Creation Upgrades, Inc. v. United States Department of Defense et al, No. 3:2008cv02388 - Document 64 (D.P.R. 2009)

Court Description: OPINION AND ORDER GRANTING 54 MOTION to dismiss Amended Complaint; 22 MOTION to dismiss; and 36 MOTION to dismiss filed by United States Department of Defense, United States Department of the Navy, Department of the Navy Base Realignment and Cl osure Program Management Office. We DISMISS Plaintiff's Freedom of Information Act claim for failure to state a claim upon which relief can be granted. We also DISMISS Plaintiff's breach of contract claim for lack of jurisdiction. Judgment shall enter accordingly. Signed by Chief Judge Jose A Fuste on 9/25/09.(mrj)

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1 2 3 4 5 6 7 8 9 10 11 UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO CREATION UPGRADES, INC., Plaintiff, Civil No. 08-2388 (JAF) v. UNITED STATES DEPARTMENT OF DEFENSE, et al., Defendants. OPINION AND ORDER 12 13 Plaintiff, Creation Upgrades, Inc., brings this action against 14 Defendants, U.S. Department of Defense, U.S. Department of the Navy, 15 and the Department of the Navy s Base Realignment and Closure Program 16 Management Office (BRAC PMO), alleging a Freedom of Information Act 17 (FOIA) violation under 5 U.S.C. § 552 and a breach of contract claim 18 under 28 U.S.C. § 1346(a)(2). 19 to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing 20 that their court-ordered compliance with the FOIA request obviates 21 Plaintiff s 22 Defendants also move to dismiss under Federal Rule of Civil Procedure 23 12(b)(1), arguing that this court lacks subject matter jurisdiction 24 to 25 complaint. (Docket No. 54.) Plaintiff opposes. (Docket Nos. 39; 62.) hear the claim for breach of (Docket Nos. 1; 52.) relief. (Docket contract claim Nos. in 36; Defendants move 47; Plaintiff s 50; 54.) amended Civil No. 08-2388 (JAF) -2- 1 I. 2 Factual and Procedural Synopsis 3 We derive the following factual summary from Plaintiff s amended 4 complaint; 5 incorporated 6 documents submitted by Defendants in compliance with court order. 7 (Docket Nos. 52; 1; 47-2; 50-1.) In ruling on a motion to dismiss, we 8 assume all of Plaintiff s allegations to be true and make all 9 reasonable inferences in its favor. See Gagliardi v. Sullivan, 513 10 exhibits into the attached amended to the complaint initial by complaint reference; and and the F.3d 301, 305 (1st Cir. 2008). 11 Defendants are responsible for disposing of surplus property in 12 the U.S. Navy s possession. At some point during 2007, Defendants 13 prepared to hold an online auction for two parcels of land on the 14 former Roosevelt Roads Naval Station in Ceiba, Puerto Rico (Sale 15 Parcels I & II). 16 in the planned auction for Sale Parcel II was set at $25,000,000. 17 Defendants eventually chose, for reasons unknown, to forego an online 18 auction in favor of a sealed bids process. Defendants issued an 19 Invitation for Bids (IFB) on March 14, 2008, officially soliciting 20 public bids for both parcels. (Docket No. 1-7.) The IFB called for 21 sealed bids to be submitted by April 30, 2008. (Id.) The highest bid 22 to surpass Defendants undisclosed minimum acceptable bid price 23 (Reserve Price) would obtain the property. 24 the Reserve Price were received, Defendants reserved the right to Plaintiff alleges that the minimum bid to be used (Id.) If no bids meeting Civil No. 08-2388 (JAF) -3- 1 reject all sealed bids and instead conduct an online auction. (Id.) 2 Plaintiff asserts that the Reserve Price for Sale Parcel II continued 3 to be $25,000,000 despite the change in bidding mechanism. 4 Plaintiff, a Puerto Rico corporation, submitted a timely bid in 5 the amount of $27,027,000 for Sale Parcel II on April 25, 2009. Only 6 two bids were received in the sealed process, with Plaintiff s being 7 the highest. (Docket No. 25.) On May 13, 2008, Defendants informed 8 Plaintiff by letter that its bid had not met the Reserve Price and 9 that, therefore, Sale Parcel II would not be sold to it. This letter 10 did not state the actual amount of the Reserve Price Plaintiff failed 11 to 12 Defendants seeking disclosure of the Winning Bid ;1 the Reserve 13 Price; the identity of the official(s) who set the Reserve Price; and 14 the date on which the Reserve Price was set. meet. In response, Plaintiff submitted a FOIA request to 15 This initial request was denied on June 23, 2008, by James E. 16 Anderson, Director of the Navy BRAC PMO Southeast. (Docket No. 1-5.) 