Woodcox v. United States Department of Education et al

Filing 33

MEMORANDUM OPINION AND ORDER by Judge Greg N. Stivers on 4/17/2018. Defendants' Motions to Dismiss (DN 13 , DN 26 ) are GRANTED, and Plaintiff's Complaint is DISMISSED WITH PREJUDICE. cc: Jeffrey Woodcox, pro se; Counsel (CDF)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:16-CV-00814-GNS

JEFFERY WOODCOX

PLAINTIFF

v.

UNITED STATES OF AMERICA; and
COUNCIL ON OCCUPATIONAL EDUCATION

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendants’ Motions to Dismiss (DN 13, 26). The
motions have been fully briefed and are ripe for adjudication. For the reasons outlined below,
the motions are GRANTED.
I.

STATEMENT OF FACTS AND CLAIMS

This is a Federal Tort Claims Act (“FTCA”) action in which Plaintiff Jeffery Woodcox
(“Plaintiff”) makes claims for abuse of process and malicious prosecution against Defendants,
the United States and the Council on Occupational Education (“COE”) (collectively
“Defendants”), as well as a negligence claim against the United States. (Am. Compl. ¶¶ 39-68,
DN 5). Plaintiff was an officer, member of the board of directors, shareholder, surety on a bond,
and guarantor of Decker College, Inc. (“Decker”), a private, two-year career institution which
filed for bankruptcy following a Program Review by the United States Department of Education
(“ED”). (Compl. ¶ 11, DN 1; Am. Compl. ¶¶ 1-2, 33). Plaintiff alleges that the ED’s Program
Review, which ultimately disqualified Decker for federal student aid funding resulting in its

bankruptcy, relied on fabricated evidence coerced from the COE “with the specific intent of
harming Decker’s shareholders and principals.” (Am. Compl. ¶ 1).
II.

STANDARD OF REVIEW

The standards for dismissal under Fed. R. Civ. P. 12(b)(1) and 12(b)(6) differ in the Sixth
Circuit. See RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996).
Threshold challenges to subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) should
generally be decided before any ruling on the merits under Fed. R. Civ. P. 12(b)(6). See Bell v.
Hood, 327 U.S. 678, 682 (1946). In most circumstances, the plaintiff bears the burden to survive
Fed. R. Civ. P. 12(b)(1) motions to dismiss for lack of subject matter jurisdiction. See id.
Challenges to subject matter jurisdiction come in several varieties.

Facial attacks

challenge a plaintiff’s establishment of jurisdiction in their complaint and require the court to
examine the jurisdictional basis. See United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994)
(citation omitted). Factual attacks contest the existence of factual prerequisites to jurisdiction.
See id. In such motions, the district court is empowered to resolve the factual disputes affecting
any jurisdictional prerequisites. See Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir.
1986). A plaintiff bears the burden in both of these situations. See Bell, 327 U.S. at 682.
Sovereign immunity may serve as a basis for a Fed. R. Civ. P. 12(b)(1) motion to dismiss
for lack of jurisdiction. See Muniz-Muniz v. U.S. Border Patrol, 741 F.3d 668, 671 (6th Cir.
2013). “‘[W]hile the Eleventh Amendment is jurisdictional in the sense that it is a limitation on
the federal court’s judicial power,’ the defense ‘is not coextensive with the limitations on judicial
power in Article III.’” Nair v. Oakland Cty. Cmty. Mental Health Auth., 443 F.3d 469, 474 (6th
Cir. 2006) (quoting Calderon v. Ashmus, 523 U.S. 740, 745 n.2 (1998)). “[U]nlike subject-

2

matter jurisdiction, ‘the entity asserting Eleventh Amendment immunity has the burden to show
that it is entitled to immunity.’” Id. (citation omitted).
When considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), courts must
presume all factual allegations in the complaint to be true and make all reasonable inferences in
favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross &
Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citation omitted). “But the district court need not
accept a bare assertion of legal conclusions.” Tackett v. M & G Polymers, USA, LLC, 561 F.3d
478, 488 (6th Cir. 2009) (citation omitted). “A pleading that offers labels and conclusions or a
formulaic recitation of the elements of a cause of action will not do. Nor does a complaint
suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (internal quotation marks omitted) (citation omitted). When a plaintiff
is proceeding pro se, the Court is required to liberally construe the complaint and hold it to a less
stringent standard than a similar pleading drafted by an attorney. Haines v. Kerner, 404 U.S.
519, 520 (1972); Hahn v. Star Bank, 190 F.3d 708, 715 (6th Cir. 1999). Even pro se complaints,
however, must satisfy basic pleading requirements. Wells v. Brown, 891 F.2d 591, 594 (6th Cir.
1989).
To survive a motion to dismiss under Rule 12(b)(6), the plaintiff must allege “enough
facts to state a claim to relief that is plausible on its face.” Traverse Bay Area Intermediate Sch.
Dist. v. Mich. Dep’t of Educ., 615 F.3d 622, 627 (6th Cir. 2010) (internal quotation marks
omitted) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim becomes
plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing
Twombly, 550 U.S. at 556). “A complaint will be dismissed pursuant to Rule 12(b)(6) if no law

3

supports the claims made, if the facts alleged are insufficient to state a claim, or if the face of the
complaint presents an insurmountable bar to relief.” Southfield Educ. Ass’n v. Southfield Bd. of
Educ., 570 F. App’x 485, 487 (6th Cir. 2014) (citing Twombly, 550 U.S. at 561-64).
III.
A.

