Terry LONATRO; Nida Lonatro; Craig Berthold; Cindy Berthold; Dante Maraldo; Monique Maraldo; Amy Sins; George Sins; Albert Zuniga; Kathleen Zuniga; Roy Arrigo; Tammy Arrigo, Plaintiffs-Appellees v. UNITED STATES of America, Defendant-Appellant.
No. 12-30425.
United States Court of Appeals, Fifth Circuit.
April 25, 2013.
714 F.3d 866
ble burden on the reorganized debtor in making disclosure[s].” Specifically, the Wooleys argue that Haynes and Boone had breached their fiduciary duties by meeting in secret and discussing a proposed bankruptcy plan and that the Wooleys did not learn of this breach until after the Plan had been confirmed. This argument, however, ignores other facts that the Wooleys alleged to support their breach-of-fiduciary-duty claim. In addition to the “[f]ailure to fairly advise the entire [board of directors],” the Wooleys’ motion claims that thе two parties breached their fiduciary duties by failing “to Disclose Conflicts of interest, malpractice, [and] SEC violations” as well as by providing “inadequate process to consider proposals before rejecting Outside Equity Investment Opportunities.” The bankruptcy court found that the Wooleys had knowledge of some of these facts as early as September 2005 when they wrote to the Committee.
Despite this knowledge, the Wooleys did not seek authority during the bankruptcy proceedings to pursue the claims. Nor did they object to the Plan on the grounds that it did not specifically reserve the state law claims. Instead, they waited until after the Plan was approved to attempt to exercise their right to bring аn action on behalf of the Debtors. That the Wooleys later discovered an additional basis for their claims does not change the fact that they could have, and should have, advocated for the reservation of the causes of action they now wish to assert. Allowing the Wooleys to assert these claims simply because some of the underlying facts were unknown at the time the Plan was confirmed would be inconsistent with “the nature of a bankruptcy, which is designed primarily to secure prompt, effective administration and settlement of all debtor‘s assets and liabilities within a limited time.” In re United Operating, LLC, 540 F.3d at 355 (internal quotation marks omitted).
Conclusion
The Plan did not specifically reserve the state law claims the Wooleys now wish to assert. Without this specific reservation, the Plan Administrator—and, by extension, the Wooleys—lack standing to pursue the proposed claims. Thus, the claims are not colorable, and the bankruptcy court did not err in denying the Wooleys’ motion to pursue causes of action on behalf of the Debtors. The judgment of the district court is AFFIRMED.
Elizabeth Ann Peterson, William Brandt Lazarus, U.S. Department of Justice, Environment & Nаtural Resources Division-Appellate Section, Washington, DC, Glenn Kenneth Schreiber, Assistant U.S. Attorney, U.S. Attorney‘s Office, Eastern District of Louisiana, New Orleans, LA, for Defendant-Appellant.
Before KING, HIGGINBOTHAM, and CLEMENT, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
The district court concluded that it had subject matter jurisdiction over this action pursuant the Quiet Title Act,
I.
Plaintiffs own and reside on property in Orleans Parish, Louisiana that is “immediately adjacent to and/or abutting the levee surrounding the 17th Street Canal.” Following Hurricane Katrina, Congress authorized the United States Army Corps of Engineers (“Corps“) to repair and strengthen the levees in southeastern Louisiana.1
Before the removal activities began, the plaintiffs filed a class action suit in Louisiana state court against the Levee District and Flood Protection Agency. They alleged state law claims and sought a temporary restraining order, permanent injunctive relief, аnd damages for appropriation of their property. Their petition challenged the existence and constitutionality of the purported state-law servitude. On July 6, 2008, the state court denied the plaintiffs’ request for a temporary restraining order, and the Corps commenced work on the plaintiffs’ land. The plaintiffs and defendants then filed cross motions for summary judgment, disputing whether the Levee District held a legal servitude over the plaintiffs’ properties. On June 3, 2009, the state court granted partial summary judgment in favor of the plaintiffs and denied the defendants’ motion, finding that Louisiana law did not grant the property rights asserted by the Levee District. On September 14, 2009, the state appellate court reversed and remаnded, concluding that the plaintiffs owned their property subject to a valid servitude in favor of the local levee authorities.2 On March 12, 2010, the Louisiana Supreme Court denied the plaintiffs’ application for further review.
On January 5, 2011, the landowners initiated a second state court suit against the Levee District and Flood Protection Agency. The landowners had learned that the Levee District had granted the Corps another right-of-entry to perform extensive work on and around their property, including (1) engaging in “deep soil mixing,” a process that uses a giant mixer inserted up to 80 feet into the ground, and (2) building new subsurface and embankment walls. The plaintiffs sought injunctive relief to prevent the defendants from entering onto thеir property and from conducting the construction activities. On January 14, 2011, the state court concluded that it was bound by the Louisiana Court of Appeal‘s decision recognizing that the Levee District held a valid servitude over the plaintiffs’ property. The state court denied the plaintiffs’ motion for injunctive relief, granted the defendants’ exception for failure to join the Corps as a necessary party, and granted the plaintiffs leave to file an amended petition to name the Corps as an additional defendant.
On February 10, 2011, the plaintiffs filed an amended petition, joining the Corps as a defendant. In their amended petition, the plaintiffs sought a declaratory judgment that the defendants did not possеss a servitude over their property, or alternatively, a declaration that the servitude (1) had been abandoned and extinguished by virtue of non-use or (2) did not permit the types of activities the defendants were performing or planning to perform. In addition, the plaintiffs sought compensation for damage to their property caused by (1) the
Shortly thereafter, the Corps removed the case to federal district court pursuant to
II.
