OLIVIER PLANTATION, LLC v. ST. BERNARD PARISH (E.D.La. 9-24-2010)

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ef28 U.S.C. § 1631; Fed.R.Civ.P. 12(h)(3). The case was removed to the Court on two separate bases: (1) the Federal Tort Claims Act on the basis of tort claims against USACE pursuant to 28 U.S.C. §§ 1441(a), 1441(b), 1442(a)(1) and 2679(d)(3); and (2) the claims against USACE as an agency of the United States, pursuant to 28 U.S.C. § 1442(a)(1), the federal officer or agency removal statute. If the Court determines that it does not have subject matter jurisdiction over the case on at least one of these bases, it must determine whether the case should be remanded, in whole or part, to the Twenty-Fifth Judicial District Court for the Parish of St. Bernard, Louisiana, where it was originally filed, dismissed, in whole or in part, or transferred, in whole or part, to the Court of Federal Claims. The Court will now discuss subject matter jurisdiction under the Federal Tort Claims Act and the federal officer or agency removal statute.

1. Subject Matter Jurisdiction-Federal Tort Claims Act

In the Federal Tort Claims Act ("FTCA"), Congress waived the United States' sovereign immunity for claims arising out of torts committed by federal employees. See 28 U.S.C. § 1346(b)(1). Relevant to the present matter, the FTCA authorizes,

[C]laims against the United States, for money damages . . . for . . . loss of property . . . caused by the negligent or wrongful act or omission by any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred. Id.

Thus, in order for this Court to have subject matter jurisdiction pursuant to the FTCA, there must be tort allegations against USACE, an employee of the United States, for money damages for loss of the Plaintiffs' property caused by USACE's negligent or wrongful acts or omissions.

a. The Petition

In the Petition, Plaintiffs allege a takings claim under the Louisiana Constitution against Defendants St. Bernard and LBBLD, seeking just compensation. The Petition contains the following specific allegations in support of this claim. Plaintiffs allege that St. Bernard, pursuant to its emergency powers, signed the Commandeering Order, commandeering Plaintiffs' private properties to obtain borrow materials, gain access, and construct the Levee. Pls. Petition ¶¶ 8-11. Plaintiffs further allege that the Commandeering Order granted St. Bernard an assignable right and easement to clear, borrow, excavate and remove, soil, dirt and other materials from the Plaintiffs' properties. Id. at ¶ 12. Additionally, Plaintiffs allege the Commandeering Order granted an irrevocable right of entry to their properties to LBBLD for its use in obtaining borrow, access and construction of the Levee for repair and rehabilitation. Id. at ¶ 13. Plaintiffs allege that LBBLD then issued an Authorization for USACE to enter Plaintiffs' properties to use its right of entry. Id. at ¶ 15. Pursuant to this Authorization, Plaintiffs allege, that USACE "entered upon the [Plaintiffs' properties] and removed large quantities of borrow material and caused damages through their access and construction activities." Id. at ¶ 16. The Petition states that the Authorization requires LBBLD to identify and compensate the Plaintiffs in accordance with Louisiana state law within twelve months of the use of their properties or otherwise LBBLD would file appropriate judicial proceedings, neither of which have occurred. Id. at ¶¶ 17-18. The Petition further states the Plaintiffs "have been damaged by the actions of St. Bernard Parish and the LBBLD due to the removal of an unknown quantity of borrow material from the Properties, the failure to properly dispose of debris, the abandonment of pieces of equipment, the spillage of oil and other liquids, and by other acts as may be shown at trial." Id. at ¶ 19. Plaintiffs seek "just compensation for [their] damages pursuant to Louisiana Constitution Article I, section 4 to the full extent of [their] loss, including attorney fees, [and] interest from the date of taking and costs." Pls. Petition ¶ 20.

