAREZ MACHAIN SUBJECT MATTER JURISDICTION "AS-IS" PROVISION VII CONCLUSION

8 8 9 11 14

TABLE OF AUTHORITIES Am erican Capital Corp. v. USA 66 Fed Cl. 315 Betz v. USA 40 Fed. Cl. 286 Bray v. USA 48 Fed. Cl 781 Jose Cervantes v. United States 330 F.3d 1186 (9th Cir. 2003) Faden v. USA 13 Cl. Ct. 328 Franklin Savings Corp. v. USA 56 Fed.Cl 720 Hatzlachh Supply Co. v. USA 444 U.S. 460 Kania v. United States 227 Ct. Cl. 458 Klam ath Irrigation v. USA 67 Fed.Ct. 504 Knieper v. USA 38 Fed.Cl.128 Levy v. USA 10 Cl.Ct 602 Price v. United States 46 Fed. Cl. 640 10 10 13 14 138 11 13 10 10 10

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Montana v. USA 124 F.3d 1269 Pratt v. United States 50 Fed. Cl. 469 (2001) SAB Construction v. USA 66 Fed.Cl. 77 Solar Turbine v. USA 26 Cl.Ct.1249 Sosa v. Alvarez-Machain 124 S.Ct. 2739 Sullivan v. USA 54 Fed.Cl. 214 Sum m it Tim ber v. USA 230 Ct.Cl. 434 Trudeau v. USA (2005) W L 2363043 Zajanckauskas v. USA 346 F.Supp.2d. 251 STATUTES 28 U.S.C. 2680(k)

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INTRODUCTION The present action arises out of the purchase of an autom obile at a U.S. Custom s Service seizure auction by plaintiff FRANCISCO JAVIER RIVERA AGREDANO (hereinafter RIVERA) and the subsequent incarceration of RIVERA and ALFONSO CALDERON LEON (hereinafter CALDERON) in Mexico as a result of the discovery of m arijuana in the vehicle by Mexican authorities in Ensenada, Mexico. Plaintiffs contend that the m arijuana was in the vehicle prior to the purchase but not rem oved by the U.S. Custom s Service due to an intentional failure to conduct an adequate search of the vehicle. Evidence is provided herewith (and discussed in detail below) showing that the USA officials' failure to conduct an adequate search was due to a San Ysidro Border Patrol policy to lim it searches of seized vehicles in order to avoid causing dam age that could dim inish the resale value of the vehicle. If necessary, plaintiffs request leave to am end the com plaint to allege additional facts to establish the causes of action set forth in the com plaint. HISTORY OF PROCEEDINGS A com plaint under the Federal Tort Claim Act was filed in the Southern District of California on Novem ber 14, 2002. In June of 2004, the United States Suprem e Court issued the ruling in Sosa v. Alvarez-Machain 124 S.Ct. 2739 (2004) finding that 28 U.S.C. 2680(k) barred any claim under the FTCA when the injury was suffered in a foreign country. On Novem ber 2, 2004, the Honorable Rudi Brewster granted defendant USA's m otion for sum m ary judgm ent as to the FTCA cause of action. Judge Brewster found that "... the U.S. negligently failed to conduct a 'com plete and thorough exam ' on the vehicle" and that the plaintiffs " ... suffered injury after being arrested and im prisoned in Mexico for alm ost one year" but that the FTCA cause of action was barred under the decision in Sosa v. Alvarez-Machain 124 S.Ct. 2739 (2004) because RIVERA and CALDERON were arrested in Mexico. Judge Brewster granted plaintiff's request for leave to am end to state causes of action under the Tucker Act. The parties then stipulated to transfer this m atter to this court. STATEMENT OF FACTS

In the m oving papers for this m otion, and for the purposes of these m otions, the USA accepted the allegations in plaintiffs' com plaint. As alleged in the com plaint and in the declarations subm itted herewith in Pl. App. 9 and 10, RIVERA and CALDERON LEON are citizens of the Country of Mexico and authorized to enter the United States to conduct business. [Cm p. para. 2-3] Jose Arm ando Jim enez Coronel purchased and thereafter im ported a 1987 Nissan Pathfinder VIN:JN8HD16Y7HW 029972 (hereinafter SUBJECT VEHICLE) into Mexico on Decem ber 12, 2000. On or about January 25, 2001, Mr. Jim enez was arrested and the SUBJECT VEHICLE was seized by USA under 18USC545; 21 USC952; and 19CFR162.45(A)(for transportation of m arijuana across the United States border.) [Cm p. para 10-11] On January 30, 2001, Mr. Jim enez pled guilty to violation of California Health and Safety Code §11359 and adm itted that he "knowingly possessed 59 pounds of m arijuana for purposes of sale." [Cm p. para. 12] On February 20, 2001, Mr. Jim enez was granted probation for three (3) years, sentenced to tim e served (39 days) and ordered to pay $400.00 in fines and restitution. In exchange, the balance of the charges against him were dism issed. [Cm p. para. 13] Thereafter the SUBJECT VEHICLE was m ade available for sale to the public through a Federal Forfeiture Sale. On Septem ber 5, 2001, RIVERA acquired the SUBJECT VEHICLE from the Departm ent of Treasury in a Public Auction following a Custom s Service Departm ent Federal Forfeiture Sale. [Cm p. para. 15]

