Wolfing v. United States

In the United States Court of Federal Claims

No. 18-523C

(Filed: August 29, 2019)

************************** Army Housing Entitlements;

*

Reserve Component; 37 U.S.C.

BRADLEY WOLFING, et al., *

* § 403; Joint Travel Regulations

Plaintiffs, * ¶¶ 10002.A, 10414.A.1-3, 10428.B;

* Rule 12(b)(1); Motion to Dismiss

v. * Rule 52.2; Motion to Remand.

*

THE UNITED STATES, *

*

Defendant. *

*

**************************

Patrick J. Hughes and Michael E. Lyons, Patriots Law Group of Lyons & Hughes, P.C.,

5819 Allentown Road, Suitland, MD 20746, for Plaintiffs.

Joseph H. Hunt, Robert E. Kirschman, Jr., Douglas K. Mickle, and Daniel K. Greene, U.S.

Department of Justice, Civil Division, Commercial Litigation Branch, P.O. Box 480, Ben Franklin

Station, Washington, D.C. 20044, for Defendant. Major Michael Townsend, Jr., United States

Army, Of Counsel.

_________________________________________________________

OPINION AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND

GRANTING DEFENDANT’S MOTION TO REMAND

_________________________________________________________

WILLIAMS, Senior Judge.

Plaintiffs, a group of seven former and current officers in the reserve component of the

United States Army (“Army”),1 claim entitlement to two allowances for housing while serving on

active-duty tours in Europe from May 2014, to the present, during which they were

“unaccompanied,” i.e., unauthorized to relocate their dependents. Plaintiffs claim entitlement to a

basic allowance for housing in the United States (“BAH”) and outside the United States (“OHA”)

pursuant to 37 U.S.C. § 403 and Chapter 10 of the Department of Defense Joint Travel Regulations

(“JTR”). Plaintiffs allege that the Army denied them a housing allowance to which they were

entitled and acted with gross negligence by willfully misapplying the JTR. Specifically, Plaintiffs

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Plaintiffs are Colonel Bradley Wolfing, Majors James Copas, Ryan Mirabal, Louis Morelli,

and Captains Alexander Gardiner, Timothy Kibodeaux, and William Schneck.

contend that in 2016, the Army wrongly began subjecting them to JTR provisions that govern

active-duty component pay and housing entitlements, instead of reserve component entitlements,

causing the loss of their second housing entitlement and resulting in substantial financial losses.

Defendant moved to dismiss the complaint for lack of subject-matter jurisdiction

contending that Plaintiffs’ claim sounds in tort because their action is based on the negligent

performance of a noncontractual duty. In the alternative, Defendant moved to remand Plaintiffs’

case to the Secretary of the Army for submission to the Army Board for the Correction of Military

Records (“ABCMR”). Because Plaintiffs seek monetary damages based upon a money-mandating

statute and regulations, this case falls within this Court’s Tucker Act jurisdiction. As such,

Defendant’s motion to dismiss is denied. The Court grants Defendant’s alternative motion for

remand because the ABCMR may grant Plaintiffs complete relief.

Background2

All Plaintiffs voluntarily performed unaccompanied active-duty tours of 365 days or less

as part of the Army’s reserve component in Europe to support contingency operations. Plaintiffs

were not authorized to ship household goods at the expense of the Government to their duty

stations in Europe. While on their individual tours for various time periods between May 2014 to

the present, Plaintiffs were ordered to “live on the economy” - - to utilize their housing allowances

to finance off-base housing, which is required when Government quarters are unavailable at or

near their duty stations. All of the officers, except Major Morelli, have one or more dependents.

