United States District Court, E.D. Pennsylvania
March 18, 2004.
CAPITAL BONDING CORPORATION, Plaintiff
DEPARTMENT OF HOMELAND SECURITY, As successor in interest to The Immigration and Naturalization Service, ROBERT P. WIEMANN, as Director of the Administrative Appeals Office of the Immigration and Naturalization Service, ASA HUTCHINSON, as Under Secretary for Border and Transportation Security in Department of Homeland Security, and ROBERT BEVILACQUA, as Director of Debt Management of the Immigration and Naturalization Service Now Part of the Office of Administration within the Department of Homeland Security, Defendants
The opinion of the court was delivered by: JAMES KNOLL GARDNER, District Judge
This matter is before the court on Defendants' Motion to Dismiss
Amended Complaint and Supporting Memorandum of Law filed August 27,
2003.*fn1 Defendants seeks to dismiss plaintiff's Complaint because they
contend that the claims presented are mooted by two Settlement
Agreements*fn2 entered into by the parties. In the alternative,
defendants claim that this court lacks jurisdiction over the matter, and
that plaintiff's claims may only be raised before the United States Court
of Federal Claims. Finally, defendants argue that Count IV of plaintiff's
Complaint fails to state a claim upon which relief may be granted.
Because we conclude that plaintiff's attempt to invalidate the
settlement contract between the parties must be resolved before the
merits of Counts I through III of plaintiff's Complaint may be addressed,
jurisdiction over the settlement contracts lies with the United
States Court of Federal Claims, we transfer plaintiff's claims concerning
the settlement agreements to the Court of Federal Claims. We further
conclude that Count IV of plaintiff's Complaint raises a nonjusticiable
issue, and, therefore, fails to state a claim upon which relief may be
granted. Accordingly, we dismiss Count IV. Finally, because the Court of
Federal Claims must resolve issues pertaining to the validity of the
Settlement Agreements before we may address Counts I through III, we
place the remainder of this action in civil suspense pending further
Order of the undersigned. After the Court of Federal Claims has resolved
the issue of the validity of the Settlement Agreements, the undersigned
will reactivate this case from civil suspense.
Plaintiff Capital Bonding Corporation ("Capital") commenced this civil
action on March 21, 2003 by filing a five-count Complaint against
defendant Department of Homeland Security ("DHS") and defendant Robert P.
Wiemann, Director of the Administrative Appeals Office of the Immigration
and Naturalization Service ("INS"). This initial Complaint averred breach
of contract, breach of the duties of good faith and fair dealing,
promissory estoppel, unjust enrichment, and
fraud in the inducement. On May 27, 2003 defendants*fn3 responded
to plaintiff's initial Complaint by filing a motion to dismiss.
On June 9, 2003 Plaintiff filed an Amended Complaint. In the Amended
Complaint, plaintiff added defendants Asa Hutchinson, Under Secretary for
Border and Transportation Security in Department of Homeland Security,
and Robert Bevilacqua, Director of Debt Management of the INS.
The Amended Complaint contains four counts. These counts are styled:
(I) Judicial Review of AAO Decisions; (II) Judicial Review of the
Agency's Failure to Acknowledge Validity of Defenses on Bonds Associated
With File Review; (III) Judicial Review Based on the Congressional Review
Act; and (IV) Review of Agency's Failure to Enact Suggested Reforms.
Although it is not listed as a count, plaintiff also seeks a declaratory
judgment that two Settlement Agreements entered by plaintiff and the
government are voidable by plaintiff. Plaintiff contends that federal
question jurisdiction is conferred on the court by the following
statutes: 5 U.S.C. § 701-706; 28 U.S.C. § 1331; and
28 U.S.C. § 2201-2202.
Defendants filed the within motion to dismiss plaintiff's Amended
Complaint on August 27, 2003.
