Clean Fuel Llc v. United States

United States Court of Federal Claims

No. 12-79 T

April 26, 2013

PUBLISHED

_____________________________________

CLEAN FUEL LLC,

American Recovery and Reinvestment

Plaintiff, Tax Act; Subject matter jurisdiction;

RCFC 12(b)(1); Consequential damages;

v. Lost profits; Tucker Act; “Money-

mandating” source of law

UNITED STATES OF AMERICA,

Defendant.

_____________________________________

Maurice A. Bellan, McGuireWoods LLP, Washington, DC, for plaintiff.

Michael J. Ronickher, Tax Division, United States Department of Justice, Washington,

DC, for defendant.

OPINION AND ORDER

Block, Judge.

Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 (AARTA),

Pub. L. 111-5, 123 Stat. 115, provides, “Upon application, the Secretary of the Treasury shall,

subject to the requirements of this section, provide a grant to each person who places in service

specified energy property to reimburse such person” in an amount equal to “the applicable

percentage basis of such property.” Put simply, when certain “energy property” is put to use to

produce clean energy, § 1603(a) requires the federal government to reimburse a portion of the

cost of such property.

This case arises because plaintiff, a developer of biodiesel platforms, sought to take

advantage of § 1603(a). For reasons not relevant here, the Treasury Department found that it

was not required to give plaintiff the requested reimbursement grants. Plaintiff brought this suit

to recover the amount of the grants, as well as “consequential damages, special damages, or other

damages that result[ed] as a consequence[] of the Government’s violation of its statutory and

regulatory mandates.”

This court has had occasion before to consider § 1603(a). In AARA Energy Co. v. United

States, 97 Fed. Cl. 12 (2011), this court held that § 1603(a) was a “money-mandating” statute

that could give rise to a claim in this court under the Tucker Act. ARRA Energy, 97 Fed. Cl. at

19-22. The court based its conclusion primarily on the fact that the statute required the payment

of grants subject only to the ministerial discretion involved in determining whether the statutory

scheme’s other requirements were met. Id. at 20.

Neither party questions that decision in this case. Instead, defendant has filed a motion

for partial dismissal, see Rule 12(b)(1) of the Rules of the United States Court of Federal Claims

(RFCF), on the ground that this court has no jurisdiction over plaintiff’s claims insofar as they

request consequential damages. Defendant argues that although § 1603(a) is money-mandating,

consequential damages are not within the mandate, and thus the statute cannot serve as the

substantive law necessary to invoke the Tucker Act with respect to consequential damages.

Plaintiff disagrees. It argues that because § 1603(a) is money-mandating, the court has

jurisdiction. In plaintiff’s view, whether the court may award consequential damages is an issue

to be decided on the merits. Essentially, plaintiff argues that if, as AARA Energy held, § 1603(a)

is money-mandating, then it does not matter whether the money it mandates includes all the

money plaintiff requests.

Thus, the question this motion presents is whether § 1603(a), which requires partial

reimbursement for certain “energy property,” can give rise to a claim for consequential damages

resulting from the denial of such reimbursement. As explained below, because consequential

damages are not included within the compensation § 1603(a) mandates, that statute cannot serve

as the source of substantive law required for this court to exercise jurisdiction over claims for

consequential damages. Accordingly, the court must grant defendant’s motion.

I. Facts

Plaintiff is a developer of biodiesel platforms. Compl. ¶ 25. On April 15, 2009, plaintiff

purchased new and used assets for the purpose of creating biodiesel fuel. Id. ¶ 26. Using these

assets, plaintiff created one renewable energy facility in Lakeland, Florida, and another one in

Groveland, Florida. Id. ¶ 27. In December 2009, plaintiff purchased a generator set for each

facility. Id. ¶¶ 30, 31, 47. The generator sets were placed in service in May 2010. Id. ¶¶ 33, 50.

In purchasing these generator sets and placing them into service, plaintiff expected to

take advantage of ARRTA’s “grant program” for renewable energy. As mentioned above,

ARRTA’s § 1603(a) requires the Secretary of the Treasury to provide “a grant to each person

who places in service specified energy property to reimburse such person” in an amount equal to

“the applicable percentage basis of such property.” Plaintiff believes that the generator sets

qualified as “specified energy property” under the complex statutory scheme. Accordingly, upon

placing the generator sets in service, plaintiff submitted the required applications for

reimbursement. Compl. ¶¶ 35-42, 52-59. But it was not to be. On January 6, 2011, the

Department of the Treasury notified plaintiff that it had denied the Lakeland application. Id. ¶

63. The other shoe fell just over two months later on March 12, 2011, when the Department

notified plaintiff that it had also denied the Groveland application. Id. ¶ 64.