DISCUSSION

COE’s Motion to Dismiss

COE seeks dismissal of Plaintiff’s claims against it, and mounts four arguments to that
effect. (Def. COE’s Mot. Dismiss 1-2, DN 13; Def. COE’s Mem. Supp. Mot. Dismiss 1-9, DN
13-1 [hereinafter Def. COE’s Mem.]). Each argument is addressed in turn.
1.

Standing & Release of Claims by Bankruptcy Trustee

COE asserts that Plaintiff lacks standing for his claims, because as a shareholder, his
claims are derivative of the injuries suffered by Decker, and he therefore “lacks standing to assert
them in his own name.” (Def. COE’s Mem. 2-4). COE further argues that, even if Plaintiff had
standing for his claims, his suit should nonetheless be dismissed because his derivative claims
were released by the Settlement Agreement and Release executed between COE and Decker in
the bankruptcy proceedings.

(Def. COE’s Mem. 4-6).

Plaintiff appears to assert that his

standing to sue COE arises because “COE is a quasi-government agency” against which Plaintiff
can bring suit under the FTCA. (Pl.’s Resp. Def. COE’s Mot. Dismiss 4, DN 29 [hereinafter
Pl.’s Resp. Def. COE]).

COE responds that Plaintiff’s claims against it are not properly

grounded in the FTCA, given that it grants consent for the United States government be sued,
and does not apply to COE. (Def.’s Reply Supp. Mot. Dismiss 3, DN 31 [hereinafter Def.
COE’s Reply] (citing Fulcher v. United States, 88 F. Supp. 3d 763, 770 (W.D. Ky. 2015))).
Plaintiff did not address COE’s argument regarding his claims being derivative of claims of
Decker, or COE’s argument regarding release by the bankruptcy trustee.

4

In order to satisfy Article III’s standing requirement, “a plaintiff must assert his own legal
rights and interests, and cannot rest his claim to relief on the legal rights or interests of third
parties.” Coyne v. Am. Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999) (internal quotation marks
omitted) (citation omitted). “[A]n action to redress injuries to a corporation . . . cannot be
maintained by a stockholder in his own name . . . .” Canderm Pharmacal, Ltd. v. Elder Pharm.,
Inc., 862 F.2d 597, 603 (6th Cir. 1988) (internal quotation marks omitted) (citations omitted); see
also Cherry v. FCC, 641 F.3d 494, 495 (2d Cir. 2011) (holding that the plaintiff, the shareholder
of a company, lacked standing to challenge the FCC’s approval of radio license assignments
because the alleged injuries were not caused by the assignments, but instead the plaintiff’s
injuries were traced to the company’s default on its loan obligations); Heart of Am. Grain
Inspection Serv., Inc. v. Mo. Dep’t of Agric., 123 F.3d 1098, 1102 (8th Cir. 1997). The rule
applies even to a corporation’s sole shareholder.

See Smith Setzer & Sons, Inc. v. S.C.

Procurement Review Panel, 20 F.3d 1311, 1317 (4th Cir. 1994).

Likewise, guarantors to

corporate liability lack standing because their liability is derivative and will not constitute an
injury in fact. See, e.g., Mid-State Fertilizer Co. v. Exch. Nat’l Bank of Chicago, 877 F.2d 1333,
1335-37 (7th Cir. 1989).
Here, Plaintiff was an officer, member of the board of directors, shareholder, surety on a
bond, and guarantor of Decker. (Am. Compl. ¶ 2). The Court agrees with COE that none of
these confer standing upon Plaintiff, as his claims are merely derivative of injuries suffered by
Decker. Plaintiff’s claims against COE will therefore be dismissed.
2.

Plaintiff’s Abuse of Process Claim

In the alternative, COE argues that Plaintiff’s abuse of process claim fails on both
procedural and substantive grounds. (Def. COE’s Mem. 6).

5

a.

Statute of Limitations

COE avers that Plaintiff’s abuse of process claim is time-barred by Kentucky’s one-year
statute of limitations on such claims. (Def. COE’s Mem. 6-7). Plaintiff’s Response did not
address this argument.
Pursuant to KRS 413.140(1)(a), Kentucky has a one-year statute of limitations on abuse
of process claims. Maqablh v. Heinz, No. 3:16-CV-289-JHM, 2016 WL 7192124, at *8 (W.D.
Ky. Dec. 12, 2016). Such claims are “generally held to accrue . . . from the termination of the
acts which constitute the abuse complained of, and not from the completion of the action in
which the process issued.” Dickerson v. City of Hickman, No. 5:08-CV-P53-R, 2010 WL
816684, at *5 (W.D. Ky. Mar. 4, 2010).
As COE notes, Plaintiff’s basis for his claim against COE is a letter COE sent to ED in
August 2005 as part of a program review of Decker. (Am. Compl. ¶¶ 51, 53, 55; Am. Compl.
Ex. 7, at 2, DN 5-7). Plaintiff instituted the present lawsuit on December 20, 2016. (Compl. 1,
DN 1). Plaintiff has not argued any reason the statute of limitations was tolled. The Court
therefore agrees that, even if Plaintiff has standing to pursue his abuse of process claim against
COE, that claim is time-barred.
b.

