Court Opinion

ID: 770223
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:31:50+00
Date Added: 2024-06-11T15:19:25.218517
License: Public Domain

224 F.3d 1260 (11th Cir. 2000)
JBP ACQUISITIONS, LP, Plaintiff-Appellant,v.UNITED STATES of America, ex rel. the FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity and as successor to the Resolution Trust Corporation, Defendants-Appellees.
No. 99-11551.
United States Court of Appeals,Eleventh Circuit.
Aug. 30, 2000.Sept. 12, 2000.

[Copyrighted Material Omitted]
Appeal from the United States District Court for the Northern District of  Georgia. (no. 98-00149-1-CV-RWS), Richard W. Story, Judge.
Before TJOFLAT, MARCUS and KRAVITCH, Circuit Judges.
MARCUS, Circuit Judge:

1
Plaintiff JBP Acquisitions, LP ("JBP") appeals the district court's order  dismissing its tort claims for lack of subject matter jurisdiction. The court  concluded that it did not have jurisdiction because the Plaintiff's tort claims  fell within the "misrepresentation" exception to the Government's waiver of  sovereign immunity in the Federal Tort Claims Act ("FTCA"). We agree and affirm  the district court's ruling.

I.

2
The essential facts of this case are undisputed. JBP Acquisitions is a  Pennsylvania limited partnership that purchases real property assets and loan  portfolios secured by real estate for profit. On December 27, 1995, JBP  purchased five nonperforming loans for $355,000.00 from the Resolution Trust  Corporation ("RTC") at an RTC auction of assets taken over from failed financial  institutions.1 Among the loans purchased was one secured by low-income  multi-family housing units located on four tracts of land near the Olympic  Stadium in Atlanta, Georgia (the "Property"). JBP planned to rent the Property  during the 1996 Olympic Games and then sell the units as low-income housing.

3
JBP alleges that ownership of the loan secured by the Property was transferred  to it on January 31, 1996, the date on the Bill of Sale and Assignment of Loans  from the RTC. Under the terms of the written contract between the RTC and JBP,  the RTC was not obligated to actually deliver the loan documents to JBP until  March 15, 1996.

4
Upon receipt of the loan file, JBP took steps to foreclose on the nonperforming  loan in order to obtain title to the Property. At an undetermined time either  before or after JBP's purchase of the loan pool, the Metropolitan Atlanta  Olympic Games Authority ("MAOGA") initiated a condemnation action on the  property in the Superior Court of Fulton County. Plaintiff alleges that during  the course of these proceedings, the RTC/FDIC negotiated with MAOGA as if it  were still the owner of the property and did not notify JBP that it was  negotiating with MAOGA. On February 22, 1996, three weeks after the official  transfer date of the loan to JBP, an Award of the Special Master of the Superior  Court was entered indicating that an agreement had been reached between the  RTC/FDIC and MAOGA in which the parties consented to the Property's condemnation  and stipulated to an award of $163,462.00 based upon an independent appraisal of  the Property. The condemnation award was funded by Peoples Town Development  Corporation, a low-income housing developer.

5
On May 7, 1996, the Sheriff's sale and foreclosure measures instituted by JBP  were completed, and JBP recorded the deed to the Property. On the same day,  MAOGA recorded its deed of title to the Property. Upon checking title just prior  to recording the foreclosure deed, JBP discovered the pending condemnation of  the Property. JBP attempted to intervene in the condemnation action asserting  its ownership interest in the Property, but MAOGA had already bulldozed the  housing units in preparation for the Olympics.

6
JBP then disputed ownership of the Property with Peoples Town, the group to  which MAOGA had transferred its interest. JBP ultimately quit-claimed its  interest in the Property to Peoples Town for $2,000,000.00. JBP argues, however,  that this amount does not reflect the fair market value of the Property. On  January 14, 1998, JBP filed suit in district court against the RTC/FDIC under  the Federal Tort Claims Act, alleging breach of contract, conversion, trespass,  negligence, and interference with property rights. JBP sought compensatory  damages in the amount of $1.3 million, offset by the consideration already paid  by People's Town, as well as punitive damages.

