Appendix — Agredano v. United States
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United States Court of Appeals for the Federal Circuit
2008-5114, 5115.
FRANCISCO JAVIER RIVERA AGREDANO and
ALFONSO CALDERON LEON,
PLAINTIFFS-Cross Appellants,
v.
UNITED STATES,
Defendant-Appellant.
Teresa Trucchi, Suppa, Trucchi and Henein, LLP, of San
Diego, California, argued for plaintiffs-cross appellants.
Patricia M. McCarthy, Trial Attorney, Commercial
Litigation Branch, Civil Division, United States Department
of Justice, of Washington, DC, argued for defendant-
appellant. With her on the brief were Tony West, Assistant
Attorney General, and Jeanne E. Davidson, Director. Of
counsel on the brief were Devin A. Wolak, Trial Attorney,
and Christopher J. Duncan, Attorney, Office of Assistant
Chief Counsel, Department of Homeland Security, United
States Customs and Border Protection, of San Diego,
California.
Appealed from: United States Court of Federal Claims
Chief Judge Emily C. Hewitt
DECIDED: February !7, 2010
Before MAYER, CLEVENGER, and DYK, Circuit Judges.
Opinion for the court filed by Circuit Judge MAYER.
Concurring opinion filed by Circuit Judge DYK.
MAYER, Circuit Judge.
The United States appeals the judgment of the Court
of Federal Claims holding that United States Customs and
Border Protection (“Customs”) breached and implied-in-fact
warranty when it inadvertently sold a vehicle containing
concealed narcotics to Francisco Javier Rivera Agredano.
See Agredano v. United States, 82 Fed. Cl. 416 (2008)
Because the court erred in finding an implied warranty in the
agreement between Customs and Agredano, we reverse.
BACKGROUND
Agredano attended a Customs auction of forfeited vehicles
on September 5, 2001. [n order to participate in the auction,
Agredano was required to sign a bidder registration form
Stating that he “‘agree{d] to comply with the terms of sale
contained in the sale catalog for this sale.” The sale catalog,
in return, stated:
A second disclaimer, printed on a flyer displayed at the
auction, stated “‘[a]ll merchandise is sold on an ‘AS IS,
WHERE IS’ basis, without warranty or guarantee as to
condition, fitness to use, or merchantability stated, implied
or otherwise. Please bid from your personal observations.”
Agredano purchased a 1987 Nissan Pathfinder at the
auction. The vehicle had been seized by Customs and
forfeited when its previous owner attempted to transport
marijuana across the Mexican border into the United States,
While Customs agents detected and removed some of the
marijuana at that time, more remained in the vehicle
unbeknownst to Customs or Agredano. Several months after
the auction, on January 24, 2002, Agredano was traveling in
the Pathfinder in Mexico with Alfonso Calderon Leon, his
business partner and brother-in-law. The two men were
stopped at a checkpoint by Mexican soldiers who inspected
the vehicle and found the hidden maryuana. Both men were
arrested and spent nearly a year in prison before being
exonerated by a Mexican appellate court on January 10,
2003
Agredano and Leon jointly filed a claim against the United
States in the United States District Court for the Southern
District of California pursuant to the Federal Tort Claims
Act (“FTCA”), 28 U.S.C. §§ 1346(b), 2671-2680, alleging,
inter alia, negligence decision in Sosa v. Alvarez-Machain,
which held that a statutory exception to the FTCA “bars all
claims based on any injury suffered in a foreign country,
regardless of where the tortuous act or omission occurred.”
542 U.S, 692, 712 (2004). Relying on Sosa, the district
court granted the government's motion for summary
judgment. The parties then stipulated to the filing of an
amended complamnt, alleging only contract claims, and the
transfer of the action to the Court of Federal Claims
The Court of Federal Claims held that a contract arose when
Agredano agreed to purchase and Customs agreed to sell the
Pathfinder, the contract contained an implied-in-fact
warranty that the vehicle did not contained contraband, and
customs breached this warranty. Agredano, 82 Fed. Cl. At
452. The court awarded damages for Agredano’s past and
future medical bills, past and future psychiatric treatment,
attorney fees in connection with the criminal proceedings in
Mexico, and costs incurred by Agredano’s family to visit him
in prison. Id. The tnal court denied third-party beneficiary
status to Leon, denied Agredano’s request to damages for
emotional distress, and held that the Customs did not violate
the implied covenant of good faith and fair dealing. Id. At
428-29,447,451-52. The united States appeals the finding of
an implied-in-fact warranty. Agredano and Leon cross
appeal as to third-party beneficiary status for Leon, damages
for emotional distress, and the implied covenant of good
faith and fair dealing. We have jursdiction pursuant to 28
U.S.C. § 1295(a)(3).
4
DISCUSSION
We review the Court of Federal Claim’s decision de novo
for errors of law and for clear error on findings of fact. Ind.
Mich. Power Co. V. United States, 422 F. 3d 1369, 1373
(Fed. Cir. 2005). Contract interpretation is a matter of law,
and 1s therefore reviewed de novo. St. Chnstopher Assocs.,
LP.v. United States, $11 F.3d 1376, 1380 (Fed.Cir.2008).
‘“{T]o recover for breach of warranty, a plaintiff must allege
and prove (1) that a valid warranty existed, (2) the warranty
was breached, and (3) plaintiff's damages were caused by
the breach.” Hercules Inc. V. United States. 24 F.3d 188,
197 (Fed. Cir. 1994). At issue in this case ts the first prong.
[t is undisputed that Customs made no express warranties
regarding the vehicle, and the trial court appropriately
determined that it did not have jurisdiction to entertain a
claim that a warranty was implied-in-law. Agredano, 82 Fed.
Cl. At 430 (cites Hercules, Inc. V. United States, 516 U.S.
417, 423 (1996). Instead, the trial court held that the
contract between Agredano and Customs contained an
imphed-in-fact warranty that the Pathfinder was free of
contraband, despite the disclaimers of warranty made by
Customs at the auction.
As the trial court correctly stated, an agreement tmplied-1n-
fact requires a “meeting of minds” that can be inferred from
the conduct of the parties. Id at 440 )quoting Baltimore &
Ohio R.R., 261 U.S. 592, 597 (1923). We have found
implied.” Lopez v. A.C. & S., Inc., 858 F. 2d 712, 715 (fed
Cir. 1988).
The trial court held that the actions of Agredano and
Customs, indicating that coth parties believed the Pathfinder
was free of contraband, demonstrate the requisite meeting of
the minds to form an implied warranty. Agredano, 82 Fed
Cl. At 440. The foundation of the parties’ belief is an
expectation that Customs had fuifilled its regulatory duty to
remove any contraband from the vehicle before selling it. Id.
At 437 (“The officers and agents of Customs are tasked with
the duty to identify and removed all contraband from
vehicles that cross into the United States.)”. However,
Customs’ responsibility to remove contraband from forfeited
vehicles does not provide a contractual warranty to future
purchasers of the vehicles that 1s has done so. D & N Bank
v. United States, 331 F.3d 1374, 1378-79 (Fed. Cir. 2003)
(“An agency’s performance of its regulatory or sovereign
functions does not create contractual obligations.”), While
Agredano is correct that the sale of the vehicle was a
commercial transaction, not a regulatory function, the source
of any responsibility on the part of Customs to search
vehicles and remove contraband is its regulatory function
and a failure to adequately perform this responsibility does
not provide a contractual remedy.
The existence of an implied-in-fact warranty 1s further
undermined by the express disclaimers Customs made at the
auction, which show that the Customs did not intend to form
an unphed-in-fact warranty therefore could not have
occurred. The tria' court held that the Customs did not
disclaim a warranty that the vehic’e was free of contraband
by interpreting the scope of disclaimer to be limited to “the
construction, maintenance, and mechanical operation of the
vehicle” and not extending to “a situation in which the
vehicle had been modified in a way that had no effect on its
ability to function for transportation.” Agredano v. United
States, 70 Fed. Cl. 564, 572 (2006) (quoting Rodriguez v.
United States, 69 Fed. Cl. 487, 498 (2006)). This
interpretation ignores the language found in the sale catalog,
which indicates that the disclaimer goes beyond mechanical
operation of the vehicle by stating that no warranties are
provided “regarding any aspect of the vehicle or its ability to
operate” (emphasis added). The sale catalog offers as
examples of aspects of the vehicle for which no warranties is
6
provided the vehicle’s identity, previous ownership, and
registration status. These examples further demonstrate that
the disclaimer is not limited to the ability of the vehicle to
function for transportation. Customs clearly and
unambiguously stated that it was not extending a warranty
regarding any aspects of the vehicle, and it is incongruous to
find that Customs impliedly warranted what it expressly
disclaimed.
The issues of third-party beneficiary status and damages for
emotional distress raised by Agredano and Leon in their
cross-appeal are rendered moot by this decision. We have
considered their argument that the government violated the
implied covenant of good faith dealing, and we concur with
the trial court’s decision on this issue.
CONCLUSION
Accordingly, the judgment of the Court of Federal Claims ts
reversed.
REVERSED
United States Court of Appeals for the Federal Circuit
2008-5114,-S115
FRANCISCO JAVIER RIVERA AGREDANO
and ALFONSO CALDERON LEON,
Plaintiffs-Cross Appellants,
V.
UNITED STATES,
Defendant-Appellant.
Appeals from the United States Court of Federal Claims in
05-CV-608, Chief Judge Emily C. Hewitt
DYK, Circuit Judge, concurring.
Absent a contractual warranty disclaimer, it seems to
me that the sale of an automobile by the government to a
private purchaser likely carries with it an implhied-in-fact
warranty of fitness, including a warranty that the vehicle
does not contain illegal drugs. However, | agree with the
majority that the contract here explicitly disclaimed all
warranties, not just relating to the operability of the vehicle.
The government’s regulatory practice of inspecting such
vehicles for contraband cannot overcome this disclaimer. |
accordingly join the majonty opinion.
United States Court of Appeals for the Federal Circuit
ERRATA
February 24, 2010
Appeal No. 2008-5114,-5115, AGREDANO V. US
Precedential Opinion
Decided : February 17, 2010
Please correct the following:
On page 2, lines 5-17, delete:
The sale catalog, in turn, stated:
The vehicles offered to you for purchase at
any U.S. Customs Auction are sold “AS IS,
WHERE IS”. This means that neither U.S
Customs or McCormack Auction Company,
or EG & G Dynatrend, extend any warranties
or promises of any kind regarding any aspect
of the vehicle or its ability to operate,
including but not limited to the vehicle’s
identity, previous ownership, physical
condition, registration status, or ability to
pass a Smog certification.
A second disclaimer, printed on a flyer displayed at the
auction, stated “[a]ll merchandise 1s sold on an AS JS,
WHERE IS basis, without warranty or guarantee as to
condition, fitness to use, or merchantability stated, implied
or otherwise. Please bid from your personal observation, “ A
second disclaimer, printed on a brochure advertising the
auction,
Stated:
The vehicles offered to your purchased at any U.S.
Customs Auction are sold “AS 1S, WHERE IS”.
This means that neither U.S. Customs or
McCormack Auction Company, or EG & G
Dynatrend, extend any warranties or promises of any
kind regarding any aspects of the vehicle or its ability
to operate, including but not limited to the vehicle’s
identity, previous ownership, physical condition,
registration status, or ability to pass a smog
certification.
On page 6, lines 5 & *, delete “sale catalog” and insert
“brochure”
9
In the United States Court of Federal Claims
No. 05-608 C (E-Filed under seal: June 24, 2008)
(E-Filed for publication: July 22, 2008)
FRANCISCO JAVIER RIVERA
AGREDANO,
Plaintiff,
THE UNITED STATES,
Defendant
Teresa Trucchi, San Diego, CA, for plaintiff
Trial; Breach of Implied-in-Fact Covenant;
Failure to Remove Contraband From Seized
Vehicle Prior to Resale Constitutes Breach of
Implied in-Fact Covenant; Damages for Injuries
Caused by Breach
Devin A. Wolak, Washington, DC, with whom were Jeffrey
S. Bucholtz, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Patricia M. McCarthy, Assistant
Director, Commercial Litigation Branch, Civil Division,
Department of Justice, Washington, DC, for defendant. Enk
J. Gantzel, U.S. Customs and Border Protection, U.S.
Department of Homeland Security, San Diego, CA, of
counsel.
10
OPINION!
HEWITT, Judge
| Introduction
'(...continued) reason(s) for the request.
Opinion filed June 24, 2008 I n.1
On July 8, 2008, defendant filed its Motion to Redact
Final Order (Redact Motion or Redact Mot.). Redact Mot.
1. In its Redact Motion, defendant requested the court to
redact certain portions of the court’s Opinion of June 24,
2008 “to avoid compromising the efforts of United States
Customs and Border Protection . . . to protect the
U.S.-Mexico border by publicly disclosing the specific means
and methods by which they carry out their law enforcement
Footnote | to the Opinion E-filed under seal on June
24, 2008 stated:
Chis Opinion is filed under seal. If any party believes
that this Opinion contains protected material that
should be redacted before publication, that party shall,
by motion to be filed on or before July 8, 2008,
request that such protected material be redacted. The
motion shall indicate the specific protected material as
to which redaction 1s requested and, with respect to
each such proposed redaction, the (continued...)
|
duties.” Id. In support of its Redact Motion, defendant
submitted a copy of the protective order in this case, which
had been issued by the United States District Court for the
Southern District of California before the case was
transferred to this court. See Redact Motion, Ex. B, 1. On
July 10, 2008, plaintiff filed its Notice of Non-Opposition to
Defendant USA’s Motion to Redact Final Order (PI1.’s
Notice), stating that plaintiff does “not oppose. . .
{defendant’s] requests as set forth in the [Redact Motion]
filed July 8, 2008. Pl.’s Notice 1-2.
The court accepts the protective order issued in this
case by the United States District Court for the Southern
District of California as the law of the case. Thus, the issue
before the court is whether the protective order should be
modified in order to enable the court to publish this Opinion
in its entirety without incorporating defendant’s proposed
redactions. The Federal Circuit has held “that a court may
enter a protective order if ‘good cause’ exists to protect
discovery information” but that “a presumption of public
access to judicial records” exists. Baystate Techs., Inc. v.
Bowers, 2008 U.S. App. LEXIS 14686, at *4 (Fed. Cir. July
10, 2008) (table) (citing Siedle v. Putnam Invs., Inc., 147
F.3d 7, 9 (1st Cir. 1998); Poliquin v. Garden Way, Inc., 989
F.2d 527, 533 (ist Cir. 1993)). The Federal Circuit further
stated that “in determining whether a protective order should
be modified, the court must balance the privacy interests of
the parties against the public interest in access to the
discovery information.” Id. at *4-5 (citing Siedle, 147 F.3d
at 10).
The court finds that a balancing test is not necessary
in this case to determine whether the protective order should
be modified. Defendant has requested redactions of portions
of the Opinion that describe the policies and procedures used
12
~
by United States Customs and Border Protection, Redact
Mot. passim, and plaintiff does not oppose those redactions,
Pl.’s Notice 2. The court determines that the portions of the
Opinion requested by defendant to be rec#ected contain
information that is not available to the public. For these
reasons, the court accepts defendant’s requests contained in
its Redact Motion. This case is before the court following
a trial’ on a claim by plaintiff, Francisco Javier Rivera
A number of the witnesses presented at trial were
Spanish speakers and required interpreters to translate their
testimony into English for the court. Under Federal Rules of
Evidence (FRE) 604, “An interpreter is subject to the
provisions of these rules relating to qualification as an expert
and the administration of an oath or affirmation to make a
true translation.” FRE 604 (2006). The court required each
interpreter to undergo a voir dire by the counsels and the
court and then to take the oath administered to every witness
The court qualified each interpreter as an expert in the
Spanish language. Agredano Trial Transcript (Tr.) 10:7-9;
14:20-22; 753:6-8. For convenient reference, the names, in
alphabetical order, and a description of the interpreters, upon
whose live translation the court relics in this opinion, follow:
Ms. Eugenia Argucllo trained as an English as a
Second Language (ESL) teacher at the national university of
Mexico; she served as an ESL teacher for fourteen years. Id.
at 751:4-10. She then attended Southwestern College in the
United States and trained to be an interpreter for two and a
half years. Id. at 751:12-14. She has a California Certificate
751:17-19. She has been qualified as an expert in the Spanish
language in the federal district courts in San Diego and
Albuquerque. Id. at 751:24752:4. Ms. Arguello has worked
[3
Agredano (Mr. Agredano or plaintiff), for breach of contract
against the government (government or United States or
as an interpreter for sixteen years, 1d. at 752:14, and she has
held her California certification for fourteen years, 1d. at
752:19-24, and her federal certification for more than ten
years, 1d. at 752:25-753:5. The court qualified Ms. Arguello
as an interpreter of the Spanish language in the trial. Id. at
753:6-8.
Ms. Gloria Mayne has an undergraduate degree in
economics, graduate courses in marketing, communication,
and business administration, and a certificate degree from the
University of California San Diego in translation and court
interpreting. [d. at 7:13-17. She also has numerous
certifications from the Judicial Council of California for
various courses taken in interpreting and translation. Id. at
7:17-8:1. Ms. Mayne has been certified in the state of
California as a court interpreter for almost seventeen years.
Id. at 8:7-9. She has been certified as an interpreter by the
United States District Courts for five years. Id. at 8:12-14.
She has worked as an interpreter in criminal and civil
proceedings in California for seventeen years. Id. at 8:9-1]2.
The court qualified Ms. Mayne as an interpreter of the
Spanish language in the tral. Id. 10:7-9.
Ms. Ruth Monroy has a law degree from the
University of Mexico and is certified as a court interpreter of
the Spanish language for the California state courts and the
United States District Courts. Id. at 13:!0-16. She has been
certified as an interpreter for the federal courts for
approximately nineteen years. Id. at 14:16-19. The court
qualified Ms. Monroy as an interpreter of the Spanish
language in the trial. Id. 14:20-22.
14
defendant). The court heard testimony from nineteen
witnesses’ and received some thirty-nine exhibits in trial
For convenient reference, the names, in alphabetical
order, and a description of the witnesses upon whose live
testumony the court relies in this opinion follow:
Mr.Jayson Ahern ts a fact witness for plaintiff
Plaintiff Francisco Javier Rivera Agredano’s Witness List,
filed Jan. 8, 2008 (PI.’s Wit.) 6. He currently works as the
Deputy Commissioner of the United States Customs and
Border Protection (Customs). Tr. 565:18-20. From March
1, 2003 to August 2007, Mr. Ahern worked as the Assistant
Commissioner for the Office of Field Operations within
Customs. Id. at 566:1-7. From May 2002 to March 2003, he
was the Assistant Commissioner for the Office of Field
Operations with the United States Customs Service (USCS)
which was then reorganized as Customs. Id. at 566:9-13.