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On Thursday, January 24, 2002 RIVERA was traveling in the SUBJECT VEHICLE from the City of Ensenada, Baja California to the City of Tijuana, Baja California. RIVERA was accom panied by CALDERON. RIVERA and CALDERON were stopped at a Highway Check Point at the location known as El Sauzal, Ensenada, Baja California by Mexican authorities. [Cm p para. 16] The SUBJECT VEHICLE was searched. The Mexican authorities discovered twenty two (22) packages containing m arijuana (weighing 17 kilogram s total.) The packages were between the upholstery walls and the body of the vehicle (the wheel well.) [Cm p. para. 17]

RIVERA and CALDERON were arrested and were in Federal Prison in Mexico from and after January 24, 2002 [Cm p. para. 18] until their release on January 10, 2003 (upon a finding of innocence). Jose Blanco Loya, an expert witness from the Office of the Attorney General (in Mexico), tested the m arijuana on January 25, 2002. On February 13, 2002, Mr. Blanco testified before the 11th Federal District Court of Ensenada that the m arijuana found by the Mexican authorities on January 24, 2002 was "highly dehydrated, consistency and texture had been lost, and due to color lost, it had a 'brownie' color trend .... change in texture and consistency is also due to they (sic) have been stored or exposed to certain physical or atm ospherical conditions, change in color is due to an old or stored m arijuana ...." [Cm p. para. 19]

On March 11, 2002, expert chem ists Rafael Garcia Gutierrez and Miguel Carrillo Mendivil, qualified as experts in the Federal Court, testified as follows: "(the m arijuana) is highly dehydrated, it has a brownie color ... it is observable that is m arijuana that has been stored for a long tim e and not only that, at opening a 'rotten' odor com es from the packages.... it is assum ed that such illegal drug was exposed to adverse atm ospherical and physical conditions for a long tim e." [Cm p. para. 20] Thereafter, in a response to a Freedom of Inform ation Act request filed by plaintiffs' counsel, photographs were produced by CUSTOMS showing that the area wherein the Mexican officials discovered the m arijuana in January of 2002 had not been searched by USA prior to the sale to RIVERA. [Cm p. para. 21][see; also, Declaration of Francisco Rivera, Pl. App. 9 and Declaration of Alfonso Calderon, Pl. App. 10] Plaintiffs contend that the area wherein the Mexican officials discovered the m arijuana in July of 2003 had not been properly searched by CUSTOMS, MCCORMACK, or EG&G, INC. despite a duty to do so. Plaintiffs contend that if the vehicle had been properly searched, the m arijuana (in excess of 33 pounds) would have been detected. The failure to conduct a thorough search of the vehicle prior to sale was the result of an USA policy to curtail searches in order to avoid causing dam age to seized vehicles during custom s' inspections. The goal of curtailing the searches was to m axim ize the resale value of the vehicle at auction. These contentions were confirm ed by defendant USA's own witnesses (including the USA's designated expert) in sworn deposition testim ony as set forth below: JAYSON AHERN "Q: Sir, who are you currently em ployed by? A: I am em ployed by the Departm ent of Hom eland Security, specifically the Bureau of Custom s and Border Protection as the Assistant Com m issioner for the Office of Field Operations." [Deposition of Jayson Ahern (6-4-04) pg. 5; ll. 7-11] Q: Now, this m em o m akes the following statem ent ..... 'One, it is the responsibility of the seizing officer to ensure that a com plete exam is done on the vehicle assigned to them .' Is that your understanding of what policy was in San Ysidro in Novem ber of 2000? A: That would have been the policy guidance they received from the field director, Rudy Cam acho, yes.

