United States Court of Appeals for the Federal Circuit
2006-1528
GONZALES & GONZALES BONDS AND INSURANCE AGENCY, INC.,
Plaintiff/Counterclaim Defendant-
Appellant,
and
AMERICAN SURETY COMPANY,
Counterclaim Defendant-
Appellant,
v.
DEPARTMENT OF HOMELAND SECURITY
and Alberto R. Gonzales, ATTORNEY GENERAL, DEPARTMENT OF JUSTICE,
Defendants/Counterclaimants-
Appellees.
Gary A. Nye, Roxborough, Pomerance & Nye LLP, of Woodland Hills, California,
argued for plaintiff/counterclaim defendant-appellant and counterclaim defendant-
appellant. With him on the brief was David R. Ginsburg.
Catherine Y. Hancock, Attorney, Appellate Staff, Civil Division, United States
Department of Justice, of Washington, DC, argued for defendants/counterclaimants-
appellees. With her on the brief were Peter D. Keisler, Assistant Attorney General,
Jeffrey A. Taylor, and Barbara C. Biddle, Attorneys.
Appealed from: United States District Court for the Central District of California
Judge Florence-Marie Cooper
United States Court of Appeals for the Federal Circuit
2006-1528
GONZALES & GONZALES BONDS AND INSURANCE AGENCY, INC.,
Plaintiff/Counterclaim Defendant-
Appellant,
and
AMERICAN SURETY COMPANY,
Counterclaim Defendant-
Appellant,
v.
DEPARTMENT OF HOMELAND SECURITY
and Alberto R. Gonzales, ATTORNEY GENERAL, DEPARTMENT OF JUSTICE,
Defendants/Counterclaimants-
Appellees.
_______________________
DECIDED: June 15, 2007
_______________________
Before SCHALL, Circuit Judge, ARCHER, Senior Circuit Judge, and GAJARSA, Circuit
Judge.
ARCHER, Senior Circuit Judge.
Gonzales & Gonzales Bonds and Insurance Agency, Inc. (“Gonzales”) appeals
the order of the United States District Court transferring its claims against the
government to the United States Court of Federal Claims. 1 Gonzales & Gonzales
1
American Surety Company (“ASC”) also appeals the transfer, asserting
that the Court of Federal Claims lacks jurisdiction over the government’s counterclaim
against it. Because we vacate the transfer order on other grounds, we need not decide
ASC’s appeal.
Bonds & Ins. Agency, Inc. v. United States, No. CV 03-7093 (C.D. Cal. May 3, 2006).
Gonzales’s claims are not Tucker Act claims for monetary relief, and thus, the Court of
Federal Claims lacks jurisdiction. 28 U.S.C. § 1491(a)(1) (2000). Accordingly, we
vacate the transfer order and instruct the district court to dismiss the Fourth Amended
Complaint in its entirety.
I
When an alien is detained by the Department of Homeland Security (“DHS”), an
immigration bond is posted for the purpose of either securing the temporary release of
the alien pending an immigration hearing or ensuring that the alien voluntarily departs
the United States on or before a date specified. In posting an immigration delivery bond
or voluntary departure bond with DHS, the bonding agent and surety, as co-obligors,
guarantee the alien’s appearance for an immigration hearing or his voluntary departure.
If there is “[s]ubstantial performance of all conditions imposed by the terms of a
bond,” DHS will cancel the surety bond, “releas[ing] the obligor from liability.”
8 C.F.R. § 103.6(c)(3). Alternatively, if certain conditions occur that obviate the need for
the bond, the bond will also be cancelled. 8 C.F.R. § 103.6(c)(2). On the other hand,
“when there has been a substantial violation of the stipulated conditions,” DHS will
declare a bond breached. 8 C.F.R. § 103.6(e). Under the terms of the bond, the
amount of the bond is forfeited and payable to the government.
Gonzales is an immigration bond agency with ASC as its surety. DHS
determined that Gonzales, as the primary agent for ASC, had breached almost 200
immigration bonds. Gonzales, however, maintains that it did not breach the bonds and
2006-1528 2
alleges that DHS breached its contractual obligations by refusing to cancel those same
bonds.
This case comes before us based on appellant Gonzales’s Fourth Amended
Complaint. Gonzales allegedly seeks “monetary damages, in the form of cancellation of
debt, against DHS who has breached a substantial number of immigration bond
contracts with [Gonzales] by failing to comply with its contractual, legal and/or
procedural obligations/requirements for the reasons set forth in this Fourth Amended
Complaint.” Fourth Am. Compl. at 2 (emphasis added). Jurisdiction is asserted
“pursuant to the [Little Tucker Act], as this action arises from a number of immigration
bond contracts between [Gonzales] and DHS whereby [Gonzales] seeks monetary
damages, in the form of cancellation of debt, which debt arises out of DHS’ claim that
[Gonzales] is indebted to DHS as a result of [Gonzales’s] breach of various immigration
bonds, each having a value of $10,000 or less.” Id. 2
The government filed a motion to dismiss, arguing that the district court lacked
subject matter jurisdiction. In the alternative, the government moved to transfer the
case to the Court of Federal Claims. The district court concluded that “the [g]overnment
has demonstrated that many . . . of the individual immigration bonds the [g]overnment
presently considers breached by [Gonzales] render [Gonzales] indebted to the
[g]overnment in excess of $10,000.” Gonzales & Gonzales, slip op. at 10. In view of
this, the district court determined that it lacked jurisdiction over those claims that
2
In a prior version of the complaint, Gonzales sought equitable relief
requesting the district court determine the rights and duties of the parties with respect to
the bond agreements. One of the jurisdictional bases asserted by Gonzales was the
Administrative Procedure Act (“APA”), which waives the government’s sovereign
immunity and provides for judicial review of federal agency decisions in actions seeking
relief other than monetary relief. This complaint was dismissed by the district court.
