UNITED STATES OF AMERICA (1),
Alphonse Jackson, Secretary of US Department of Housing and Urban Development,
his designees and assigns, and
Dirk Kempthorne, Secretary of US Department of Interior,
his designees and assigns,
[2008 DSD 7]
United States District Court
District of South Dakota--Central Division
OPINION AND ORDER ON
DEFENDANTS' MOTION TO DISMISS
Robert J. Doody, St. Francis, SD
Attorneys for Plaintiff.
Stephanie Carlson Bengford, U.S. Attorney's Office, Sioux Falls, SD
Attorney for Defendants.
Filed March 31, 2008.
Kornmann, U.S. District Judge
[¶1] Plaintiff, Yvonne Garreaux ("Plaintiff"), instituted this suit pursuant to the Federal Tort Claims Act ("FTCA"), 28 USC §§ 2671-2680 and 1346(b), and the Administrative Procedure Act ("APA"), 5 USC §§ 701-706. Plaintiff brings this action against the United States of America and its agents, Alphonse Jackson, Secretary of the Department of Housing and Urban Development ("HUD"), and Dirk Kempthorne, Secretary of the Department of Interior ("DOI"). Plaintiff seeks monetary damages in excess of $250,000 pursuant to the FTCA and declaratory and injunctive relief pursuant to the APA. Plaintiff alleges two specific causes of action: (1) an FTCA claim, namely that HUD negligently created, supervised, approved and administered the plaintiff's Mutual Help Occupancy Agreement and that the Department of Interior's Bureau of Indian Affairs ("BIA") negligently drafted, created, approved and administered the underlying lease agreement on land held in trust by the BIA and leased to the Cheyenne River Housing Authority ("CRHA"); (2) an APA claim, namely that both HUD and the BIA failed to enforce their standards and perform their duties; in other words, they have acted in a manner which is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." Defendant now moves to dismiss this action (Doc. 9) under Fed. R. Civ. P. 12(b)(1) for want of subject matter jurisdiction and under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted.
[¶2] On September 21, 1977, the BIA approved a renewable twenty-five year renewable lease agreement between CRHA and certain Indian heirs of land held in trust for them by the United States. This parcel of land consisted of 2.5 acres in Dewey County, South Dakota. The lease terms provided that the premises were to be used to construct a dwelling for Mable Blackbird, one of the heirs, with the financial assistance of HUD, in accordance with the United States Housing Act of 1937. When Ms. Blackbird and her successors failed to make timely payments on the dwelling, the home was turned over to CRHA to be administered as a Mutual Help Home under the auspices of the MHHO Program administered by HUD. Under the MHHO Program, Indians who are eligible and interested in buying a family home enter into a contract, called a "Mutual Help and Occupancy Agreement" ("MHOA"), 42 USC § 1437bb(e), with the relevant Indian housing authority for that area, in this case CRHA.
[¶3] In 1992, the plaintiff, an elderly Native American woman, allegedly entered into a MHOA with CRHA to purchase the dwelling. She allegedly took possession of the dwelling with the understanding that CRHA would make repairs to the dwelling and that if she complied with the terms of the MHOA, she would eventually be conveyed title to the dwelling. In March 2005, the necessary repairs were estimated at over $40,000, which was approximately equal to the appraised value of the home.
[¶4] In October 2004, the plaintiff allegedly satisfied all the terms of the MHOA, with the exception of the final payment. Either the plaintiff or CRHA initiated contact to request a meeting to arrange conveyance of title. During the process of conveying title, the Superintendent of the BIA contacted the plaintiff. The Superintendent informed the plaintiff that because HUD no longer had an interest in the leased land, the lease was terminated and she had thirty days to move her house and leave the land. Shortly thereafter, CRHA contacted the BIA to inform them that they still had a financial interest in the land because the final payment had not been made and because outstanding repairs to the dwelling had not been completed. The BIA agreed that the lease could remain in effect until such time as CRHA ceased to maintain an interest or until an agreement was reached between the parties concerning the repairs.
[¶5] Between March 2005 and May 2006, CRHA and the plaintiff attempted to resolve their differences. CRHA offered to provide the plaintiff a replacement home, with the purchase price being offset by a credit for the value of her current home plus the amount of the outstanding repairs. This offer was unacceptable to the plaintiff due to replacement home's location and due to the fact that the purchase price for the replacement home exceeded the credit being offered. Unable to resolve their differences, on January 31, 2006, the plaintiff filed an administrative compliant under the FTCA. In her administrative complaint, the plaintiff alleged that HUD and the BIA negligently administered the MHOA and the lease agreement and were also negligent in their trust responsibility to an American Indian person.
