Kuwait Pearls Catering Co. v. United States
| Decision Date | 30 September 2019 |
| Docket Number | No. 17-220C,17-220C |
| Parties | KUWAIT PEARLS CATERING CO., WLL, Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
Rule 12(b)(1); Motion to Dismiss; Fifth Amendment Taking; Standing; Substantial Connections of Foreign Plaintiff to United States; 28 U.S.C. § 1502; United States-Iraq Status of Forces Agreement
Murphy S. Klasing, Tanta N. Garrison, Weycer, Kaplan, Pulaski & Zuber, PC, 11 Greenway Plaza, Suite 1400, Houston, Texas 77046, for Plaintiff.
Chad A. Readler, Robert E. Kirschman, Jr., L. Misha Preheim, Nathanael B. Yale, and Zachary J. Sullivan, United States Department of Justice, Civil Division, Commercial Litigation Branch, P.O. Box 480, Ben Franklin Station, Washington, D.C. 20044, for Defendant.
This Fifth Amendment takings case comes before the Court on Defendant's motion to dismiss for lack of subject-matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted. Plaintiff Kuwait Pearls Catering Co., WLL ("KPCC") is a subcontractor that provided dining services to the United States military in Iraq. KPCC alleges that in December 2011 the Government effected a Fifth Amendment taking of its property by physically excluding it from a temporary dining facility ("DFAC") its predecessor built and KPCC operated, and by preventing its continued performance under its subcontract. KPCC seeks compensation equal to the value of the facility and equipment.
The Government argues that KPCC's taking claim should be dismissed for lack of subject-matter jurisdiction because KPCC, as a foreign company, did not possess sufficient substantial connections with the United States to recover under the Takings Clause. The Government also argues that the Court does not possess jurisdiction to entertain KPCC's claim under 28 U.S.C. § 1502, which prevents the Court from exercising jurisdiction over "any claim against the United States growing out of or dependent upon any treaty." Alternatively, the Government argues that KPCC has failed to plausibly allege a cognizable property interest and that KPCC's claim presents a nonjusticiable political question.
This Court finds that KPCC has established that it possessed substantial connections with the United States by voluntarily providing a dining facility and related services directly to United States military personnel on a United States base, submitting to extensive United States control of its operations and personnel, and adhering to United States laws and regulations. KPCC has plausibly alleged a cognizable property interest in the dining facility and associated equipment, and KPCC's claim is not dependent upon a treaty. Although the United States did enter an executive agreement with Iraq governing the withdrawal of United States troops, the property KPCC claims--its dining facility and equipment--were not subject to the agreement, as the dining facility was relocatable. The Court further finds that KPCC's action presents a justiciable question--a monetary takings claim, not a challenge to the political determination to enter into the SOFA. As such, the Government's motion to dismiss is denied.
On December 14, 2001, prior to the start of the Iraq War, Brown & Root Services and the United States Department of the Army entered into Contract No. DAAA09-02-D-0007, in support of the Army's Logistics Civil Augmentation Program. Am. Compl. ¶ 6. The contract, known as LOGCAP III, required Brown & Root to provide logistical support services, including dining services, to United States forces. Id. On August 1, 2003, following the start of the Iraq War, "LOGCAP III was novated and transferred from Brown and Root Services to Kellogg Brown & Root Services, Inc. ("KBR")." Id.
In August 2006, Tamimi Global, a Saudi Arabian corporation and parent corporation of KPCC, entered into a subcontract with KBR to construct the DFAC at the FOB Warrior (C7) United States Army base in Kirkuk, Iraq. Am. Compl. ¶ 8; Hr'g Tr. 96, 128, 131. Tamimi Global, using its own funds, commenced construction in December 2006, and completed construction on March 6, 2008. Am. Compl. ¶ 10; Hr'g Tr. 131-32. After the opening of the dining facility in July 2007, Tamimi Global was substituted with KPCC, a Kuwaiti wholly owned subsidiary of Tamimi Global, to provide catering services to the United States Army. Am. Compl. ¶ 1; Hr'g Tr. 131, 133.
The DFAC was a temporary and portable structure that could be assembled and disassembled as needed. Am. Compl. ¶ 11; Hr'g Tr. 120, 164-65, 220. The facility was placed on a concrete pad with an overhead cover positioned approximately four or five feet above the building to protect against bomb attacks. Hr'g Tr. 220-21. Removing this overhead cover, made of glass and fused to steel pillars, was expensive, but not impossible. Hr'g Tr. 83, 220-21. Removal of the DFAC would leave the Government with a large, protected area suitable for a variety of uses. Hr'g Tr. 220-21.
