Court Opinion

ID: 4683301
Source: CourtListenerOpinion
Date Created: 2021-05-03 13:01:31.497346+00
Date Added: 2024-06-11T08:04:13.852537
License: Public Domain

In the United States Court of Federal Claims

    JOHN DOE,
                                                       No. 19-cv-720 C
                    Plaintiff,
                                                       Filed Under Seal: April 15, 2021
                        v.
                                                       Publication: April 30, 2021 1
    THE UNITED STATES,

                    Defendant.

Thomas Scott Tufts, Orlando, Florida for Plaintiff.

Joseph Alan Pixley, United States Department of Justice, Civil Division, Washington, D.C. for
Defendant. With him on the briefs are Joseph H. Hunt, Assistant Attorney General, Civil
Division; Robert E. Kirschman, Jr., Director, Commercial Litigation; James P. Connor, Assistant
Director, Commercial Litigation, Washington D.C.

                                   MEMORANDUM AND ORDER

        This case arises out of Plaintiff’s status as a former confidential informant for the Internal

Revenue Service (IRS or Government). Plaintiff 2 alleges that the IRS breached a             implied-

in-fact contract (Count I) and a      written agreement (Count II), under which the IRS allegedly

promised to pay him an award in the amount of a certain percentage of taxes recovered from

1
  This Memorandum and Order was filed under seal in accordance with the Protective Order
entered in this case on April 15, 2021. (ECF No. 36.) Pursuant to that Memorandum and Order,
the parties were instructed to propose redactions in accordance with this Court’s Protective Order.
See id. at 20 (citing ECF No. 14). On April 29, 2021, Plaintiff filed a status report notifying the
Court of its proposed redactions. See ECF No. 38. Defendant notified the Court that it did not
have any proposed redactions. See ECF No. 37. The Court has incorporated Plaintiff’s proposed
redactions into the Court’s public version of its Memorandum and Order where appropriate. See
ECF No. 38-1. This public version also corrects a typographical error.
2
  Plaintiff proceeds anonymously in this case as John Doe. See ECF No. 12. He is referenced
throughout this Memorandum and Order as “Plaintiff’ or “Mr. Doe.”

                                                                                                    1
targeted individuals, based upon information Mr. Doe provided as a confidential informant and

whistleblower. Compl. ¶¶ 124-37 (Count I), ¶¶ 138-49 (Count II) (ECF No. 1). Mr. Doe also

alleges that the Government breached covenants of good faith and fair dealing under these

contracts. See Compl. ¶¶ 150-79 (Count III). Mr. Doe seeks damages “in the amount of at least

$               , and [additional relief] in an amount to be determined.” See Compl. at 43. 3

          Defendant timely moved to dismiss this action pursuant to Rules 12(b)(1) and 12(b)(6) of

the Rules of the United States Court of Federal Claims (Rules or RCFC). See generally Motion to

Dismiss (ECF No. 17) (Def. Mot.); Reply to Response to Motion to Dismiss (ECF No. 27) (Def.

Reply). In its Motion, Defendant argues that: (1) this Court lacks jurisdiction to consider Mr.

Doe’s implied-in-fact contract claims, and (2) the            written agreement did not obligate

Defendant to make any future award to Mr. Doe. See Def. Mot. at 14-17 (no jurisdiction to hear

implied contract claim), at 18-22 (failure to state a claim for future payment under express

contract); Def. Reply at 2-10 (no jurisdiction to hear implied-in-fact contract claim), at 10-15

(failure to state a claim for future payment under express contract). Concomitantly, Defendant

argues that Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing must

also fail if there is no valid contract covering future awards. See Def. Mot. at 22-23; Def. Reply

at 8-9.

          For the reasons discussed below, Defendant’s Motion to Dismiss is GRANTED in part

and DENIED in part.

3
  Specifically, Plaintiff alleges he is entitled to “15% of the identified post-decision proceeds, or
$              [], plus the amount of payroll taxes obtained by way of the [Combined Annual Wage
Reconciliation or (CAWR)] program developed as a result of Plaintiff’s work.” Plaintiff’s
Response to the Motion to Dismiss (ECF No. 24) (Pl. Resp.) at 12.
                                                                                                   2
                                          BACKGROUND

       From        until       , Mr. Doe served as a confidential informant for the IRS in a criminal

payroll and corporate income tax evasion investigation of his then-employer. See Compl. ¶¶ 4, 8,

46. Mr. Doe alleges that in             , certain unnamed IRS agents “promised” or informed Mr.

Doe that he would receive 15 percent of taxes collected relating to information he provided to the

IRS about his then-employer as a whistleblower or confidential informant. Id. ¶¶ 36-38, 41. In

              , and again in              , Mr. Doe completed an IRS Form 211 to formalize his

whistleblower claim. 4 Id. ¶¶ 19, 51. Plaintiff remained employed with the same employer,

allegedly at the IRS’s behest, until        . Id. ¶ 65. By letter dated                    , the IRS

deactivated Mr. Doe as a confidential informant. Id. ¶ 75.

