Confidential Informant 59-05071 v. United States
134 Fed. Cl. 698
| Fed. Cl. | 2017Background
- CI (Confidential Informant 59-05071) entered a written Reward Agreement with the IRS to provide information about an alleged tax-evasion scheme; IRS agreed to protect CI’s identity and to pay a percentage-based reward of recovered net tax liabilities (with a cap).
- CI provided detailed information; the matter was transferred from LMSB to IRS Criminal Investigation (CI) and CI later disclosed its identity to CI agents and signed an amendment reflecting willingness to cooperate further.
- IRS personnel (including an Undercover Program Manager and a Special Agent) sought to renegotiate the Reward Agreement (or have CI sign Form 211); CI refused and alleges agents threatened not to pursue the case unless CI agreed.
- Despite the dispute, IRS agents conducted undercover operations, then closed the criminal investigation for lack of provable criminal culpability and referred the matter (or otherwise contemplated civil follow-up); no records show the IRS collected taxes attributable to CI’s disclosures.
- CI sued alleging (1) anticipatory repudiation, (2) breach of the covenant of good faith and fair dealing (bad‑faith interference to deprive CI of contract benefits), and (3) a claim for an accounting; the government moved for summary judgment and to dismiss Count III for lack of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Anticipatory repudiation | IRS agents threatened not to pursue investigation unless CI renegotiated, which amounted to a pre‑performance renunciation of contractual duties | No contract obligation required IRS to investigate or to take enforcement action; CI did not treat alleged repudiation as an immediate breach and IRS later performed an investigation | SJ for gov’t: no repudiation — CI didn’t elect to treat alleged threats as breach and IRS performed; threats (even if made) did not renounce contractual duties |
| Breach of implied covenant of good faith and fair dealing | IRS acted in bad faith to deprive CI of the fruits of the agreement by pressuring renegotiation, cutting communications, and failing to secure civil follow‑up | Agreement did not obligate IRS to pursue enforcement or to consult CI; agency enforcement decisions are discretionary and presumed made in good faith | SJ for gov’t: no clear & convincing evidence of specific intent to injure CI; deviations from policy aren’t proof of bad faith and record shows bona fide law‑enforcement reasons for closing |
| Accounting (jurisdiction) | CI seeks an accounting under the Agreement and as equitable relief to learn whether taxes were collected and rewards owed | Court lacks jurisdiction to order an accounting absent a viable money claim under the Tucker Act; no evidence IRS collected funds tied to CI | Count III dismissed for lack of jurisdiction; CI’s summary‑judgment motion on accounting denied |
| Additional discovery / judicial notice / Rule 56(d) relief | CI sought judicial notice of press reports and TIGTA report and asked for additional electronic/workload‑log discovery under RCFC 56(d) | Many proposed items were cumulative or not shown to create a triable issue; TIGTA report is judicially noticeable but press printouts were not; CI had extensive prior discovery opportunities | Judicial notice of TIGTA report granted; judicial notice of news articles denied; RCFC 56(d) discovery request denied as untimely and speculative |
Key Cases Cited
- Ind. Mich. Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005) (definition of anticipatory repudiation)
- Amber Res. Co. v. United States, 538 F.3d 1358 (Fed. Cir. 2008) (anticipatory repudiation requires clear refusal or election issues when parties continue performance)
- Franconia Assocs. v. United States, 536 U.S. 129 (2002) (promisee must elect to treat repudiation as present breach for it to ripen prior to performance)
- Metcalf Constr. Co. v. United States, 742 F.3d 984 (Fed. Cir. 2014) (scope of implied covenant of good faith and fair dealing in government contracts)
- Heckler v. Chaney, 470 U.S. 821 (1985) (agency decision not to enforce is generally committed to agency discretion)
- Doe v. United States, 100 F.3d 1576 (Fed. Cir. 1996) (Court of Federal Claims may order accounting only in aid of an existing money judgment)