Mendez v. United States

In the United States Court of Federal Claims

No. 14-497C

(E-Filed: May 29, 2015)

)

JOSE MENDEZ, ) Confidential Informant;

) Compensation, Restitution, or Reward;

Plaintiff, ) Judicial Forfeitures; Breach of Express

) or Implied-In-Fact Contract; Express

v. ) or Implied Actual Authority; Subject-

) Matter Jurisdiction; Statute of

THE UNITED STATES, ) Limitations; RCFC 12(b)(1); RCFC

) 12(d) Conversion of RCFC 12(b)(6)

Defendant. ) Motion to RCFC 56 Motion

)

Kenneth Foard McCallion, New York, N.Y., for plaintiff.

Alexander Orlando Canizares, Trial Attorney, with whom were Joyce R. Branda, Acting

Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Bryant G. Snee,

Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of

Justice, Washington, D.C., for defendant.

OPINION AND ORDER

CAMPBELL-SMITH, Chief Judge

Plaintiff Jose Mendez (Mendez) was a confidential informant whose assistance

and cooperation, over roughly nine years, contributed to the government’s successful

criminal prosecution of numerous mafia principals and subsequent forfeiture of their

significant assets. See generally Compl., Jun. 10, 2014, ECF No. 1. Mendez alleges that,

despite his contributions, the government later reneged on its promises to pay Mendez for

his services as an informant, which was in breach of their alleged agreement and of the

implied duty of good faith and fair dealing. Id. ¶¶ 29–37 (Counts II and III).

Before the court is defendant’s motion to dismiss plaintiff’s breach claims for lack

of jurisdiction or alternatively, for failure to state a claim under Rules 12(b)(1) and

12(b)(6) of the Rules of the Court of Federal Claims (RCFC or Rule), respectively.

Def.’s Mot. Dismiss (Def.’s Mot.), ECF No. 12. Defendant argues there were never any

promises or agreements to pay Mendez for his confidential informant services and the

evidence on which Mendez relies to substantiate his claims actually refutes them. Id. at

3. Alternatively, even if government officials made promises or purported to enter

agreements with Mendez, defendant contends that the government cannot be liable

because the officials either lacked actual authority to bind the government or were

divested of such authority by intervening statutes. Id. at 3, 22–23. Furthermore,

plaintiff’s claims allegedly accrued, if at all, beyond the statute of limitations. Id. at 3.

The court held oral argument on defendant’s motion on April 8, 2015. See Tr., Apr. 8,

2015, ECF No. 24.

I. Background1

From December 1995 through April 1997, plaintiff Jose Mendez managed a

casino in Peru pursuant to a professional services contract with casino principals Jose

Miguel Battle Sr. (Battle) and others. See Compl. ¶ 4; id. at Ex. B (Mendez Aff., Mar.

28, 2007, ¶ 1). In May 1997, Mendez sued his employers in Florida Circuit Court for

nonpayment of back wages, expenses, and commissions ($794,712), but the case was

dismissed for improper venue owing to a contract clause requiring suit in Peru. See

Compl. ¶¶ 4, 6; Mendez Aff. ¶ 7.

In preparing Mendez’s employment case, his attorney John Spittler (Attorney

Spittler) concluded, “Battle and his associates were using the Casino to facilitate a huge

racketeering and money laundering operation, which involved the ‘laundering’ of

illegally obtained funds originating in the United States.” Compl. ¶ 5; see also Mendez

Aff. ¶ 3 (detailing Mendez’s own misgivings about the casino’s principals, their illegal

activities, and consequences). Attorney Spittler then communicated with representatives

of the United States government who expressed interest in seeing “all of the original

accounting, financial and international banking records of the Casino and its owners that

were in the possession of Mendez.” Compl. ¶ 7; Mendez Aff. ¶ 13. Apparently the

government was already investigating Battle as the “undisputed leader of La

Corporacion, the largest Cuban organized crime syndicate in the United States [that for

decades] had profited from illegal gambling, narcotics distribution[,] and extortion,

enforcing its objectives through contract murder.” See Compl. at Ex. J (O’Bannon Mem.,

Apr. 6, 2005, at 1); see also id. ¶ 25 (identifying Exhibit J as a report authored by

Supervisory Special Agent (SSA) O’Bannon); Tr. 12:8–16 (similar).

By “late April of 1998,” Mendez began acting as an “agent/informant in the

investigation and prosecution of members of the . . . cartel headed by Battle.” Compl.

¶ 8. Mendez contends that he provided the government with significantly helpful

information: (i) “original books and records of the Casino, all original bank financial

documents, and other relevant files;” (ii) “the names, addresses, and telephone numbers

1

The facts recited in this section do not constitute findings by the court; rather,

unless otherwise noted, all of the stated facts are either undisputed or alleged and

assumed to be true for purpose of the pending motions.

2

of the individuals working with Battle in his racketeering enterprise . . ., e.g., attorneys,

accountants, bankers, businessmen, couriers, etc., many of whom were later named in the

indictment;” (iii) “evidence relating to the participation of Battle and his ‘partners’ in the

racketeering enterprise;” (iv) “detailed information concerning the properties and bank

accounts of these individuals;” and (v) “the identification of corroborating witnesses.”

Id. ¶¶ 14–15; see generally id. at Ex. D (Spittler Narrative, Jun. 8, 2005, at 3); O’Bannon

Mem. 2; Mendez Aff. ¶ 9; Tr. 28:8–16. Mendez avers that, at the government’s request,

he worked with government accountants to unpack the illegal financial activities of Battle

and his associates. Mendez Aff. ¶ 20. Mendez also purports to have “provided all, or

virtually all, of the information” used by the government to identify and tally an

estimated $1.57 billion in assets held by Battle and his associates that were later subject

to criminal forfeiture by the government. Compl. ¶ 17; Spittler Narrative 3; see infra Part

I.D (discussing United States v. Battle, No. 04-20159 (S.D. Fla.)).

In order to provide this wealth of information and services, Mendez and Attorney

Spittler allegedly met with various government officials on numerous occasions over the

course of approximately nine years, from 1998 to 2007. See Mendez Aff. ¶¶ 10–11; Tr.

28:21–24. Mendez’s primary point-of-contact appears to have been Agent Dave Shanks.

See Compl. ¶ 15; Mendez Aff. ¶ 10. Among others in contact with Mendez and Attorney

Spittler were Supervisory Special Agent (SSA) Robert O’Bannon of the Diplomatic

Security Service (DSS) at the State Department who led the Battle investigative team,

and who was succeeded later by Special Agent in Charge (SAC) Mike Foster. Id. ¶¶ 18–

19. Assistant U.S. Attorney (AUSA) Robert Lehner was the initial lead prosecutor in

Battle, and was succeeded later by AUSA Tony Gonzalez. Compl. ¶ 19. AUSA Alison

Lehr of the Miami Civil Forfeiture Division also became involved in Battle as the

criminal forfeitures took center stage later in proceedings. Id. ¶ 21.

Mendez testified in June 2002 before a grand jury in Miami regarding Battle, his

associates, and their activities. Mendez Aff. ¶ 12. Mendez further contends that,

throughout these nine years, his life and the lives of his family members remained under

physical threat from Battle and his associates. See Tr. 28:21–24.