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Q: So that's what the officers were expected to do as far as searching these vehicles; is that correct? A: Yes." [Deposition of Jayson Ahern (6-4-04) pg. 50; ll. 20-25; pg. 51, ll 1-11; Pl. App. 1] ROBERT ROOT "Q: .... you're supervisor in the canine enforcem ent departm ent? A: Yes, m a'am . [Deposition of Robert Root (6-24-04) pg. 6; ll. 6-8; Pl. App. 2] "Q: .... the first paragraph of this m em o ... states: 'Prior to the sale of all conveyances seized and forfeited for the sm uggling of controlled substances, a final canine screening or inspection m ust occur. This is to ensure that each conveyance sold is free of contraband.' W as that your understanding of the policy at the San Ysidro Port in 2001? A: To the best of m y knowledge." [Deposition of Robert Root (6-24-04) pg. 30; ll. 2-8; Pl.App.2] The fact that this duty was breached in this case was verified in depositions taken of the USA's designated expert David Murphy on June 25, 2004 as follows: DAVID MURPHY "Q: .... what is you occupation? A: .... I'm the acting assistant director of field operations for the San Diego field office." [Deposition of David Murphy (6-24-04) pg. 5; ll. 17-19; Pl. App. 3] "Q: ... am I correct you've been asked to provide expert opinions in this case? A: I've been designated as a federal em ployee with knowledge in this case on the standards of care, policies, and procedures for searching and inspecting seized and forfeited vehicles." [Deposition of David Murphy (6-24-04) pg. 9;ll. 25; pg. 10;ll. 1-5; Pl.App. 3] "Q: I am going to ask you a hypothetical question ... For the purposes of this question, please assum e that there were approxim ately 37 pounds of m arijuana still in this (vehicle) after Officer Marilao detected and rem oved som e m arijuana from the gas tank. .... In your opinion, if all of the search techniques that you described were perform ed on this vehicle in an adequate fashion, in your opinion, would they have detected an am ount of drugs that was 37 pounds of m arijuana? [Objections om itted] A: I would hope that they would. Q: So in your opinion if those search techniques are perform ed adequately, an am ount of that size, i.e., around 37 pounds, would be detected? A: Yes." [Deposition of David Murphy (6-24-04) pg. 43; ll. 21-25; pg. 44; ll. 1-18; Pl. App. 3] The fact that the breach occurred in order to increase the financial gain received by the USA at the auction sale was verified in depositions of the USA agents as follows: OFFICER JOSEPH MARILAO "Q: ....W hat is your current em ployer? A: United States Custom s Border Protection" [Deposition of Officer Joseph Marilao (6-9-04) pg. 6; ll. 23-24] "Q: You're aware of an incident where inspectors were told in general (to avoid dam age to the vehicles)? A: Yes, m a'am Q: And who -- how do you know about that? ..... A: That was briefed in general as far as when you're going through a vehicle to m inim ize the dam age on them for resale purposes." [Deposition of Officer Joseph Marilao (6-9-04) pg. 26; ll. 9-16]

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"Q: W hen you say it was 'briefed in general,' who -- it was briefed by whom to whom? A: I can't recall, but I know that it's been -- it's been said by other supervisors that you want to m ake -m inim ize the dam age for a vehicle for resale purposes, you know, as far as seizures go. Q: Okay. And that was at San Ysidro? A: Yes, Ma'am . [Deposition of Officer Joseph Marilao (6-9-04) pg. 26; ll. 22-25 and pg. 27; ll. 1-4; Pl. App. 4] ROBERT BICKERS "Q: W ho are you currently em ployed by? A: Custom s and Border protection." [Deposition of Robert Bickers (6-9-04) pg. 6; ll. 21-22; Pl. App. 5] "Q: .... W hat's your current position called? A: I'm the antiterrorist contraband enforcem ent team supervisor." [Deposition of Robert Bickers (6-9-04) pg. 8; ll. 10-12; Pl. App. 5] "Q: ... Are you are of any requests or statem ents m ade to the inspectors at secondary (inspection) to try to avoid -- to m inim ize dam age to the seized vehicle so they would have a higher resale value at auction? ..... Have you heard anybody discuss a suggestion such as that am ong the inspectors? A: I've heard inspectors say it. Q: W hat have you heard in that regard? A: They don't want you to tear it up, but I correct them and direct them to do what they need to do." [Deposition of Robert Bickers (6-9-04) pg. 26; ll. 3-17; Pl. App. 5]

The fact that this duty to search existed, and was breached by the USA, is further evidenced by Michael Levine, Plaintiff's expert on the standards and policies of USA custom s departm ent. As set forth in the report of Mr. Levine, USA is required under its policies and procedures to search any autom obile when there is probable cause to suspect narcotics to be hidden within the vehicle, and that the USA's search of the autom obile was "significantly substandard and incom plete." [Dec of Trucchi, Pl. App. 6]. STATEMENT OF SIMILAR CASES The issue of whether or not these parties have a right to sue the USA under this general fact pattern was exam ined by the Ninth Circuit Court of Appeals in another sim ilar case entitled Jose Cervantes v. USA [United States District Court Num ber 01CV0128K(LSP)]. CERVANTES V. USA

In 1999, 67 year old Jose Cervantes was arrested by US Custom officials as he waited in line at the border crossing at Otay Mesa, CA to deliver a passport to his grandson (who was on a field trip to the USA). Mr. Cervantes stayed in jail in from October 22, 1999 until his release on February 9, 2000. [Cervantes v. USA 330 F.3d 1186 (9th Cir. 2003)] Mr. Cervantes purchased the vehicle he was driving at the tim e of his arrest from the USA at a USA custom forfeiture seizure sale. The m arijuana found in his car was eventually determ ined to have been left in the vehicle at the tim e of the sale. [Cervantes v. USA, supra at 1188]