Failure to State a Claim

COE also contends that Plaintiff failed to establish the elements of an abuse of process
claim under Kentucky law. (Def. COE’s Mem. 7-9). Plaintiff did not substantively respond to
this position, merely stating that “[t]he Complaint more than adequately pleads an abuse of
process claim.” (Pl.’s Resp. Def. COE 3).
A defendant is liable for abuse of process where he or she used “a legal process, whether
criminal or civil, against another primarily to accomplish a purpose for which that process is not

6

designed . . . .” Sprint Commc’ns Co., L.P. v. Leggett, 307 S.W.3d 109, 113 (Ky. 2010) (citing
Restatement (Second) of Torts § 682 (1977)). Under Kentucky law, there are two essential
elements of the claim:
(1) an ulterior purpose and (2) a willful act in the use of the process not proper in
the regular conduct of the proceeding. Some definite act or threat not authorized
by the process, or aimed at an objective not legitimate in the use of the process is
required and there is no liability where the defendant has done nothing more than
carry out the process to its authorized conclusion even though with bad intentions.
Simpson v. Laytart, 962 S.W.2d 392, 394-95 (Ky. 1998) (internal citations omitted) (citation
omitted). Stated another way, there is a “difference between the proper use of process, though
ill-motivated, and an abuse of process.” Cherry v. Howie, 191 F. Supp. 3d 707, 716 (W.D. Ky.
2016).
Plaintiff’s abuse of process claim alleges that “ED . . . and COE wrongfully employed the
Program Review to destroy Decker and attack the value of shareholders in Decker . . . .” (Am.
Compl. ¶ 53). The Court concurs with COE’s position that, “as the Program Review is a process
initiated by the Department of Education[,]”1 Plaintiff’s abuse of process claim will not lie
against COE. (Def. COE’s Mem. 8 (citing Garland v. Brewer, No. 3:11-25-DCR, 2012 WL
1068737 (E.D. Ky. Mar. 29, 2012) (dismissing plaintiff’s claim for abuse of process where
defendant had not instituted any judicial proceedings against plaintiff))).
3.

Plaintiff’s Malicious Prosecution Claim

COE finally argues that Plaintiff has failed to adequately plead a claim for malicious
prosecution. (Def. COE’s Mem. 9). Again, Plaintiff has not substantively responded to this
position, but simply included that he “believes he [h]as more than adequate[ly] alleged the claim
of Malicious Prosecution.” (Pl.’s Resp. Def. COE 3-4).
1

The Complaint itself includes the statement that “ED instituted a program review of Decker
College . . . .” (Am. Compl. ¶ 60).
7

In Kentucky, a malicious prosecution action is established by showing five elements:
1)

2)
3)

4)
5)

the defendant initiated, continued, or procured a criminal or civil
judicial proceeding, or an administrative disciplinary proceeding
against the plaintiff;
the defendant acted without probable cause;
the defendant acted with malice, which, in the criminal context, means
seeking to achieve a purpose other than bringing an offender to justice;
and in the civil context, means seeking to achieve a purpose other than
the proper adjudication of the claim upon which the underlying
proceeding was based;
the proceeding, except in ex parte civil actions, terminated in favor of
the person against whom it was brought; and
the plaintiff suffered damages as a result of the proceeding.

Martin v. O’Daniel, 507 S.W.3d 1, 11-12 (Ky. 2016), as corrected (Sept. 22, 2016), reh’g denied
(Feb. 16, 2017) (citation omitted). Generally, actions for malicious prosecution are disfavored,
as public policy favors the exposure of crimes, and sustaining actions for malicious prosecution
in every case resulting in an acquittal or dismissal “would serve as a deterrent to the enforcement
of the criminal law, since the prosecutor would hesitate to set the criminal law in motion if he
was rendered liable for damages, unless the prosecution should be successful[.]”

Hunt v.

Lawson, No. 2007-SC-000438-DG, 2008 Ky. LEXIS 234, at *11-12 (Ky. Oct. 23, 2008)
(alteration in original) (internal quotation marks omitted) (quoting Davis v. Brady, 291 S.W. 412,
412-13 (Ky. 1927)). As “the tort of malicious prosecution is one that has not been favored in the
law,” a plaintiff “must strictly comply with the elements of the tort.” Davidson v. Castner-Knott
Dry Goods Co., 202 S.W.3d 597, 602 (Ky. App. 2006) (citations omitted).
As noted above, since the Complaint acknowledges that the ED, not COE, initiated the
Program Review against Decker, Plaintiff cannot maintain an action for malicious prosecution
against COE, as he cannot establish the first element of the claim.

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B.