From January 2001 to May 2002, Mr. Ahern was the
Director for the Southern California Customs Management
Center in San Diego, id. at 566:15-19, and before that, he
was the Port Director for Operations of Customs in Los
Angeles, id. at 567:1-2.
Mr. Francisco Javier Rivera Agredano 1s the plaintiff
in this case and a fact witness for plaintiff. Pl.’s Wit. 2. He 1:
forty-five years old and resides in Tijuana, Mexico. T1
44:16-19. He works in the printing business as a printer, a
job that he has held for twelve years. Id. at 44:20-21;
45:11-12. He has a technical degree in accounting. Id. at
45:15. Mr. Rivera Agredano ts married to Maria del Carmen
Calderon, with whom he has two daughters. Id. at
44:20-45:4. Mr. Robert Bickers is a fact witness for plainuff
Pl.’s Wit. 9. He currently works as a Customs and Borde
Apredano Trrat
’(...continued)
244:18. He is a Deputy Assistant Port Director for Customs
at Otay Mesa. Id. at 185:18-186:8. He first worked as a
Customs Inspector for USCS in 1987. Id. at 186:1-2;
Patrol Supervisor for Customs. Tr. 261:13-18 He first
began working for the USCS in 1991 as an Inspector at the
port of entry. Id. at 261:23-262:5. In 2001, he served as a
Supervisor for the Contraband Enforcement Team. Id. at
263:8-13. In his current position, Mr. Bickers trains new
inspectors. Id. at 262:23-24.
Dr. Jesus Manuel Cesea Caro is a fact witness for
plaintiff. Pl.’s Wit. 14-15. He has worked as a medical
doctor for twenty-five years. Tr. 754:18-20. He currently
practices in gerontology at the Issste Hospital in Tijuana,
Mexico and his private practice. Id. at 754:22; 755:19-20
He studied medicine at the Autonomous University in
Guadalajara, Mexico. Id. at 755:5-6. He specialized in
family medicine at the Issste Hospital in Tijuana, Mexico and
pursued a sub-speciality in gerontology at the Lopez Mateos
Hospital in Mexico City, Mexico. Id. at_755:6-9.
Mr. Lawrence Fanning 1s a fact witness for plaintiff,
Pl.’s Wit. 8-9, and a fact witness for defendant, Defendant’s
Witness List (Def.’s Wit.) 4. He currently works as an
Assistant Port Director at Otay Mesa Cargo. Tr. 448:2-3
From October 2000 through 2007, Mr. Fanning served as a
Fines and Penalties Officer. Id. at 448:6-19.
Mr. Robert Hood is a fact witness for plaintiff, Pl.’s
Wit. 10, and defendant, Tr. 243:16(continued...)
16
186:12-14. At that time, he worked in secondary
inspections and, over the years, he has worked m cargo,
commercial, and airport operations. Id. at 186:18-21. He
became a Senior Inspector in 1991 and a Supervisory
Customs Inspector in 2000. Id. at 187:8-10. In 2004, he
became a Supervisory Customs and Border Protection
Officer, and he was promoted to Chief Customs and Borde
Protection Officer. Id. at 187:10-14. In October 2007, Mr
Hood became Deputy Assistant Port Director. Id. at
187:14-16.
Mr. Alfonso Calderon Leon is a fact witness for
plaintiff. Pl.’s Wit. 3. He was a plaintiff in this case when
the complaint was first filed. Id.; see Complaint (Compl.) §
5. He is thirty nine years old, and he works with Messrs
Agredano and Gabriel Calderon wm a pnnt shop. Tr.
94:21-95:1. He has worked at the print shop for
approximately fifteen years. Id. at 95:4-5. Mr. Rivera
Agredano is married to Mr. Calderon’s sister. [d. at 95:6-8
Mr. Gabriel Calderon Leon 1s a fact witness for
plaintiff. Pl.’s Wit. 15. He is thirty-five years old and works
as a printer with his brother-in-law, Mr. Agredano. T1
520:8-15. He lives in Tijuana, Baja California, Mexico. Id
at 520:16-17.
Ms. Juliet Calip is a rebuttal] witness for defendant
Tr. 676:18-22. She works as a paralegal specialist for U.S.
Immigration and Customs Enforcement. Id. at 677:22-24
She has held that position since March 2003. Id. at 678:1__
Prior to that, she was a paralegal specialist for USCS for
two years. Id. at 678:2-8. In both positions, which are
essentially the same jobs (the difference being the
reorganization of the USCS within the Department of
}7
Frometand Securiry (Dtts) i 2003), Ms. Calip processes
Freedom of Information Act requests. Id. at 678:9-22
Dr. Miguel Lizarraga 1s a fact and expert witness for
plaintiff. Pl.’s Wit. 14. He works as a medical doctor. Tr
798:1. He received a degree in a medicine from the
University Juarez Autonoma de Tabasco in Mexico. Id. at
798:6-10. Dr. Lizarraga has a certificate in obesity, which
was awarded to him by the Association of Obesity in
lijuana, Baja California after attending classes there. Id. at
799:6-17. For the past twenty-four years, he has practiced
emergency medicine at the Issste Hospital in Tijuana,
Mexico. Id. at 800:2-5. The court qualified Dr. Lizarraya
as an expert in general medicine and in the control of
obesity. Id. at 800:16-19
Mr. Carlos Mejia Lopez ts a fact witness for plaintiff
Pl.’s Wit. 3-4. He is a criminal law attorney in Tijuana,
Mexico. Tr. 129:20; 130:2-4. He was president of the
municipality of Tijuana from 2004 to 2007. Id. at
| 30:25-131:]1. He represented Mr. Agredano in the criminal!
proceedings that followed Mr. Rivera Agredano’s arrest by
the Mexican border authorities. Id. 140:12-14. Mr. Rivera
Agredano’s wife is a sister to Mr. Lopez’s wife. Id. 140:11
(continued... )
(...continued)
Mr. Joseph Marilao is a fact witness for plaintiff
Pl.’s Wit. 6. He 1s a Supervisory Customs and Border
Protection Officer, a position that he has held since 2006
Tr. 398:16-21. He began his employment with USCS tn
1992 as an inspector at San Ysidro. Id. at 398:22399:4
After six months, he worked as an inspector at Otay Mesa
and then returned to San Ysidro two and a half years later
Id. at 399:5-16. In 1997, he became a Canine Enforcement
Officer and, in 2000, he became a Senior Inspector. Id. at
18
399:20-400:2. In 2002, Mr. Marilao served as a Canine
Enforcement Officer again, and he became a Supervisor in
the Canine Border Protection unit in 2006. Id. at 400:3-12.
Mr. David John Murphy, Jr. is a fact witness for
plaintiff. Pl.’s Wit. 7-8. He currently works as the Director
of Field Operations for Customs in the Chicago field office.
Tr. 304:24305:1. From 1983 to 1986, he orked for USCS
as a customs inspector in San Ysidro, California. Id. at
305:4-14. Heb then worked as a Canine Enforcement
Officer in the San Diego field office until 1999 when he
ecame Acting Chief of the canine section. Id. at
305:21-306:10. After approximately three montshs, Mr.
Murphy was selected as the Enforcement Coordinator for
the Southern California Custom{s} Management Center, a
position that he held until November 2001. Id. at
306:15-25.
Ms. Aide Nunez ts a fact witness for plainuff. PI.’s
Wit. 12. She is an Inspector with Customs, Tr. 369:6-8, a
position she has held since 1995, id. at 369:9-10. In 2001,
she served as the Lead Officer tn the Contraband
Enforcement Team. Jd. at 370:19-22.
Mr. Jose Perez is a rebuttal witness for defendant.
Tr. 724:23-725:3. Mr. Perez is a Supervisor Chief with
Customs, a position that he has held since 2000. Id. at
725:17; 726:2-3. He has becn with USCS and Customs for
over nineteen years. Id. at 725:24-25.
Mr. Robert Root is a fact witness for plaintiff, P1.’s
Wit. 11, and a fact witness for defendant, Def.’s Wit. 3.
Although currently retired, Tr. 642:17, Mr. Root previously
was employed by USCS, id. at 642:18-20. Beginning in
19
October 1983, he served as an Inspector for USCS for three
years. Id. at 642:21-643:6. In 1986, he became a Canine
Enforcement Officer, a position that he held until 1995 when
he became a Canine Enforcement Supervisor. Id. at 643:9-
17. Mr. Root served as a Canine Enforcement Supervisor
until his retirement in 2007. Id. at 643:19-20.
Dr. Hector Santillana ts a fact and expert witness for
plainuff. Pl.’s Wit. 13. He has worked as a psychiatrist for
forty years. Tr. 772:21-23. He currently practices in
Tiyuana, Mexico. Id. at 773:9-12. He earned a degree in
psychiatry in 1969. Id. at 773:6-8. From 1965 through
1968, he trained at Hospital Cruz del Norte in Hermosillo
Sonora, Mexico, Hospital Cruz del Sur in Oaxaca, Mexico,
and Hospital Fray Bernardino Alvarez. in Mexico City,
Mexico. Id. at 774:13-19. Since that time, he has kept his
own Office for private practice, and, in 1970 (continued...)
Transcript (Tr.) passim. Following tral, the parties filed
post-trial briefs and replies: Plaintiff Francisco Javier Rivera
Agredano’s Post Tnal Brief (PI.’s Br.); Defendant's Posttrial
Brief (Def.’s Br.); Plaintiff Francisco Javier Rivera
Agredano’s Post Trial Reply Brief (Pl.’s Reply); and
Defendant’s Response to Plaintiff's Post-Trial Brief (Def.’s
Reply). In a previous opinion in this case, the court
dismissed a related claim brought by plaintiff's
brother-in-law, Agredano v. United States (Agredano 1), 70
Fed. Cl. 564, 579 (2006), and denied a motion by defendant
to dismiss the case in its entirety, id. at 580. The procedural
background is described in more detail in Part II.C below.
Plaintiff seeks to recover damages arising from an
alleged breach of contract by the government, specifically,
U.S. Customs and Border Protection (Customs), in
connection with the government’s sale of a 1987 Nissan
Pathfinder (the Pathfinder) after Mexican authorities stopped
plaintiff in the Pathfinder and arrested him for transporting
seventeen kilograms of marijuana found in the Pathfinder.
Complaint (Compl.) 4] 7, 1316. Specifically, plaintiff seeks
to recover $2,600 for the fair market value of the Pathfinder;
$350,000 for attorneys fees incurred by plaintiff during his
criminal proceedings in Mexico; $1,254 for the costs and
expenses incurred by plaintiff's family in bringing supplies to
plaintiff while he was imprisoned; $48,000 for the income
plaintiff lost during his imprisonment; $10,000 for the
medical bills plaintiff incurred from the injuries and illnesses
he sustained as a result of his imprisonment; $80,000 for the
medical expenses it is reasonably foreseeable that plaintiff
will incur in the future as a result of the injuries and illnesses
he sustained as a result of his imprisonment; $12,500 for the
psychiatric bills plaintiff has incurred as a result of the
psychiatric ailments that his imprisonment caused; $33,000
to $60,000 for psychiatric expenses it 1s reasonably
foreseeable that plaintiff will incur as a result of his
imprisonment; and “[e]motional distress damages in an
amount which the Court deems reasonable compensation for
the arrest and impnsonment of. . . [plaintiff] for a period of
$51 days... and the residual related problems suffered
thereafter.” Pl.’s Br. 1-2.
{| Background
*(...continued)
and 1976, he also had two psychiatric clinics in Tijuana,
Mexico. Id. at 774:25-775:12. From 1981 to 1984, Dr.
Santillana also served as the director of the lssste Hospital.
Id. at 775:21-25. In 1996, he was the director of another
hospital, Health Department Health Center No. |. Id. at
2
775:21-776:1. From 1974 through 1978, Dr. Santillana also
served as the president and vice president at the medical
university in Tijuana. Id. at 776:19-777:4. The court
recognized Dr. Santillana as an expert in psychiatry. Id. at
778:1-2._
A. Plaintiff's Purchase of the Pathfinder and
Subsequent Arrest by Mexican Authonties
Plamtiff Agredano currently resides in Tijuana,
Mexico with his wife, Maria del Carmen Calderon, and two
daughters. Tr. 44:18; 44:22-45:8; 49:13-15. He is in the
printing business._Id. at 44:20-21. Alfonso Calderon and
Gabriel Calderon, both of whom are brothers to plaintiffs
wife, have worked as partners in plaintiff's printing business
for the last twelve years. Id. at 45:16-46:13. Plaintiff's
business prints items such as brochures, cards, stationary,
and envelopes. Id. at 47:22-48:!. Some of plaintiffs clients
are ad agencies that conduct work for Burger King in
Tyuana and Cali-Max, a supermarket chain._ Id. at 48:4-7.
Plaintiff has printing equipment in Tyuana that he uses for
smaller jobs, but he sometimes rents equipment at othe!
locations in order to perform larger-scale projects. Id. at
47:9-13. Depending on the particular job, plaintiff may rent
equipment in either Tijuana or Enseneda, Baja California._
Id. at 48:10-16; see Joint Exhibit (JX) 12 (photographs from
the evidence offering sesston) 18.
On September 5, 2001, plaintiff bought the
Pathfinder at an auction held by U.S. Customs near San
Diego, California. Tr. 50:7-15; 51:6-7; see JX 4
(Conveyance Custody Acceptance Report) 13; JX 7
(plaintiff's title to the Pathfinder) 1. He attended the auction
with his brother-in-law and business partner, Gabriel
ry,
~&
Calderon, because they each wanted to buy a vehicle. Tr.
54:22-55:5. At the auction, three to four hundred cars were
being auctioned, id. at 55:5-6, but plaintiff and Gabriel
Calderon decided to buy only one vehicle because “[s]ome
of the ones that we were interested in were too expensive,
so we weren't able to buy them,” id. at 55:6-8. Plaintiff had
learned about the auction from an acquaintance, and he was
interested in purchasing a vehicle at the auction because
“this vehicle [Pathfinder], for example, in Tijuana would cost
about $5,000, but at the auction, this vehicle cost - it cost
me $2,600.” Id. at 51:17-25. Plaintiff understood that the
vehicles sold at these auctions were seized vehicles, but he
had no knowledge as to where or why the cars had been
seized. Id. at $2:2-12. Prior to this particular auction,
plaintiff had bought vehicles at U.S. government auctions in
the past “several times,” and he had never had a problem
with any of the vehicles that he had purchased previously.
Id. at 51:12-16.
When plaintiff arrived at the auction lot, he
completed a Bidder Registration Form that was administered
by U.S. Customs Service Support. Id. at $2:22-53:3; JX 6
(Bidder Registration Form) 1. As a condition of
participating in the auction, plaintiff signed the Bidder
Registration Form, Tr. 53:1-3, which provided, “I agree to
comply with the terms of sale contained in the sale catalog
for this sale and all future sales | attend,” JX 6 (Bidder
Registration Form) |. Plaintiff chose to bid on the
Pathfinder because of the vehicle’s condition: “[1]t wasn’t
destroyed on the outside and the interior was intact.” Id. at
53:12-13. Plaintiff was unable to open the doors and mspect
the interior of the Pathfinder directly, but “[t]he back part
was open and inside of that was a gas tank that had been
removed and that’s how you could look inside, and you
could also look inside through the windows.”’ Id. at
23
$3:11-54:7. Gabriel Calderon confirmed at trial that the
interior “looked in perfect condition,” 1d. at 524:16, and that
the only visible damage to the car was “that the gasoline
tank had been removed and it was in the back of the car, in
the trunk,” id. at 524:10-12. Plaintiff further testified that
“the upholstery was complete” in the Pathfinder, as opposed
to “[o]ther vehicles [that] had the upholstery torn.” Id. at
54:10-12. The fact that the upholstery was complete was
important to plaintiff because “with some cars, tt would be
too expensive to have them be operational again[, a]nd that
would raise the cost.” Id. at 54:16-18. At some point prior
to purchasing the Pathfinder, plaintiff saw a flyer, id. at 56:7-
10, that stated the following:
WARRANTY/GUARANTEE: All
merchandise is sold on an “AS IS, WHERE
IS” basis, without warranty or guarantee as
to condition, fitness to use, or
merchantability stated, implied or otherwise.
Please bid from your personal observations.
JX 5 (auction flyer) 1. Plaintiff testified that he understood
that he was purchasing the vehicle “as 1s.” Tr. 56:11-13. He
stated that U.S. Customs “on one occasion said that the
vehicles were auctioned as they were, ‘as 1s.”. And they
made reference to the fact that they didn’t assume any
responsibility if the engine was shot or the transmission
didn’t work.” Id. at 56:16-20. Plaimtitf also testified that he
was not concerned about the Pathfinder containing narcotics
“{b]ecause | was buying it from a country that has - that I
supposed had high technology, the latest technology, and
that it was umpossible for it to have any problem.” Id. at
58:9-12. Plaintiff “felt 100 percent sure, safe” that the
Pathfinder had been checked for contraband because he
“was buying it from the [U.S.] [g]overnment itself.” Id. at
58:20-59: 1.
Plaintiff paid tor the Pathfinder with cash, 1d. at
88:9-11, and signed the title to the vehicle, thereby obtaining
ownership, JX 7 (Certificate to Obtain Title to a Vehicle) |
The title stated the following:
The undersigned Department or Agency of
the United States Government certifies that
the vehicle described herein, the property
of the United States Government, has been
transferred this Sth day of September 2001,
to the Transferee designated herein; and
that this is the first transfer of such vehicle
in ordinary trade and commerce subsequent
to acquisition thereof by the United States
Government.
Id. The title listed the transferor of the vehicle as “U.S.
Customs Service” in San Diego and the transferee as
“Francisco J. Rivera Agredano.” Id. The signer on behalf of
the transferor was Guiseppe A. Vaccano, and plaintiff signed
as the transferee. Id.
Having obtained possession of the Pathfinder,
plaintiff “had to install the gas tank, which was right there in
the vehicle itself.” Tr. 59:3-4. To plainuff's knowledge,
after purchasing the Pathfinder, no one ever removed the
rear seats, took out the paneling on the inside of the interior,
or inspected the wheel walls above the tires. Id. at
59:14-25. Plaintiffand Gabriel Calderon drove the
Pathfinder without any problems. Id. at 59:7-13
hr
WZ
Some four and one-half months later, on January 24,
2002, at about eleven o’clock at night, plaintiff drove with
Alfonso Calderon in the Pathfinder from Enseneda to
Tiuana. Id. at 60:21-61:9. They had traveled to Ensenada
earlier that day to drop off ten thousand blank sheets of
paper to be processed at printing facilities there. Id. at
60:7-12. For their trip home, they packed into the
Pathfinder five thousand printed, cardboard-like posters for
one of their clients, the supermarket chain Cali-Max. Id. at
61:3-6; 62:10-12.