Plaintiffs do not allege claims, tort or otherwise, against USACE, thus, there is no subject matter jurisdiction pursuant to the FTCA based upon the Petition. Defendants claim that certain allegations involving USACE amount to tort claims under Louisiana law. However,"[a] federal question `is presented' when the complaint invokes federal law as the basis for relief. It does not suffice that the facts alleged in support of an asserted state-law claim would also support a federal claim." Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 12 (2003) (Scalia, J. dissenting). Furthermore, "[t]he presence or absence of federal-question jurisdiction is governed by the `well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. " Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Under the well-pleaded complaint rule, the plaintiff is the master of the claim and may avoid federal jurisdiction by exclusively relying on state law, even where a federal claim is also available. Id.; see Hoskins v. Belkins Van Lines, 343 F.3d 769, 772-73 (5th Cir. 2003) ("A plaintiff with a choice between federal- and state-law claims may elect to proceed in state court on the exclusive basis of state law, thus defeating the defendant's opportunity to remove, but taking the risk that his federal claims will one day be precluded"). Assuming Plaintiffs could have asserted tort claims against USACE, they have chosen not to, and are entitled to decline to do so as the masters of their Petition; therefore, the facts alleged involving USACE do not give rise to federal question jurisdiction pursuant to the FTCA.

The Court recognizes there are exceptions to the well-pleaded complaint rule. For example, where a case with only state law claims in which "the vindication of a right under state law necessarily turn[s] on some construction of federal law." Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 9 (1983); see Empire HealthChoice Assur., Inc. v. McVeigh, 547 U.S. 677, 690 (2006); In re Carter, 618 F.2d 1093, 1100 (5th Cir. 1980). However, for a district court to exercise federal-question removal jurisdiction on this basis, the plaintiff's claim must "necessarily raise a state federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Grable Sons Metal Prod., Inc. v. Darue Eng'g Mfr., 545 U.S. 308, 314 (2005). In the present matter, a determination of whether the Defendants' actions constituted a taking under the Louisiana Constitution does not implicate any issues of federal law, and thus, does not provide a basis for this Court to exercise federal subject matter jurisdiction.

A second exception to the well-pleaded complaint rule is the artful pleading doctrine. The artful pleading doctrine provides that "Congress may so completely preempt a particular area [of law] that any civil complaint raising this select group of claims is necessarily federal in character." Johnson v. Baylor Univ., 214 F.3d 630, 632 (5th Cir. 2000) (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987)). The artful pleading doctrine relies exclusively on complete preemption. Waste Control Specialists, LLC v. Envirocare of Tex., Inc., 199 F.3d 781 (5th Cir. 2000). No parties have suggested that there exists complete preemption in the present matter to provide this Court with jurisdiction, nor does the Court find any basis for complete preemption. Thus, the artful pleading doctrine is not implicated in the present matter.

b. The Third-Party Demand

St. Bernard's Third-Party Demand notes the allegations in the Petition involving USACE, and alleges that the "[Amended] Cooperation Agreement requires [USACE] to identify and compensate the [Plaintiffs]," and it is "entitled to contribution from third-party defendant, [USACE] for any and all sums that Plaintiffs may be awarded in this action." Rec. Doc. No. 1-1. That the Amended Cooperation Agreement constitutes a contract entered into by St. Bernard, LBBLD and USACE is not disputed. The Agreement states that USACE is authorized by 33 U.S.C. § 701n to assist in the repair and restoration of the Levee and the Defendants have the authority and legal capacity to furnish the "non-Federal cooperation" and participation in the Levee project. See Rec. Doc. No. 1-1. It further provides that USACE "shall identify and pay just compensation to the [Plaintiffs]." Id.

"The Federal Tort Claims Act does not extend subject matter jurisdiction over breach of contract claims." Davis v. United States, 961 F.2d 53, 56 (5th Cir. 1991) (citing Woodbury v. United States, 313 F.2d 291, 295 (9th Cir. 1963)).

[C]laims which are founded upon an alleged failure to perform contractual obligations are not tort claims that support subject-matter jurisdiction under the Federal Tort Claims Act. This principle holds true regardless of whether the plaintiff chooses to characterize the failure in terms of negligence upon the part of the contracting officer or other government officials. Id.