7
The Government moved to dismiss for lack of subject matter jurisdiction on the  grounds that JBP's tort claims were barred by the "misrepresentation" exception  to the FTCA, and that JBP's breach of contract claim was barred by the Little  Tucker Act, 28 U.S.C.  1346. Alternatively, the Government argued that JBP's  tort claims should be dismissed for failure to state a claim upon which relief  could be granted.

8
On February 22, 1999, the district court granted the Government's motion to  dismiss for lack of subject matter jurisdiction. As for the tort claims, the  court found that "all of JBP's injuries arise not out of FDIC's negligent  performance of operational tasks in connection with the loan transfer but,  instead arise, solely out of RTC's failure to convey information to JBP about  the pending condemnation proceedings and out of FDIC's misrepresentations to  MAOGA that RTC still owned an interest in the property." Order at 4. The court  held that "[h]aving found that these claims arise solely out of  misrepresentations by the Government, they must be dismissed pursuant to   2680(h)." Order at 4. The district court also concluded that it lacked  jurisdiction over JBP's breach of contract claim because the Little Tucker Act,  28 U.S.C.  1346, provides that breach of contract claims against the government  in excess of $10,000 lie within the exclusive jurisdiction of the United States  Court of Federal Claims. Order at 5-6. JBP does not challenge the district  court's holding as to its breach of contract claim, but does challenge the  dismissal of its tort claims.

II.

9
We review de novo the district court's dismissal of an action for lack of  subject matter jurisdiction and its interpretation and application of statutory  provisions. See Ochran v. United States, 117 F.3d 495, 499 (11th Cir.1997); see  also Pillow v. Bechtel Constr. Inc., 201 F.3d 1348, 1351 (11th Cir.2000).

10
The law at issue in this case is clearly established and not in dispute. "Absent  a waiver, sovereign immunity shields the Federal Government and its agencies  from suit." FDIC v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 1000, 127 L.Ed.2d  308 (1994); see also United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948,  953, 47 L.Ed.2d 114 (1976); United States v. Sherwood, 312 U.S. 584, 586, 61  S.Ct. 767, 769, 85 L.Ed. 1058 (1941). The terms of the federal government's  "consent to be sued in any court define that court's jurisdiction to entertain  the suit." Sherwood, 312 U.S. at 586, 61 S.Ct. at 770. The Federal Tort Claims  Act provides a limited waiver of sovereign immunity making the United States  liable for "injury or loss of property, or personal injury or death caused by  the negligent or wrongful act or omission of any employee of the Government  while acting within the scope of his office of employment...." 28 U.S.C.   1346(b). Where the FTCA applies, the United States may be liable for certain  torts "in the same manner and to the same extent as a private individual under  like circumstances...." 28 U.S.C.  2674.

11
Congress, however, "adopted several exceptions to this consent to be sued, which  must be strictly construed in favor of the United States." McNeily v. United  States, 6 F.3d 343, 347 (5th Cir.1993); see also Baum v. United States, 986 F.2d  716, 719 (4th Cir.1993) (noting that "waiver of immunity is tempered by a rather  extensive list of exceptions"). If the alleged conduct falls within one of these  statutory exceptions, the court lacks subject matter jurisdiction over the  action. See Dalehite v. United States, 346 U.S. 15, 31, 73 S.Ct. 956, 965, 97  L.Ed. 1427 (1953); Boda v. United States, 698 F.2d 1174, 1176 (11th Cir.1983).

12
At issue in the present case is the "misrepresentation" exception to the FTCA.  The misrepresentation exception bars any claim "[a]rising out of ...  misrepresentation, deceit, or interference with contract rights." 28 U.S.C.   2680(h). The test in applying the misrepresentation exception is whether the  essence of the claim involves the government's failure to use due care in  obtaining and communicating information. See Block v. Neal, 460 U.S. 289, 296,  103 S.Ct. 1089, 1093, 75 L.Ed.2d 67 (1983) (explaining that "[t]he essence of an  action for misrepresentation, whether negligent or intentional, is the  communication of misinformation on which the recipient relies"); United States  v. Neustadt, 366 U.S. 696, 706-07, 81 S.Ct. 1294, 1300-01, 6 L.Ed.2d 614 (1961)  (holding that the breach of the "duty to use due care in obtaining and  communicating information upon which that party may reasonably be expected to  rely in the conduct of his economic affairs, is only to state the traditional  and commonly understood legal definition of the tort of 'negligent  misrepresentation,' ... which there is every reason to believe Congress had in  mind when it placed the word 'misrepresentation' before the word 'deceit' in   2680(h)").