Plaintiff filed its complaint in this court of February 3, 2012. In each of its two counts

(one for each denied application) plaintiff requests monetary relief in the amount of the

reimbursement it claims to have been entitled to under § 1603. Plaintiff also requests

“consequential damages, special damages, or other damages that result[ed] as a consequence[] of

the Government’s violation of its statutory and regulatory mandates.” Specifically, plaintiff

argues that as a result of the denial of its applications, it was unable to operate either facility in

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2011, thus forfeiting the net income that each facility would have generated that year

($8,977,251, in the case of the Lakeland facility). Compl. ¶¶ 72, 78.

II. Motion to Dismiss

Defendant answered plaintiff’s complaint and filed this motion for partial dismissal under

RCFC 12(b)(1). In its motion, defendant asks the court to dismiss plaintiff’s claims insofar as

those claims request the award of “consequential damages, special damages, or other damages

that result[ed] as a consequence[] of the Government’s violation of its statutory and regulatory

mandates.” Def.’s Mot. at 4. Defendant claims that such damages are not authorized by § 1603

and that therefore this court lacks jurisdiction to award them. Id. at 4-7.

Plaintiff asks the court to deny defendant’s motion. Pl.’s Opp. at 13. Plaintiff argues that

§ 1603 is a money-mandating statute and has been held to be such by this court. Id. at 6-7 (citing

ARRA Energy, 97 Fed. Cl. at 16, 17, 28). Plaintiff also argues that whether consequential

damages can be awarded in this case is irrelevant to the threshold jurisdictional question and

ought instead to be determined on the merits. Id. at 7-11.

In reply, defendant acknowledges that § 1603 is a money-mandating statute but denies

that the compensation the statute mandates includes consequential damages. Def.’s Reply at 1-2.

Defendant argues that plaintiff cannot “shoehorn its consequential damages claim into its claim

for a specifically defined, statutorily mandated payment.” Id. at 3.

For reasons explained more fully below, defendant is correct. The obligation to identify a

money-mandating statute is an obligation to identify a statute that mandates the form of

monetary compensation a plaintiff requests. When a plaintiff requests more than one form of

damages, the court has jurisdiction with respect only to those claims for damages covered by the

money-mandating statute. Because § 1603 cannot “fairly be interpreted” to mandate lost profits

or other consequential damages, the court must grant defendant’s motion.

III. Discussion

The Tucker Act confers on this court jurisdiction of claims for damages not sounding in

tort and arising out of, inter alia, federal statutes. 28 U.S.C. § 1491(a)(1). 1 But to invoke

Tucker Act jurisdiction, a plaintiff must identify the “money-mandating” statute under which his

claim arises. Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc). And a

statute is “money-mandating” if it can “fairly be interpreted” as mandating the compensation the

plaintiff seeks. 2 United States v. Mitchell, 463 U.S. 206, 216-17 (1983) (Mitchell II); United

States v. Testan, 424 U.S. 392, 400 (1976).

1

“The United States Court of Federal Claims shall have jurisdiction to render judgment upon

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) (emphasis added).

2

Defendant wrongly asserts that, in assessing whether a statute is money-mandating, this court

must construe the statute “strictly.” The court must strictly construe the waiver of sovereign

immunity itself (in this case, the Tucker Act), but the question with respect to the substantive

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For purposes of this case, the key point is that the compensation the statute can “fairly be

interpreted” as mandating must be the kind of compensation the plaintiff seeks. This court has

no jurisdiction over a claim for one type of money damages if the “money-mandating” statute the

plaintiff cites pertains only to a different type of money damages. “The crucial question is

whether, and to what extent, Congress has consented to a monetary claim in this court.” Mitchell

v. United States, 664 F.2d 265, 270 (Ct. Cl. 1981) (en banc) (Mitchell II) (emphasis added), aff’d,

463 U.S. 206.

The Court of Claims decision in Mitchell II illustrates this. The case was on remand from

the Supreme Court, which had held in Mitchell I that the trust established by the General

Allotment Act, 25 U.S.C. §§ 331-54, did not give rise to a suit for mismanagement of Indian

lands. See United States v. Mitchell, 445 U.S. 535, 546 (1980) (Mitchell I). In remanding the

case, the Supreme Court had instructed the Court of Claims to consider other jurisdictional

arguments. Id. at 546 n.7. Carefully considering the relevant statutes, the Court of Claims found

that Congress had mandated “a restricted degree of compensation” for breach of trust duties.