Furthermore, "the Federal Circuit has instructed that `it is well established that where a tort claim stems from a breach of contract, the cause of action is ultimately one arising in contract, and thus is properly within the exclusive jurisdiction of the Court of Federal Claims . . .'" Dobyns v. U.S., 91 Fed. Cl. 412, 418 (Fed. Cl. 2010) (quoting Awad v. United States, 301 F.3d 1367, 1372 (Fed. Cir. 2002)). Because the Amended Cooperation Agreement, a contract, obligates USACE to compensate the Plaintiffs for the damages to their properties, any claim arising therefrom would sound in contract, not tort. Even though St. Bernard seeks "contribution" from USACE, this claim is dependant upon the Plaintiffs' success in their Louisiana state law takings claims against the Defendants, not on any tort claims. Accordingly, Defendants have not alleged a tort claim against USACE which would grant this Court subject matter jurisdiction pursuant to FTCA.

c. Anderson v. Red River Waterway Commission

Defendants rely upon the Fifth Circuit's decision in Anderson v. Red River Waterway Commission, 231 F.3d 211, to support their claim that this Court possesses jurisdiction over the case. The facts of Anderson are somewhat similar to the present matter in that they involve a state law inverse condemnation claim by landowners against a local commission and a third party demand against USACE. 231 F.3d 211. The Anderson case was removed to federal district court pursuant to 28 U.S.C. § 2679(d), the FTCA. Id. at 231. The Fifth Circuit affirmed the decision of the district court to deny a motion to sever and remand the principal claim back to state court on the basis that, under § 1441(c) the district court was without discretion to sever and remand the action since plaintiffs failed to demonstrate any factual distinction between the

primary claim and the third-party claim. Id. at 214.

However, Anderson is distinguishable from the present matter since, unlike Anderson, here there is no original federal question jurisdiction pursuant to the FTCA or otherwise. Additionally, the statute at issue in Anderson, 28 U.S.C. § 1441(c), only applies "[w]henever a separate and independent claim or cause of action within the jurisdiction conferred by [original federal question jurisdiction] is joined with one or more otherwise non-removable claims or causes of action." 28 U.S.C. § 1441(c); see generally Washington v. Ernster, 551 F.Supp.2d 568, 575 (E.D. Tex. 2007) ("Nevertheless, this case is outside the purview of § 1441(c) because the parties do not assert any claims that fall within the court's federal question jurisdiction"). Here, there is no federal question jurisdiction; therefore, this statute is inapplicable to the present case. See id. Anderson is also distinguishable from the present matter on the basis it affirmed the grant of a motion for summary judgment on the merits as to whether the plaintiffs could recover from the local defendant and/or USACE for their damages, 231 F.3d at 215, while the present Motion to Dismiss alleges lack of subject matter jurisdiction. See Hix. U.S. Army Corps. of Engineers, 155 Fed. App'x 121, 128 (5th Cir. 2005) (quoting Stanley v. Cent. Intelligence Agency, 639 F.2d 1146, 1157 (5th Cir. 1981) ("Since the granting of summary judgment is a disposition on the merits of the case, a motion for summary judgment is not the appropriate procedure for raising the defense of lack of subject matter jurisdiction")). Thus, in the present case, unlike in Anderson, it is appropriate for the Court to limit its consideration to the jurisdictional issues presented. Id. 2. Subject Matter Jurisdiction-Federal Officer Removal Statute

USACE removed the present matter on an additional basis, 28 U.S.C. § 1442(a), the federal officer or agency removal statute, which permits removal when a civil action is filed in state court against the United States or an agency or officer thereof. See Rec. Doc. No. 1, ¶ III. Section 1442 "results in removal of the entire civil action, including otherwise non-removable claims asserted by and against non-governmental parties." JAJ Ventures, LLC v. Envtl. Chem. Corp., 2009 WL 911020, at *3 (E.D. La. Mar. 31, 2009) (citing IMFC Prof. Servs. v. Latin Am. Home Health, Inc., 676 F.2d 152, 156-57 (5th Cir. 1982)). The parties do not dispute that USACE is a proper agency of the United States, permitted to remove the case under 28 U.S.C. § 1442(a). Rather, the dispute involving 28 U.S.C. § 1442(a) raises the issue of whether the statute confers subject matter jurisdiction on the Court. At the heart of this inquiry is the derivative jurisdiction doctrine.