17 In response to Plaintiff s request to reveal the identity of the 18 winning bidder, Anderson informed Plaintiff that no bidder had met 19 the reserve price and that, consequently, there was no successful 20 bidder. 21 internal working memorandum responsive to [its] request for the 1 Anderson also revealed to Plaintiff the existence of an Winning Bid is a term of art employed by Defendants in their IFB referencing the highest bid received that also conformed to the form and procedures outlined in the IFB. (Docket No. 1-7.) Civil No. 08-2388 (JAF) -4- 1 disclosure of the Navy s Reserve Price and how it was established, 2 when and by whom. (Id.) Anderson denied disclosure of this document, 3 relying on the exemptions in 5 U.S.C. § 552(b)(4)-(5) for commercial 4 or financial information that is privileged or confidential and for 5 intra-agency memos and letters not available by law to a party other 6 than an agency in litigation. 7 In a letter dated July 7, 2008, Plaintiff requested the General 8 Counsel of the Navy to reconsider the denial of its FOIA request. 9 The General Counsel did not respond to Plaintiff s request within the 10 statutorily mandated twenty-day period. See 5 U.S.C. § 552(a)(6) 11 (A)(I). Plaintiff filed its initial complaint with this court on 12 December 13 government documents to fulfill the FOIA request. 18, 2008, requesting that we order the production of 14 Defendants did not answer the complaint but instead filed a 15 motion to dismiss based solely on the 5 U.S.C. § 552(b)(5) exemption 16 to agencies FOIA obligations. (Docket No. 22.) Plaintiff concedes 17 that Defendants have released much of the information referred to 18 in the initial FOIA request. (Docket No. 52.) Through Defendants 19 motions and the court-ordered release of the IFB Award Plan, 20 Plaintiff has discovered the identity of the winning bidder, the 21 reserve price, and the approval date of the IFB Award Plan. (See 22 Docket Nos. 25; 50-2.) Defendants argue that, with the release of the 23 complete version of the IFB Award Plan, they have provided in full 24 the internal memorandum referenced in their initial denial of Civil No. 08-2388 (JAF) -5- 1 Plaintiff s FOIA request. (Docket No. 50.) Plaintiff maintains that 2 it has not received satisfactory answers to two inquiries in its 3 original FOIA request: When the reserve price was set and by whom. 4 (Docket No. 52.) 5 In the amended complaint filed on August 20, 2009, Plaintiff 6 added an additional claim for breach of contract under 28 U.S.C. 7 § 1346(a)(2). (Docket No. 52.) Plaintiff maintains that the Reserve 8 Price for Sale Parcel II was always $25 million and was only changed 9 to $36 million at some point after Plaintiff submitted its bid but 10 before 11 transferring Sale Parcel II to Plaintiff following receipt of its 12 winning bid over the Reserve Price, Plaintiff alleges that Defendants 13 have violated an implied contract that arose between the parties when 14 Plaintiff submitted its bid in conformity with the IFB. The only 15 remedy Plaintiff seeks for this breach is specific performance of the 16 alleged contract. (Id. at 13.) 17 the public Defendants opening move to of the dismiss bids. (Id. Plaintiff s at 12.) amended By not complaint, 18 incorporating by reference their previous motion to dismiss the FOIA 19 claim and also moving to dismiss the additional contract claim for 20 lack of jurisdiction. (Docket No. 54.) Defendants argue that the 21 Contract Disputes Act, 41 U.S.C. §§ 601-609, preempts this court s 22 jurisdiction. (Id. at 4-7) In the alternative, Defendants assert that 23 this court lacks jurisdiction under 28 U.S.C. § 1346(a)(2). (Id. at 24 7.) Plaintiff opposes. (Docket No. 62.) Civil No. 08-2388 (JAF) -6- 1 II. 2 Analysis 3 A. FOIA Claim 4 1. Standard under Rule 12(b)(6) 5 A defendant may move to dismiss an action against him, based 6 solely on the complaint, for the plaintiff s failure to state a 7 claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). 