       The IRS ultimately launched a formal investigation of Mr. Doe’s employer. In                 ,

several of the target principals reached plea agreements with the Government stemming from the

tax evasion investigation. Compl. ¶ 79. As a result of this       action, the IRS allegedly collected

approximately $ million in taxes from one of the principals and has allegedly continued to pursue

the collection of taxes due from the target taxpayers. Id. ¶¶ 82, 89.

       In                  , Mr. Doe contacted the IRS Whistleblower Office to request that the IRS

pay him an award for the work he performed as a confidential informant. Compl. ¶¶ 91-92. On

                     , the Whistleblower Office sent Mr. Doe a document entitled “Preliminary

Award Recommendation Under Section 7623(a)” (PARL). Def. Mot. Ex. A (unredacted, complete

4
  IRS Form 211 is a standard form that an informant may complete after supplying information
about alleged violations of the tax laws. See Capelouto v. United States, 99 Fed. Cl. 682, 690
(2011).

                                                                                                   3
copy of the Preliminary Award Recommendation Under Section 7623(a)). 5 The letter states in

pertinent part:

         The Whistleblower Office has reached a preliminary award recommendation under
         Internal Revenue Code 7623(a) based on your Form 211, Application for Award
         for Original Information dated                   . Enclosed is a Summary Report
         that explains our preliminary award recommendation in the amount of $           .
         This amount is a preliminary recommendation because the determination of tax is
         not final and is subject to change. If there are any changes to the recommended
         award percentage or the amount of collected proceeds as reflected in the Summary
         Report, then the Whistleblower Office will send you a revised Preliminary Award
         Recommendation Letter.

         ....

         As of the date of this preliminary award recommendation, there is the possibility
         the IRS will collect post-decision proceeds . . . . If post-decision proceeds are
         collected, the IRS will pay consistent with this preliminary award recommendation
         and the attached Summary Report.

         ....

         If you agree with this preliminary award recommendation:

         1. Check the appropriate box, sign and date the enclosed Response to Summary Report
            form indicating your agreement; and
         2. Return the signed form to us.

         By checking the box that you agree with the preliminary award recommendation,
         you agree to waive any judicial appeal rights with respect to the award
         determination, including filing a petition with the U.S. Tax Court. As noted above,
         there is not yet a final determination of tax. Your agreement and waiver of appeal
         rights shall only be binding to the extent that payment is made consistent with this
         preliminary award recommendation and the applicable Budget Act reduction for
         the year in which the payment will be made.

Compl. ¶ 114; Def. Mot. Ex. A at 2-3. 6
5
 Mr. Doe did not attach a complete copy of the Preliminary Award Recommendation Letter to his
complaint. Nevertheless, in deciding whether to dismiss a complaint under RCFC 12(b)(6), the
Court may consider the undisputed contract documents that are contained in, or cited in, the
pleadings without converting the motion to one for summary judgment. See Bristol Bay Area
Health Corp. v. United States, 110 Fed. Cl. 251, 261-62 (2013) (citing, inter alia, Tellabs, Inc. v.
Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).
6
    When citing to Exhibit A of Defendant’s Motion, the page numbers reference the CM/ECF page
                                                                                                  4
        The PARL also included a “Summary Report,” which included the following relevant

provisions:

        6. Expected Final Determination of Tax date:

        7. Post-decision proceeds:

                a. Additional amounts, such as tax attributes, that may be collected post
                 decision based on information provided by the Whistleblower:
                 $

                b. Award percentage to be applied to post-decision proceeds (if any): 15%

See Compl. ¶ 115; Def. Mot. Ex. A at 5.

        On                      , Mr. Doe executed the response to the PARL and returned a signed

“Response to Summary Report,” which included the following relevant language:

        I agree with the preliminary award recommendation and accept it as an award
        decision. To the extent payment is received by the undersigned consistent with this
        preliminary award recommendation, I waive all my administrative and judicial
        appeal rights with respect to the award decision, including my right to petition the
        United States Tax Court.

See Compl. ¶ 116; Def. Mot. Ex. A at 9. On                         , the United States Treasury issued

a check to Mr. Doe in the amount of $               . See Compl. ¶ 118. 7

        On                 , pursuant to a court order (the               judgment), Defendant sold

property against which the IRS had previously placed liens due to information Plaintiff had

provided as a confidential informant. Compl. ¶ 120. Specifically, Defendant sold property

belonging to those taxpayers that Plaintiff had identified (i.e., principals associated with Plaintiff’s

former employer). Id. ¶ 121. With regard to one property sold, Defendant collected “over

numbers located on the header of each page.
7
  The amount paid reflects a tax withholding of $        from the preliminary award amount of
$          , as indicated in paragraph 5 of the Summary Report. See Def. Mot. Ex. A at 5.
                                                                                                      5
$         of so-called post-decision proceeds [which were] to be applied to judgments [Defendant]

had obtained of over $       million as a result of Plaintiff’s work as a confidential informant and

source.” Id.

        Following the              judgment, Plaintiff allegedly attempted to contact the Director of

the IRS Whistleblower Office to inquire about his award of 15 percent of the post-decision

proceeds. Id. ¶ 122. According to Plaintiff, the IRS responded that Plaintiff would receive no

further payment. See id. ¶ 123. This action followed.

