OPINION
The plaintiffs seek damages for an alleged breach of Standard Reinsurance Agreements (“SRA”) between them, individually, and the Federal Crop Insurance Corporation (“FCIC”). The defendant filed a Motion to Dismiss under Rule 12(b)(1) of the Rules of the United States Court of Federal Claims (“RCFC”) arguing: (1) section 1506(d) of the
Background
The Federal Crop Insurance Act, codified as amended at 7 U.S.C. §§ 1501-1524 (2000), was passed as part of the New Deal legislation during the Great Depression to rescue and to preserve agriculture in an effort to restore it to its position of strength in the national economy. See State of Kan., ex rel. Todd v. United States,
Under the 1998 SRA, the FCIC reinsured a portion of the underwriting risk related to catastrophic risk protection insurance (“CAT”) and other federal crop insurance policies issued by the plaintiffs. In addition to reinsurance rights, the SRA, for example, the 1998 SRA, includes provisions for specified subsidies and administrative fees and for the payment of loss adjustment expenses to the contracting insurance providers. Further, in addition to the mutual obligations and rights contained within the SRA, there are provisions permitting for suspension, termination, renewal, and replacement. As a governmental agency, the FCIA may undertake one or more of those actions with re
The Secretary of Agriculture and the FCIC are authorized, pursuant to section 1516 of the FCIA, to issue such regulations as may be necessary to carry out the provisions of the chapter. These regulations are binding on the insureds, Federal Crop Ins. Corp. v. Merrill,
Indeed, in the decades following its creation, the FCIA has been significantly expanded and remains “one of a panoply of government programs designed to encourage, by subsidy if necessary, the nation’s agricultural business.” R & R Farm Enters., Inc. v. Federal Crop Ins. Corp.,
Subtitle C of Title V of the AREERA introduced reforms and spending cuts, such as reducing the level of reimbursement provided for companies’ administrative costs, within the crop insurance program. Section 532 of the Act provided:
(a) Administrative Fee for Catastrophic Risk Protection. — Section 508(b) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)) is amended by striking paragraph (5) and inserting the following:
“(5) Administrative Fee.—
“(A) Basic Fee. — Each producer shall pay an administrative fee for catastrophic risk protection in an amount equal to 10 percent of the premium for the catastrophic risk protection or $50 per crop per county, whichever is greater, as determined by the Corporation.
“(B) Additional Fee. — In addition to the amount required under subparagraph (A), the producer shall pay a $10 fee for each amount determined under subparagraph (A).
“(C) Time for Payment. — The amounts required under subparagraphs (A) and (B) shall be paid by the producer on the date that premium for a policy of additional coverage would be paid by the producer.
“(D) Use of Fees.—
“(i) In General. — The amounts paid under this paragraph shall be deposited in the crop insurance fund established under section 516(c), to be available for the programs and activities of the Corporation.
“(ii) Limitation. — No funds deposited in the crop insurance fund under this subparagraph may be used to compensate an approved insurance provider or agent for the delivery of services under this subsection.
“(E) Waiver of Fee. — The Corporation shall waive the amounts required under this paragraph for limited resource farmers, as defined by the Corporation.”.
(b) Administrative Fee for Additional Coverage. — Section 508(c)(10) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)(10)) is amended—
(1) by striking subparagraph (A) and inserting the following:
“(A) Fee Required. — Except as otherwise provided in this paragraph, if a producer elects to purchase additional coverage for a crop at a level that is less than 65 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, the producer shall pay an administrative fee for the additional coverage. The administrative fee for the producer shall be $50 per crop per county, but not to exceed $200 per producer per county, up to a maximum of $600 per producer for all counties in which a producer has insured crops. Subparagraphs (D) and (E) of subsection (b)(5) shall apply with respect*179 to the use of administrative fees under this subparagraph.”; and (2) in subparagraph (C), by striking “$10” and inserting “$20”.
(c) Reimbursement for Administrative and Operating Costs. — Section 508(k) of the Federal Crop Insurance Act (7 U.S.C. 1508(k)) is amended by striking paragraph (4) and inserting the following:
“(4) Rate.—
“(A) In General. — Except as provided in subparagraph (B), the rate established by the Board to reimburse approved insurance providers and agents for the administrative and operating costs of the providers and agents shall not exceed—
“(i) for the 1998 reinsurance year, 27 percent of the premium used to define loss ratio; and
“(ii) for each of the 1999 and subsequent reinsurance years, 24.5 percent of the premium used to define loss ratio.