United States’ Motion to Dismiss

The United States also seeks dismissal of Plaintiff’s claims under several arguments.
(Def. United States’ Mot. Dismiss 1, DN 26; Def. United States’ Mem. Supp. Mot. Dismiss 1-2,
5-23, DN 26-1 [hereinafter Def. U.S.’s Mem.]). Each of its arguments is addressed below.
1.

Standing

The United States contends that Plaintiff lacks standing to pursue his claims, and the
Court therefore lacks subject matter jurisdiction. (Def. U.S.’s Mem. 19-20). Plaintiff argues that
his American citizenship gives him standing, and that subrogation entitles him to recover at least
the value of his house, lost as “a direct consequence of the Defendant’s action.” (Pl.’s Resp. Def.
U.S.’s Mot. Dismiss 7, DN 30 [hereinafter Pl.’s Resp. Def. U.S.]).
As discussed above, Plaintiff lacks standing to bring the present suit against COE; this
deficiency applies equally to his claims against the United States. Jurisdiction in this Court fails
for lack of standing, and Plaintiff’s claims against the United States will be dismissed.
2.

Failure to Timely File Administrative Claim

The United States also argues that Plaintiff’s administrative claim before the Department
of Education was not timely filed under the FTCA, such that his claims are now time-barred.
(Def. U.S.’s Mem. 2-3, 7-10; Pl.’s Admin. Claim, DN 26-2 to 26-3).
“‘The United States, as sovereign, is immune from suit save as it consents to be
sued . . . .’ This principle extends to agencies of the United States, as well, which are immune
absent a showing of a waiver of sovereign immunity.” Whittle v. United States, 7 F.3d 1259,
1262 (6th Cir. 1993) (internal citation omitted) (citing United States v. Testan, 424 U.S. 392
(1976)). The FTCA is the exclusive remedy for suits against the United States or its agencies

9

sounding in tort.2 28 U.S.C. § 2679(a). The FTCA “waives sovereign immunity to the extent
that state-law would impose liability on a private individual in similar circumstances.” Young v.
United States, 71 F.3d 1238, 1241 (6th Cir. 1995) (internal quotation marks omitted) (citation
omitted).
The FTCA provides:
[a] tort claim against the United States shall be forever barred unless it is
presented in writing to the appropriate Federal agency within two years after such
claim accrues or unless action is begun within six months after the date of
mailing, by certified or registered mail, of notice of final denial of the claim by
the agency to which it was presented.
28 U.S.C. § 2401(b).

The time limits of Section 2401(b) govern litigation against the

government under the FTCA. United States v. Wong, 135 S. Ct. 1625, 1633 (2015). In actions
based on negligence, the Supreme Court has held that federal law controls as to when a claim
accrues under the FTCA. United States v. Kubrick, 444 U.S. 111, 123 (1979). The Kubrick
court held that negligence claims accrue within the meaning of Section 2401(b) when a plaintiff
knows of both the existence and the cause of his injury, and not at a later time when he also
knows that the acts inflicting the injury may amount to negligence. Id. at 121-23.
Plaintiff filed his administrative claim on February 10, 2016, more than ten years after (1)
the COE sent a letter to the ED regarding Decker’s accreditation, (2) Decker ceased offering
classes, and (3) Decker went into bankruptcy. (Pl.’s Admin. Claim 1, DN 26-2; Am. Compl. Ex.
A, at 4, DN 5-5). The United States further notes that Plaintiff’s administrative claim relied on
documents dated in 2007, and that the case sub judice rests on documents dated in 2012. (Def.
U.S.’s Mem. 9-10). Plaintiff does not appear to contest these facts, but instead argues that

2

The United States notes that Plaintiff’s administrative claim accused ED employees of
“negligence, and lies[,]” but did not allege the torts of malicious prosecution or abuse of process.
(Def. U.S.’s Mem. 2; Pl.’s Admin. Claim 1, DN 26-2).
10

equitable tolling should be enforced under Wong,3 because COE’s incorrect determination
regarding Decker’s accreditation was not “exposed” by the ED until 2014.4 (Pl.’s Resp. Def.
U.S. 5-6).

The United States responds that Plaintiff’s theory regarding Decker’s proper

accreditation status is not equivalent to Plaintiff’s own legal rights, is unsupported by evidence
beyond Plaintiff’s claims, and is undermined by the fact that documents attached to his
administrative claim “demonstrate that others had concluded that COE was wrong about Decker
College’s accreditation long before 2014.”5 (Def. U.S.’s Reply 3-4).
Equitable tolling allows a federal court “to toll a statute of limitations when a litigant’s
failure to meet a legally-mandated deadline unavoidably arose from circumstances beyond that
litigant’s control.”