                               APPLICABLE LEGAL STANDARD

        Pursuant to Rules 12(b)(1) and 12(h)(3), this Court must dismiss claims that do not fall

within its subject matter jurisdiction. When considering a motion to dismiss based upon lack of

subject matter jurisdiction, this Court accepts as true all uncontroverted factual allegations made

by the non-movant and draws all reasonable inferences in the light most favorable to that party.

See Estes Express Lines v. United States, 739 F.3d 689, 692 (Fed. Cir. 2014); Pixton v. B&B

Plastics, Inc., 291 F.3d 1324, 1326 (Fed. Cir. 2002). If a motion to dismiss for lack of subject-

matter jurisdiction challenges the truth of the jurisdictional facts alleged, the Court may consider

relevant evidence outside the complaint in resolving the dispute. Banks v. United States, 741 F.3d

1268, 1277 (Fed. Cir. 2014) (quoting Reynolds v. Army & Airforce Exch. Serv., 846 F.2d 746, 747

(Fed. Cir. 1988)).

        To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)). The plaintiff also must establish “more than a sheer possibility that a defendant has

acted unlawfully.” Ashcroft, 556 U.S. at 678. Thus, “[a] pleading that offers ‘labels and

                                                                                                       6
conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ Nor does

a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.”’ Id.

(quoting Twombly, 550 U.S. at 555, 557).

                                           DISCUSSION

       The United States Court of Federal Claims is a court of limited jurisdiction. Through

enactment of the Tucker Act, which acts as a waiver of sovereign immunity, Congress has placed

within this Court’s jurisdiction “any claim against the United States founded either upon the

Constitution, or any act of Congress or any regulation of an executive department, or upon any

express or implied contract with the United States, or for liquidated or unliquidated damages in

cases not sounding in tort.” 28 U.S.C. § 1491(a)(1); see also United States v. Mitchell, 463 U.S.

206, 212 (1983). The Tucker Act is a jurisdictional statute and does not create any enforceable

right against the United States on its own. See Mitchell, 463 U.S. at 216; United States v. Testan,

424 U.S. 392, 398 (1976); Todd v. United States, 386 F.3d 1091, 1093-94 (Fed. Cir. 2004). In

order to fall within the Tucker Act’s waiver of sovereign immunity, a plaintiff’s claim for money

damages against the United States must be based upon an express or implied contract with the

United States, or a money-mandating constitutional provision, statute, or regulation. See 28 U.S.C.

§ 1491(a); Mitchell, 463 U.S. at 216-18.

       Section 7623(a) of the Internal Revenue Code provides that the Secretary of the Treasury,

under “regulations prescribed by the Secretary, is authorized to pay such sums, as he deems

necessary for (1) detecting underpayments of tax . . . .” 26 U.S.C. § 7623 (Supp. V 2000). 8

Treasury Regulations provide that “the Whistleblower Office may pay an award under section

8
 This version of Section 7623 was in effect between 1997 and 2006. In subsequent versions of
Section 7623, the language referenced above was placed in subsection (a) but remained unchanged.

                                                                                                  7
7623(a), in a suitable amount, for information necessary for detecting underpayments of tax or

detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws

or conniving at the same.” 26 C.F.R. § 301.7623–1(a) (2020). 9

        Section 7623(a) and its implementing regulations at 26 C.F.R. § 301.7623-1, et seq., are

discretionary and not money-mandating. See Cambridge v. United States, 558 F.3d 1331, 1333

(Fed. Cir. 2009) (quoting Merrick v. United States, 846 F.2d 725, 726 (Fed. Cir. 1988)).

Consequently, a whistleblower cannot pursue an award claim relying solely upon the statute and

implementing regulations. Merrick v. United States, 846 F.2d 725, 726 (Fed. Cir. 1988) (“The

United States cannot be contractually bound merely by invoking the cited statute and regulation.”

(citation omitted)). Instead, “[a]n enforceable contract will arise under these authorities only after

the informant and the government negotiate and fix a specific amount as the reward.” Id. (citations

omitted).

        Where a plaintiff alleges that he contracted with the Government, the plaintiff need only

make “a non-frivolous allegation of a contract with the government.” Mendez v. United States,

121 Fed. Cl. 370, 378 (2015) (internal quotations omitted) (quoting Engage Learning, Inc. v.

Salazar, 660 F.3d 1349, 1353 (Fed. Cir. 2011)).

        Plaintiff alleges that two separate contracts with the IRS entitle him to relief: (1)

implied-in-fact contract and (2) the PARL. See Compl. ¶¶ 125-26, 139-40. He claims that

Defendant has violated the express terms of the parties’ agreement(s) as well as the implied duty

of good faith and fair dealing. Id. ¶¶ 137, 146-49, 179.