A. Disputed 1998 “Restitution/Compensation Agreement”

In dispute is whether Mendez and government officials ever entered an agreement

to compensate Mendez for his assistance as a confidential informant (CI). Mendez avers

that, on his behalf, Attorney Spittler met with AUSA Lehner in early 1998 at the Miami

office of the United States Attorney. Compl. ¶ 9. Also in attendance were

representatives of “other relevant agencies.” Tr. 32:6; O’Bannon Mem. 1. At the

meeting, Mendez alleges that the parties verbally agreed that “[i]n consideration for

Mendez’s cooperation, services and assistance, . . . Mendez would be paid, as

compensation and/or restitution, the outstanding salary and commissions owed him as

general manager of the Casino, namely $791,712, plus accrued interest, reasonable fees

and costs.” Compl. ¶¶ 8–9; cf. O’Bannon Mem. 1 (“Government representatives

3

unanimously agreed to fully assist the CI in his efforts to recoup the referenced financial

losses . . . .”). Ostensibly, Mendez would be paid out of assets seized by the government

in the course of its criminal prosecution of Battle and his associates for racketeering and

money laundering. See Compl. ¶ 19; see O’Bannon Mem. 1.

The terms of this verbal agreement allegedly were “memorializ[ed]” in a letter

from Attorney Spittler to AUSA Lehner dated March 18, 1998. Compl. ¶ 9. Attorney

Spittler wrote, in relevant part:

Regarding our discussion in your office it will be necessary to have an

agreement(s) entered into between Mr. Mendez and the appropriate United

States government official(s) with the authority to bind the government (e.g.

yourself, the AUSA handling the forfeiture case, an assistant at the Attorney

General’s office regarding rewards pursuant to 18 USC 3059, etc.).

The agreement(s) should include that Mr. Mendez will be entitled to

restitution prior to the government receiving any fine, penalty, or other

monies and same stipulation will be included in all court documents . . . .

It is anticipated that restitution/reward to [Mendez] will come from

[the criminal forfeiture of Battle’s] ranch and its contents . . . in Homestead,

Florida[]. The amount of restitution will be the damages requested in

[Mendez’s employment lawsuit] which [was] approximately $791,712.00 +

legal interests from January 1, 1996 + reasonable attorneys[’] fees + punitive

damages.

Id. at Ex. A (Spittler Letter, Mar. 18, 1998). The letter further provided, “in

consideration for the above,” Mendez would provide documentation, testify before a

grand jury, and comply with other requests. Id. Attorney Spittler asked AUSA Lehner to

call him “regarding drafting of the appropriate agreement(s) and scheduling Mr. Mendez

for debriefing.” Id. at 2.

According to Mendez, the government refused this invitation to reduce the verbal

agreement to a formal writing signed by the parties. See Compl. ¶ 11. Mendez avers,

“[a]fter receiving the March 18th letter, AUSA Lehner advised [Attorney] Spittler that the

verbal agreement with Mendez could not be reduced to writing” for “Mendez’s own

protection.” Id. In “the absence of any formal written agreement[,]” Mendez contends

he was told, “there would be no written document that would have to be divulged to any

of the defendants’ attorneys, who would ‘blow his cover.’” Id. In addition, because

“there was ample evidence that Battle [allegedly] had murdered numerous persons, both

within his own drug trafficking network as well as some individuals outside of it[,] . . .

Mendez and his family would be in mortal danger” if Battle became aware that Mendez

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was cooperating with the government. Id. ¶ 12; see also Tr. 32:11–25.2 Nevertheless,

AUSA Lehner purportedly “gave repeated assurances that the verbal agreement with

Mendez was ‘as good as gold’ and would be honored by the government.” Compl. ¶ 13.

B. Disputed 2002 Amendment

Mendez further avers that by “May of 2002, Attorney Spittler was advised by

Agent Shanks that AUSA Gonzalez wanted to modify the original

restitution/compensation agreement between Mendez and the government.” Id. ¶ 20. In

turn, Mendez contends that Attorney Spittler and SSA O’Bannon reached a verbal

agreement on modification. Id. Attorney Spittler then purportedly memorialized the

modification in a facsimile transmitted to SSA O’Bannon, dated June 3, 2002. Id. That

communication refers to an “original agreement between Joe Mendez, agent Shanks,

AUSA Bob Lehner, [SSA O’Bannon] and [Attorney Spittler].” Id. at Ex. E (Spittler

Facsimile, June 3, 2002). The two “[a]dditions” to the 1998 “[a]greement” allegedly

“agreed to” by the parties were: (1) “the moneys owed to Mr. Mendez for restitution

from the forfeited properties [would] be paid directly to [an escrow account set up by

Attorney Spittler];” and (2) “in lieu of direct payment to [the escrow account] from the

first moneys/assets forfeited, . . . Mendez [agreed to forego filing any] liens on Battle [or

his co-defendants’] properties/assets prior to government seizure in the criminal case.”

Id.

On September 25, 2002, Attorney Spittler asked AUSA Lehr, of the Civil

Forfeiture Division-Miami, when the government would pay Mendez from the forfeitures

of Battle’s assets. Compl. ¶ 21. “In response, AUSA Lehr requested that Attorney

Spittler send her evidence of the Agreement, which Attorney Spittler did the next day,

and again the following month.” Id.; see also id. at Ex. F (Spittler Facsimiles, Sept. 26,

2002 & Oct. 1, 2002) & Ex. G (Spittler Facsimile, Sept. 27, 2002). Neither AUSA Lehr

nor anyone else from the government appears to have responded to any of the facsimiles.

See Compl. ¶¶ 21–22.

In March 2004, Attorney Spittler’s co-counsel, Karen Read (Attorney Read),

spoke with AUSA Lehr regarding Mendez and another of Attorney Read’s clients named

Harold Marchena (who it appears was also a witness or informant in Battle). See id. ¶ 23.

In a subsequent facsimile, Attorney Read followed up, referring to the “restitution

agreements between the United States government” and Mendez and Marchena, and

notifying AUSA Lehr that her office was “prepared to file an equitable lien for both Mr.

Mendez and Mr. Marchena on various properties over which [AUSA Lehr and the

2

“Indeed, when Battle eventually became aware that Mendez was cooperating with

the government,” Mendez avers that “[he] and the other members of his family were

forced into hiding, and they presently remain in seclusion.” Compl., Jun. 10, 2014, ECF

No. 1, ¶ 12.

5

government generally] . . . have [current] responsibility.” Id. at Ex. H (Read Facsimile,

Mar. 29, 2004, at 1).

C. Disputed Other Promises/Agreements

Sometime in 1998 or thereafter, Mendez alleges that he also “became an official

confidential informant (‘CI’) with the U.S. Department of State, DSS.” Compl. ¶ 18.

Mendez further avers that “SAC Foster [of DSS] had a verbal agreement with the

Department of State senior staff recommending that Mendez, as its CI, be paid $2 million

or 20% of all amounts recovered, whichever was greater [(the DSS Compensation

Promise)].” Id. ¶ 19. “SAC Foster also [allegedly] told Spittler that DSS would make a

recommendation to the [Department of Justice (DOJ)] and the IRS that they also pay

Mendez in a similar manner, i.e., 20% of all amounts recovered.” Id. It is unclear from

Mendez’s complaint whether Mendez relies upon these DSS, DOJ, and IRS-related

promises as separate and distinct agreements on which he sues for breach, or whether

these alleged promises were the means for carrying out the 1998 agreement.

D. The Battle Case—Criminals Prosecutions & Asset Forfeiture

By early 2004, the government indicted Battle and approximately twenty-four

associates for illegal gambling in violation of 18 U.S.C. § 1955 and racketeering

conspiracy in violation of 18 U.S.C. § 1962(d). See Def.’s Mot. 7 & Ex. 1 (Indictment

11–12, 16–17, Battle (Mar. 16, 2004)); see also Compl. ¶ 8 (citing Battle). The

indictment also provided for forfeiture of all property constituting or derived from a

violation of 18 U.S.C. § 1955, which was estimated to be worth at least $1.57 billion.

Indictment at 17–32; see also Def.’s Mot. 7; Compl. ¶ 16.

