ANDERSON v. USA

Filing 24

PUBLISHED OPINION. Denying as Moot 7 Motion for Entry of Default; Granting 10 Motion to Dismiss - Rule 12(b)(1) Signed by Judge Emily C. Hewitt. (el3)

A N D E R S O N v. USA

D o c . 24

In the United States Court of Federal Claims
N o . 08-260 C (E -F ile d : January 28, 2009) ) ) ) ) ) ) ) ) ) ) ) M o tio n to Dismiss; RCFC 1 2 ( b ) ( 1 ) ; RCFC 12(b)(6); D e p a r t m e n t of Veterans Affairs (V A ) Home Loan Guaranty P r o g ra m ; 38 U.S.C. § 3701-36 (2 0 0 6 ); No Entitlement of a P la in tif f Mortgagor to Proceeds F r o m a Resale by VA as F o r e c lo s u re Purchaser After F o re c lo su re of Loan Partially G u a ra n te e d by VA

A N D E R S O N , PETER A., P l a in tif f , v. T H E UNITED STATES, Defendant.

C h ris to p h e r A. Anderson, North Scituate, RI, for plaintiff. A. Bondurant Eley, Washington, DC, with whom were Gregory G. Katsas, Assistant A tto rn e y General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant D ire c to r, Commercial Litigation Branch, Civil Division, Department of Justice, W a s h in g to n , DC, for defendant. OPINION AND ORDER H E W IT T , Judge B ef o re the court are Defendant's Motion to Dismiss (defendant's Motion or Def.'s M o t.), plaintiff's Objection to Defendant's Rule 12(b) Motions to Dismiss, plaintiff's M e m o r a n d u m in Support of Plaintiff's Objection to Defendant[']s Motion to Dismiss1 (p lain tiff 's Response or Pl.'s Resp.), Defendant's Reply to Plaintiff's Response to Its M o tio n to Dismiss (defendant's Reply or Def.'s Reply), plaintiff's Supplemental M e m o r a n d u m in Support of Plaintiff's Objection to Defendant[']s Motion to Dismiss ( p la in t if f ' s Supplemental Memorandum or Pl.'s Supp. Mem.), and Defendant's Response

Plaintiff's Memorandum in Support of Plaintiff's Objection to Defendant[']s Motion to Dismiss (plaintiff's Response or Pl.'s Resp.), on which the court relies for plaintiff's statement of his position, was filed separately from an earlier-filed document titled [Plaintiff's] Objection to Defendant's Rule 12(b) Motions to Dismiss.

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to Plaintiff's Supplemental Memorandum in Support of Plaintiff's Objection to D e f en d a n t's Motion to Dismiss (defendant's Response or Def.'s Resp.). For the f o re g o in g reasons, defendant's Motion is GRANTED. I. B a c k g ro u n d A. P ro c ed u ral History

O n August 24, 2007 plaintiff filed a complaint in the United States District Court f o r the Middle District of Florida. Anderson v. Nicholson, No. 07-cv-1343, Dkt. No. 1 (M .D . Fla. Aug. 24, 2007). On March 13, 2008 plaintiff filed a motion to transfer the c a s e to the United States Court of Federal Claims (USCFC). Id. at Dkt. No. 29. On M a rc h 19, 2008 the district court granted plaintiff's motion and transferred the case to th is court. Id. at Dkt. No. 30. Plaintiff filed his complaint in this court on May 9, 2008 c laim in g a "breach of an implied right of action under Federal law for the failure to re f u n d Plaintiff's equity in a home purchased by Plaintiff with a loan guaranteed by the D e f en d a n t following foreclosure of the loan by the lender, purchase of the home by D e f en d a n t at the foreclosure sale and re-sale of the home by Defendant." Complaint (p lain tiff 's Complaint or Compl.), filed May 9, 2008 ¶ 3. Defendant filed its motion to d is m is s on July 15, 2008. Def.'s Mot. 2-3. B. F a c tu a l Background

M r. Anderson, a veteran, purchased a parcel of real property in Florida in March 1 9 9 6 that was financed by Wells Fargo Home Mortgage, Inc. (Wells Fargo) through a n o te and a mortgage that was partially guaranteed by the United States Department of V e te ra n s Affairs (the VA). Compl. ¶¶ 12-13; Def.'s Mot. 3. The VA home loan g u a ra n ty2 program provides for partial guaranties on home loans for veterans. 38 U.S.C. § § 3701-36 (2006). The guaranty "operate[s] as the substantial equivalent of a down p a ym e n t in the same amount by the veteran on the purchase price, in order to induce p ro s p e c tiv e mortgagee-creditors to provide 100% financing for a veteran's home." United States v. Shimer (Shimer), 367 U.S. 374, 383 (1961). Mr. Anderson became delinquent on his loan and Wells Fargo instituted f o re c lo s u re proceedings in Florida state court in September 2000. Compl. ¶¶ 14-15; D e f .'s Mot. 3. Wells Fargo made a claim against the VA under the terms of the guaranty. For the spelling of "guaranty" and its plural form, "guaranties," see American Heritage Dictionary (AHD) at 778. AHD 778 (4th ed. 2006). Except for spelling within quotations, the court follows the AHD. 2
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C o m p l . ¶ 16; Def.'s Mot. 3. At the court-ordered foreclosure sale the VA was the highest b id d e r for the property and purchased the property from Wells Fargo. Compl. ¶¶ 17-20; Def.'s Mot. 3. In August 2001 the VA sold the property to a third party in a private sale a n d received approximately $65,000 over and above the guarantied amount. Compl. ¶¶ 2 1 -2 2 ; see Def.'s Mot. 3. Plaintiff claims that the VA is not entitled to the $65,000 profit a n d , instead, that the VA should remit the profit to him. Compl. ¶¶ 2, 22-25; Def.'s Mot. 3. II. L e g a l Standards A. J u r is d ic tio n