9
  The current versions of 26 C.F.R. §§ 301.7623-1 through 301.7623-4 apply to “claims for award
under sections 7623(a) and 7623(b) that are open as of August 12, 2014.” See 26 C.F.R.
§§ 301.7623-1(f); 301.7623-2(f); 301.7623-3(f); 301.7623-4(e). The post-decision proceeds at
issue here all relate to awards that are “open” after that date; therefore, the current versions of these
regulations apply to this action.
                                                                                                       8
          As discussed further below, this Court holds that the      implied-in-fact agreement and

the PARL relate to the same subject matter; therefore, the alleged implied-in-fact contract is

preempted. The Court also holds that the plain language of the PARL is sufficiently definite to

constitute a non-frivolous allegation to entitle Plaintiff to a percentage of post-decision proceeds,

if the IRS collects or collected the proceeds after the parties signed the PARL. Finally, this Court

holds that Plaintiff has made a non-frivolous allegation of a breach of good faith and fair dealing

to the extent his claim relates to proceeds collected after execution of the PARL.

    I.       Breach of the       Implied-in-Fact Contract

          Plaintiff alleges that an implied-in-fact agreement exists between the parties that awards

Plaintiff 15 percent of all proceeds the Government collected attributable to the information

Plaintiff supplied. See Compl. ¶¶ 125-26. Specifically, Plaintiff alleges that: (1) IRS agents

induced Plaintiff to stay with his employer with a promise of a reward, (2) the IRS benefitted from

Plaintiff’s information, which was instrumental to the IRS’s investigation concerning Plaintiff’s

employer’s tax evasion, and (3) Plaintiff’s agreement with IRS agents was ratified by the IRS

District Director and ultimately the IRS Whistleblower Office. See Compl. ¶¶ 3-7. Defendant

contends that no implied-in-fact agreement exists because the PARL covers the same subject

matter as the alleged implied-in-fact agreement; accordingly, Defendant contends that the Court

should dismiss Plaintiff’s implied-in-fact contract claims. See Def. Mot. at 14-15; Def. Reply

at 2-8.

          “An agreement implied in fact is founded upon a meeting of minds, which, although not

embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the

light of the surrounding circumstances, their tacit understanding.” Hercules, Inc. v. United States,

516 U.S. 417, 424 (1996) (internal quotations and citations omitted). “[T]he existence of an

                                                                                                   9
express contract precludes the existence of an implied-in-fact contract dealing with the same

subject, unless the implied contract is entirely unrelated to the express contract.” Schism v. United

States, 316 F.3d 1259, 1278 (Fed. Cir. 2002) (en banc) (citing Atlas Corp. v. United States, 895

F.2d 745, 754-55 (Fed. Cir. 1990)); see also Rick’s Mushroom Service, Inc. v. United States, 521

F.3d 1338, 1344 (Fed. Cir. 2008).

       Here, the alleged       implied-in-fact agreement and the        express agreement (i.e., the

PARL) are undoubtably related. Mr. Doe contends an implied-in-fact contract exists pursuant to

which the IRS promised to pay him 15 percent of any amount collected resulting from information

he provided via his signed Form 211. Pl. Resp. at 7. Similarly, the PARL states that Mr. Doe’s

award of 15 percent is “based on [Mr. Doe’s] Form 211, Application for Award for Original

Information dated                   .” Def. Mot. Ex. A at 2. In other words, both the       promise

and the PARL offer the same award for the same information. 10

       Accordingly, as a matter of law, the existence of the alleged        implied-in-fact contract

is precluded by the        express contract (the PARL). 11 See Atlas Corp. v. United States, 895

F.2d 745, 754-55 (Fed. Cir. 1990) (“The existence of an express contract precludes the existence

of an implied contract dealing with the same subject, unless the implied contract is entirely

unrelated to the express contract.” (citation omitted)).

10
   Compare Compl. ¶125 (seeking “damages in an amount to be determined, equal to the stated
15% of the actual amount of taxes shown to have been collected as a result of Plaintiff’s
information and Plaintiff’s works as a confidential informant and source[]” for the alleged breach
of the implied-in-fact contract) with ¶ 139 (seeking “damages in an amount to be determined, equal
to the stated 15% of the actual amount of taxes shown to have been collected as a result of
Plaintiff’s information and work as a confidential informant and source commencing in           []”
for the alleged breach of the express contract).
11
   Plaintiff also argues that the IRS ratified the alleged implied-in-fact agreement through
subsequent acts. Pl. Resp. at 23. Because the Court finds that the implied and express contracts
are related, it need not address this issue.

                                                                                                  10
   II.       Breach of the PARL

         Next, both parties agree that the PARL operates as an enforceable contract. See Compl.

¶ 6; Def. Mot. at 18. However, the parties disagree on whether the PARL is sufficiently definite

to obligate the IRS to pay Plaintiff a percentage of the proceeds which have been or will be

collected after the parties entered into that agreement.

