United States v. Dorio
| Decision Date | 02 September 2020 |
| Docket Number | Civil No. 3:19-cv-1531 (AWT) |
| Citation | 483 F.Supp.3d 145 |
| Parties | UNITED STATES of America, Plaintiff, v. Faith DORIO, Defendant. |
| Court | U.S. District Court — District of Connecticut |
Christine L. Sciarrino, Lauren M. Nash, U.S. Attorney's Office, New Haven, CT, for Plaintiff.
Sabato Pellegrino Fiano, Zeldes, Needle & Cooper, P.C., Bridgeport, CT, for Defendant.
RULING ON MOTION TO DISMISS
The United States of America (the "United States") commenced the instant action on behalf of the Department of Veterans Affairs (the "VA") against defendant and counterclaimant Faith Dorio. The United States alleges that Dorio is indebted to the VA in the amount of $59,913.25 because she failed to comply with the terms of a scholarship agreement she entered into with the VA. Dorio has filed counterclaims in which she concedes that she owes the principal amount of the scholarship funds she was given, but asserts five counts against the United States based on its imposition of fees, penalties, and interest above the principal amount. The United States moves to dismiss the counterclaims pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons set forth below, its motion is being granted.
For the purposes of deciding this motion, the court takes as true the following allegations in the counterclaims.
On April 18, 2011, Dorio, a VA registered nurse, entered into the VA's Employee Incentive Scholarship Program (the "EISP"). The EISP was established by Congress as a subset of the VA's Health Professionals Educational Assistance Program (the "Educational Assistance Program") to assist the Veterans Health Administration ("VHA") in recruiting and retaining qualified health professionals. Through the legislative authority of the Educational Assistance Program, codified at 38 U.S.C. §§ 7601 et seq., and the EISP, codified at 38 U.S.C. §§ 7671 - 7675, the VA created the National Nursing Education Initiative (the "NNEI"), which awards scholarships specifically to VA registered nurses seeking baccalaureate and advanced nursing degrees from an authorized, accredited education program. In exchange, the scholarship recipient promises to serve at least a three-year period of obligated service as a full-time registered nurse in a VHA facility selected by the Secretary of Veterans Affairs (the "Secretary"). Under 38 U.S.C. § 7675(c), the failure of a scholarship recipient to complete the obligated period of service "for any reason" constitutes a breach of the scholarship agreement, and entitles the United States to recover an amount equal to three times the amount of the scholarship funds given to the recipient plus interest, discounted for any amount of time actually served by the recipient1 . The service or payment obligation is waivable by the Secretary "whenever noncompliance by the participant is due to circumstances beyond the control of the participant or whenever the Secretary determines that the waiver ... is in the best interest of the United States." 38 U.S.C. § 7634(b).
Upon entering the EISP, Dorio executed the NNEI Scholarship Program Agreement (the "Agreement") which included the statutorily mandated terms set forth above. See 38 U.S.C. § 7672(e). In doing so, she committed herself to three years of obligated service, having received $19,205 for her tuition and related education expenses.
Dorio alleges that as a further inducement for her to enter into the Agreement and to remain as an employee of the VHA, the VA also promised her that she would receive an annual retention payment of $12,000. Dorio alleges that the retention payments were "required to meet her living expenses," as the compensation offered at VHA facilities was "insufficient." Countercl. at ¶¶ 28, 15. The retention payments were to be included in Dorio's paycheck as soon as the Secretary placed her with a VHA facility and were to be deposited annually thereafter.
Dorio commenced an accredited nursing program on June 27, 2011. After completing the program on March 3, 2013, she was placed with the VA HealthCare System in West Haven, Connecticut (the "VACT") to complete her service obligation. She served approximately eight months of her three-year obligation at the VACT. During that time, she received the promised retention payments. Dorio alleges that thereafter, however, the VA unilaterally eliminated her retention payments without notice, and Dorio's efforts to get them reinstated were unsuccessful. Dorio contends that she was forced to leave her employment with the VA because, without the retention payments, she was unable to pay her living expenses. She tendered her resignation on October 10, 2013, and it became effective on November 1, 2013.
Dorio later received a VA Bill of Collection Worksheet stating that she owed the VA $47,569.87 because of her breach of the Agreement. At that time, Dorio requested a waiver of her service obligation from the Secretary on the grounds of extreme hardship. In her request, she offered to repay the VA $20,000 -- an amount in excess of the scholarship funds she received but much less than the treble damages to which the VA claims it is entitled. The Secretary denied her waiver request.
On September 27, 2019, the United States instituted the instant action to recover the debt owed by Dorio, which totaled $59,913.25 as of the date of filing; interest continues to accrue. On December 6, 2019, Dorio filed counterclaims in five counts seeking to enjoin the United States from enforcing and collecting the debt against her in any amount greater than $14,937.24 – that is, the amount of scholarship funds she received discounted for the amount of time she served.
Dorio claims, in the First Count, that the VA breached the Agreement with Dorio by failing to provide the promised retention payments and, in the Second Count, that the VA intentionally misrepresented that the retention payments would be incorporated into the Agreement and included in her compensation so long as she remained an employee of the VA. In the alternative, Dorio claims, in the Third Count, that the VA negligently misrepresented that the retention payments would be made, and, in the Fourth Count, that the VA is estopped from collecting the debt from her because of its misrepresentations. In the Fifth Count, Dorio claims that the United States violated her rights to equal protection under the Fourteenth Amendment2 , Article I, § 20 of the Connecticut Constitution, and 42 U.S.C. § 1983.
When deciding a motion to dismiss a counterclaim under Rule 12(b)(6), the court must accept as true all factual allegations in the counterclaim and must draw inferences in a light most favorable to the counterclaim plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). Although a counterclaim "does not need detailed factual allegations, a [counterclaim] plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ) (on a motion to dismiss, courts "are not bound to accept as true a legal conclusion couched as a factual allegation"). "Nor does a [counterclaim] suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the [counterclaim] are true (even if doubtful in fact)." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal citations and quotations omitted). However, the counterclaim plaintiff must plead "only enough facts to state a claim to relief that is plausible on its face." Id. at 547, 127 S.Ct. 1955. "A claim has facial plausibility when the [claimant] pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "The function of a motion to dismiss is ‘merely to assess the legal feasibility of the [counterclaim], not to assay the weight of the evidence which might be offered in support thereof.’ " Mytych v. May Dep't Stores Co., 34 F. Supp. 2d 130, 131 (D. Conn. 1999) (quoting Ryder Energy Distrib. v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984) ). "The issue on a motion to dismiss is not whether the [counterclaim] plaintiff will prevail, but whether the [counterclaim] plaintiff is entitled to offer evidence to support his claims." United States v. Yale New Haven Hosp., 727 F. Supp. 784, 786 (D. Conn. 1990) (citing Scheuer, 416 U.S. at 232, 94 S.Ct. 1683 ).
In its review of a motion to dismiss for failure to state a claim, the court may consider "only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings and matters of which judicial notice may be taken." Samuels v. Air Transp. Local 504, 992 F.2d 12, 15 (2d Cir. 1993). Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) ).
"A district court properly dismisses an action under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction if the court ‘lacks the statutory or constitutional power to adjudicate...
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