T h e USCFC, like all federal courts, is a court of limited jurisdiction. See United S ta te s v. King, 395 U.S. 1, 3 (1969). The Tucker Act is the primary statute establishing th e jurisdiction of the court. 28 U.S.C. § 1491(a)(1) (2006). In relevant part, the statute p r o v i d e s that this court "shall have jurisdiction to render judgment upon any claim against th e United States founded either upon the Constitution, or any Act of Congress or any re g u la tio n of an executive department, or upon any express or implied contract with the U n ite d States." Id. The Tucker Act provides the waiver of sovereign immunity necessary to sue the U n ite d States for money damages, but the plaintiff must establish an independent s u b s ta n tiv e right to money damages from the United States, that is, a money-mandating s o u rc e within a contract, regulation, statute, or constitutional provision itself, in order for th e case to proceed. See United States v. Testan, 424 U.S. 392, 398 (1976). As stated by th e United States Court of Appeals for the Federal Circuit (Federal Circuit), the alleged s o u rc e of the substantive right to money damages must "be reasonably amenable to the re a d in g that it mandates a right of recovery in damages. While the premise to a Tucker A c t claim will not be `lightly inferred,' . . . a fair inference will do." Fisher v. United S ta te s (Fisher), 402 F.3d 1167, 1174 (Fed. Cir. 2005) (en banc) (quoting United States v. W h ite Mountain Apache Tribe, 537 U.S. 465, 472-73 (2003)) (emphases and omission in o ri g in a l) . The burden of proof of establishing jurisdiction is borne by the plaintiff. McNutt v . Gen. Motors Acceptance Corp. (McNutt), 298 U.S. 178, 189 (1936); Russell v. United S ta te s, 78 Fed. Cl. 281, 285 (2007). If the defendant challenges jurisdictional facts, the p la in tif f must support them with "competent proof." McNutt, 298 U.S. at 189. The p lain tiff bears the burden to show by a preponderance of the evidence that jurisdiction is p ro p e r. Reynolds v. Army & Air Force Exch. Serv. (Reynolds), 846 F.2d 746, 748 (Fed. C ir. 1988). Jurisdiction is a threshold matter and a case can proceed no further if the 3

co u rt lacks jurisdiction to hear it. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1 9 9 8 ). B. M o t io n s to Dismiss

R u le 12(b) of the Rules of the United States Court of Federal Claims (RCFC) g o v e rn s motions to dismiss. Specifically, RCFC 12(b)(1) governs the dismissal of claims f o r lack of subject matter jurisdiction and RCFC 12(b)(6) governs dismissal of claims for f a ilu re to state a claim upon which relief can be granted. RCFC 12(b). The Federal C irc u it recently enumerated three grounds on which the government "might file a motion to dismiss in a Tucker Act case: (1) lack of subject matter jurisdiction due to the lack of a money-mandating source; (2) failure to state a claim upon which relief can be granted d u e to lack of a money-mandating source; and (3) failure to state a claim upon which re lie f can be granted because the plaintiff is ultimately not entitled to recover money d a m a g e s under the statute." Greenlee County v. United States (Greenlee County), 487 F .3 d 871, 876 (Fed. Cir. 2007) (citing Fisher, 402 F.3d at 1172-73). The Federal Circuit re ite ra te d that this court is to resolve motions to dismiss under grounds one and two "by a `s in g le step' at the outset of the case and `the determination that the source is moneym a n d a tin g shall be determinative both as to the question of the court's jurisdiction and th e re a fte r as to the question of whether, on the merits, plaintiff has a money-mandating s o u rc e on which to base his cause of action.'" Id. (quoting Fisher, 402 F.3d at 1172-73). Whether a plaintiff has alleged facts sufficient to make out a cause of action is a se p a ra te inquiry than whether a plaintiff "`has a money-mandating source on which to b a se his cause of action.'" Adair v. United States (Adair), 497 F.3d 1244, 1251 (Fed. C ir.) (2007) (quoting Fisher, 402 F.3d at 1173). In Adair the Federal Circuit further e x p la in e d the proper analysis for 12(b)(1) and 12(b)(6) motions: If a trial court concludes that the particular statute simply is not m o n e y-m a n d a tin g , then the court shall dismiss the claim for lack of subject m a tte r jurisdiction under Rule 12(b)(1). If, however, the court concludes th a t the facts as pled do not fit within the scope of a statute that is m o n e y-m a n d a tin g , the court shall dismiss the claim on the merits under R u le 12(b)(6) for failing to state a claim upon which relief can be granted. Id. (citations omitted). C. S ta n d a rd of Review

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I n deciding a motion to dismiss pursuant to RCFC 12(b)(1), "the court [is] o b lig a te d to assume all factual allegations to be true and to draw all reasonable inferences in plaintiff's favor." Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995) (citing S c h e u e r v. Rhodes, 416 U.S. 232, 236-37 (1974)). The standard for deciding an RCFC 1 2 (b )(6 ) motion is identical. See Sommers Oil Co. v. United States, 241 F.3d 1375, 1378 (F e d . Cir. 2001) (citations omitted) ("When reviewing a dismissal for failure to state a c la im upon which relief can be granted . . . , we must accept as true all the factual a lle g a tio n s in the complaint, . . . and we must indulge all reasonable inferences in favor of th e [plaintiff] . . . .") (interpreting RCFC 12(b)(4), the predecessor to RCFC 12(b)(6)). III. D is c u ss io n

D e f en d a n t contends that plaintiff has not established that this court has jurisdiction o v e r plaintiff's claims. Def.'s Mot. 3-10. Plaintiff claims there is jurisdiction in this co u rt because he seeks a "declaration of rights pursuant to the federal Declaratory J u d g m e n t Act." Compl. ¶ 26. He also claims that the action is an "equitable action for re stitu tio n of surplus funds" and is "an action for breach of an implied right of action u n d e r Federal law." Id. ¶¶ 2-3. Finally, plaintiff attempts to invoke this court's Tucker A c t jurisdiction by citing two federal statutes in the Complaint and a regulation in the R e s p o n s e . See Compl. ¶¶ 41, 49 (citing 38 U.S.C. § 3732(a)(1) (2006) and 38 U.S.C. § 5 3 0 2 (2006)); Pl.'s Resp. 7 (citing 38 C.F.R. § 1.967 (2008)). This case was transferred to this court from a United States District Court to cure a la c k of jurisdiction in the district court. However, "[t]he mere transfer of a case from the D is tric t Court to [the USCFC] does not establish jurisdiction and the defendant is not e sto p p e d from arguing lack of . . . jurisdiction even if it may have urged lack of ju ris d ic tio n in the District Court based on jurisdiction in [the USCFC]." 3 Singleton v. U n ite d States, 6 Cl. Ct. 156, 165 (1984) (citing Marshall N. Dana Constr., Inc. v. United S tates, 229 Ct. Cl. 862, 865 (1982)).