In order to drive to Tijuana from Ensenada, plaintiff
was required to stop at a mandatory checkpoint in the smal!
town of Sauzal. Id. at 61:10-15. “[Sjoldiers were
inspecting all of the vehicles that came through there,” and
plaintiff and Alfonso Calderon “were asked where we were
heading and what we were carrying.” Id. at 62:810.
Plaintiff was asked to pull to the side of the road, to get out
of the Pathfinder, and to open the trunk._Id. at 62:20-24.
The soldiers had a metal antenna “‘like {a] rod,” id. at 63:14,
‘and they removed some coverings that the back upholstery
has and they would stick in that meta] antenna,” 1d. at
63:9-11. Plaintiff saw the soldiers stick the metal antenna
inside several places in the Pathfinder. Id. at 63:15-17.
‘When they were poking the side, the soldiers noticed that it
would stop on something[,] and they started using force to
knock off one of the coverings.” Id. at 63:20-22. The
soldiers found a package on the right side of the back part of
upholstery. Id. at 63:23-64:5. They then asked Alfonso
Calderon to get out of the Pathfinder, and “[t}hey started
knocking down all of the - the signs, the cardboard signs,
and they started breaking up all of the inside.””_Id. at
64:8-23. The soldiers found additional packages in the
upholstery, mn the doors, and in the sides of the vehicle. Id.
at 64:24-65:3; see JX 12 (photographs from the evidence
26
offering session) 12.
During the inspection at Sauzal, plaintiff and Alfonso
Calderon were restrained by the soldiers, who pointed guns
to their heads, touched them with the butt of the guns, and
handcuffed them. Tr. 65:23-66:8. Plaintiff injured his nght
arm “from the excessive movement upwards that they [the
soldiers] made when they handcuffed me,” and he was hit in
the back a few times with the butt of a rifle._Id. at
67:20-68:10. Once the search was complete, plaintiff and
Alfonso Calderon were held in a room and unable to make
any telephone calls until six or seven o’clock in the morning.
Id. at 66:11-19. The next morning, they were taken to an
army barracks in Ensenada where “in a hidden manner a
soldier let me [plaintiff] call Tijuana.” Id. at 66:21-24.
Plaintiff called his wife, Carmen. Id. at 66:25-67:1.
By nine o’clock on the morning of January 25, 2002,
plaintiff was at the Office of the Federal Attorney General,
where he was held in a cell separate from Alfonso Calderon.
Id. at 68:17-24. He stayed in that cell for about twelve
hours and then went to the court in Ensenada to give a
statement. Id. at 69:1; 69:7-11. Plaintiff and Alfonso
Calderon were then taken to the penitentiary at Ensenada at
about ten or eleven o’clock at night. Id. at 69:8-9.
After arriving at the penitentiary, plaintiff was
“totally, completely searched,” and his wallet, belt, and
shoelaces were taken._Id. at 70:2-4. The prison was
constructed entirely of concrete and contained several areas
with exposed sewage. Id. at 82:11; 83:19-21. Plaintiff was
placed in a cell that contained approximately eleven other
persons, id. at 70:9-10, and he remained there for twenty or
thirty days, id. at 70:15. He testified that he did not fit in the
cell and that he “was left to sit there at the door.” Id. at
27
70:12-13. Because of the small size of the cell, plaintiff was
unable to lie down to sleep. Id. at 70:20-23. The only
bathroom facility available to plaintiff was a hole in the cell.
Id. at 71:1-2. With regard to food and drink, plaintiff was
given coffee and water three times a day and fed beans, rice,
and soup. ld. at 71:15-24. Plaintiff's family would come
and visit but it was difficult to do so “[b]ecause they had to
be amongst the other inmates that were there. There
[was]|n’t.a special place where you can meet with them.”’ Id.
at 74:4-6. Eventually, plaintiff was transferred to another
cell that contained forty-five or fifty persons. Id. at
72:17-19. He slept on the floor in that cell, id. at 75:9-11,
and spent his days just sitting in the cell without an
opportunity to exercise, id. at 74:18-75:14. He was
provided with the same food and drink that he had received
in the first cell. Id. at 81:19-23. There was only one toilet,
which did not flush, located in the cell, and hot water was
available for showering only at three or five o’clock in the
morning. Id. at 83:1-15. Plaintiff remained in that cell for
eleven months. Id. at 75:19-21.
B. Plaintiff's Criminal Proceedings in Mexico
Attorney Carlos Meyia-Lopez, a criminal attorney in
Tijuana, Tr. 129:20-130:4, who is married to one of the
sisters of plaintiff's wife, id. at!40:11, represented plaintiff
throughout plaintiffs Mexican criminal proceedings, id. at
140:12-166:24. Mr. Mejia testified that, under Mexican
criminal law, once someone Is arrested, that person must
appear before “the authorities that have jurisdiction over the
person who’s detained,” 1d. at 131:18-19, within twenty-four
hours and give a statement called “a ministerial statement,”
id. at 131:24-132:8. “It 1s at that time that the suspect is
informed of the charges that he’s being charged with.” Id. at
132:2-3. “The Ministerial Government Office or District
Attorney’s Office then decides whether there are enough
elements based on that statement . . . for that detainee to
give a second statement before a judge.” Id. at 132:11-15.
The judge has forty-eight hours in which to accept the
detainee’s statement, which is known as “the pre-trial
statement.” Id. at 132:18-20. Ifthe judge decides to pursue
the charge, the defendant has three to six days to provide
proof of his innocence. Id. at 133:2-22.
Followmg the search of the Pathfinder by Mexican
authorities at Sauzal, plaintiff was charged with drug
trafficking and possession of drugs. Id. at 141:10. The first
judge was a judge based in Ensenada. Id. at 138:20-24. Mr.
Mejia requested from that judge the extended time period
within which to produce evidence, and he was granted the
sixday period. Id. at 136:8-14. The protocol is that
evidence is presented to the court in wniting, id. at
133:23-24, and that “[o]ne has to present each means of
proof or evidence one by one and has to disclose the
purpose of each evidence,” id. at 133:24-134:1. “Evidence
can be testimony from witnesses, police inspections, expert
evidence, documents, [and/or] interviews... .”’_Id. at
134:2-5. The evidence is then presented to a clerk. Id. at
134:22-135:1. “The judge almost never sees the defendant.”
Id. at 135:25.
Mr. Mejia testified that, following the initial
presentation of evidence, if the defendant is indicted, the
“instruction period,” Tr. 136:22-25, begins, during which
“the judge says you have an X amount of months for you to
offer more evidence because this evidence is not sufficient,”
id. at 137:1-3. The evidence includes “statements,
documents, eyewitness visits, confrontations, [and/or]
reconstructing the scene of the events.”” Id. at 137:6-8. At
the end of the instruction period, a hearing occurs at which
29
the judge affords the attorney a final opportunity to make a
record. Id. at 137:21-138:1. A few days after the hearing,
the judge issues a decision. Id. at 138:1-2. If the judge finds
the defendant guilty, the defendant may appeal the sentence
before a “higher” judge. Id. at 138:11-15. Before the
“higher” judge, “‘you present your written arguments and
documents that you may have, but you are not allowed any
more to offer any kind of statements or testimony or any
visits where you personally go and inspect the scene.” Id. at
138:15-19. Ifthat second judge affirms the guilty verdict,
the defendant may appeal once more before a pa.el of three
“higher” judges. Id. at 139:10-12.
Plaintiff's mitial line of defense was “‘to try to prove
to the judge that they [plaintiff and Alfonso Calderon] were
in Ensenada doing a printing job.”” Id. at 141:1314. Plaintiff
did not, when he was arrested, know how the marijuana
came to be in the Pathfinder, id. at 141:22-142:1, and “{iJt
wasn’t until weeks later that we [plaintiff's defense
attormeys] realized that the problem had been that that car
had been previously detained with drugs in tt.”” Id. at
142:1-3. On March 11, 2002, Mr. Mejia “had a visual
inspection evidence offering session in Ensenada” where he
“asked the judge to open those packages [the packages
seized by the Mexican soldiers at the checkpoint].” Id. at
142:3-6. Mr. Mejia testified, “We opened some packages
and the drugs had rotted. It was full of like fungi. It was
rotten. It was no good.” Id. at 142:6-8; see also JX 12
(photographs from the evidence offering session) 1-8. On
that same date, plaintiffs wife presented Mr. Mejia with a
document “that had the name Jose Jimenez-Coronel” and
“explained there in English that the car had been seized at
the San Ysidro Customs area on... January 25, 2001.” Id.
at 142:14-20; see JX 2 (Custody Receipt) 1. Mr. Mejia then
contacted the U.S. Customs and Border Patrol in Otay Mesa
for more information about the circumstances leading to the
Customs sale of the Pathfinder at the auction, Tr. 143:7-10
144:8-19, but the Custems officials “[spoke) harshly to me
and they’d close the window,” id. at 144:1-2. Mr. Mejia
then hired a law firm in San Diego to help him obtain the
information that he sought from Customs. Id. at
144:24-145:4
With the help of the law firm in San Diego, which ts
the law firm to which plaintiff's counsel belongs, Mr. Mejia
“obtained some important documents” from Customs. Tr
145:7. Specifically, plaintiff's counsel sent a Freedom of
Information Act (FOIA)/Privacy Act (PA) request to
Customs, asking for “photographs of the Pathfinder and the
marijuana found in the Pathfinder, and other photographs
connected to this seizure file.” JX 14 (Customs’ response to
plaintiff's counsel’s FOIA request) |. After receiving an
incomplete response and sending a second FOIA request,
see Part [1].G.2, Mr. Mejia finally obtained the eight
photographs that Customs had taken after having seized the
Pathfinder, JX 15 (Customs’ response to plaintiff's counsel’:
FOIA request) |, 7-24. Mr. Mejia presented all eight
photographs to the first judge before she submitted her
ruling on the case. Tr. 14%:2-5
Mr. Mejia also offered evidence regarding the
condition of the Pathfinder after the Mexican security for
discovered the marijuana. Id. at 150:12-154:11; JX 12
(photographs from the evidence offering session) 9-17. Mr
Meyjra testified at trial that
|W Je went to do a car inspection because |
wanted to see how it was that they had
gotten the packages out of the car. Becaus:
he soldiers had said that the packages were
hidden in the car, in the walls. And we
went - when we went there to carry out this
inspection, we realized that the soldiers had
destroyed the whole interior of the car
They destroyed it all. They pulled off all of
the upholstery. From the moment that they
found the first package, they tore the car up
inside entirely, took down all the walls
They didn’t hesitate a bit. They found one
[package] and they tore everything up, all of
it totally. The car was destroyed
Pr. 150:15-151:2; see JX 12 (photographs of the evidence
offering session) 9-17. The posters that plaintiff and
Alfonso Calderon had been transporting from California to
Tijuana remained in the back of the car. Tr. 152:2-11; JX 12
(photographs from the evidence offering session) 21. Mr:
Mejia took pictures of the posters and presented those
pictures as additional evidence “‘because the judge did not
1527:5./
believe that the posters had been in the car.” Tr
see JX 12 (photographs from the evidence offering session)
i )
oe oF ©
Mr. Mejia presented additional photographs of the
packages of marijuana. See JX 12 (photographs of the
evidence offering session) 27-29. Mr. Mejia testified that
the Mexican Federal Attorney General’s Office “explained to
me that some of the packages were wrapped 1n plastic
vacuum-packed so that the smell would not go through the
packaging and that, because of this, most likely the package:
could have been in the car for so long, about a year, and
practically not have smelled.” Tr. 159:22-160:2. On
chemist had inspected the packages on the date that plaintiff
and Alfonso Calderon were detained, and Mr. Mejia stated
that
ae
[H]e [the first chemist] testified before the
judge because I asked that he be
subpoenaed to give his statement. When |
asked him certain things about the drugs,
the characteristics of the drugs that he had
checked on the date that my guys had been
detained, he answered that the drugs that
he had inspected in those packages was
very dry, that it smelled badly, that it was
drugs that had been stored for a long time
and that it lacked texture and he was the
chemust for the prosecution . . . , yet he was
testifying as to things that he had noted the
first day when he checked the drugs when
they were arrested. ...
And then, afterwards, I asked for an expert
opinion with two other chemists so that they
could analyze each package one by one and
that’s how the three chemists finally arrived
at the same conclusion, in that it was old
drugs, that it was - they were - it was dry,
that it lacked texture, and that it had spoiled
and that these drugs had been in the
car for at least a year. And the
defendants had been arrested only
about a month and a half.*
It appears that “a month and a half,” Tr. 161:19,
refers to the time elapsed between plaintiffs arrest and the
chemist’s examination of the drugs. The Pathfinder was
seized on January 25, 2001, Compl. {| 9, and forfeited to
33
Id. at 160:20-161:19 (footnote added); see also JX 18
(summary of the first chemist’s testrmony) 1-2.
Mr. Mejia “offered 57 pieces of evidence,
approximately.” Tr. 162:24-25. The evidence included
‘visual inspections, expert chemists’ testimony, many
statements of witnesses, character witnesses to prove Mr.
Rivera and Mr. Calderon’s honorability, many reference
letters, statements on the part of the soldiers, confrontations
with the soldiers, and the soldiers themselves.” Id. at
163:1-6. Mr. Mejia testifed that he asked the soldiers,
“*When you asked the car to stop, what was the attitude on
the part of these men, Rivera and Calderon?’ They said that
it was normal, that it didn’t seem that they were worried or
anything because they were convinced that what they were
carrying in the car were posters, the posters that they had
just printed up.” Id. at 163:7-13.
Proceedings took place before the judge in Ensenada
up until June 25, 2002. Id. at 138:23-24. On that date, the
judge found plaintiff guilty and sentenced plaintiff to five
years in jail. Id. at 139:23. The opinion delivered by the
judge’ found plaintiff's defense - that the United States had
defendant at some point between January 25, 2001 and
September 5, 2001, id. at §§| 9-13. Plaintiff purchased the
Pathfinder on September 5, 2001. Tr. 50:7-10; 51:6-7.
Plaintiff was arrested on January 24, 2002, id. at
60:21-66:13, approximately a year after the Pathfinder was
seized.
Plaintiff and defendant agreed to admit into evidence
Interpreter Mayne’s translation of certain sections of an
opinion issued in Spanish by the Mexican criminal judge, Tr.
34
failed adequately to inspect the Pathfinder before selling it to
plaintiff - incredible:
Thus, what the Defense has stated, that
precisely the authorities of the United
States have not conducted an adequate
inspection of the other compartments of
the vehicle because the interior of the
same was found intact 1s not credible.
Said information, which was provided by
the Customs Department, and which was
offered as evidence in this criminal case,
does not benefit them in any way since[, |
independently of what the Defense states,
that the U.S. authorities did not conduct
258:7-259:4, 514:3-13, at this juncture. Interpreter Mayne
sight translated and read into the record portions of the
opinion designated by plaintiff's attorney. Id. at 516:7-519:5.
The court admitted the opinion into evidence under FRE
1005, Tr. 259:13-260:1, which states that “[t]he contents of
an official record, or of a document authorized to be recorded
or filed and actually recorded or filed . . . , may be proved by
copy, certified as correct in accordance with [FRE] 902 or
testified to be correct by a witness who has compared it with
the original,” FRE 1005. The opinion is selfauthenticating
under FRE 902(3), which provides that a foreign public
document is selfauthenticating and the court may treat it “as
presumptively authentic without final certification or permit
[1t] to be evidenced by an attested summary with or without
final certification.”” FRE 902(3). The opinion issued by the
Mexican criminal court is a foretgn public document;
accordingly, no further proof of authenticity other than the
document itself was required.
35
an exhaustive inspection, it must be noted
that they have adequate technology and
don’t have the need to destroy the
vehicle. So, in regard to the documentary
evidence presented or submitted,
specifically the photographs showing the
interior of the vehicle intact, that indicates
that it did not have drugs in any other
part of the vehicle and that they did not
know of their existence.
Id. at 516:14-517:10. The judge opined that the United
States officers would not have violated United States law by
failing to inspect the Pathfinder:
This Judge could not establish that an
omission has been made on behalf of the
Customs authorities in the United States in
| that they did not inspect adequately the
other compartments of the vehicle since, as
has been informed, such determination
would constitute a violation of the laws of
that country.
Id. at 517:13-20. The judge appears to assume that - based
on photographic evidence the proper inspections must have
been made without destroying the interior. She further
appears to assume that the “technology” available to the
United States would have permitted a complete search
without damaging the interior of the Pathfinder:
[In order to make a determination of
something that is a matter for them to
resolve, even though :n the photographs it
36
can be noted that the vehicles interior was
intact and thus can be clearly seen, that the
same at the moment it was seized by the
Government of the United States did not
have drugs in any other part and that, on the
contrary, that the gasoline tank that had been
removed had been the place where they had
found drugs at the moment they seized - the
United States authorities seized the vehicle
and that the inspection was conducted
according to their methods, procedures, and
technology that they have, without having to
destroy a vehicle in order to inspect It.
Id. at 517:20-518:11. The judge had previously refused to
credit plaintiffs testimony that he had crossed the United
States/Mexican border without incident:
On the other hand, it is also incredible that
the Defendant, Francisco Javiet
Rivera-Agredano, and witnesses Gabriel
Calderon-Leon, as well as the minor,
Paulina Lizeth Rivera-Calderon, what they
stated, that during the Christmas season
they crossed the vehicle in question into the
United States in more than one occasion.
Since that version is unbelievable since at
that time of the year, the inspections are
even more exhaustive. In addition, in
December of 2001, they were particularly
exhaustive since they were at a very recent
tume after the events of the terrorist attacks
to the Twin Towers in New York. Being
able to consider that if the drug that was
seized had been found in the vehicle, tt
could have been easily detected.
Id. at $18:13-519:5.
From June 25, 2002 through September 17, 2002,
plaintiff appealed before a magistrate judge in Tijuana. Id. at
138:25-139:5. Mr. Mejia “explained many of the arguments
to the magistrate,” id. At 164:14-15, who told Mr. Mejia
that his “defense was very good,” id. at 164:19, because he
“offered many pieces of evidence,” 1d. at 164:20-21.