         Contracts are interpreted “in terms of the parties’ intent, as revealed by language and

circumstance.” United States v. Winstar Corp., 518 U.S. 839, 911 (1996) (Breyer, J., concurring)

(citations omitted). Generally, this process begins and ends with the language of the contract. See

C. Sanchez and Son, Inc. v. United States, 6 F.3d 1539, 1543 (Fed. Cir.1993) (“A contract is read

in accordance with its express terms and the plain meaning thereof.”); TEG-Paradigm

Environmental, Inc. v. United States, 465 F.3d 1329, 1338 (Fed. Cir. 2006); Foley Co. v. United

States, 11 F.3d 1032, 1034 (Fed. Cir. 1993). “The contract must be construed to effectuate its

spirit and purpose giving reasonable meaning to all parts of the contract.” Hercules, Inc. v. United

States, 292 F.3d 1378, 1381 (Fed. Cir. 2002) (citing Gould, Inc. v. United States, 935 F.2d 1271,

1274 (Fed. Cir. 1991)); see also NVT Technologies, Inc. v. United States, 370 F.3d 1153, 1159

(Fed. Cir. 2004) (“An interpretation that gives meaning to all parts of the contract is to be preferred

over one that leaves a portion of the contract useless, inexplicable, void, or superfluous.” (citation

omitted)).

         In analyzing the plain language of the PARL in its entirety, the contract supports a non-

frivolous allegation that the parties agreed to a fixed and specific amount as the reward. See

Cambridge, 558 F.3d at 1333 (“[A]n enforceable contract will arise under these [statutory and

regulatory] authorities only after the informant and the government negotiate and fix a specific

amount as the reward.” (quoting Merrick, 846 F.2d at 726)). Specifically, the PARL states, “[i]f

                                                                                                    11
post-decision proceeds are collected, the IRS will pay consistent with this preliminary award

recommendation and the attached Summary Report.” Def. Mot. Ex. A at 3 (emphasis added).

“[P]ost-decision proceeds” refers to money collected after the execution of the PARL. Id. at 5

(“Post-decision proceeds: . . . Additional amounts, such as tax attributes, that may be collected

post-decision based on information provided by [Plaintiff] . . . .”). The term “will,” as used in the

PARL, is non-discretionary. The IRS Whistleblower Office’s “Summary Report” attached to the

PARL included a following disclosure: “Award percentage to be applied to post decision proceeds

(if any): 15 %.” Def. Mot. Ex. A at 5, ¶ 7b. When the Summary Report and the PARL are read

in conjunction, the contract is clear. If post-decision proceeds are collected, it is evident that Mr.

Doe is entitled to 15 percent of those proceeds. Though this promise is conditional upon collection,

the percentage of any recovery owed to Mr. Doe is a fixed and specific amount.

       This language is similar to the terms at issue in Merrick v. United States, 846 F.2d 725

(Fed. Cir. 1988). In Merrick, the plaintiff relied on IRS Publication No. 733 (July 1980) which

stated, “Merrick would obtain for each investor 10% of the first $75,000 recovered, 5% of the next

$25,000 recovered, and 1% of the any additional recovery with the total reward for each investor

not to exceed $50,000.” Merrick, 846 F.2d at 725-26. On these facts, the United States Court of

Appeals for the Federal Circuit (Federal Circuit) found that Merrick had sufficiently pleaded that

“the IRS fixed the amount of the reward.” Id. at 726. Like the contract language at issue in

Merrick, the PARL specifies a percentage of proceeds to be awarded resulting from sums collected

attributable to information Plaintiff provided as an informant.

       The Defendant points to the Federal Circuit’s decision in Cambridge to argue that the

PARL is unenforceable as to future awards because it did not “fix a specific amount” of a reward.

Def. Mot. at 20 (citing Cambridge v. United States, 558 F.3d 1331 (Fed. Cir. 2009)). Mr. Doe’s

                                                                                                   12
action, however, is distinguishable. In Cambridge, the Federal Circuit determined that the open-

ended language in Form 733 (Rev. 1–89) did not create a right to a future reward for payment.

Cambridge, 558 F.3d at 1335. That version of the Form 733 stated:

       The District Director will determine whether a reward will be paid and its amount.
       In making this decision, the information you provided will be evaluated in relation
       to the facts developed by the resulting investigation. Claims for reward will be paid
       in proportion to the value of the information you furnished voluntarily and on your
       own initiative with respect to taxes, fines, and penalties (but not interest) we collect.

Cambridge v. United States, No. 07-142T, 2007 WL 1888888, at *2 (Fed. Cl. May 29, 2007), aff'd,

558 F.3d 1331 (Fed. Cir. 2009). Unlike the open-ended language at issue in Cambridge, the non-

discretionary statement that “the IRS will pay” Plaintiff 15 percent of post-decision proceeds does

not permit the District Director discretion to “determine whether a reward will be paid and its

amount.” Compare Def. Mot. Ex. A (stating the PARL’s “will pay” language) (emphasis added)

with Cambridge, 2007 WL 1888888, at *2 (referencing the relevant form that authorized the

director to determine whether to pay a reward).

       Furthermore, contrary to Defendant’s assertion, Plaintiff did not waive his right to post-

decision proceeds by signing a release contained in the PARL. Although the PARL contained a

provision waiving Plaintiff’s right to challenge his preliminary award, the PARL is silent about

Doe’s right to bring a challenge regarding post-decision proceeds. In addition, it is well established

that finality provisions in settlements do not bar claims for breach of the settlement itself. LaBatte

v. United States, 899 F.3d 1373, 1378 (Fed. Cir. 2018). Here, Mr. Doe alleges that he “was entitled

to receive 15% of all ‘post-decision proceeds,’ or a fixed amount of $                 (i.e., 15 percent

of $              ) . . . .” Compl. ¶ 8. Plaintiff further alleges that the Government collected

$            in            , and that he is entitled to 15 percent of that collection, or $            .

