Lea v. United States
662 F. App'x 925
| Fed. Cir. | 2016Background
- Corey Lea (sole shareholder of Corey Lea, Inc.) obtained an FSA-guaranteed loan in the corporation’s name; Farmers National Bank held the first mortgage and the Farm Service Agency held the second mortgage.
- Lea defaulted; the bank foreclosed. He then filed multiple suits in federal courts (at least eleven actions) challenging foreclosure and asserting contractual, tort, takings, and other claims against the United States and private parties.
- The Claims Court dismissed prior suits for lack of jurisdiction over non-United-States defendants, declaratory/injunctive relief, and tort claims; it also dismissed contract claims for failure to show party or third-party beneficiary status. This court vacated and remanded only to permit discovery on third-party beneficiary status.
- Lea filed successive complaints (Lea III and Lea IV) repeating many of the same claims. The Claims Court dismissed repeated claims as precluded and held Lea lacked standing to pursue contract claims in his individual capacity because the contracts named the corporation, not him.
- The Claims Court also concluded a dissolved corporation cannot be represented by a nonlawyer shareholder and that any purported corporate claims were derivative; Lea’s motion for reconsideration was denied.
- On appeal, the Federal Circuit affirmed the Claims Court: Lea was not a party to the government contracts, did not establish third-party beneficiary status, and failed to cure prior jurisdictional defects.
Issues
| Issue | Lea's Argument | United States' Argument | Held |
|---|---|---|---|
| Whether the Claims Court had Tucker Act jurisdiction over breach-of-contract claims filed by Lea individually | Lea argued the corporation is dissolved and he is winding up its affairs, so he can pursue the claims; alternatively, he suggested third-party beneficiary status and relied on prior rulings | Gov argued Lea was not a contracting party, any injury was corporate/derivative, and shareholder-derivative suits require counsel; court may raise jurisdiction sua sponte | Held: No jurisdiction; Lea is not in privity and did not show third-party beneficiary status, so Tucker Act claims dismissed |
| Whether dissolution of Corey Lea, Inc. permitted Lea (a nonlawyer) to represent the corporation in Claims Court | Lea contended dissolution and his winding-up role allowed him to litigate without counsel | Gov: corporate status remains separate; a corporation cannot be represented by non-attorney; dissolution doesn’t create privity | Held: Dissolution does not permit nonlawyer shareholder to represent the corporation; claims dismissed |
| Whether prior dismissals bar reassertion of the same claims (preclusion, law of the case, mandate rule) | Lea argued prior rulings established standing or otherwise foreclosed jurisdictional challenges | Gov argued claims were duplicative of Lea III and jurisdictional defects were not cured; collateral estoppel and preclusion apply | Held: Claims were precluded/repetitive; jurisdictional defects not cured, so dismissal affirmed |
| Whether Lea cured defects by alleging third-party beneficiary status late in litigation | Lea made an oblique third-party beneficiary claim in reply and argued earlier decisions supported his standing | Gov argued the complaint and prior proceedings showed contracts intended to benefit the corporation, not Lea individually | Held: Lea failed to allege facts showing intended direct benefit; shareholders not automatically third-party beneficiaries; no standing |
Key Cases Cited
- FloorPro, Inc. v. United States, 680 F.3d 1377 (Fed. Cir. 2012) (standard of de novo review for jurisdictional dismissal)
- Erickson Air Crane Co. of Wash. v. United States, 731 F.2d 810 (Fed. Cir. 1984) (government consents to suit only by parties in privity)
- Glass v. United States, 258 F.3d 1349 (Fed. Cir. 2001) (third-party beneficiary must be intended to receive direct benefit under contract)
- First Hartford Corp. Pension Plan & Tr. v. United States, 194 F.3d 1279 (Fed. Cir. 1999) (shareholders generally are not third-party beneficiaries entitled to sue government contracts)