Sahagun-Pelayo v. United States

ORI$IIUAI.
lJntbe @nite! $ltutts @ourt of feberut @tsims
No. l3-929 C
(Filed July 22,2014)
FILED
UNPUBLISHED JUL zz zt,r4

x rr {. 'fi ,* ,r. {< * * i. * :r :r ,. * U'S COURT oF
'r. FEDERAL CLAIMS
JUANMANUEL SA}IAGUN- :I'

PELAYO, * Pro Se Plaintiff; RCFC 12(b)(l);
* RCFC 12(bX6); Tort Claim;
Pro Se Plaintffi * Implausible Breach of Contract
* Claim.
.'., *
n

TFIE UNITED STATES. *
:r

Defendant.
t< * !k !* ,k :1. :l< * ,F '* * {< 'F + ,k *

Juan Manuel Sahagun-Pelayo, Oakdale, LA, pro se.

P. Davis Oliver, United States Department of Justice, with whom were
Stuart F. Delery, Assistant Attorney General, Robert E. Kirschman, -Ir., Director,
Steven J. Gillingham, Assistant Director, Washington, DC, for defendant.

OPINION

BUSIJ,Judge.

The court has before it defendant's motion to dismiss this suit, which was
brought pursuant to Rules I 2(bX 1) and 12(b)(6) of the Rules of the United States
Court of Federal Claims (RCFC). Defendant's motion was filed January 28,2014
and has been fully briefed. For the reasons set forth below, defendant's motion is
sranted.
 BACKGROUND'

Plaintiff Juan Manuel Sahagun-Pelayo is incarcerated in a federal prison in
Louisiana. Mr. Sahagun-Pelayo asserts that he is a Mexican citizen and that he
provided confidential informant services to a variety of American federal agencies
investigating drug and gun trafficking. Compl. at I , App. at 2-4, t 0.2 The
complaint presents two claims: (1) a tort claim, citing the "Federal Tort Claims
Act,28 U.S.C. $ [1346(bX1) (2012)]"; and (2) a "Breach of Contract" claim,
alleging that a verbal confidential informant contract with the United States was
breached. Compl. at l, App. at 9. Mr. Sahagun-Pelayo's complaint asserts that
plaintiff is owed $84,717,000 for his claims. Id. at3, App. at 18.

Three years ago, Mr. Sahagun-Pelayo presented essentially the same claims
in a complaint filed in the United States District Court for the District of
Columbia, although the relief requested was then set at $1,500,000. Pelayo v.
United States, No. 1:11-cv-01430-UNA (DDC filed Aug. 8, 2011). The tort claim
was dismissed for failure to exhaust administrative remedies and the breach of
contract claim was dismissed for exceeding the monetary limit of the district
court's contract claims jurisdiction.3 Pelayo v. (Jnited States, No. I l-1430, 2011
\t/L 5244363,at * I (DDC Oct. 3 1, 201 1).

Plaintiff filed his suit in this court on November 22,2013. He is proceeding
pro se and in forma pauperis. He requested and the court ordered defendant to
provide him with the source materials cited in defendant's motion to dismiss. The
court now turns to the standards ofreview applicable in this case.

DISCUSSION

r/ The facts recited here are taken from plaintiffs complaint, an appendix of exhibits to
the complaint, plaintiff s response to defendant's motion to dismiss, and court records ofa
similar suit Mr. Sahagun-Pelayo frled in the United States District Court for the District of
Columbia. See Pelayo v. United States,No. 1:11-cv-01430-UNA (DDC filed Aug. 8, 2011).
2/ The court has supplied page numbers to the documents attached to the complaint.

3/ These claims had also been summarily dismissed at an earlier date. Pelayo v. United
States, No. 1 l-1430, 2011 WL 3797742, at * I (DDC Aug. 26, 201i).
I. Standards ofReview

A. Pro Se Litigants

The court acknowledges that Mr. Sahagun-Pelayo is proceeding pro se, and
is "not expected to frame issues with the precision of a common law pleading."
Rochev. U.S. Postal Sen.,828 F.2d 1555, 1558 (Fed. Cir. 1987). Pro se plaintiffs
are entitled to a liberal construction of their pleadings. See Haines v. Kerner, 4Q4
U.S. 519, 520 (1972) (requiring that allegations contained inapro se complaint be
held to "less stringent standards than formal pleadings drafted by lawyers").
Accordingly, the court has examined the complaint and plaintiff s response brief
thoroughly in an attempt to discem plaintiff s claims and legal arguments.a