Compl. ¶¶ 120-21, 135, 142-43, 149. Because, Plaintiff alleges that Defendant breached the PARL

                                                                                                     13
through instances occurring after the execution of the PARL, Mr. Doe’s claims relating to post-

decision proceeds are not barred by the PARL’s waiver provisions.

   III.      Ripeness

          Finally, Defendant contends that Plaintiff’s claims are not ripe pursuant to Treasury

Regulation Section 301.7623-4, which specifies that “[p]ayment of an award will be made as

promptly as the circumstances permit, but not until there has been a final determination . . . .” See

Def. Reply at 2, 14-15 (quoting 26 C.F.R § 301.7623-4(d)); see also Def. Mot. at 22. That

argument is without merit.

          The PARL is governed by 26 C.F.R. § 301.7623-3(b)(6), which permits the IRS’s

Whistleblower Office to pay whistleblowers percentage awards from collected proceeds prior to a

final determination of tax.     If the Whistleblower Office enters into an agreement with a

whistleblower for early payment, such payment will be made “as promptly as circumstances

permit.” 26 C.F.R. § 301.7623-3(b)(6). Here, the IRS indicated that it would pay Plaintiff a

preliminary award based on “collected proceeds” as well as fifteen percent of all “[p]ost-decision

proceeds . . . that may be collected . . . .” Def. Mot. Ex. A at 5. The PARL indicated that Defendant

expected to make a final determination of tax by             . Id. As discussed earlier, this expected

date did not create an obligation on the part of the government to make a final determination by

this date but it does indicate that Plaintiff would become entitled to his percentage award of all

post-decision proceeds collected within a reasonable time after a final determination of tax was

made. Moreover, 26 C.F.R. § 301.7623-4 specifies that “[p]ayment of an award will be made as

promptly as the circumstances permit, but not until there has been a final determination of tax with

respect to the action(s) . . . .” Defendant is therefore correct that, under the PARL and its governing

regulations, Defendant did not have an obligation to pay Plaintiff 15 percent of collected proceeds

                                                                                                    14
until after there is a “final determination of tax.” 26 C.F.R. § 301.7623-4; see also Norfolk &

Western Ry. Co. v. Am. Train Dispatchers Ass’n, 499 U.S. 117, 130 (1991) (“Laws which subsist

at the time and place of the making of a contract, and where it is to be performed, enter into and

form a part of it, as fully as if they had been expressly referred to or incorporated in its terms.”)

(quoting Farmers & Merchants’ Bank of Monroe N.C. v. Fed. Reserve Bank of Richmond Va., 262

U.S. 649, 660 (1923)).

          But the inquiry does not end there in this case. Here, Plaintiff has alleged that Defendant

made a blanket statement that Defendant would not abide by the PARL. Compl. ¶ 123. Further,

Plaintiff alleges that Defendant has collected “post-decision proceeds” to be applied to final

judgments the IRS obtained as a result of Plaintiff’s work as a confidential informant, and the

PARL contemplates that post-decision proceeds will be paid “if post-decision proceeds are

collected.” Compl. ¶¶ 120-21. Def. Mot. Ex. A at 3. Assuming these allegations are true for

purposes of this motion and viewing this allegation in the light most favorable to the Plaintiff, as

this Court must, Defendant’s statement would violate Defendant’s obligation to pay Plaintiff any

proceeds collected after the execution of the PARL. While these actions would normally not

constitute breach until after a final determination of tax is made, under the doctrine of anticipatory

repudiation, Plaintiff need not wait for payment to become due to vindicate its rights under the

contract. Franconia Assocs. v. United States, 536 U.S. 129, 143 (2002) (quoting 4 A. Corbin,

Contracts § 959, p. 855 (1951)). 12 Instead, Plaintiff is entitled to treat Defendant’s statements as

12
     In its reply brief, Defendant states:
          As for when a final determination of tax will occur, that is unclear as it is up to the
          agency to pursue collections, which can take years. Generally, the statute of
          limitations for IRS collections is 10 years, but the agency refers the collection cases
          to the Department of Justice for judgments. After that, the period of limitations is
          governed by the limitations on the judgment 26 U.S.C. § 6502(a). Effectively,
          Federal judgments are good for 20 years, and they can be renewed once. See
                                                                                                    15
a present breach even before performance is due under the contract. See id. at 143 (quoting Roehm

v. Horst, 178 U.S. 1, 13) (“[Repudiation] give[s] the promisee the right of electing either to . . .

wait till the time for [promisor’s] performance has arrived, or to act upon the renunciation and treat

it as a final assertion by the promisor that he is no longer bound by the contract.” (internal citation

and quotations omitted)).