However, on September 17, 2002, the magistrate judge
affirmed the first judge’s sentence in a written ruling. Id. at
165:2-5. The judge ruled that the first judge “had been able
to correctly evaluate the evidence, that the judge had done
an excellent job.” [d. at 165:1012. From September 17,
2002 through January 10, 2003, Mr. Mejia worked on the
final appeal for plaintiff, which was held before three judges
in Mexicah. Id. at 139:10-17. On January 10, 2003, Mr.
Mejia “received a call from Mexicali letting me know that
they [plaintiff and Alfonso Calderon] would be released that
day.”’ Id. at 166:22-24.
i, Procedural Background
On November 14, 2002, plaintiff and his
brother-in-law, Alfonso Calderon Leon, jointly filed a claim
in the United States District Court for the Southern District
of California pursuant to the Federal Tort Claims Act, 28
U.S.C. §§ 1346(b) and 2671-80, alleging negligence, breach
of contract, breach of the 1mplied covenant of good faith and
fair dealing, fraud or intentional misrepresentation, negligent
misrepresentation, negligent and intentional infliction of
emotional distress, and violation of California’s Consumer
Legal Remedies Act, § 1770(a)(14). Defendant’s Motion to
38
Dismiss Or, in the Alternative, for Summary Judgment
(Def.’s Mot. or defendant’s motion) App. 20-47. On June
29, 2004, the United States Supreme Court issued its
decision in Sosa v. AlvarezMachain, 542 U.S. 692 (2004),
finding that a cause of action could not lie under the Federal
Tort Claims Act for “any injury suffered in a foreign country,
regardless of where the tortious act or omission occurred.””_
Sosa v. Alvarez-Machain, 542 U.S. 692, 712 (2004). On or
about November 3, 2004, Compl. 4] 3, the United States
District Court for the Southern District of California granted
defendant’s motion for summary judgment, finding that the
action was barred under the Federal Tort Claims Act
because plaintiffs’ arrest occurred in Mexico, see Agredano
v. United States, No. 02CV2243B, Docket Entry No. 71
(S.D. Cal. Nov. 3, 2004).
Thereafter, plaintiff, Alfonso Calderon, and
defendant stipulated to the filing of an amended complaint
and to the transfer of the action to this court. Compl. § 3.
On February 3, 2005, pursuant to the parties’ stipulation, the
United States Court for the Southern District of California
dismissed plaintiff's and Calderon’s claims without
prejudice, granted the parties’ motion to amend, and
transferred the action to this court. Stipulation to Transfer
and Dismiss Appeal, Agredano v. United States, No.
05-608, Docket Entry No. 1, Attach. I (Fed Cl. June 8,
2005).
On June 17, 2005, plaintiff and Alfonso Calderon
filed their amended complaint in this court, alleging breach
of warranty, breach of contract, and breach of the covenant
of good faith and fair dealing. Compl. passim. On
September 20, 2005, defendant filed defendant’s motion,
alleging that this court lacked jurisdiction because plaintiff's
and Alfonso Calderon’s claims sound in tort or, alternatively,
39
that the material facts are not in dispute and that the facts as
alleged entitle defendant to judgment as a matter of law.
Def.’s Mot. 1-22. In support of its motion for summary
judgment, defendant argued (1) that the “as is” clause in the
terms of sale precludes the existence of an implied warranty,
id. at 12-16; (2) that defendant did not breach the implied
covenant of good faith and fair dealing because it did not
“specific[ally] inten[d] to mjure” plaintiffs or harbor “actual
malice” toward them, id. at 16-18 (citing Am-Pro Protective
Agency, Inc. v. United States, 281 F.3d 1234, 1239 (Fed.
Cir. 2002), and Carolina Tobacco Co. v. Bureau of Customs
& Border Prot., 402 F.3d 1345, 1350 (Fed. Cir. 2005)); (3)
that the damages plaintiff and Alfonso Calderon alleged were
unrecoverable because defendant’s breach did not directly
cause plaintiffs’ harm, id. at 18-20; and (4) that Alfonso
Calderon was not a third-party beneficiary of the contract of
sale and therefore cannot recover under the contract, id. at
21. On November 14, 2005, plaintiff and Alfonso Calderon
filed their Opposition to Defendant USA’s Motion to
Dismiss or, in the Alternative, for Summary Judgment, with
Appendix (Pls.’ Resp. or plaintiffs’ response), arguing (1)
that this court had jurisdiction because defendant’s failure to
search the vehicle constituted a breach of contract, Pls.’
Resp. 15; (2) that the “as is” clause did not preclude the
existence of a warranty because its scope was not broad
enough to cover the defect plaintiffs allege, id. at 20; (3) that
there was a triable issue of material fact as to whether
defendant’s alleged failure to search the vehicle prior to sale
for the purpose of increasing the resale value of the vehicle
and defendant’s concomitant failure to disclose its actions
constitute a breach of the covenant of good faith and fair
dealing, id. at 17, 19-21; (4) that the damages sustained
were recoverable because they were foreseeable and tn fact
occurred, id. at 2, 17-18; and (5S) that Alfonso Calderon was
a third-party beneficiary and accordingly entitled to recover
40
under the contract, id. at 17. Plaintiff and Calderon further
moved the court for “leave to amend the[ir] complaimt to
allege additional facts to establish the causes of action set
forth in the complaint,” “if necessary.” Id. at 1.
[In its Opinion filed March 27, 2006, this court held:
(1) that plaintiff and Alfonso Calderon sufficiently
established that there were genuine issues of material fact as
to whether the context of the sale and the policy to search
seized vehicles prior to resale constituted an affirmative
representation which would negate the disclaimer and create
a warranty; (2) that plaintiff may pursue his allegation that
defendant breached the covenant of good faith ar 1 fair
dealing by proving either that the government failed to
conduct an adequate search for the purpose of obtaining a
higher resale value for the vehicle at auction or that plaintiffs
could not have discovered the hidden contraband in the
circumstances of the auction sale and that the government
had a policy to search thoroughly any vehicle seized because
it contained narcotics, but that the government acted in
direct contravention of its stated policy; (3) that plaintiff
established the existence of a genuine issue of material fact
as to whether damages he sustained in Mexico are
recoverable in contract 2yainst defendant; (4) that Alfonso
Calderon was not a third-party beneficiary of the contract
between Agredano, the buyer of the Pathfinder, and
defendant, the seller of the Pathfinder; and (5) that plaintiff
may not be given leave to amend his complaint. Agredano |,
70 Fed. Cl. at 573-580
Following telephonic status conferences held with
the parties on July 6, 2006 and July 10, 2006, the court
assigned-in-part the case to alternative dispute resolution
(ADR) proceedings and retained jurisdiction over discovery
and other proceedings 1n the case. See Order of July 10,
4]
2006. On September |, 2006, the parties requested the
ADR judge to suspend proceedings while the parties
pursued formal discovery. Defendant’s Status Report, Sept.
1, 2006, 1. The ADR judge granted the parties’ request to
suspend ADR proceedings, Order of Oct. 10, 2006, and this
court issued a scheduling order for dispositive briefing,
Order of Oct. 30, 2006. In the months that followed, the
parties proceeded with the discovery process and again
attempted to settle the dispute. See Order of Feb. 9, 2007;
Order of Feb. 14, 2007; Order of June 1, 2007. Pursuant to
the parties’ request, the ADR judge terminated ADR
proceedings on July 20, 2007. Order of July 20, 2007. On
September 14, 2007, this court set out a pretrial scheduling
order in preparation for tral. Order of Sept. 14, 2007.
Pursuant to that pretnal scheduling order, the parties filed:
Plaintiff Francisco Javier Rivera Agredano’s Memorandum
of Contentions of Fact and Law (PI.’s Mem.); Defendant’s
Memorandum of Contentions of Fact and Law (Def.’s
Mem.); Defendant’s Witness List (Def.’s Wit.); Defendant's
Exhibit List (Def.’s Ex.); Plaintiff Francisco Javier Rivera
Agredano’s Response and Objections to Defendant’s
Memorandum of Contentions of Fact and Law; Witness and
Exhibit List (PI.’s Obj.); Plaintiff Francisco Javier Rivera
Agredano’s Witness List (P1.’s Wit.); Plaintiff's Exhibit List
(P1.’s Ex.); and defendant’s Motion for Leave to File
Defendant’s Objections to Plaintiff's Revised Witness and
Exhibit Lists (Def.’s Obj.). Following a pretnal conference
held on January 14, 2008, see Order of Jan. 10, 2008; Order
of Jan. 15, 2008, the court held trial on January 28, 2008
through January 31, 2008 in the Federal Building at 880
Front Street, San Diego, California. See Tr. passim.
In its post-trial briefing, the government concedes
that a contract existed between plaintiff and defendant when
plaintiff purchased the Pathfinder. See Def.’s Br. 1-2, 5
42
(acknowledging that a contract existed between plaintiff and
defendant). However, the government contends that the
various contractual theories of breach posited by plaintiff do
not apply._ See Def.’s Br. passim; Def.’s Reply passim. Out
of twenty-one witnesses in total, defendant presented only
three witnesses on direct examination and three witnesses on
rebuttal. Defendant did not address in its post-trial briefing
plaintiff's damages presentation other than to argue
generally that compensatory and emotional! distress damages
are not available at all to plaintiff. Def.’s Br. 22-29; Def.’s
Reply 24-27. With several exceptions, the government has
chosen to use the forum of a trial and posttrial briefing to
present essentially legal arguments. The bulk of the
testimony and evidence presented at trial, therefore, was
presented by plaintiff in support of his case that a contract
existed between plaintiff and defendant, that defendant
breached that the terms of that contract when it sold the
Pathfinder to plaintiff, and the nature and the amounts of the
damages caused by that breach. See Tr. passim
[I] Discussion
A Legal Standards
Jurisdiction
The United States Court of Federal Claims has
junsdiction “to render judgment upon any claim against the
United States founded . . . upon any express or implied
contract with the United States.” 28 U.S.C. § 1491(a)(1)
(2006). The court does not have jurisdiction to render!
judgment upon actions sounding in tort. Id. When a
defendant challenges this court’s jurisdiction pursuant to
Rule 12(b)(1) of the Rules of the United States Court of
eerie tanner aaa
43
Federal Claims (RCKC), the plaintiff bears the burden of
proving that jurisdiction is proper. Toxgon Corp. v. BNFL,
Inc., 312 F.3d 1379, 1383 (Fed. Cir. 2002); Reynolds v
Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cu
1988): Corrigan v. United States, 68 Fed. Cl. 589, 592
(2005)
Che jurisdiction of this court 1s not limited by the
tortious nature of a claim otherwise cognizable in it. See,
e.g., Chain Belt Co. v. United States, 115 F. Supp. 701,
711-12 (Ct. Cl. 1953) (“While it is true that this court does
not have jurisdiction over claims sounding primarily in tort,
an action may be maintained in this court which arises
primarily from a contractual undertaking regardless of the
fact that the loss resulted from the negligent manner in which
defendant performed its contract.”). In particular, a claim
for tortious breach of contract is not precluded merely
because the claim, though rooted in contract, also sounds in
tort. Id.; Pratt v. United States, 50 Fed. Cl. 469, 480 (2001)
(stating that a claim for tortious breach of contract has been
recognized “not [to be] a tort independent of the contract so
as to preclude Tucker Act jurisdiction”). Nor does the fact
that consequential damages are alleged make the clam a tort
claim; rather, an allegation of “consequentia! damages”
presumes that the plaintiffs are proceeding under a contract
theory. See, e.g., Bohac v. Dep’t of Agric., 239 F.3d 1334
1339-40 (Fed. Cir. 2001) (recognizing “consequential
damages” as a “contract law concept’). As long as the clain
“specifically relate[s] to a contractual obligation,” it will
survive a motion to dismiss. Pratt, 50 Fed. Cl. at 480
Despite defendant’s assertion that the court did not
have jurisdiction over this matter, see Def.’s Mot. 1-22
(alleging that this court lacks jurisdiction because plaintiffs
claims sound in tort or. alternatively. that the material fact
ee 0
defendant to 1udgmen
-Vv1I0OU sly that ne
laims brought by
(
12-13. In order to determine whether such a warranty
existed and, if it did. whether defendant violated that
warranty, the court first will examine defendant's polic
regarding searches and seizures of seized vehicles. | he
court then will examine defendant's and plaintiff's
understandings, to be proven by plaintiff, reasonably
inferable as facts from the parties’ conduct in light of the
Surrounding crrcumstances, regarding whether the Pathfind
was free of all contraband. The “meeting of the minds” in
this case, therefore, is a mutual, if tacit, understanding
ty
between plaintiff and defendant that the Pathfinder was f
of all contraband when defendant sold the Pathfinder t
plaintiff
cnor Knowl
[he supenor knowledge doctrine provid
where the vovernment has vital information about t!
transaction or object of the transaction, Knows that 1
’
contracting partner has no knowledge of and no reaso!
obtain such information, misleads its contracting partne!
to that information, or fails to put its contracting partn
notice to inquire, and does not provide the relevant
information, the government has breached the contract
GAF Corp. v. United States, 932 F.2d 947, 949 (Fe
1991). As this court ruled previously, “Where the
rovernment has a policy providing that it will
chicle prior to resale when there 1s probable cau
t he ven) leo
uspect that narcotics are hidden within
where, as here, the vehicle wa eized because of tl
presence of contraband the government may be Io
have misled its contracting partner or, alternatively, failed
put its contracting partner on notice to inquire as to U
presence Of contraband tn the vehictk Agredano | |
46
The government has a duty to disclose “superior
knowledge . . . which is unknown and reasonably is not
available to the contractor.” John Massman Contracting Co.
v. United States (Massman), 23 Cl. Ct. 24, 32 (1991) (citing
Utility Contractors, Inc. v. United States, 8 Cl. Ct. 42, 52
(1985), aff'd, 790 F.2d 90 (Fed. Cir. 1986) (Table)). The
government does not, however, have a duty to disclose
information that is reasonably available, Massman, 23 Cl. Ct.
at 32 (citing L.G. Everist, Inc. v. United States, 231 Ct. CL.
1013, 1018 (1982)); see also Vann v. United States, 420
F.2d 968, 982 (Ct. Cl. 1970), or that the contractor has an
opportunity to learn on its own, see Vann, 420 F.2d at 982
(stating that a contractor who knows or has the opportunity
to learn the facts cannot show that it was misled by the
contract).
Plaintiff alleges that defendant violated the doctrine
of superior Knowledge when it did not disclose to plaintiff
the alleged existence of a rumored policy in Customs to
minimize damage during searches of seized vehicles in order
to preserve the resale value of the vehicles at auction. PIl.’s
Br. 21. In order to determine whether such a policy existed
and whether defendant violated the superior knowledge
doctrine, the court will examine the relevant testimony
provided by Customs employees at tral.
4. Implied Covenant of Good Faith and Fair
Dealing
The covenant of good faith and fair dealing 1s implied
in every contract. Centex Corp. v. United States, 395 F.3d
1283, 1304 (Fed. Cir. 2005). The covenant provides that no
party may “act to destroy the reasonable expectations of its
contracting partner regarding the fruits of the contract” and
“applies to the government just as it does to private parties.”
47
Id.; see Chain Belt Co., 115 F. Supp. at 710-712 (holding
that government could not act negligently when performing
its obligations under a contract). A contracting party,
including the government, may not “depriv[e] its contracting
partner[] of a substantial measure of the fruits of the
contract and appropriat[e] those fruits, pro tanto, to itself.”
Centex, 395 F.3d at 1305. Although the “implied covenant
of good faith and fair dealing cannot be used to expand a
party’s contractual duties beyond those tn its express
contract,” the object of the contract is presumed to be
subject to the covenant of good faith and fair dealing and the
exact prohibited conduct need not be expressed. _Id. at
1306.
Plaintiff alleges that defendant violated the covenant
of good faith and fair dealing because defendant failed to
search the Pathfinder adequately in order to obtain a higher
resale value at auction and because defendant acted in direct
contravention of its stated policy to remove all contraband
from the Pathfinder. Pl.’s Br. 26-27. In order to determine
whether defendant curtailed its search of the Pathfinder in an
effort to obtain a higher resale value and/or whether
defendant acted in direct contravention of its own policy, the
couri will examine the testimony provided at trial by
plaintiff, Alfonso Calderon, several Customs employees, and
an employee with the United States Immigration and
Customs Enforcement. The court will also consider the
numerous directives presented to the court at tral as joint
exhibits.
B. [*** Parts [II.B.1-4 are redacted
except for the last paragraph in Part [11.B.4._
eS ed
In the hght of the foregoing framework of search
48
procedures, the court now reviews the evidence concerning
the search of the Pathfinder after its seizure by Customs.
c Inspection and Seizure of the Pathfinder
On January 25, 2001, Customs stopped the
Pathfinder at a border patrol facility near the United States
border with Mexico. _Id. at 401:17-20. One Jose Armando
Jimenez Coronel (Mr. Jimenez) was d-ving the Pathfinder
north from Mexico into the United States. Id.; JX 3
(Personal Property Inventory) 1. An imitial canine search
was conducted at the border patro}) facility, and the search
indicated the potential presence of illegal narcotics concealed
in the vehicle. Tr. 411:9-17; JX 55 ([***]) 1. Customs
moved the vehicle to a secondary searching area where
Joseph Marilao, Senior Inspector, conducted a [***] and
documented his findings. Tr. 401:17-20; 402:11-403:5; JX
1 (Vehicle Inventory) |. The court heard the testimony of
Mr. Marilao at trial.
Mr. Marilao documented his search of the Pathfinder
on a form entitled, “(***].” JX 55 ({***]) 1; Tr. 409:15-25.
In that form, Mr. Marilao noted that 27.05 kilograms of
marijuana was found in the gas tank of the Pathfinder that
was driven and owned by Mr. Jiminez. JX 55 ({(***]) 1. In
the “Narrative” section of the form, Mr. Marilao typed the
following:
ON 01252001 AT APPROXIMATELY 1530
HOURS I WAS INFORMED BY Cl
[Customs Inspector] WARREN JOHNSON
OF A CANINE ALERT ON THE GAS
TANK OF A 1987 NISSAN DRIVEN BY
THE ABOVE SUBJECT. THE
49
CONTRACT MECHANIC WAS
DISPATCHED. THE GAS TANK WAS
REMOVED BY 1HE CONTRACT
MECHANIC. WHEN THE TANK
SENSOR WAS REMOVED I OBSERVED
PACKAGES WITH PACKING TAPE,
CELLOPHANE, AND VACUUM SEALED
INSIDE THE GAS TANK. I REMOVED
ONE RANDOMLY SELECTED
PACKAGE THAT TESTED POSITIVE
FOR MARIJUANA. SECTOR WAS
NOTIFIED AND SA [Special Agent] HALL
RESPONDED. A TOTAL OF 40
PACKAGES THAT WEIGHED 27.05 KGS
WERE REMOVED FROM THE GAS
TANK. THE BULK, SAMPLES,
VEHICLE, AND REGISTRATION WERE
SEIZED ON CF6051'S
2001250490000401,2,3, AND 4
RESPECTIVELY [refers to chain of custody
forms, Tr. 415:18-416:8]. TWO BARRELS
CONTAINING THE BULK AND A
BUCKET CONTAINING THE SAMPLES
WERE TURNED OVER TO SCI [Semor
Customs Inspector] VAN BROWN FOR
LOCKUP IN THE VAULT.
