Kenney et al v. Allawat
Filing
115
MEMORANDUM OPINION AND ORDER: USA's 112 Motion to Dismiss for Lack of Jurisdiction is GRANTED and the USA's alternative 112 Motion to Dismiss for Failure to State a Claim is DENIED AS MOOT. This case is DISMISSED WITHOUT PREJUDICE. This matter is CLOSED and STRICKEN from the Court's active docket. Signed by Judge Karen K. Caldwell on July 15, 2013. (AWD) cc: COR,D,JC
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
CIVIL ACTION NO. 12-138-KKC
JOHN M. KENNEY and
KENNEY ORTHOPEDIC, LLC,
V.
PLAINTIFFS,
MEMORANDUM OPINION AND ORDER
UNITED STATES,
DEFENDANT
Before the Court are a motion to dismiss for lack of jurisdiction and/or a motion to
dismiss for failure to state a claim filed by the United States. (R. 112) A two-day evidentiary
hearing was held in this case in March 2013. For the following reasons, the Court will grant the
United States’ motion to dismiss for lack of jurisdiction and deny as moot the alternative motion
for failure to state a claim for relief.
BACKGROUND
Kenney Orthopedic LLC is a government contractor providing prosthetic and orthotic
devices and services to the United States Government including the Kentucky Veterans
Administration Hospital. John M. Kenney is the sole proprietor of Kenney. Peggy Allawat is a
Prosthetic Manager at the VA Medical Center in Lexington, Kentucky. A lengthy history exists
between the parties and the Court need not recount the detailed history in full. The current case
arose from alleged breach of a settlement agreement in the underlying case, Kenney v. United
States, 08-CV-401-JBC. Kenney brought the current suit against Allawat alleging counts of
fraud, deceit, misrepresentation, breach of contract, breach of covenant of good faith and fair
dealing, defamation of character, tortious interference with a prospective and contractual
advantage, injurious falsehood, illegal restraint of trade and commerce, trade disparagement,
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intentional infliction of emotional distress. The United States moved to substitute itself as the
proper defendant pursuant to the Westfall Act, 28 U.S.C. § 2679(d)(1) and provided the required
certification. After an evidentiary hearing and oral argument on whether employee Peggy
Allawat acted outside the scope of her employment at the VA motivated by an alleged “personal
vendetta” against Kenney Orthopedics, the Court orally granted the United States’ motion to
substitute itself as a proper defendant in this case. Following that hearing and ruling, the Court
ordered the United States to file an answer or other responsive pleading to the complaint in this
matter and requested that the parties address whether the Court had jurisdiction in this matter
given the substitution of the United States as the proper defendant.
DISCUSSION
Plaintiff’s contractual claims must be dismissed for lack of subject matter jurisdiction.
The United States Court of Claims has exclusive jurisdiction over contract claims against the
United States for those in excess of $10,000. Lundstrum v. Lyng, 954 F.2d 1142, 1147 (6th Cir.
1991); 28 U.S.C. §1346(a)(2) and §1491. Indeed, the Plaintiffs inform the Court that these
claims are currently the subject of separate litigation pending in the Court of Federal Claims.
Thus, it is appropriate for the Court to abstain from any contractual claims to avoid any
duplicative litigation.
In addition, Plaintiffs’ tort claims must be dismissed for lack of subject matter
jurisdiction. The Westfall Act immunizes federal employees from liability for torts they commit
when acting within the scope of their federal employment and requires that any private remedy
for that tort must be sought against the United States under the Federal Tort Claims Act. Rector
v. United States, 243 Fed. App’x 976, 979 (6th Cir. 2007). The administrative requirements of
the FTCA must be fulfilled. Dolan v. United States, 514 F.3d 587, 592 (6th Cir. 2008). The
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appropriate remedy for failure to exhaust is dismissal for lack of subject matter jurisdiction.
Roberts v. United States, 191 Fed. App’x 338 (6th Cir. 2006).
Here, it is not disputed that the plaintiffs have not pursued any administrative claims.
The Court notes that the Plaintiffs appear to concede that this Court is deprived of jurisdiction
but ask for the Court to hold this case in abeyance pending any resolution of administrative
claims or in the alternative to dismiss without prejudice so that these claims may be pursued.
Plaintiffs cite to no authority for the Court to hold this matter in abeyance when it lacks subject
matter jurisdiction and the Court has likewise found none. However, the Court will dismiss
these claims without prejudice so as not to impair the Plaintiffs’ pursuit of these claims in an
administrative proceeding and because this is in accordance with the Court’s previous oral
ruling. See R. 110.
Finally, the Court notes that because it does not have jurisdiction in this matter it need not
address the United States’ alternative motion to dismiss for failure to state a claim. This motion
will be denied as moot.
Accordingly,
IT IS ORDERED that the United States’ motion to dismiss for lack of subject matter
jurisdiction is GRANTED and the United States’ alternative motion to dismiss for failure to
state a claim is DENIED AS MOOT.
IT IS FURTHER ORDERED that this case is DISMISSED WITHOUT
PREJUDICE. This matter is CLOSED and STRICKEN from the Court’s active docket.
Dated this 15th day of July, 2013.
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