The six officers who have dependents were on “unaccompanied orders,” meaning they were not

authorized to relocate their dependents to their duty station at Government expense. Additionally,

the six officers with dependents represented to the Army that their dependents were residing in the

United States during their tours. All Plaintiffs received BAH starting on the first day of their tours,

and the six Plaintiffs with dependents received an additional family separation housing allowance

for overseas housing (“FSH-O”) for part of their tours.3

Plaintiffs allege that the unavailability of Government quarters entitled them each to two

base housing allowances for the duration of their tours, BAH and OHA, citing 37 U.S.C. § 403

and Joint Travel Regulations ¶¶ 10002.A, 10428.B. Plaintiffs allege that sometime in 2016, the

Army changed its official interpretation of the JTR relating to eligibility for reserve component

housing allowances and as a result, began retroactively applying active duty component pay and

housing allowance entitlements to reserve component soldiers. Plaintiffs claim this change

removed their second base housing allowance, denying them and many reserve component soldiers

appropriate BAH benefits. Plaintiffs characterize the Army’s revised interpretation of the

applicable JTR and retroactive application of active duty component pay as a willful and grossly

negligent disregard of 37 U.S.C. § 403 and the applicable JTR.

2

This background is derived from Plaintiffs’ complaint and the appendix to Defendant’s

motion to dismiss.

3

Plaintiffs dispute that they were paid FSH-O allowances and instead claim that the

monies they received were OHAs. Pls.’ Sur-reply 15.

2

Defendant describes the circumstances differently. Defendant submits that pursuant to the

JTR, all seven Plaintiffs were entitled to only one base housing allowance, either BAH or OHA,

depending on the place where the soldier was located when entering active duty, citing JTR ¶

10428.B. Def.’s Mot. 4-5. The regulation provides:

A Reserve Component member called/ordered to active duty in support of a

contingency operation is authorized BAH/OHA for the duration of the tour. If the

Reserve Component member receives a permanent change of station order

authorizing HHG [household goods] transportation, BAH/OHA is based on the new

Primary Duty Station. However, if the member is called or ordered to active duty

and a permanent change of station order is not issued, BAH/OHA rate is based

(paid) on the primary residence location at the time called/ordered to active duty . .

..

JTR ¶ 10428.B.

Members with dependents may also receive an additional housing allowance, FSH-O, as

long as they satisfy three conditions: (1) dependent transportation to the Permanent Duty Station

was not authorized as Government expense under 37 U.S.C. § 476; (2) dependents did not reside

in the permanent duty station vicinity; and (3) Government quarters were not available for

assignment to the member. JTR ¶ 10414.A.1-3. In Defendant’s view, at the time Plaintiffs were

called to active duty, based on their representations in financial processing forms submitted to the

Army, the six Plaintiffs with dependents appeared to be eligible for the FSH-O allowance because

they met these three conditions. Def.’s Mot. App. 113. Plaintiffs received BAH starting on the

first day of their tours, and the six Plaintiffs with dependents received FSH-O for part of their

tours. Major Morelli, however, was erroneously paid an additional OHA allowance for a portion

of his tour.4

Rather than a change in official Army interpretation of the JTR, Defendant points to the

findings of an investigation by the Army’s Wiesbaden Criminal Investigation Command (“CID”)

as the cause of Plaintiffs’ pay changes. In 2016, CID conducted a criminal investigation

concerning representations the six Plaintiffs with dependents made to the Army in order to receive

the FSH-O additional housing allowance. Army CID concluded that the six Plaintiffs moved their

dependents overseas or had their dependents reside with them at their duty stations for more than

90 days, thus rendering them ineligible for FSH-O because they no longer satisfied the second

condition of JTR ¶ 10414.A: that their dependents did not reside in the vicinity of the permanent

duty station. In addition, the Army determined that it inadvertently paid Major Morelli both BAH

and OHA. Def.’s Mot. App. 114. The Army’s Office of the Staff Judge Advocate and

Compensation/Entitlements Branch upheld these findings. Def.’s Mot. App. 109. As a result, the

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Major Morelli, an officer with no dependents, was authorized to receive only BAH.