[¶6] Prior to the resolution of her administrative complaint, on July, 5, 2006, the plaintiff filed a complaint in the US Court of Federal Claims ("COFC"). In that complaint, the plaintiff alleged that the government committed a breach of contract and a wrong under Article I of the 1868 Fort Laramie Treaty by the following acts: (1) breaching the MHOA; (2) failing to properly administer the MHOA; (3) failing to provide safe, sanitary and healthy living conditions as mandated by the Indian Housing Act; and (4) negligence in administration and breach of the MHOA. On November 29, 2006, the BIA and HUD denied the plaintiff's administrative claims on the basis that the plaintiff chose to file a lawsuit in the COFC concerning the same matter. 28 USC § 2675(a). On July 27, 2007, the COFC dismissed the plaintiff's complaint holding that (1) HUD did not have privity with the plaintiff; and (2) the plaintiff's breach of contract claims and negligence claims did not fall with the purview of the "bad men" provision of the Fort Laramie Treaty, so as to create subject matter jurisdiction. Garreaux v. United States, 77 Fed.Cl. 726 (Fed.Cl. 2007). Finally, on May 22, 2007, plaintiff initiated this suit, claiming violations of the FTCA and the APA.
I. Standard of Review
[¶7] "Federal courts are not courts of general jurisdiction and have only the power that is authorized by Article III of the Constitution and statutes enacted by Congress pursuant thereto."
Marine Equipment Management Co. v. United States, 4 F3d 643, 646 (8th Cir. 1993) (citing Bender v. Williams-Port Area School Dist., 475 US 534, 541, 106 SCt 1326, 1331, 89 LEd2d 501, reh'g denied 476 US 1132, 106 SCt 2003, 90 LEd2d 682 (1986), (citing in turn Marbury v. Madison, 5 US (1 Cranch) 137, 2 LEd60 (1803))). "The threshold inquiry in every federal case is whether the court has jurisdiction" and the Eighth Circuit has "admonished district judges to be attentive to a satisfaction of jurisdictional requirements in all cases." Rock Island Millwork Co. v. Hedges-Gough Lumber Co., 337 F2d 24, 26-27 (8th Cir. 1964), and Sanders v. Clemco Industries, 823 F2d 214, 216 (8th Cir. 1987).
[¶8] A motion to dismiss for lack of subject matter jurisdiction challenges the court's power to hear the case. Mortensen v. First Savings and Loan Association, 549 F2d 884, 891 (3rd Cir. 1977). Jurisdictional issues are for the court to decide and the court has broad power to decide its own right to hear a case. Osborn v. United States, 918 F2d 724, 729 (8th Cir. 1990) (quoting Williamson v. Tucker, 645 F2d 404, 413 (5th Cir. 1981)). Because jurisdiction is a threshold question, judicial economy demands that the issue be decided at the onset. Osborne, at 729.
[¶9] Where, as here, the defendants move for dismissal under Rule 12(b)(1), Fed.R.Civ.P., as well as on other grounds, "the court should consider the Rule 12(b)(1) challenge first since if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and objections become moot and do not need to be determined." 5 C. Wright and A. Miller, Federal Practice and Procedure, § 1350, p. 548 (1969). cf., Bell v. Hood, 327 US 678, 682, 66 SCt 773, 776, 90 LEd 939 (1946) (motion to dismiss for failure to state a claim may be decided only after finding subject matter jurisdiction). "In order to properly dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the complaint must be successfully challenged on its face or on the factual truthfulness of its averments." Titus v. Sullivan, 4 F3d 590, 593 (8th Cir. 1993).
[¶10] "The district court has the authority to consider matters outside the pleadings on a motion challenging subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1)." Drevlow v. Lutheran Church, Mo. Synod, 991 F2d 468, 470 (8th Cir. 1993). See also Osborn, 918 F2d at 729, fn. 4 (citing Land v. Dollar, 330 US 731, 735 & fn. 4, 67 SCt 1009, 1011 & fn. 4, 91 LEd 1209 (1947), and Satz v. ITT Fin. Corp., 619 F2d 738, 742 (8th Cir. 1980)). Such consideration does not convert a motion to dismiss into a motion for summary judgment. Deuser v. Vecera, 139 F3d 1190, 1191 fn. 3 (8th Cir. 1998), and Drevlow, 991 F2d at 470. Plaintiff has the burden of establishing that jurisdiction exists. It is not the responsibility of defendants to prove otherwise. Titus, 4 F3d at 593 fn. 1.
[¶11] The Eighth Circuit, in Osborn, delineated the standard of review for motions to dismiss under Fed. R. Civ. P. 12(b)(1):
[H]ere the trial court may proceed as it never could under 12(b)(6) or Fed. R. Civ. P. 56. Because at issue in a factual 12(b)(1) motion is the trial court's jurisdiction - its very power to hear the case - there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover, the plaintiff will have the burden of proof that jurisdiction does in fact exist.
918 F2d at 730 (quoting Mortensen v. First Fed. Sav. & Loan Ass'n., 549 F2d at 891). However, courts have also recognized that the jurisdictional issue and substantive issues can be so intertwined that a full trial on the merits may be necessary to resolve the issue. Id. (quoting Crawford v. United States, 796 F2d 924, 928 (7th Cir. 1986)). See also Whalen v. United States, 29 FSupp 2d 1093, 1095-96 (DSD 1998). The parties have submitted exhibits in support of and in resistance to the motion to dismiss and the court will consider such evidence as it relates to the jurisdictional challenge.
