JBP Acquisitions v. U.S.

• Decision Date: 30 August 2000
• Docket Number: No. 99-11551,99-11551
• Citation: 224 F.3d 1260
• Parties: (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.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1260

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:

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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).

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)").

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...