Soldiers without dependents or unaccompanied orders overseas who must live on the economy

receive BAH. However, they can obtain a waiver to receive OHA instead of BAH to cover housing

expenses. Major Morelli elected to receive OHA. In error, Major Morelli was paid both OHA

and BAH. Def.’s Mot. App. 113-14.

3

Army concluded that it had overpaid all Plaintiffs by one housing allowance - - FSH-O in the case

of the six officers with dependents, and OHA in the case of Major Morelli. Def.’s Mot. App. 114.

Defendant alleges that the Army equitably sought to recoup the overpayments. Thus,

instead of making the six officers forfeit all of their housing allowances until the debt was repaid,

the Army identified for recoupment the housing allowance that had been paid at the lower rate. In

the case of the six officers with dependents, this was the BAH. In the case of Major Morelli, the

debt for the OHA overpayment was cancelled upon determining that Major Morelli was not at

fault for the overpayment.

After their BAH was recouped, Plaintiffs initiated multiple inquiries in response to the

Army CID’s findings and the claimed misinterpretation of the JTR through their chain of

command, as well as through the Defense Finance and Accounting Service (“DFAS”), the

Inspector General, and Congressional Representatives. See Def.’s Mot. App. 115-25; Pls.’ Resp.

App. 8-20.

On October 18, 2018, the Army’s Financial Management Support Center concluded that

“[a]ll six officers with dependents who have filed suit received the appropriate basic allowance for

housing based on the accurate location of their dependents.” Def.’s Mot. App. 114.

Discussion

Jurisdiction

The Tucker Act, 28 U.S.C. § 1491, grants jurisdiction to the Court of Federal Claims over

“any claim against the United States founded either upon the Constitution, or any Act of Congress

or any regulation of an executive department, or upon any express or implied contract with the

United States, or for liquidated or unliquidated damages in cases not sounding in tort.” 28 U.S.C.

§ 1491(a)(1) (2012). “The Tucker Act itself does not create a substantive cause of action . . . .”

Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005). If a claim is to fall within the

Court’s Tucker Act jurisdiction, “a plaintiff must identify a separate source of substantive law that

creates the right to money damages.” Aviation & Gen. Ins. Co., Ltd. v. United States, 121 Fed.

Cl. 357, 361-62 (2015) (citing Fisher, 402 F.3d at 1172). Further, the substantive law the plaintiff

identifies must be “money-mandating.” Id. (citing United States v. Mitchell, 463 U.S. 206, 217

(1983)).

For the purposes of Tucker Act jurisdiction, a statute or regulation is money-mandating if

it “can fairly be interpreted as mandating compensation for damages sustained as a result of the

breach of the duties [it] impose[s].” Fisher, 402 F.3d at 1173 (quoting Mitchell, 463 U.S. at 217).

In determining whether a statute is money-mandating, courts evaluate the extent to which the

statute imposes an obligation on the Government to pay money when statutory conditions are met.

Samish Indian Nation v. United States, 657 F.3d 1330, 1335 (Fed. Cir. 2011). The Federal Circuit

has noted that, in limited situations, the money-mandating requirements may be satisfied even

when the Government reserves discretion over the payment of funds when the statute: “(1)

provides ‘clear standards for paying’ money to recipients; (2) states the ‘precise amounts' that must

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be paid; or (3) as interpreted, compels payment on satisfaction of certain conditions.” Id. (quoting

Perri v. United States, 340 F.3d 1337, 1342-43 (Fed. Cir. 2003)).

Before the Court may proceed to the merits of the action, Plaintiffs must first establish

subject-matter jurisdiction by a preponderance of the evidence. Hardie v. United States, 367 F.3d

1288, 1290 (Fed. Cir. 2004); Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed.