“(B) Proportional Reductions. — A policy of additional coverage that received a rate of reimbursement for administrative and operating costs for the 1998 reinsurance year that is lower than the rate specified in subparagraph (A)(i) shall receive a reduction in the rate of reimbursement that is proportional to the reduction in the rate of reimbursement between clauses (i) and (ii) of sub-paragraph (A).”.
(d) Loss Adjustment Expenses for Catastrophic Risk Protection. — Section 508(b) of the Federal Crop Insurance Act (7 U.S.C. § 1508(b)) is amended by adding at the end the following:
“(11) Loss Adjustment. — The rate for reimbursing an approved insurance provider or agent for expenses incurred by the approved insurance provider or agent for loss adjustment in connection with a policy of catastrophic risk protection shall not exceed 11 percent of the premium for catastrophic risk protection that is used to define loss ratio.”.
AREERA, 112 Stat. 523, at 581-83.
Subtitle A of Title I of the ARPA further amended the FCIA, and reduced the level of loss adjustment expenses payable to approved insurance providers from 11 percent to 8 percent. Section 103(d) of the Act provided:
(d) Reimbursement Rate Change.— Section 508(b)(ll) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)(ll)) is amended by striking “11 percent” and inserting “8 percent”.
ARPA, 114 Stat. 358, at 366.
The responsibility for implementing these statutory changes fell upon the USDA, through the Risk Management Agency (“RMA”), and ultimately the FCIC as part of its administration of the crop insurance programs. It is undisputed that in order to implement the relevant statutory changes introduced by the AREERA and ARPA, the FCIC issued documents, each entitled an “Amendment” to the SRA.
The plaintiffs complain that the “FCIC has breached the 1998 SRA, causing substantial damages to plaintiffs, as a result of three legislative actions.” (Am.Compl.H 24.) In Count I of the First Amended Complaint, the plaintiffs assert that the Government’s refusal to allow them to retain certain CAT fees and to receive loss adjustment expenses, subsequent to the FCIC’s implementation of the relevant statutory amendments, has constituted both a breach of the 1998 SRA as well as a breach of the implied covenant of good faith and fair dealing. Count II alleges that the Government, through the alleged breaches and “[b]y its refusal to honor the terms of the 1998 SRA,” has been unjustly enriched. (Am.Comp.1174.) The plaintiffs claim entitlement to monetary damages. (Am. Compl. Wherefore Cl.)
For the reasons set forth below, the defendant’s Motion to Dismiss is hereby granted, and the plaintiffs’ motion to transfer, pursuant to 28 U.S.C. § 1631, is hereby denied.
Discussion
The defendant has filed a Motion to Dismiss pursuant to RCFC 12(b)(1) for lack of subject matter jurisdiction. It argues that Congress withdrew the Court of Federal Claims’ jurisdiction with respect to all claims involving the FCIC; therefore, its Motion to Dismiss should be granted because this Court lacks subject matter jurisdiction to hear the plaintiffs’ claims. The defendant also argues that this Court lacks jurisdiction because the plaintiffs have failed to exhaust, in a timely manner, mandatory administrative remedies.
A. Standard of Review
“The burden of establishing the court’s subject matter jurisdiction rests with the party seeking to invoke it.” McRae Indus., Inc. v. United States,
In order for this Court to have jurisdiction over the plaintiffs’ First Amended Complaint, the Tucker Act, 28 U.S.C. § 1491 (2000), requires that a substantive right, which is enforceable against the United States for money damages, must exist independent of 28 U.S.C. § 1491. The Tucker Act provides:
The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with*181 the United States, or for liquidated or unliquidated damages in cases not sounding in tort.
28 U.S.C. § 1491(a)(1) (2000).
The Tucker Act merely confers jurisdiction on this Court; it does not create a substantive right that is enforceable against the United States for money damages. United States v. Mitchell,
The question before this Court is whether the plaintiffs’ claims of breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment are within the jurisdiction of the United States Court of Federal Claims.
B. Count I-Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing
1. Whether the Plaintiffs’ Failure to Exhaust Administrative Remedies Bars This Court From Hearing Plaintiffs’ Claims
In general, exhaustion of administrative remedies is the rule, and waiver the exception, because exhaustion serves a myriad of purposes, including limiting judicial interference in agency affairs, conserving judicial resources, and preventing the “frequent and deliberate flouting of administrative processes [that] could weaken the effectiveness of an agency * * McKart v. United States,
Two kinds of exhaustion doctrine are currently applied by the federal courts, and the distinction between them is pivotal. Statutory exhaustion requirements are mandatory, and courts are not free to dispense with them. Common law (or “judicial”) exhaustion doctrine, on the other hand, recognizes judicial discretion to employ a broad array of exceptions that allow a plaintiff to bring his case in federal court despite his abandonment of the administrative review process.