We review de novo a district court‘s ruling on a motion to dismiss for lack of subject matter jurisdiction,5 but we “review the district court‘s jurisdictionаl findings of fact for clear error.”6
III.
“The United States, as sovereign, is immune from suit save as it consents to be sued.”7 Hence, consent to be sued or a waiver of sovereign immunity “is a prerequisite for jurisdiction,”8 and “the terms of [the United States‘] consent to be sued define [the] court‘s jurisdiction to entertain the suit.”9 The plaintiffs claim that the QTA waives the United States’ sovereign immunity from this suit and furnishes a basis for federal subject matter jurisdiction.10 Although it has been clearly established that the QTA waives the sovereign immunity “subject to certain exceptions ... in civil actions to adjudicate title disputes involving real property in which the United States claims an interest,”11 the Government argues that the federal courts lack subject matter jurisdiction over this
“[L]imitations and conditions upon which the Government consents to be sued must be strictly observed and exceptions thereto are not to be implied.”12 Section 2409a(a), by its plain language, imposes two explicit conditions on the United States’ waiver of sovereign immunity—(1) the aсtion must be one “to adjudicate a disputed title to real property” (2) “in which the United States claims an interest.” We do not consider whether the second condition is satisfied here because we conclude that this action is not one “to adjudicate a disputed title to real property” within the meaning of the QTA.
The title dispute underlying this action is not bеtween the plaintiffs and the United States; rather, any liability on the part of the United States depends entirely on an adjudication of the validity of the servitude claimed by the Levee District. We read the QTA as requiring that the title dispute must be between the plaintiff—an adverse claimant—and the United States. That condition is not satisfied here because the dispositivе title dispute in this case—the validity of the servitude—is a title dispute between the plaintiffs and a third party, not between the plaintiffs and the United States.
Our reading of the QTA is compelled by the Supreme Court‘s decision last Term in Federal Aviation Administration v. Cooper.13 In Cooper, the Court explained that the scope of a waiver of sovereign immunity must “be clearly discernable from the statutory text in light of traditional interрretative tools;” if it is not, then a court should “take the interpretation most favorable to the Government.”14 The issue presented in Cooper was whether the term “actual damages” in the civil remedies provision of the Privacy Act includes compensation for mental and emotional harm. The Government urged that the civil remedies provision did not waive the United States’ sovereign immunity with respect to such recovery. The Supreme Court considered the particular context in which the term appears in the Act and prior versions of the bill, both of which suggested that Congress intended the term “actual damages” in the Act to mean “special damages.” The Court thus interpreted “actual damages” as meaning “special damages.” It explained that although “the contrary reading advanced by respondent is [not] inconceivable,” it was required to adopt the limited interpretation urged by the Government:
[B]ecause the Privacy Act waives the Federal Government‘s sovereign immunity, the question we must answer is whether it is plausible to read the statute, as the Government does, to authorize only damages for economic loss. When waiving the Government‘s sovereign immunity, Congress must speak unequivocally. Here, we conclude that it did not. As a consequence, we adopt an interpretation of “actual damages” limited to proven pecuniary or economic harm. To do otherwise would expand the scope of Congress’ sovereign immunity to waiver beyond what the statutory text clearly requires.15
Under Cooper, the question we must answer to determine the scope of a waiver of sovereign immunity is “whether it is plausible” to read the waiver in the manner
The QTA, by its own terms, suggests that it only applies to such an action. Section 2409a(e) provides that the jurisdiction of the district court shall cease “[i]f the United States disclaims all interest in the real property or interest therein adverse to the plaintiff.”17 That provision indicаtes that QTA jurisdiction is premised on adversity between the plaintiff and the United States.
The House Report accompanying the QTA also supports our interpretation. The plaintiffs cite a letter from the Attorney General included in the House Report and argue that the letter shows that Congress intended the QTA to apply to actions like this one. In that lettеr, the Attorney General explained:
If the United States were in possession under a lease, and the title of the Government‘s lessor were adjudicated to be invalid, the United States could elect to continue its lease with the true owner. If the United States were adjudged to be occupying without title, it is only fair to require it to choose between acquiring the right of possession and ceasing to occupy.18
But that example does not “unequivocally” indicate that Congress intended the QTA to allow a plaintiff to initiate suit against the United States to adjudicate a third party‘s claim to the plaintiff‘s property.19 The example only speaks to what happens after the third party‘s title is adjudicated as invalid. It does not suggest that the federal courts would have jurisdiction to adjudicate the initial title dispute between the plaintiff and the third party. In other words, that example does not suggest that a plaintiff could file suit against the United States when its claim against the United States depends entirely on a title dispute with a third party. The legislative history not only fails to provide a сlear indication that Congress intended the QTA to apply to such an action, but it actually supports a contrary reading. The House Report referenced the common law history of quiet title actions, which sought “to quiet title or to remove a cloud on title,” and explained that “[p]erhaps the most common application of the prоposed statute would be in boundary disputes between the United States and owners of adjacent property.”20
In light of both
IV.
In sum, because the title dispute here conсerns ownership of the purported servitude—a title dispute between the plaintiffs and a third party—and because it is plausible to read the QTA as only authorizing suit when the underlying title dispute is between the plaintiff and the United States, we REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion.