Fuentes-Fernandez & Co., PSC v. Caballero & Castellanos, PL
770 F. Supp. 2d 277
D.D.C.2011Background
- HANO is a state-created housing authority in Louisiana under HUD receivership, with Gilmore as its receiver.
- HANO awarded an $8.5 million contract to C&C in 2006 to provide Financial Operations Recovery Services; C&C sub-contracted $1.5 million to FFC, a minority-certified firm.
- Castellanos, a C&C principal who became HANO's CFO, pled guilty to theft related to federal funds; HANO withheld payment due to Castellanos' conduct and restitution obligations.
- Plaintiffs allege breach of contract between HANO and C&C and between FFC and Fuentes as third-party beneficiaries, unjust enrichment, and negligent administration.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(2) and 12(b)(6); court granted the motion.
- Court held lack of personal jurisdiction and contract-disputes clauses bar claims; also paragraph 16 of the contract releases HANO from related claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over HANO and Gilmore | Plaintiffs argue sufficient contacts and government involvement warrant jurisdiction. | HANO and Gilmore have no DC long-arm contacts and interactions with HUD are governmental, not jurisdictional. | No personal jurisdiction; long-arm statute and due process not satisfied. |
| Whether the contract-disputes clause bars plaintiffs' claims | Claims arise under the contract and should be adjudicated in court. | Disputes must be raised in writing to HANO first, per the contract; suit is improper. | Claims barred by the contract's disputes clause due to noncompliance. |
| Whether paragraph 16 release bars the claims | Claims relate to contract performance and should not be barred by releases. | Paragraph 16 saves HANO and its employees from claims arising from the contractor's activities. | Claims barred by the contract release provision. |
| Whether the government-contacts exception to the long-arm statute applies | HUD supervision and federal involvement create sufficient contacts with DC. | HUD interactions are uniquely governmental and do not create jurisdiction. | Exception does not establish personal jurisdiction. |
Key Cases Cited
- Moore v. Motz, 437 F.Supp.2d 88 (D.D.C.2006) (12(b)(6) standard requires plausible claims; not all allegations accepted)
- United States v. Holpuch, 328 U.S. 234 (Supreme Court, 1946) (disputes clause controls contract questions absent exception)
- Siam Kraft Paper Co., Ltd. v. Parsons & Whittemore, Inc., 400 F.Supp. 810 (D.D.C.1975) (government-contacts exception to long-arm statute; governmental activities)
- Coal on Sensible Transp., Inc. v. Dole, 631 F.Supp. 1382 (D.D.C.1986) (government-contacts principle; federal-government interactions may be insufficient)
- Agee v. Sebelius, 668 F.Supp.2d 1 (D.D.C.2009) (minimum contacts analysis for due process in long-arm jurisdiction)
- United States v. Ferrara, 54 F.3d 825 (D.C.Cir.1995) (basis for jurisdiction and due process considerations)