While the United States has been found within its rights under the law to urge possibly conflicting theories against the same plaintiff in different fora, the court has characterized such a strategy as a "whipsaw" of the plaintiff. See Phillips v. United States, 77 Fed. Cl. 513, 521 (2007). In a case not involving jurisdiction, the practice could be barred under the doctrine of judicial estoppel. See HighQBPO, LLC v. United States, 84 Fed. Cl. 360, 364 (2008) ("The doctrine of judicial estoppel posits that `where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position.'") (quoting Davis v. Wakelee, 156 U.S. 680, 689 (1895)). 5

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F o r the following reasons, defendant's Motion is GRANTED because this court la c k s jurisdiction. In the alternative, and even if jurisdiction were found to exist as to any o f plaintiff's claims, the court finds that plaintiff has failed to state a claim upon which re lie f can be granted. A. P lain tiff 's Equitable Claims Are Outside the Jurisdiction of This Court

P lain tiff seeks several forms of equitable relief. Specifically, he asks for a " d e cla ra tio n of rights pursuant to the federal Declaratory Judgment Act," Compl. ¶ 26, or a lte rn a tiv e ly, characterizes his claim as an "equitable action for restitution of surplus f u n d s," id. ¶ 2, or as "an action for breach of an implied right of action under Federal la w ," id. ¶ 3. The USCFC lacks jurisdiction to grant general equitable relief. Martinez v. U n ite d States, 333 F.3d 1295, 1303 (Fed. Cir. 2003) (en banc) (noting that "the Court of F e d e ra l Claims does not have general equity jurisdiction" and can only award equitable re lie f incidental to its Tucker Act jurisdiction). With exceptions for cases arising under th e Administrative Dispute Resolution Act, usually bid protests,4 and in certain contract c a se s,5 any equitable relief "must be incidental to and collateral to a claim for money d a m a g e s." Boubula v. U.S. Dep't of Justice, 970 F.2d 854, 859 (Fed. Cir. 1992) ("While lim ite d equitable relief is sometimes available in Tucker Act suits, the equitable relief m u s t be incidental to and collateral to a claim for money damages."). "Stated another w a y, the [United States] Court of Federal Claims has no power `to grant affirmative n o n -m o n e ta ry relief unless it is tied and subordinate to a money judgment.'" James v.

The Tucker Act, as amended by the Administrative Dispute Resolution Act (ADRA), 28 U.S.C. § 1491(b), confers jurisdiction on this court to: render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement. . . . . (2) To afford relief in such an action, the courts may award any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs. 28 U.S.C. § 1491(b) (2006). This is the court's bid protest jurisdiction. A portion of the Tucker Act, 28 U.S.C. § 1491(a)(2), permits this court to grant nonmonetary relief on claims arising under the Contract Disputes Act, 41 U.S.C. § 609(a)(1), when the claims concern "disputes on which a decision of the contracting officer has been issued." 28 U.S.C. § 1491(a)(2). 6
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C a ld e ra , 159 F.3d 573, 580 (Fed. Cir. 1998) (quoting Austin v. United States, 206 Ct. Cl. 7 1 9 , 723 (1975)). Accordingly, the court lacks jurisdiction over plaintiff's equitable claims and they m u s t be dismissed. B. 1. P la in tif f Has Failed to State a Claim Under the Tucker Act 3 8 U.S.C. § 3732 Is Not a Money-Mandating Source of Law

P la in tif f claims that 38 U.S.C. § 3732(a)(1) is money-mandating. Pl.'s Resp. 5. Section 3732(a)(1) states: In the event of default in the payment of any loan guaranteed under this c h a p te r, the holder of the obligation shall notify the Secretary of such d e f a u lt. Upon receipt of such notice, the Secretary may, subject to s u b s e c tio n (c) of this section, pay to such holder the guaranty not in excess o f the pro rata portion of the amount originally guaranteed. Except as p ro v id e d in section 3703(e) of this title, if the Secretary makes such a p a ym e n t, the Secretary shall be subrogated to the rights of the holder of the o b lig a tio n to the extent of the amount paid on the guaranty. 3 8 U.S.C. § 3732(a)(1) (emphasis added). The court must analyze whether the statute is m o n e y-m a n d a tin g by determining "whether the plaintiff is within the class of plaintiffs e n title d to recover under the statute if the elements of a cause of action are established." Greenlee County, 487 F.3d at 876. Section 3732(a)(1) affords the Secretary of the VA (the Secretary) a right of s u b ro g a tio n 6 to the lender's rights when and to the extent that the VA makes a payment

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Subrogation is:

broadly defined as the substitution of one person in the place of another with reference to a lawful claim or right. It is a right which is purely derivative and it permits a party who has been required to satisfy a loss created by a third party's wrongful act to step into the shoes of the loser and pursue recovery from the responsible wrongdoer. Stated another way, it is a substitution of one person in place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim, and its rights, remedies, or securities. (continued...) 7

o n the guaranty of the borrower's loan. 38 U.S.C. § 3732(a)(1). Here, the Secretary b o u g h t the property at the foreclosure sale, Compl. ¶ 20, a circumstance not addressed in § 3732(a)(1). See 38 U.S.C. § 3732(a)(1). The subrogation scenario contemplated in § 3 7 3 2 (a )(1 ) simply did not arise in this case. Plaintiff claims a right to monetary damages b a s e d on a claim that he is within a class of persons who have participated in the VA h o m e loan guaranty program who (1) had a loan foreclosed by the lender, (2) where the p ro p e rty was bought by the VA in a foreclosure sale and (3) where the VA thereafter re so ld the property for an amount greater than the amount of the VA loan guaranty. See C o m p l. passim. Essentially, plaintiff argues that, because the VA is subrogated to the rig h ts of the lender "to the extent of the amount paid on the guaranty," he should be e n t itle d to any money received by the VA in a subsequent resale of the property in excess o f the amount of the guaranty. Pl.'s Resp. 5-6 (citing 38 U.S.C. § 3732(a)(1)). The text o f 38 U.S.C. § 3732(a)(1) on which plaintiff reliefs contains absolutely no indication of an y such entitlement in plaintiff. To the contrary, the benefit of subrogation under § 3 7 3 2 (a )( 1 ) is afforded to the VA against a borrower, not to a borrower against the VA. a. The Section 3703(e) Exception to Section 3732 Does Not Support P lain tiff 's Claim

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(...continued)

73 Am. Jur. 2d Subrogation § 1 (2008) (footnotes omitted). In the mortgage context: One who pays off a mortgage or encumbrance which the principal debtor has failed to discharge may be entitled to subrogation provided the entire mortgage debt is paid. In other words, the doctrine of subrogation holds that where a person, other than the principal obligor, pays the mortgage indebtedness on land in which he has an interest equity will substitute him in place of the original mortgagee and vest that mortgagee's rights in him, thus, he may keep alive and enforce the lien insofar as is necessary for his protection. Equity will substitute the person paying the debt with the original creditor so as to enable him to enforce the security for the purpose of reimbursement. This right of subrogation may exist in favor of one who pays the encumbrance to protect his own interest in the property or who makes the payment because he is secondarily liable for the debt or for the discharge of the lien. 73 Am. Jur. 2d Subrogation § 52 (2008) (footnotes omitted). 8

T h e third sentence of § 3732(a)(1) begins with the phrase "[e]xcept as provided in s e c tio n 3703(e)." This exception is of no assistance to plaintiff. Section 3703(e)(1) s ta te s : E x c e p t as provided in paragraph (2) of this subsection,7 an individual who p a ys a fee under section 3729 of this title, or who is exempted under section 3 7 2 9 (c ) of this title from paying such fee, with respect to a housing loan g u a ra n te e d or insured under this chapter that is closed after December 31, 1 9 8 9 , shall have no liability to the Secretary with respect to the loan for any lo s s resulting from any default of such individual except in the case of f ra u d , misrepresentation, or bad faith by such individual in obtaining the lo a n or in connection with the loan default. 3 8 U.S.C. § 3703(e)(1) (emphasis and footnote added). This section provides that any v e te ra n wishing to participate in the home loan guaranty program may pay a fee up front to forestall liability for the guarantied amount in case of default (but not in cases of fraud, m is re p re se n ta tio n or bad faith by the veteran). Id. P la in tif f 's liability to the VA is governed by 38 U.S.C. § 3703(e). Plaintiff p u rc h a se d his real property after December 31, 1981. See Compl. ¶ 13 (stating that p lain tiff purchased his home in 1996). Pursuant to 38 U.S.C. § 3729(a)(1), with e x c ep tio n s not relevant here, all veterans wishing to obtain a home loan guaranty after 1 9 8 1 are required to pay such a fee. 38 U.S.C. § 3729(a)(1) (added to the United States C o d e in 1982). Additionally, there have been no allegations of fraud, misrepresentation o r bad faith that would create liability on the part of Mr. Anderson to the VA. See Def.'s M o t. passim; 38 U.S.C. § 3703(e)(1). Neither 38 U.S.C. § 3703(e)(1) nor 38 U.S.C. § 3732 creates any obligation on the p a rt of the VA to plaintiff. The first rule of statutory construction is that where, as here, th e statutory language is clear, that is the end of the inquiry. See Hemscheidt Corp. v. U n ited States, 72 F.3d 868, 871 (Fed. Cir. 1995) ("Language unmistakably certain on its f a ce ends our inquiry."). There is no phrase within 38 U.S.C. § 3732 or § 3703(e)(1) that c o u ld be read to suggest that the VA owes money to plaintiff. The statute serves instead a s a protection for veterans in certain circumstances against a possible claim by the VA in c a se of a deficiency. Plaintiff argues that the VA has "abuse[d] . . . the subrogation

"[P]aragraph (2) of this subsection" disallows the release of liability under 38 U.S.C. § 3703(e)(1) (2006) for loans that are "loan assumption[s]" under 38 U.S.C. § 3729(b)(2)(I) (2006) and loans to purchase manufactured homes. Neither exception is relevant here. 9

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p o w e r vested in the [VA] by Congress," Pl.'s Resp. 5, but there is no basis whatsoever in th e text of 38 U.S.C. § 3732(a)(1) for plaintiff's argument. b. S ec tio n 3732 was Enacted to Protect the Government­Not Borrowers

S e c tio n 3732(a)(1), like its predecessor code provisions, does not confer rights on b o rro w e rs ; instead, it protects the government. The provision "was enacted solely in the in te re s t of the government as surety, not of defaulting obligors." Gatter v. Nimmo (G a tte r) , 672 F.2d 343, 347 (3d Cir. 1982) (interpreting a predecessor to 38 U.S.C. § 3 7 3 2 ). The VA home loan guaranty program "relies on financial incentives to a c c o m p lish a welfare objective and does not purport to confer enforceable federal rights d irec tly on the veteran-borrower." Rank v. Nimmo (Rank), 677 F.2d 692, 697 (9th Cir. 1 9 8 2 ). Because the statute does not confer rights on borrowers, the statute is not " re a so n a b ly amenable" to a reading that it is money-mandating. See Fisher, 402 F.3d at 1174. c. S e c tio n 3732 Does Not Apply to Post-Foreclosure Events

M o re o v e r, 38 U.S.C. § 3732 addresses the relationship between the VA as g u a ra n to r and the holder of the obligation secured by the borrower in the property if the S e c re ta ry makes a payment on the guaranty. This case does not involve that c irc u m sta n c e . Here, the Secretary purchased the property at foreclosure. The VA sold th e property for a $65,000 profit after the foreclosure sale. See Compl. ¶¶ 19-21. When a p r o p e r ty is sold at a foreclosure sale, any money above the amount of the claim against th e property is called a surplus. See Fitzgerald v. Cleland (Fitzgerald), 650 F.2d 360, 361 (1 s t Cir. 1981). Almost all states "have recognized that surpluses that arise out of fo rec losu re sales must ordinarily be returned to the debtor." Id. Here, when plaintiff's p ro p e rty was sold at a foreclosure sale, there was no surplus. See Compl. 20. Therefore, n o surplus exists in this case. The $65,000 profit was made by the VA on a resale of the p ro p e rty after a judicially-supervised foreclosure.8 See Compl. ¶¶ 17-22; Def.'s Mot. 3. H e re , the property has been foreclosed upon and bought by the VA at the foreclosure sale.