Jackson v. United States, 751 F.3d 712, 718 (6th Cir. 2014) (internal

3

“Section 2401(b) is not a jurisdictional requirement. The time limits in the FTCA are just time
limits, nothing more. Even though they govern litigation against the Government, a court can
toll them on equitable grounds.” Wong, 135 S. Ct. at 1633.
4
Plaintiff contends that Decker was “destroyed” as part of a “personal vendetta against Decker’s
CEO” held by a Federal Student Aid office case team director involved in the ED’s Program
Review of Decker. (Am. Compl. ¶¶ 1, 5, 28-30). His equitable tolling argument is grounded in
his position that the United States is “active in its fraudulent concealment of its ongoing role” in
Decker’s closure. (Pl.’s Resp. Def. U.S. 5). He further alleges that the ED’s lawyer, Steve
Finley (“Finley”), “came clean” about the falsity of Decker’s accreditation status with COE in
“late 2014.” (Pl.’s Resp. Def. U.S. 5-6). The United States noted that it is “not aware” of any
such filing by Finley apart from an administrative brief filed by him in April 2015, which it
contends “does not support a foundation for equitable tolling in this case.” (Def.’s Reply Supp.
Mot. Dismiss 3 n.2, DN 32 [hereinafter Def. U.S.’s Reply]; Finley Admin. Br., Def. U.S.’s Reply
Supp. Mot. Dismiss Ex. B, DN 32-2).
5
Specifically, the United States points to “a legal brief from 2007 claim[ing] that COE misstated
facts and offered the conclusion that there was then ‘not a single scrap of documentary evidence
that supports COE’s post hoc letters that the Programs in issue . . . were not duly and fully
accredited by COE in June 2004.’” (Def. U.S.’s Reply 4 (quoting Pl.’s Admin. Claim 41, DN
26-3)). Further, the findings of the bankruptcy court, issued in July 2012, included the Decker
Trustee’s allegation that COE had “intentionally or negligently made ‘factually erroneous
statements’ to the [ED] that [COE] ‘had not approved three Decker College degree programs”
and the conclusion that the statements by COE to the ED regarding Decker’s non-accreditation
“were false insofar as they asserted that [Decker] had not been approved to offer the Programs
through distance education.” (Am. Compl. Ex. B, at 2, 18-19, DN 5-6). The government
contends that “[t]his evidence defies Plaintiff’s claim that he was reliant upon a brief from a
government attorney [in 2014] to discover his cause of action and certainly does not support any
contention that information was concealed.” (Def. U.S.’s Reply 4).
11

quotation marks omitted) (citation omitted). To determine whether equitable tolling is available
to a plaintiff, a court considers five factors:
(1) the plaintiff’s lack of notice of the filing requirement; (2) the plaintiff’s lack of
constructive knowledge of the filing requirement; (3) the plaintiff’s diligence in
pursuing [his] rights; (4) an absence of prejudice to the defendant; and (5) the
plaintiff’s reasonableness in remaining ignorant of the particular legal
requirement.
Id. at 719 (citation omitted). These factors are not exhaustive, and not all are relevant in each
case; rather, the Court considers equitable tolling on a “case-by-case basis.” Cook v. Stegall, 295
F.3d 517, 521 (6th Cir. 2012) (citation omitted). “While ‘equitable tolling may be applied in
suits against the government, courts will only do so sparingly, and not when there has only been
a garden variety claim of excusable neglect.’” Jackson, 751 F.3d at 718-19 (quoting Chomic v.
United States, 377 F.3d 607, 615 (6th Cir. 2004)); see also Ayers v. United States, 277 F.3d 821,
829 (6th Cir. 2002) (holding equitable tolling not available where “diligent research” would have
resolved the plaintiff’s mistake). The plaintiff carries the burden of establishing his entitlement
to equitable tolling. Jackson, 751 F.3d at 718-19.
The Court agrees with the United States that Plaintiff has failed to meet his burden to
obtain equitable tolling. A federal bankruptcy judge concluded in July 2012 that COE had made
false statements regarding Decker’s accreditation status, and the Decker Trustee argued the same
position in those proceedings that Plaintiff now uses to ground his own lawsuit. (Am. Compl.
Ex. B, at 2, 18-19). Diligent research would have uncovered this decision in a timely manner,
especially given Plaintiff’s relationship to Decker and interest in its bankruptcy proceedings.
Thus, Plaintiff’s claims accrued in July 2014 at the latest; Plaintiff’s administrative claim in
February 2016 was therefore filed outside of time.

Plaintiff has not alleged any lack of

knowledge of the filing requirement, and his diligence pursuing his rights has been disproven.

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The Court therefore finds Plaintiff has failed to meet the requirements for suit under the FTCA,
and his claims will be dismissed.
3.

Sovereign Immunity

The United States next contends that Plaintiff’s claims of abuse of process and malicious
prosecution are barred because those claims “fall squarely within the FTCA’s express
exceptions[,]” meaning the United States enjoys sovereign immunity. (Def. U.S.’s Mem. 10-15).
By its own terms, the FTCA does not waive sovereign immunity for “(a)ny claim arising
out of . . . false imprisonment, false arrest, malicious prosecution (or) abuse of process . . . .” 28
U.S.C. § 2680(h). Exempted from this exception are the “acts or omissions” of a specific class
of investigative or law enforcement officer “who is empowered by law to execute searches, to
seize evidence, or to make arrests for violations of Federal law.” Id. Plaintiff contends that his
claim falls within this exemption. (Pl.’s Resp. Def. U.S. 6; Am. Compl. ¶ 38).6 If the United
States challenges jurisdiction, a plaintiff asserting the FTCA claim bears the burden of
demonstrating that subject matter jurisdiction exists. See Sharp v. United States, 401 F.3d 440,
443 n.1 (6th Cir. 2005).
The United States has provided the Court with the declaration of Ron Bennett
(“Bennett”), Director of the School Eligibility Service Group within the Program Compliance
Office in Federal Student Aid for the ED. (Bennett Decl., DN 26-5). Bennett’s declaration
includes a description of the responsibilities of the relevant division of the ED, and that its
employees have the “authority to request and obtain access to information or reports from
institutions to conduct audits, investigations, program reviews, or other reviews related to the
6