[¶12] When considering a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted the district count must accept the allegations of the complaint as true and must construe them liberally in plaintiff's favor. Booker v. City of St. Louis, 309 F3d 464, 467 (8th Cir. 2002), Duffy v. Landberg, 133 F3d 1120, 1122 (8th Cir. 1998), Whisman el rel. Whisman v. Rinehart, 119 F3d 1303, 1308 (8th Cir. 1997), and Hafley v. Lohman, 90 F3d 264, 266 (8th Cir. 1996). Dismissal under Fed. R.12(b)(6) is appropriate only when it appears beyond doubt that plaintiffs can prove no set of facts in support of their claim which would entitle them to relief. Parnes v. Gateway 2000, Inc., 122 F3d 539, 546 (8th Cir. 1997), and Dover Elevator Co. v. Arkansas State Univ., 64 F3d 442, 445 (8th Cir. 1995). Moreover, all that is required of plaintiff's complaint is a "short and plain statement of the claim" stating why the plaintiff is entitled to relief. Fed. R. Civ. P. 8(a).
II. Indian Housing Legislation
[¶13] The federal government's involvement in Indian Housing began in the 1820s when it negotiated removal treaties with various Native American tribes. F. Cohen, Handbook of Federal Indian Law, § 22.05 (1982 ed.). See also Virginia Davis, A Discovery of Sorts: Reexamining the Origins of the Federal Indian Housing Obligation, 18 Harv. Blackletter L.J. 211, 221-225 (2002). In these treaties, the federal government promised to compensate tribes for the loss of their homes and to assist them with new housing. Id. These promises continued throughout the 1800's and became more frequent in later treaties between the federal government and the tribes as the need to provide housing assistance for Native Americans was inextricably tied to assimilationist desires to attach Indians to permanent homes and to agriculture. Id. " This trend continued throughout the allotment and assimilation eras, as the Indian Department built increasing numbers of homes to help inculcate an American idea of private property." Id.
[¶14] Not surprisingly, in 1928, the Meriam Report cited serious deficiencies in the government's efforts to provide suitable, safe, and sanitary housing for Native Americans. See Inst. for Gov't Research, The Problem of Indian Administration 8 (1928) (Lewis Meriam, Technical Director). In fact, the government's involvement in housing only exacerbated the intractable problems faced by Native Americans on the reservations. F. Cohen at § 22.05.
[¶15] In 1934, the government passed the Indian Reorganization Act ("IRA"), 48 Stat. 984, chapter 576, 25 USC 461 et seq., to address some of the issue identified in the Meriam Report. Id. The IRA established a revolving fund that authorized the Secretary of the Interior to make loans to tribes for the purposes of promoting economic development. 25 USC § 470. Also, beginning in 1936, some of the funds appropriated under the Emergency Relief Appropriation Acts, 49 Stat. 115, chapter 48, were dedicated to provide housing in Indian Country, resulting in the creation of a short-lived Indian Relief and Rehabilitation Program. F. Cohen at § 22.05.
[¶16] In 1937, the United States Housing Act of 1937 ("Housing Act") was enacted to help Americans find decent, safe, and sanitary living conditions. Pub. L. No. 75-412, 50 Stat. 888 (1937), current version at 42 USC §§ 1437-1444. The Housing Act authorized government loans to public housing agencies for the development of or administration of public or low-rent housing. 42 USC § 1437g(c). In 1940, the Solicitor General determined that tribes could qualify as public housing agencies authorized to develop or administer low-rent housing. F.Cohen at § 22.05 (citing Op. Sol. Int., M-28316 (Mar. 18, 1936)).
[¶17] Despite the Solicitor's opinion, programs for Native Americans were not created for another thirty years. Dewakuku v. Cuomo, 107 FSupp2d 1117, 1121 (D.Ariz. 2000) (Dewakuku I). See also F. Cohen at § 22.05. "It wasn't until 1962 that the Public Housing Administration, the predecessor to HUD, determined that the 1937 Housing Act even authorized low-rent housing programs on Indian lands." Id. Prevailing legal doctrines prior to the change held that tribes did not have the requisite power to enact housing ordinances and to create housing agencies, which are necessary to receive federal funding. Id. "This gap of nearly three decades is not surprising, however, given the federal policy regarding assimilation and the slow erosion of tribal lands." Id. But yet again, the stimulus for change was a devastating report on the state of housing in Indian Country. F. Cohen at § 22.05.
[¶18] After the application of the Housing Act in Indian Country, the Mutual Help and Homeownership Program ("MHHO Program") was developed to assist low-income Indian families in purchasing their own homes. Dewakuku I, 107 FSupp at 1122. "Because Indian lands are held in trust by the government and alternative financing is often unavailable, this is, in essence, the only opportunity for Native Americans to participate in the American dream of home ownership." Id.
