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Shehan v. Turner Construction Co.

United States District Court, E.D. Kentucky, Northern Division, Covington

March 22, 2019



          David L. Bunning United States District Judge.

         This matter is before the Court on three pending Motions: Defendant Turner Construction Company's Motion to Dismiss (Doc. # 15); Defendant American Museum of Natural History's Motion to Dismiss (Doc. # 16); and Defendant United States Department of Justice's Motion to Dismiss (Doc. # 22). Plaintiff William C. Shehan, Jr., who is proceeding pro se, has filed a Response to each Motion (Docs. # 40, # 41, # 42), and Defendants have each filed a Reply (Docs. # 43, # 44, # 45). Accordingly, the above motions have been fully briefed and are ripe for adjudication. For the reasons set forth below, all three motions to dismiss will be granted.

         I. BACKGROUND

         According to Plaintiff, this lawsuit stems from the Department of Justice's prosecution of him in this Court for attempted tax evasion beginning in 2010. See United States v. Shehan, No. 2:10-cr-72. Shehan pleaded guilty in May 2011 to attempted income tax evasion and was sentenced to a 24-month term of incarceration. Shehan contends in this civil suit that the Department of Justice's prosecution was a “fabricated fraud” and ultimately “destroyed [his] finances, bonding capacity and businesses.” (Doc. # 1, at 8, 20). He asserts that his ability to engage in his profession has wrongfully been hindered as a result of his prosecution. Specifically, Shehan alleges that because of his conviction, he is unable to obtain bonding and provide financial strength to engage in business deals with Defendants Turner Construction Company and the American Museum of Natural History. (See id. at 16).

         Plaintiff, proceeding pro se, filed this action on January 16, 2018, naming as Defendants Turner Construction Company (“Turner”), United States Department of Justice (the “DOJ”), and the American Museum of Natural History (the “Museum”) and seeking damages allegedly resulting from the DOJ's prosecution of him for tax evasion and from Turner's and the Museum's breach of contracts for work as he attempted to rebuild his businesses following his conviction. (See Doc. # 1).

         Shehan is the owner of L.T.C. Signature Environments, LLC, doing business as Larson Theme Construction, a Kentucky limited liability company which specializes in designing theme environments. (Id. at 5). He asserts that two contracts were formed that give rise to his claims against Turner and the Museum. First, he alleges a contract was formed in 2016 between himself, Defendant Turner, and non-party St. Elizabeth Healthcare in which Turner agreed to help Shehan “find projects and get work” in exchange for Shehan's assistance in mending a strained business relationship between Turner and St. Elizabeth (the “2016 Contract”). (Id. at 9-11; see Doc. # 1-1, at 2). Shehan asserts that as a result of his efforts, St. Elizabeth awarded Turner a contract to build a $200 million cancer treatment center and placed Turner in a favorable strategic position to bid for future projects with St. Elizabeth. (Doc. # 1, at 14).

         Second, Shehan asserts that he and Turner entered into a contract November 3, 2017, after Turner had been awarded a construction project to build an expansion for the American Museum of Natural History located in New York (hereinafter referred to as the “Gilder Center project”). (Id.). Shehan alleges that as part of the Gilder Center project, Turner, by and through its representative Andrew Thomann, entered into a contract with him on November 3, 2017, to design/build and design/assist with the Shotcrete Canyon for the Museum's Gilder Center project (the “2017 Contract”). Shehan avers that “[i]n order to issue contract documents, on Wednesday, November 8, 2017, ” Turner's representative “requested documentation of Shehan's vital statistics, bonding capacity and financial strength . . . .” (Id.). However, he alleges the contract was terminated by Turner “and by extension” the Museum on November 29, 2017, because he “could not provide an immediate bonding facility and financial strength.” (Id. at 15, 16).

         Shehan further maintains that the 2016 Contract for Turner to help Shehan “find projects and get work” was also terminated during this time, “days after Turner captured the $200 million St. Elizabeth contract[.]” (Id. at 16). He alleges that when he could not immediately provide a bonding facility, rather than provide Shehan with work on the Shotcrete Canyon that could be negotiated and did not require bonding, Turner declined attempts to provide him with any work and “terminated [his] design/build - design/assist contract . . . and Turner's broader contract with [him] to: find projects and get work.” (Id. at 15-16) (emphasis omitted). He asserts that he has suffered damage as a result of these terminations. (Id.).