The USA m oved to dism iss the com plaint based, in part, on the "detention of goods" exception to the FTCA found at 28 USC 2860©). The m otion to dism iss was granted by the trial court. On June 2, 2003, the 9th Circuit Court of Appeal reversed in a published opinion that states:

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"In asserting the detention of goods exception as its defense, rather than com pensating a plaintiff it has seriously wronged, the United States thum bs its nose at its obligation to see that justice is done. The Suprem e Court long ago pronounced the special obligation of the United States Attorney to serve the interests of justice:

'The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern im partially is as com pelling as its obligations to govern at all; and whose interest, therefore, in a crim inal prosecution is not that it shall win a case, but that justice shall be done ...[He] is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer.' [citing Berger v. United States 295 U.S. 78, 88 (1935)] ' In asserting a last-ditch, far-fetched defense in this case, the United States Attorney failed to m eet this obligation. W e trust that this is but a m om entary lapse."

[Cervantes, supra, 1190-1191] RODRIGUEZ v. USA ET. AL. There is another sim ilar case pending in this court in front of the Honorable Judge Lettow. The com plaint in Rodriguez v. USA (United States Court of Federal Claim s Num ber 05-370c)][see; also, Declaration of Ali Jazm in Rodriguez Rivera, Pl. App. 7 and Declaration of Adrian Rodriguez, Pl. App. 8] alleges as follows: Plaintiffs' com plaint alleges that on March 3, 2003, Ali Jazm in Rodriguez and Adrian Rodriguez (husband and wife) purchased a Volkswagen Passat at an auction conducted by EG&G/McCorm ick for the Departm ent of Hom eland Security of the UNITED STATES OF AMERICA [Com plaint, paragraph 16].

On July 17, 2003, Adrian Rodriguez took the vehicle to a m echanic in Tijuana because it was m aking an unusual sound. The vehicle was found to have 33 pounds of m arijuana in a box on the underside of the body. Upon discovery of the m arijuana, Adrian Rodriguez asked the m echanic to call the police. The Tijuana police arrived and Adrian Rodriguez was arrested. [Com plaint, paragraphs 17-18] Adrian Rodriguez was in Federal Prison in Mexico from and after July 17, 2003 until August 15, 2003 when he was released. [Com plaint, paragraphs 17-22] SOSA v. ALVAREZ MACHAIN

Currently, the instant case (RODRIGUEZ) and the RIVERA/CALDERON cases are pending in the United States Court of Federal Claim s while the CERVANTES case rem ains in the Southern District Court of California. To explain why this has occurred, it is necessary to briefly address the Suprem e Court ruling in the case Sosa v. Alvarez-Machain (2004) 124 S. Ct. 2739. Dr. Alvarez Machain was alleged to be an accom plice to a torturer working for a drug trafficker in Mexico. Dr. Alvarez Machain was accused of using his m edical skills to keep DEA agent Enrique Cam arena alive for as long as possible in order to subject Agent Cam arena to further torture before he died. [Sosa v. Alvarez-Machain at pages 2746-2750]

In the case of Sosa v. Alvarez Machain, som e DEA agents working for the USA becam e concerned that Mexico would not com plete the extradition process and bring Dr. Alvarez-Machain to justice for his alleged acts. In order to circum vent the extradition process altogether, these USA DEA agents hired a couple of Mexican nationals to kidnap Dr. Alvarez-Machain (a Mexican citizen residing in Mexico) and put him on a private plane bound for El Paso, Texas. The Mexican nationals com plied with the wishes of the USA DEA

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agents and Dr. Alvarez-Machain was kidnaped from his hom e in Mexico, held overnight in a m otel in Mexico, flown to El Paso, Texas the next day and eventually brought to trial in the United States. [Sosa v. Alvarez-Machain at pages 2746-2750]

Dr. Alvarez-Machain m oved to dism iss the crim inal case based upon the illegality of his forcible seizure in Mexico. The District Court and the 9th Circuit Court of Appeals agreed with Dr. Alvarez-Machain. The United States Suprem e Court disagreed and reversed finding that the fact of Alvarez-Machain's "forcible seizure did not affect the jurisdiction of a federal court". [Sosa v. Alvarez-Machain at page 2746-2750] The crim inal case was tried in 1992, and ended at the close of the Governm ent's case, when the District Court granted Alvarez's m otion for a judgm ent of acquittal. [Sosa v. Alvarez-Machain at page 2750] Thereafter, Dr. Alvarez-Machain sued the individuals that kidnaped him (one of whom was appellant Jose Francisco Sosa) and the United States of Am erica for his kidnaping and one night detention in a m otel in Mexico. [Sosa v. Alvarez-Machain at page 2750]