[¶19] Under the MHHO Program, an Indian housing authority could apply to HUD for loans to enable the housing authority to develop public housing designed for sale to eligible tribal members. 24 CFR §§ 805.404(a), 805.415, 805.416, 805.421, 805.422 (1976). Utilizing this program, housing authorities could sell public housing to low-income families under "such terms and conditions as [HUD] may determine by regulation." 42 USC § 1437c(h). In practical terms, the MHHO Program was operated partly from HUD's regulations and partly from an Indian Housing Handbook. See H.R.Rep. No. 100-604 (1988) (reprinted in 1988 U.S.C.C.A.N. 791, 793).
[¶20] Unfortunately, this informal program proved ineffective because the housing needs of Native Americans in Indian Country were radically different than the needs of low-income Americans in urban areas. Id. at 1122. Despite the effort to include Native Americans in the Housing Act, an enormous demand for basic shelter persisted across Indian Country. Id. The next significant change in Indian housing legislation occurred with the enactment of the Indian Housing Act of 1988 ("Indian Housing Act"). 42 USC §§ 1437aa-ff (1988) (repealed by Native American Housing Assistance and Self-Determination Act of 1996, Pub.L. No. 104-330, 110 Stat. 4016 (1996)).
[¶21] The Indian Housing Act mandated that the Secretary of the Housing Department "provide lower income housing on Indian reservations and other Indian areas …" 42 USC § 1437aa(a) (1988). The legislation, which incorporated many of the provisions of the original Housing Act, "was viewed as marking an important step towards enabling Native Americans to work with the Federal Government to obtain decent and affordable housing, to which all Americans are entitled." Dewakuku I, 107 FSupp at 1123. Another significant component of this new legislation was that it provided statutory authority for the MHHO Program to be carried out by HUD. Dewakuku v. Martinez, 226 FSupp2d 1199, 1201 (D.Ariz. 2002) (Dewakuku III). In response to its new statutory authority, HUD issued implementing regulations for the MHHO Program. 24 CFR § 905 (1991).
[¶22] Under the formalized MHHO Program, HUD entered into agreements called "Annual Contributions Contracts" ("ACC") with tribal housing authorities under which HUD agreed to provide a specified amount of money to fund projects undertaken by the housing authorities and preapproved by HUD. 24 CFR §§ 805.102 (1979), 805.206. After securing funding from HUD, the housing authority, in turn, would enter into MHOA's with eligible American Indian families. 42 USC § 1437bb(e), and 24 CFR § 805.406. The family enters into what is, in essence, a lease-purchase agreement for a period up to twenty-five years. 42 USC §1437bb(e)(2)(A)(i), and Dewakuku I, 107 FSupp at 1123. The families were required to contribute land, labor, or materials to the building of their house, 24 CFR § 805.408, and after occupying the house, each family was required to make monthly payments in an amount calibrated to family income, 24 CFR § 805.416(a)(1)(ii). See also 42 USC §§ 1437bb(e)(1), 1437bb(e)(2)(A)(i). In addition, the families are responsible for all utility costs and maintenance. 42 USC § 1437bb(e)(3), and 24 CFR § 805.418(a). "The ownership contract differs from the lease agreement found in many public housing circumstances because a resident has an equitable interest in the property." 107 FSupp at 1123. The families are required to contribute and invest in the ongoing development of the property. 42 USC §§ 1437bb(e)(2)(A)(i), 1437bb(e)(3).
[¶23] In 1996, Congress repealed the Indian Housing Act and enacted the Native American Housing Assistance and Self-Determination Act of 1996 ("NAHASDA"), 25 USC §§ 4101- 4243. The statute's statement of congressional findings declared, "federal Indian housing assistance was to be provided in a manner that recognizes the right of Indian self-determination and tribal self-governance and with the goals of economic self-sufficiency and self-determination for tribes and their members ." Marceau v. Blackfeet Housing Authority, ___ F3d ___, 2008 WL 726445 (9th Cir. 2008) (quotations omitted) (Marceau II), and 25 USC § 4101(6)-(7). To accomplish this goal, the statute directs HUD to make annual block grants, in amounts determined by a formula, to a tribe or its designated housing entity (such as an Indian housing authority), to carry out activities related to the provision of affordable housing. 25 USC §§4111(a), 4152, and 24 CFR §§ 1000.201, 1000.202, 1000.206, 1000.301-.340.
[¶24] To be eligible for a HUD block grant, a tribe must submit to HUD an Indian housing plan that meets certain requirements and that is subject to HUD's approval. 25 USC § 4111(b), and 24 CFR § 1000.201. However, the housing plan is to be "locally driven." 24 CFR §1000.220. "And HUD's statutorily prescribed role-in addition, of course, to providing the block grants themselves-is generally confined to a limited review of each Indian housing plan, and even then only to the extent that [HUD] considers review is necessary." Marceau II, 2008 WL 726445 and 25 USC § 4113(a)(1). "The grant, once made, is subject to tribal control; the recipient, rather than HUD, is responsible for operating the housing program, including the continued maintenance of housing." Id., 25 USC § 4133, and 24 CFR § 1000.56. "HUD's responsibility consists primarily of oversight and audit, to ensure that federal funds are spent for the intended purpose." Id., and 24 CFR § 1000.520.