Based upon the allegations in plaintiff's Amended Complaint, the
following are the pertinent facts.*fn4 Capital and its agents, on behalf
of sureties Frontier Insurance Company, Connecticut Indemnity Company,
Highland Insurance Company, Aegis Security Insurance Company, and HARCO
National Insurance Company, posted many immigration bonds with DHS.*fn5
Capital and the surety companies were co-obligors on these immigration
bonds.*fn6 Capital was and is responsible for performing the duties set
forth in the bonds.*fn7
Over 98% of the bonds are "delivery" bonds under which DHS has a right
to demand an alien's surrender at a specified location, at a specified
time.*fn8 If Capital fails to
produce an alien as required, the bond is considered to be
If the government sends a notice of breach to Capital, then Capital has
30 days in which to file an administrative appeal with the Administrative
Appeals Office (AAO).*fn10 In an appeal to the AAO, Capital may assert a
number of defenses.*fn11 If a defense is determined to be valid, then
the bond may be cancelled or the breach rescinded.*fn12
In the event that Capital fails to appeal, the defenses are rejected by
the AAO, or the AAO dismisses the appeal, then DHS sends notice of the
breach to the office of Debt Management and Collection, which then sends
an invoice to Capital.*fn13
Capital claims that there have been numerous occasions when the AAO has
rejected a valid defense. In 2001 Capital had a number of these unpaid
invoices on breached
immigration bonds.*fn14 Because Capital believed that it had a
number of meritorious defenses to many of these invoices, Capital in
November 2001 requested DHS to conduct a review of a sampling of the
In August 2002 Capital and DHS*fn16 entered into a settlement
Agreement ("2002 Agreement") whereby Capital was to pay DHS an initial
payment of $3,000,000 in six semi-monthly payments of $500,000.*fn17
Under the 2002 Agreement, Capital was to make additional payments of
$500,000 monthly until any additional amount due was satisfied.*fn18
Finally, Capital and DHS agreed to conduct a joint review of a sample of
the breached bonds to determine the percentage of breached bonds to which
Capital had a valid defense.*fn19
Capital and DHS conducted the file review during September 2002.*fn20
The 2002 Agreement required that the parties "attempt to jointly
determine the actual amount" Capital owed the government.*fn21 In the
event the parties could not agree, DHS was to make a good faith
determination of Capital's liability.*fn22
Capital and the government did not reach an agreement concerning
Capital's liability.*fn23 Capital argued that its liability should have
been reduced by 35%.*fn24 The government contended that Capital's
liability should be reduced by 18%.*fn25
On February 21, 2003 Capital and DHS entered in an additional Agreement
("2003 Agreement") which altered the payment schedule.*fn26
Capital contends that it is not required, and is unable, to pay the
government for the breached bonds. Plaintiff claims that the government
has failed to credit it for cases with applicable, valid defenses and has
breached bonds when Capital has, in fact, surrendered the alien in
STANDARD FOR MOTION TO DISMISS
When considering a motion to dismiss, the court must accept as true all
factual allegations in the Complaint and construe all reasonable
inferences to be drawn therefrom in the light most favorable to the
plaintiff. Jurimex Kommerz Transit G.M.B.H. v. Case Corp., 65
Fed. Appx. 803 (3d Cir. 2003) (citing Lorenz v. CSX
Corp., 1 F.3d 1406, 1411 (3d Cir. 1993)). A Rule 12(b)(6) motion
should be granted "if it appears to a certainty that no relief could be
granted under any set of facts which could be proved." Morse v.
Lower Merion School District, 132 F.3d 902, 906 (3d Cir. 1997). But
a court need not credit a Complaint's "bald assertions" or "legal
conclusions" when deciding a motion to dismiss. 132 F.3d at 906.
When weighing a motion to dismiss, the court may consider the
Complaint, attachments to the Complaint and "public records deemed to be
undisputedly authentic." Greer v. Smith, 59 Fed. Appx. 491,
492 n.1 (3d Cir. 2003). Plaintiff has attached numerous documents to its
Complaint, including copies of both the 2002 Agreement and the 2003
Agreement. Because these documents are both attachments to the Complaint
and public records, we consider the documents to be undisputedly
authentic. See City of Pittsburgh v. West Penn Power
Company, 147 F.3d 256, 259 (3d Cir. 1998).
Accordingly, in disposing of this motion, we considered both the
averments of, and attachments to, the Complaint.
Counts I through III
In Counts I through III of plaintiff's Complaint, plaintiff seeks to
have the court review adverse decisions by the AAO, DHS's failure to
acknowledge the validity of Capital's defenses to certain surrender
bonds, and DHS's rules under the Congressional Review Act*fn27. In the
2003 Agreement, plaintiff contracted away its right to state each of
these claims. Thus, the operative issue is the force and validity of the
In the Settlement Agreements, the parties agreed to limit Capital's
ability to seek redress for a myriad of wrongs in this court.
Specifically, "Capital . . . waive[s] its right under the August 2002
Agreement or otherwise to litigate adverse decisions by the
Administrative Appeals Office ("AAO") or issues raised by those
decisions, that were raised on or
before January 31, 2004." Furthermore, the 2003 Agreement contains
the following language in paragraph 4:
Capital agrees that from the date of execution of
this Agreement forward, it shall file no appeal or
challenge to a bond breach in any forum that
asserts, directly or indirectly, any of the
a. defective, incomplete, or unsigned bond
b. lack of compliance with the Paperwork
c. lack of compliance with the Congressional
d. delivery of an alien following the expiration
of any applicable mitigation period.
e. the alleged right to advance notice of
Thus, plaintiff may only raise the issues presented in Counts I
through III if the Settlement Agreements are invalidated.