8 In assessing this motion, we accept[] all well-pleaded facts as 9 true, and we draw all reasonable inferences in favor of the 10 [plaintiff]. Wash. Legal Found. v. Mass. Bar Found., 993 F.2d 962, 11 971 (1st Cir. 1993). 12 The complaint must demonstrate a plausible entitlement to 13 relief by alleging facts that directly or inferentially support each 14 material element of some legal claim. Gagliardi v. Sullivan, 513 F.3d 15 301, 305 (1st Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 16 U.S. 17 statement need only give the defendant fair notice of what the . . . 18 claim is and the grounds upon which it rests. 19 551 U.S. 89, 93 (2007) (internal quotation marks omitted) (quoting 20 Twombly, 550 U.S. at 559). 544, 559 (2007)). Specific facts are not necessary; the Erickson v. Pardus, 21 Federal Rule of Civil Procedure 12(d) states that whenever 22 matters outside of the pleadings are presented on a 12(b)(6) motion 23 and not excluded by the court, the motion must be treated as one of 24 summary judgment under Rule 56. Whenever this situation arises, Civil No. 08-2388 (JAF) -7- 1 [a]ll parties must be given a reasonable opportunity to present all 2 the material that is pertinent to the motion. 3 The First Circuit has found exceptions to Rule 12(d) for documents 4 whose authenticity is undisputed, official public records, documents 5 central 6 referenced in the complaint. 7 Inc., 575 F.3d 10, 15 (1st Cir. 2009). to the plaintiff s claim, or Fed R. Civ. P. 12(d). documents sufficiently Rivera v. Centro Medico de Turabo, 8 2. Analysis 9 The Freedom of Information Act was enacted to open agency 10 action to the light of public scrutiny. DOJ v. Reporters Comm. for 11 Freedom of the Press, 489 U.S. 749, 772 (1989) (citation omitted). 12 The statute requires government agencies to promptly fulfill all 13 document disclosure requests that reasonably describe the records 14 requested and comply with each agency s established FOIA procedure. 15 5 U.S.C. § 552(a)(3)(A). An agency may deny access to requested 16 information in its possession only when one of nine exemptions 17 enumerated in 5 U.S.C. § 552(b) applies. An agency s denial of a FOIA 18 request may be appealed to the agency head. 19 agency appeals have been exhausted, requesting parties may appeal to 20 district courts to review an agency s denial of a FOIA request. 21 § 552(a)(4)(B). The District Court reviews such denials de novo. 22 Id.; see also Church of Scientology, Int l v. DOJ, 30 F.3d 224, 228 23 (1st Cir. 1994). The burden of proving § 552(b) exemptions rests with Id. § 552(a)(6). Once Id. Civil No. 08-2388 (JAF) -8- 1 the defendant agency. Maynard v. CIA., 986 F.2d 547, 557-58 (1st Cir. 2 1993). 3 In the present case, Defendants have provided a full copy of the 4 IFB Awards Plan, which, they assert, is the document referenced by 5 James Anderson in his initial denial of Plaintiff s FOIA request. 6 (Docket No. 50-1.) This document was not attached to Plaintiff s 7 amended complaint or Defendants motion to dismiss the amended 8 complaint. (Docket No. 52.) 9 an answer in this case, the Plaintiff s amended complaint is the only 10 pleading available for us to consider. As the IFB Award Plan is 11 central to Plaintiff s claim, and as the complaint makes sufficient 12 reference to it, we find that it falls under the exceptions to Rule 13 12(d) enumerated above. We, therefore, consider this as a 12(b)(6) 14 motion and not under the more stringent Rule 56 summary judgment 15 standard. 16 Since the government has not yet filed Defendants argue that by disclosing a complete copy of the IFB 17 Award Plan, they fulfilled the original FOIA request. This document 18 provides the Reserve Price, the method used to determine that price, 19 and the date on which the plan received final approval. It also 20 includes the signatures of the BRAC PMO personnel responsible for 21 creating and approving the plan. 22 dispute as to the disclosure of the document identified in the 23 Defendants response to the initial FOIA request. As a result, there is no longer any Civil No. 08-2388 (JAF) -9- 1 This court finds no other FOIA claim on which relief could be 2 granted in Plaintiff s amended complaint. Where the agency has fully 3 disclosed all documents uncovered by its search in response to the 4 initial FOIA request, there is no basis for judicial review unless 5 the Plaintiff challenges the adequacy of the agency s search for 6 documents. 