         Therefore, to the extent that the filing of this suit precedes Defendant’s duty to perform

under the PARL, these alleged statements plausibly constitute an anticipatory repudiation which

is ripe for judicial review. Barlow & Haun, Inc. v. United States, 118 Fed. Cl. 597, 615 (2014),

aff'd, 805 F.3d 1049 (Fed. Cir. 2015) (finding Plaintiff’s claims ripe where Plaintiff demonstrated

it treated repudiation as breach by filing suit prior to date of performance).

   IV.      Breach of Good Faith and Fair Dealing

         Finally, Plaintiff alleges that Defendant violated the implied covenant of good faith and

fair dealing by: (1) “refusing to pay 15% of other taxes, interest, and penalties Plaintiff has learned

were actually collected by the Defendant . . . ;” (2) “refusing to make a ‘final determination;’” [(3)]

“refusing to respond to Plaintiff’s repeated requests for reassurances in

that it was going to adhere to the agreement . . . ;” (4) “by further unspecified action and inaction,

including a failure to communicate with Plaintiff.” Compl. ¶ 174.

         Defendant argues that Plaintiff fails to state a plausible claim for breach of the implied

covenant of good faith and fair dealing because the IRS is not obligated to collect future proceeds

         28 USC § 3201. So, once the Department of Justice gets a judgment, the period of
         limitations could be upwards of 50 years from the assessment date; and it gets even
         longer because the period can be tolled during bankruptcy, for example.
Def. Reply at 15 n.4.
                                                                                                    16
or communicate with Plaintiff regarding its collection of proceeds. See Def. Mot. at 22-23; Def.

Reply at 8-9.

       “Every contract, including one with the federal government, imposes upon each party an

implied duty of good faith and fair dealing in its performance and enforcement.” Dobyns v. United

States, 915 F.3d 733, 739 (Fed. Cir. 2019) (citation omitted). “A party breaches the contract when

it fails to abide by this implied duty, which includes the duty not to interfere with the other party’s

performance and not to act so as to destroy the reasonable expectations of the other party regarding

the fruits of the contract.” Id. (citation and internal quotation marks omitted). However, “[t]he

implied duty of good faith and fair dealing cannot expand a party’s contractual duties beyond those

in the express contract or create duties inconsistent with the contract’s provisions.” Id. (quoting

Precision Pine & Timber, Inc. v. United States, 596 F.3d 817, 831 (Fed. Cir. 2010)). “[A]n act

will not be found to violate the duty . . . if such a finding would be at odds with the terms of the

original bargain, whether by altering the contract's discernible allocation of risks and benefits or

by conflicting with a contract provision.” Metcalf Const. Co. v. United States, 742 F.3d 984, 991

(Fed. Cir. 2014).

       Because a party’s duty of good faith and fair dealing pertains to a party’s contractual duties,

the Court analyzes the breach of good faith and dealing claim only with respect to the PARL. To

the extent Plaintiff’s breach of good faith and fair dealing arguments relate to actions that precede

the PARL or extend to amounts not collected, the claims must be dismissed. However, Defendant

has an obligation to act in good faith as to the amounts already collected and subject to the PARL.

Therefore, Plaintiff has stated a plausible claim for a breach of good faith and fair dealing only to

the extent that its claims related to post-decision proceeds which have been collected.

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       Many of Plaintiff’s allegations that Defendant breached its duty of good faith and fair

dealing seem to involve allegations of Government action or inaction that pre-date the execution

of the PARL. See e.g., Compl. ¶¶ 152-155 (alleging the Government had a duty to reasonably

respond to Plaintiff’s                inquiries regarding his whistleblower claims). To the extent

that Plaintiff’s allegations pre-date the PARL, Plaintiff has clearly waived his right to judicially

challenge the IRS’s preliminary award determination that Plaintiff received by the terms the PARL

itself. See Def. Mot. Ex. A at 3, 7. The PARL’s signature page clearly states, in relevant part,

“[t]o the extent payment is received by the undersigned consistent with this preliminary award

recommendation, I waive all my administrative and judicial appeal rights with respect to the award

decision . . . .” Id. at 7. Such a release generally bars claims based upon events occurring prior to

the date of the release. See Augustine Med., Inc. v. Progressive Dynamics, 194 F.3d 1367, 1373

(Fed. Cir. 1999) (citing Johnson, Drake & Piper, Inc. v. United States, 531 F.2d 1037, 1047 (Cl.

Ct. 1976)). Accordingly, to the extent Plaintiff’s claims relate to events that occurred prior to the

execution of the PARL, those claims must be dismissed because Mr. Doe expressly waived them. 13

       Next, Plaintiff alleges that the Government breached its duty of good faith and fair dealing

by refusing to make a final determination by             . See Compl. ¶ 163. This allegation does

not state a plausible claim for relief for several reasons. Under 26 C.F.R. § 301.7623-4(d), “a final

determination of tax means that the proceeds resulting from the action(s) subject to the award

determination have been collected and either the statutory period for filing a claim for refund has

expired or the taxpayer(s) subject to the action(s) and the IRS have agreed with finality to the tax