Thereafter, the Battle court entered a series of orders of criminal forfeiture in

March 2006, December 2006, January 2007, and January 2010, against Battle and his co-

defendants, directing the forfeiture to the United States of property connected to the

criminal violations. Def.’s Mot. 7 & Ex. 2 (Forfeiture Orders, Battle). In turn, on July 5,

2006, Battle and his co-defendants were found guilty by a jury of the RICO conspiracy

charged in the indictment. Def.’s Mot. 7 & Ex. 3 (Special Verdict Form, Battle (Jul. 25,

2006)) (detailing the jury’s finding that the property listed therein was subject to

forfeiture because it was “obtained directly or indirectly [from Battle and his co-

defendants’] racketeering activity”).

E. Mendez’s Efforts to Collect

Following the criminal convictions, on February 27, 2007, Mendez filed in the

Battle case for an equitable lien against the assets to be forfeited, seeking to recover the

funds allegedly promised Mendez pursuant to the alleged 1998 verbal

Restitution/Compensation Agreement. See Compl. at Ex. C (Notice of Lien & Mem. of

Law (Notice of Lien), Battle (Apr. 4, 2007)); see also Compl. ¶ 14; Def.’s Mot. 7–8

6

(discussing same). On April 5, 2007, the government responded to the Notice of Lien

with a motion to strike, arguing that Mendez failed to meet the prerequisites for

lienholder status under the RICO statute, 18 U.S.C. § 1963. Def.’s Mot. 8 & Ex. 4 (Mot.

Strike Claims of Harold Marchena & Jose Mendez, Battle (Apr. 5, 2007)). On March 3,

2008, a United States Magistrate Judge granted the government’s motion, finding in

relevant part that Mendez failed to establish the requisite legal right, title, or interest in

any specific property subject to forfeiture under 18 U.S.C. § 1963(l)(6). Id. at Ex. 5

(Magistrate Order, Battle (Mar. 3, 2008)) & Ex. 6 (Order, Battle (Nov. 21, 2008)

(substantially affirming Magistrate)).

Mendez also separately tried to obtain money judgments in Florida Circuit Court

against two of Battle’s associates and fellow principals in the casino. See Compl. ¶ 24.

Mendez was successful obtaining those judgments, dated July 1, 2008 and August 8,

2008, in the amounts of $791,712.00, plus prejudgment interest, id. at Ex. I (Final

Judgments, Mendez v. Marquez, No. 08-21101-CA-10 (Fla. Cir. Ct.)); however, there is

no evidence Mendez has ever been able to collect.

Lastly, in June 2012, Mendez sought unsuccessfully to obtain Department of

Justice approval to receive compensation for his informant services. Def.’s Mot. 8. In

Mendez’s petition for remission to the DOJ’s Asset Forfeiture and Money Laundering

Section (AFMLS), he argued that he qualified as a “victim” of offenses committed by

Battle and his co-defendants and was owed compensation. Def.’s Mot. 8–9; id. at Ex. 7

(Petition for Remission, undated, with exhibits). On May 8, 2013, the AFMLS denied

Mendez’s petition because he was neither a “victim” of the crime underlying the

forfeiture nor a valid lienholder entitled to remission. Def.’s Mot. at Ex. 8 (DOJ Letter

1). He was not a “victim” because there was an insufficient link “between the alleged

unpaid employment wages and the racketeering charges underlying the forfeiture.” Id. at

1 (citing 28 C.F.R. § 9.8(a) (2012), defining “victim”). Nor was he a valid lienholder

because he became a judgment creditor (based the 2008 Florida Circuit Court judgments)

only after the seizure of the property for forfeiture. Id. at 1–2 (citing 28 C.F.R. §

9.6(f)(1) (2012), stating that a judgment creditor will be recognized as a lienholder only if

the judgment was recorded before the seizure of the property for forfeiture).

According to Mendez, at some undefined date, AUSA Lehr also denied the

existence of any agreement obligating the government to pay Mendez for his services as

an informant. Compl. ¶ 26. To date, Mendez has not received any compensation or

restitution from the government. Id.

II. Procedural Posture

Mendez’s complaint seeks compensation or restitution for the information and

services he provided to the government in connection with the Battle case “in an amount

of not less than that promised under the Agreements, namely, a minimum of . . .

($791,712), plus interest, reasonable attorneys’ fees and costs, the exact amount to be

7

determined at a hearing on the matter, plus any statutory awards this Court deems fair and

just.” Id. at 11–12 (“wherefore” clause). His allegations originally took the form of

seven counts, id. ¶¶ 27–50, although Mendez has since agreed to dismiss, voluntarily and

without prejudice, Count I (declaratory judgment) and Counts IV through VII (unjust

enrichment, promissory estoppel, equitable lien, and fraud), Pl.’s Mem. in Opp’n (Pl.’s

Opp’n), ECF No. 18, at 2 n.1. This leaves for adjudication only Counts II and III,

alleging breach of express or implied-in-fact contract and breach of the implied duty of

good faith and fair dealing.

Defendant moves to dismiss these counts on Rule 12(b)(1) and 12(b)(6) grounds.

See generally Def.’s Mot. The government argues that subject-matter jurisdiction is

lacking over Mendez’s express and implied breach of contract claims, as well as his

implied covenant of good faith and fair dealing claim, because (i) the evidence relied

upon by Mendez belies the existence of any mutuality of intent to be bound or to

contract; (ii) the agents with whom Mendez dealt lacked authority to bind the

government; and (iii) Mendez’s claims accrued, if at all, more than six years ago and thus

are outside the statute of limitations. Id. at 2–3, 19. Alternatively, if jurisdiction exists,

then for these same reasons the alleged breaches fail to state a claim upon which this

court could grant relief. Id. at 11.

III. Subject-Matter Jurisdiction

A. Express or Implied-in-Fact Contract

The Tucker Act vests this court with jurisdiction to hear claims against the United

States founded on an “express or implied contract.” 28 U.S.C. § 1491(a)(1) (2012);

Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1324 (Fed. Cir. 1997). For purposes

of Tucker Act jurisdiction, alleged contracts enjoy a presumption that money damages

are available for breach. Holmes v. United States, 657 F.3d 1303, 1314 (Fed. Cir. 2011).

“[A]ny agreement can be a contract within the meaning of the Tucker Act, provided that

it meets the requirements for a contract with the government . . . .” Trauma Serv. Grp.,

104 F.3d at 1326. Thus, the alleged express or implied contract may be oral or written.

See Warr v. United States, 46 Fed. Cl. 343, 350 (2000) (exercising jurisdiction over

alleged oral agreement). If the alleged contract is implied, it must be implied-in-fact; the

court’s jurisdiction does not encompass contracts implied-in-law.3 Hercules, Inc. v.

3

“An implied-in-fact contract is one founded upon a meeting of minds and ‘is

inferred, as a fact, from the conduct of the parties showing, in the light of the surrounding

circumstances, their tacit understanding.’” Hanlin v. United States, 316 F.3d 1325, 1328

(Fed. Cir. 2003) (quoting Balt. & Ohio R.R. v. United States, 261 U.S. 592, 597, 43 S.

Ct. 425, 426–27 (1923)); Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1326 (Fed.

Cir. 1997) (quoting Hercules, Inc. v. United States, 516 U.S. 417, 423, 116 S. Ct. 981,

986 (1995)). In contrast, contracts based on implied-in-law theory (i.e., a quasi-contract

or unjust enrichment theory) do not arise from mutual assent between the parties and,

8

United States, 516 U.S. 417, 423–24, 116 S. Ct. 981, 986 (1996); see Hanlin v. United

States, 214 F.3d 1319, 1321 (Fed. Cir. 2000); City of El Centro v. United States, 922 F.2d

816, 820 (Fed. Cir. 1990); U.S. Home Corp. v. United States, 92 Fed. Cl. 401, 410-11

(2010).