III. BIA Leasing Authority
[¶25] In 1955, Congress passed the Indian Long-Term Leasing Act ("ITLA" or "Leasing Act"), permitting Indians to commit their lands to long-term leases, for "public, religious, educational, recreational, residential, or business purposes," subject to the approval of the Secretary of the Interior. Brown v. United States, 42 Fed.Cl. 538, 543 (Fed.Cl. 1998), and 25 USC § 415. With the passage of ITLA, Indians were permitted to realize the ultimate commercial potential from their land. Id.
[¶26] The federal regulations governing leases of Indian land are found at 25 CFR Part 162. Indian land is defined in the regulations as "any tract in which an interest is owned by an individual Indian or tribe in trust or restricted status. 25 CFR § 162.102. Indian land owners may lease their land for up to 25 years, but they can include provisions authorizing a renewal or an extension for one additional term for up to 25 years. 25 CFR § 162.607 (a). Leases may be negotiated by the tribe or individual Indian land owners concerned or with the assistance of the BIA. 25 CFR § 162.107(a).
[¶27] Approvals of leases are directly handled by the Bureau of Indian Affairs (BIA) by delegation from the Department of Interior. Brown, 42 Fed.Cl. at 543. Prior to approval of any lease or extension of an existing lease, the Secretary must be satisfied that adequate consideration has been given to environmental and land use factors. 25 USC § 415(a). The BIA will attempt to ensure (through proper notice) that the use of the land is consistent with the landowners' wishes. 25 CFR § 162.107(a). Further, in reviewing a negotiated lease for approval, the BIA will defer to the landowners' determination that the lease is in their best interest, to the maximum extent possible. 25 CFR § 162.107(a).
[¶28] The BIA also has several responsibilities in administering and enforcing the leases. These responsibilities are:
(a) We will ensure that tenants meet their payment obligations to Indian landowners, through the collection of rent on behalf of the landowners and the prompt initiation of appropriate collection and enforcement actions. We will also assist landowners in the enforcement of payment obligations that run directly to them, and in the exercise of any negotiated remedies that apply in addition to specific remedies made available to us under these or other regulations.
(b) We will ensure that tenants comply with the operating requirements in their leases, through appropriate inspections and enforcement actions as needed to protect the interests of the Indian landowners and respond to concerns expressed by them. We will take immediate action to recover possession from trespassers operating without a lease, and take other emergency action as needed to preserve the value of the land.
25 CFR § 162.108 .
[¶29] Any decisions taken by the BIA, with certain exceptions, under these regulations are appealable pursuant to 25 CFR Part 2. 25 CFR § 162.113.
IV. FTCA Claims
[¶30] It is well settled that "[t]he United States, as sovereign, is immune from suit save as it consents to be sued … and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit." United States v. Mitchell, 445 US 535, 538, 100 SCt 1349, 1352, 63 LEd2d 607 (1980) (quoting United States v. Sherwood, 312 US 584, 586, 61 SCt 767, 769, 85 LEd1058 (1941)). See also F.D.I.C. v. Meyer, 510 US 471, 475 (1994) ("Sovereign immunity is jurisdictional in nature."). One such "consent to suit" is encompassed in the Federal Tort Claims Act (FTCA), 28 USC §§ 1346(b), 2671-2680, which constitutes "a limited waiver of sovereign immunity, making the Federal Government liable to the same extent as a private party for certain torts of federal employees acting within the scope of their employment." United States v. Orleans, 425 US 807, 813, 96 SCt 1971, 1975, 48 LEd2d 390 (1976). Any waiver of sovereign immunity, including the FTCA, must be strictly construed and, to come within the ambit of a particular waiver, a claimant must fully adhere to all statutory procedures. United States v. Mitchell, 445 US 535, 538, 100 SCt 1349, 1351, 63 LEd2d 607 (1980), and Block v. North Dakota, 461 US 273, 287, 103 SCt 1811, 1819, 75 LEd2d 840 (1983). Moreover, the plaintiff bears the burden of demonstrating that the government has unequivocally waived its sovereign immunity. Barnes v. United States, 448 F3d 1065, 1066 (8th Cir. 2006).
[¶31] Plaintiff asserts essentially two FTCA claims: (1) that HUD negligently created, supervised, approved and administered the plaintiff's MHOA; and (2) that the BIA negligently drafted, created, approved and administered the underlying lease agreement on land held in trust by the BIA and leased to the CRHA. The court will examine each of these claims in turn.
A. HUD's Claimed Negligence
[¶32] Plaintiff's claims against HUD are premised on CRHA's alleged breach of its MHOA with the plaintiff, and on HUD's alleged breach of its ACC with CRHA. Breaches of contract, in many instances, can also be treated as torts. "But … where the 'tort' complained of is based entirely upon breach by the government of a promise made by it in a contract, so that the claim is in substance a breach of contract claim, and only incidentally and conceptually also a tort claim, we do not think that the common law or local state law right to 'waive the breach and sue in tort' brings the case within the Federal Tort Claims Act. United States v. Smith, 324 F2d 622, 625 (5th Cir.1963 ) (quoting Woodbury v. United States, 313 F2d 291, 295, (9th Cir.1963)). Accord Awad v. United States, 301 F3d 1367, 1372 (Fed. Cir. 2002).