The Amended Complaint includes the assertion that the relevant ED employees involved in
Decker’s Program Review “are empowered by law to execute searches and seize evidence of
Decker’s facilities and records and therefore . . . Plaintiff’s claims for abuse of process and
malicious prosecution are permitted under 28 U.S. Code § 2680(h).” (Am. Compl. ¶ 38).
13

administration of” the federal financial aid programs. (Bennett Decl. ¶ 7). This authority is
derived from the school’s voluntary Program Participation Agreement, not from any power to
execute searches, seize evidence, or make arrests, which Bennett affirmatively stated neither of
the relevant employees had pursuant to their employment with the ED. (Bennett Decl. ¶¶ 8-10).
The United States further directed the Court’s attention to a handful of similar cases, all
of which “rejected Plaintiff’s absurd interpretation of [Section] 2680(h).” (Def. U.S.’s Mem. 1115 (discussing Equal Employment Opportunity Comm’n v. First National Bank of Jackson, 614
F.2d 1004, 1007-08 (5th Cir. 1980) (dismissing the plaintiff’s claim, as EEOC employees given
access to evidence for examining unlawful employment practices did not meet the plain meaning
of Section 2680(h)’s exemption); DeLong v. United States, 600 F. Supp. 331, 331-32 (D. Alaska
1984) (dismissing plaintiff’s claim where, after analyzing the responsibilities of marine guards,
the court concluded that they were not authorized to execute searches, seize evidence, or arrest
individuals for violations of federal law); Saratoga Savings & Loan Ass’n v. Federal Home Loan
Bank of San Francisco, 724 F. Supp. 683, 689 (N.D. Cal. 1989) (dismissing the plaintiffs’ claim
where the plaintiffs voluntarily agreed by contract to provide or allow access as required by
personnel of the Federal Home Loan Bank Board, so exemption did not apply); Vanderklok v.
United States, 142 F. Supp. 3d 356, 360-63 (E.D. Pa. 2015) (analyzing cases concluding
screeners for the Transportation Security Administration do not fall within Section 2680(h)’s
exemption, and agreeing))). The United States argues that the employees named by Plaintiff do
not fall within Section 2680(h)’s exemption under the relevant case law, especially because
“[t]he limited powers granted . . . [to the ED] employees were those to which Decker College
consented by way of its Program Participation Agreement.” (Def. U.S.’s Mem. 15).

14

Plaintiff responds by directing the Court’s attention to Millbrook v. United States, 569
U.S. 50 (2013), which he contends applies, as the Court decided “that law enforcement
‘employment’ duties are not limited to searches, seizures of evidence, or arrests, and as such the
petitioner can sue.” (Pl.’s Resp. Def. U.S. 6). In fact, Millbrook is inapposite, as it dealt with the
earlier “acts or omissions” language of Section 2680(h), rather than the class of officer to whom
the provision applies. Id. at 54-57.
The Court agrees with the United States that the ED employees at issue do not fall within
Section 2680(h)’s exemption, as they are not “empowered by law to execute searches, to seize
evidence, or to make arrests for violations of Federal law,” and any authority they possessed
resembling those enumerated functions was expressly derived from the Program Participation
Agreement between Decker and the ED. Plaintiff’s abuse of process and malicious prosecution
claims therefore fall within the FTCA’s exceptions, and this Court lacks jurisdiction to hear
them.
4.

Failure to Exhaust Administrative Remedies

The government next argues that Plaintiff’s claims for abuse of process and malicious
prosecution should be dismissed because Plaintiff failed to exhaust his administrative remedies.
(Def. U.S.’s Mem. 15-16).
In order to maintain a lawsuit against the United States under the FTCA, a plaintiff must
first exhaust administrative remedies. In relevant part, the statute provides:
An action shall not be instituted upon a claim against the United States for money
damages for injury or loss of property or personal injury or death caused by the
negligent or wrongful act or omission of any employee of the Government while
acting within the scope of his office or employment, unless the claimant shall
have first presented the claim to the appropriate Federal agency and his claim
shall have been finally denied by the agency in writing and sent by certified or
registered mail.