To survive a Rule 12(b)(1) challenge to jurisdiction, the Federal Circuit has held

unambiguously that “jurisdiction . . . requires no more than a non-frivolous allegation of

a contract with the government.” Engage Learning, Inc. v. Salazar, 660 F.3d 1346, 1353

(Fed. Cir. 2011) (citing, e.g., Lewis v. United States, 70 F.3d 597, 602, 604 (Fed. Cir.

1995)); see also Hanlin, 214 F.3d at 1321 (explaining that a non-frivolous allegation of

the existence of an implied-in-fact contract is sufficient to confer jurisdiction unless

another statute divests the court of jurisdiction). Thus, a plaintiff merely “must show that

either an express or implied-in-fact contract underlies its claim.”4 Trauma Serv. Grp.,

104 F.3d at 1325 (Fed. Cir. 1997) (“A well-pleaded allegation [of express or implied-in-

fact contract] in the complaint is sufficient to overcome challenges to jurisdiction.”

(citing Spruill v. Merit Sys. Protection Bd., 978 F.2d 679, 686 (Fed. Cir. 1992))); see also

U.S. Home Corp., 92 Fed. Cl. at 411 (explaining that “[a] non-frivolous jurisdictional

allegation is one that asserts that the plaintiffs are ‘within the class of plaintiffs entitled to

recover under the money-mandating source’” (quoting Jan’s Helicopter Serv., Inc. v.

FAA, 525 F.3d 1299, 1309 (Fed. Cir. 2008))). Thus, “[w]hen this court hears such a

jurisdictional challenge, ‘its task is necessarily a limited one.’” Patton v. United States,

64 Fed. Cl. 768, 773 (2005) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct.

1683, 1686 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 104 S.

Ct. 3012 (1984)). The relevant issue in a motion to dismiss under Rule 12(b)(1) “‘is not

whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer

evidence to support the claims.’” Id. (quoting same).

therefore, are not actually contracts but rather legal fictions created by the courts to

impose legal duties on one or both parties to prevent injustice. Lumbermens Mut. Cas.

Co. v. United States, 654 F.3d 1305, 1316 (Fed. Cir. 2011); see also City of Cincinnati v.

United States, 153 F.3d 1375, 1377 (Fed. Cir. 1998) (citing Hercules, 516 U.S. at 423,

116 S. Ct. at 986); Merritt v. United States, 267 U.S. 338, 340–41, 45 S. Ct. 278, 279

(1925); Russell Corp. v. United States, 537 F.2d 474, 482 (Ct. Cl. 1976)).

4

“Non-frivolousness” for purposes of jurisdiction is not well-defined in case law.

By way of comparison, “frivolous claims” for which it is not “in the interest of justice” to

transfer to another forum under the transfer statute, 28 U.S.C. § 1631, are claims that

“include spurious and specious arguments and distortion and disregard of the record[,]

. . . involve legal [conclusions] not arguable on the merits, . . . or [are claims] whose

disposition is obvious.” Galloway Farms, Inc. v. United States, 834 F.2d 998, 1000 (Fed.

Cir. 1987) (internal quotation marks omitted).

9

For purposes of jurisdiction, there is no further inquiry into whether the allegations

of the complaint state a non-frivolous claim on the merits. Jan’s Helicopter Serv., 525

F.3d at 1309 (drawing distinction between jurisdiction and merits in the context of a

takings claim). Indeed, “[t]he [Supreme] Court [has] made clear that the merits of the

claim [are] not pertinent to the jurisdictional inquiry.” Jan’s Helicopter, 525 F.3d at 1307

(discussing United States v. White Mountain Apache Tribe, 537 U.S. 465, 123 S. Ct.

1126 (2003)). Thus, the actual existence of a contract is not a jurisdictional matter but

rather a decision on the merits of the case. See Engage Learning, 660 F.3d at 1355

(addressing jurisdiction over contract dispute under the Contract Disputes Act (CDA), 41

U.S.C. §§ 7101–7109); Gould, Inc. v. United States, 67 F.3d 925, 930 (Fed. Cir. 1995)

(explaining that the trial court must first take jurisdiction before it can determine whether

the elements of the alleged contract have been met); Total Med. Mgmt. v. United States,

104 F.3d 1314, 1319 (Fed. Cir. 1997) (“[T]he law is clear that, for the Court of Federal

Claims to have jurisdiction, a valid contract must only be pleaded, not ultimately

proven.” (citing Spruill, 978 F.2d at 686; Gould, 67 F.3d at 929))).

As noted by the Federal Circuit, “[c]ourts frequently confuse or conflate the

distinction between subject matter jurisdiction and the essential elements of a claim for

relief.” Engage Learning, 660 F.3d at 1353 (citing Arbaugh v. Y & H Corp., 546 U.S.

500, 503, 511, 126 S. Ct. 1235, 1238, 1242 (2006) (“On the subject-matter

jurisdiction/ingredient-of-claim-for-relief dichotomy, this Court and others have been less

than meticulous.”); Moden v. United States, 404 F.3d 1335, 1340 (Fed. Cir. 2005)).

“Jurisdiction in this context refers to the power of a court to hear and decide a case—

subject matter jurisdiction.” Gould, 67 F.3d at 929 (citing Spruill, 978 F.2d at 686). “A

dismissal for lack of jurisdiction means that the subject-matter of the dispute is one that

the court is not empowered to hear and decide.” Id. In contrast, “[a] dismissal for failure

to state a claim . . . is a decision on the merits which focuses on whether the complaint

contains allegations[] that, if proven, are sufficient to entitle a party to relief.” Id.

“Jurisdiction, therefore, is not defeated . . . by the possibility that the averments might fail

to state a cause of action on which petitioners could actually recover.” Do-Well Mach.

Shop, Inc. v. United States, 870 F.2d 637, 639 (Fed. Cir. 1989) (quoting Bell v. Hood,

327 U.S. 678, 682, 66 S. Ct. 773, 776 (1946)); accord Trauma Serv. Grp., 104 F.3d at

1325; Gould, 67 F.3d at 929.

The Federal Circuit has addressed a number of circumstances in which a merits

inquiry has bled inappropriately into a jurisdictional inquiry. See, e.g., Hanlin, 214 F.3d

1320 (reversing dismissal for lack of jurisdiction where plaintiff made non-frivolous

allegation of contract implied-in-fact and no other statute divested the Court of Federal

Claims of jurisdiction); Trauma Serv. Grp., 104 F.3d at 1324–28 (rejecting the trial

court’s dismissal for lack of jurisdiction but affirming its decision for failure to state a

claim where contract was alleged but could not be shown); Gould, 67 F.3d at 929–30

(finding error in the dismissal of a breach of contract claim for lack of jurisdiction

10

because the complaint’s allegation of the existence of an express contract was sufficient

to confer jurisdiction even where the contract was alleged to be a statutory violation).

In Brach v. United States, for example, the Court of Federal Claims dismissed a

taxpayer’s breach of contract action against the Internal Revenue Service (IRS) for lack

of jurisdiction on the ground that the taxpayer failed to establish the existence of a

contract, but the Federal Circuit held that the trial court possessed jurisdiction over the

case based on the plaintiff’s allegation of a contract. 98 Fed. Cl. 60, 65 & n.10, 69–70

(2011), aff’d on other grounds, 443 F. App’x 543, 546 (Fed. Cir. 2011). Jurisdiction

existed notwithstanding the Federal Circuit’s concurrence with the trial court that no

contract to pay out a tax refund actually existed because the improper government forms

were used and the IRS agents lacked the requisite authority to contract. 443 F. App’x at

547–48. Such facts did not divest the court of jurisdiction, but rather warranted dismissal

of the action for failure to state a claim. Id. at 549.

Similarly, in Engage Learning, the Federal Circuit found that the Civilian Board of

Contract Appeals erred in holding it lacked jurisdiction under the CDA because Engage

failed to establish it had a contract with the government for unpaid services. 660 F.3d at

1349, 1353. Engage was not required to prove it had either an express or an implied-in-

fact contract to establish jurisdiction. Id. at 1353 (applying Tucker Act, 28 U.S.C.