The United States filed a m otion to dism iss based upon the foreign country exception to the Federal Torts Claim act. [28 U.S.C. 2680(k)] The foreign country exception to the Federal Torts Claim s Act [28 U.S.C. 2680(k)] states that it bars all claim s involving an injury "arising in" a foreign country. The Alvarez-Machain decision involved an analysis of the "headquarter doctrine". [Sosa v. AlvarezMachain at page 2748-2749] This doctrine was developed in case law and essentially provided that the foreign county exception to the Federal Torts Claim Act found at 28 U.S.C. 2680(k) did not bar a suit against the USA if the "negligent act or om ission" leading to the injury occurred in the United States. [Sosa v. Alvarez-Machain at page 2750] The "headquarter doctrine" was prim arily developed in cases involving a situation where USA agents, while physically located in their office in the USA, plotted som e sort of tort that they wanted to com m it in a foreign country.

On June 29, 2004, the United States Suprem e Court dism issed Dr. Alvarez-Machain's civil suit against the United States of Am erica rejecting the "headquarters doctrine" and finding that because the injury to Dr. Alvarez was "suffered in a foreign country", it was barred. [Sosa v. Alvarez-Machain at page 2750] In Alvarez-Machain, the Suprem e Court found that the "injury" alleged in the civil suit was the kidnaping and one night detention in Mexico. The only act occurring on U.S. soil was the USA DEA agents' decision to hire the Mexican kidnappers -- a classic "headquarters doctrine" argum ent. [Sosa v. Alvarez-Machain at page 2750] W hile analyzing the viability of the "headquarters doctrine" in the Alvarez-Machain case, the Suprem e Court interpreted the phrase "arising in" to m ean "suffered in a foreign country". The Alvarez-Machain decision rejected the "headquarters doctrine" by holding that the foreign country exception applies when the injury is suffered in a foreign country regardless of where the tortious act or om ission occurred. [Sosa v. Alvarez-Machain at page 2750] It is because of this ruling that the case of Jose Cervantes (a Mexican citizen living in Tijuana) can sue the USA under the FTCA while RODRIGUEZ (a United States citizen) and RIVERA/CALDERON (Mexican nationals) have been forced to pursue their request for a rem edy through the Tucker Act. SUBJECT MATTER JURISDICTION Defendant, the UNITED STATES OF AMERICA ("USA") brings the present m otion on the grounds that there is no triable issue of m aterial fact as to whether or not the plaintiffs can state a cause of action over which the United States Court of Federal Claim s has subject m atter jurisdiction. The USA contends that the causes of action contained in the com plaint are torts and do not arise out of a contract (express or im plied).

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In support of this contention, USA cites a variety of cases that do not involve business transactions at all -crim inal cases such as Kania v. United States 227 Ct. Cl. 458, 650 F2d 264, 269 (Ct. Cl. 1981), a m ilitary pay case entitled Bray v. USA 48 Fed. Cl 781, 783-84 (2001); an im m inent dom ain case entitled Faden v. USA 13 Cl. Ct. 328, 335 (1978) and tax liens cases such as Betz v. USA 40 Fed. Cl. 286, 291 (Fed. Cl. 1998) and Pratt v. United States 50 Fed. Cl. 469 (2001). The USA's reliance upon the Pratt, id. case is interesting because in Pratt, Id., at pg. 478 and FN6, the Court found that the plaintiff could state a cause of action for breach of contract; breach of the im plied covenant of good faith, id., at 479-480; and was entitled to seek reim bursem ent of attorney fees as dam ages, id., at 482-483. The Pratt court further stated: "A claim for tortious breach of contract, in contrast, is not a tort independent of the contract so as to preclude Tucker Act jurisdiction (citations om itted). This is true regardless of whether the loss resulted from the negligent m anner in which the governm ent perform ed the contract (citations om itted) although it is not enough that the conduct is m erely related in som e general sense to the contractual relationship of the parties (citations om itted) For jurisdictional purposes, the tortious conduct m ust specifically relate to a contractual obligation." [Pratt v. USA 50 Fed.Cl. 469, 480-481] In Pratt, the court ultim ately found that there was no connection between the USA's conduct during subsequent litigation and the contractual obligation initially owed to plaintiff. This is not the case in the instant m atter. In the instant m atter, the obligation to search the vehicles in a reasonable fashion was an integral com ponent of the contract for sale to the plaintiffs as well as the contract between the USA and EG&G to conduct the seizure sales. The USA's reliance on Kania v. USA , supra, 227 Ct. Cl. 458 is m isplaced in light of the fact that Kania involved a crim inal action and the USA was acting in its sovereign capacity. In Trudeau v. USA (2005) W L 2363043 (Fed. Cl.) the Court discussed Kania and cited with approval the language in Kania that distinguishes a situation where the USA is acting as a sovereign (as in Kania) as opposed to a proprietary capacity (as in the instant case). In Zajanckauskas v. USA 346 F.Supp.2d. 251 the Court took a different approach and concluded that the difference between a crim inal action (such as Kania) and a civil action (such as the instant m atter) was critical in determ ining whether or not a contract claim was "cognizable under the Tucker Acts as a m atter of course (civil) and those cognizable only if they contain a clear and unm istakable statem ent subjecting the Untied States to m onetary liability for any breach (crim inal)." [Zajanckauskas Id., at 257] None of the cases cited by the USA involved a fact pattern sim ilar to the fact pattern involved in this case. The case that is on point factually with the instant m atter is entitled Sullivan v. USA 54 Fed.Cl. 214 (2002). In Sullivan, id., the plaintiff was injured in a vehicular accident caused by a governm ent contractor and sued the USA alleging that she was a third party beneficiary of contractual provisions which required the contractor to possess vehicle insurance. As this agreem ent was breached, she was entitled to dam ages in the am ount of $750,000 for her personal injuries from the USA on a breach of contract cause of action. As set forth in Sullivan, Id. and other cases (discussed below), it is not required that the plaintiffs be a party to the contract as long as the plaintiffs are proper third party beneficiaries of the contract(s) at issue. Plaintiffs were allowed to pursue claim s as third party beneficiaries in the following cases: Am erican Capital Corp. v. USA 66 Fed Cl. 315, 341 (2005) (third party beneficiary of a forbearance agreem ent) and Klam ath Irrigation v. USA 67 Fed.Ct. 504, 532-535. Klam ath Irrigation, id., is particularly interesting as plaintiffs were m em bers of the general public who stood to benefit from drainage agreem ents involving the USA and third parties. In the present case, the USA had a contractual agreem ent with EG&G, Inc. to conduct these seizure sales. The pre-sale search was obviously for the benefit of the ultim ate purchaser as there would be no other purpose (except to protect the purchaser) for an additional search after the vehicle had already been forfeited.

