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Wilkey v. Golden Feather Realty Services

August 25, 2006

LEBRON WILKEY AND LISA WILKEY, PLAINTIFFS,
v.
GOLDEN FEATHER REALTY SERVICES, INC., DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: R. Allan Edgar United States District Judge

Edgar / Lee

MEMORANDUM

Plaintiffs Lebron Wilkey and Lisa Wilkey originally brought this action in the Circuit Court of Hamilton County, Tennessee against Defendant Golden Feather Realty Services, Inc. ("Golden Feather") for breach of a settlement agreement entered into by Plaintiffs and Golden Feather to repair certain defects in their home. Golden Feather then filed a Third-Party Complaint against Third-Party Defendant Department of Housing and Urban Development ("HUD") alleging that HUD was responsible for any breach of the settlement agreement. HUD removed the action to this Court and now brings a motion to dismiss the Third-Party Complaint filed by Golden Feather. [Court Doc. No. 8-1]. Although HUD does not state its basis for the motion to dismiss, this Court assumes that HUD brings the motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) for lack of jurisdiction and Fed. R. Civ. P. 12(b)(5) for insufficiency of service of process. Golden Feather opposes the motion to dismiss. [Court Doc. No. 15].

I. Background

The parties appear to agree on the facts relevant to the motion to dismiss. The Wilkeys filed a complaint in the Circuit Court of Hamilton County, Tennessee alleging that Golden Feather had entered into a contract to perform certain repairs on the Wilkey's residence in Chattanooga, Tennessee. The Wilkeys allege in their complaint that Golden Feather has refused to complete the repairs, leaving the Plaintiffs' home "without floor is [sic] some rooms, with electrical power lines on the ground, with inadequate support under some floors, with a leaking roof and other such items." [Court Doc. No. 8-2]. Plaintiffs seek $19,290 in damages for failure to complete the repairs itemized in the contract and $50,000 in damages "for the intolerable and burdensome conditions under which they were forced to live." Id.

Attached to the Plaintiffs' original complaint is a document entitled "Full and Final Release and Settlement Agreement." [Court Doc. No. 8-2]. In the settlement agreement the parties stipulate that the Wilkeys entered into a contract for the purchase of a home from HUD. The parties agree that at the time of the sale, Golden Feather was managing the property. After the sale of the property closed, the Wilkeys discovered "latent defects" on the property. The Wilkeys alleged that HUD and Golden Feather were responsible for the defects, although HUD and Golden Feather both denied any liability. Id. In the agreement Golden Feather agreed to complete a number of repairs to the structure of the house at a maximum cost of $19,290. Id. The agreement further provided that the repairs would be at HUD's expense. In exchange for the repairs, the Wilkeys agreed to release Golden Feather and HUD from any claims against them.

The Wilkeys and representatives of Golden Feather and HUD all signed the settlement agreement. Id.

Following the filing of Plaintiffs' complaint against Golden Feather, Golden Feather filed a Third-Party Complaint against HUD. [Court Doc. No. 8-3]. Golden Feather's complaint against HUD alleges that although Golden Feather has spent over $16,000 on repairs at the Wilkey's property, HUD has breached its duty to reimburse Golden Feather as stated in the settlement agreement entered into with the Wilkeys.

Following the filing of the Third-Party Complaint, HUD removed this action from state court to this Court pursuant to 28 U.S.C. § 1442(a)(1). [Court Doc. No. 1-1]. HUD has now moved to dismiss the Third-Party Complaint against it.

II. Standard of Review

This Court assumes that HUD brings this motion pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction and Fed. R. Civ. P. 12(b)(5) for insufficiency of service of process. The Sixth Circuit has discussed the district court's review of a motion to dismiss for lack of subject matter jurisdiction:

Because at issue in a factual 12(b)(1) motion is the trial court's jurisdiction--its very power to hear the case--there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover the plaintiff will have the burden of proof that jurisdiction does in fact exist.

RMI Titanium Co. v. Westinghous Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996) (quoting Mortensen v. First Federal Savings and Loan Ass'n, 549 F.2d 884, 890-91 (3d Cir. 1977)).

III. Analysis

HUD claims that the Third-Party Complaint against it should be dismissed because Congress has not waived HUD's sovereign immunity. In the alternative, HUD claims that the Court of Federal Claims has exclusive jurisdiction over Golden Feather's claims against it pursuant to the Tucker Act, 28 U.S.C. § 1491(a)(1), and the Contract Disputes Act ("CDA"), 41 U.S.C. § 601 et seq. HUD also claims that Golden Feather has not properly served all the appropriate parties with a summons and complaint pursuant to Fed. R. Civ. P. 4(i).

Golden Feather responds that Congress expressly waived HUD's sovereign immunity in the National Housing Act ("NHA"), 12 U.S.C. § 1702, and that the Court of Federal Claims does not have exclusive jurisdiction over Golden Feather's claims because neither the Tucker Act nor the CDA apply to Golden Feather's claims. Golden Feather also claims that it is not bound by the service requirements of Fed. R. Civ. P. 4(i) because Plaintiffs originally brought this action in state court, and Golden Feather filed its Third-Party Complaint in state court. The Court will address these arguments in turn.

A. Sovereign Immunity and Subject Matter Jurisdiction

HUD is correct that "[j]urisdiction over any suit against the Government requires a clear statement from the United States waiving sovereign immunity." United States v. White Mountain Apache Tribe, 537 U.S. 465, 472, 123 S.Ct. 1126, 155 L.Ed.2d 40 (2003) (citing United States v. Mitchell, 445 U.S. 535, 538-39, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980)); see also, Federal Deposit Ins. Corp. v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). In addition, a consent to sue must not be inferred, but rather, must be "unequivocally expressed." White Mountain Apache Tribe, 537 U.S. at 472, 123 S.Ct. 1126 (quoting Mitchell, 445 U.S. at 538, 100 S.Ct. 1349).

The Tucker Act contains such a waiver. White Mountain Apache Tribe, 537 U.S. at 472 (citing United States v. Mitchell, 463 U.S. 206, 212, 103 S.Ct. 2961, 77 L.Ed.2d ...


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