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28 U.S.C. § 2675(a). The Sixth Circuit has held that the exhaustion requirement under the FTCA
is jurisdictional and a plaintiff’s failure to exhaust prior to filing suit requires dismissal for lack
of jurisdiction. Bumgardner v. United States, 469 F. App’x 414, 417 (6th Cir. 2012) (citing
Joelson v. United States, 86 F.3d 1413, 1422 (6th Cir. 1996) (“exhaustion requirement [of
Section 2765(a) is jurisdictional”); Schaffer by Schaffer v. A.O. Smith Corp., No. 93-3764, 1994
U.S. App. LEXIS 26841, at *7-8 (6th Cir. Sept. 21, 1994) (“[Section 2675(a) ] requires that
exhaustion must be achieved in advance of the federal tort suit, not merely in conjunction with
it.” (citation omitted)); Buchanan v. United States, 102 F. Supp. 3d 935, 943-44 (W.D. Ky.
2015). Further, the requirements of Section 2675 are met under Sixth Circuit precedent if the
claimant gives the agency written notice of his claim sufficient to enable the agency to
investigate, and places a value on his claim. Douglas v. United States, 658 F.2d 445, 447 (6th
Cir. 1981) (citations omitted).
The United States argues that, as Plaintiff’s administrative claim claimed only
“negligence, and lies” as his theories of liability, the government was not placed on notice that he
would bring abuse of process or malicious prosecution claims, especially given the legal
distinction between claims of negligence and defamation as compared to malicious prosecution
and abuse of process. (Def. U.S.’s Mem. 16; Def. U.S.’s Reply 7-9). Plaintiff avers that he did
not have to state a specific cause of action in his administrative claim, and that this case relies on
the facts and exhibits presented therein. (Pl.’s Resp. Def. U.S. 5 (citing Rise v. United States,
630 F.2d 1068 (5th Cir. 1980); Williams v. United States, 932 F. Supp. 357 (D.D.C. 1996))).
Under “basis of claim” on Plaintiff’s administrative claim form, the whole of Plaintiff’s
argument was as follows:
The Department of Education employees, Ralph Lobosco, Dvac Corwin of the
Kansas City, Missouri office negligence, and lies causing the Department and its
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employees to destroy my property Decker College. Recently FSA Attorney
Steven Finley offered in defense to the Office of Hearing and Appeals Judge
Robert G. Layton that Charles Mula and the staff of OPE Accredition [sic]
Division, along with Secretaries Spelling, and Duncan independantly [sic]
investigated and determined that Decker College was not properly accredited to
offer its Distant Education courses thus all of there [sic] negligence conspired to
destroy my property Decker College.
(Pl.’s Admin. Claim 2, DN 26-2). Attached to this form were: (1) slides of a presentation by
Goldman, Sachs & Co. from June 7, 2005 to Compass Educational Holdings (presumably
included for valuation purposes, as it includes slides of “Private Market Comparables” with the
“levered value” of other educational providers, though not Decker) (Pl.’s Admin. Claim 4, 41-42,
DN 26-2); and (2) what appears to be a draft of Decker’s brief, dated “November ___, 2007”,
apparently to be filed with the ED relating to Decker’s Request for Review of the Final Program
Determination issued March 31, 2006 by the Office of Federal Student Aid of the ED. (Pl.’s
Admin Claim 2-52, DN 26-3). The brief included a detailed discussion of the facts leading up to
and following the COE letter to the ED that Plaintiff now alleges caused the destruction of
Decker. (Pl.’s Admin Claim 6-31, DN 26-3).
In Rise, the Fifth Circuit specifically required that “a Federal Tort Claims Act suit can be
based on particular facts and theories of liability only when those facts and theories can be
considered part of the plaintiff’s administrative claim.” Rise, 630 F.2d at 1071. “[I]f the
Government’s investigation of [a plaintiff’s] claim should have revealed theories of liability
other than those specifically enumerated therein, those theories can properly be considered part
of the claim.” Id. The Court agrees with the United States that Plaintiff’s administrative claim
as submitted was insufficient to give written notice of his abuse of process and malicious
prosecution claims.

Plaintiff’s factual argument specifically referenced allegations of

“negligence, and lies” and the attachments do not reveal theories of liability related to abuse of

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process or malicious prosecution.

Plaintiff therefore failed to exhaust his administrative

remedies as to these claims, and they therefore must be dismissed for lack of jurisdiction.
5.

Plaintiff’s Malicious Prosecution Claim

The United States further avers that Plaintiff cannot prove the elements of his malicious
prosecution claim. (Def. U.S.’s Mem. 16-18). Plaintiff’s only substantive response to this
argument was to recite the elements of a malicious prosecution claim and state that he “believes
he has more than adequate[ly] alleged the claim of Malicious Prosecution.” (Pl.’s Resp. Def.
U.S. 4).
As stated above, malicious prosecution under Kentucky law has five elements, which
must be strictly complied with, as such actions are generally disfavored:
1)

2)
3)

4)
5)

the defendant initiated, continued, or procured a criminal or civil
judicial proceeding, or an administrative disciplinary proceeding
against the plaintiff;
the defendant acted without probable cause;
the defendant acted with malice, which, in the criminal context, means
seeking to achieve a purpose other than bringing an offender to justice;
and in the civil context, means seeking to achieve a purpose other than
the proper adjudication of the claim upon which the underlying
proceeding was based;
the proceeding, except in ex parte civil actions, terminated in favor of
the person against whom it was brought; and
the plaintiff suffered damages as a result of the proceeding.