[¶33] Courts recognize that "[t]hough distinctions between contract and tort claims do not retain historic significance under modern judicial administration, they retain vitality in view of the jurisdictional provisions of laws consenting to actions against the government." Murray v. United States, 132 US App. DC 91, 405 F2d 1361, 1366-67 (D.C. Cir. 1968). Under federal law, jurisdiction of the courts over contract claims against the government is different from jurisdiction over tort claims. Contract claims are covered by the Tucker Act which confers upon the COFC jurisdiction over "any claim against the United States … founded … upon any express or implied contract with the United States … in cases not sounding in tort." 28 USC §1491. The district courts have concurrent jurisdiction of such cases under 28 USC §1346(a)(2), but only when the claim does not exceed $10,000. Jurisdiction over tort claims against the government is made exclusive to the district courts by 28 USC § 1346(b).
[¶34] Plaintiff's claims exceed the $10,000 statutory limit, so the court lacks concurrent jurisdiction. The court does have subject matter jurisdiction to adjudicate the plaintiff's tort claims, but only if they fall within the ambit of the FTCA.
[¶35] Here, the plaintiff's grievances relate specifically to HUD's alleged failure to perform or to HUD's careless performance of a duty allegedly owed under the terms of these contracts. See United States v. Neustadt, 366 US 696 (1961) (careless performance of a duty allegedly owed sounds in torts). These grievances have the potential to sound in both contract and tort. Even though plaintiff has cast her allegations as torts, the defendant owed her no duty unless a contractual or an intended third party beneficiary relationship existed between the parties. Absent these relationships, no duties were owed to the plaintiff. First, with regard to the plaintiff's MHOA, the COFC found, and this court agrees, that the there was no privity of contract between HUD and the plaintiff. See Garreaux, 77 Fed.Cl. at 731 (holding the fact that HUD administered the MHHO Program and supervised CRHA did not establish privity of contract between the government and tenant who entered into MHOA with CRHA under auspices of the MHHO Program). Second, with respect to the ACC between HUD and CRHA, under similar circumstances, the US Court of Appeals for the Federal Circuit found that a tenant is not an intended third party beneficiary under the ACC. Dewakuku II, 271 F3d at 1040, 1042 (ACC explicitly excludes claims against HUD by a third party as an intended beneficiary). The court adopts the reasoning of this case. Accordingly, I find the necessary predicate to all the plaintiff's tort claims, namely some type of contractual relationship, has not been met.
[¶36] Additionally, the damages sought by the plaintiff also belie that this is a sustainable tort action. Plaintiff's claim for damages caused by HUD's alleged breach are: (1) money damages for loss of her interest in the home and property; (2) money damages for living in a substandard dwelling; (3) money damages for physical and emotional harm; and (4) specific performance, namely repair the home and convey title for the full estate or replace the home. These damages are expectation damages and consequential damages relating to HUD's alleged breach of a contract. Accord Claxton v. Small Business Admin. of the United States Government, 525 FSupp 777 (S.D.Ga.1981) (plaintiff's claim for damages caused by SBA's refusal to convey title and for specific performance of contract does not fall within FTCA's jurisdictional grant). Consequently, plaintiff's alleged tort claims against HUD cannot be sustained.
[¶37] In sum, the gravamen of the plaintiff's claims are that HUD did not perform at all or carelessly performed affirmative duties emanating solely from an alleged contractual relationship between them. These claims are breach of contract claims and, at least in theory, tort claims. However, without privity of contract, no contractual duty is owed to the plaintiff. Absent a duty to the plaintiff, no tort claim can be sustained. The question of duty is a question of law and there was no duty owed to the plaintiff. These claims sound only in contract and thus are not actionable under the FTCA. Also, the alleged breach of contract claims exceed the statutory maximum permitted for subject matter jurisdiction in district court. Accordingly, this court finds that it does not have subject matter jurisdiction to adjudicate this controversy. The defendants' motion to dismiss should be granted as to HUD.
B. BIA's Claimed Negligence
[¶38] The plaintiff claims that the BIA negligently drafted, created, approved and administered the underlying lease agreement on land held in trust by the BIA and leased to the CRHA. These claims suffer from some of the same infirmities found in the plaintiff's claims against HUD. Again, there is no privity of contract between the BIA and the plaintiff. The parties to the lease were the original Indian heirs of land held in trust by the government and CRHA. The BIA was not a party to the lease.
[¶39] While it is true that the BIA approved the lease and administered the lease agreement, these actions do not equate to making it a party to the lease or create any specific duties to the plaintiff. The BIA is simply fulfilling its fiduciary obligations to the Indian landowner. Wilkinson v. United States, 440 F3d 970, 975 (8th Cir. 2006). The government owes no fiduciary duties to parties who are not landowners. Nulankeyutmonen Nkihtaqmikon v. Impson, 503 F3d 18, 31(1st Cir. 2007) (we can find no law in support of an enforceable fiduciary duty owed by the federal government to plaintiffs qua individuals who are not landowners).