§ 1491(a), jurisprudence). Rather, it need only have asserted a “non-frivolous allegation

of a contract with the government.” Id. Thus, even though Engage failed to plead all of

the requisite conditions for the formation of a contract in that case, the Board should have

recognized it was not divested of jurisdiction over Engage’s claim. Id. at 1354–56.

Accordingly, the Board was directed on remand to accept jurisdiction and only thereafter

to review the merits (dismissing on the latter grounds, if appropriate). Id. at 1356.

Here, Mendez puts forth non-frivolous allegations of an express or implied-in-fact

contract with the government, see Compl. ¶¶ 2–26, 29–37, asserting with specificity

material terms of the alleged agreement and surrounding facts and circumstances. “[T]he

requirements for an implied-in-fact contract are the same as for an express contract; only

the nature of the evidence differs.” Hanlin, 316 F.3d at 1328; accord Russell Corp. v.

United States, 537 F.2d 474, 482 (Ct. Cl. 1976); Thermalon Indus. v. United States, 34

Fed. Cl. 411, 414 (1995). The party must show a mutual intent to contract including

offer, acceptance, and consideration. City of El Centro, 922 F.2d at 820; see also Trauma

Serv. Grp., 104 F.3d at 1325; Thermalon, 34 Fed. Cl. at 414; Fincke v. United States, 675

F.2d 289, 295 (Ct. Cl. 1982). A contract with the United States also requires that the

government representative who entered or ratified the agreement had actual authority to

bind the United States. Trauma Serv. Grp., 104 F.3d at 1325; City of El Centro, 922 F.2d

at 820; see also Harbert/Lummus Agrifuels Projects v. United States, 142 F.3d 1429,

1432 (Fed. Cir. 1998) (“It is well established that the government is not bound by the acts

of its agents beyond the scope of their actual authority.” (citing, e.g., Fed. Crop. Ins.

Corp. v. Merrill, 332 U.S. 380, 384, 68 S. Ct. 1, 3 (1947))).

11

Mendez avers each of the elements for the formation of contract. See discussion

supra Part I. In brief, his contract allegations center upon an alleged meeting of the

minds at a 1998 in-person meeting with government officials at the Miami U.S.

Attorney’s Office and through conduct thereafter over the course of nine years. See

Compl. ¶ 9; O’Bannon Mem. 1. Mendez allegedly agreed to serve as a confidential

informant (and grand jury witness, if necessary) against Battle and his associates. Compl.

¶¶ 8–9; cf. O’Bannon Mem. 1. In exchange, Mendez would recover from the

government an amount at least equivalent to the back pay, fees, expenses, and costs, he

unsuccessfully sought to recover in employment litigation against Battle. See Compl. ¶¶

4, 8. Mendez also presents a plausible explanation for why the alleged verbal agreement

or, alternatively, implied-in-fact agreement, was never reduced to a formal writing signed

by the parties. Id. ¶¶ 11–12; see also Tr. 32:11–25. In addition, even if the contract was

not express, it was implied-in-fact as allegedly manifested in the parties’ conduct over the

ensuing nine years. E.g., id. ¶¶ 11, 13, 19–23, 25; see generally O’Bannon Mem. He

further alleges that the individuals with whom he dealt had authority and/or that their

agreements were ratified by supervisory individuals with the requisite authority. See

Pl.’s Opp’n 2, 10, 20–23; Tr. 27:23–25, 31:19–32:25, 40:22–42:6; see also Compl. Ex. A

(Spittler Letter, Mar. 18, 1998).

In support of his allegations, Mendez also attaches to his complaint

contemporaneous communications from Attorney Spittler and Attorney Read to

government officials, which were sent periodically over the course of nine years

purporting to memorialize material terms (although they seemingly went unanswered by

the government). See Compl. at Exs. A, E–F, H. Mendez also attaches to his complaint

his own affidavit, a narrative from his attorney, and an internal DSS draft memorandum

authored by SSA O’Bannon, all of which generally corroborate his allegations. Id. at

Exs. B, D, J. Moreover, there can be no dispute that Mendez alleges money damages, id.

(“wherefore” clause), and that, if successful in his suit, money damages would be the

appropriate remedy, see Holmes, 657 F.3d at 1314 (explaining money damages are

presumed in breach of contract suits). Regardless of the ultimate veracity or sufficiency

of these allegations, a “non-frivolous” allegation of express or implied contract clearly

“underlies” Mendez’s claim, and that is all that is required to confer jurisdiction on this

court. See Engage Learning, 660 F.3d at 1353; Trauma Serv. Grp., 104 F.3d at 1325.

The government argues that Mendez’s allegations are insufficient, refuted by the

very evidence on which he relies, incorrect, and/or “implausible” and “unpersuasive.”

Def.’s Mot. 3, 18–20. But, these challenges go to whether Mendez has stated a claim and

the ultimate validity and enforceability of the contract. See Trauma Serv. Grp., 104 F.3d

at 1325–28 (affirming dismissal for failure to state a claim based on insufficient evidence

of breach); Henke, 43 Fed. Cl. at 25–26 (granting defendant summary judgment based,

inter alia, on plaintiff’s failure to adduce sufficient evidence that alleged discussions

amounted to a mutual intent to contract or assent to plaintiff’s understanding).

12

Likewise, although the government argues that AUSAs and field agents lack the

requisite authority to contract under the common law, Def.’s Mot. 20–24, such challenges

to authority weigh not against jurisdiction but against whether a plaintiff has stated a

claim upon which this court may grant relief. E.g., Jumah v. United States, No. 2010-

5076, 385 F. App’x 987, 988–90 (Fed. Cir. Jul. 9, 2010), aff’g, 90 Fed. Cl. 603, 608–14

(2009) (exercising jurisdiction over a breach of contract claim, but dismissing it under

Rule 12(b)(6) where plaintiff, a confidential informant, failed to allege facts

demonstrating the existence of an oral contract, including a plausible claim that the

government representative with whom he dealt had authority); Krupnick v. United States,

No. 07-367 CQ, 2008 WL 1709022, at *5, *8 (Fed. Cl. Apr. 9, 2008) (exercising

jurisdiction over plaintiff’s allegation of the government’s promise to pay plaintiff a

specific reward of fifteen percent, but then granting dismissal for failure to state a claim,

considered under summary judgment standards, based on the lack of an allegation and the

lack of evidence that the government representative had actual authority to bind the

United States to agreement); McAfee v. United States, 46 Fed. Cl. 428, 431–32, 434–38

(2000) (exercising jurisdiction over a breach of contract allegation but ultimately

dismissing it for failure to state a claim where plaintiff could not establish that the

government representative who allegedly entered the agreement was authorized to bind

the United States).

Alternatively, such challenges may be resolved on summary judgment. E.g., Doe

v. United States, 100 F.3d 1576, 1578–79, 1584–85 (Fed. Cir. 1996) (affirming, in

relevant part, the trial court’s grant of summary judgment to defendant on a breach of

contract claim where the informant failed to raise a material fact issue as to the

government representative’s lack of actual authority to promise reward); JEM Transp.,

Inc. v. United States, 120 Fed. Cl. 189, 191 (2015) (exercising jurisdiction over a breach

of contract claim arising from an alleged contract extension, but granting summary

judgment to defendant based on undisputed facts that the alleged extension was never

signed or approved by an individual with authority to bind the government); Cornejo-

Ortega v. United States, 61 Fed. Cl. 371, 374–76 (2004) (granting defendant summary

judgment where the informant failed to show that any of the parties with whom he dealt

had authority to enter into a reward contract of the sort he alleged); Warr, 46 Fed. Cl. at

350–52 (finding jurisdiction over an alleged breach of oral agreement but then converting

a motion for failure to state a claim to one for summary judgment and finding in

defendant’s favor that the alleged oral agreement did not exist because plaintiff could not

establish the government’s obligation to pay); Henke v. United States, 43 Fed. Cl. 15,

25–28 (1999) (granting summary judgment to defendant on plaintiff’s breach of oral

contract claim where evidence was insufficient to establish an express or implied contract

with the government agency and, even if the purported agreement existed, the

government agent did not have authority to approve the agreement and the plaintiff failed

to show ratification).