13
The exception covers actions for negligence when the basis for the negligence  action is an underlying claim for misrepresentation. See Metz v. United States,  788 F.2d 1528, 1534 (11th Cir.1986) (emphasizing that a "cause of action which  is distinct from one of those excepted under 2680(h) will nevertheless be deemed  to 'arise out of' an excepted cause of action when the underlying governmental  conduct which constitutes an excepted cause of action is 'essential' to  plaintiff's claim"); Rey v. United States, 484 F.2d 45, 49 (5th Cir.1973)  (barring a claim for negligence where the "negligently erroneous transmission of  misinformation is the crucial element in the chain of causation from defendant's  negligence to plaintiffs' damages");2 Mt. Homes, Inc. v. United States, 912 F.2d  352, 355 (9th Cir.1990) (holding that plaintiff's claim for failure to  communicate correct sales tax information "is in essence an action for negligent  misrepresentation"); Leaf v. United States, 661 F.2d 740, 742 (9th Cir.1981)  (holding plaintiff's negligence claim barred by misrepresentation exception  because the alleged false representation was "within the chain of causative  events upon which plaintiff's claim is founded").

14
"It is the substance of the claim and not the language used in stating it which  controls" whether the claim is barred by an FTCA exception. See Gaudet v. United  States, 517 F.2d 1034, 1035 (5th Cir.1975). Thus, a plaintiff cannot circumvent  the misrepresentation exception simply through the artful pleading of its  claims. See Atorie Air, Inc. v. Fed. Aviation Admin., 942 F.2d 954, 958 (5th  Cir.1991) (rejecting plaintiff's attempt to recast a misrepresentation claim as  one for breach of duty of good faith and fair dealing and explaining that  "causes of action distinct from those excepted under section 2680(h) are  nevertheless deemed to be barred when the underlying governmental conduct  'essential' to the plaintiff's claim can fairly be read to 'arise out of'  conduct that would establish an excepted cause of action"); Mt. Homes, 912 F.2d  at 356 (analyzing whether plaintiff's claim fell within the misrepresentation  exception and explaining that "[a]lthough it has couched its complaint in terms  of the breach of a duty to prepare the documents adequately, we look beyond the  characterization to the conduct on which the claim is based"); Lambertson v.  United States, 528 F.2d 441, 443 (2d Cir.1976) (explaining that "[i]n  determining the applicability of the 2580(h) exception, a court must look, not  to the theory upon which the plaintiff elects to proceed, but rather to the  substance of the claim which he asserts").

15
JBP argues that the misrepresentation exception does not bar its claims because  its claims against the Government are not grounded in "misrepresentation," but  instead in the Government's negligent performance of an operational task. In  Block, the Supreme Court made clear that the misrepresentation exception "does  not bar negligence actions which focus not on the Government's failure to use  due care in communicating information, but rather on the Government's breach of  a different duty." Block, 460 U.S. at 297, 103 S.Ct. at 1093-94 (holding that  respondent's claim against the government for negligent supervision of the  construction of her home was not barred by the misrepresentation exception  because the government's "duty to use due care to ensure that the builder adhere  to previously approved plans and cure all defects before completing construction  is distinct from any duty to use due care in communicating information to  respondent"); see also Guild v. United States, 685 F.2d 324, 325 (9th Cir.1982)  (explaining that "[t]he Government is liable for injuries resulting from  negligence in performance of operational tasks even though misrepresentations  are collaterally involved. It is not liable, however, for injuries resulting  from commercial decisions made in reliance on government misrepresentations.").  Specifically, JBP argues that the Government was negligent in selling it the  loan securing the Property and then continuing to act as though it had an  ownership interest in the Property by negotiating a condemnation award with  MAOGA. JBP contends that its tort claims are based on the Government's negligent  performance of a particular task, not on the Government's misrepresentations,  and, therefore, the claims are not barred by the misrepresentation exception.