Although no count seeks to invalidate the Settlement Agreements,
plaintiff requests declaratory judgment*fn29 that the contracts are
voidable by plaintiff. Although plaintiff does not assert any legal
justification for the desired remedy, in the last Wherefore clause of
plaintiff's Amended Complaint plaintiff seeks to void the Settlement
Agreements and to proceed with Counts I through III.*fn30
Because of plaintiff's request for declaratory judgment to void the
contract, we are presented with a contractual claim, which, if granted,
would have the immediate consequence of invalidating an agreement
requiring plaintiff to pay the government a minimum of $3,000,000. Under
these facts, there are two applicable statutes of jurisdictional
significance: the Tucker Act*fn31 and the Little Tucker Act*fn32.
Both the Tucker Act and the Little Tucker Act permit plaintiffs to sue
the government regarding contractual disputes. Specifically, the Little
Tucker Act permits district courts and the Court of Federal Claims
concurrent jurisdiction over any "claim against the United States, not
exceeding $10,000 in amount, founded . . . upon any express or implied
contact with the United States . . . in cases not sounding in tort."
28 U.S.C. § 1346.
The Tucker Act, however, defines the jurisdiction of the Court of
Federal Claims as reaching "any claim against the United States founded
. . . upon any express or implied contract with the United States
. . . not sounding in tort." 28 U.S.C. § 1491. Accordingly,
contractual claims against the United States in excess of $10,000 are
within the exclusive jurisdiction of the United States Court of Federal
Plaintiff's claim is contractual in nature and the amount in
controversy exceeds $10,000. Plaintiff's attempt to recast its action as
(1) an action for declaratory judgment as opposed to a contractual claim,
and (2) an action in equity as opposed to at law does not save this
action from the Court of Federal Claims jurisdiction. "Court of Federal
Claims jurisdiction cannot be circumvented by such artful pleading and,
accordingly, we customarily look to the substance of the pleadings rather
than their form." Brazos Electric Power Cooperative, Inc. v. United
States, 144 F.3d 784, 787 (Fed. Cir. 1998).
As noted above, while plaintiff does not articulate any legal basis for
a declaration that the Settlement Agreements are voidable, plaintiff
avers facts which indicate that plaintiff relies on a contractual theory.
Moreover, in its response, plaintiff expressly states that it relies on
contractual theory. There is neither an averment nor a basis for
finding that this action sounds in tort. Accordingly, we conclude that
this is a contract claim.
Furthermore, the amount in controversy exceeds $10,000. If we were
inclined to grant plaintiff's declaratory judgment, it would result in
the cancellation of a contractually agreed debt that plaintiff owes the
government. "Cancellation of debt owed to the federal government under
such circumstances is just as much a form of monetary damages for
purposes of the Tucker Act as the direct payment by the federal
government of conventional monetary damages." Brazos, 144 F.3d
In this case, a cancellation of the Settlement Agreements would obviate
the need for plaintiff to pay the government a minimum of $3,000,000.
Accordingly, the Little Tucker Act is inapplicable, and this matter is
squarely within the framework of the Tucker Act.
Thus, we conclude that the Tucker Act requires the United States Court
of Federal Claims to hear plaintiff's claim for a declaratory judgment to
void the Settlement Agreements. As we interpret the language of the 2002
and 2003 Settlement Agreements, quoted at page 9 above, Capital agreed
not to litigate or appeal any matter pertaining to the
settlement agreements. Therefore, if the Settlement Agreements are
valid, the within matter is moot.
We have determined that only the United States Court of Federal Claims
may determine if the Settlement Agreements are valid. If that court
determines that the agreements are valid, then the undersigned will
dismiss the within action as moot. If, on the other hand, the Court of
Federal Claims determines that the Settlement Agreements are invalid,
then the within case will proceed to trial before this court on Counts I
through III of plaintiff's Amended Complaint.
Because of the foregoing, plaintiff's declaratory judgment claim must
be disposed of before any further action may be taken in regard to Counts
I through III. Accordingly, we transfer plaintiff's declaratory judgment
claim to the United States Court of Federal Claims, see
28 U.S.C. § 1631, and place Counts I through III in civil suspense
pending further Order by the undersigned after determination of the
validity of the Settlement Agreements by the Court of Federal Claims.
