Bаnk of Guam (the “Bank”) appeals from the final judgment of the United States Court of Federal Claims that dismissed its suit for breach of contract against the United States.
Bank of Guam v. United States,
BACKGROUND
I.
In 1950, Congress enacted the Organic Act of Guam, establishing the government for the U.S. Territory of Guam.
See
Organ
By instituting the GTIT, Congress decided to “mirror” the IRC, rather than create an entirely new tax code for Guam. In other words, except for those provisions of the IRC that are “manifestly inapplicable or incompatible with the intent” of § 1421i, IRC § 1 applies to Guam taxpayers as GTIT § 1.
See
48 U.S.C. § 1421i(d)(l).
See generally Sayre & Co. v. Riddell,
The U.S. Treasury is authorized to issue USGOs, such as Treasury bills and bonds.
See, e.g.,
5 U.S.C. § 301; 12 U.S.C. § 391; 31 U.S.C. §§ 3102-3104 (pertaining to bonds, notes, and Treasury bills); 31 U.S.C. § 3121 (authorizing the Secretary of the Treasury to prescribe rules and regulations pertaining to USGOs). While USGOs, and the interest earned on them, are typically subject to federal income tax for U.S. taxpayers,
see generally
26 U.S.C. § 61 (including interest' in definition of “gross income”), USGOs are “exempt from taxation by a State or political subdivision of a State,” 31 U.S.C. § 3124(a)
2
;
see
31
II.
The facts pertinent to this appeal are not in dispute and are set forth in the decision of the Court of Federal Claims.
See generally Dismissal Order,
On January 24, 2001, the Director of the Guam Department of Revenue and Taxation (“GDRT”) issued a Notice of Deficiency to the Bank for tax years 1992-94, contending that the Bank owed GTIT taxes on the interest earned on the Bank’s USGOs. In response, the Bank initiated a suit in the United States District Court for the District of Guam, contending that Guam could not, through the GTIT, collect taxes on USGOs.
Bank of Guam v. Dir. of Dep’t of Revenue & Taxation,
No. 01-00016,
III.
On January 17, 2007, the Bank filed its four-count complaint in the Court of Federal Claims, putting forth many of the same arguments it had advanced in the District Court of Guam, but as breach of contract claims. The Bank requested a monetary award equaling the amount of tax it paid in settlеment with the GDRT “for all open tax years through and including 2001” plus the amount of tax it paid to the GDRT commencing in 2002. Bank’s Compl. ¶¶ 12, 20. The first count of the complaint alleged that, because Guam sought to collect GTIT on income from the USGOs, the United States had breached a contractual promise that income from the USGOs would be exempt from taxation imposed by a possession. Id. ¶¶ 18-20. The second count contended that all bond contracts should be reformed “to contain an obligation on the part of the United States government, requiring it to reimburse and indemnify the Bank.” Id. ¶ 26. In its third count, the Bank alleged an implied-in-fact contract requiring the United States to reimburse the Bank all taxes it had paid on the USGOs. Id. ¶ 30. Finally in count four, because the Bank “expected] to continue to purchase and hold USGOs,” and because collecting the GTIT on USGOs amounted to a breach of present and future USGO contracts, the Bank sought declaratory relief requiring the government to “reimburse the Bank on a forward basis for all sums which the Bank will hereafter be obliged to pay.” Id. ¶¶ 33-35; id. WHEREFORE clause ¶3.
The government filed motions to dismiss all counts under RCFC 12(b)(1) and 12(b)(6). Pursuant to RCFC 12(b)(1), the government argued that the Court of Federal Claims lacked jurisdiction over all of the Bank’s contract claims because those claims were barred by the Tucker Act’s, 28 U.S.C. § 1491(a), statute of limitations. See 28 U.S.C § 2501 (requiring filing “within six years after such claim first accrues”). In particular, the government contended that, even assuming that some сontract was breached, any possible date of such breach was not within six years of when the Bank filed suit, January 17, 2007, and was therefore outside the statute of limitations. In addition and specific to the Bank’s demand for declaratory relief, the government contended that the court lacked jurisdiction over the Bank’s demand because it was not based on contracts in existence. Alternatively, the Government moved to dismiss all counts for failure to state a claim pursuant to RCFC 12(b)(6), arguing that the contract claims were mer-itless because the Ninth Circuit’s Guma-taotao decision had already rejected the Bank’s exact argument.