JX 55 ([***]) 1. Mr. Marilao explained at trial that the
contract mechanic referred to in the “Narrative” was
“American Towing. Tr. 412:11-13. He stated: “Those are
the mechanics that we have come down to the port of entry
to help remove gas tanks and tires and any other parts that
we cannot remove without the use of some sort of special
knowledge or skill or tools.” Id. at 412:13-17. Mr. Marilao
further explained that, once one of the wrapped packages
50
tested positive for marijuana, Agent Hall, an investigating
agent for Customs, responded to conduct the investigation,
that 1s, “to sit down and talk to the violators and anybody
else that’s in the vehicle.” Id. at 414:1-14.
At trial, Mr. Marilao recalled removing the gas tank
from the Pathfinder but not having caused any additional
damage to the vehicle._Id. at 405:5-406:20. Per search
protocol, Mr. Marilao completed a document entitled
“[***]." Id. at 403:12-404:15; JX 1 ([***]) 1. Box 21 of
the document states the following: “CONDITION OF
CONVEYANCE (Note damage, dents, etc. any other
defects at time of seizure - body, motor, tires, paint and
interior. Give general description.” JX 1 ({***]) 1. The
only comment made by Mr. Marilao in Box 21 ts “tank
removed.” Id. Mr. Marilao testified that the absence of any
other comment probably means that no other damage was
caused to the car. Tr. 406:14-407:3. He stated, “I just had
the tank removed,” id. at 406:18-19, and if he had “removed
the seat, [he would have] most likely throw[n] it back in the
vehicle,” id. at 407:2-3.
Although Mr. Marilao did not note any physical
changes to the Pathfinder other than removal of the gas tank,
he admitted that damage is “normally” caused to a vehicle
during a [***]. Id. at 426:18-21. After damaging a vehicle
during a search, such as tearing out the seats or dismantling
the side panels, he agreed with plaintiff's counsel that [***]_
Id. at 426:23-25. Rather, he agreed that the damaged or
removed items [***]._ Id. at 426:24.
At some point during the seizure, Mr. Marilao took
photographs of the Pathfinder, but he does not recall exactly
when he took them._ Id. at 416:24-417:12. The photographs
were provided to plaintiff in response to his counsel’s
5]
second FOIA request and were entcred into evidence as JX
[5 (Customs’ response to plaintiff's counsel’s FOIA
request) 17-24. See supra Part II.B. [***] id. at 417:6-8
Mr. Marilao’s testimony confirmed that the photographs
contained in JX 15 (Customs’ response to plaintiff's
counsel’s FO[A request) 17-24 appear to be pictures of the
removed gas tank, the packages in the tank, and the exterior
and interior of the Pathfinder. Id. at 417:25-418:25.
An additional form that Mr. Marilao filled out at the
time of his inspection of the Pathfinder 1s contained in JX 56
({***]) 1. Entitled “[***],” this form states that forty
packages of marijuana, which were sealed in vacuum seal
bags with duct tape, cellophane wrap, and packing tape and
weighed 27.05 kilograms, were found in the gas tank. JX 56
({***]) 1; see also Tr. 419:13-25. The form contains a
space entitled ‘Total time to remove contraband” in which
Mr. Marilao wrote “15 minutes” by hand. JX 56 ([***]) 1.
Mr. Marilao testified that the fifteen minutes refers to “the
time it took me to take the packages out and to. weigh
them.” Tr. 420:7-8.
At trial, plaintiff's counsel questioned Mr. Marilao
about his search for narcotics in other areas of the
Pathfinder. Id. at 421:15-423:16. Mr. Marilao
acknowledged that he has “encountered situations where
marijuana is found in more than one location of a vehicle.”
Id. at 421:16-18. He agreed with plaintiff's counsel’s
statement that [***]. Id. at 421:20-22.
It is unclear what happened immediately after Mr.
Marilao’s search of the Pathfinder. No documentary
evidence was presented and no witnesses recalled whether
the Pathfinder then underwent [***]. At some point after
Mr. Marilao’s search, however, the FP&F division of
Ar
tho
Customs oversaw the towing and subsequent storage of the
Pathfinder. Id. at 452:25-453:9. Mr. Fanning, an FP&F
Officer, id. at 448:6, testified that “EG&G was the national
storage contractor,” id. at 453:3-4, that Customs used at the
time the Pathfinder was seized, and that American Towing
was a subcontractor to EG&G, id. at 453:3-4. EG&G
“contracted with American Towing to perform their towing
services and their storage services.” Id. at 453:8-9.
The involvement of FP&F in the forfeiture process
began with receipt of Customs’ “{***],” JX 54 ({***]) 1-14,
which was written by Special Agent Hall after he received
“all the facts concerning the seizure and the individual [Mr.
Jimenez],” Tr. 455:5-6. Included in that report is a
description of the se:zure and information about Mr.
Jimenez, JX 54 ([***]) 1-4, a “[***],” 1d. at 5; see also Tr.
455:21-25, a chain of custody form for the marijuana seized
from the Pathfinder, JX 54 ([***]) 6; Tr. 456:2-4, and a
seizure report, JX 54 ([***]) 7-14; Tr. 456:5-16.
EG&G prepared a series of documents regarding the
Pathfinder when performing its towing and storing
responsibilities for Customs. See JX 4 ([***]) passim.
EG&G filled out a “[***]” form, JX 4 ({***]) 4, which Mr.
Fanning testified ts “used to document the condition and
inventory of the venicle,” Tr. 463:21-22. Box 15D of that
form asks for descriptions of “interior damage” to the
upholstery, floor cover, head liner, and other areas of the
vehicle. JX 4 ([***]) 4. A handwritten “ok” follows after
each item on the lines provided for the descriptions. Id. Mr
Fanning testified that, according to EG&G, the interior of
the car was “ok” at the time that EG&G took possession of
it. Tr. 464:17-24. Mr. Fanning stated that sometimes
EG&G would perform a “very basic maintenance plan,” Tr.
471:25, and he testified that, per the “(***]” form included
a3
in JX 4 ([***]) 7, “it looks like the vehicle came in, they did
some work to it, and they charged us for that,” Tr.
472:13-14; see JX4 ({(***]) 7. The work charged for on the
form contained in JX4 ([***]) 7 included the following:
“Check tire pressures and inflate to specifications,” “Remove
trash and perishables from interior and storage
compartments;” “Roll windows up;” and “Lock doors.” JX4
(ere Ty.
After the Pathfinder was put into storage, EG&G
filled out its “[***]” form. Tr. 475:14-16; see JX4 ({***})
12. Mr. Fanning testified that the Customs officer, at the
seizure of the vehicle, “is required to provide an appraised
value that the agency says it’s worth X amount of dollars,”
Tr. 475:18-19, and that “that value is essentially a book
value, .. . a Kelley Blue Book or an NADA book that says
it’s a certain type of car, certam year, certain amount of
miles, and those are usually the factors involved,” id. at
475:20-24. He further stated:
Then the contractor is required to do what
we call a fair market value and that’s what
they believe it’s going to catch - it would
fetch in the marketplace if they were to sell
it. And so their number 1s typically different
from ours. As you can see [referring to JX4
({***]) 12], we appraised it at [$]5,000 in
block number five, and then they - they
looked at the car and applied their
experience plus they looked at any damage,
dents, dings, and all that sort of stuff, and
then they come up with their value which
looks to be - it looks to be that either the -
[$]3,050 or the [$]3150.
54
Id. at 476:7-17. Box 22 of the form lists the “Initial FMV
{Fair Market Value}” at $3,050, and Box 23 lists the
“Adjusted FMV” at $3,150. JX4 ([***]) 12. Mr. Fanning
testified that the initial FMV value represents the value
assigned to the vehicle “shortly after they [EG&G] receive
the vehicle,” Tr. 476:24-25, and that the adjusted FMV
represents the value of the vehicle “pnor to sale,” id. at
477:3. Mr. Fanning was unable to explain why the adjusted
FMV was higher than the initial FMV for the Pathfinder. Id.
at 478:9-17. Nevertheless, the actual price for which a
vehicle sold is the important figure because EG&G then
deducts the storage and maintenance costs from the auction
proceeds. Id. at 484:4-9. Mr. Fanning testified:
So, for example, if the car sold for a
thousand dollars, then you have the sale of
the vehicle minus. . . storage costs and all
that other stuff. And then you do the math
and then that’s what the Government ends
up with.
Id. When asked if the government receives less money from
the sale of a vehicle when more services are performed on
the vehicle by EG&G prior to sale, Mr. Fanning answered,
“Absolutely.” Id. at 484:15-18.
On September 6, 2001, American Towing, which ts a
subcontractor to EG&G, moved the Pathfinder to the
auction lot, which was controlled by the McCormack
Auction Company. JX 4 ({***]) 2. There was no witness
testimony that the Pathfinder, once at the auction lot, was
[***]. Mr. Fanning testified that it was his understanding
that “[***].” Tr. 495:3-6. Additionally, based on testimony
by Deputy Hood and Mr. Marilao, it appears to the court
that defendant’s policy in 2001 was [***]. See id. at
55
218:1 1-22; 425:8-426:9. Speaking from his experience as a
Canine Officer, Mr. Marilao testified about [***]:
Q: Okay. And the purpose of the
[***] is to search for any drugs that
might still be in the vehicles [***]? A:
Yes.
Q: And you personally have found
additional drugs in some of the cars
[***]: 1s that correct? A: Yes.
Q: And you’re aware of circumstances
where other inspectors have found drugs
[***] in the vehicles?
A: Yes. Usually it’s canine officers. |
haven’t had the experience with the
inspectors going down to find other
narcotics, but I have heard of that. Q:
Okay. So normally [***]? A: Yes.
Q: Okay. Was it your understanding that
the [***] was to try to make sure that the
vehicles did not contain drugs when a
person thereafter bought them at the
auction? A: Yes.
Id. at 425:11-426:9. Mr. Fanning underscored Mr
Marilao’s testimony regarding the purpose of the
agadeal }
Q: And ts the purpose of that [***] to
make sure that there were no more
narcotics in the vehicles before it was
sold? A: Yes.
Q: If there are narcotics in the
vehicle, then Customs won’t sell
them; nght?
A: At that time, correct
Q: Is there - is there a time when they will sell cars
with narcotics?
A: Well, they’ll - | mean, if they - if they
the dog alerts on narcotics, then they'll
search the vehicle and if they're satisfied
that they’ve removed all of the narcotics,
then we will sell the vehicle. Whether that
occurs on the same day, you know, prior to
that sale and in tire for that vehicle to go to
sale or not depends on the situation.
Q: Because the United States
doesn’t want to sell vehicles that
have narcotics in them?
A: That would be a - yes.
Id. at 495:7-25. Mr. Fanning further testified that another:
purpose of the [***], although not the primary purpose, 1s to
protect the purchasing public._ Id. at 496:1-497:20. He
stated that “our purpose for searching vehicles is to ensure
that we've interdicted and got all of the drugs out of the
vehicle,” id. at 496:4-7, and that “when we get to point of
sale, obviously we want all of that removed out of the
vehicle so that when we sell the vehicle, it doesn’t have
drugs in it,” id. at 496:12-15 (emphasis added).
At the auction, the Pathfinder was sold to plaintiff
for $2,600._Id. at 51:17-25; JX9 (Disposition Order) 1.
EG&G documented the sales price in a form admitted to the
court as JX9 (Disposition Order) |. |r. 488:9-490:4; see
JX9 (Disposition Order) |,
D. Whether a Contract Arose Between Plaintiff
57
and Defendant When Plaintiff Purchased the
Pathfinder from Defendant
The court previously ruled that a contract did im fact
arise between plaintiff and defendant when plaintiff
purchased the pathfinder. Agredano |, 70 Fed. Cl. at
571-73. Specifically, the court defined the written portion of
the contract as both the document that transferred title of the
Pathfinder from defendant to plaintiff and the Bidder
Registration Form to which plaintiff agreed by signing. Id.
at 571-72. The Bidder Registration Form provided that the
signer “‘agree[s] to comply with the terms of sale contained
in the sale catalog for this sale and all future sales I attend.’”
Id. at 567. “The sale catalog state[d,] in pertinent part:
“WARRANTY/GUARANTEE: AIl merchandise is sold on
an “AS IS, WHERE IS” basis, without warranty or
guarantee as to condition, fitness to use, or merchantability
stated, implied or otherwise. Please bid from your persona!
observations.’”’ Id. (discussing what is referred to as the “as
is’ clause).
The court also held in its Opinion of March 27, 2006
that “the plain meaning of the ‘as is’ clause limits its scope to
the construction, maintenance, and mechanical operation of
the vehicle and does not cover a situation in which ‘the
vehicle had been modified in a way that had no effect on its
ability to function for transportation’ by ‘introduc[ing] an
attribute not ordinarily associated with [the vehicle's ability
to function for transportation].’” Id. at 70 Fed. Cl. at 572
(quoting Rodriguez v. United States, 69 Fed. Cl. 487, 498
(2006)). Accordingly, the law of the case is that the “‘as is”
clause in the contract does not preclude the existence of a
possible implied-in-fact warranty in this case because the “as
is’ clause does not cover a situation in which defendant sells
the Pathfinder with concealed contraband to plaintiff. See
60
conducted the secondary inspection of the Pathfinder, sec JX
} (Vehicle Inventory) |, also testified that one would need to
be trained to discover concealed narcotics ina vehicle
Q: And would you agree that
thoroughly searching a vehicle for
hidden compartments takes a level of
specialized training and experience? A
Yes
Q: [I]t’s not something you
expect a layperson to be able
todo? A: Yes. That’s
correct
Q: Some of the
compartments are
really sophisticated?
A: They canbe. Yes
Q: And you wouldn’t expect a layperson
to find something unless it was obvious|, |
correct? A: Yes
Tr. 423:4-I¢
At trial, Mr. Ahern stated that the “as 1s” clause was
not related to defendant’s responsibility to conduct thorough 4
searches of seized vehicles. He testified that the goal of the
policy of Customs to search vehicles was to retrieve “all the
narcotics:’
Q: Did the fact that the vehicles were
offered for sale as 1s, as a policy maker, 1n
your mind did the fact that they’re being
sold as is relicve the United States of any
of its responsibilities to conduct a
6]
thorough search of the vehicle before the
sale?
A: Again, | want to go back to the answer
that I’ve piven on what our reasons were for
conducting the inspection. The goal, again,
that | had set for the people that were within
my area of responsibility was to make sure
we retrieved all of the narcotics at every
opportunity that we had, at the port of entry
and certainly as we were out at the seized
property locations. That was my goal
[T]he goal that I had set for our officers
[was] to make sure that all the narcotics were
seized prior to the sale, | mean, it was to give
every opportunity for us to retrieve all the
narcotics. That is my goal. It was not
necessarily to relleve the government, or this
organization, or Customs at the time, of any
lability. It was to make sure that, again, we
seized all the narcotics that may have been
present in those vehicles
©: So your responsibility stayed the same
whether the vehicle was sold as is or not,
correct?
A: My goals and the policy direction I set was to
retricve the narcotics
Q: Right. And the fact that the vehicle
was sold as ts didn’t make a bit of
difference to that particular goal? A
That would be correct
lr. 597:18-599:1. The evidence at trial is consistent with
the court’s earher holding that the “as 1s” clause does not
preclude the existence of an implied-in- fact warranty,
62
Agredano 1, 70 Fed. Cl. at 572, and demonstrates as well
that, as a matter of fact, plaintiff could not reasonably have
been expected to discover hidden narcotics in the Pathfinder
I: Whether Defendant Violated an
Implied-in-Fact Warranty When It Sold the
Pathfinder to Plaintiff
Plaintiff argues that an implhied-im-fact warranty
existed within the contract that arose between plaintiff and
defendant when plaintiff purchased the Pathfinder from
defendant. PI.’s Br. 10. Plaintiff asserts that the
imphied-in-fact warranty represented that the Pathfinder had
been subject “to a reasonable search for contraband before tt
was sold to the public at the auction sale and that
“reasonable efforts had been made to remove narcotics from
the seized and forfeited vehicle before it was released for
sale to [plaintiff].”. Id. Defendant counters that plamtiff has
not satisfied his burden in proving the existence of an
implicd-in-fact warranty. Def.’s Br. [3. Defeidant argues
that, in order to prove the existence of an mplicd-in-fact
warranty, plaintiff “must prove ‘facts that show or suggest in
some manner an agreement between the parlics, a mectinyg of
the minds and a mutual consent to be bound.’”” Id. at 14
(emphasis omitted) (quoting Shaw v. United States, 8 CL. Ct
796, 799 (1985)).
| Whether Defendant Represented
Mhat the Pathfinder Was Free of AJl
(Contraband
Plaintiff argues that the context of the sale of the
Pathfinder “created an affirmative representation that the
63
| Pathfinder] had been subjected to a reasonable search for
contraband.” Pl.’s Br. 12. Specifically, plaintiff asserts that
it was defendant's responsibility to remove all contraband
from the vehicle and that plaintiff's belief that all contraband
had been removed was a reasonable presumption because
the auction was sponsored by Customs. Id. at 12-13.
Defendant counters that plaintiffs “assumption that, because
the United States was selling the vehicle, it must be free of
all contraband . . . falls far short of establishing facts and
circumstances that would evidence a mutual intent to agree
to the asserted imphed warranty.”” Def.’s Br. 16.