B. RCFC 12(bX1)

In considering the issue of subject matter jurisdiction, this court must
presume all undisputed factual allegations in the complaint to be true and construe
all reasonable inferences in favor ofthe plaintiff. Scheuer v. Rhodes,4l6 U.S.
232,236 (1974), abrogated on other grounds by Harlow v. Fitzgerald,45T U.S.
800, 814-15 (1982); Reynolds v. Army & Air Force Exch. Serv.,846 F.2d 746,747
(Fed. Cir. 1988). However, plaintiffbears the burden ofestablishing subject
matterjurisdiction,AlderTerrace, Inc.v. UnitedStates,167F.3d1372, 1377 (Fed.
Cir. 1998) (cltlngMcNutt v. Gen. Motors Acceptance Corp. of lnd.,298 U.S. 178,
189 ( 1 93 6), and must do so by a preponderance of the evidence, Reynolds , 846
F.2d at 748 (citations omitted). Ifjurisdiction is found to be lacking, this court
must dismiss the action. RCFC 12(hX3).

c. RCFC 12(bX6)

4i Although defendant asserts that the court should consider only the complaint when
analyzing plaintiffs claims, Def.'s Reply at 1, 3-4, the court has also considered plaintiff s
response briefas an informal clarification ofthe statement of the claims presented in the
complaint. See, e.g.,Gardnerv. United States, No. 10-451,2011 WL 678429, at*4 n.5 (Fed. Cl.
Feb. 17, 201 1) (construing a pro se plaintif? s response to a motion to dismiss as an amendment
to her complaint); W'atson v. United States, No. 06-716, 2007 WL 5171595, at *6-7 (Fed. Cl. Jan.
26,2007) (considering a claim raised for the first time in a pro se plaintiffs response to a motion
to dismiss).
 It is well-settled that a complaint should be dismissed under RCFC 12(bX6)
"when the facts asserted by the claimant do not entitle him to a legal remedy."
Lindsay v. United states, 295 F.3d 1252, 1257 (Fed. Cir. 2002). When
considering a motion to dismiss brought under RCFC 12(bX6), "the allegations of
the complaint should be construed favorably to the pleader." Scheuer,416 U.S. at
236. The court must inquire, however, whether the complaint meets the
"plausibility" standard recently described by the United States Supreme Court, i.e.,
whether it adequately states a claim and provides a "showing [ofl *y set of facts
consistent with the allegations in the complaint." Bell Atlantic Corp. v. Twombly,
550 U.S. 544,560,563 (2007) (Twombly) (citations omitted). "To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to 'state a claim to reliefthat is plausible on its face."' Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (Iqbat) (quoting Twombly,550 U.S. at 570).

As the United States Court of Appeals for the Federal Circuit has explained:

We must presume that the facts are as alleged in the
complaint, and make all reasonable inferences in favor of
the plaintiff. To state a claim, the complaint must allege
facts "plausibly suggesting (not merely consistent with)"
a showing of entitlement to relief. The factual
allegations must be enough to raise a right to relief above
the speculative level. This does not require the plaintiff
to set out in detail the facts upon which the claim is
based, but enough facts to state a claim to reliefthat is
plausible on its face.

Cary v. United States,552 F.3d 1373,1376 (Fed. Cir. 2009) (quoting and citing
Twombly,550 U.S. at 555-57 ,570 and citing Gould, Inc. v. United States, 935
F .2d 127 | , 127 4 (F ed. Cir. 1991)). The post-Iwo mbly standard has frequently
been described as context-specific in its application. See, e.g., Iqbal, 556 U.S. at
679 ("Determining whether a complaint states a plausible claim for relief will . . .
be a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.") (citation omitted). As this court now considers
claims challenged by motions brought under RCFC l2(bX6), Twombly and Iqbal
are properly read to establish a slightly less hospitable review ofthe sufficiency of
factual allegations presented in a complaint. E.g., Dobyns v. United States,9l
Fed. Cl. 412, 422-28 (201 0) (conducting a thorough analysis of the impact of
Twombly and lqbal on this court's standard of review for RCFC 12(bX6)
motions).