13
   This includes the pre-PARL activity alleged in paragraphs 152 through 160 of the Complaint.
See Compl. ¶ 152 (discussing alleged obligation to inform Plaintiff of the IRS’s       collection),
¶¶ 154-55 (discussing alleged obligation to respond to Plaintiff’s          inquiry regarding IRS
collections), ¶¶ 156-60 (discussing alleged impropriety of Defendant’s efforts to coerce Plaintiff
to agree to an “early payout” award).
                                                                                                  18
or other liabilities for the period(s) at issue and the taxpayer(s) have waived the right to file a claim

for refund.” Based on this definition, the IRS’s ability to reach a final determination of tax is

subject to a number of contingencies beyond the control of the Government. Accordingly, the

Government clearly indicated that there was no guarantee that a final determination would be made

by            . Instead, the PARL qualifies that                is the “Expected Final Determination

of Tax” date and addresses only the “possibility” that additional, post-decision proceeds “may be

collected.” See Compl. ¶ 115; Def. Mot. Ex. A at 5, ¶¶ 6-7. Thus, although the PARL guarantees

that Plaintiff will receive 15 percent of the Government’s recovery from Mr. Doe’s former

employer, if collected, the PARL makes no guarantee that the Government will collect any

post-decision proceeds.

        However, at this stage in the litigation, to the extent Plaintiff’s allegations relate to amounts

that the Government already collected and are post-decision proceeds, Plaintiff has pleaded a

plausible claim for relief. See Compl. ¶¶ 153, 161, 163, 172, 174-77. As noted, Defendant is

obligated to pay the Plaintiff post-decision proceeds which have been collected. See Def. Mot.

Ex. A at 3.

        Here, Plaintiff alleged that Defendant has refused to keep Plaintiff apprised of

post-decision proceeds amounts that Defendant has collected, and that Defendant has expressly

communicated its intent not to abide by the terms of the PARL. Compl. ¶ 174. Good faith dictates

that a party to a contract has a duty to cooperate so as not to destroy the benefit of the bargain. See

Agility Pub. Warehousing Co. KSCP v. Mattis, 852 F.3d 1370, 1384 (Fed. Cir. 2017) (citations

omitted). Defendant’s duty to reasonably inform Plaintiff of Defendant’s collections and timely

pay the Plaintiff is concomitant with Defendant’s duty to pay under the PARL.

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        Accordingly, Plaintiff has stated a plausible claim that Defendant violated its implied duty

of good faith and fair dealing as it relates to “post-decision proceeds.” See Pl. Resp. at 12 (citing

Compl. ¶¶ 123, 163). 14

                                            CONCLUSION

        Defendant’s Motion to Dismiss (ECF No. 17) is GRANTED in part and DENIED in

part. Consistent with this Memorandum and Order, Count I of the complaint is dismissed in its

entirety. The Court denies Defendant’s Motion to Dismiss with respect to Count II of the

complaint. Count III of the complaint is dismissed except as to the allegations therein that relate

to post-decision proceeds already collected.

        Within fourteen (14) days of this Memorandum and Order, the parties shall CONFER and

FILE a NOTICE, attaching a proposed public version of this Memorandum and Order, with any

protected information redacted in accordance with this Court’s Protective Order. See ECF No. 14.

14
   The Court notes that if Plaintiff were to ultimately succeed on his claim that Defendant
materially breached the express contract, it is likely that the contract would terminate. Indiana
Michigan Power Co. v. United States, 422 F.3d 1369, 176 (Fed. Cir. 2005) (“[W]here a plaintiff
commences an action for total breach, ‘he is obliged in order to avoid splitting, to claim all his
damages with respect to the contract, prospective as well as past, and judgment in the action
precludes any further action by the plaintiff for damages arising from the contract.’” (quoting
Restatement (Second) of Judgment § 26 cmt. g)). Furthermore, Plaintiff’s requested relief, if he
were to succeed, would be statutorily limited to a percentage award based only on proceeds that
the Defendant has already collected. See 26 U.S.C. § 7623 (“[I]n cases where such expenses are
not otherwise provided for by law[, a]ny amount payable under the preceding sentence shall be
paid from the proceeds of amounts . . . collected by reason of the information provided, and any
amount so collected shall be available for such payments.”). Based on the information before the
Court at this time, it does not appear that Plaintiff would receive any additional relief from his
claim for breach of good faith and fair dealing that he would not otherwise receive from his breach
of contract claim. However, at this stage, Plaintiff is entitled to pursue alternative theories of relief.
See Entergy Louisiana, L.L.C. v. United States, 133 Fed. Cl. 258, 262 (2017) (finding that
“[b]ecause Plaintiff's claim of breach of the covenant of good faith and fair dealing is separate and
distinct from its claim of breach of contract and constitutes a separate cause of action, Plaintiff is
entitled to plead both claims). Therefore, this Court declines to dismiss Plaintiff’s good faith and
fair dealing claim as duplicative at this stage in the proceedings.
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       Additionally, within fourteen (14) days of this Memorandum and Order, the parties shall

FILE a joint status report, including a joint proposal for further proceedings.

       IT IS SO ORDERED.

                                                                 s/Eleni M. Roumel
                                                                ELENI M. ROUMEL
                                                                        Judge

Dated: April 15, 2021,
Washington, D.C.

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