The officers and agents of Customs are tasked with
the duty to identify and remove all contraband from vehicles
that cross into the United States. As the court described in
Part 111.B.2, sce supra Part [11.B.2, a series of directives
tasked the officers and agents of Customs with exactly that
duty. JX 39 (US. directives) 1-82. Additionally, the
uncont. overted testimony of numerous Customs witnesses
confirmed that Customs officers and agents were responsible
for removing all contraband from vehicles scized at the
border. For example, Deputy Hood confirmed that the
policy at the San Ysidro port of entry was that the vehicles
“were to be free of contraband, we were to remove all the
contraband from the vehicle.” Tr. 236:21-22. He also
testified that getting “all of the drugs out of the vehicle” was
“our job.””_ Id. at 208:12-13. Mr. Murphy stated that “we
would do our best to make sure that we had searched that
vehicle systematically to remove whatever contraband was in
the car.” Id. at 318:5-7. He further stated that the “hope”
was that the contraband would be removed “so it’s not there
when the vehicle is sold.” Id. at 318:10-12. Other
employees confirmed that Customs’ “goal” was to remove
all contraband from the vehicle. See id. at 272:4-13
(Bickers) (confirming that “our goal” was to sell
64
conveyances that were free of all contraband); 378:16-19
(Nunez) (confirming that she understood that [***] were “to
make sure there were no drugs in the vehicles before they
were sold”); 383:3-6 (Nunez) (stating that “the point of
[***] [was] [to make] sure that we didn’t leave no drugs in
the vehicle’).
Mr. Marilao testified that his responsibility with
regard to the Pathfinder was to remove the contraband. Id.
at 40):17-402:3. As the “seizing inspector,” he was “the
one that’s responsible for seizing the contraband out of the
vehicle.” Id. at 401:23-24. When asked what his
responsibilities were in the position of seizing inspector, he
responded, “To take the contraband out of the vehicle and
turn it over to be stored.” Id. at 402:2-3. Plaintiffs counsel
then asked, “Are there any obligations for searching
connected with the seizing inspector role?” Id. at 402:4-S.
Mr. Marilao answered, “Yes. ... They have to go ahead
and do the inspection of the vehicle and take all the
contraband out of the vehicle.” Id. at 402:6- 10 (emphasis
added). Further, Mr. Marilao testified that the [***] were
“to try to make sure that the vehicles did not contam drugs
when a person thereafter bought them at the auction.”” Id. at
426:6-8. Mr. Fanning confirmed Mr. Marilao’s
understanding of the |***] by agreeing that “the purpose of
that [***} [was] to make sure that there were no more
narcotics in the vehicles before it was sold.” Id. at 495:7-9.
Ms. Nunez, who also works as a Seizing Officer, td.
at 369:7-370:22, confirmed Mr. Marilao’s understanding of
Customs’ policy to remove all contraband from a seized and
forfeited vehicle, id. at 394:13-16. She testified that the
purpose of the policy of removing all contraband from a
vehicle was to ensure that the vehicle was not sold with
contraband. Id. at 394:5-9 (agreeing with the statement that
65S
“the purpose of [***] was to make sure that when they were
sold, there was no packages left in them’)
Mr. Root, a Canine Enforcement Supervisor, id. at
643:9-23, also testified that the purpose of [***] was to
remove all of the contraband from the vehicles. Id. at
652:11-20. He stated that [***] “to make sure that we
removed or got all the contraband out of the vehicles.” Id.
at 652:13-14. He agreed that another purpose of [***} was
“to make sure you have all the narcotics or whatever the
contraband may be out of the vehicle before it’s sold.” Id. at
652:18-20. Mr. Root expanded upon his testimony during
cross-examunation:
Q: You testified earlier that you understood
that the purpose of [***] was to make sure
that the vehicles were free of contraband by
the time they were sold or something to that
effect. Is that right? A: That’s right
Q: Why do you understand that to be the policy?
A: Well, as an officer of the U.S. Customs
Service[,| it was one thing we don’t want to
do is be selling vehicles with contraband still
left in them. That would not look good for
the Department. In a lot of cases there were
thresholds on narcotic weights. | can’t recall
exactly how they were, but it might be if it’s a
first time smuggler and there might be a
threshold saying that 1f it’s less than 100
pounds of marijuana the federal government
won't try the case, or they'll turn it over to
the state, or something along those lines, or if
it’s a second time offense for this individual
and then if it’s 100 pounds or more then
definitely he’s going to do a lot more time in
66
prison and so forth. So[,] if you’ve taken
maryuana out of a vehicle, and have only
gotten like 67 pounds, and you stop let’s say
at the gas tank and didn’t search anything
else, this particular smuggier goes to court
and that’s all he had was 67 pounds, that may
have not hit the threshold to keep them in
prison longer, if at all. So it’s necessary to
get everything out of these vehicles if
possible because you don’t know the
consequences of what it could mean for the
agent, and the Courts and so forth in the
system. That and the fact that I would say
it’s embarrassing to the Customs Services to,
you know, scll a vehicle that has narcotics
already in it. I mean, we’re supposed to be
getting narcotics off the street and not giving
it to the public.
ld. at 658:19-660:5 (emphasis added).
According to the documentary evidence before the
court and the trial testimony of numerous Customs
employees, it 1s clear to the court that a stated goal of
Customs’ procedures regarding seized vehicles is to remove
all contraband from a vehicle prior to sale. That goal is the
actual standard that defendant set for itself. Defendant is
responsible for “getting narcotics off the street and not
giving it to the public.” Id. at 660:4-5. The government has
legal narcotics. Private individuals are barred from
possessing illegal narcotics. It is the responsibility of
defendant to seize “all” illegal narcotics from vehicles
forfeited by private individuals. Defendant’s conduct of the
sale, in particular, the fact that defendant provided no
warning about the possible presence of narcotics in vehicles,
demonstrates defendant’s own belief that it had successfully
carried out its policy of removing all narcotics
Ps Whether Plaintiff Reasonably Assumed That
the Pathfinder Was Free of All Contraband
The court now turns to the other contracting party in
the transaction that led to Customs’ transferring ownership
of the Pathfinder to plaintiff: the plaintiff buyer. Plaintiff
argues that he held a subjective belief, “consistent with that
of a reasonably prudent person. . . [,] that since the vehicles
were being sold by the [United States], they had been
searched and did not contain large quantities of narcotics.”
Pl.’s Br. 12. Indeed, plaintiff testified that, when he
purchased the Pathfinder at the auction, he was. not
concerned that it may contain contraband:
Q: When you decided to purchase the
Pathfinder, did you have a concern that it
might still have drugs in it left by the
previous owner? A: No.
Q: Why not?
A: Because I was buying it from a
country that has - that I supposed had
high technology, the latest technology,
and that it was impossible for it to have
any problem.
Q: What type of technology are you referring to?
A: Well, the same - you know, when |
cross into the United States, there is a great
deal of inspection, there are dogs, and then
there is a Secondary Inspection. And |
imagine that, there, they had equipment to
68
check tt
Q: When you bought the Pathfinder, were
you under the impression that it had been
checked for contraband or drugs? A: | felt
100 percent sure, safe. Q: Why’?
A: Because what I just said,
that I was buying it from the
[U.S.] Government itself.
rr. 58:4-59:1. Plaintiff also testified that no announcements
or warnings regarding the vehicles’ seizure histories or
potential to contain contraband were made prior to the
auction. Id. at $2:19-21.
Gabriel Calderon, who was with plaintiff when he
bought the Pathfinder, testified that he had a simular
understanding to that of plaintiff:
©: When you were at the auction, did you
have an understanding of where the
vehicles had come fron:?
A: It was my understanding that the cars
had been confiscated or seized by the
Government of the United States
Q: Did you know anything
about the history of the
Pathfinder? A: No, never
Q: Were you
worried that it
might have drugs
init? A: No.
Q: And why not?
A: Weil, because if the Government of
the United States was selling it, it was
69
logical that it had been thoroughly
inspected.
Id. at 525:21-526:10.
The materials distributed to potential buyers at the
auction identified the auction as a Customs-sponsored event
Customs itself advertised the auction as a Customs-affiliated
event. See JX 5 (auction flyer) 1. The flyer used to
announce the auction was entitled “U.S. Customs &
Combined Agency Public Vehicle Auction.” Id. Further,
the bidder registration form, which was provided to potential
and actual purchasers, was entitled “EG&G Technical
Services Inc., U.S. Customs Service Support, Bidder
Registration Form.” JX 6 (Bidder Registration Form) 1.
The document that transferred title from Customs to the
purchaser, the “Certificate to Obtain Title to a Vehicle,” JX
7 (Certificate to Obtain Title to a Vehicle) |, identified
defendant as the owner of the vehicle until transfer of title is
complete:
The undersigned Department or Agency of
the United States Government certifies that
the vehicle described herein, the property of
the United States Government, has been
transferred this Sth day of September 2001,
to the Transferee designated herein; and that
this is the first transfer of such vehicle in
ordinary trade and commerce subsequent to
acquisition thereof by the United States
Government.
Id. (emphasis added). The back of that same document
reiterates that the vehicle is government property prior to
10
transfer to the purchaser: ‘This certificate constitutes an
official transfer of the vehicle described hereon, and formally
evidences its release from the custody of the United States
Government to the designated transferee.” Id. at 2
(emphasis added).
Plaintiff demonstrated at trial that he believed that
the Pathfinder was in fact free of contraband when he bought
it, Tr. 58:4-59:1, and Gabriel Calderon confirmed that belief,
id. at 525:21-526:10. The court determines that plaintiff s
belief was reasonable. By selling the Pathfinder, which then
belonged to the United States government, see JX 7
(Certificate to Obtain Title to a Vehicle) i-2, at an auction
sponsored by the United States government, JX 5 (auction
flyer) 1, defendant represented to potential buyers that the
Pathfinder did not contain any contraband. Because
defendant works to remove illegal narcotics from the hands
and property of private individuals and because only
defendant may possess illegal narcotics, it was reasonable for
plaintiff to assume as a fact that defendant would not sell a
vehicle containing illegal narcotics to a private individual
An implied-in-fact warranty is “founded upon a
meeting of minds, which, although not embodied in an
express contract, 1s inferred, as a fact, from conduct of the
parties showing, in the light of the surrounding
circumstances, their tacit understanding.” Baltimore & Ohio
R.R., 261 U.S. at 597. In Ryan Stevedoring Co. v
Pan-Atlantic Steamship Corp. (Ryan), 350 U.S. 124 (1956),
the United States Supreme Court held that an implied-in-fact
warranty existed when the petitioner stevedoring contractor
agreed to perform all of the respondent shipowner’s
stevedoring Operations without signing a formal stevedoring
contract or an express indemnity agreement. Ryan, 350 U.S
at 126, 1. When one of the shipowner’s longshoreman
yy
j
severely injured his leg - while unloading cargo that the
stevedoring contractor had loaded onto the ship - and
subsequently sued the shipowner, the shipowner filed suit
against the stevedoring contractor for indemnification. Id. at
12628. The Supreme Court held that the parties’
“uncontroverted agreement to perform all of the shipowner’s
stevedoring operations at the time and place where the cargo
in question was loaded . . . necessarily includes [the
stevedoring contractor’s] obligation not only to stow the
[cargo], but to stow [it] properly and safely.” Id. at 133
(emphasis added). The Court further stated:
Competency and safety of stowage are
inescapable elements of the service
undertaken. This obligation is not a
quasi-contractual obligation implied in law
or arising out of a noncontractual
relationship. It is of the essence of
petitioner’s stevedoring contract
Id. (emphasis added)
When plaintiff purchased the Pathfinder from
defendant, both parties had the same expectation: that the
Pathfinder was free ofall contraband. That mutual and
common expectation is the “meeting of minds” within this
contract. Much like the parties in Ryan, who expected the
stevedoring contractor not only to load the shipowner’s ship
but to load it “properly and safely,” Ryan, 350 U.S. at 133,
the parties in this case expected to transfer ownership of the
Pathfinder free of any contraband. Defendant’s conduct that
showed its “tacit understanding” of this warranty was
repeatedly demonstrated by defendant’s written policies, by
the testimony provided by defendant’s agents, and by the
fact that the circumstances of the sale suggested absolutely
no uncertainty on the part of the government that the
Pathfinder was free of contraband. That documentary and
testimonial evidence proved that the “purpose” of
defendant’s search procedures was to remove al] contraband
from seized and forfeited vehicles prior to sale. Selling a
vehicle that contains illegal narcotics to a private individual
after having seized the vehicle and having been in possession
of the illegal narcotics contradicts defendant’s stated goal of
removing “all” contraband. The conduct of the sale - with
no warning to the public or Opportunity for the public to
inspect the vehicles - makes clear that defendant assumed a
a fact that the vehicles it sold were free of narcotics
Defendant has a duty to “[get) narcotics off the street and
[not to give] it to the public.” Tr. 660:4-5. Plaintiff was
reasonable in assuming, as a fact, that the Pathfinder did not
contain any contraband because, as a private individual, it is
illegal for him to possess contraband. Defendant did not
meet its own standard of clearing “all” contraband from the
Pathfinder before selling the Pathfinder to plaintiff.
Defendant violated the implied-in-fact warranty, evidenced
by the circumstances of the sale, that the Pathfinder was free
of contraband when it sold the Pathfinder with seventeen
kilograms of marijuana to plaintiff.
i Whether Defendant Violated the
Doctrine of Superior Knowledge and
Breached Its Contract with Plaintiff
Plaintiff argues that defendant violated the doctrine
of superior knowledge when it did not disclose to plaintiff
that a “policy/rumor/suggestion to ‘minimize damage’ during
searches to preserve ‘resale value’ (which increased the risk
that ‘large loads’ of drugs remained in the vehicles at the
time of sale)” allegedly existed. Pl.’s Br. 21. Plaintiff
asserts that, had the government disclosed this informatio1
to plaintiff, “the value of the conveyance would have been
decreased but [plaintiff] would have been aware of the risk
and taken proper steps to protect himself if he decided to
proceed with the sale.” Id. Defendant counters that the
doctrine of superior knowledge is inapplicable to this case
it claims that plaintiff has not proven the government's
withholding of a fact because plaintiff failed to prove that a
policy to curtail] searches in fact existed. Def.’s Reply 9.
Defendant further argues that the doctrine is strictly limited
to the disclosure of facts that affect performance costs and
that “the only cost component of the contract [in this case] 1s
the price of the property purchased.” Id. |
Plaintiff presents the testrmony of Mr. Marilao, the
seizing Officer who searched the Pathfinder, as evidence that
defendant had a policy to minimize damage during its vehicle
searches in order to obtain a high resale value of those
vehicles at auction. During direct examination by plaintiff's
counsel, Mr. Marilao stated that there was a policy at the
San Ysidro point of entry to rainimize damage to seized
vehicles for purposes of reselling the vehicles at the auctions
Tr. 427:23-429:9. He agreed with plaintiff's counsel that his
supervisors had instructed him and other seizing officers “to
minimize the damage for a vehicle for resale purposes.” Id
at 428:21-22; see also id. at 429:22. He also agreed with
plaintiff's counsel’s statement that “the inspectors were told
that they - that when they inspect the vehicles, not to cause
extensive damage because the vehicles were going to go into
auction.” Id. at 429:1-4. Mr. Marilao admitted that
“because this [minimizing damage] would make the car
worth more at auction, sometimes [he] would do [his] best
to munimize the damage during a search.” Id. at 429:6-8
During cross-examination, Mr. Marilao reiterated that the
policy was a “policy to minimize damages for purposes of
resale,” not “a policy simply to minimize damage.” Id. at
~J]
~
_
431:11-13. However, he then appeared to contradict his
earlier statements, testifying that the officers’ attempts to
minimize damage to the vehicles was “[nJot necessarily,” 1d.
at 431:17, always for the purposes of resale. He further
stated that he did not “curtail [his] own searches pursuant to
this policy to a degree where [he was] skipping things that
[he] would normally do,” id. at 432:17-19, and that, if he
had to cut up a seat in order to search for contraband, he
would do so, 1d. at 432:21-23
As discussed in Part III.A.3, the supenor knowledge
doctrine provides that, where the government has vital
information about the transaction or object of the
transaction, knows that its contracting partner has no
knowicdge of and no reason to obtain such information,
musleads its contracting partner as to that information, or
fails to put its contracting partner on notice to inquire, and
does not provide the relevant information, the government
has breached the contract. GAF Corp., 932 F.2d at 949
However, not all information that could be or 1s
withheld by a party would implicate the supenor knowledge
doctrine. In Hercules, the Federal Circuit noted that the
doctrine concems only “the withholding of superior
knowledge that makes it more difficult to perform under the
terms of the contract at issue.”” Hercules, 24 F.3d at 197
(emphasis added). Hercules involved plaintiff chemical
companies seeking indemnification for a settlement suit into
which they had entered with veterans allegedly wyured by the
use of Agent Orange during the Vietnam War. Id. at
191-93. Because the government had knowledge of the
health nsks associated with chemicals contained in Agent
Orange, the plaintiffs argued, the government should
indemnify the plaintiffs for the costs and attorneys fees of
litigating the veterans’ suit. Id. at 193-94. The Federal
75
Circuit ruled against the Hercules plaintiffs because it found
that “nothing the government did or failed to do had any
impact upon [plaintiffs’] production of Agent Orange.” Id.
at 197
In Helene Curtis Industries, Inc. v. United States
({felene Curtis), 312 F.2d 774 (Ct. Cl. 1963), the Court of
Claims, the predecessor to this court, held that the defendant
United States Army, did violate the doctrine of superior
knowledge when it withheld specialized knowledge of the
manufacturing method necessary to produce chlormelamine,
a disinfectant chlorine powder, and about the product itself.
Helene Curtis, 312 F.2d at 777-78. The defendant had
solicited a bid for chlormelamine to be used as a disinfectant
for army gear in the Korean War, id. at 775-76, without
providing certain information about the product and the
methods used to manufacture it, id. at 778. The plaintiff,
who had submitted the lowest bid based upon a belief that
chlormelamine could be made simply by mixing various
ingredients, was awarded the contract and incurred $90,000
more in costs because it discovered that grinding was
necessary to make the product meet defendant’s solubility
specifications. Id. at 776. The Court of Claims ruled in
favor of the plaintiff and held that the government failed to
disclose its knowledge of the difficulties in producing
chlormelamine and that it had even implied that grinding
would not be necessary. Id. at 778
Similarly, n Hardeman-Monier-Hutcherson v. United
States (Hardeman), 458 F.2d 1364 (Ct. Cl. 1972), the
Clauns Court held that defendant, the United States Navy,
violated the doctrine of superior knowledge when it awarded
a contract to the plaintiff contractor that included
construction of a pier at a site marred by “unpleasantly
rough sea[s].”.. Hardeman, 458 F.2d at 1365, 1372. When
76
the plaintiff had submitted its bid to defendant, the plaintiff
had requested copies of the defendant’s reports that divulged
the statistics for the tidal streams and winds of the proposed
pter’s location._Id. at 1367. The defendant denied the
plaintiff's request, id., and “[t}he invitation for bids
contained no affirmative representation as to the winds, tide,
currents Or sca condition other than the statement that there
were occasional cyclones,” id. at 1369. Because the plaintiff
did not have time within the bidding period to perform an
adequate investigation of the proposed pier site, the plaintiff
underestimated the amount of time it would take to
complete performance of the contract. Id. at 1367-68. The
Court of Claims found that the defendant had a duty to
disclose its superior knowledge regarding the conditions at
the proposed pier site, and it held that the defendant’s failure
to disclose that knowledge constituted a breach of contract.