Cir. 1988); Tindle v. United States, 56 Fed. Cl. 337, 341 (2003). The Court must dismiss the action

if subject-matter jurisdiction is found to be lacking. Adair v. United States, 497 F.3d 1244, 1251

(Fed. Cir. 2007). When ruling on a motion to dismiss pursuant to Rule 12(b)(1), the Court assumes

that all factual allegations are true, and will construe the complaint in a manner most favorable to

the plaintiff. Pennington Seed, Inc. v. Produce Exch. No. 299, 457 F.3d 1334, 1338 (Fed. Cir.

2006).

In considering a motion to dismiss, the Court primarily considers the allegations contained

in the complaint, but is not limited by its four corners. Dimare Fresh, Inc. v. United States, 808

F.3d 1301, 1306 (Fed. Cir. 2015) (internal citation omitted). The Court may also look to “matters

incorporated by reference or integral to the claim, items subject to judicial notice, [and] matters of

public record.” Id. When a document is not incorporated by reference, the court may “nevertheless

consider it where the complaint relies heavily upon its terms and effect, which renders the

document integral to the complaint.” Bell/Heery v. United States, 106 Fed. Cl. 300, 307 (2012),

aff’d, 739 F.3d 1324 (2014).

A Money-Mandating Statute: 37 U.S.C. § 403

In their complaint, Plaintiffs rely upon 37 U.S.C. § 403 as the money-mandating source of

this Court’s Tucker Act jurisdiction. This provision states:

a member of a uniformed service who is entitled to basic pay is entitled to a basic

allowance for housing at the monthly rates prescribed under this section or another

provision of law with regard to the applicable component of the basic allowance

for housing.

37 U.S.C. § 403(a)(1).

Defendant does not dispute that Section 403(a)(1) is money-mandating because Plaintiffs

were entitled to “a basic allowance for housing” while receiving basic pay during their respective

tours in Europe. Id.; Def.’s Mot. 9-10. Instead, Defendant characterizes Plaintiffs’ claims as the

Government’s negligent performance of a noncontractual duty and relies upon another subsection

of § 403 - - 37 U.S.C. § 403(k)(2) - - to argue that Plaintiff’s claim sounds in tort. Id. Section

403(k)(2) provides:

Any determination made under this section with regard to a member of the

uniformed services is final and is not subject to review by any accounting officer

of the United States or a court, unless there is fraud or gross negligence.

37 U.S.C. § 403(k)(2) (emphasis added).

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That this statutory language permits judicial review of a housing-allowance determination

only when alleged to be grossly negligent, does not convert the cause of action from a Tucker Act

statutory violation claim for monetary damages, into a tort claim for compensatory damages due

to negligence. Plaintiffs allege that the Army interpreted and applied 37 U.S.C. § 403 in a grossly

negligent manner by erroneously determining that active duty component JTR provisions applied

to reserve component soldiers. The conduct complained of is not either the tort of negligence

arising under common law or the Federal Tort Claims Act (“FTCA”), but rather is a gross failure

to follow a statutory mandate to pay reservists housing allowances to which they are entitled.

This claim for housing allowances - - a claim for money that is mandated by statute - - is a

quintessential Tucker Act claim, not a negligence claim for damages for an injury due to a breach

of a duty owed. This Court has routinely exercised its Tucker Act jurisdiction to address monetary

statutory claims in many contexts. See, e.g., Randolph v. United States, 129 Fed. Cl. 301 (2016),

aff’d, 2017 WL 2558256 (Fed. Cir. 2017) (seeking back pay, involuntary and improper discharge);

West v. U.S., 103 Fed. Cl. 55 (2012) (seeking backpay and correction of his status following

alleged illegal discharge); Young v. United States, 57 Fed. Cl. 441 (2003) (seeking backpay for

time spent in confinement serving a sentence that was later set aside); Holley v. United States, 33

Fed.Cl. 454 (1995) (seeking entitlement to overseas housing allowance). The fact that judicial

review of entitlement to a housing allowance is conditioned upon a finding that the Army acted

with gross negligence in denying such allowance does not alter the fundamental character of the

claim. Rather, the claim remains one for entitlement to housing allowances, and the remedy

remains payment of monies owed due to a grossly negligent or fraudulent denial of a statutory

entitlement. The Tucker Act’s jurisdictional requirements have been satisfied because Plaintiffs

have invoked 37 U.S.C. § 403, a money-mandating statute and have sufficiently pleaded a claim

for grossly negligent denial of housing allowances under that statute. See 37 U.S.C. § 403(k)(2).