In Count IV, plaintiff seeks to have the court
enjoin the defendants from any and all collection
activities related to any alleged
breaches of delivery bonds until the Agency
conducts a comprehensive study of reforms which
will shift the emphasis of its bond program from
collecting money to removing aliens who have
[been] found to have no legal right to remain in
the United States and either enacts the reforms or
explains to the Court's satisfaction why they will
not further the goal of removing illegal aliens.
Amended Complaint, page 27.
In essence, plaintiff argues that DHS' current bond policy is more
directed at producing revenue from companies like Capital, then
increasing surrenders of aliens. To that end, plaintiff asks the
undersigned to distill the various policy options available to DHS to
increase alien surrenders and choose the best among them. In the process
of so doing, plaintiff requests that the court supervise DHS as it
conducts a comprehensive internal review of its surrender policy. We
decline plaintiff's invitation.
Count IV presents a controversy over a political question apportioned
to a coordinate branch of government and is nonjusticiable. "A
controversy is nonjusticiable i.e., involves a political
question where there is "a textually demonstrable constitutional
commitment of the issue to a coordinate political department; or a lack
of judicially discoverable and manageable standards for resolving
it. . . ." Nixon v. United States, 506 U.S. 224, 228, 113
732, 735, 122 L.Ed.2d 1, 8 (1993) (quoting Baker v.
Carr, 369 U.S. 186, 217, 82 S.Ct. 691, 710, 7 L.Ed.2d 663, 686
(1962)); see New Jersey v. United States,
91 F.3d 463 (1996).
The political question doctrine excludes from
judicial review those controversies which revolve
around policy choices and value determinations
constitutionally committed for resolution to the
halls of Congress or the confines of the Executive
Branch. The Judiciary is particularly ill suited
to make such decisions, as "courts are
fundamentally underequipped to formulate national
policies or develop standards for matters not
legal in nature."
Japan Whaling Association v. American Cetacean Society,
478 U.S. 221
, 230, 106 S.Ct. 2860, 2866, 92 L.Ed.2d 166, 178
(1986)(quoting United States ex rel. Joseph v.
Cannon, 642 F.2d 1373, 1379 (D.C. Cir. 1981), cert.
denied, 455 U.S. 999
The United States Constitution provides that "[t]he executive Power
shall be vested in a President of the United States of America." U.S.
Const. Art. II, § 1. In this case, the President has delegated his
authority to the Department of
Homeland Security. See 3 U.S.C. § 301;
6 U.S.C. § 111-113; 6 U.S.C. § 203; 6 U.S.C. § 251. It is the responsibility
of the Department of Homeland Security to implement and enforce the law
concerning aliens. See New Jersey, 91 F.3d at 470;
Cf. Bowsher v. Synar, 478 U.S. 714, 760,
106 S.Ct. 3181, 3205, 92 L.Ed.2d 583, 617-618 (1986) (explaining role of
executive branch officials). To that end, DHS has implemented a number of
policies concerning the surrender of aliens.
It is clear from its Amended Complaint that Capital is displeased with
the surrender policy DHS has chosen to implement. However, plaintiff does
not aver that DHS's policy violates any law. Rather, plaintiff argues
that there are other policies that would better effectuate the law. Such
a position does not confer standing upon plaintiff.
The doctrine of standing serves to identify those disputes which are
appropriately resolved through the judicial process. Whitmore v.
Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 1723, 109 L.Ed.2d 135,
145 (1990). It is not for this court to weigh different policy options
and decide how best to enforce the law. Moreover, it is not for the
undersigned to supervise an Executive agency's policy review. This court
lacks the institutional competency to perform this
task appropriately. See New Jersey, 91 F.3d
This issue is Constitutionally relegated to the Executive branch. DHS
is better equipped and suited to discover what issues exist that pertain
to the surrender of aliens. As such, DHS is in a better position to
decide how best to effectuate the law governing aliens residing in the
If this were a case where plaintiff could identify a law or
Constitutional provision that DHS's current policy violated, then our
analysis might differ. Clearly, "not `every case of controversy which
touches on foreign relations lies beyond judicial cognizance.'" New
Jersey, 91 F.3d 470 (quoting Baker v. Carr,
369 U.S. 186, 211, 82 S.Ct. 691, 707,
7 L.Ed.2d 663, 682 (1962)). But in the absence of such an allegation,
we abstain from any decision on the matter. Accordingly, count IV is
For all the foregoing reasons, we grant in part and deny in part
defendants' motion to dismiss. Because Count IV presents a nonjusticiable
claim, we dismiss that count from plaintiff's Complaint. Further, we
transfer plaintiff's claim
for a declaratory judgment regarding the Settlement Agreements to
the United States Court of Federal Claims. Finally, we place the
remainder of the within action in civil suspense pending further Order by