Id. at 1372
{tis not clear, however, that the superior knowledge
doctrine addresses information of the type alleged by
plaintiff to exist in this case. The knowledge that the
defendants withheld in Helene Curtis and Hardeman
involved specialized, scientific information that was
determined and documented by the government. See Helene
Curtis, 312 F.2d at 77778; Hardeman, 458 F.2d at 1365-66
Even if the superior knowledge doctrine were
applicable to the information allegedly withheld in this case,
plaintiff was unable to produce any evidence demonstrating
that the rumored policy to minimize searches for the sake of
resale values was an official policy of Customs or even that
the rumor was widespread within Customs. On the
contrary, several Customs agents testified that no such
policy existed. Chief Jose Perez, a Supervisor within
Customs, Ir. 725:17, stated at trial that he never heard an
77
instruction at San Ysidero to curtail searches in order to
increase the resale prices of vehicles, that he never heard a
rumor to that effect, and that he never instructed anyone to
curtail their searches for that reason, id. at 728:21-729:10
He further specified that, as Supervisor to Mr. Marilao, he
never “instructed Joseph Marilao to curtail his searches so
that the resale prices at auction would be higher.” Id. at
729:11-14. He went on to say:
[Customs] would never say well, we're
concerned about the resale value of a seized
vehicle so don’t search it, or don’t do this,
or don’t do that. Our job is to get all the
drugs out of a vehicle by whatever means
possible... . The goal is to get all the drugs
out ofa vehicle. [ could say that [ don’t
think too many Customs Officers would
care at all what the resale value of a vehicle
would or would not be
Id. at 729:19-730:24. Deputy Hood also testified that he
has never heard of defendant’s “engag| ing] in a practice of
curtailing its searches of seized vehicles in order to increase
the resale prices of those vehicles when they were sold at
public auction,” id. at 243:23244:1, that he had never been
instructed to curtail searches for that reason, id. at 244:4-8,
and that he himself had never curtailed the searches of
vehicles for any reason, id. at 244:9-16 Additionally, Mi:
Bickers demied ever hearing the rumor, id. at 282:3, and M1
Root stated that he “never” heard that rumor, id. at 663:19
Mr. Root further testified that “[mJoney [the resale price]
was never an issuc,”’ 1d. at 664:4-5, and that he does not care
for what price a vehicle sells because his “job 1s to make sure
that the narcotics everywhere in that vehicle wherever it’s
found is removed before it’s sold at auction.” id. at
78
664:18-21.
Even if the superior knowledge doctrine were
applicable, plaintiff did not prove facts sufficient to support a
claim that defendant violated the doctrine of superior
knowledge. Because plaintiff fatled to prove that defendant
had a policy to “‘minimize damage’ during searches to
preserve ‘resale value,’” Pl.’s Br. 21, much less withheld
knowledge of such policy, the court finds that the doctrine
of superior knowledge is inapplicable to this case.
G Whether Defendant Violated the Implied
Covenant of Good Faith and Fair Dealing When It
Sold the Pathfinder to Plaintiff
In Agredano I, when defendant moved for summary
judgment as to plaintiff's claim that defendant violated the
implied covenant of good faith and fair dealing, the court
ruled:
(he court declines to grant
defendant’s motion for summary judgment as
to its claim that defendant did not breach the
covenant of good faith and fair dealing. It
may be that plaintiffs can prove that the
government failed to conduct an adequate
search for the purpose of obtaining a higher
resale value for the vehicle at auction. This
could be a case of the government’s
appropriating profits to itself at the expense
of its contracting partner in direct
contravention of the covenant of good faith
and fair dealing. See Centex, 395 F.3d at
1305
79
Or, if plaintiffs prove that they could
not have discovered the hidden contraband in
the circumstances of the auction sale, and
that the government had a policy to search
thoroughly any vehicles seized because they
contained narcotics, but that the government
acted in direct contravention of its stated
policy, plaintiffs may be able to show that the
government had a duty to notify plaintiffs of
the government’s failure to search the vehicle
thoroughly or a responsibility to put plaintiffs
on notice that it would be their responsibility
to mspect the vehicle for contraband and to
allow them the opportunity to conduct a
meaningful inspection
Agredano [, 70 Fed. Cl. at 574
Whether Defendant Had a Policy to Curtail
Searches of Vehicles In Order to Obtain a Higher
Resale Value
Plaintiff argues that defendant violated the covenant
of good faith and fair dealing because defendant “failed to
conduct an adequate search of the Pathfinder [flor the
purpose of obtainmg a higher resaie value for the vehicle at
auction.” Pl.’s Br. 26 (emphasis omitted). However, as
discussed in connection with plaintiff's claim under the
superior knowledge doctrine in Part II[.F above, plaintiff
failed to prove the existence of a policy of minimizing
damage to obtain a higher resale value or that such a motive
affected the search of the Pathfinder. See supra Part II.
The court notes that several Customs agents, including
Customs inspectors and directors, testified that, had the
Pathfinder undergone a thorough, {***], the marijuana left in
\
80
the Pathfinder would have been discovered. See Tr.
276:20-24 (Bickers) (“Q: And if there were 35 pounds of
marijuana on the interior of the car, do you - would you
expect that it should be found during that process? A:
Thirty-five pounds of marijuana should be found during that
process. Yes."’); id. at 333:22-334:1 (Murphy) (“Q: How
about 35 pounds of marijuana; would you expect that a
thorough inspection of the interior to detect that? A: I
would hope that if you followed all the procedures, that you
would find that amount. Yes.”); 1d. at 379:15-22 (Nunez)
(“Q: Would you expect that if all of the searches were done
in the way you were trained on the Pathfinder in this case,
that - and if the Pathfinder had 37 pounds of marijuana in it
at the time of the search, that it would be found by the
inspectors if they had done all the searches the way they
were supposed to be done? A: Correct.”’); id. at
237:25-238:7 (Hood) (“Q: Ifa[***] is conducted
thoroughly, would you expect that they would find an
amount of maryuana that was, say, 35 pounds? [A:] |
would expect that I would find it. I don’t know about other
officers. | would expect | would. I can only speak for
myself.”’); id. at 605:22-606:2 (Ahern) (“Q: What if the
maryuana was in the door, and the wheel wells and under the
seat? Would those be areas you would expect them to find
if they were conducting a thorough and adequate [***]? A
[ would think so, yes.”’)
The court does not know how Customs missed the
contraband in the Pathfinder that resulted in plaintiff's arrest,
incarceration, and injuries. However, the court cannot
conclude, based on the preponderance of the credible
evidence, that the reason for the failure was the
government's intent to obtain a higher resale value for the
Pathfinder. The preponderance of the evidence presented at
trial sumply does not support the allegation. See supra Part
81
Iti.F. Thus, the court cannot find a violation of the covenant
of good faith and fear dealing based on the allegation that
the government failed to conduct an adequate search for the
purpose of obtaining a higher resale value
2.Whether Defendant Acted in Direct Contravention of Its
Stated Policy
Che court now turns to plaintiff's alternative theory
that defendant may have violated the implied covenant of
good faith and fair dealing if plaintiff proves: 1) that he
could not have discovered the hidden contraband himself; 2)
that the government had a policy to search thoroughly any
vehicles seized because they contained narcotics; and 3) that
the government acted in direct contravention of its stated
policy. With regard to the first element, it is clear to the
court that it was impossible for plaintiff to discover the
contraband himself prior to his purchase of the Pathfinder
See supra Part II1.D. When plaintiff first saw the Pathfinder
on the auction lot, and before he decided to bid on it, the
Pathfinder was locked and plaintiff was unable to open the
doors. Tr. 53:14-16. The first tume plaintiff was able to get
inside of the Pathfinder was “[a] day after it was bought.”
Id. at 55:12. Gabriel Calderon, who accompanied plaintift
to the auction, confirmed plaintiff's testumony that it was
impossible to inspect the interior of the car. Id. at 524:5
$27:11. He stated that “the car was locked,” 1d. at 524°7-8,
when he and plaintiff viewed it before bidding at the auction
He further stated that he was not able to open the doors to
the Pathfinder and to get inside of it until
the day after plaintiff purchased it. Id. at
526:21-23
§2
Furthermore, even if plaintiff had been able to inspect
the interior of the Pathfinder pnor to bidding on it at the
auction, it is highly unlikely that, as a layperson with no
training in searching for contraband in seized vehicles,
plaintiff could have discovered the narcotics himseif._See
supra Part II1.D. Several Customs agents testified that no
layperson could discover hidden contraband within a vehicle
Mr. Bickers agreed that training and experience were
required in order “to detect hidden narcotics in the vehicles
that were coming through the border,” Tr. 268:24-25, and
that a layperson would only be able to detect hidden
narcotics in a vehicle “after some training,” Tr. 269:5. Mr
Marilao confirmed Mr. Bickers’ testimony by agreeing “that
thoroughly searching a vehicle for hidden compartments
takes a level of specialized training and experience,” id. at
123:4-6, which is something that one cannot “expect a
layperson to be able to do,” id. at 423:8-9. Accordingly, the
court finds that the first element of its inquiry, that plaintiff
could not have discovered the contraband on his own, 1s
satisfied
With regard to the second element of the court's
inquiry, “that the government had a policy to search
thoroughly any vehicles seized because they contained
narcotics,” Agredano I, 70 Fed. Cl. at 574, the court has
already determined that defendant certainly had such a
policy, see supra Part III.B. Thus, the court now turns to
the third and final inquiry: whether the government acted
direct contravention of its stated policy
lhe Federal Circuit held in Centex that the
government breached a contract with corporate plaintiffs
when Congress enacted certain tax legislation. Centex, 395
F.3d at 1314. The case arose out of the savings and loans
crisis in which “(t]he government sought to mitigate the
effects of the crisis in the industry by inducing healthy
financial institutions to take over troubled [savings and loan
associations] in order to avert their collapse.” Id. at 1287.
The plaintiffs had entered into one such takeover
arrangement that provided that the government would
provide tax benefits to the plaintiffs in consideration of their
bailing out troubled associations. Id. at 1287-88. Soon
thereafter, Congress enacted new tax legislation that “had
the effect of disallowing such institutions from claiming
deductions for the built-in losses on assets covered by the
. assistance agreements.” Id. at 1289. The Federal Circuit
affirmed the ruling by the Court of Federal Claims, holding
that “an umplied promise of good faith and fair dealing
was breached when Congress passed the targeted legislation
that effectively appropriated to the government a substantial
portion of the benefits that the plaintiffs reasonably expected
from the operation of the Agreement.” Id. at 1314
Plaintiff sets forth two allegations in support of his
claim that defendant acted in direct contravention of its
stated policy. Pl.’s Br. 26-27. Furst, plaintiff points to the
alleged rumor that seizing officers were directed to minimize
damage during searches of seized vehicles in order to retain
the resale value of the vehicles. Id. at 26. Second, plaintiff
claims that the difficulties he and his attorneys faced when
requesting the photographs taken by Customs after the
Pathfinder had been seized demonstrate that “the
government, knowingly and without reasonable justification
withheld relevant information from its contracting partner
({plamtiff}).”” Id. at 27
[he court has already examined plaintiff's claim
regarding the alleged rumor and determined that the
documentary evidence presented at trial and the testimony
provided by numerous witnesses do not support plaintiff's
84
claims. See supra Part III.F. Unlike the circumstances in
Centex, in which the defendant performed an action
enacting new tax legislation, that directly contravened what
it had promised to the Centex plaintiffs, see Centex, 395
F.3d at 1314, the allegation of an unsubstantiated rumor
does not rise to the level of direct contravention. The court
therefore concludes that the possible existence of an alleged
rumor to minimize damage to vehicles during searches is not
an action taken by defendant that directly contravenes
lefendant’s stated policy to search all vehicles thorough
With regard to plaintiffs allegation that defendant
withheld evidence from plaintiff by not initially submitting ¢
plaintiff all of the photographs of the Pathfinder taken by
Customs, the court understands how plaintiff's suspicio1
could have arisen. When plaintiff's criminal attorney in
Mexico was unable to retrieve photographs of the Pathfind
irom the government, he enlisted the assistance of plaintifl
yunsel in the United States. Tr. 144:24-145:4: see JX ¢
Mr. Mejia’s FOIA request) 1-10. On April 5, 2002
plaintiff's counsel sent a letter to the Office of the opecia
|
\gent in Charge, c/o Freedom of Information Act/Priva
Act. JX 59 (plaintiff's counsel’s FOIA request) 1-4. TI
letter requested “any and all photographs taken in
connection with the seizure of a 1987 Nissan Pathfind
from Jose Jimenez Coronel in January of 2001 as furthe:
described in the Custody Receipt for Retained or Sez
Property attached hereto.”” Id. at 1. On April 8, 200
Customs responded to plaintiff's counsel with a lett
lud “ the followme pal if? T Ipn
here exists eight (8) pictures in our fil }
tne abo, S referen ed telephor cConversatlh
| lease be advised that IX (6) ern lo Ip ture
provided in response to your request. One
picture is non-responsive, and one (1) picture |
being withheld pursuant to 5 U.S.C. [§]
552(b)(7){c)
}X 14 (Response to plaintiff's counsel's FOIA request) |
Juliet Calip, a paralegal specialist for the United States
Immigration and Customs Enforcement (ICE), testified that
she had prepared that response to plaintiff's counsel’s initia
FOIA request. Tr. 682:17-23. She explained that 5 U 5.
$52(b)(7)(c) concerns “invasion of privacy,” id. at
684:8-10, and that she withheld one of the photographs
which depicted an interior view of the Pathfinder from th:
passenger's side, for the reason that “a person’s face” wa
it, id. at 690:24-25: see JX 15 (Response to Mr. Mejia’
FOIA request) 20 (showing the redacted version of the
photograph with the person’s face blacked out). She st
that she found the other photograph, which depicted a1
‘ntirely intenor view of the back seat of the Pathfinder
Mir. Mena’s FOIA request) 24
non-responsive to plaintiff ; counsel s request becau
A
IX 154 (Response to
if here were no pictures Of any drugs in that pictul in
‘
Was aSking about pictures of drugs in a wheel well and u
ar, and that exact picture had pictur f it that v
not drugs, and they were inside a
| td
! the back seat of the Pathfinder was d
n ponsive to plaintiff PQ requ
‘ , ntift fi]
| .
tation in the futu ll
py of any photograpl {the Pathi
i lal rOur nt Patht
ther photograph from the above refere!
seizure file
IX SY (plaintifl ; counsel's FOIA request) | ( mphas!
iddead } [he court understands that sentence to requ
‘
learly three types of photographs: |) any photographs «
he Pathfinder; 2) any photographs of the marijuana found
the Pathfinder; and 3) any other photographs contained in
the seizure file maintained by Customs. Ms. Calip testihe
that eight photographs were contained in the seizure fil
14 16 | X vet she on ent >. photog IpNAs to plaintitl
unsel 1x [4 Va Do! r to plaintiff ms | KC)
Nor did plaintiff's evidence prove that defendant intended 1
act in direct contravention of its stated policy to remove a
contraband from the Pathfinder. The court finds that
defendant did not violate the implied covenant of good 1
ind far dealine when it iid the Pathfinder to plaintiff
/ ')
| he
, ’ ’ ,
} ul
i tract \ hur } )
ix Pri ’ f ' , tor ;
mM [
t mak mpensation to tl
part n det ining ti n t
p ition as the “dama
warded, tl ! |
, | m
IT la pe
, , > ¥
’
‘
, |
i 1] irt ! i | j
by ty oe 4 Y ; | } ’
ii | 1a! !
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' ; ; ‘ :
’
; :
‘ : } " i :
; fy
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RS
failure or deficiency, plus
°(...continued)
Customs’ “headquarters and legal counsel,” Tr. 690:22-23,
to send a redacted version of the photograph that contained
an agent’s face, id. at 690:23-691:4. She was then
instructed to send the redacted photograph to Mr. Mejia.
Id. at 691:5-7. In her response to Mr. Mejia’s request, Ms.
Calip also included the picture of the interior of the
Pathfinder, which she had not included in her response to
plaintiff's counsel’s request. Compare JX 15 (Response to
Mr. Mejia’s FOIA request) 17-24 with JX 14 (Response to
plaintiff's counsel’s FOIA request) 4-9.
(b) any other loss, including incidental or
consequential loss, caused by the breach,
less
(c) any cost or other loss that he has avoided by not
having to perform.
Restatement (Second) of Contracts § 347 (1981).’ The
In addition to the Restatement (Second) of Contracts
(1981), the Federal Circuit sometimes looks to the Uniform
Commercial Code (U.C.C.), which governs contracts for
sales of goods, see U.C.C. § 2-102 (2004), as a point of
reference in adjudicating contract disputes, see, e.g., Metro.
Area Transit, Inc. v. Nicholson, 463 F.3d 1256, 1260 (Fed.
Cir. 2006); CruzMartinez v. Dep’t of Homeland Sec., 410
F.3d 1366, 1371 (Fed. Cir. 2005); Rumsfeld v. Freedom NY,
Inc., 329 F.3d 1320, 1328 (Fed. Cir. 2003). However, the
89
Federal Circuit has confirmed the purpose of expectation
damages: “[(e]xpectation damages give the non-breaching
party the benefit of his bargain by putting him in as good a
position he would have been had the contract been
Federal Circuit has observed that “Congress has not applied
the Uniform Commercial Code to federal contracts.” GAF
Corp. v. United States, 932 F.2d 947, 951 (Fed. Cir. 1991).
The contract at issue in GAF Corp., however, was not one in
which the United States sold goods to a private buyer. See
id. at 948. The court is not aware of any case in which the
Federal Circuit has ruled on the applicability of the U.C.C. to
sales of goods by the government to a private buyer, but the
United States Supreme Court has held that “[w]hen the
United States enters into contract relations, its mghts and
duties therein are governed generally by the law applicable to
contracts between private individuals.”” Lynch v. United
States, 292 U.S. 571, 579 (1934). Ifthe U.C.C. were to -
apply to the sales of goods by the government to a private
buyer, the U.C.C. would provide additional authority under
which the court may award damages to plaintiff. See U.C.C.