Plaintiff cites 38 C.F.R. § 36.4323(e) (2008) in support of his theory that he is obligated to the United States Department of Veterans Affairs (the VA). Pl.'s Resp. 6 n.1. However, section 36.4323(e) of title 38 of the Code of Federal Regulations states: "Any amounts paid by the Secretary on account of the liabilities of any veteran guaranteed or insured under the provisions of 38 U.S.C. chapter 37 shall constitute a debt owing to the United States by such veteran." 38 C.F.R. § 36.4323(e)(1) (emphasis added). As noted above in Part III.B.1.a, see supra Part III.B.1.a, and below in Part III.B.2, see infra Part III.B.2, plaintiff is no longer obligated to the VA because the foreclosure sale has been completed and plaintiff has paid a fee to be released from any obligation to the VA. 10

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Id . Section 3703(c) protected plaintiff­in the absence of fraud, misrepresentation or bad f a ith ­ f ro m liability to the VA. See supra Part III.B.1.a. But neither § 3703(c) nor § 3732 cre ates any rights in a veteran-borrower against the VA. Id. As discussed more p a rtic u la rly below in Part III.B.5, the resale is legally separate from and unrelated to the f o re c lo s u re purchase of the property by the VA. See infra Part III.B.5. 2. 3 8 U.S.C. § 5302 and 38 C.F.R. § 1.967 Are Not Money-Mandating S o u r c e s of Law as to Plaintiff

P lain tiff suggests that 38 U.S.C. § 5302, Compl. ¶ 49, and 38 C.F.R. § 1.967, Pl.'s R e sp . 7, are money-mandating sources of law. Section 5302(b) states, in part, that: W ith respect to any loan guaranteed, insured, or made under chapter 37 of th is title [(the home loan guaranty program)], the Secretary shall . . . waive p a ym e n t of an indebtedness to the Department by the veteran . . . following d e f au lt and loss of the property, where the Secretary determines that c o lle c tio n of such indebtedness would be against equity and good c o n s c ie n c e . 38 U.S.C. § 5302(b). This section, in plain language, applies only to veterans who are in d e b te d to the VA. 38 U.S.C. § 5302(b) (referring to "an indebtedness to the D e p a rtm e n t by the veteran"). Plaintiff is not indebted to the VA. Mr. Anderson's home w a s sold in a judicially-supervised foreclosure sale and he was not indebted to the VA b e c au s e of the operation of the exception language in 38 U.S.C. § 3703(e)(1). See supra Part III.B.1.a; Compl. ¶¶ 19-20. Because Mr. Anderson paid the appropriate fee, he does n o t have an obligation to repay the guaranty. See 38 U.S.C. 3703(e)(1); see supra Part III.B .1 .a. Additionally, the VA has not taken any action that in any way suggests that Mr. A n d e rs o n is indebted to the VA. See Def.'s Mot. passim. Accordingly, this provision c a n n o t be viewed as money-mandating as to Mr. Anderson. Even if 38 U.S.C. § 5302(b) w e re money-mandating as to some persons, the facts of Mr. Anderson's case do not fit w ith in the scope of the statute. See Adair, 497 F.3d at 1258 (upholding a dismissal of a c o m p la in t on the basis of failure to state a claim where a statute and implementing re g u latio n s were money-mandating, but where the facts of the complaint did not fit within th e statute). Plaintiff suggests that 38 C.F.R. § 1.967 provides a money-mandating source of la w . Pl.'s Resp. 7. Section 1.967 reads in relevant parts: (a ) . . . any portion of an indebtedness resulting from participation in benefits p ro g ra m s administered by the Department of Veterans Affairs which has b e e n recovered by the U.S. Government from the debtor may be considered 11

f o r waiver, provided the debtor requests waiver in accordance with the time lim its of § 1.963(b). .... (d ) . . . Only where the amount collected exceeds the balance of the in d e b te d n e ss still in existence will a refund be made in the amount of the d if f e re n c e between the two. 38 C.F.R. § 1.967(a), (d). Plaintiff claims that the "amount collected" by the VA " e x c e e d s the balance of the indebtedness" and that he is entitled to a refund under this re g u la tio n . See Pl.'s Resp. 7. Plaintiff's argument is unavailing. Section 1.967(a) a p p lie s only to borrowers who are indebted to the VA and then only to amounts collected " f ro m the debtor." 38 C.F.R. § 1.967(a). Plaintiff is not indebted to the VA because of th e operation of 38 U.S.C. § 3703(e). See supra Part III.B.1.a. Moreover, there is no s u g g e stio n that any amount "has been recovered by the U.S. Government from the d e b to r" (that is, from plaintiff), see 38 C.F.R. § 1.967(a), a condition precedent to "a re f u n d ," see 38 C.F.R. § 1.967(d). In addition, the court does not view the governmental a c tio n contemplated by § 1.967(a), "considered for waiver," to be money-mandating, but ra th e r an action within the discretion of the government. See 38 C.F.R. § 1.967(a). Plaintiff cannot rely on this regulation as a money-mandating source of law.9

Even if the statutes and regulations discussed in Part III.B.2 of this opinion were money-mandating, there is a requirement that plaintiff go through an administrative procedure before coming to this court. Section 1.967(a) of title 38 of the Code of Federal Regulations requires that "the debtor request[] a waiver" in accordance with VA regulations. 38 C.F.R. § 1.967(a) (2008). Section 5302(b) of title 38 of the United States Code requires that the veteran submit "an application for relief" to the VA within one year of being notified about the deficiency and informed about the application process. 38 U.S.C. § 5302(b) (2008). Plaintiff has not alleged in his complaint that he has exhausted the administrative remedies available to him. See Compl. passim. Plaintiff claims that there is no administrative remedy because no administrative remedies "exist to review an otherwise ultra vires act." Plaintiff's Supplemental Memorandum in Support of Plaintiff's Objection to Defendant[']s Motion to Dismiss (plaintiff's Supplemental Memorandum or Pl.'s Supp. Mem.) 1 (emphasis added). The United States Court of Appeals for the Federal Circuit has developed a definition of "ultra vires" in the takings context, which is useful in this case. See Del-Rio Drilling Corp. v. United States, 146 F.3d 1358, 1362 (Fed. Cir. 1998). Ultra vires conduct is conduct that is "either explicitly prohibited or [is] outside the normal scope of the government official[']s duties." Id. No action complained of here was ultra vires; the actions were all within the regulations established under the VA home loan guaranty program. 12

9

E v e n if 38 C.F.R. § 1.967 were viewed as money-mandating as to some persons, the facts of Mr. Anderson's case do not fit within the scope of the regulation. See Adair, 4 9 7 F.3d at 1258 (upholding a dismissal of a complaint on the basis of failure to state a claim where a statute and implementing regulations were money-mandating, but where th e facts of the complaint did not fit within the statute). 3. N e ith e r the General Statutory Scheme of the VA as a Department of G o v e rn m e n t nor the VA Home Loan Guaranty Program Is MoneyM a n d a tin g As to Mr. Anderson