[¶40] The question of duty is a question of law and there was no duty owed to the plaintiff. Also, the plaintiff cannot claim a specific trust relationship created by the Secretary's general obligation to consider their interests before approving a lease. See Id. (citing Brown, 86 F3d at 1562 ("[T]he statutory criteria that constrain the Secretary's exercise of his or her approval power are … in the nature of zoning, safety, or environmental concerns, which are the traditional general welfare concerns of government when acting in a non-fiduciary capacity.")). The government is simply not a trustee on behalf of lessees. See Burrell v. Acting Albuquerque Area Director, 35 IB LA 56, 58 (2000) (an oil and gas lease), Citation Oilfield Supply and Leasing, Ltd. v. Acting Billings Area Director, 27 IB LA 210, 223 (1995) (business lease), Great Western Casinos, Inc. v. Acting Pacific Regional Director, 36 IB LA 115, 122 (2001) (farming and grazing lease), Cooper v. Acting Southern Plains Regional Director, 41 IBIA 58, 60 (2006) (residential lease). Therefore, the plaintiff's FTCA claim cannot be sustained and the court does not possess subject matter jurisdiction. The defendants' motion to dismiss should be granted.
V. APA Claims
[¶41] Plaintiff alleges that she is entitled to relief under the APA, 5 USC §§ 702-706. The APA authorizes suit by "[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute." 5 USC § 702. Plaintiff's claimed statutory basis for a grant of subject matter jurisdiction is the Indian Housing Act, 42 USC §§ 1437aa-ff, and the regulations, 24 CFR § 805 et seq., pertaining to the MHHO Program. While several cases have held that neither the Indian Housing Act nor NAHASDA provide an express or implied private right of action, Dewakuku v. Martinez, 271 F3d 1031, 1040 (Fed.Cir. 2001)(Dewakuku II), and Marceau v. Blackfeet Housing Authority, 455 F3d 974, 984 (9th Cir. 2006) (Marceau I), this is not necessarily a bar to the court's subject matter jurisdiction because the APA provides for judicial review of agency action, Norton v. Southern Utah Wilderness Alliance, 542 US 55, 61 124 SCt 2373 (2004), and Central South Dakota Co-op. Grazing Dist. v. Secretary of US Dept. of Agriculture, 266 F3d 889, 894 (8th Cir. 2001).
[¶42] When reviewing agency action, a court may only (1) "compel agency action unlawfully withheld or unreasonably delayed"; or (2) "hold unlawful and set aside agency action, findings, and conclusions found to be (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 USC § 706(1)-(2)(A). But, the only agency action that can be compelled under the APA is action legally required. Norton, 542 US at 62. Consequently, a claim under § 706(1) can proceed only where a plaintiff asserts that an agency failed to take a discrete agency action that it is required to take. Id.
[¶43] An agency decision is said to be arbitrary and capricious if:
the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 US 29, 43, 103 SCt 2856, 77 LEd2d 443 (1983).
[¶44] Further, where no other statute provides a private right of action, as is the case here, the "agency action" complained of must be " final agency action." Norton, 542 US at 62, and §704. Two conditions must be satisfied for an agency action to be final. First, the action must mark the consummation of the agency's decision-making process - it must not be of a merely tentative or interlocutory nature. And second, the action must be one by which rights or obligations have been determined, or from which legal consequences will flow." Bennett v. Spear, 520 US 154, 177-78, 117 SCt 1154, 137 LEd2d 281 (1997).
[¶45] Accordingly, the first inquiry in this case is whether HUD's and BIA's oversight of CRHA's responsibilities constitute agency action. The defendant maintains that responsibility for the state of the plaintiff's dwelling rests with CRHA. While the defendants acknowledge that they control CRHA's financing and that they exercise some supervision over the contracts entered into by CRHA, this relationship does not translate into agency action. In other words, "[g]rants of federal funds generally do not create a partnership or joint venture with the recipient, nor do they serve to convert the acts of the recipient from private acts to governmental acts absent extensive, detailed, and virtually day-to-day supervision." Forsham v. Harris, 445 US 169, 180, 100 SCt 977 (1980) (citing United States v. Orleans, 425 US 807, 818, 96 SCt 1971, 1977, 48 LEd2d 390 (1976)). In their view, CRHA is a private contractor and the APA does not permit suits between private parties. Solien v. Miscellaneous Drivers and Helpers Union, 440 F2d 124 (8th Cir. 1971). Also, the defendants rely upon the fact that they were strangers to this contract (the MHOA), i.e. there was no privity of contract between the defendants and the plaintiff. See Garreaux, 77 Fed.Cl. at 731 (holding the fact that HUD administered the MHHO Program and supervised CRHA did not establish privity of contract between the government and tenant who entered into MHOA with CRHA under auspices of the MHHO Program). Concerning the issue of the BIA being a party to the land lease and exercising supervision over it, the defendants contend that this claim was not presented to the BIA and therefore, the claim has not been exhausted and cannot be reviewed by the court. See Crow Creek Sioux Tribe v. Bureau of Indian Affairs, 463 FSupp2d 964 (DSD 2006). Further, the defendants' contend the Indian Housing Act's maintenance responsibilities for MHOA homes are vague. See 24 CFR § 905.345. In fact, the regulations explicitly put the maintenance burden on the homeowner. See 24 CFR § 905.345(d).