The derivative jurisdiction doctrine "recognizes that a court lacks jurisdiction on removal because it cannot have jurisdiction where the state court from which the action was removed lacked jurisdiction." In re Katrina Canal Breaches Consol. Litig., 2007 WL 1461036, at *2 (E.D. La. May 16, 2007) (citing Barnaby v. Quintos, 410 F.Supp.2d 142, 143 (S.D.N.Y. 2005)). Although Congress has eliminated this doctrine from removals pursuant to 28 U.S.C. § 1441, see id.; 28 U.S.C. § 1441(f), "courts have consistently held that the doctrine still applies to removals pursuant to § 1442." In re Katrina Canal Breaches Consol. Litig., 20076 WL 1461036, at *2. This Court and others recognize that the doctrine is "arguably outdated and illogical in nature," yet "courts from other circuits continue to apply the doctrine [] to matters properly removed pursuant to § 1442." JAJ Ventures, 2009 WL 911020, at *3. Furthermore, "in the absence of definitive guidance from the Supreme Court or the Fifth Circuit, this Court finds no reason to disagree with the rationale of these courts' decisions." Id.

In the present matter, the state court lacked jurisdiction over the present matter once USACE was added as a third-party defendant. Pursuant to 28 U.S.C. § 1346(a)(2), the district courts and the United States Court of Federal Claims have original jurisdiction over claims against the United States arising from "any express or implied contract." Whether this Court or the Court of Federal Claims has jurisdiction depends upon whether the claim is more or less than $10,000, 28 U.S.C. §§ 1346(a)(2); 1491(a)(1), and will be discussed more thoroughly below. See infra pp. 21-23. Therefore, the state court does not have jurisdiction over the present matter as long as the Third-Party Demand against USACE remains in the case. Accordingly, following the great weight of jurisprudence, the Court applies the derivative jurisdiction doctrine and finds that it lacks subject matter jurisdiction over the Third-Party Demand, and the case as a whole.

C. Transfer to the Court of Federal Claims

The Defendants urge the Court to transfer the entire case to the Court of Federal Claims. Pursuant to the Tucker Act, the Court of Federal Claims has exclusive jurisdiction over Fifth Amendment takings claims and contract claims that seek monetary damages in excess of $10,000 against the United States. See 28 U.S.C. §§ 1346(a)(2), 1491(a)(1); Chichakli v. Szubin, 546 F.3d 315, 317 (5th Cir. 2008). The Tucker Act, which grants the Court of Federal Claims jurisdiction to hear certain claims, does not "provide a substantive right to relief and, standing alone, is insufficient to grant jurisdiction to the [Court of Federal Claims]." Riser v. United States, 93 Fed. Cl. 212, 215 (Fed. Cl. 2010); see Peninsula Group Capital Corp. v. United States, 93 Fed. Cl. 720 (Fed. Cl. 2010) ("No substantive rights are created by the Tucker Act, which merely allows [the Court of Federal Claims] to exercise jurisdiction over the federal government when a substantive right exists, such as when the government has breached a contract"). "Therefore, a plaintiff must identify and plead an independent contractual relationship, constitutional provision, federal statute, or executive agency regulation that provides a substantive right to money damages." Wyoming Sawmills, Inc. v. United States, 90 Fed. Cl. 148, 153 (Fed. Cl. 2009) (citing Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc)).