P la in tif f argues that "the VA's general statutory scheme [is] `money-mandating' u n d e r the Tucker Act as it supports the return of funds to the Plaintiff." Pl.'s Resp. 9-10 (" T h e very notion that the VA can keep the hard[-]earned equity of a Veteran, f u n c tio n a lly punishing the Veteran for having an asset, runs counter [to] the obvious p u rp o s e behind Congress's creation of the [VA]."). In the alternative, plaintiff states that the loan guaranty program, taken as a whole, is money-mandating. See id. at 9. In s u p p o r t, plaintiff quotes the statement of the United States Court of Appeals for the First C irc u it (First Circuit) that "`the loan guarantee act evinces an intent to treat veteran m o rtg ag o rs favorably, not harshly.'" Pl.'s Resp. 9 (quoting Fitzgerald, 650 F.2d at 362). It is true that "separate statutory provisions can be read together to create a m o n e y-m a n d a tin g statutory scheme sufficient to create jurisdiction under the Tucker A c t." Sharp v. United States, 80 Fed. Cl. 422, 427 (2008) ("[B]oth [the USCFC] and the F e d e ra l Circuit have found Tucker Act jurisdiction in cases in which the m o n e y-m a n d a tin g `separate source of substantive law' was a statutory scheme rather than a single statutory provision.") (citing El-Sheikh v. United States (El-Sheikh), 177 F.3d 1 3 2 1 , 1323-24 (Fed. Cir. 1999) and Ralston Steel Corp. v. United States, 169 Ct. Cl. 119, 3 4 0 F.2d 663, 667-68 (Ct. Cl. 1965)). However, the court does not find persuasive p la in tif f 's argument that the general statutory scheme of the VA is a money-mandating s o u rc e of law. a. T h e General Statutory Scheme of the VA as a Department of Government Is Not a Money-Mandating Source of Law

W h ile in some instances a regulatory scheme taken as a whole can be moneym a n d a tin g , it appears to the court unlikely that the organic laws and regulations of an e n tire cabinet-level agency would be money-mandating. Plaintiff claims that "the sta tu to ry scheme of the Veteran's Administration is to help [v]eterans," Pl.'s Resp. 8, in o rd e r to support his conclusion that his claim arises from a money-mandating source of la w . Several departments of the United States government, for example, the United S ta te s Department of Education and the United States Department of Housing and Urban 13

D e v e lo p m e n t have missions of benefiting groups of people that are analogous, more or le ss , to the mission of the VA to help veterans. Under plaintiff's logic, all sources of law re latin g to the various departments in government with missions to assist persons would b e money-mandating. The logic of plaintiff's argument is simply inconsistent with the lim ite d waiver of sovereign immunity provided by the Tucker Act. See, e.g., Orff v. U n ited States, 545 U.S. 596, 601-02 (2005) (noting that "a waiver of sovereign immunity m u s t be strictly construed in favor of the sovereign"). In El-Sheikh, the Federal Circuit found a money-mandating scheme by connecting tw o provisions of the United States Code together­one that defined "employee" to in c lu d e the plaintiff and another that enabled an "employee" to sue the employer in f e d e ra l court. El-Sheikh, 177 F.3d at 1323-24 (finding that, read together, 29 U.S.C. § 2 0 3 ( e )( 2 ) (2006) and 29 U.S.C. § 216(b) (2006) were money-mandating for the purpose o f Tucker Act jurisdiction). Here, unlike the situation in El-Sheikh, plaintiff has not p o in te d to any provisions that, when reasonably read together, would indicate that the g en era l scheme of laws under which the VA is organized is money-mandating. See Pl.'s R es p . passim. Accordingly, the court declines to find that the general scheme of the VA is a money-mandating source of law. b. T h e VA Home Loan Guaranty Program Is Not a Money-Mandating Source o f Law

N o r does the court find persuasive Mr. Anderson's argument that the general s c h e m e of the VA home loan guaranty program is money-mandating. The VA home loan g u a ra n ty program was meant to "operate as the substantial equivalent of a down payment in the same amount by the veteran on the purchase price, in order to induce prospective m o rtg a g e e -c re d ito rs to provide 100% financing for a veteran's home." Shimer, 367 U.S. at 383. However, the program "relies on financial incentives to accomplish a welfare o b je c tiv e and does not purport to confer enforceable federal rights directly on the veteranb o rro w e r." Rank, 677 F.2d at 697 (finding that the home loan guaranty program does not g iv e a veteran a private right of action against a private lender). The general scheme of th e VA home loan guaranty program is not to provide enforceable rights to the veterans b u t to promote a welfare objective and, at the same time, protect the interests of the VA th ro u g h provisions that allow it to manage the program and protect its financial interests. Again, unlike the plaintiff in El-Sheikh, Mr. Anderson has not pointed to specific p r o v i sio n s that can be read together to show that the program is money-mandating as a w a iv e r of sovereign immunity under the Tucker Act. See Pl.'s Resp. passim. T h e provisions Mr. Anderson cites in his briefing, whether addressed separately or re a d together, cannot be viewed as money-mandating. Accordingly, plaintiff's claim 14

u n d e r the general scheme of the VA home loan guaranty program must be dismissed for la c k of subject matter jurisdiction. 4. A VA Policy Manual Is Not Money-Mandating

P la in tif f 's Supplemental Memorandum cites a VA policy manual which, plaintiff a rg u e s, allows "possible adjustment of obligors' debts" after a sale and enables the VA to " re f le c t the VA's actual net loss or gain." Pl.'s Supp. Mem. 2; Dept. of Veterans Aff., P o lic ie s and Procs. Manual (Policy Manual), M26-4, Procedures­Claims and Liquidation o f Security, § 3.14(a) Analysis After Sale of Property by VA available at h t t p : / / w w w .w a r m s .v b a .v a .g o v / a d m i n 2 6 / m 2 6 _ 0 4 / c h 0 3 .d o c . P lain tiff 's reliance on the Policy Manual is unavailing. As discussed above in Part III.B .1 .a , plaintiff is not obligated to the VA and does have any "debts" to the VA. See s u p ra Part III.B.1.a; Policy Manual § 3.14(a). Therefore, treatment of the proceeds of the re sa le after the foreclosure of plaintiff's property do not appear to the court to be within the scope of the Policy Manual provision. In addition, the Policy Manual, even if it were a p p lic a b le to the facts of plaintiff's case, cannot be used as a money-mandating source of la w to confer jurisdiction on this court because the Policy Manual does not have the force o f law. As stated by the Third Circuit: [ A VA Policy Manual] satisf[ies] none of the criteria which have b e e n developed by the courts to determine whether agency regulations have th e force of law. They have never been published in the Federal Register. They have not been promulgated with the procedural requirements for ru le m a k in g . They have never been intended for or used by anyone other th a n VA employees. Gatter, 672 F.2d at 347 (citations omitted); accord Killip v. Office of Pers. Mgmt., 991 F .2 d 1564, 1569 (Fed. Cir. 1993) (noting that "even if [a policy manual is] `interpretive' . . . [it] lacks the `force and effect of law'") (citing Chrysler Corp. v. Brown, 441 U.S. 281, 3 0 1 (1976)). The Policy Manual is not a source of law that can support Tucker Act ju ri s d ic tio n . Furthermore, even if the Policy Manual were a source of law on which plaintiff c o u ld rely for Tucker Act jurisdiction, the text on which plaintiff relies neither " m a n d a te s" the payment of money nor supports a "fair inference" of such a mandate. See F is h e r, 402 F.3d at 1174. The phrase "possible adjustment of obligors' debts," cited by p la in tif f , Pl.'s Supp. Mem. 2, indicates a discretionary activity. 5. P la in tif f Has Lost All Rights in the Property At Issue 15