16
JBP's characterization of its claims is unpersuasive. The basis for JBP's claims  against the Government is the Government's misrepresentations to JBP and MAOGA.  JBP's complaint makes clear that the Government's failure to communicate  information to JBP about the Government's negotiations with MAOGA is central to  its claim for damages.3 The complaint alleges that "[t]he RTC/FDIC did not  notify Plaintiff that it was negotiating with MAOGA and PeoplesTown as if it  still owned the Property, did not notify Plaintiff of the existence of the  condemnation action, and did not cease negotiations upon selling the Property in  question to Plaintiff." Complaint, ¶14. Also central to JBP's claims is the  Government's misrepresentation to MAOGA regarding its continued ownership of the  loan during the condemnation proceeding. While JBP contends that the basis for  its tort claims is the Government's negligent act of continuing negotiation with  MAOGA subsequent to its sale of the ownership interest in the Property to JBP,  the basis of the Government's negligence, in fact what makes it negligence in  the first place, is the Government's misrepresentation to MAOGA regarding its  current ownership of the loan. It is that misrepresentation which is the  "crucial element of the chain of causation" upon which JBP's claims are founded.  See Rey, 484 F.2d at 49; see also Leaf, 661 F.2d at 742 (failure to provide  information to plaintiffs was the misrepresentation "at the heart of plaintiffs'  complaint, however deftly they have attempted to avoid using the word"). Without  the false representation by the Government that it was the owner of the  Property, the consent agreement in the condemnation proceedings never would have  been consummated, the Property would not have been demolished, and JBP would  have suffered no injury.

17
Moreover, the Plaintiff does not point to any negligence by the Government that  is independent of or in any real way removed from its misrepresentations to JBP  and MAOGA. The only "task" JBP complains of is the Government's selling the loan  to JBP and then continuing to negotiate with MAOGA, just as though it still had  an ownership interest in the Property. Again, we emphasize that at its core the  negligent "act" is the Government's misrepresentation to MAOGA regarding its  ownership interest in the Property and its misrepresentation to JBP regarding  its continued negotiation in the condemnation proceedings.

18
JBP also suggests that its claims against the Government are not barred by the  misrepresentation exception because it does not allege that the Government  directly misrepresented any facts to JBP. As we have noted, the Government's  failure to communicate to JBP the fact that it was engaged in condemnation  proceedings with MAOGA is central to JBP's claims, and failure to communicate,  as well as direct miscommunication, is encompassed by the misrepresentation  exception. See Neustadt, 366 U.S. at 706-07, 81 S.Ct. at 1300-01. Moreover, it  does not matter for purposes of the misrepresentation exception whether the  misrepresentations causing JBP's claims were made directly to it or to some  third party. See Schneider v. United States, 936 F.2d 956, 960 (7th Cir.1991)  (holding plaintiffs' claims, based on the government's misrepresentation to the  private builder from whom plaintiffs bought their homes, were barred by the  misrepresentation exception); Baroni v. United States, 662 F.2d 287, 288-89 (5th  Cir.1981) (holding plaintiff homeowners' claims were barred by the  misrepresentation exception even though the government's miscalculation was  communicated to the real estate developer and not to the plaintiffs directly).  Thus, even if the Government's misrepresentations were only to MAOGA and not to  JBP, this fact is legally irrelevant to the determination of whether JBP's  claims against the Government are barred by the FTCA.

19
In short, the district court properly concluded that the underlying conduct  essential to JBP's tort claims was not the Government's negligent performance of  a particular task in connection with the loan transfer, but instead the  Government's failure to convey any information to JBP about the pending  condemnation proceedings, and its misrepresentations to MAOGA regarding the  Government's ownership interest in the Property. Accordingly, we must affirm the  dismissal of JBP's tort claims for lack of subject matter jurisdiction.

20
AFFIRMED.

NOTES:

1
 The Federal Deposit Insurance Corporation ("FDIC") has since succeeded the RTC.  They will be referred to collectively as "RTC/FDIC."

2
 Fifth Circuit decisions issued prior to October 1, 1981 are binding precedent in  the Eleventh Circuit. See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th  Cir.1981) (en banc ).

3
 The misrepresentation exception encompasses failure to communicate as well as  miscommunication. See Neustadt, 366 U.S. at 706-07, 81 S.Ct. at 1300-01.