1. Fifth Amendment Claims

The Defendants claim that Plaintiffs' Petition raises a Fifth Amendment takings claim against the United States since USACE is solely responsible for the damage to the Plaintiffs' properties. On this basis, they argue that the entire case should be transferred to the Court of Federal Claims for adjudication. However, the Petition contains no language alleging a Fifth Amendment takings claim against USACE; the only claim in the Petition is a state law taking claim pursuant to the Louisiana Constitution against the local Defendants. Pursuant to the well-pleaded complaint rule, see supra pp. 14-15, Plaintiffs' Petition, which contains no Fifth Amendment claim against USACE, does not give rise to the Court of Federal Claims' subject matter jurisdiction over the case. Caterpillar, 482 U.S. at 392; Acceptance Ins. Companies, Inc. v. United States, 503 F.3d 1328, 1334 (Fed. Cir. 2007). Nor do the exceptions to the well-pleaded complaint rule apply here; federal law is not necessary for a determination of the state law takings claim, nor is there complete preemption. See supra p. 15.

Furthermore, Defendants raise a number of substantive Louisiana state law issues, such as the St. Julien doctrine and immunity, in conjunction with their defense that Plaintiffs fail to allege a takings claim against them, and instead raise a Fifth Amendment claim against USACE. However, the Court of Federal Claims does not have jurisdiction to entertain these substantive Louisiana state law issues. See 28 U.S.C. § 1491(a)(1); Sounders v. South Carolina Pub. Serv. Auth., 497 F.3d 1303, 1307 (Fed. Cir. 2007) ("Claims founded on state law are also outside the scope of the limited jurisdiction of the Court of Federal Claims"). Additionally, federal defenses to a claim, such as the Defendants' invocation of the Fifth Amendment, are not sufficient to confer subject matter jurisdiction. See Parker v. United States, 93 Fed. Cl. 159, 160 (Fed. Cl. 2010) ("However, `determination of jurisdiction starts with the complaint, which must be well-pleaded in that it must state the necessary elements of the plaintiff's claim, independent of any defense that may be interposed'"); Aaron v. Nat. Union Fire Ins. Co. of Pittsburgh, 876 F.2d 1157, 1161 (5th Cir. 1989) ("Thus, the general rule provides that a federal defense to a state law claim does not create removal jurisdiction"). Accordingly, since Plaintiffs have not alleged a Fifth Amendment takings claim against USACE, there exists no basis under the Fifth Amendment for transferring the present matter to the Court of Federal Claims.

2. Contract Claims Against USACE

As discussed above, St. Bernard raised a contract claim, arising from the Amended Cooperation Agreement, against USACE, as an agency of the United States, in the Third-Party Demand. See supra pp. 15-17. As to this claim, the parties agree that the Third-Party Demand is for more than $10,000 since Plaintiffs seek more than $10,000 from the Defendants, rendering the Third-Party Demand also in excess of $10,000. See Rec. Doc. Nos. 17, p. 2; 42, p. 9; 60, p. 9; see e.g. Chichakli, 546 F.3d at 317. Accordingly, it appears at first glance appropriate for this Court to transfer either the entire case or the Third-Party Demand to the Court of Federal Claims pursuant to 28 U.S.C. § 1631. Section 1631 provides, "[w]henever a civil action is filed in a court . . . and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action . . . to any other such court in which the action . . . could have been brought at the time it was filed . . ." 28 U.S.C. § 1631. However, before such a transfer, the Court must consider, (1) whether the Court of Federal Claims has jurisdiction over the matter, and (2) whether the transfer to the Court of Federal Claims is in the "interest of justice."