The Supreme Court has directed that “[w]here Congress specifically mandates, exhaustion is required. But where Congress has not clearly required exhaustion, sound judicial discretion governs.” McCarthy v. Madigan,
Notwithstanding any other provision of law, a person shall exhaust all administrative appeal procedures established by the Secretary or required by law before the person may bring an action in a court of competent jurisdiction against—
(1) the Secretary;
(2) the Department; or
(3) an agency, office, officer, or employee of the Department.
7 U.S.C. § 6912(e). Faced with unambiguous statutory language requiring exhaustion of administrative remedies, “[w]e are not free to rewrite the statutory text.” McNeil v. United States,
The defendant argues that the plaintiffs’ claims should be dismissed for failure to exhaust administrative remedies. Its argument is based upon section 6912(e) and section 1506 of the FCIA, the express terms of the 1998 SRA,
“In construing the true nature of a claim we [this Court] look[s] to the real underlying claim, not how the plaintiff frames it.” Puget Sound Energy, Inc. v. United States,
Despite the plaintiffs’ suggestion that the FCIC is not the breaching party because Congress allegedly breached the 1998 SRA when it enacted the AREERA and the ARPA, the plaintiffs neither challenge the substantive provisions of AREERA (administrative fees) or ARPA (loss adjustment expenses), the power of Congress to enact or of the FCIC to implement those provisions, nor do they assert due process, taking, or any other violation of a constitutional right. Rather, the plaintiffs’ claims are centered solely upon the FCIC’s implementation of those statutory provisions, beginning in 1998 (administrative fees and loss adjustment expenses) and in 2000 (additional reduction in loss adjustment expenses). Although the Court is perhaps beating a dead horse at this point, it bears repeating that the plaintiffs allege that the FCIC’s actions of amending, or attempting to amend, the 1998 SRA to require the plaintiffs to remit all administrative fees to the FCIC and to reduce the amount of loss adjustment expense paid for CAT policies and the subsequent failure of the FCIC to comply with the terms of the 1998 SRA constitute breaches of that contract. (Am.Compl.1t1133-43, 65-68, 72-75.) The plaintiffs have neither specifically alleged nor have they shown, or provided evidence to suggest, that Congress mandated the way in which the FCIC should implement the relevant provisions of the AREERA or ARPA. Thus, they again fail to satisfy their burden of showing that this Court has jurisdiction over the instant action. For these reasons, the plaintiffs’ attempt to circumnavigate the FCIA are misguided and will not land them within this Court’s jurisdiction. Congress has expressly set out a statutory scheme that applies to suits, such as this one, that allege a breach of an SRA resulting from the actions of the FCIC.
This Court already has examined the applicability of 7 U.S.C. § 6912(e) in a suit brought against the United States in which the plaintiff asserted a breach of contract claim allegedly resulting from the actions of an agency of the United States Department of Agriculture. Farmers & Merchants Bank,
As a last ditch effort to clear the hurdle of their failure to exhaust established administrative remedies, the plaintiffs argue, in the alternative, that their claims fall within judicial exceptions to the statutory and regulato
As previously noted, the Supreme Court has directed that “[w]here Congress specifically mandates, exhaustion is required. But where Congress has not clearly required exhaustion, sound judicial discretion governs.” McCarthy,
In other words, if Congress has not explicitly required exhaustion, judicial exhaustion doctrine provides that courts may, in their discretion, waive administrative exhaustion under certain circumstances.
Accordingly, because the various exceptions to exhaustion urged by the plaintiffs do not apply where, as here, a clear statutory exhaustion requirement exists, the plaintiffs’ arguments relying on these exceptions are unavailing. See, e.g., Bastek,
Finally, to the extent that the plaintiffs seek restitution incident to their claim for breach of contract, the Court has no jurisdiction to entertain the merits because it lacks jurisdiction over the plaintiffs’ underlying breach of contract claim. See, e.g., Collins v. United States,
2. Whether 7 U.S.C. § 1506(d) Bars This Court From Hearing Plaintiffs’ Claims
The defendant asserts that Congress, pursuant to section 1506(d), expressly granted the federal district courts with exclusive original jurisdiction over all claims involving the FCIC, no matter what amount is in controversy, and thereby withdrew this Court’s Tucker Act jurisdiction. It thus argues that this Court must dismiss the plain
While this Court has found that it lacks subject matter jurisdiction over the plaintiffs’ First Amended Complaint as a result of their failure to pursue mandatory administrative review and appeal, thereby exhausting then-remedies, it also believes that 7 U.S.C. § 1506(d) would bar it from hearing the plaintiffs’ claims.