M r. Anderson no longer has any rights in the property at issue. State law and g e n e ra l property law principles, when not in conflict with federal law, are controlling for th e law of mortgages in relation to the home loan guaranty program. See Rank, 677 F.2d a t 697 (noting that "`mortgage foreclosure has traditionally been a matter for state courts a n d state law'" and concluding that it was "most improbable that the VA Act was in te n d e d to authorize the federal courts to create, with respect to the area of V A -g u a ra n tie d home loans, a federal common law of mortgages to supplement or s u p p la n t the law provided by the states" (quoting Roberts v. Cameron-Brown Co., 556 F .2 d 356, 361 (5th Cir. 1997))); Fitzgerald, 650 F.2d at 362 (noting that the regulations u n d e r the VA home loan guaranty program "are to be interpreted in light of traditional p ro p e rty law practices"). "[T]he rights of all parties are ordinarily determined as of the tim e of foreclosure . . . ." Id. at 363. According to the "settled principle of mortgage law . . . the value of [a] mortgagor's equity in the mortgaged property is fixed by the amount b id at the foreclosure sale." McKnight v. United States (McKnight), 259 F.2d 540, 544 (9th Cir. 1958). T h e real property in this case is located in Florida, Compl. ¶ 5, and, accordingly, F lo rid a law and general property law principles control. Under Florida law, "the m o rtg a g e e . . . acquires rights of possession and title in the mortgaged property [once] th e re has been a `default, court foreclosure, and sale to the mortgagee and transfer of title to [the mortgagee]." Morris v. Osteen (Morris), 948 So. 2d 821, 825 (Fla. Dist. Ct. App. 2 0 0 7 ) (quoting Martyn v. First Fed. Sav. & Loan Ass'n, 257 So. 2d 576, 580 (Fla. Dist. C t. App. 1971)). The property at issue has been foreclosed on by Wells Fargo and, thus, M r. Anderson had "no right to compel a mortgagee to account to him for any profit made u p o n a subsequent resale of the premises." See McKnight, 259 F.2d at 544. Plaintiff had n o rights in the property as of the date of the foreclosure at which point the time for re d e m p tio n had passed. See Morris, 948 So. 2d at 825-26 (discussing the right of re d e m p tio n under Florida law). Grant v. U.S. Dep't of Veterans Affairs (Grant), 827 F. Supp. 418 (S.D. Tex. 1 9 9 3 ) is closely analogous to the current situation. Grant, 827 F. Supp. at 418. In Grant, the court addressed the issue of whether or not a veteran is entitled to a surplus after a f o re c lo s u re sale and decided that a veteran was not so entitled. See id. at 422. The Grant c o u rt stated: [ P la in tif f s] assert that they should be the beneficiaries of the s u b s e q u e n t sale of the property by the VA, the second conveyance after the f o re c lo su re sale. It is well established, however, that sales subsequent to the foreclosure sale of property financed by a VA-guaranteed loan are sim p ly irrelevant to the initial mortgagor's rights because the parties' rights a re determined at the time of the foreclosure sale. 16

Id . P la in tif f relies on Fitzgerald, Pl.'s Resp. 13 (citing Fitzgerald, 650 F.2d at 360), for th e proposition that the VA must return the surplus to the borrower. The facts in F itz g e r a ld , however, are dissimilar to the facts of this case. A surplus in Fitzgerald arose d u rin g the foreclosure process. Fitzgerald, 650 F.2d at 363. Here, plaintiff is claiming rig h ts in a "surplus," Compl. ¶ 31, but there was no surplus at the judicially-supervised f o re c lo su re sale of plaintiff's property. Instead the VA realized a profit in a resale s u b s e q u e n t to a completed judicially-supervised foreclosure sale. See Compl. ¶ 22. Under the specific facts of Fitzgerald, the court decided that general principles of p ro p e rty law dictated that the VA was required to return the surplus to the veteran. Fitzgerald, 650 F.2d at 362-63. The Fitzgerald court based its decision, in part, on events th a t happened during the foreclosure process. Id. at 361-63. In Fitzgerald, the VA did n o t take ownership of the property under a judicially-supervised foreclosure sale. See id. a t 361-62. Here, there was a judicially-supervised foreclosure sale. See Compl. ¶ 20. The money plaintiff seeks was obtained by the VA from a sale subsequent to a c o m p le te d foreclosure. Compl. ¶¶ 20-22. The Fitzgerald court acknowledged that " su b s e q u e n t sales after foreclosure are irrelevant." Fitzgerald, 650 F.2d at 363 (citing M c K n ig h t, 259 F.2d at 544). Under traditional property law, "surpluses that arise out of fo rec losu re sales must ordinarily be returned to the debtor." Id. at 361. However, in Mr. A n d e rso n 's case, there was a foreclosure sale and the price paid at the foreclosure sale did n o t yield any surplus. See Compl. ¶ 21. Mr. Anderson's rights to the property were e x tin g u is h e d on the date of the foreclosure. The Fitzgerald court found that not returning the surplus would produce a "harsh" a n d inequitable result in the circumstances of that case. Fitzgerald, 650 F.2d at 362 (n o tin g that the home loan guaranty program has an implied "obligation to treat [the g u a r a n ty] in accordance with ordinary property law principles at least where those p rin c ip le s would prevent inequitably harsh treatment of veteran mortgagors and where the V A has not seen fit to publish regulations to the contrary"). Here, there has not been a h a rs h result. Mr. Anderson defaulted on his loan; however, because of the operation of 3 8 U.S.C. § 3703(e) and 38 U.S.C. § 3732(a)(1), he does not owe the VA any money. See supra Part III.B.1.a. Because Mr. Anderson's rights in the proceeds of any s u b s e q u e n t sale of the property were cut off on the date of the foreclosure sale, he has f a ile d to state a claim and his complaint must be dismissed. 6. V A Statutes and Regulations Allow the VA to Retain Proceeds From Sales o f Foreclosed Properties 17