Motion to Remand

In the alternative, Defendant requests that the Court remand this matter to the Secretary of

the Army for submission to the ABCMR. Defendant argues that remand is in the interest of justice

due to the Army’s mission of fairly treating all soldiers, the Army’s expertise in these types of

claims and access to interpretations of the relevant JTR provisions. In addition, Defendant notes

that the ABCMR would be able to grant all relief that Plaintiffs seek. Plaintiffs contend that

remanding their claim is unnecessary as they have already filed similar complaints through their

chain of command, the Inspector General, Congressional Representatives, and DFAS. Plaintiffs

assert that “because the way their system is designed, the ABCMR will likely seek advisory

opinions from the same people who have already misinterpreted the Army’s legal requirements to

date.” Pls.’ Resp. 27.

The Tucker Act gives the Court of Federal Claims the authority “to remand appropriate

matters to any administrative or executive body or official with such direction as it may deem

proper and just.” 28 U.S.C. § 1491(a)(2) (2012); see R. Ct. Fed. Cl. 52.2; accord Ward v. United

States, 133 Fed. Cl. 418, 427-32 (2017); Reaves v. United States, 128 Fed. Cl. 196, 200-03 (2016);

Stuart v. United States, 123 Fed.Cl. 413, 422-23 (2015). Under Rule 52.2, “[a]n order remanding

a case must (A) include such direction as the Court deems proper and just; (B) establish the

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duration of the remand period, not to exceed 6 months; (C) specify the extent to which court

proceedings will be stayed during the remand period; and (D) designate a party to report to the

court, every 90 days or less, on the status of the remand proceedings. R. Ct. Fed. Cl. 52.2(b)(1).

Here, remand is appropriate to afford the ABCMR an opportunity to grant Plaintiffs the

relief they are seeking - - to correct their military personnel records and award payments resulting

from such corrections if warranted. See 10 U.S.C. § 1552(c)(1); Roth v. United States, 378 F.3d

1371, 1382 (Fed. Cir. 2004) (“[A] correction board may entertain any kind of application for

correction . . . .ranging from changing the terms of a discharge, or the citation of awards received,

to amending records that include officer effectiveness reports passover decisions by selection

boards or special selection boards, and discharge orders.” (citing Porter v. United States, 163 F.3d

1304, 1311 (Fed. Cir. 1998)). Remand will not prejudice Plaintiffs as the ABCMR may award

them complete relief.

Conclusion

Defendant’s Motion to Dismiss Plaintiffs’ complaint for lack of jurisdiction is DENIED.5

Defendant’s Motion to Remand is GRANTED.

The Court REMANDS this matter to the Secretary of the Army for referral to the Army

Board for Correction of Military Records for administrative action pursuant to Rule 52.2 and

orders:

a. The Army Board for Correction of Military Records is directed to compile a

full administrative record and reassess Plaintiffs’ entitlement to their claimed

housing allowances in accordance with 37 U.S.C. § 403 and Chapter 10 of the

DoD Joint Travel Regulations.

b. Defendant shall file a report with the Court on the status of the remand

proceeding 90 days from issuance of this order and every 90 days thereafter.

c. Defendant shall provide the Court with the Army Board for Correction of

Military Records’ decision within 180 days.

The case is STAYED for all purposes for the duration of remand proceedings.

s/Mary Ellen Coster Williams

MARY ELLEN COSTER WILLIAMS

Senior Judge

5

Defendant’s motion to strike pages 1-4 and 6-21 of Plaintiffs’ sur-reply is DENIED.

7