         Plaintiff also alleges that “[w]hile not the focus of the action, ” he has suffered damage from “the felonious prosecution” by the DOJ in the unrelated criminal tax case. (Id. at 16). As a result of these events, Shehan asserts “Defendants stole by deception, [his] path to rebuilding [h]is business” and he therefore filed the instant action. (Id. at 17). In his Complaint, Shehan alleges nine counts: 1) intentional infliction of emotional distress (“IIED”) by the DOJ and Turner; 2) breach of contract by Turner; 3) conspiracy to defraud by Turner; 4) unfair business practices by Turner; 5) theft by deception by Turner; 6) unjust enrichment by Turner; 7) breach of good faith and fair dealing by Turner; 8) a claim for punitive damages against all Defendants; and 9) a claim for reasonable attorney's fees against all Defendants. (Id. at 21-27). The last count being brought even though he is proceeding pro se without counsel.

         In lieu of an answer, each Defendant has filed a Motion to Dismiss Plaintiff's original Complaint. (Doc. # 15; Doc. # 16; Doc. # 22). Turner filed its Motion to Dismiss on March 1, 2018. (Doc. # 15). Turner argues that because they have initiated a parallel action in New York state court based on a breach of a separate confidentiality agreement and other actions by Shehan, the Court should abstain from hearing the instant matter based on the Supreme Court's holding in Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). (Id. at 8-19). Alternatively, if the Court declines to abstain, Turner moves to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for which relief can be granted. (Id. at 19-39).

         The Museum filed its Motion on March 1, 2018. (Doc. # 16). The Museum moves to dismiss the Complaint pursuant to Federal Rule 12(b) for: 1) lack of personal jurisdiction, and 2) failure to state a claim for which relief can be granted. The Museum also asserts that because Plaintiff is not the real party in interest, he lacks standing to bring this action. (Id. at 14; Doc. # 45, at 10-11).

         The DOJ filed its Motion to Dismiss, or, alternatively, Motion for Summary Judgment on April 3, 2018. (Doc. # 22). The DOJ moves to dismiss the Complaint on the basis that Shehan has failed to exhaust all administrative remedies prior to filing the current suit as required by the Federal Torts Claim Act (“FTCA”) and is thus barred from bringing this action in district court. (Doc. # 22-1, at 1-2). In support, the DOJ provides that a search of the DOJ “database of administrative claims revealed no claim presented by William Shehan” as of March 20, 2018. (Id. at 2; Doc. # 22-2). Additionally, the DOJ asserts that because Plaintiff's IIED claim against the DOJ arises out of a contractual relationship and malicious prosecution claim, that IIED claim is excepted from coverage under the FTCA, and thus the DOJ has not waived its sovereign immunity. (Doc. # 22-1, at 2-6). Alternatively, the DOJ asserts that the case should be dismissed pursuant to Federal Rule 12(b)(6) for failure to state a claim for which relief can be granted. (Id. at 6-7, 8-9). Finally, the DOJ argues that pursuant to federal law, the Government cannot be liable for punitive damages, nor is there a separate cause of action for attorney's fees under the FTCA. (Id. at 7).

         Subsequent to each Motion to Dismiss filing, Shehan filed a 79-page submission on April 17, 2018, wherein he sought to respond to the pending Motions to Dismiss, move to open discovery, and to amend his Complaint. (Doc. # 24; see Doc. # 39). On the same day, the same filing was docketed as a proposed Amended Complaint. (Doc. # 26). A Motion Conference was held on June 12, 2018 by the presiding Magistrate Judge regarding Plaintiff's submission and to clarify the record. (Doc. # 39). Plaintiff's filing was stricken as procedurally improper and Shehan was provided with additional time to file separate Responses to each of the Defendants' Motions to Dismiss and/or a Civil Rule 8 compliant amended complaint. (Id. at 2). Shehan did not file an amended complaint, instead filing separate Responses to each of Defendants' Motions (Doc. # 40; Doc. # 41; Doc. # 42). However, in his Responses to Turner and the Museum, Shehan provides that he is responding to each party's Motion to Dismiss his Amended Complaint and refers to a “motion for leave to file a Second Amended Complaint.” (Doc. # 40, at 1; Doc. # 41, at 1). Moreover, in his Response to Turner, Plaintiff attaches his original Complaint (Doc. # 1) and in his Response to the Museum, he attaches his prior 79-page filing that was previously stricken.