7 B. Plaintiff makes no such challenge in its complaint. Contract Claim 8 1. 9 Under Federal Rule of Civil Procedure Rule 12(b)(1), a defendant 10 may move to dismiss an action against him for lack of federal subject 11 matter jurisdiction. The party asserting jurisdiction has the burden 12 of demonstrating its existence. See Skwira v. United States, 344 F.3d 13 64, 71 (1st Cir. 2003) (citing Murphy v. United States, 45 F.3d 520, 14 522 (1st Cir. 1995)). 15 Standard under Rule 12(b)(1) Rule 12(b)(1) is a large umbrella, overspreading a variety of 16 different types of challenges to subject-matter jurisdiction. 17 Valentin v. Hosp. Bella Vista, 254 F.3d 358, 362-63 (1st Cir. 2001). 18 A movant may base a challenge to the sufficiency of the plaintiff's 19 assertion of subject matter jurisdiction solely on the pleadings. 20 Id. at 363. In that case, we take the plaintiff's jurisdictionally- 21 significant facts as true and assess whether the plaintiff has 22 propounded an adequate basis for subject-matter jurisdiction. Id. at 23 363; see Pejepscot Indus. Park, Inc. v. Me. Cent. R.R. Co., 215 F.3d 24 195, 197 (1st Cir. 2000). Civil No. 08-2388 (JAF) -10- 1 2. Analysis 2 In order for a claim against the United States to survive a 3 motion to dismiss, 4 expressed waiver of sovereign immunity. Muirhead v. Meacham, 427 5 F.3d 14, 17 (1st Cir. 2005). In the case at bar, Plaintiff brings its 6 claim under 28 U.S.C. § 1346(a)(2). Defendants devote the lion s 7 share of their argument to the notion that our jurisdiction over this 8 case is preempted by the Contract Disputes Act (CDA), 41 U.S.C. 9 §§ 601-609. (Docket it must No. be 54.) brought The CDA, under an however, unequivocally is completely 10 inapposite to this case. The statute encompasses neither the disposal 11 nor procurement of real property.2 Plaintiff seeks redress for the 12 breach of a contract for the sale of real property. Therefore, 13 Defendants argument that the CDA governs this contract dispute and 14 preempts this court s jurisdiction fails. 15 Our finding the CDA inapplicable to the instant case does not, 16 however, conclude our jurisdictional analysis. Plaintiff has brought 17 this action under the aegis of 28 U.S.C. § 1346(a)(2). 18 grants concurrent jurisdiction to district courts and the Court of 19 Federal Claims for all claims against the government not exceeding 20 $10,000 and founded on any express or implied contract with the 2 This statute The only property-disposal contracts governed by the CDA are for the disposal of personal property. 41 U.S.C. § 602(a)(4). The disposal of real property, on the other hand, is impliedly exempted from the CDA. Similarly, section 602(a)(1) of the act expressly exempts procurement of real property in being from the ambit of the CDA. Id. § 602(a)(1) ( [T]his chapter applies to any express or implied contract . . . entered into by an executive agency for (1) the procurement of property, other than real property in being. (emphasis added)). Civil No. 08-2388 (JAF) States. 28 -11- 1 United U.S.C. § 1346(a)(2). But this grant of 2 jurisdiction does not extend to claims that seek primarily equitable 3 relief. 4 Furthermore, in cases where the only relief requested is specific 5 performance of a government contract (Docket No. 52 at 13), the First 6 Circuit 7 Coggeshall Dev. Corp. v. Diamond, 884 F.2d 1, 3 (1st Cir. 1989) 8 ( Federal Courts do not have the power to order specific performance 9 by the United States of its alleged contractual obligations. ). 10 Thus, we lack jurisdiction under 28 U.S.C. § 1346(a)(2) to hear 11 Plaintiff s claim for breach of contract. Berman v. United States, 264 F.3d 16, 21 (1st Cir. 2001). has explicitly denied this 12 jurisdiction. See III. 13 court s Conclusion 14 For the reasons stated herein, we hereby GRANT Defendants 15 motion to dismiss. We DISMISS Plaintiff s Freedom of Information Act 16 claim for failure to state a claim upon which relief can be granted. 17 We also DISMISS Plaintiff s breach of contract claim for lack of 18 jurisdiction. 19 IT IS SO ORDERED. 20 San Juan, Puerto Rico, this 25th day of September, 2009. 21 22 23 s/José Antonio Fusté JOSE ANTONIO FUSTE Chief U.S. District Judge

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