Whether or not St. Bernard has a claim against USACE arising from the Amended Cooperation Agreement entirely depends upon the resolution of the Plaintiffs' claim against the Defendants under the Louisiana Constitution. See Mary Kay Holding Corp. v. Federal Ins. Co., 309 Fed. App'x 842, 848 n. 4 (5th Cir. 2009). The Court of Federal Claims does not have jurisdiction to decide Louisiana state law claims. See 28 U.S.C. § 1491(a)(1); Sounders v. South Carolina Pub. Serv. Auth., 497 F.3d 1303, 1307 (Fed. Cir. 2007) ("Claims founded on state law are also outside the scope of the limited jurisdiction of the Court of Federal Claims"). Although the Court of Federal Claims may exercise pendent jurisdiction over state law claims, it has declined to do so where the "precise legal question presented by the plaintiffs was one of state law" as opposed to where a plaintiff states a claim granting the Court of Federal Claims jurisdiction along with "state contract claims being truly pendent." Trek Leasing, Inc. v. United States, 62 Fed. Cl. 673, 679-81 (Fed. Cl. 2004)); see Jim Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567 (Fed. Cir. 1997). Additionally, it is premature for the Defendants to raise a claim against USACE for indemnity since no decision has been made as to Plaintiffs' takings claim against Defendants, see Schooner Harbor Ventures, Inc. v. United States, 92 Fed.Cl. 373, 378-79 (Fed.Cl. 2010) ("However, the Court of Federal Claims does not have jurisdiction over claims that are not ripe"). Thus, the Court of Federal Claims lacks jurisdiction over the present matter.

In addition, the Court finds it is not in the "interest of justice" to transfer the case to the Court of Federal Claims given that the Defendants have the option to re-file their claim against USACE in the Court of Federal Claims, without penalty, if and when Plaintiffs prevail against the Defendants on their state law claim. See e.g. Dalrymple v. Grand River Dam Authority, 145 F.3d 1180, 1187 (10th Cir. 1998) (holding the district court committed no error in dismissing third party complaints within the jurisdiction of the Court of Federal Claims since transfer was not in the interest of justice given the complaints could be re-filed without penalty); Earnest v. United States, 33 Fed. Cl. 341, 344-45 (Fed. Cl. 1995) (holding transfer pursuant to 28 U.S.C. § 1631 is not necessary to advance the interests of justice when the plaintiff may re-file without penalty in the proper court). Thus, Defendants may, after resolution of the state court takings claim, file a timely claim against USACE arising from the Amended Cooperation Agreement in the Federal Court of Claims. See 28 U.S.C. § 1491(a)(1). Likewise, Plaintiffs, if they deem appropriate in the future, may file a timely Fifth Amendment taking claim against USACE in the Court of Federal Claims. See Sounders, 497 F.3d at 1308. Accordingly, transfer of the case or a claim thereof to the Court of Federal Claims is not appropriate.

D. Sever, Dismiss Remand

The Court has determined that it lacks subject matter jurisdiction over both claims in the present matter. Given the unique circumstances of this case, i.e. that no one court has jurisdiction to hear both claims simultaneously, the Court exercises its broad discretion to sever the Plaintiffs' claim in the Petition from the Defendants' claim in the Third-Party Demand. See Fed.R.Civ.P. 21; Xavier, 2008 WL 4862549, at *3. With regard to the Plaintiffs' Louisiana state law takings claim against the Defendants, the Court finds that this claim should be remanded to state court pursuant to 28 U.S.C. § 1447(c). With regard to the Defendants' Third-Party Demand against USACE arising from the Amended Cooperation Agreement, the Court finds that remand is inappropriate since there is no jurisdiction in state court, see 28 U.S.C. §§ 1346(a)(2), 1491(a)(1); nor is it appropriate for the Court to transfer the Third-Party Demand to the Court of Federal Claims. See supra p. 23. Accordingly, the Court exercises its authority to dismiss the Third-Party Demand, without prejudice. See Fed.R.Civ.P. 12(h)(3); see also 28 U.S.C. § 1631.

IV. CONCLUSION

For the foregoing reasons, Plaintiffs Olivier Plantation, LLC, Park Investments, Ltd., and Morning Park, Inc.'s Motion to Sever, Motion to Dismiss, and Motion to Remand, Rec. Doc. No. 5, is GRANTED, severing the Plaintiffs' claim in the Petition from the Defendants' claim in the Third-Party Demand, remanding the Plaintiffs' claim in the Petition to the 34^th Judicial District Court for the Parish of St. Bernard, Louisiana, and dismissing, without prejudice, the Defendants' claim in the Third-Party Demand.

New Orleans, Louisiana, this 23rd day of September, 2010.