Under Twombly and Iqbal, the court must not mistake legal conclusions
presented in a complaint for factual allegations which are entitled to favorable
inferences. See, e.g.,SiouxHoneyAss'nv. HartfordFirelns. Co.,672 F.3d 1041,
1062 (Fed. Cir.2012) ("The Supreme Court explained in Twombly that while Rule
8 does not require 'detailed factual allegations,' it does require more than 'labels
and conclusions."' (citing Twombly,550 U.S. at 555)). The following passage
from Sioux Honey appears to capture the essence ofthe post-Zwombly standard of
review for motions brought under RCFC 12(b)(6):

To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
ofreliefthat is plausible on its face. A claim has facial
plausibility when the plaintiffpleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. The
plausibility standard is not akin to a probability
requirement, but it asks for more than a sheer possibility
that a defendant has acted unlawfully. Determining
whether a complaint states a plausible claim for relief
will . . . be a context-specific task that requires the
reviewing court to draw on itsjudicial experience and
common sense,

672 F .3d at 1062-63 (citing lqbal,556 U,S. at 678-79; Twombly, 550 U.S. at 556-
58, 570) (internal quotations omitted).

It is important to note that pre-Twombly cases provide very little assistance
when considering RCFC 12(bX6) challenges to a complaint, because these cases
used a different standard of review, one where dismissal was forbidden unless the
court found that "it is beyond doubt that the plaintiff can prove no set of facts
which would entitle him to relief." Hamlet v, United States,873 F.2d 1414, 1416
(Fed. Cir. 1989)(citing Conleyv. Gibson,355 U.S. 41,45-46 (1957). Conley's
formulation of the standard of review was ovemrled bv Twomblv and is no lonser
the proper standard to apply. Twombly,550 U.S. at 562-63.

One pre-Twombly decision relied upon by defendant in this case, Sommers
Oil Co. v. United States, 241 F .3d I 3 75 (Fed. Cir. 2001 ), employs the superseded
Conley standard. See id. at 1378 ("A trial court should not dismiss a complaint for
failure to state a claim unless it is 'beyond doubt that the plaintiffcan prove no set
of facts which would entitle him to relief."' (citing Hamlet,873 F.2d at 1416).
The Sommers Oil holding is a clear example of a court applying the Conley
standard, not the Twombly standard. See May v. United States, 80 Fed. Cl. 442,
446 (2008) (citing Sommers Oil as an example of cases applying the Conley
standard of review, and then discussing how the Twombly standard has replaced
the Conley standard). For this reason, Sommers Oil, with its distinguishable facts
and its application ofa superseded standard of review, is ofno value in this court's
RCFC 12(bX6) analysis.

II. Analysis

A. Tort Claim

This court's jurisdiction does not extend to the consideration of tort clarms.
28 U.S.C. $ 1a91(a) (2012). Defendant argues, and plaintiffdoes not dispute, that
Mr. Sahagun-Pelayo's claim sounding in tort must be dismissed for lack of
jurisdiction. Def.'s Reply at2. The court agrees and grants defendant's RCFC
12(bXl) motion as to plaintiff s tort claim.

B. Breach of Contract Claim

1. The Alleged Verbal Agreement

The complaint alleges that various federal agents entered into a verbal
agreement with Mr. Sahagun-Pelayo so that he would provide information leading
to the arrests of various Mexican drug cartel members. Compl. App. at 8-10. The
agencies allegedly involved included the Drug Enforcement Administration
(DEA), Immigration and Customs Enforcement (ICE), the Federal Bureau of
Investigation (FBI), and the Bureau of Alcohol, Tobacco, Firearms and Explosives
(ATF). Id. The complaint identifies an ICE agent (Jesus Loscano), a DEA
operative (Carmen); an FBI employee (Mike Kosinsky); and, "Jhon an other's"
from ATF.5 Id. at 10. Nowhere in the complaint, or in plaintiff s response brief, is
a specific individual identified as having represented the United States in
negotiating the alleged confidential informant contract with Mr. Sahagun-Pelayo.
Nor is the specific agency that was to provide payment and other services to
plaintiff identihed.

Thus, the complaint contains an extremely vague allegation of a verbal
agreement between a number of federal employees from various agencies and the
plaintiff. The terms of the alleged agreement are similarly unclear. Mr. Sahagun-
Pelayo states that he was told that he would "rec[e]ive pa[y]m[e]nts and protection
from [traffickers]" if he accepted the agents' offer. Compl. App. at 2. In return
for his services, plaintiff asserts that he also would receive "protection for [his]
family." Id. App. at8.

No specific payment terms of the alleged confidential informant verbaL
agreement are provided in the complaint. Instead, Mr. Sahagun-Pelayo includes a
bill which demands $26,000,000 for information leading to arrests, and
$5,750,000 for information leading to the seizure of drugs and currency, with a
credit for $40,000 in payments plaintiff alleges he has already received. Compl.
App. at 9. The "Past Due Pa[y]ments 'Cash"' requested are $3 I,710,000, although
this figure is later increased in a "Final Notice" to $84,717,000. Id. App. at 9, I 8.

