United States v. Gonzales & Gonzales Bonds & Ins. Agency, Inc.
| Decision Date | 01 February 2012 |
| Docket Number | No. C-09-4029 EMC,C-09-4029 EMC |
| Court | U.S. District Court — Northern District of California |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. GONZALES & GONZALES BONDS AND INSURANCE AGENCY, INC., et al., Defendants. |
Pending before the Court is Plaintiff United States' motion to dismiss Defendant G&G's Amended Counterclaims. Docket No. 100. After considering the parties' submissions and oral argument, the Court hereby enters the following order.
Pursuant to this Court's order of October 14, 2011, Docket No. 90, Defendants G&G and American Surety ("G&G") were given permission to file a First Amended Counterclaim ("FACC") to assert additional bonds in addition to the 6 bonds asserted in its original counterclaim which were not remanded back to agency. Docket No. 94. The FACC contains a total of 34 bonds. In the FACC, Defendants allege that the United States has breached the immigration bond contracts - and acted arbitrarily and capriciously in declaring them breached - by failing to comply with one of 14 requirements included in the contracts pursuant to the Amwest settlement agreements. See FACC ¶ 21. Specifically, paragraph 21 alleges:
The immigration bond contracts between G&G/ASC and DHS provide, inter alia, the following:
Defendants allege that Plaintiff has repeatedly breached these obligations. FACC ¶ 22. However, Defendants do not specify which of the above-fourteen acts of breach Plaintiff committed for each bond in question. Rather, they simply assert with respect to each bond that DHS has breached the bond "by failing to comply with at least one, and oftentimes many, of the legal and contractual requirements specified in paragraph 21, above." Id. ¶¶ 26, 33, 40, 47, 54, 61, 69. Defendants assert that they will be able to amend their counterclaim to assert more detailed facts once they receive the relevant A-Files for the bonds in question. Id. ¶ 71.
For 6 of the bonds in question, Defendants allege that they have paid the government under protest to satisfy these bonds, and that they seek repayment under the Little Tucker Act due to Plaintiff's breach of contract. Id. ¶¶ 23-24. For each of the 34 bonds, Defendants assert a cause of action under the Administrative Procedure Act ("APA"), 5 U.S.C. 701, et seq., alleging that Plaintiff has breached one of the 14 requirements above and that it has acted "unlawfully, arbitrarily,capriciously and in excess of its statutory jurisdiction, authority and limitations." Id. ¶¶ 67-70. Defendants seek injunctive relief in the form of "setting aside or rescinding DHS' bond breach determinations and/or canceling the disputed bond breaches." Id. at 21 ¶ 2. They also seek declaratory relief of non-liability based on (1) Plaintiff's unlawful conduct with respect to the bond breach determinations; and (2) Plaintiffs' alleged failure to review the A-Files of each bonded alien and/or failure to include such A-Files in the record of proceedings used to determine bond breaches. Id. ¶¶ 75-76.
Plaintiff has filed a motion to dismiss the FACC, which is now pending before the Court. Docket No. 100.
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). In considering such a motion, a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although "conclusory allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal." Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). While "a complaint need not contain detailed factual allegations . . . it must plead 'enough facts to state a claim to relief that is plausible on its face.'" Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than sheer possibility that a defendant acted unlawfully." Id.
The gravamen of Plaintiff's motion is that Defendants fail to state a claim for relief because they fail to connect any of the 34 bonds to any of the 14 asserted ways in which the government breached the bond contracts. Although Defendants claim their pleadings satisfy Twombly and Iqbal, merely providing a list of defenses and a list of bonds-without explaining what defenses apply to which bonds-does not provide the government with fair notice of Defendants' claims with respect to each bond. See McHenry v. Renne, 84 F.3d 1172, 1175-76 (9th Cir. 1996) ().
Although the Court has acknowledged in the past that Defendants are entitled to view the A-Files for all bonds in dispute, and that upon viewing those files they may discover additional defenses to the breach determinations, see Docket No. 48, at 23; Docket No. 104, Defendants must still identify at least their preliminary list of defenses to each bond breach determination. As the government points out, Defendants had, in their prior counterclaim, asserted such specific facts with respect to the 6 bonds that have been carried over to the FACC. See, e.g., Answer & Counterclaim, Docket No. 9, at 30 ¶ 41 (). In the FACC, by contrast, Defendants have not only failed to include such detail with respect to the 28 new bonds they assert, but they have also removed such allegations from the 6 bonds that remain from the initial counterclaim. See, e.g., FACC ¶ 26 (). Presumably, Defendants must have some Rule 11 basis for alleging that the government breached these bonds;...
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