Mitchell II, 664 F.2d at 270-71. Specifically, the court found that it had jurisdiction to consider

claims for (1) fall-off from income the Indian plaintiffs would have received but for the alleged

breaches of trust, and (2) the value of property lost through the federal government’s improper

actions. Id. at 271.

However, the court also held that it lacked jurisdiction of claims for “other,

consequential, indirect damages.” Id. Specifically, the plaintiffs could not sue for “other types

of damages or compensation: indirect or consequential business, economic, or personal damages

due to the loss . . . of their property, or personal, psychological, or social harm experienced by

the Indian owners or the tribe as a consequence of federal mismanagement of their property.” Id.

at 273-74. The court reasoned that such damages were not “included within the legislation [the]

plaintiffs invoke.” Id. at 274. Thus, while denying most of the defendant’s motion to dismiss,

the court did grant the motion in part. The money-mandating sources of law permitted

jurisdiction not of claims for all money damages, but only of claims for “a restricted degree of

compensation.” Id. at 270-71. 3

A few years later, in Anderson v. United States, 5 Cl. Ct. 573 (1984), the Court of Claims

granted a partial motion to dismiss for lack of subject matter jurisdiction where some of the

damages sought were not authorized by the money-mandating source of law. In that case,

source of law is whether it can “fairly be interpreted” as mandating compensation. See United

States v. White Mountain Apache Tribe, 537 U.S. 465, 472-73 (noting that the Tucker Act

provides an “unequivocally expressed” waiver of sovereign immunity and that the “‘fair

interpretation’ rule” governing money-mandating statues “demands a showing demonstrably

lower than the standard for the initial waiver of sovereign immunity”). In this case, defendant’s

mistake makes no difference because, as explained below, § 1603(a) cannot “fairly be

interpreted” as mandating consequential damages.

3

In Mitchell II, the government appealed the portion of the Court of Claims decision finding

jurisdiction, and the Supreme Court affirmed. See Mitchell II, 463 U.S. 206. The Supreme

Court did not review the Court of Claims’ decision insofar as it found no jurisdiction over certain

claims for damages.

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construction workers employed by the Department of Health and Human Services sought

monetary damages for sick and annual leave, health and life insurance benefits, per diem

allowances, and the rates of pay they would be entitled to as prevailing rate employees. 5 Cl. Ct.

at 575. The defendant moved to dismiss the claims for leave and insurance benefits on the

ground that such damages were not covered by the money mandating law the plaintiffs invoked.

The court found that although such benefits were mandated for another type of worker, the

plaintiffs could not claim that the law mandated such benefits for them. Accordingly, the court

found that it was “without authority” to consider the plaintiffs’ claims for those damages. Id. at

581. 4

Here, as in Mitchell II and Anderson, some of the damages plaintiff seeks are not

“included within the legislation” plaintiff invokes. See Mitchell II, 664 F.2d at 274. Although

money-mandating, 1603(a) mandates only “a restricted degree of compensation”—namely “a

grant . . . to reimburse” the cost of certain “energy property.” The amount of that grant is to be

equal to “the applicable percentage basis of such property.” There is no provision, explicit or

implicit, for any kind of consequential damages. In short, § 1603(a) cannot “fairly be

interpreted” as mandating consequential damages. LCM Energy Solutions v. United States, 107

Fed. Cl. 770, 773-74 (2012) (holding that § 1603(a) cannot be “fairly interpreted” as mandating

consequential damages).

Plaintiff does not argue otherwise, but instead contends ARRA Energy found jurisdiction

even though the complaint in that case contained a request for consequential damages in addition

to a request for the reimbursement grant. Pl.’s Opp. at 6 & n.1. But the ARRA Energy court

simply noted the request for consequential damages in passing. See ARRA Energy, 97 Fed. Cl. at

16. It did not actually consider the jurisdictional issue raised by that request. The oversight is

entirely understandable because the government did not move for dismissal based on the request

4

Plaintiff’s counsel ought to know better than to argue, speciously, that “[t]he Government

would like the [c]ourt to sever [p]laintiff’s consequential damages claim from the rest of [its]

claims, but there is no precedence [sic] for dissecting a plaintiff’s claim in this way on

jurisdictional grounds.” Pl.’s Opp. at 6. That is a blatant misstatement of the law. First, the