§§ 2-711, 2-715. According to the U.C.C., if a seller fails to
perform a contractual obligation, see U.C.C. § 2-711(1), the
buyer may “recover damages for breach with regard to
accepted goods,” id. § 271 1(2)(f), and may also “recover
damages in any manner that is reasonable under the
circumstances,” id. § 2-711(2)(j). Further, the buyer is
entitled to recover for “injury to person or property
proximately resulting from any breach of warranty” in the
form of consequential damages. Id. § 2-715(2)(b). Given the
uncertainty as to the applicability of the U.C.C. to this case,
the court conducts its damages analysis under the guidelines
provided by the Restatement (Second) of Contracts as
interpreted and applied by the Federal Circuit.
90)
performed.” S. Cal. Fed. Sav. & Loan Assoc. v. United
States (S. Cal Fed.), 422 F.3d 1319, 1334 (Fed. Cir. 2005)
(citng Bluebonnet Sav. Bank, F.S.B. v. United States
(Bluebonnet), 266 F.3d 1348, 1355 (Fed. Cir. 2001)). The
Federal Circuit has further held that a three-prong inquiry
underlies the awarding of expectation damages:
Expectation damages are recoverable
provided they are actually foreseen or
reasonably foreseeable, are caused by the
breach of the promisor, and are proved with
reasonable certainty.
Bluebonnet, 266 F.3d at 1355 (citing Restatement (Second)
of Contracts §§ 347, 351-52 (1981)).
With regard to foreseeability, the Federal Circuit
looks to the Restatement (Second) of Contracts for
guidance. See Bluebonnet, 266 F.3d at 1355; Landmark
Land Co. v. Fed. Deposit Ins. Corp., 256 F.3d 1365, 1378
(Fed. Cir. 2001). Section 351 of the Restatement concerns
“Unforeseeability and Related Limitations on Damages:”
(1) Damages are not recoverable for loss
that the party in breach did not have
reason to foresee as a probable result of
the breach when the contract was made.
(2) Loss may be foresecable as a
probable result of a breach because it
follows from the breach
(a) in the ordinary course of events, or
Q]
(b) as a result of special
circumstances, beyond the ordinary
course of events, that the party in
breach had reason to know.
Restatement (Second) of Contracts § 351. The losses
suffered by plaintiff were foreseeable to defendant because
those losses “‘follow[] from the breach in the ordinary course
of events.” See id. Defendant breached its contract with
plaintiff when it sold to plaintiff the Pathfinder containing
seventeen kilograms of marijuana. See supra Part III.E. It
was foreseeable to defendant that, by selling a vehicle
containing contraband, the buyer of that vehicle would be at
risk for arrest and imprisonment. Only defendant may
legally possess contraband, a fact that is evidenced by
defendant’s policies to retrieve all contraband from seized
vehicles. See id. Although the particular circumstances of
this case may be unique, it is within the “ordinary course of
events” that a vehicle containing contraband would be seized
by law enforcement officials and that the owner of the
vehicle would be arrested, convicted, and imprisoned. That
is exactly what happened to plaintiff, supra Part IJ.A, and the
court determines that the events were foreseeable to
defendant at the time defendant sold the Pathfinder to
plaintiff. Included in the foregoing are the damages that
could reasonably be expected to be incurred in connection
with imprisonment: legal fees, additional expenses of family
members directly related to plaintiff's imprisonment,
plaintiff's lost income, and the costs of the medical treatment
for plaintiff's injuries and illnesses caused by the
imprisonment.
The second prong in the inquiry regarding
92
expectation damages concems causation. In order to
determine the causal relationship between a breach of
contract and a party’s losses, the Federal Circuit has set
forth two standards: the “substantial factor” theory and the
“but for” theory. Citizens Fed. Bank v. United States
(Citizens), 474 F.3d 1314, 1318 (Fed. Cir. 2007). The
“substantial factor” theory of causation provides that a
plaintiff may recover damages where a defendant’s breach of
a contract “was a substantial factor in causing the damages.”
Id. The “but for” theory of causation provides that “a
‘plaintiff can only recover those items of damage which are
the proximate result of the acts of the [g]overnment.’” Id.
(quoting Myerle v. United States, 33 Ct. Cl. 1, 27 (1897)).
Ultimately, it is within the discretion of the trial court to
determine which standard to apply: “the selection of the
appropriate causation standard depends upon the facts of the
particular case and lies largely within the trial court’s
discretion.” Id._
The court finds that a causal relationship exists
between defendant’s breach of contract and plaintiff's losses
under either the “substantial factor” or “but for” theories of
causation. Each and every item of monetary damayes that
plaintiff seeks to recover, described in detail below, stems
directly from defendant’s breach of the contract with
plaintiff. Plaintiffs physical and mental health problems,
financial woes, and the costs incurred by his family are all
direct and foreseeable results of defendant’s breach.
Defendant breached its contract with plaintiff when it sold
the Pathfinder to plaintiff with seventeen kilograms of
marijuana contained inside of it. See supra Part III.E.
Because of defendant’s breach, plaintiff was arrested,
charged with possession of illegal narcotics, found guilty,
and imprisoned for one year. See supra Part Il.A. The
health and financial problems that plaintiff has dealt with
93
during his imprisonment and since his release are directly
related to defendant’s breach. Defendant is therefore
responsible for the consequences of plaintiff's imprisonment.
Under the “substantial factor” test, defendant’s breach was
not only a substantial factor - but also the critical factor - in
causing the damages: had defendant not sold the Pathfinder
with contraband to plaintiff, plaintiff would not have been
arrested and imprisoned. Similarly, under the “but for” test,
“but for” defendant’s breach, plaintiff would not have been
arrested and imprisoned. In either case, had plaintiff not
been arrested, he would not face the health and financial
problems that he has encountered and will continue to
encounter. Thus, the court finds that defendant’s breach of
contract was both a “substantial factor in causing [plaintiffs]
damages,” see Citizens, 474 F.3d at 1318, and that plaintiff's
damages “are the proximate result of the acts of the
[g]overnment,” see id.
With regard to the third and final prong, whether the
damages are proved with reasonable certainty, the court
notes that the parties have stipulated to the monetary
amounts for damages regarding plaintiff's health and
financial losses._ See Stipulations of Fact (Stip.) 6-7. Based
on the stipulations, together with extensive testimony,
including testimony by both percipient witnesses and
qualified experts, see Tr. 754:17-822:14, detailed below, the
court concludes that the damages sought by plaintiff are fair
and reasonable. The court finds that plaintiff is entitled to
expectation damages because of defendant’s breach of
contract.
A Plaintiffs Health
In the parties’ Stipulations of Fact, the parties
supulate that “plaintiff's total medical expenses are $10,000”
94
and that “plaintiff's total psychiatric expenses are $12,500.”
Stip. 6. Defendant states, with respect to each amount, that
it “neither concedes that this amount is recoverable as
damages in this case, nor stipulates that this category of
alleged damages was foreseeable.” Id. Because the court
has determined that plaintiff's medical costs were
foreseeable consequences of defendant’s breach and are
recoverable by plaintiff, see Part IV, the court accepts the
monetary amounts set forth by the parties for the medical
costs already incurred by plaintiff. However, because
plaintiff requests additional damages to cover the costs of his
future medical and psychiatric treatments, Pl.’s Br. 39-40,
the court now turns to testimony provided by plaintiff's
doctors at trial.
Prior to his imprisonment, plaintiff did not suffer any
of the health problems that he developed in prison and
continues to suffer to the present day. See Tr. 768:16-769: 1
(“The change was evident in [plaintiff]. The change was
evident. The change between before he was in prison and
after he was in prison, so the fact that he was in prison
modified his factors, his life.””); id. at 816:18-22 (testimony
of Dr. Miguel Lizarraga that plaintiff's imprisonment
“triggered the illnesses that he has currently and the ones
that were formed’’). About six or seven months after
entering prison, plaintiff was visited by his doctors, id. at
79:5-9, and three of those doctors presented testimony at
trial.
Dr. Jesus Manuel Cesea Caro, a medical doctor.
visited plaintiff in prison on July 29, 2002. Id. at 757:12-16;
JX 33 (Dr. Cesea’s medical report) 3. Dr. Cesea found
plaintiff to be “very nervous, depressed, obe[se].”. Tr.
757:19; JX 33 (Dr. Cesea’s medical report) |. He
concluded that plaintiff was nervous because of his
95
“{iJnsomnia and crying crises.” Tr. 759:9; JX 33 (Dr.
Cesea’s medical report) 1. Dr. Cesea also noted that
plaintiff “was suffering from diarrhea, headache, problems
on his skin[,] and difficulty of not being able to keep [up his]
personal hygiene.” Tr. 761:10-12; JX 33 (Dr. Cesea’s
medical report) 2-6. Dr. Cesea testified that the lack of
personal hygtene probably led to plaintiff's skin ailments,
including itching and fungi, Tr. 761:15-16, and to increased
cavities in his teeth, id. at 762:8-14. Dr. Cesea diagnosed
plaintiff as obese, and, due to plaintiff's added weight and
inability to exercise, plaintiff also suffered from articular pain
in his knees, 1d. at 762:18-763:3, from becoming out of
breath after a small amount of exercise, id. at 763:19-23, and
from “insufficiency of veins,” id. at 766:7-8. The prognosis
that Dr. Cesea provided at the time was that plaintiff was at
risk “to suffer a cardiac problem and emotional disorders.”
Id. at 767:17-18; JX 33 (Dr. Cesea’s medical report) 2.
Since plaintiff's release from prison, Dr. Cesea has seen
plaintiff several times. Tr. 767:25-768:7. He currently
treats plaintiff for diabetes, a condition that Dr. Cesea stated
was caused by plaintiff's weight gain in prison._Id. at
769:6-15.
Dr. Hector Santillana, a psychiatrist, examined
plaintiff in prison in August 2002. Id. at 772:20-21;
778:7-9. Dr. Santillana conducted the psychiatric exam both
by conducting a direct psychiatric exam and by questioning
“[p]resentation, demeanor, body appearance, conscious
state, adaptability, memory, reasoning, orientation,
productivity, and consciousness of mental illness.” Id. at
779:1-7. Dr. Santillana testified that, when he examined
plaintiff, he found plaintiff to be unkempt in appearance and
to have a depressed demeanor, which was evidenced by
plaintiff's “crying easily, tiredness, [and] lack of interest [in
96
life].”’ Id. at 780:4-6; 780:7-10; 780:22. Dr. Santillana
diagnosed plaintiff with major depression, which is the
highest grade of depression._Id. at 785:23-786:2; JX 30 (Dr
Santillana’s psychiatric report) 10. More specifically, Dr.
Santillana determined that plaintiff's depression was reactive
and recurrent. Tr. 785:24; JX 30 (Dr. Santillana’s
psychiatric report) 10. “Reactive” means that an external
cause prompted the depression, Tr. 786:4-8, and “recurrent”
indicates that the depression can come and go in cycles, id.
at 786:20787:5. Dr. Santillana testified that the external
cause to plaintiff's depression was “[h]is mistreatment and
his confinement,” Tr. 786:11; IX 30 (Dr. Santillana’s
psychiatric report) 8-9, something the doctor classified as
“[a] serious external cause,” Tr. 789:11. Dr. Santillana also
diagnosed plaintiff as being claustrophobic, the “fear [of]
being locked up or enclosed,” id. at 786:15-16, which the
doctor determined “[b]cause of [plaintiff's] anguish and
desperation,” id. at 786:19. Plaintiff exhibited physical
characteristics that Dr. Santillana understood to be indicative
of psychiatric conditions._Id. at 788:3-4 (stating that “[a]
doctor used to say that when the hurt is not released in tears,
it makes other organs cry.”). Dr. Santillana found that
plaintiff did not have a regular pulse, had chest pains and
variation in his blood pressure, was obese, and suffered from
a fungus infection. Id. at 788:7-19. In terms of plaintiff's
functioning ability, Dr. Santillana graded plaintiff a score of
forty on a 100-point scale promulgated by the American
Society of Psychiatry. Id. at 789:18-790:14; JX 30 (Dr.
Santillana’s psychiatric report) 10. If someone is rated at
100 percent, that person is “totally well . . . with no
psychiatric issues.” Tr. 790:17-18. Dr. Santillana also noted
that plaintiff harbored “[f]rank [s]uicide [i]deas,” JX 30 (Dr
Santillana’s psychiatric report) 10, because plaintiff preferred
“to die [rather] than [be] in prison,” Tr. 791:18-19.
97
With regard to treatment options for plaintiff's
psychiatric condition, Dr. Santillana testified that plaintiff
should be hospitalized for approximately two weeks. Id. at
792:19
24. Dr. Santillana stated that the cost of hospitalization in
Tijuana, Mexico is between $4,000 to $5,000 per week. Id.
at 793:3-9. After a period of hospitalization, plaintiff would
then require out-patient therapy for five years or more, for
which Dr. Santillana estimated costs to be between $5,000
to $10,000 per year. Id. at 793:10-15.
Dr. Miguel Lizarraga is a medical doctor, id. at
798:1, with a speciality in treating obesity, id. at 799:4-8.
Dr. Lizarraga examined plaintiff in prison in August of 2002.
Id. at 801:18-23. Dr. Lizarraga conducted a clinical
examination, which included recording plaintiff's heredity
information and health history, physically examining plaintiff,
and making a diagnosis._Id. at 802:3-11. Plaintiff reported
to Dr. Lizarraga that, since entering prison, he suffered from
nasal bleeding, headaches, cough, thoracic pain, chest pain,
fever, nasal congestion, earache, eye pain, and throat pain.
Id. at 803:9-11; JX 31 (Dr. Lizarraga’s medical report) |.
Plaintiff also reported suffering from insomnia, shortness of
breath, weight gain, pain in his teeth, feeling a burning
sensation while urinating, numbness in his legs and hands,
inflammation of his legs and ankles, pain in his shoulders,
arms, and knees, diarrhea, abdominal pain, and depression.
Tr. 803:19-807:18; JX 31 (Dr. Lizarraga’s medical report)
|-2. Dr. Lizarraga diagnosed plaintiff as suffering from an
emotional disorder, Tr. 810:2-3; JX 31 (Dr. Lizarraga’s
medical report) 4-5, “morbid obesity with a severe risk of
cardiovascular illness,” Tr. 810:5-6; JX 31 (Dr. Lizarraga’s
medical report) 4, dermatitis, JX 31 (Dr. Lizarraga’s medical
report) 4, conjunctivitis, JX 31 (Dr. Lizarraga’s medical
Y);
report) 4, hypertension, Tr. 812:9-14, and gastroenteritis, JX
31(Dr. Lizarraga’s medical report) 4, which ts an infection
associated with diarrhea, nausea, and vomiting, id. at
811:21-24. Dr. Lizarraga concluded that plaintiff's health
problems stemmed from his “being charged with and
consequently becoming a victim of an injustice,” that is, that
plaintiff's imprisonment caused plaintiff's health disorders.
Id. at 814:17-815:2; JX 31 (Dr. Lizarraga’s medical report)
5-6.
Dr. Lizarraga testified that the treatment that plaintiff
requires, “a treatment with a group of medical scientists
specialized in multi-disciplinary [treatment]” can cost over
$100,000 in the United States. Tr. 817:4-7. He stated that
similar treatment, which includes “endocrinologists, [a]
rheumatologist, cardiologist, and nutritionist,” id. at
817:11-5, would cost about twenty percent less in Mexico,
id. at 821:22-23, which would be $80,000
Based on the parties’ stipulations and the testimony
provided at trial, the court awards to plaintiff the following
medical expenses incurred and to be incurred: $10,000 foi
plaintiff's medical bills to date; $80,000 for plaintiff's future
medical treatments;
$12,500 for plaintiff's psychiatric bills to
date; and $46,500 for plaintiff's future psychiatric
treatment. ®
Dr. Santillana testified that plaintiff's psychiatric
treatment should entail two weeks of hospitalization and five
years or more of ambulatory care. Tr. 792:1-24. He stated
that hospitalization costs between $4,000 and $5,000 per
99
B. Plaintiff's Finances
Plaintiff seeks to recover the fair market value of the
Pathfinder, the attorneys fees he incurred to obtain his
freedom in Mexico, and the income he lost during the year
of his imprisonment. PI.’s Reply 18-19. The parties
stipulated that the fair market value of the Pathfinder is
$2,600, that plaintiff's criminal attorneys fees are $350,000,
and that plaintiff's lost income is $48,000. Stip. 6. After
each stipulation, defendant states that it “neither concedes
that this amount is recoverable as damages in this case, nor
stipulates that this category of alleged damages was
foreseeable.” Id. Because the court has determined that the
value of the Pathfinder, criminal attorneys fees, and lost
income were foreseeable consequences of defendant’s
breach and are recoverable by plaintiff, see Part IV, the
court accepts the monetary amounts to which the parties
have stipulated. Thus, the court awards the following to
plaintiff: $2,600 for the value of the Pathfinder; $350,000
for the criminal attorneys fees incurred by plaintiff; and
$48,000 for the income lost by plaintiff during his
imprisonment
j Costs and Expenses Incurred by Plaintiff's
Family
week, and that ambulatory care costs between $5,000 to
$10,000 per year. Id. at 792:19-793:15. The court arrives at
$46,500 as a final sum by taking the median amount for each
treatment - $4,500 per week for hospitalization and $7,500
per year for ambulatory care - and multiplying those figures
by the time advised by Dr. Santillana for each treatment - two
weeks and five years, respectively. The total is $46,500
100
Plaintiff seeks to recover “[t]he costs and expenses
incurred by his family members to bring him supplies while
he was imprisoned.” PI.’s Br. 39; Pl.’s Reply 18. The
parties stipulated that “[e]xpenses in the amount of
$1,254.00 were incurred when . . . plaintiff's wife traveled to
see . . . plaintiff while he was incarcerated.” Stip. 6.
Defendant states that it “neither concedes that this amount is
recoverable as damages in this case, nor stipulates that this
category of alleged damages was foreseeable.” Id. Because
the court determined that the costs incurred by plaintiff's
family were foreseeable consequences of defendant’s breach
and are recoverable by plaintiff, see Part IV, the court
awards $1,254 for costs and expenses incurred by plaintiff's
family.
Emotional Distress
Plaintiff states in briefing that he is entitled to
recover “emotional distress damages in an amount which the
Court deems reasonable compensation for the arrest and
imprisonment of [plaintiff] for a period of 351 days.” PI.’s
Reply 19. Plaintiff argues that his emotional distress
includes, but is not limited to, “suicidal thoughts . . . [,]
serious and life[-]threatening physical injuries and diseases
. [,] anguish, l
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