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"The intended beneficiary need not be specifically or individually identified in the contract, but m ust fall within a class clearly intended to be benefitted thereby (citing Montana v. USA 124 F.3d 1269, 1273 (1997)." Klam ath Irrigation v. USA 67 Fed. Ct. at 533 Sim ilarly, in this case, plaintiffs allege that they were the third party beneficiaries of the contractual obligation and regulatory duty to conduct a thorough search of seized vehicles before selling the sam e to plaintiffs. The obligation to conduct a thorough search of the vehicle was breached. The breach occurred for the express purpose of increasing the USA's gain in the subsequent com m ercial transaction with plaintiffs. The USA did not notify potential purchasers that the vehicles had not been thoroughly searched as part of the seizure and sale preparations. This lack of disclosure increased the value of the vehicles for the USA (as the vehicles were not dam aged by the search) to the detrim ent of the purchaser (who were not aware that the reason for the m arketable state of the vehicle was an inadequate search for contraband). There is a triable issue of m aterial fact as to whether or not this conduct rises to the level required under Franklin Savings Corp. v. USA 56 Fed.Cl. 720, 746 (2003) to support a claim for violation of the covenant of good faith and fair dealing by the USA. The dam ages sustained are also foreseeable. The purpose of searching the vehicle before a sale to the general public is obviously to ensure that the vehicle is not released into the stream of com m erce to an unwitting purchaser while it is still full of a substantial am ount of drugs. The only foreseeable harm that would com e to the purchaser should the vehicle not be searched would be detention and arrest by the authorities if the drugs are thereafter discovered. It is very foreseeable that these vehicles will be driven to Mexico. In fact, in each case discussed above, Mexico was involved: the first case, Cervantes, the vehicle was sold to a Mexican National and he was arrested when he tried to come back into the USA. In the Rodriguez v. USA case, Adrian Rodriguez (an USA citizen) was arrested when he took the vehicle into Tijuana for repairs. In this case, the vehicle was sold to a Mexican national so it is very foreseeable that the vehicle will be driven into Mexico. It is foreseeable that a person will drive around in a vehicle that he or she purchased in one of these auctions. As such, it is not reasonable to conclude that, as a m atter of law, it is not foreseeable that the purchaser of a vehicle full of drugs at an USA governm ent auction near the border will be arrested in Mexico after driving the vehicle over the border to return hom e. In support of the contention that the dam ages sustained by plaintiffs are speculative as a m atter of law and no triable issue of m aterial fact exists as to this issue, the USA cites the case of SAB Construction v. USA 66 Fed.Cl. 77. In this case, the purchaser of real estate claim ed that the USA failed to disclose asbestos and that the presence of asbestos m ight expose the purchaser to loss in the future. The plaintiff sought reim bursem ent of litigation costs incurred in a separate action against the project's design contractor. The court found that since no injury related to the asbestos had occurred and as it was the plaintiff's choice to instigate the related civil action, dam ages against the USA were speculative. [Id., at 88] In contrast, in the present case, the plaintiffs were injured and their need to incur legal fees to obtain their freedom in the Mexican crim inal action was not at their election. As such, the holding in SAB Construction does not bar the instant case as a m atter of law. As a triable issue of m aterial fact exists as to all of these issues, the plaintiffs should be entitled to a trial on the m erits of this action . "AS-IS" PROVISION