13

Such challenges to authority also have been resolved after trial. E.g., Leonardo v.

United States, 63 Fed. Cl. 552, 579 (2005) (entering judgment for defendant on plaintiff’s

breach of contract claim based on lack of evidence adduced at trial to establish a

“‘meeting of the minds’ between plaintiff and a person with authority to bind the

government on the terms of plaintiff’s alleged [] bailment contract”). In any event, based

on the foregoing, a government representative’s authority to bind the government plainly

bears—as a matter of common law—upon the validity of a purported agreement and is

not a basis for divesting this court of its jurisdiction over such an agreement.

Nor do the forfeiture statutes relied upon by the government, see Def.’s Mot. 23

(discussing the Department of the Treasury Forfeiture Fund, 31 U.S.C. § 9703, and the

Department of Justice Assets Forfeiture Fund, 28 U.S.C. § 524(c)), somehow displace or

preempt this court’s jurisdiction over an alleged contract with the government.

Section 9703, and authority interpreting it, confirms that the Treasury Forfeiture

Fund may be used for law enforcement purposes including, in relevant part,

compensation for informants; for information or assistance leading to forfeitures or

relating to a money laundering violation; or for reimbursing private persons for expenses

incurred assisting the government. See 31 U.S.C. § 9703(a)(2); United States v.

$133,735.30 Seized from U.S. Bancorp Brokerage Account No. 32130630, 139 F.3d 729,

730–31 (9th Cir. 1998); United States v. Cuellar, 96 F.3d 1179, 1185–86 (9th Cir. 1996)

(Wiggins, J., concurring). The same is true for the use of assets under the Assets

Forfeiture Fund. See 28 U.S.C. § 524(c); Perri v. United States, 340 F.3d 1337, 1340–43

(Fed. Cir. 2003); Doe v. United States, 58 Fed. Cl. 479, 481–83 (2003). However, while

both statutes are money-authorizing, any compensation that either entity actually pays out

is subject to the discretion of the secretary at each entity. 28 U.S.C. § 524(c)(1)(A), (C);

31 U.S.C. § 9703(2). Accordingly, authorities confirm section 524(c) is not money-

mandating and therefore cannot be a source of jurisdiction for this court. Perri, 340 F.3d

at 1340–43 (discussing 28 U.S.C. § 524(c)); Doe, 58 Fed. Cl. at 481–82 (same); see also

Aboo v. United States, 86 Fed. Cl. 618, 626 (2009), aff’d, 347 F. App’x 581 (Fed. Cir.

2009) (“Because the asset forfeiture statute [28 U.S.C. § 524(c)] gives the Attorney

General or his delegate the discretion to determine whether to make a compensatory

award, the statute cannot appropriately be interpreted as being money-mandating.”)

(citing Perri, 240 F.3d at 1342). By logical extension, the same would be true for section

9703, although no reported opinions appear to have addressed the issue specifically.

Here, therefore, defendant is correct that jurisdiction would be lacking to the extent

Mendez asserts a right to compensation under either statute.

However, to the extent Mendez alleges the government inadequately pursued or

frustrated Mendez’s opportunity for compensation under these statutes in breach of the

14

alleged 1998 agreement or the implied duty of good faith and fair dealing,5 the forfeiture

statutes do not affect this court’s jurisdiction over Mendez’s breach claims. Likewise, to

the extent the government relies on either statute to render void or voidable any purported

agreement between Mendez and the government, then such challenges are to the merits of

Mendez’s breach claim and are not a basis for divesting or preempting this court’s

jurisdiction over an alleged contract. See U.S. Home Corp., 92 Fed. Cl. at 409

(explaining that “several precedential decisions [exist that have] affirmed this court’s

Tucker Act jurisdiction over contract claims, despite the fact that the subject matter of the

contracts at issue might otherwise have been governed by statutory schemes under which

claims could not be litigated in this court” (citing, e.g., California v. United States, 271

F.3d 1377, 1383 (Fed. Cir. 2001) (affirming this court’s jurisdiction over a breach of

contract claim, because no “unambiguous evidence in the text or legislative history of

[the Flood Control Act of 1928, 33 U.S.C. § 702c (2006) showed] that Congress had

‘withdrawn the Tucker Act grant of jurisdiction’”))); see also Salles v. United States, 156

F.3d 1383, 1383–84 (Fed. Cir. 1988) (per curiam) (affirming the trial court’s summary

judgment dismissing a confidential informant’s breach claim based on a finding that the

government officials’ authority to contract was “limited by . . . 28 U.S.C. § 524(c), which

does not authorize payment promises providing for a percentage of all seizures, as

alleged”); cf. Gould, 67 F.3d at 929 (holding that the court was not divested of

jurisdiction over a contract based on an allegation that the contract was illegal because

the court “must first take jurisdiction over the case before it decides whether an illegality

. . . [is a] proper basis . . . [for] dismissal . . . [for] failure to state a claim”); U.S. Home

Corp., 92 Fed. Cl. at 407–10 (holding that a breach claim based on deed covenants was

not jurisdictionally displaced or preempted by an environmental statute).

In sum, Mendez’s complaint presents well-pleaded, non-frivolous allegations of a

contract that underlies his breach claims; these allegations are sufficient to confer

jurisdiction on this court under 28 U.S.C. § 1491(a)(1).

5

“Every contract imposes upon each party a duty of good faith and fair dealing in

its performance and enforcement.” Metcalf Const. Co. v. United States, 742 F.3d 984,

990 (Fed. Cir. 2014) (citing Restatement (Second) of Contracts § 205 (1981)

(Restatement), quoted in Alabama v. North Carolina, 560 U.S. 330, 130 S. Ct. 2295,

2312 (2010)). “Failure to fulfill that duty constitutes a breach of contract, as does failure

to fulfill a duty ‘imposed by a promise stated in the agreement.’” Id. (quoting

Restatement § 235). The Federal Circuit “[has] long applied those principles to contracts

with the federal government.” Id. (citing, e.g., Precision Pine & Timber, Inc. v. United

States, 596 F.3d 817, 828 (Fed. Cir. 2010); Malone v. United States, 849 F.2d 1441,

1445–46 (Fed. Cir. 1988)).

15

B. Mendez’s Claims Are Not Time-Barred Under 28 U.S.C. § 2501

Although Mendez’s well-pleaded allegations of contract confer jurisdiction on this

court, the court can only exercise that jurisdiction if Mendez’s breach claims accrued

within the court’s statute of limitations. Claims against the United States must be “filed

within six years after such claim first accrues.” 28 U.S.C. § 2501 (2012); see John R.

