United States District Court, W.D. Kentucky, Paducah Division
MEMORANDUM OPINION AND ORDER
N. Stivers, Judge United States District Court
matter is before the Court on Plaintiff's Combined Motion
to Dismiss and for Summary Judgment (DN 72) and
Defendant's Motion to Transfer (DN 78). For the reasons
outlined below, Plaintiff's Motion to Dismiss is
GRANTED IN PART and DENIED IN
PART, Plaintiff's Motion for Summary Judgment is
DENIED AS MOOT, and Defendant's Motion
to Transfer is GRANTED IN PART and
DENIED IN PART.
STATEMENT OF FACTS AND CLAIMS
pending motions arise out of a foreclosure action by the
United on behalf of its agency, the Department of
Agriculture, Rural Housing Service and counterclaims asserted
by Defendant Bluegrass Lodge Apartments, Ltd.
(“Bluegrass”). In 1985, USDA RD made a $1.4
million loan to Bluegrass, memorialized by a promissory note
(the “Note”), a real estate mortgage, a loan
agreement, and an interest credit and rental assistance
agreement (the “Agreement”). (Compl. ¶¶
1-5, DN 1; Pl.'s Mem. 1-2). The collateral for the loan,
and the reason for USDA RD's involvement, “was a
48-unit apartment complex in Pembroke, Kentucky, fifteen
units of which were originally designated for low-income
renters.” (Pl.'s Mem. 2). The Agreement provided
that USDA RD would pay $11, 165.47 each month toward the
interest due under the Note, but that such interest credit
subsidy would terminate upon any default by Bluegrass.
(Pl.'s Mem. 2-3). The Agreement also provided for USDA
RD's payment of rental assistance to Bluegrass on behalf
of low-income tenants, and that any default by Bluegrass
would entitle the government to suspend or terminate such
rental subsidies. (Pl.'s Mem. 3).
to the United States, Bluegrass defaulted in numerous ways,
allowing it to accelerate the loan and ultimately foreclose
upon the property. (Pl.'s Mem. 4-8). Communications
between Bluegrass and USDA RD did not satisfactorily resolve
Bluegrass' alleged noncompliance as to several covenants
within the loan documents, and, as a result, USDA RD sent
Bluegrass a notice of acceleration on November 15, 2010.
(Pl.'s Mem. 8-9). Thereafter, the parties engaged in a
formal mediation, which resulted in a memorandum of
understanding (“MOU”), also styled as a mediation
settlement agreement. The MOU provided that USDA RD would
terminate the foreclosure proceedings if Bluegrass satisfied
certain conditions within 60 days; the United States
maintains that Bluegrass again failed to cure its default.
(Pl.'s Mem. 9-11). Bluegrass filed an appeal with the
USDA National Appeals Division on November 25, 2011, which
found in favor of USDA RD on March 6, 2012. (Pl.'s Mem.
United States then initiated foreclosure proceedings against
Bluegrass, and Bluegrass asserted five counterclaims in
response. In Count I, Bluegrass demands an
“accounting” and payment/credit of withheld
rental assistance subsidy payments to Bluegrass by USDA RD.
Counts 2 and 3 are contract claims pursuant to the loan
documents and MOU, requesting a declaratory judgment and
monetary award for breach of the duty of good faith and fair
dealing and breach of contract related to nonpayment by the
USDA RD of the rental assistance subsidy payments. Counts 4
and 5 are tort claims requesting a temporary restraining
order and preliminary injunction for intentional interference
with contracts and intentional interference with business
relations, relating to USDA RD's communications with
Bluegrass' tenants relaying information about the pending
foreclosure action. (Answer & Countercl. ¶¶
34-51, DN 7 [hereinafter Countercl.]; Def.'s First Am.
Countercl. ¶¶ 52-64, DN 8; Pl.'s Mem. 11).
United States moves the Court to dismiss or grant summary
judgment on Bluegrass' counterclaims, asserting,
inter alia, that Count 1 is barred by sovereign
immunity, Counts 2 and 3 are barred by the Tucker Act, 28
U.S.C. § 1491, and Counts 4 and 5 are barred by the
Federal Tort Claims Act (“FTCA”), 28 U.S.C.