Martin, 507 S.W.3d at 11-12; Hunt, 2008 Ky. LEXIS 234, at *11-12 (citation omitted); Prewitt
v. Sexton, 777 S.W.2d 891, 895 (Ky. 1989); Davidson, 202 S.W.3d at 602.
The government argues that none of the actions taken by the ED or its employees meet
the first element, as even a successful challenge to the ED’s determination that Decker was
ineligible for financial aid reimbursement does not provide a foundation for a malicious
prosecution claim. (Def. U.S.’s Mem. 17 (citing McMaster v. Cabinet for Human Res., 824 F.2d
518, 521 (6th Cir. 1987) (“The tort of malicious prosecution is based upon conduct by the
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defendant that directly results in judicial or quasi-judicial conduct against the plaintiff.”))). In
McMaster, the Sixth Circuit specifically rejected the plaintiffs’ claim, writing:
Plaintiffs’ argument would stand the law of malicious prosecution on its head. By
plaintiffs’ reasoning, a successfully challenged wrongful dismissal from a job
subject to a collective bargaining agreement, for example, would support not only
the standard claims against the employer or union or both, but also a claim for
malicious prosecution because the employee invoked internal administrative or
judicial proceedings for reinstatement or compensation. Similarly, every
successful defamation case would support a parallel cause of action for malicious
prosecution because the plaintiff is also entitled to institute proceedings to redress
injury to his reputation.
McMaster, 824 F.2d at 521-22. As the United States reasons, if the Court allowed Plaintiff’s
action, every successful challenge to a federal agency determination would give rise to a
malicious prosecution claim. (Def. U.S.’s Mem. 18). The Court agrees, and will dismiss
Plaintiff’s malicious prosecution claim.
6.

Failure to Timely Serve Process and to Name Proper Defendant to an
FTCA Action

The government finally argues that Plaintiff did not timely serve any named federal
defendant, and failed to name the proper defendant, the United States, in his initial complaint.
(Def. U.S.’s Mem. 20-23). Plaintiff’s original complaint was filed on December 20, 2016, his
amended complaint was filed on April 27, 2017, both naming the ED as a defendant, and the
United States notes that, to its knowledge, “Plaintiff did not attempt service of any complaint
until July 2017.” (Def. U.S.’s Mem. 20; Compl. 1; Am. Compl. 1). Plaintiff does not dispute
these facts, but contends that “[s]ubstance should control form, even in procedure[,]” given that
the “first amended complaint” served upon the United States “was almost exactly identical to the
original complaint and should be properly viewed as the original complaint, even though it bore
a different title.” (Pl’s Resp. Def. U.S. 7-8). Plaintiff argues in favor of “hapless claimant”
status, that the government’s argument is ineffective in light of Wong, and that “due to the

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extraordinary behavior of the Government[,] equitable tolling of 28 U.S.C. [§] 2401(b) is
applicable . . . .” (Pl’s Resp. Def. U.S. 7-8).
Fed. R. Civ. P. 4(m) requires that service be made upon a defendant within 90 days after
the complaint is filed with the Court. The filing of an amended complaint does not begin a new
90-day period for the purpose of service of a summons and complaint. See Harris v. City of
Cleveland, 7 F. App’x 452, 456 (6th Cir. 2001) (“A plaintiff cannot extend the service period
with respect to an already-named defendant by filing an amended complaint naming additional
defendants.” (citation omitted)). In the absence of a showing of good cause—for which the
burden of proof rests upon the plaintiff—failure to timely serve a defendant mandates dismissal.
Habib v. Gen. Motors Corp., 15 F.3d 72, 73 (6th Cir. 1994) (citations omitted).
“The FTCA clearly provides that the United States is the only proper defendant in a suit
alleging negligence by a federal employee.” Allgeier v. United States, 909 F.2d 869, 871 (6th
Cir. 1990) (citing 28 U.S.C. § 2679(a)). The Sixth Circuit has held that the “[f]ailure to name the
United States as a defendant in an FTCA suit results in a fatal lack of jurisdiction[,]” and naming
a federal agency in lieu of the United States does not cure this error. Id. (citations omitted).
The Court finds that Plaintiff’s argument regarding substance controlling form lacks just
that—substance. Plaintiff has offered no evidence supporting his claim for equitable tolling, and
has therefore failed to meet his burden to establish good cause to extend the required service
period. Furthermore, Plaintiff’s attorneys filed both his original and amended complaints which
failed to properly name the United States as a defendant and were not timely served, rendering
his “hapless claimant” argument inapplicable. The Court, for all of the reasons discussed above,
will thus dismiss Plaintiff’s claims against the United States.

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IV.

CONCLUSION

For the reasons outlined above, IT IS HEREBY ORDERED that Defendants’ Motions
to Dismiss (DN 13, 26) are GRANTED, and Plaintiff’s Complaint is DISMISSED WITH
PREJUDICE.

Greg N. Stivers, Judge
United States District Court
April 17, 2018

cc:

counsel of record
Jeffrey Woodcox, pro se

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