2. Failure to State A Claim

Defendant's primary argument that Mr. Sahagun-Pelayo's breach of contract
claim is deficient is that plaintiff "has not alleged any facts to make a plausible
claim that any Govemment representative had the requisite authority to enter into
a contract with him." Def.'s Mot. at 8. In his response brief, plaintiff offers an
entirely new factual allegation in an apparent attempt to cure the defect in his
complaint:

[T]he Plaintiff met with representatives of the UNITED
STATES Government from Washington, DC in El Paso,
Texas, who he believed had the authority to make him
the offers and the security arrangements [which are the

t/ Mr. Sahagun's handwritten documents attached to the complaint are barely legible.
 subject of the complaint in this casel.

Pl.'s Resp. at 2. These government representatives are not identified by name or
by the agency that they represent. In the following paragraphs ofplaintiffs brief,
these alleged multiple representatives become just one representative:

[T]he Plaintiff was of the understanding that the
Government's representative in that El Paso meeting at
the border had the authority [to] offer and approve the
contractual arrangements being disputed by the
Government in their Motion to Dismiss under Rule
r2(b).

The Govemment's sending a representative from
Washington, DC to El Paso, Texas, shows their intent [to
contract].

Id. at2-3. Defendant argues, nonetheless, that plaintiffhas failed to state a claim
under an implied-in-fact contract theory. Def.'s Reply at 5.

It is perhaps helpful to provide a context for confidential informant
contracts and disputes in this court over alleged breaches of such contracts. Many
ofthese cases involve allegations ofwritten contracts. See, e.g., Vargas v, United
States, I l4 Fed. CL.226,229 & n.2 (2U$; Jumah v. (Jnited States,90 Fed. Cl.
603,605 (2009), aff'd,385 F. App'x 987 (Fed. Cir.20l0); see also Salles v.
United States,156 F.3d 1383, 1384 (Newman, J., dissenting) (noting that a written
informant contract was alleged to have been supplemented by an oral promise in
that case). Where there have been allegations of purely oral contracts, the plaintiff
typically identified specific individuals and specific agencies that negotiated and
entered into the alleged contract with the informant. See, e.g., SGS-92-X003 v.
United States,74Fed.Cl.637,650 (2007); DickTracyv. (Jnited States, 55 Fed.
Cl. 679,682 (2003); Doe v. United States,,32 Fed. Cl. 472,473 (1999 (Doe I),
aff'd in relevant part, I 00 F.3d 1576 (Fed. Cir. 1996) (Doe II).

Here, Mr. Sahagun-Pelayo has failed to allege facts as to the specific agent
of the govemment who contracted with him, or as to the specific agency of the
govemment that contracted with him.6 In the court's view, the complaint, as
supplemented by plaintiffs response brief, does not provide sufficient facts to
plausibly suggest that any government employee had implied or express actual
authority to enter into a contract with Mr. Sahagun-Pelayo that would possibly
entitle him to the relief he seeks in the complaint.

Perhaps the most instructive and analogous case is Jumah. The plaintiff in
that case, Mr. Amin Jumah, claimed that his confidential informant contract
obligated the DEA to pay him for services rendered. Several written agreements
had been signed by the DEA and Mr. Jumah, and he also had documentation of
several payments from the DEA that he had received over the years. Jumah,,90
Fed. Cl. at 605. The govemment challenged Mr. Jumah's contract claims on the
grounds that his written contracts had expired before the informant services, if
any, had been provided, and that Mr. Jumah failed to plead either the terms of any
implied-in-fact contract or the identity of the person with whom Mr. Jumah
contracted. Id. at606.

The court noted that the formation of an implied-in-fact contract with the
United States requires "(1) mutuality of intent; (2) consideration; (3) lack of
ambiguity in the offer and acceptance; and (4) actual authority to bind the
Govemment in contract on the part of the government representative whose
conduct is relied upon." Jumah,90 Fed. Cl. at 610 (citations omitted). Mr. Jumah
relied upon a conversation he had with a DEA special agent for his implied-in-fact
confidential informant contract. Id. at 611. The court found. however. that a DEA
special agent has neither express actual authority nor implied actual authority to
bind the United States in a confidential informant contract for payments exceeding
$250,000. Id. at 612-14. The court therefore dismissed Mr. Jumah's contract
claims pursuant to RCFC 12(bX6) for failure to state a claim. Id. at 614.