P la in tif f argues that there is no federal law that authorizes the VA to retain the p ro c e ed s of a resale of a foreclosed property. Pl.'s Resp. 16-19. However, defendant a r g u e s that subsequent statutory enactments after Fitzgerald indicate that Congress e x p e cte d and knew that the VA would account for the proceeds of the home loan g u a ra n ty program, and that the proceeds include resale of foreclosed properties. See D e f .'s Reply 12. Plaintiff claims that statutory enactments that require the VA to account f o r the money in the VA home loan guaranty program do not prove that the VA can retain p ro c e ed s beyond the amount of the guaranty. Pl.'s Resp. 19. Defendant responds by s ta tin g that "Congress would not require [the VA] to report any income from foreclosed p rop erties if it also intended for [the VA] to do what Mr. Anderson suggests." Def.'s R e p ly 13. In particular, defendant points to the requirement that the VA report to Congress in v e s tm e n t income that includes "[s]ales of foreclosed properties." 38 U.S.C. § 3 7 3 4 (b )(2 )(C ) (2006). Defendant argues that this provision indicates that Congress is a w a re that the VA relies on sales as part of the funding for its home loan guaranty p ro g ra m . The Federal Credit Reform Act, 2 U.S.C. §§ 661-661f (2006), is the legal f ra m e w o rk under which Congress determines funding for loan programs throughout the v a rio u s departments of government. 2 U.S.C. § 661d(b) (authorizing agency financing a c co u n ts ). The fund for the home loan guaranty program is called the Veterans Housing B e n e f it Program Fund (VHBP Fund). 38 U.S.C. § 3722(a). The assets of the VHBP F u n d include "proceeds from the sale, rental, use, or other disposition of property." 38 U .S .C . § 3722(c)(3)(B). Section 3722(c)(3)(B) clearly contemplates that the VA will re ta in proceeds from foreclosure sales. 7. L a c k of a Statutory Provision to Refund Surplus

T h e re is no statutory authorization to refund money to Mr. Anderson. No such p ro v is io n is found in chapter 37 of title 38 of the United States Code or in VA re g u la tio n s . When there is "particularization and detail" in a statutory scheme that C o n g re ss has created, a court should not add provisions that are not present in the s c h e m e . See Iselin v. United States, 270 U.S. 245, 250-51 (1926). Here plaintiff seeks, in effect, an enlargement of a statute. Plaintiff also argues that the foreclosure has nothing to do with the issue at hand. Pl.'s Supp. Mem. 5. He argues that the issue is whether the VA has the authority to keep th e surplus and not whether or not Mr. Anderson has any substantive rights to the surplus. Id . This argument fails both because there is no surplus and because there is no

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s u b s ta n tiv e law enabling the VA to return its profits from a resale after a completed f o r e c lo s u r e .1 0 The fact that there is no provision enabling the payment of such funds is d is p o s itiv e . As the Court has noted, "The established rule is that the expenditure of p u b lic funds is proper only when authorized by Congress, not that public funds may be e x p e n d ed unless prohibited by Congress." United States v. MacCollum, 426 U.S. 317, 3 2 1 (1976) (citing Reeside v. Walker, 52 U.S. (11 How.) 272, 291 (1851)). There is no au tho rity for the payment to Mr. Anderson of the public money he seeks. Plaintiff's c la im must be dismissed. IV. C o n c lu s io n

F o r the foregoing reasons, plaintiff has not established that this court has jurisd iction to hear any of his claims and his claims must be dismissed. Even if this court h a d jurisdiction to hear any of plaintiff's claims, the case must be dismissed because p la in tif f has not shown he is "entitled to recover money damages" under the relevant s o u rc e s of law. See Greenlee County, 487 F.3d at 876; RCFC 12(b)(6). Dismissal p u rs u a n t to RCFC 12(b)(6) is appropriate "when the court determines that the facts as a ss e rte d do not entitle the claimant to a legal remedy." Godwin v. United States, 338 F .3 d 1374, 1377 (Fed. Cir. 2003) (discussing RCFC 12(b)(4), the predecessor to RCFC 1 2 (b )(6 )). Here, the facts Mr. Anderson has alleged in his Complaint state no claim upon w h ic h relief can be granted. D e f e n d a n t's Motion to Dismiss is GRANTED and the Clerk of the Court is D IR E C T E D to enter judgment in favor of the defendant.11 Even if there were a money-mandating source of law enabling the return of the surplus, plaintiff has not exhausted his administrative remedies. See supra Part III.B.2 at n.9. Before the court is also plaintiff's Application to the Clerk of the Court of the United States Court of Federal Claims for Entry of Default Pursuant to Rule 55(a) (plaintiff's Application), filed July 9, 2008 and Defendant's Response to Plaintiff's Motion for Default Judgment (defendant's Response), filed July 15, 2008. A decision on the merits is favored over a technical dismissal of a case. See Info. Sys. & Networks Corp. v. United States, 994 F.2d 792, 795 (Fed. Cir. 1993) (stating that it is "well-established . . . that a trial on the merits is favored over default judgment"). Pursuant to Rule 55(b) of the Rules of the United States Court of Federal Claims (RCFC), "A default judgment may be entered only if the claimant establishes a claim or right to relief by evidence that satisfies the court." RCFC 55(b)(2). RCFC 55(b) has no application to the facts of this case. Moreover, the court cannot enter judgment for plaintiff where the court lacks jurisdiction over plaintiff's claims. See, e.g., Folden v. United States, 379 (continued...) 19
11 10

IT IS SO ORDERED. s/ Emily C. Hewitt EMILY C. HEWITT Judge

(...continued) F.3d 1344, 1354 (Fed. Cir. 2004) ("Subject-matter jurisdiction may be challenged at any time by the parties or by the court sua sponte.") (citing Fanning, Phillips & Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998)). For the foregoing reasons, and because the court has granted defendant's Motion to Dismiss, the court DENIES AS MOOT plaintiff's Application. 20

11