Considering first the Government’s contention that the Bank’s suit was barred by the six-year statute of limitations, the court ruled that:
[t]he filing of the Notice of Deficiency in January 2001 ... constituted an actual breach.... Plaintiff filed suit within six years of this actual breach. Defendant’s motion to dismiss for lack of jurisdiction based on the time bar of the statute of limitations therefore is denied.
Dismissal Order,
Finding numerous decisions of the Ninth Circuit on similar issues instructive, the court then dismissed the Bank’s express contract, implied-in-fact contract, and reformation counts under RCFC 12(b)(6).
Id.
at 751-54. In particular, the court agreed with the reasoning in the
Bank of America
and
Gumataotao
decisions. The 1976 de-
Finally, the court dismissed the Bank’s declaratory relief count under RCFC 12(b)(1).
Dismissal Order,
DISCUSSION
On appeal, the Bank suggests that the Court of Federal Claims erred in dismissing all of its counts for numerous reasons. First, regarding the court’s dismissal pursuant to RCFC 12(b)(1) of the breach of contract claims with respect to all tax years prior to 2001, the Bank contends that the court’s decision is inconsistent. Specifically, the Bank highlights that the court determined that the 2001 Notice of Deficiency was the breach, thus triggering the six-year statute of limitations, аnd that the court then found that the Bank filed its contract claims within the requisite six-year limitations period. Yet, according to the Bank, the court later dismissed pursuant to RCFC 12(b)(1) all claims for breach of contract relating to all tax years prior to 2001. The Bank points out that the court did so despite the fact that the 2001 Notice of Deficiency contained tax deficiencies for tax years prior to 2001.
Next, the Bank contends that the court’s RCFC 12(b)(6) dismissal of its contract claims was erroneous. According to the Bank, it had a contract with the government that exempted USGOs from taxation by the GTIT. First, the Bank points out that USGOs are contracts with the United States. The Bank then argues that U.S. Treasury statutes and regulations, for exаmple 31 C.F.R. §§ 356.32(a) and 357.2, state that these USGOs are exempt from taxation by any State, which is defined to include U.S. possessions. Thus, according to the Bank, because the United States authorized the statutes and regulations exempting USGOs from taxation by Guam, and because the United States Congress then authorized Guam to tax its USGOs, the United States breached its contractual obligation with the Bank.
Specific to its implied-in-fact contract claim, the Bank argues that, if the language of the statutes and regulations governing the USGOs does not exempt them from taxation by the GTIT, then the United States exhibited conduct that implies a contract exempting USGOs from the GTIT. In particular, the Bank points to documents obtained through an August 22, 2002 Freedom of Information Act (“FOIA”) request, allegedly evidencing that the Bank, Guam, and the United
Regarding its reformation count, the Bank argues that, if the contract is read to only exempt “taxes legislated or imposed by Guam on its own authority,” then it is entitled to reformation to reflect the true understanding between the United States and the Bank. Specifically, according to the Bank, the contract should reflect that at all times the United States represented that income from the bonds was not taxable by the GTIT. Concerning its claim for declaratory relief, the Bank argues that the court had jurisdiction over its claim for declaratory relief because it is ancillary to the claims for monetary relief properly before the court. The Bank, however, recognizes that the Court of Federal Claims has limited ability to hear claims for declaratory relief.
We address each of the Bank’s contentions in turn.
I.
As an initial matter, we first consider whether the court properly dismissed portions of the Bank’s contract claims pursuant to RCFC 12(b)(1). “An appellate federal court must satisfy itself not only of its own jurisdiction, but also of that of the lower courts in a cause under review,” and therefore we must determine whether the Court of Federal Claims properly dismissed the Bank’s contract claims for lack of subject matter jurisdiction.
Mitchell v. Maurer,
We hold that the Court of Federal Claims did have jurisdiction over the Bank’s breach of contract claims for all tax years prior to 2001. We therefore reverse the court’s decision to the contrary. In order for the Court of Federal Claims to have jurisdiction, the statute of limitations requires filing suit within six years after a claim — in this case, the alleged breach of contract — accrues.
See
28 U.S.C. § 2501. Because the Bank filed suit on January 17, 2007 and the Notice of Deficiency issued on January 24, 2001, and because the Notice of Deficiency contained tax assessments for tax years prior to 2001, the court erred in dismissing the Bank’s breach of contract claims for all years prior to 2001. Thus, we reverse the court’s dismissal pursuant to RCFC 12(b)(1) for all tax years prior to 2001 and hold that subject matter jurisdiction was proper for those claims. This does not prevent us from dismissing those claims, however, because, as explained below, those claims were properly dismissed pursuant to RCFC 12(b)(6).
See Adair,
II.
We turn now to the dismissal of the Bank’s express and implied contract claims pursuant to RCFC 12(b)(6). “The question of whether a complaint was properly dismissed for failure to state a claim upon which relief could be granted is one of law, which we review independently.”
Highland Falls-Fort Montgomery Cent. Sch. Dist. v. United States,
A.
A party alleging either an express or implied-in-fact contract with the government “must show a mutual intent to contract including an offer, an acceptance, and consideration.”
Trauma Serv. Group,
In order to frame the issue of the government’s alleged breach of an express contract, it is helpful to identify what is not in dispute. First, it is not disputed that, with the purchase of the USGOs, the Bank and the United States entered into a contract.
See, e.g., Estate of Berg v. United States,
The United States Code exempts US-GOs, and likewise interest earned on US-
Focusing on the relevant question, it is quite clear that Congress, not Guam, enacted, authorized, or otherwise imposed the GTIT. Consequently, it is clear that the Bank’s USGO contracts do not contain a duty to exempt them from taxation by the GTIT. Thus, there is no breach for imposing the GTIT on the USGOs. Importantly, in arguing that the contracting and breaching party is the government, as it must for jurisdiction in the Court of Federal Claims,
see, e.g., Ransom v. United States,
Court: “Do you say that Gumataotao was wrong in its holding that the U.S. Congress imposed this tax?”
Bank: “No. And our complaint alleges that Congress imposed this tax.”
Oral Arg. 8:10-21, Mar. 6, 2009, available at http://oralarguments.cafc.uscourts.gov.
Regardless of the Bank’s admissions, it is clear that Congress enacted, through 48 U.S.C. § 1421i, the GTIT, which “mirrors” the federal IRC.
See, e.g., Ramsey v. Chaco,
Although addressing tax claims rather than contract claims, the reasoning in
Bank of America
and
Gumataotao
also supports our conclusions. Two years before the Bank began purchasing USGOs, the appellant in
Bank of America
contended that Guam’s enactment of a business privilege tax violated 12 U.S.C. § 548, which allowed a local government to tax the net income of a business only once.
Bank of Am.,
Nor can the various documents offered as parol evidence by the Bank change our holding that the contract between the Bank and the United does not exempt USGOs from taxation by the GTIT. Because the laws and regulations governing USGOs, and thus the terms of the Bank’s express contract, clearly do not exempt USGOs from taxation by the GTIT, such parol evidence cannot be considered to interpret the Bank’s contract with the United States.
See, e.g., McAbee Constr., Inc. v. United States,
For the above reasons, we hold that the Bank cannot establish that its express USGO contract with the government included a duty exempting USGOs from taxation by the GTIT. Thus, the government has not breached the USGO contract by imposing the GTIT. We therefore affirm the Court of Federal Claims’s dismissal of the Bank’s express contract cоunt pursuant to RCFC 12(b)(6).
B.
Having determined that, while there is an express contract between the
Howеver, “[i]t is well settled that the existence of an express contract precludes the existence of an implied-in-fact contract dealing with the same subject matter, unless the implied contract is entirely unrelated to the express contract.”
Schism v. United States,
For the foregoing reasons, the Bank cannot prove it had an implied-in-fact contract entitling it to the requested relief. We therefore affirm the Court of Federal Claims dismissal of that claim pursuant to RCFC 12(b)(6).
III.
Having affirmed the dismissal of the Bank’s express contract and implied-in-fact contract claims, we now address its reformation claim. In order to have a
Because the Bank cannot prevail on several requisite aspects of its reformation claim, the Court of Federal Claims did not err in dismissing the claim pursuant to RCFC 12(b)(6). First, the Bank has not alleged a mutual mistake of fact that, in this case, can support reformation. Rather, it alleges at most mistake of law with respect to the taxing of interest on USGOs that is contrary to statute and regulation.
See, e.g., William Cramp & Sons Ship & Engine Bldg. Co. v. United States,
Also fatal to the Bank’s claim is the fact that, even assuming the Bank could show that the government at some point had a mistaken belief about the tax status of USGOs, there is no indication that this alleged mistaken belief “constituted a basic assumption underlying the contract” about a term that the parties could negotiate.
See Atlas,
For the foregoing reasons, we affirm the dismissal of the Bank’s reformation claim pursuant to RCFC 12(b)(6). 8
IV.
Finally, we see no reason to disturb the Court of Federal Claims’s dismissal of the Bank’s claim for declaratory relief. The Bank essentially requests, in the event that we interpret its USGO contracts to preclude taxation by the GTIT, a declaration from this court preventing the government from acting contrary to that interpretation. The Court of Federal Claims, and likewise this court, typically declines jurisdiction over this type of relief — requesting a prospective equitable declaration pertaining to contracts that arе not yet breached nor require payment of money presently due.
See, e.g., Katz v. Cisneros,
CONCLUSION
In sum, although we disagree with the Court of Federal Claims’s decision to dismiss pursuant to RCFC 12(b)(1) the Bank’s breach of contract claims with respect to all tax years prior to 2001 and, therefore, reverse that ruling, the Court of Federal Claims properly dismissed all of the Bank’s claims on other grounds, as described in this opinion. We therefore affirm the court’s ultimate judgment in favor of the government.
AFFIRMED
Notes
. In pertinent part, 48 U.S.C. § 142li provides:
(a) Applicability of Federal laws; separate tax
The income-tax laws in force in the United States of America and those which may hereafter be enacted shall be held to be likewise in force in Guam: Provided, That notwithstanding any other provision of law, the Legislature of Guam may levy a separate tax on all taxpayers in an amount not to exceed 10 per centum of their annual income tax obligation to the Government of Guam.
(b) Guam Territorial income tax
The income-tax laws in force in Guam pursuant to subsection (a) of this section shall be deemed to impose a separate Territorial income tax, payable to the government of Guam, which tax is designated the "Guam Territorial income tax.”
. Section 3124 provides:
(a) Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax, except—
(1) a nondiscriminatoiy franchise tax or another nonproperty tax instead of a franchise tax, imposed on a corporation; and
(2) an estate or inheritance tax.
31 U.S.C. § 3124(a). The two exceptions listed in § 3124(a)(l)-(2) are not relevant to this appeal.
. We recognize that the statutes and regulations governing the USGOs, and in particular 31 U.S.C. § 3124 (providing the tax exemption for USGOs), have been slightly amended and modified during the period beginning with the Bank's initial purchase of USGOs in 1978 through its most recent purchases impacted by this appeal. Neither party, however, has relied on these modifications to support its position and, in fact, both parties primarily focus on language that has remained relatively constant — namely, the "taxation by” or "imposed by” language. Thus, for purрoses of this opinion, we assume, unless noted otherwise, that these slight modifications over the relevant years do not substantively impact our analysis.
. We have not previously addressed some of the exact issues presented in this appeal and, thus, while not binding, the decisions of other regional circuits are persuasive authority and instructive.
See, e.g., Summit Tech., Inc. v. Nidek Co.,
. We note that, after 1986, Congress authorized Guam to "de-link” from the IRC, thereby allowing Guam to
pass
its own tax legislation replacing the IRC.
See generally Gumataotao,
. Because § 548 considerеd Guam a "state,” it was not disputed that Guam locally imposed the business privilege tax pursuant to § 548 and that § 548 precluded Guam from locally taxing the net business income twice.
Bank of Am.,
. It is difficult not to have doubts about the Bank's “mistaken belief” because the Bank admitted that, when it began purchasing the USGOs and thus entered into its "contract,” it initially listed the USGOs as taxable.
See
PI. Mot. for Recon. In other words, the Bank could not have thought that the USGOs were tax free when it began purchasing those US-GOs. Thus, although the Bank may currently believe that USGOs are exempt from taxation by the GTIT, this belief did not “constitute[ ] a basic assumption underlying the contract.”
See Atlas,
. As we have explained, even assuming that the Bank could show that the government had a mistaken belief, at some point, about the tax status of the USGOs, its reformation claim would fail nonetheless. For this reason, the documents offered by the Bank, which relate solely to the government's alleged mistaken belief, do not change our conclusion.