Janowsky v. United States

37 Cont. Cas. Fed. 76,148, 23 Cl. Ct. 706, 1991 U.S. Claims LEXIS 346, 1991 WL 149902
CourtUnited States Court of Claims
DecidedAugust 6, 1991
DocketNo. 90-3846 C
StatusPublished
Cited by15 cases

This text of 37 Cont. Cas. Fed. 76,148 (Janowsky v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Janowsky v. United States, 37 Cont. Cas. Fed. 76,148, 23 Cl. Ct. 706, 1991 U.S. Claims LEXIS 346, 1991 WL 149902 (cc 1991).

Opinion

[707]*707OPINION AND ORDER

TURNER, Judge.

This opinion supplements an earlier unpublished opinion. Janowsky v. United States, No. 90-3846 (Cl.Ct. April 19, 1991). In that earlier opinion, we raised sua sponte but did not rule on two potentially dispositive issues: (i) whether plaintiffs’ claim that the FBI breached an implied-in-fact contract to compensate them for their services and for the use of their business as a front for an undercover FBI investigation is subject to the Contract Disputes Act (CDA) and (ii) whether plaintiffs’ claim that the FBI took their business for law enforcement purposes without just compensation fails as a matter of law due to their allegation that they freely agreed to allow the FBI to use their business.

The parties have briefed these two issues and we now address them. We conclude that count I of the complaint (contract claim) is subject to the CDA. Accordingly, count I should be dismissed for lack of jurisdiction due to plaintiffs’ failure to file a certified claim with the FBI and to receive a final decision on the claim prior to bringing suit. We further conclude that count II of the complaint (inverse condemnation claim) should be dismissed for failure to state a claim upon which relief can be granted, because plaintiffs’ allegation that they agreed to assist in the investigation and to let the FBI use their business is sufficient to defeat their inverse condemnation claim as a matter of law.

I

A

The following statement of facts is based on the allegations of the complaint and on the procedural history of this dispute.

Plaintiffs Timothy and Peggy Janowsky own and operate Geno’s Vending in Gary, Indiana. In October 1984, Timothy Janow-sky agreed to assist the FBI in an undercover investigation into an alleged bribery and extortion ring involving corrupt police, local government officials and organized crime. In late 1984, Special Agents Michael Kahoe and Phillip Hultgen, working out of the Gary, Indiana FBI office, asked Janowsky to allow Geno’s Vending to be used as a front for the investigation. Through the business, Janowsky was to purchase and to distribute gambling equipment and to infiltrate the alleged crime ring.

Special Agent Kahoe promised that the FBI would either purchase Geno’s Vending at its fair market value at the conclusion of the investigation (less any rewards paid to Janowsky) or provide financing for a purchaser. In return Janowsky agreed to engage in gambling and other activities as directed by the FBI, to record surreptitiously his conversations with targets of the investigation and to testify before grand juries and at any trial of individuals charged as a result of the investigation.

Geno’s Vending was under FBI control and was run for the benefit of the FBI from December 1984 until early 1988. During this time the business could not be operated at a profit, and as a result of the investigation the value of the business was permanently reduced. In addition, the Ja-nowskys purchased gambling devices and made other expenditures at the FBI’s direction but were never reimbursed.

The Janowskys brought suit in a federal district court against the United States under the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 2671-2680. The Janow-skys alleged that the Special Agents in Gary negligently failed to obtain authority from FBI headquarters to reimburse them for expenditures during the investigation and negligently failed to guard against their financial loss.1

The government moved to dismiss the complaint on the ground that the FTCA excepts from its coverage actions arising out of misrepresentations by government officials. 28 U.S.C. § 2680(h). The district court granted the government’s motion, of[708]*708fering a twofold rationale. First, it held that to the extent plaintiffs alleged reliance on incorrect assurances by FBI agents that they would receive compensation, the claim was barred under the misrepresentation exception to the FTCA. Second, the court held that if the Janowskys did not rely on assurances of compensation but rather were volunteers, then the FBI’s failure to compensate them was not tortious as a matter of law. Janowsky v. United States, 713 F.Supp. 282 (N.D.Ind.1989). On appeal, the Seventh Circuit affirmed, agreeing with both aspects of the district court’s ruling. Janowsky v. United States, 913 F.2d 393 (7th Cir.1990).

B

After the Seventh Circuit’s ruling, the Janowskys brought the present action. In their two-count complaint, plaintiffs seek relief for the FBI’s breach of an implied-in-fact contract to compensate them for their services and for the use of their business or, in the alternative, just compensation for the taking of their business for public use.2

Defendant moved to dismiss the complaint in its entirety for lack of subject matter jurisdiction, arguing that the Special Agents in Gary lacked authority to bind the FBI to a contract and lacked authority to take Geno’s Vending for use in an undercover investigation. We ruled that defendant’s motion as it related to the contract claim was not directed to the court’s jurisdiction, but rather was directed to the sufficiency of the complaint; further, we converted the motion as it related to the contract claim to a motion for summary judgment since defendant had submitted matters beyond the pleadings relevant to the contract claim. Janowsky v. United States, No. 90-3846, slip op. at 3-4 (Cl.Ct. April 19, 1991) (unpublished). We went on to conclude that defendant’s motion to dismiss the contract claim was not ripe for decision for two reasons. First, plaintiffs argued persuasively that without discovery they could not respond meaningfully to defendant’s assertion that the Special Agents in Gary lacked authority to bind the FBI in contract. Second, there was a potential jurisdictional defect which we raised sua sponte, namely, whether plaintiffs were required to perfect their claim in accordance with the CDA prior to filing suit.3 Id. at 4-5. With respect to the inverse condemnation claim, we rejected the government’s argument that as a matter of law the Special Agents in Gary lacked authority to direct the operations of a private business in furtherance of an undercover investigation. Id. at 7-8. We raised sua sponte the question whether an inverse condemnation claim is stated when the property owners allege that they consented to the government’s use of their property. Id. at 8.

II

For purposes of determining whether we have jurisdiction over the contract claim, we take as true the allegations in the complaint. See Hamlet v. United States, 873 F.2d 1414, 1416 (Fed.Cir.1989) (in determining whether it has jurisdiction, the court must assume the allegations of the complaint to be true). Thus, we assume that plaintiffs agreed to allow Geno’s Vending to be used as a front for the FBI investigation, that in exchange Special Agent Kahoe promised that plaintiffs would be paid for their services and for the use of Geno’s Vending, that plaintiffs assisted in the investigation over a four-year period in accordance with their promise and that plaintiffs have not received any payment from the FBI.

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Bluebook (online)
37 Cont. Cas. Fed. 76,148, 23 Cl. Ct. 706, 1991 U.S. Claims LEXIS 346, 1991 WL 149902, Counsel Stack Legal Research, https://law.counselstack.com/opinion/janowsky-v-united-states-cc-1991.