The UNITED STATES argues that it's one-page, unsigned "Notice to Potential Bidder" creates an "as-is" contract with Plaintiffs that binds them to accept the Volkswagen with 37 pounds of m arijuana hidden inside and bars Plaintiffs from recovery in the present action. This argum ent is not supported by law or fact. In the first place, there is a triable issue of m aterial fact as to whether or not the plaintiffs ever saw the disclaim er or were even aware of any such disclaim er at the tim e of the sale [Pl. App. 7 and 8] Further, an "as is" provision does not relieve a seller of all responsibility of disclosure. Instead, it is a factor to be considered with all other circum stances in determ ining whether the buyer has been m isled or the seller is in breach. The Pratt v. USA 50 Fed.Cl. 469, 479 court found that the m ere existence of a risk of

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loss disclaim er does not excuse the Governm ent from the im plied obligation to act in good faith and to deal with purchasers fairly. In the case of Solar Turbine v. USA 26 Cl.Ct. 1249, 1273 the court discussed Section 2-313 of the Uniform Com m ercial Code and found that an affirm ation of fact can create a warranty where the affirm ation is "part of the basis of the bargain" in that it was m ade in the course of negotiating the agreem ent. There is a triable issue of m aterial fact in this case as to whether or not the fact that these sales were presented as US forfeiture sales created an affirm ation of fact that would lead the reasonable purchaser to believe that the vehicles had been adequately searched prior to the sale (or at least that the search was not intentionally lim ited to increase the USA's profits). Plaintiffs were reasonable to presum e that the USA perform ed a proper search of the vehicle as this was required by its own policies and procedures. As adm itted by the USA expert, David Murphy, if the search had been adequate, an am ount equal to 37 pounds would have been detected: Q: So in your opinion if those search techniques are perform ed adequately, an am ount of that size, i.e., around 37 pounds, would be detected? A: Yes." [Deposition of David Murphy (6-24-04) pg. 43; ll. 21-25; pg. 44; ll. 1-18; App. 3] . Furtherm ore, a careful reading of the Notice indicates that it address warranties of title, identity, physical condition and registration status. Nowhere does it advise the buyer that these vehicles could still have significant am ounts of narcotics hidden within them , and that the purchase knowingly agrees to accept the vehicle despite this fact. This was not com m unicated to J. RODRIGUEZ, A. RODRIGUEZ, RIVERA or CALDERON. [Dec. of J. RODRIGUEZ, Pl. App. 7; Dec. of A. Rodriguez, Pl. App. 8; Dec. of RIVERA, para. 13-16, Pl. App. 9; Dec. of CALDERON, para. 12-15, Pl. App. 10] at the tim e of the sale The Pratt v. USA case (supra, 50 Fed. Cl. 469 at 481) provides further support for the finding that there is a triable issue of m aterial fact in this case as to the scope of the "as-is" provision in the unsigned brochure: "Defendant cites no authority for the proposition that the existence of disclaim ers precludes a party from m aking affirm ative m isrepresentations. As with the breach of contract claim , the issue here is whether any alleged m isrepresentations fell within the scope of the disclaim ers ... [The contract] contained positive, but erroneous representations upon which plaintiff in fact relied ... That those erroneous "positive representations" were that defendant had taken certain actions prior to contract form ation (parenthetically, a not unusual situation) is plainly no defense to an action for breach of contract based upon m isrepresentation (citing Sum m it Tim ber v. USA 230 Ct. Cl. 434 at 440-41)" In the present case, despite the language in the Notice that the vehicles are sold "as-is where is," this is actually not the case: the UNITED STATES has in fact im plem ented policies and procedures for searching the vehicles and failed to follow them , which is not within its discretionary function. The United States Suprem e Court has repeatedly scrutinized the exercise of the United States discretionary function, and finds that while United States' enactm ent of a policy or procedure m ay have been discretionary, its perform ance under that act is not. In the deposition testim ony of Jayson Ahern, set forth above, Mr. Ahern testified that USA is required by its rules and regulations to perform a com plete and thorough search of the vehicle. Further, the "as-is where is" warranty is clearly m eant to refer to the m echanical condition of the vehicles and issues related to title. A warranty in this situation would not relieve the USA Border patrol officials from their m andatory duty to

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conduct a thorough inspection on the vehicle before it was released to the general public in an auction sale.