Sand & Gravel Co. v. United States, 552 U.S. 130, 133–35 (2008) (providing that the six-

year limitations period is an “absolute” limit on the ability of the Court of Federal Claims

to reach the merits of a dispute); FloorPro, Inc. v. United States, 680 F.3d 1377, 1381

(Fed. Cir. 2012) (holding that the limitations period imposed by section 2501 is

“jurisdictional, and may not be waived or tolled”). “A claim accrues ‘when all the events

have occurred which fix the liability of the Government and entitle the claimant to

institute an action.’” Patton, 64 Fed. Cl. at 774 (quoting Kinsey v. United States, 852

F.2d 556, 557 (Fed. Cir. 1988)). “Claims for breach of contract generally accrue at the

time of the breach.” Id. (citing Brighton Vill. Assocs. v. United States, 52 F.3d 1056,

1060 (Fed. Cir. 1995)). “A claim does not accrue, however, ‘unless the claimant knew or

should have known that the claim existed.’”6 Id. (quoting Kinsey, 852 F.2d at 557 n.*);

see also Banks v. United States, 741 F.3d 1268, 1279–80 (Fed. Cir. 2014) (“The accrual

of a claim against the United States is suspended, for purposes of 28 U.S.C. § 2501, until

the claimant knew or should have known that the claim existed (‘the accrual suspension

rule’).” “Alternatively, ‘[a] claim accrues when damages are ascertainable.’” Patton, 64

Fed. Cl. at 774 (quoting Shermco Indus., Inc. v. United States, 6 Cl. Ct. 588, 591 (1984)).

Mendez filed his complaint on June 10, 2014; thus, his breach of contract and

good faith and fair dealing claims must have accrued, if at all, no earlier than June 10,

2008 (six years prior). The government asserts that Mendez’s claims accrued, if at all, in

either 2004 or 2007 and thus, are barred by limitations. Def.’s Mot. 16–17. In support of

its position, the government points to Attorney Read’s March 2004 threat to AUSA Lehr

that Mendez was “prepared to file an equitable lien,” as well as the February 2007 filing

of a Notice of Lien in Battle, as evidence that Mendez knew at those times that the

government did not consider itself obligated to pay Mendez any compensation. Id. at 17.

Alternatively, the government contends that Mendez had to know of the government’s

6

“For the accrual suspension rule to apply, the claimant ‘must either show that the

defendant has concealed its acts with the result that plaintiff was unaware of their

existence or it must show that its injury was ‘inherently unknowable’ at the accrual

date.’” Banks v. United States, 741 F.3d 1268, 1280 (Fed. Cir. 2014) (quoting Young v.

United States, 529 F.3d 1380, 1384 (Fed. Cir. 2008) (quoting Martinez v. United States,

333 F.3d 1295, 1319 (Fed. Cir. 2003) (en banc))); see also Patton v. United States, 64

Fed. Cl. 768, 776 (2005) (holding that these conditional exceptions are met “only where

[a plantiff’s] due diligence would not have prompted discovery” at an earlier date).

16

opposition to payment when the government filed its Motion to Strike the Notice of Lien

on April 5, 2007. See Tr. 9:5–10:4.

Mendez responds that “[i]t is axiomatic that, in order for a breach of contract

claim to accrue, there must first be a breach.” Pl.’s Opp’n 11 (citation omitted). Thus,

according to Mendez, “the date when [his] claim first accrue[d], [would be] the date the

Government first denie[d] the claim for payment.” Id. (citations omitted). In this case,

Mendez contends, that date was “May 8, 2013, when [Attorney Spittler] received a letter

from the U.S. Department of Justice stating that Mendez’s Petition [for Remission] to the

U.S. Attorney General was denied.” Id. at 12; see also Def.’s Mot. at Ex. 8 (DOJ Letter,

May 8, 2013) (denying Petition for Remission). Government resistance prior to 2013

allegedly had more to do with objecting to the method Mendez was taking to recover the

money (e.g., the equitable lien in Battle) than any aversion to honoring the parties’

alleged 1998 agreement. See Pl.’s Opp’n 12–13. Indeed, after the 2008 denial of

Mendez’s equitable lien, the government allegedly provided Mendez with “substantial

encouragement and assistance” in his preparation and filing of the Petition for Remission

with the Attorney General, up to and including providing him with necessary forms in

2012. Id. at 13–15. This support is evidenced in SSA O’Bannon’s internal DSS

memorandum, as well as SSA O’Bannon’s affidavit filed in this case. Id. at 14.

Based on the record presently before the court, the court finds that the statute of

limitations began to run on or about January 14, 2010, when the final judicial order of

forfeiture was entered. See Def.’s Mot. at Ex. 2 (Forfeiture Orders); Tr. 16:9–20

(explaining significance of the 2010 final order of forfeiture). The preponderance of the

evidence suggests that, about that time or shortly thereafter, Mendez’s alleged right to

compensation out of the forfeitures ripened, Mendez “knew or should have known that

[his] claim [for compensation] existed,” see Kinsey, 852 F.2d at 557 n.*, and his

“damages [were] ascertainable,” see Shermco Indus., 6 Cl. Ct. at 591. Counsel for

Mendez conceded as much at oral argument. Tr. 29:16–21, 38:9–21. Counsel for the

government effectively did as well. See Tr. 53:20–54:11. Thus, based on this finding,

the court concludes at present that Mendez’s complaint lodged roughly four-and-a-half

years later, on June 10, 2014, was filed within the court’s six-year statute of limitations.

However, the court does not discount the possibility that the weight of the evidence will

shift if subsequent discovery reveals, inter alia, that Mendez’s right to payment accrued

earlier or that he knew or should have known earlier that the government would not

honor the allege agreement; alternatively, discovery also might reveal that the

government had been concealing its intention to disclaim the alleged agreement, such that

the doctrine of accrual suspension might apply to extend the limitations period. The

parties are forewarned, therefore, that the court may revisit the limitations issue at a later

date if the evidence so warrants. See Folden v. United States, 379 F.3d 1344, 1354 (Fed.

Cir. 2004) (“Subject-matter jurisdiction may be challenged at any time by the parties or

by the court sua sponte.” (citing Fanning, Phillips & Molnar v. West, 160 F.3d 717, 720

(Fed. Cir. 1998))).

17

IV. The Rule 12(b)(6) Motion Is Deferred for Consideration Under Rule 56

Having found that the court may exercise jurisdiction over Mendez’s breach

claims, the government urges dismissal of those breach claims on the alternate theory that

Mendez fails to state claims upon which this court may grant relief.7 Def.’s Mot. 1, 24–

25 (invoking Rule 12(b)(6)).

The government’s arguments under Rule 12(b)(6) are essentially the same as its

arguments under Rule 12(b)(1)—namely, there can be no breach of contract where there

never existed a contract in the first instance. The government contends, specifically, that

Mendez’s allegations are insufficient and implausible based on the lack of evidence of

mutuality of intent. Id. at 17–20, 24. Furthermore, even if government representatives

made the alleged promises, such promises purportedly are invalid and/or unenforceable

because the representatives lacked express or implied actual authority to bind the

government to pay Mendez for his services. Id. at 20–25. Alternatively, the government

representatives were divested of authority by the RICO statute, 18 U.S.C. § 1963(g), and

the statutes governing the Treasury Forfeiture Fund, 31 U.S.C. § 9703, and the DOJ

Assets Forfeiture Fund, 28 U.S.C. § 524(c), id. at 22–23, which vest sole discretion to

compromise forfeiture assets and/or to reward informants with the Attorney General and

the heads of the relevant agencies, respectively, see supra Part III. In support of its

position, the government attaches to its motion copies of a myriad of documents

evidencing Mendez’s efforts to collect on the government’s alleged promise to pay

compensation and the reasons those efforts were unsuccessful. See Def.’s Mot. at Exs.

1–8. The government also attaches to its reply brief copies of a government

Memorandum filed in Battle discussing contract issues, Def.’s Reply, ECF No. 21, at Ex.

9, as well as a DOJ handbook entitled “The Attorney General’s Guidelines on Seized and

Forfeited property,” dated July 1990 and marked amended November 2005, id. at Ex. 10.

Mendez responds that “[t]he evidence of a mutuality of intent and interest in

entering into an implied-in-fact contract is extensive and unambiguous.” Pl.’s Opp’n 16.