§§ 2671-2680. (Pl.'s Mem. 18-26). Bluegrass
agrees that Counts 4 and 5 are barred,  and notes that,
as the private sale of the property has been completed,
“the issue of the interest credit subsidies [has]
become moot.” (Def.'s Resp. 2 n.1). Bluegrass
contends that its remaining counterclaims are valid, as
“[t]he United States has waived its sovereign immunity
and USDA RD has breached its contract with Bluegrass by
arbitrarily and capriciously suspending the rental assistance
. . . .” (Def.'s Resp. 3). Alternatively, Bluegrass
asks the Court to transfer any claims for which the Court
determines it lacks subject matter jurisdiction to the United
States Court of Federal Claims, pursuant to 28 U.S.C. §
1631. (Def.'s Resp. 3).
Supreme Court has made clear, “[f]ederal courts are
courts of limited jurisdiction. They possess only that power
authorized by Constitution and statute, which is not to be
expanded by judicial decree.” Kokkonen v. Guardian
Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal
citations omitted) (citation omitted). Thus, “[i]t is
to be presumed that a cause lies outside this limited
jurisdiction, ” and “the burden of establishing
the contrary rests upon the party asserting jurisdiction . .
. .” Id. (internal citation omitted).
Fed.R.Civ.P. 12(b)(1) provides that a party to a lawsuit may
file a motion asserting that the Court lacks subject matter
jurisdiction over the case, and can challenge the claim of
jurisdiction either facially, “in which case all
allegations of the plaintiff must be considered as true,
” or factually, “in which case the trial court
must weigh the evidence and the plaintiff bears the burden of
proving that jurisdiction exists.” DLX, Inc. v.
Kentucky, 381 F.3d 511, 516 (6th Cir. 2004) (citations
Plaintiff's Motion to Dismiss - Count 1
United States contends that Count 1, which purports to seek
an “accounting” relating to USDA RD's
management of Bluegrass' loan, is barred by sovereign
immunity. (Pl.'s Mem. 18). The United States further
argues that to the extent Bluegrass' claim for an
accounting ultimately seeks money damages against USDA RD for
funds owed under a contract, it is duplicative of Counts 2
and 3 and should be dismissed. (Pl.'s Reply Combined Mot.
Dismiss & Mot. Summ. J. 9-10, DN 79 [hereinafter
Pl.'s Reply]). The Court agrees that Bluegrass has
abandoned the equitable accounting premise of Count
and essentially collapsed its argument into the same damages
sought under Counts 2 and 3. Count 1 will therefore be
considered as part of the Court's analysis of Counts 2
Plaintiff's Motion to Dismiss - Counts 2 &
United States may not be sued absent its consent. Mackey
v. United States, 247 F. App'x 641, 643 (6th Cir.
2007) (citing United States v. Mitchell, 445 U.S.
535, 538 (1980)). Any waiver of sovereign immunity is
strictly construed in favor of the United States. Library
of Congress v. Shaw, 478 U.S. 310, 318 (1986);
Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-86
(1983). The United States argues that Counts 2 and 3 appear
to demand more than $10, 000 in damages and are therefore
barred by the Tucker Act, 28 U.S.C. § 1491(a)(1), which
waives sovereign immunity for claims for monetary relief
exceeding $10, 000 founded upon government contracts, but
grants exclusive jurisdiction for such claims to the United
States Court of Federal Claims. (Pl.'s Mem. 20-21).
Bluegrass appears to agree that its contract claims fall
within the province of the Tucker Act, but contends that they
should be resolved either by the Court exercising
jurisdiction under the “Little Tucker Act, ” 28
U.S.C. § 1346(a)(2), or by transferring the matter to
the United States Court of Federal Claims. (Def.'s Resp.
so-called “Little Tucker Act” creates concurrent
jurisdiction in District Courts and the Court of Federal
Claims for contract claims under $10, 000. 28 U.S.C. §
1346(a)(2). Bluegrass argues that the Court should exercise
jurisdiction pursuant to the Little Tucker Act, as “the
Sixth Circuit has interpreted the Little Tucker Act to allow
the district court to exercise jurisdiction where the amount
of each individual breach is less than $10, 000, even if the
aggregate amount sought by the plaintiff is greater than $10,
000.” (Def.'s Resp. 13-14 (citing United States
v. Louisville & Nashville R.R. Co., 221 F.2d 698,
702 (6th Cir. 1955))). The United States contends that
Bluegrass misstates the Sixth Circuit's holding in that
case, which instead premised jurisdiction upon whether each
contract sued under was below the $10, 000
threshold. (Pl.'s Reply 10-11). ...