The FCIA provides:
The Corporation [the FCIC], subject to the provisions of section 1508(j) of this title, may sue and be sued in its corporate name, but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the [FCIC] or its property. The district courts of the United States, including the district courts of the District of Columbia and of any territory or possession, shall have exclusive original jurisdiction, without regard to the amount in controversy, of all suits brought by or against the [FCIC] * * *. Any suit against the [FCIC] shall be brought in the District of Columbia, or in the district wherein the plaintiff resides or is engaged in business.
7 U.S.C. § 1506(d) (emphasis added).
Under the Tucker Act, 28 U.S.C. § 1491(a)(1), the Court of Federal Claims has exclusive jurisdiction to render judgment upon any claim against the United States for money damages exceeding $10,000 that is “founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.” Congress may, however, withdraw the Tucker Act grant of jurisdiction. See, e.g., Ruckelshaus v. Monsanto Co.,
Section 1506(d) states that the federal district courts “shall have” jurisdiction of claims brought against the FCIC “without regard to the amount in controversy, of all suits brought by or against the [FCIC].” This Court believes that as a matter of statutory interpretation, section 1506 grants the district courts exclusive jurisdiction over claims against the United States alleging breach of an SRA resulting from actions of the FCIC.
In addition, the plaintiffs’ attempt to avoid the application of section 1506(d) by pointing to the fact that they have named the United States, rather than the FCIC, as the party defendant in this action is unpersuasive. Again, the claims in their First Amended Complaint center upon a breach of contract action and are based upon the allegedly unlawful actions of the FCIC in implementing statutory amendments to the FCIA. For this reason, the Court believes that section 1506(d) would apply also to bar it from hearing the plaintiffs’ claims as pleaded in the instant action. 7 U.S.C. § 1506(d); see generally Texas Peanut Farmers, 59 Fed.Cl. at
C. Count II — Unjust Enrichment
The plaintiffs argue that “[a]t all times pertinent to this suit, [they] have each performed their obligations to sell and service CAT policies to producers of agricultural commodities under the continuously effective 1998 SRA.” (Am.Compl.U 71.) They assert that the United States breached that express contract and, by refusing to honor the terms of the SRA, that it has been unjustly enriched. (Id. U1172-74.) Based upon these assertions, the plaintiffs claim entitlement to “restitution of all benefits which they have conferred upon the United States through the 1998 SRA.” (Id. U 75.)
The plaintiffs’ claim of unjust enrichment, however, also is beyond this Court’s jurisdiction. Contracts implied in law, as opposed to those implied in fact, do not fall under the Tucker Act. Hercules, Inc. v. United States,
Even if the plaintiffs were to contend, which they have not, that this Court has jurisdiction over Count II under the theory that unjust enrichment could be brought in the instant case as an implied-in-fact contract claim, the undisputed existence of an express contract between the parties, the 1998 SRA, would cause that argument to fail. Indeed, there is no implied-in-fact contract upon which the plaintiffs can stake their claim for recovery.
Although it is undisputed that the Court of Federal Claims has no jurisdiction over implied-in-law contracts, Hercules,
D. Plaintiffs’ Motion to Transfer
The plaintiffs request, for the first time in their Opposition to Defendant’s Rule 12(b)(1) Motion to Dismiss for Lack of Jurisdiction, that this action be transferred to the United States District Court for the District Columbia pursuant to 28 U.S.C. § 1631 if this Court found that it lacks jurisdiction. (Pis.’ Opp’n at 8.) The defendant opposes that request. It argues that a transfer would not be in the interests of justice, as required by § 1631, because the plaintiffs have not exhausted their administrative remedies, and therefore, they could not have brought this action in a federal district court “ ‘at the time
Having determined that this Court lacks jurisdiction over the plaintiffs’ claims, the Court must decide whether to dismiss or to transfer the case. If the Court finds jurisdiction lacking as a matter of law, dismissal is required. Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514,
As such, a transfer presumes jurisdiction in the transferee court. 28 U.S.C. § 1631; Omega,
CONCLUSION
The plaintiffs have failed to exhaust the mandatory administrative review and appeal process, which would then have been reviewed exclusively by a federal district court. Thus, this Court lacks subject matter jurisdiction over the plaintiffs’ First Amended Complaint. Accordingly, the defendant’s Motion to Dismiss pursuant to Rule 12(b)(1) is GRANTED, and the plaintiffs’ First Amended Complaint is to be dismissed. Further, the plaintiffs’ motion to transfer is DENIED.