         Pursuant to this Court's Minute Entry Order of June 12, 2018 (Doc. # 39), Plaintiff's 79-page submission was stricken from the record. Although the same filing was also docketed at Entry 26, it is the same procedurally improper filing. Shehan was given an opportunity to file an amended complaint, but chose not to do so. Because he has not filed an amended complaint, this Memorandum Opinion and Order addresses Defendants' Motions to Dismiss based upon the allegations in the original Complaint. Any additional factual allegations presented by the Plaintiff in his Responses to the Motions to Dismiss have also been considered herein.

         For the reasons below, the Motions to Dismiss filed by all three Defendants will be granted.

         II. ANALYSIS

         A. Plaintiff's claims cannot be maintained against the DOJ.

         “As a sovereign, the United States is immune from suits, except to the extent that it has consented to be sued.” Johnson v. Conley, No. 0:12-cv-18-DLB, 2012 WL 1947330, at *3 (E.D. Ky. May 30, 2012) (citing F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994)). An exception to the United States' sovereign immunity is the FTCA. The FTCA “acts as a waiver of the United States' sovereign immunity in state law tort actions . . .” and permits plaintiffs to bring certain tort claims against the Government. Id. However, “although the FTCA is a limited waiver of the United States' immunity, it does not waive the sovereign immunity of federal government agencies.” Johnson, 2012 WL 1947330, at *3 (citing 28 U.S.C. § 2679(a)); see Yisra'El v. U.S. Dep't of Justice, No. 5:11-cv-289-KSF, 2012 WL 1153476, at *2 (E.D. Ky. Apr. 4, 2012) (“. . . a federal agency may not be sued under the FTCA.”); see also Millhouse v. Jones, No. 6:18-cv-125-DLB, 2018 WL 3716311, at *3 (dismissing FTCA claims against individual defendants and the Bureau of Prisons). Rather, “[i]t is the United States and not the responsible agency . . . that is the proper defendant in a FTCA suit.” Johnson, 2012 WL 1947330, at *3 (citing Allgeier v. United States, 909 F.2d 869, 871 (6th Cir. 1990)).

         In his Complaint, Shehan asserts a claim for IIED against the DOJ, as well as separate “claims” for punitive damages and attorney's fees “reasonably incurred in this action[.] (Doc. # 1, at 27). As a threshold matter, typically, punitive damages and attorney's fees are a remedy, and not a separate cause of action. Even if construed as separate claims, the DOJ correctly points out that the Government cannot be liable for punitive damages. Premo v. United States, 599 F.3d 540, 545 (6th Cir. 2010) (citing 28 U.S.C. § 2674). Moreover, generally, “[i]t is clear that the FTCA does not waive the United States' immunity from attorneys' fees.”[1] Bergman v. United States, 844 F.2d 353, 355 (6th Cir. 1988) (citing Joe v. United States, 772 F.2d 1535 (11th Cir. 1985)). Therefore, these claims, which are forms of relief, cannot be pursued against the DOJ or the United States and therefore will be dismissed with prejudice.

         As for Shehan's remaining claim against the DOJ, he has labeled his tort claim as one for IIED, but the Government indicates that his claim should be construed as one arising out of malicious prosecution or interference with a contractual relationship. If the Government is correct in its assertion, then Shehan's claim would fall within an exception to the exception of sovereign immunity, presented under 28 U.S.C. § 2680(h). In other words, Shehan's claim would be excepted from the immunity waiver afforded under the FTCA and he therefore would not be able to pursue that claim.

         Title 28 of the United States Code, § 2680(h) provides an exception to the FTCA, whereby the United States has not waived sovereign immunity as to:

Any claim arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights . . . .

         The Sixth Circuit has stated that “courts have interpreted ‘arising out of' broadly.” Wilburn v. United States, 616 Fed.Appx. 848, 857 (6th Cir. 2015); see also Brooks v. Silva, No. 7:08-cv-105-KKC, 2010 WL 2595984, at *2 (E.D. Ky. June 24, 2010). “[A] cause of action which is distinct from one of those excepted under § 2680(h) will nevertheless be deemed to ‘arise out of' an excepted cause of action when the underlying governmental conduct which constitutes an excepted cause of action is ‘essential' to plaintiff's claim[.]” Hartwig v. United States, 80 F.Supp.2d 765, 773 (N.D. Oh. 1999) (quoting Metz v. United States, 788 F.2d 1528, 1534 (11th Cir. 1986)) (internal quotation marks omitted). “Even if all of Plaintiff[‘s] allegations regarding the government's conduct are true, if their claims are in truth ones for [those excepted from FTCA coverage under the statute], this court does not have jurisdiction to hear them[.]” Id. at 768. The Sixth Circuit has noted that “[i]t is the substance of the claim and not the language used in stating it which controls.” Milligan v. United States, 670 F.3d 686, 696 (6th Cir. 2012) (quoting Reed v. U.S. Postal Service, 288 Fed.Appx. 638, 640 (11th Cir. 2008)). In Hartwig, the district court explained that in order to determine whether a plaintiff's claim is one arising out of an excepted cause of action under § 2680(h), a court must compare a plaintiff's claim with the “traditional and commonly understood definition” of the excepted cause of action, “rather than between [p]laintiff[‘s] claim[] and the definition” of the excepted cause of action “in any particular state.” Hartwig, 80 F.Supp.2d at 771; see also Fitch v. United States, 513 F.2d 1013, 1015 (6th Cir. 1975) (“Under 28 U.S.C. § 2680(h), Congress has chosen not to allow the courts to consider ‘any claim arising out of . . . misrepresentation.' We must construe this term according to the ‘traditional and commonly understood legal definition of the tort.”) (citing United States v. Neustadt, 366 U.S. 696, 706 (1961)).

         Here, although Shehan labels his claim as one for IIED, his claim clearly arises out interference of contract rights and thus this Court lacks jurisdiction to hear it. Under the Restatement (Second) of Torts and Kentucky law, “[o]ne who intentionally and improperly interferes with another's prospective contractual relation . . . is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of (a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation.” Bassett v. National Collegiate Athletic Ass'n, No. 5:04-425-JMH, 2006 WL 1312471, at *3 (E.D. Ky. May 11, 2006) (quoting Restatement (Second) of Torts § 766B (1979)).

         For example, in Mark v. United States Department of Transportation, the district court in the Eastern District of Michigan determined that a plaintiff's IIED and negligence claims arose out of interference with contract rights and thus were barred when his “tort claims [were] thinly veiled contract claims.” No. 17-cv-13894, 2018 WL 3861729, at *3 (E.D. Mich. Aug. 14, 2018). In Mark, the plaintiff worked as a flight engineer for an air carrier and claimed that he was suffering from PTSD after a “near disaster” involving an aircraft. Id. at *1. Plaintiff reported the event to a committee established by the Federal Aviation Administration, which committee was tasked with reviewing reported safety concerns. Id. at *1-2. The committee was created as part of an agreement between the aircraft carrier and the Federal Aviation Administration. Id. at *2. Under the agreement, certain procedures were established in order to address when airmen reported medical qualification issues, which the plaintiff alleged were not followed and caused his subsequent termination. Id. The court held that the substance of the plaintiff's claims involved a committee member's failure to abide by the terms of an agreement, and plaintiff argued his employment contract was ultimately terminated because of the failure. Id. At *3. Thus, because plaintiff's allegations “plainly reflect[ed] a contract dispute, ” sovereign immunity had not been waived and the court lacked jurisdiction to hear the claims. Id.

         Like Mark, the substance of Shehan's IIED claim is based upon the DOJ's alleged interference with contract rights, specifically with Turner and the Museum. To support his tort claim, Shehan provides that he “cannot bond and provide financial strength because of the felonious prosecution by the [DOJ] of Shehan in his tax case.” (Doc. # 1, at 21). He explains that Turner “damaged Shehan by terminating both contracts because [he] could not provide an immediate bonding facility and financial strength” as a result of the DOJ's prosecution and therefore “[d]amages by the Defendants are now the [l]iability of the [DOJ].” (Id. at 22). Shehan asserts that because of the DOJ's prosecution, he was unable to provide bonding for the Gilder Center Project under the 2017 Contract which, as a result of the DOJ's actions, was terminated. In other words, the alleged interference ...

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