[¶46] Alternatively, the plaintiff argues that HUD's control over CRHA is near total and that CRHA is not a wholly independent entity. In fact, according to the plaintiff, it is a creature of HUD and, the acts of CRHA are the acts of HUD. Further, the plaintiff claims that HUD failed in its oversight responsibility in two respects: (1) HUD did not properly ensure the plaintiff's dwelling was "decent, safe, and sanitary;" (2) HUD did not exercise proper oversight when it permitted the plaintiff to enter into MHOA with a defective land lease. Plaintiff finds support for her argument in Dewakuku III where the court held that HUD violated the APA when it failed to properly supervise the local housing authority and when it failed to provide a tribe member with a dwelling which was decent, safe, and sanitary. See 226 FSupp2d 1199. With respect to the BIA, the plaintiff contends that the BIA is a party to the land lease and has supervisory powers over the lease agreement. With the BIA's relationship to the lease, the plaintiff claims they should have never approved a lease that does not enable the plaintiff to take full title.
[¶47] The court finds merit in the defendants arguments. First, as previously mentioned, the defendants' duties to the plaintiff with respect to the MHOA or the land lease and the acts of CRHA were private acts and not acts of the government. There is plenary control of neither the money nor the property. Id. Also, the evolution of Indian Housing legislation is toward increased Indian self-determination and greater tribal self-governance. The statute authorizing the Indian Housing Act stated the objective of the legislation was "to vest in local public housing agencies the maximum amount of responsibility in the administration of their housing programs." 42 USC § 1437. NAHASDA's statement of congressional findings recognized, federal Indian housing assistance was to be provided "in a manner that recognizes the right of Indian self-determination and tribal self-governance" and with the "goals of economic self-sufficiency and self-determination for tribes and their members." 25 USC § 4101(6)- (7). To adopt the plaintiff's arguments would require the federal government to micro manage the affairs of housing authorities and completely destroy the authority of the local housing authority.
[¶48] Second, Dewakuku III is distinguishable from the instant case because Dewakuku III was primarily concerned HUD agency action pertaining to initial construction of the MHOA house. HUD's role in the initial construction of public housing can be pervasive. This case is not about the initial construction of the home or a de facto warranty of habitability. It is about allegations of promised repairs to an existing home and a defective land lease. The regulations make clear that the maintenance obligations are the responsibility of the owner, not HUD. See Marceau II, 2008 WL 726445 ("Ultimately, no statute ever required tribes to form housing authorities. No statute obliged Indian housing authorities, once formed, to seek federal funds. No statute committed the United States itself to construct houses on Indian lands or to manage or repair them. Indeed, the relevant regulations expressly imposed inspection duties on Indian housing authorities, independently of HUD, including any enforcement of warranties. No statute has imposed duties on the government to manage or maintain the property… "). Further, if there was a promise to repair the home then this is a contractual obligation that CRHA entered into, not HUD. It was, if anything, a contractual obligation between two private parties.
[¶49] Finally, the plaintiff's APA claim falls short because a claim under the APA requires, among other things, that the claimant seek "relief other than money damages." 5 USC § 702, Bowen v. Massachusetts, 487 US 879, 895-902 (1988) (analyzing the meaning of "money damages" in 5 USC § 702). Examination of the relief that the plaintiff seeks does not stop at her allegations. Marceau I, 455 F3d at 985. Instead, "the substance of the pleadings must prevail over their form." Id. (citing Tucson Airport Auth. v. Gen. Dynamics Corp., 136 F3d 641, 645 (9th Cir.1998) (examining plaintiff's APA claims and concluding that the "claims are not 'for money damages'"). The court must "discern the nature of the relief being sought and focus on the type of relief that will result from the action." Id. As previously discussed, the essence of the relief sought by the plaintiff is money damages. Accordingly, for all the reasons stated above the court lacks subject matter jurisdiction and the defendants' motion to dismiss should be granted.
[¶50] Now, therefore,
[¶51] IT IS ORDERED, as follows:
(1) The motion of defendants to dismiss (Doc. 9) is granted.
(2) The motion of defendants for extension of time to file an answer (Doc. 4) is denied as moot.
(3) The motion of defendants for leave to file excess pages (Doc. 6) is granted.
1.A federal agency cannot be sued under the Federal Tort Claims Act. The United States is the proper defendant. 28 USC § 2679, F.D.I.C. v. Meyer, 510 US 471, 476-77, 114 SCt 996, 127 LEd2d 308 (1994), and Duncan v. Department of Labor, 313 F3d 445, 447 (8th Cir. 2002).