In this case, Mr. Sahagun-Pelayo's contract claim is even less plausible than
the one dismissed in Jumah. No allegations of written agreements were made by
plaintiff, and no documentation of previous payments received from the United
States was attached to the complaint. Mr. Sahagun-Pelayo's vague and
inconsistent descriotion ofconversations he had with various federal asents lacks

u/ Indeed, plaintiffs allegations in this regard are both vague and contradictory.

9
the specificity of the particular promise Mr. Jumah alleges he received from a
specific DEA agent on a specific day. In the context ofconfidential informant
claims, Mr. Sahagun-Pelayo's contract claim is not plausible under Twombly or
under lqbal.

The court notes, in particular, that plaintiffrelies on his alleged beliefthat
an unidentified govemment official (or officials) had the authority to make him
certain promises in retum for informant services. See Pl.'s Resp. at 2 ("[T]he
Plaintiff met with representatives of the I-JNITED STATES Govemment from
Washington, DC in El Paso, Texas, who he believed had the authority to make him
the offers and the security arrangements [which are the subject of the complaint in
this casel."); ld (stating that "Plaintiff was of the understanding that the
Govemment's representative in that El Paso meeting at the border had the
authority [to] offer and approve the contractual arrangements being disputed by
the Govemment in their Motion to Dismiss under Ruie 12(b)"). Defendant argues
that plaintiffs alleged subjective beliefin an official's authority to contract is
irrelevant, because actual authority to contract, not just apparent authority, is
required. Def.'s Reply at 3 n.1 (citing Winter v. Cath-dr/Balti Joint Venture,497
F.3d 1339, 1344 (Fed. Cir. 2007)). Defendant is correct; "[a]nyone entering into
an agreement with the Government takes the risk of accurately ascertaining the
authority of the agents who purport to act for the Government, and this risk
remains with the contractor even when the Government agents themselves may
have been unaware of the limitations on their authority." Trauma Serv. Grp. v.
United States,l04 F.3d 1321, 1325 (Fed. Cir. 1997) (citations omitted)'
Furthermore, even if the complaint or plaintiff s response brief could somehow be
read to include a statement asserting the actual authority ofany of the federal
employees who are alleged to have contracted with Mr. Sahagun-Pelayo, such a
bare statement would be a mere legal conclusion which would not be entitled to
the favorable inferences of a factual allegation. E.g., Twombly, 550 U.S. at 555
(citing P apas an v. All ain, 478 U. S. 265, 286 ( I 986).

Here, the court finds no plausible allegation in the complaint or in plaintiff s
response briefthat anyone who spoke with Mr. Sahagun-Pelayo had express or
implied actual authority to enter into a contract whereby plaintiff is now owed
$84,717,000. Compl. App. at 18. Thattype of authority is beyond the authority of
the specific individuals identified in the complaint. See Salles,156 F.3d at 1384;
Doe, ll0 F.3d at 1584-85; Jumah,90 Fed. Cl. at612-14; Tracy,55 Fed. Cl' at

l0
682-84. Furthermore, plaintiff s vague reference to an individual or individuals
from Washington, DC is not specific enough to survive a challenge to the
sufficiency of the complaint. See, e.g., Doe v. United States, 95 Fed. CL.546,582-
85 (2010) (holding that a complaint's reference to vaguely identified officials of
unknown authority was insufficient for an implied-in-fact contract claim to survive
a motion brought under RCFC 12(bX6).

According all favorable inferences to the factual allegations of plaintiffs
complaint, even as clarified by his response brief, there is no plausible inference
that an implied-in-fact contract supports the claims presented in this suit. In other
words, it is not plausible that any offer ofpayment or protection described by
plaintiff created an implied-in-fact contract which now binds the United States to
pay Mr. Sahagun-Pelayo the money he seeks in this suit. See, e.g., Jumah,9O Fed'
Cl. at 612-14 (describing limits on contracting with confidential informants)' For
this reason, the court must grant defendant's RCFC 12(bX6) motion to dismiss
plaintiff s contract claim. Because both of plaintiff s claims are dismissed, this
case must be closed.

CONCLUSION

Accordingly, it is hereby ORDERED that:

(1) Defendant's Motion to Dismiss, filed January 28,2014,is
GRANTED;

(2) The Clerk's Office is directed to ENTER final judgment in favor of
defendant DISMISSING plaintiff s tort claim for lack of subject
matter jurisdiction, without prejudice, and plaintiff s breach of
contract claim for failure to state a claim upon which relief may be
granted, with prejudice; and,

(3) Each party shall bear its own costs.

L . BUSH

11