The USA had a policy to conduct searches for the purposes of ensuring that the vehicles were reasonably clear of contraband before they were sold. A purchaser at a USA seizure sale would be reasonable if he or she were to presum e that the vehicle had been com pletely inspected. This belief is reasonable because of the representation that this is a USA forfeiture sale. W hen the USA then decided to lim it searches for the purpose of increasing resale value of the vehicle, but did not disclose this policy to the purchaser, a m aterial m isrepresentation of an im plied-in-fact term of the contract occurred. There is a triable issue of fact as to whether or not the post-secondary searches were for the purpose of protecting Plaintiffs from harm that would be suffered if a large quantity of narcotics rem ained in the seized vehicles at the tim e of sale.

Accordingly, once the USA's policies and procedures for conducting searches of seized vehicles was determ ined, it was the USA's responsibility to see that they were followed with "constant vigilance." As seen by the deposition testim ony above, there was a determ ination by the officials in charge of conducting the searches to abandon those procedures in favor of a policy that placed m axim izing profits over the safety of the individuals purchasing the seized vehicles. As such, the "as-is" provision cannot be construed as a knowing waiver of any claim for dam ages arising out of hidden narcotics in the vehicle, particularly when there is no evidence that Plaintiffs saw, agreed or signed the Notice. Accordingly, as an issue of fact exists regarding the nature and scope of the as-is provision, sum m ary judgm ent should be denied. As to the claim for warranty and a contract im plied in fact, in the US Suprem e Court case entitled Hatzlachh Supply Co. v. USA 444 U.S. 460, 465 the Court found that the absence of Governm ent tort liability has not been thought to bar contractual rem edies on im plied-in-fact contracts, even in those cases also having elem ents of a tort: "W ithout m ore, neither the existence of a tort rem edy nor the lack of one is relevant to determ ining whether there is an im plied-in fact contract ..." The USA cites the cases of Price v. United States 46 Fed. Cl. 640, 648 (2000); Knieper v. USA 38 Fed.Cl.128, 140 (1997) and Levy v. USA 10 Cl.Ct 602, 612-13 (1986) in support of their contention that the one page, unsigned "Notice to Bidder" precludes recovery in this case as a m atter of law. None of these cases are on point with the instant m atter. In Price v. United States 46 Fed. Cl. 640, 648 (2000), the issue was whether the governm ent disclosed issues related to code violations in connection with the sale of real property to Price. The Court found that the contract expressly discussed zoning issues and that the plaintiff had the m eans at his disposal to find out about the zoning issues him self (therefore, there was no justified reliance on anything the USA m ay have failed to disclose regarding zoning). In this case, there is a triable issue of m aterial fact as to whether the one page unsigned "Notice to Bidder" is effective as a disclaim er. Further, in this case, there is a triable issue of m aterial fact as to whether or not the plaintiffs were justified in relying upon the fact that the vehicle had been seized (and presum ably searched) by the US border officials before being offered for sale to plaintiff RIVERA. In Knieper v. USA 38 Fed.Cl.128, 140 (1997), the plaintiff was seeking to rescind a contract based upon m utual m istake. Plaintiff claim ed that he purchased real property under the m istaken belief that the property contained an operative well. The language cited by defendant USA from Knieper refers to a rescission claim , not a claim for breach. Further, in Knieper, there was a contract signed by both parties that expressly and thoroughly addressed the scope of the "as-is" provision in the contract. Finally, in Knieper (unlike the situation in the present case) there was no allegation that the USA had taken any steps to conceal the true state of the property from the purchaser or allowed the purchaser to develop incorrect assum ptions regarding the state of the property at the tim e of the sale.

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In Levy v. USA 10 Cl.Ct 602, 612-13 (1986), the issue was sim ilar to the issue in Price, supra: the purchaser of real estate from the USA claim ed that the real estate did not include a tennis court. However, as in Price, the purchaser could have obtained this knowledge from a review of the county land records (Levy, supra at page 612) and (unlike the present case) there was no indication that the USA possessed facts which were m aterial to the bid and which the unsuspecting bidder neither knew nor should have known about at the tim e of the sale. [Levy, supra, at page 612] In the present case, the USA knew that the searches of the seized vehicles were inadequate in order to increase profits. There is a triable issue of m aterial fact as to whether or not a bidder at a governm ent forfeiture auction "should know" that the USA was lim iting its searches of vehicles in order to m ake additional profit in a subsequent com m ercial transaction with the purchaser. VI CONCLUSION For the reasons stated above, plaintiffs respectfully request that the defendant's m otion to dism iss or, in the alternative, for sum m ary judgm ent be denied. In the alternative, plaintiffs respectfully request leave to am end their com plaint to the extent the factual allegations are deem ed insufficient to support any of the requests for relief contained therein.

DATED: October 31, 2005 SUPPA, TRUCCHI & HENEIN, LLP By: TERESA TRUCCHI, Attorneys for Plaintiffs

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