The Clerk is hereby directed to dismiss the Plaintiffs’ First Amended Complaint, and judgment is to be entered accordingly.
No costs.
Notes
. The SRA is a financial assistance agreement setting forth the terms and conditions under which the FCIC will provide premium subsidy, expense reimbursement, and reinsurance on multiple peril crop insurance sold or reinsured by the FCIC and its implementing regulations. The SRA is not a standard Government procurement contract and so is not governed by the Contract Disputes Act ("CDA”). Rain & Hail Ins. Serv., Inc. v. Federal Crop Ins. Corp.,
. The plaintiffs have attached a copy of the 1998 SRA to the First Amended Complaint. (Am. Compl.Exh. A.)
. That the plaintiffs and the FCIC entered into the 1998 SRA is not in dispute. It also is undisputed that for at least one or more of the 1998 through 2003 reinsurance years, each plaintiff was an approved insurance provider that wrote CAT and other federal crop insurance policies. The plaintiffs, however, argue that the 1998 SRA was automatically renewed, under its terms, since July 1, 1997, and thus has been continuously effective for the reinsurance years through June 30, 2003. The Government denies that assertion and argues that the SRA is a cooperative financial agreement and that the 1998 SRA was amended and renewed giving rise to a new SRA each reinsurance year. This conflict, while relevant to the plaintiffs’ claims for breach of contract, is not determinative with respect to the issue of this Court’s jurisdiction, which is the basis for the Government’s pending Motion to Dismiss.
. The defendant cites to Section V, General Provisions, Section L.l. of the 1998 SRA. (Pis.' App. Ex. A at 27.) That provision states: "The Cornpany may appeal any actions, finding, or deci
. The Board of Contract Appeals (“BCA”) of the USDA has jurisdiction over disputes involving the FCIC. 7 C.F.R. § 24.4. Specifically, 24.4(b) states that the BCA has jurisdiction over FCIC determinations “pertaining to standard reinsurance agreements under 7 CFR 400.169(d).” Section 400.169(d) provides: “Appealable final administrative determinations of the Corporation under paragraph (a) or (b) of this section may be appealed to the Board of Contract Appeals in accordance with the provisions of subtitle A, part 24 of title 7 of the Code of Federal Regulations.” 7 C.F.R. § 400.169(d).
. The plaintiffs fail to address directly the statutory exhaustion requirement of 7 U.S.C. § 6912(e). They argue, however, that section 1506(d) is also not applicable in their claims solely against the United States, and they will be allowed to incorporate that argument by reference with respect to section 6912(e). (See Pis.' Opp'n at 6.)
In support of their argument that administrative exhaustion is no bar to their claims, the plaintiffs also have submitted a Notice of Recent Supplemental Authority drawing the Court’s attention to the decision of the United States Court of Appeals for the Eighth Circuit in National Crop Insurance Services, Inc. v. Federal Crop Insurance Corp.,
. The plaintiffs do not allege that the acts of Congress (or of the FCIC) amounted to a taking. That claim if made, however, would not satisfy the plaintiffs' burden. A takings claim is inappropriate where it duplicates a breach of contract claim and a breach of contract remedy is available to the plaintiff. Castle v. United States,
. As noted by the Bastek court, ‘‘[s]uch circumstances may occur when: (1) requiring exhaustion would 'occasion undue prejudice to subsequent assertion of a court action'; (2) the administrative remedy is inadequate because the agency cannot give effective relief, e.g., (a) 'it lacks institutional competence to resolve the particular type of issue presented, such as the constitutionality of a statute’; (b) the challenge is to 'the adequacy of the agency procedure itself'; or (c) the agency lack[s] authority to grant the type of relief requested’; or (3) the agency is biased or has predetermined the issue (also known as 'futility'). McCarthy,
. The relevant federal regulation, 7 C.F.R. § 400.169, also requires parties to exhaust administratively their claims against the FCIC.
. The Court notes the plaintiffs' complaint that the Government has argued that, in actions filed within the federal district courts, breach of SRA cases belong in this Court. (Pls.' Opp'n at 3-4, citing Rain & Hail Ins. Serv., 229 F.Supp.2d at 712; American Growers Ins. Co.,
. The statute provides: "Whenever a civil action is filed in a court * * * and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action * * * to any other such court in which the action * * * could have been brought at the time it was filed or noticed, and the action * * * shall proceed as if it had been filed in * * * the court to which it is transferred on the date upon which it was actually filed in * * * for the court from which it is transferred.” 28 U.S.C. § 1631.