Federal Circuit could not be more explicit: “This is not to say that there was jurisdiction over

every aspect of the case or every contention advanced by appellants; jurisdiction over the

individual points has to be judged separately.” Smithson v. United States, 847 F.2d 791, 794

(Fed. Cir. 1988) (emphasis added). Second, Mitchell II and Anderson are clear examples of the

court “dissecting” a plaintiff’s claims, dismissing claims for certain damages for lack of

jurisdiction, and exercising jurisdiction over claims for other damages. Third, even if the precise

facts of this case are unusual, this court has found that it lacks jurisdiction over a portion of a

plaintiff’s claims in innumerable cases. See, e.g., Haas v. United States, 107 Fed. Cl. 1, 5-6

(2012); L.A. Ruiz Assoc., Inc. v. United States, 94 Fed. Cl. 768, 772-72 (2010); Laudes Corp. v.

United States, 84 Fed. Cl. 298, 312-14 (2008); Ewer v. United States, 64 Fed. Cl. 396, 399-402

(2005); Am. Telecom Corp. v. United States, 59 Fed. Cl. 467, 470-73 (2004); Deponte Inv., Inc.

v. United States, 54 Fed. Cl. 112, 114-16 (2002); Chaney v. United States, 45 Fed. Cl. 309, 320

(1999). As Smithson and this court’s cases make clear, not only is there precedent for this court

“dissecting” a plaintiff’s claim in adjudicating a motion to dismiss for lack of jurisdiction, the

court is required to engage in such dissection. Plaintiff’s contention to the contrary is, at best,

careless.

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for consequential damages. Nor, as best this court can tell, did the parties argue the point. This

court does not construe the oversight in ARRA Energy as somehow trumping Mitchell II or

Anderson. Nor does the court construe the oversight to mean that a statute mandating only

reimbursement for the cost of property somehow also mandates consequential damages for

failure to grant that reimbursement.

Apparently sensing that § 1603(a) cannot “fairly be interpreted” as mandating

consequential damages, plaintiff argues that whether consequential damages can be proven (i.e.,

whether or not they are too speculative) goes to the merits, rather than to jurisdiction. Pl.’s Opp.

at 8-11. That is true, 5 but it misses the point. Regardless of how speculative consequential

damages would be if this court were authorized to calculate them, the real problem for plaintiff is

that the money-mandating source of law plaintiff invokes does not authorize any consequential

damages. Such damages are simply not within the “restricted degree of compensation” the

money-mandating statute contemplates. See Mitchell II, 664 F.2d at 270-71. This, unlike the

provability of consequential damages, goes to jurisdiction. LCM Energy Solutions, 107 Fed. Cl.

at 773-74; see also id.; Anderson, 5 Ct. Cl. at 581.

Because the only money-mandating source of law plaintiff cites does not mandate

consequential damages, this court has no jurisdiction to consider plaintiff’s claims for

consequential damages. 6 Insofar as plaintiff requests such damages, the court must grant

defendant’s motion for partial dismissal.

IV. Conclusion

For the foregoing reasons, defendant’s MOTION for partial dismissal for lack of subject

matter jurisdiction is GRANTED.

IT IS SO ORDERED.

s/ Lawrence J. Block

Lawrence J. Block

Judge

5

Specifically, the merits of a claim for lost profits concern whether the plaintiff has established

by a preponderance of the evidence that (1) the loss was the proximate result of the breach; (2)

the loss of profits caused by the breach was within the contemplation of the parties because the

loss was foreseeable or because the defaulting party had knowledge of special circumstances at

the time of contracting, and (3) a sufficient basis exists for estimating the amount of lost profits

with reasonable certainty. Energy Capital Corp. v. United States, 302 F.3d 1315, 1324-25 (Fed.

Cir. 2002) (citing Chain Belt Co. v. United States, 115 F. Supp. 701, 714 (Ct. Cl. 1953);

Restatement (Second) of Contracts § 351(1) (1981)); see also Hadley v. Baxendale, 9 Exch. 341,

156 Eng. Rep. 145 (1854).

6

Plaintiff does not allege an implied contract based on ARRTA in its complaint. The court

expresses no opinion on whether it would have jurisdiction to consider a claim for consequential

damages based on a theory of implied contract.

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