For example, Mendez avers that Attorney Spittler’s 1998 letter to AUSA Lehner is not

evidence of on-going negotiations, as argued by the government, but rather is an attempt

to memorialize a verbal agreement and arrange for its reduction to a formal writing. Id.

at 19–20. In addition, “[f]ar from the ‘silence’ that the Government claims was its only

response to plaintiff’s representations regarding the existence of an oral agreement, the

7

In order to state a claim for breach of contract, Mendez must allege: (1) a valid

contract between the parties (i.e., mutuality of intent evidenced by offer, acceptance, and

consideration, as well as requisite authority); (2) an obligation or duty arising out of the

contract; (3) a breach of that duty; and (4) damages caused by the breach. See Trauma

Serv. Grp., 104 F.3d at 1325 (elements of valid contract with the government); San

Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir. 1989)

(elements of breach).

18

Government repeatedly assured Mendez and his attorney that there was, in fact, an oral

agreement regarding Mendez’s compensation, and that the Government intended to honor

that agreement.” Id. at 16 (internal citation omitted); see also id. at 20–23. Furthermore,

“the Government readily agreed to the insertion of a handwritten addition to the standard

immunity agreement with the U.S. Attorney’s Office which specifically acknowledged

[the existence of the 1998 restitution agreement].” Id. at 21. In addition, Mendez

contends that AUSA Lehner or others did have implied actual authority. See id. at 23. In

support of his opposition to dismissal, Mendez provided as exhibits to his briefing

substantive affidavits from himself, SSA O’Bannon, and Attorney Spittler, as well as

various documents that were attached as exhibits to the furnished affidavits. See Mendez

Aff., Dec. 11, 2014, ECF No. 18-1 (Mendez Second Aff.); O’Bannon Aff., Dec. 5, 2014,

ECF No. 18-2; Spittler Aff., Dec. 19, 2014, ECF No. 18-3.

The problem for the court is that the parties rely extensively on the contents of the

exhibits and affidavits appended to their briefing to support their Rule 12(b)(6)

arguments, such that the court cannot consider the merits of their arguments without

considering the affidavits and documents themselves. Of particular interest to the court

are the affidavits attached to Mendez’s opposition brief and the DOJ handbook attached

to the government’s reply brief. In any event, all of these materials attached to the

briefing are outside the pleadings. Thus, the court must convert the government’s Rule

12(b)(6) motion to dismiss for failure to state a claim to a motion for summary judgment.

See RCFC 12(d) (“If, on a motion under RCFC 12(b)(6) . . . , matters outside the

pleadings are presented to and not excluded by the court, the motion must be treated as

one for summary judgment under RCFC 56.”). In Advanced Cardiovascular Systems,

Inc. v. Scimed Life Systems, Inc., for example, the Federal Circuit vacated a dismissal

pursuant to Federal Rule of Civil Procedure 12(b)(6) where the trial court had considered

materials outside the pleadings, because in those circumstances “the rules governing

summary judgment must apply.” 988 F.2d 1157, 1164 (Fed. Cir. 1993); accord U.S.

Home Corp., 92 Fed. Cl. at 407 (converting a motion where both the plaintiff and the

defendant appended materials to their briefing that were integrally related to the merits of

their arguments for and against dismissal); Krupnick, No. 07-367 CQ, 2008 WL

1709022, at *1, *7–8 (Fed. Cl. Apr. 9, 2008) (converting a motion and finding in favor of

defendant based on the lack of evidence of requisite authority); Cornejo-Ortega, 61 Fed.

Cl. at 372–76 (granting judgment to defendant on a motion to dismiss converted to

summary judgment based on the lack of evidence that the parties with whom plaintiff had

dealt possessed the requisite authority to bind the government to pay an informant under

a purported reward contract); Warr, 46 Fed. Cl. at 350–52 (converting a motion and

finding for defendant on summary judgment that no oral contract existed).

Challenges to a government representative’s authority to contract are commonly

addressed on summary judgment. See Salles, 156 F.3d at 1383–84 (affirming trial

court’s summary judgment, which found that the confidential informant failed to adduce

evidence of requisite authority to support the allegation of an oral contract with the

19

government for the payment of a percentage of the value of seizures and forfeitures that

the informant helped the government obtain); Bailey v. United States, 40 Fed. Cl. 449,

469 (1998) (explaining that, in the record before the court on a motion to dismiss, there

was “insufficient evidence” to determine (i) at what level the discussions occurred

between the parties, which resulted in plaintiff providing certain information based on the

belief he would be paid; and (ii) whether someone with the requisite authority approved

the arrangement that the plaintiff claimed resulted in the alleged contract); see also

Sommers Oil Co. v. United States, 241 F.3d 1375, 1379–81 (Fed. Cir. 2001) (finding the

complaint was sufficient to state a claim for breach of contract by the government and

remanding for a determination on the merits whether any government official was

actually authorized to make a promise to pay the plaintiff-informant and what regulatory

or statutory provision authorized the official to do so); cf. Harbert, 142 F.3d at 1430 (Fed.

Cir. 1998) (affirming in part, and reversing in part, the Court of Federal Claims’ post-trial

fact-intensive findings on authority and ratification relating to an alleged oral contract).

Furthermore, in converting the motion, the court must provide the parties with an

opportunity to litigate the government’s Rule 12(b)(6) challenge through the procedures

afforded by Rule 56. See RCFC 12(d) (“All parties must be given a reasonable

opportunity to present all the material that is pertinent to the motion.”); see also Levy v.

United States, 10 Cl. Ct. 602, 605–06 (1986) (allowing the parties in a real estate sale

breach of contract suit to supplement initial briefing on a motion to dismiss, to which

defendant had attached exhibits related to the real estate sale, with “additional legal

argument and materials in support of, or opposition to, summary judgment”); cf. Gary v.

United States, 67 Fed. Cl. 202, 204, 218 (2005) (granting a motion to dismiss for lack of

jurisdiction based on the plaintiff’s failure to adduce evidence in support of actual

authority or ratification after the court permitted discovery on the issue of whether a

contract existed between them). For these reasons, the court reserves the government’s

Rule 12(b)(6) challenge to the complaint for further proceedings.

V. Conclusion

Mendez has agreed to dismiss voluntarily Count I (declaratory judgment) and

Counts IV through VII (unjust enrichment, promissory estoppel, equitable lien, and

fraud). With respect to remaining Counts II and III, alleging breach of express or

implied-in-fact contract and breach of the implied duty of good faith and fair dealing, this

court has jurisdiction for the reasons set forth in Part III, supra. Further, the court

converts the government’s Rule 12(b)(6) challenge to Counts II and III to a motion for

summary judgment for the reasons set forth in Part IV, supra.

Accordingly, it is hereby ORDERED that

(1) The Clerk’s office is directed to DISMISS Count I and Counts IV through VII

of the Complaint pursuant to Rule 41(a)(2), without prejudice;

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(2) Defendant’s Motion to Dismiss, filed November 5, 2014, is DENIED in part

and CONVERTED in part to a summary judgment motion, as follows:

(a) Defendant’s Rule 12(b)(1) and 12(b)(6) challenges to Count I and

Counts IV through VII of the Complaint are DENIED as moot in light

of plaintiff’s voluntary dismissal of those counts;

(b) Defendant’s Rule 12(b)(1) challenge to Counts II and III is DENIED;

(c) Defendant’s Rule 12(b)(6) challenge to Counts II and III of the

Complaint is CONVERTED to a Rule 56 motion for summary

judgment and the court DEFERS ruling on defendant’s summary

judgment motion; and

(3) On or before June 17, 2015, the parties shall FILE a Joint Status Report

proposing a schedule for further proceedings with respect to discovery and

summary judgment and stating the extent to which the parties have determined

whether any or all of the claims before the court may be settled. Settlement

negotiations and alternative dispute resolution should be considered as

alternatives to litigation.

s/ Patricia Campbell-Smith

PATRICIA CAMPBELL-SMITH

Chief Judge

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