2006-1528 3
exceeded the Little Tucker Act’s $10,000 jurisdictional maximum. See
28 U.S.C. § 1346(a)(2). The court thus ordered that all of Gonzales’s claims should be
transferred to the Court of Federal Claims, because “underlying factual and legal issues
are common to bonds where the debt to be cancelled exceeds $10,000 and those
where it does not.” Id. at 12.
Gonzales appeals the district court’s transfer of its claims to the Court of Federal
Claims. We have jurisdiction pursuant to 28 U.S.C. § 1292(d)(4)(A).
II
“We review a district court’s decision to transfer a case to the Court of Federal
Claims de novo because it is jurisdictional.” James v. Caldera, 159 F.3d 573, 578 (Fed.
Cir. 1998) (citing Benderson Dev. Co. v. U.S. Postal Serv., 998 F.2d 959, 962 (Fed. Cir.
1993)).
In relevant part, 28 U.S.C. § 1346(a)(2) (the “Little Tucker Act”) waives sovereign
immunity and grants the district courts original jurisdiction, concurrent with the Court of
Federal Claims, over contract claims against the government not exceeding $10,000 in
amount. A district court’s jurisdiction does not extend to claims seeking damages
greater than $10,000. Such claims must be brought in the Court of Federal Claims
under 28 U.S.C. § 1491(a)(1) (the “Tucker Act”). In order for a claim to be brought
under either the Tucker Act or the Little Tucker Act, the claim must be for monetary
relief; it cannot be for equitable relief, except in very limited circumstances not at issue
2006-1528 4
here. See Doe v. United States, 372 F.3d 1308, 1312 (Fed. Cir. 2004) (citing Lee v.
Thornton, 420 U.S. 139, 140 (1975) (“The Tucker Act empowers district courts to award
damages but not to grant injunctive or declaratory relief.”)). 3
In this appeal, the government argues that the district court erred in transferring
the present case to the Court of Federal Claims because Gonzales’s claim is not one for
monetary relief. Thus, the Court of Federal Claims lacks jurisdiction under either the
Tucker Act or the Little Tucker Act to hear the case. The government asserts that
instead of transferring the case the district court should have dismissed the entire case
because the allegations of the Fourth Amended Complaint failed to state a claim for
monetary relief under either the Tucker Act or the Little Tucker Act.
Gonzales responds by asserting that the government’s argument is not properly
before us because the district court previously rejected the contention that Gonzales
was seeking declaratory relief or specific performance, rather than monetary relief, and
these rulings have not been appealed. 4 At oral argument, counsel for Gonzales again
argued that we could not reach the issue of whether Gonzales’s claim was one for
monetary relief. This is not correct.
“An appellate federal court must satisfy itself not only of its own jurisdiction, but
also of that of the lower courts [sic] in a cause under review.” Mitchell v. Maurer, 293
U.S. 237, 244 (1934). Thus, “even if the issue is not properly raised, this court sua
sponte may consider all bases for the trial court’s jurisdiction,” Consolidation Coal Co. v.
3
“While limited equitable relief is sometimes available in Tucker Act suits,
the equitable relief must be incidental and collateral to a claim for money damages.”
Bobula v. U.S. Dep’t of Justice, 902 F.2d 854, 858-59 (Fed. Cir. 1992) (citing
28 U.S.C. § 1491(a)(2) (1988)).
4
See supra note 2.
2006-1528 5
United States, 351 F.3d 1374, 1378 (Fed. Cir. 2003), or lack thereof. See Bender v.
Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986). Similarly, we must be satisfied
that the transferee court has jurisdiction to hear the case. The district court could
properly transfer this case only if the Court of Federal Claims possesses jurisdiction.
See 28 U.S.C. § 1631. As stated above, in order for the Court of Federal Claims to
have jurisdiction over a breach of contract claim against the government, the claim must
be one for monetary relief. In determining whether a claim is for monetary relief, a court
must look beyond the form of the pleadings to the substance of the claim. See Brazos
Elec. Power Coop. v. United States, 144 F.3d 784, 787 (Fed. Cir. 1998) (“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.”). Accordingly, whether Gonzales’s claims are for monetary relief and within the
jurisdiction afforded by the Tucker Act is properly before us.