On November 17, 2008, the United States and the Republic of Iraq entered into an executive agreement, titled "Agreement Between the United States of America and the Republic of Iraq On the Withdrawal of United States Forces from Iraq and the Organization of Their Activities during Their Temporary Presence in Iraq," ("SOFA") which governed the continued presence and formal withdrawal of American military forces in Iraq. Def.'s Mot. to Dismiss, App. 1. Article 5 of the SOFA states "Iraq owns all buildings, non-relocatable structures, and assemblies connected to the soil that exist on agreed facilities and areas, including those that are used, constructed, altered, or improved by the United States Forces." Id. App. 4. The SOFA defined "agreed facilities and areas" to include "those Iraqi facilities and areas owned by the Government of Iraq that are in use by the United States Forces during the period in which this Agreement is in force." Id. App. 2. The SOFA provided that "[t]he United States Forces and United States contractors shall retain title to all equipment, materials, supplies, relocatable structures, and other movable property that was legitimately imported into or legitimately acquired within the territory of Iraq in connection with this Agreement." Id. App. 6. The SOFA took effect on January 1, 2009. Id. App. 31.
On September 1, 2010, KPCC entered into Subcontract No. GCA90M-VC-SDF0920, ("Facility Agreement") with KBR to provide dining facility services at the Kirkuk base. Am. Compl. ¶ 11. The Facility Agreement provided that KPCC was to "provide all labor, materials, equipment, transportation, insurance, supervision, permits, supplies, documentation, inspection, protective personal equipment, quality control and all other things necessary to construct and/or operate a dining facility." Pl.'s Ex. 46 at 1, 4. The Facility Agreement defined the "Contractor" as KBR, the "Subcontractor" as KPCC, and the "Owner" or "Client" as the United States Government. Id.
The Facility Agreement provided that KBR would lease the DFAC to the Government for a monthly sum of $43,750 and contained an option for KBR to purchase the DFAC. Pl.'s Ex. 46 at 7. The Facility Agreement stated that "because these services are being performed on a US Military controlled installation, though outside United States territorial boundaries, all laws of the United States apply to the operation of this service, to include but not limited to, OSHA and the Rules and Regulations of the Environmental Protection Agency." Id. at 13. The Facility Agreement also provided for "demobilization" of the DFAC, which meant that all KPCC's property had to be removed and the land returned to its pre-construction condition. Pl.'s Ex. 46 at 11; Hr'g. Tr. 151. The Facility Agreement also required that demobilization be completed "no later than 30 days after last meal served upon coordination with CONTRACTOR," and "include removal of all SUBCONTRACTOR-owned assets." Id. at 8, 11.
In April 2011, KBR began negotiating to purchase the DFAC from KPCC. Hr'g Tr. 58, 246. These negotiations proved unsuccessful, as KPCC was seeking $6,500,000, while the Army claimed it could not pay over $750,000.2 Pl.'s Ex. 15. By June 2011, with KPCC "not budging on the price," the Army considered having KPCC remove the DFAC entirely to enable the Armyto build another structure on the concrete pad; however, this plan was never executed. Pl.'s Ex. 17.
No concrete action regarding the DFAC was taken for the next several months. Sometime in October 2011, Army legal counsel determined, without explanation in the record, that the DFAC was real (and non-relocatable) property and, pursuant to the SOFA effective in 2009, was the property of the Government of Iraq. Pl.'s Ex. 27 at US-0000057. According to the Army, this finding negated any requirement for KBR to purchase the DFAC from KPCC. Id. at US-0000058.
The Army's legal position that the DFAC qualified as non-relocatable real property contradicted KPCC's subcontract which provided for the DFAC's removal. Pl.'s Ex. 46 at 11. Further, the Army had considered having the DFAC removed entirely just a few months earlier. Pl.'s Ex. 17 at US-00000911. Mark Mower, an Army contracting officer, stated in an October 11, 2011 email, Id. at US-0000060. The next day Kathie Potter, another Army contracting officer, pointed out that the Army had in fact purchased two other DFACs the previous year. Id. at US-0000058. Ms. Potter stated in an October 12, 2011 email:
I've been trying to get [KPCC's DFAC and another DFAC owned by a different subcontractor] purchased for some time . . . [Army legal] non-concurred on the purchase of the two DFACs indicating that these were...
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