The district court addressed the nature of Gonzales’s claim in response to a
motion to dismiss filed by the government. The court described Gonzales’s claims as
for debt cancellation and concluded that “a claim for cancellation of debt is the
functional equivalent of damages.” The court further opined that “[i]f the remedy is
granted, [Gonzales] will be better off financially, and the Government will be worse off.
There is no substantive difference between a plaintiff paying money and the
government returning it, and the plaintiff never having to pay it in the first place.” As
2006-1528 6
support for this holding, the district court cited our decision in Brazos v. Electric Power
Cooperative v. United States. 5
In Brazos, the plaintiff sought recovery of certain funds the government applied to
a prepayment penalty arising from an agreement between Brazos and the government.
144 F.3d at 786. Brazos alleged that the prepayment penalty assessed against it was
improper.
Brazos characterized its claim as one for the equitable relief of a declaration of
rights and an injunction against a federal agency and not for monetary relief. Id. We
disagreed, explaining:
The net result of the [agency] being ordered not to classify as a
Prepayment Penalty any of the money it received from Texas Utilities
would be either the refunding of the Prepayment Penalty to Brazos or the
crediting of this money towards Brazos’s other debt. 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. . . . The substance of Brazos’s complaint is money damages
from the federal government. In essence, Brazos is seeking a refund of
money that it claims was wrongfully paid to the federal government.
Whether this money is paid directly to Brazos or whether it is credited
towards other money Brazos owes to the federal government is irrelevant
to our analysis. Either way, Brazos would be receiving monetary
damages from the public fisc of the United States which is the touchstone
of Tucker Act jurisdiction.
Id. at 787 (citations omitted) (emphasis added). Even though Brazos might not have
received any money if it prevailed, because any wrongfully paid funds would simply be
5
The district court also cited Oakbrook Village Associates v. Cisneros, 25
F. Supp. 2d 730, 733 (E.D. La. 1998), in support of its conclusion. This case, of course,
is not binding on us. Regardless, it is distinguishable, because Oakbrook sought
monetary relief--requesting the Department of Housing and Urban Development to use
money it allegedly improperly retained to pay the entirety of Oakbrook’s second
mortgage. As the district court there noted, “monetary relief [was] clearly the primary
objective of [the] suit and the direct consequence if Oakbrook’s claims [were]
successful.” Id. at 733.
2006-1528 7
used by the government to offset Brazos’s other debts to the government, we concluded
its claim was one for monetary relief. Thus, the term “debt cancellation” did not refer to
the cancellation of any funds purportedly owed and not paid to the government but
rather to the offsetting of other debts which Brazos owed the government. An award in
the form of an offset of other debt is a form of monetary relief. See Dalton v. Sherwood
Van Lines, Inc., 50 F.3d 1014, 1017 (Fed. Cir. 1995) (noting that a contractor may file
suit under the Tucker Act to obtain judicial review of a setoff decision). Because Brazos
was a case involving either the offsetting of funds or the direct payment of money to
Brazos, it fell within the Court of Federal Claims’s Tucker Act jurisdiction.
The present case is markedly different. Gonzales’s complaint seeks either
specific performance of DHS’s contractual obligations, pursuant to which the
government allegedly would be obligated to cancel the bonds, or declaratory and
injunctive relief determining that DHS breached the bonds and precluding the
government from collecting the debts owed thereunder. Gonzales is seeking debt
cancellation in the true sense of the phrase. If Gonzales prevails on the merits, any
purported bond obligations would be cancelled. No monies would be due Gonzales
either in the form of cash or credit (such as an offset of other debt). Rather, Gonzales
would simply be relieved of any obligation to pay the government under the terms of the
immigration bonds.
Contrary to the district court’s analysis, there is a substantive difference between
a plaintiff seeking the return of money it already paid the government and a plaintiff
never having to pay the government in the first place. Simply stated, if the plaintiff in the
second scenario prevails, he would not “be receiving monetary damages from the public
2006-1528 8
fisc of the United States.” Brazos, 144 F.3d at 787. Accordingly, Gonzales’s debt
cancellation claim is not one for monetary relief. Therefore, jurisdiction does not lie in
the Court of Federal Claims. 6
Because the district court improperly transferred this case to the Court of Federal
Claims, we vacate the transfer order.
The district court concluded that it “lack[ed] jurisdiction under the [Little Tucker
Act] because many of the debts [Gonzales] seeks to have cancelled exceed the
$10,000 jurisdictional maximum on recovery.” Gonzales, slip op. at 7. In view of the
above analysis, however, this rationale for a lack of jurisdiction is incorrect. Rather, the
district court lacked jurisdiction under the Little Tucker Act because Gonzales’s contract-
based claims were not claims for monetary relief.
Accordingly, the district court’s transfer order is vacated, and the case is
remanded with instructions to the court to dismiss the Fourth Amended Complaint in its
entirety.
VACATED and REMANDED
6
In view of our jurisdictional determination, we need not decide the other
issues raised by Gonzales.
2006-1528 9