The opinion of the court was delivered by: Honorable Ronald E. Bush U. S. Magistrate Judge
ORDER RE: DEFENDANT'S MOTION TO DISMISS (Docket No. 21) MEMORANDUM DECISION AND
Currently pending before the Court is Defendant's Motion to Dismiss (Docket No. 21). Having carefully considered the record, participated in oral argument, and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:
In 2009, Defendant United States of America, acting through the Rural Housing Service, an agency of the United States Department of Agriculture ("USDA"), (collectively "Defendant") made a home construction loan*fn2 to Plaintiffs Tim and Nancy Farrell ("Plaintiffs"). See Pls.' Second Am. Verified Compl., ¶ 5 (Docket No. 15). Plaintiffs developed a set of specifications for a house and contracted with Revelstoke Custom Homes, LLC ("Revelstoke") to construct their home. See id. Revelstoke requested approval from Defendant to participate in the Program; in turn, Defendant approved Revelstoke as a contractor. See id. at ¶ 6. According to Plaintiffs, however, Revelstoke was not a qualified builder and was not financially sound. See id. at ¶ 7.
Construction occurred from March 29, 2010 to June 21, 2010. See id. at ¶ 9. During this time, Plaintiffs claim that Revelstoke failed to perform in a workmanlike manner in a number of respects. See id. at ¶ 8. Still, Defendant advanced funds to Revelstoke. See id. at ¶¶ 8-9. Eventually, Defendant demanded that Revelstoke remedy the construction defects before it would advance any additional funds. See id. at ¶ 10. Revelstoke refused to remedy the defects and abandoned the job in July 2010. See id. at ¶ 11.
Revelstoke then filed a lien against the property for approximately $80,000. See id. Subcontractors followed suit, filing a lien against the property for approximately $54,000. See id. After these liens were filed, Defendant refused to provide the funds to finish the construction of Plaintiffs' house. See id. at ¶ 12.
In October 2010, Revelstoke filed suit in Idaho state court, foreclosing on its lien and naming all other lien holders. See id. at ¶ 13. Following that action's December 2010 removal to this District, U.S. District Judge B. Lynn Winmill dismissed Revelstoke's claims in December 2011 (Revelstoke failed to notify the Court how and by whom it would be represented within 21 days after its original attorney withdrew) without the Court addressing its substantive merits (including Defendant's then-pending motion for summary judgment speaking to lien priorities between Defendant, Revelstoke, and the subcontractors). See Revelstoke Custom Homes, LLC v. Tim and Nancy Farrell, et al., Case No. 2:10-cv-00599-BLW at Docket Nos. 40 & 47; see also See Pls.' Second Am. Verified Compl., ¶ 20 (Docket No. 15).
In June 2011, Plaintiffs submitted a Documentation of Construction Complaint/Request for Compensation for Construction Defects to the USDA, demanding that Defendant remedy Revelstoke's above-referenced construction defects. See Pls.' Second Am. Verified Compl., ¶ 14 (Docket No. 15). In an October 2011 administrative mediation of that complaint, the parties resolved their dispute, agreeing in part that: (1) the issue confronting the USDA and Plaintiffs will be tabled until the question of lien holders is determined by the Court, and (2) should the USDA be determined to be in a first position, the USDA will release the remaining funds available (approximately $68,000) to complete the construction of Plaintiffs' home. See id. at ¶¶ 15-17.
In November 2011, Plaintiffs submitted to the USDA a Tort Claim for Damage, contending that (1) Revelstoke never should have been qualified to do the work and (2) the USDA improperly managed the construction loan and inspection and payment processes. See id. at ¶ 19. In December 2011, following Judge Winmill's dismissal of Revelstoke's claims, Plaintiffs requested that Defendant begin the process of completing their home, presumably believing that the USDA was determined to be in "first position" in the foreclosure action, consistent with the October 2011 mediation's terms. See id. at ¶ 21.
In early 2012, Defendant informed Plaintiffs that it would not forward the remaining funds to complete the construction of Plaintiffs' home. See id. at ¶¶ 22-26. This action followed. Through their Second Amended Complaint and Request for Preliminary Injunction, Plaintiffs assert four causes of action against Defendant: (1) breach of the parties' mediated settlement agreement; (2) breach of the lending agreement; (3) negligence; and (4) negligent infliction of emotional distress. See id. at ¶¶ 27-42. Plaintiffs' also sought entry of a preliminary injunction, "requiring Defendant to release the remaining construction funds to allow [them] to complete their home to the point that would allow [them] to occupy the same . . . ." See id. at ¶ 2, p. 8.
Now, Defendant moves to dismiss Plaintiffs' claims against it, arguing that "[t]his Court lacks subject-matter jurisdiction over this case because it is based on contracts." See Def.'s Mem. in Supp. of Mot. to Dismiss, p. 1 (Docket No. 21, Att. 1). Specifically, Defendant argues that each of Plaintiffs' claims sound in contract and that, pursuant to the Tucker Act, claims based on a contract with the United States are enforceable only in the United States Court of Federal Claims. See id. at pp. 3-7.*fn3
The Tucker Act controls any action against the United States which is "at its essence" a contract claim. See 28 U.S.C. § 1491. District Courts and the Court of Federal Claims have concurrent jurisdiction over Tucker Act claims not exceeding $10,000; however, where a claim is for an amount in excess of $10,000, the Court of Federal Claims has exclusive jurisdiction. Here, Defendant moves for dismissal based on lack of subject-matter jurisdiction, arguing that Plaintiffs' claims are more accurately characterized as contract claims exceeding $10,000 -- not tort claims -- and that jurisdiction therefore lies in the Court of Federal Claims, not this Court.
The decision on Defendant's Motion to Dismiss turns upon whether Plaintiffs' claims (stemming from Defendant's alleged refusal to release construction funds pursuant to the parties' October 2011 mediated settlement agreement, and also couched in terms of negligence and negligent infliction of emotional distress) are sufficiently tied to a contract between the parties such that it may be said that such claims are "in substance a breach of contract claim and only 'incidentally and conceptually a tort.'" Darko v. United States, 646 F. Supp. 223, 227 (D. Mont. 1986) (quoting Woodbury v. United States, 313 F.2d 291, 295 (9th Cir. 1963)). With this in mind, if a claim is "concerned solely with rights created within the contractual relationship and has nothing to do with duties arising independently of the contract[,] the claim is founded upon a contract with the United States and is therefore within the Tucker Act and subject to its restrictions on relief." North Star Alaska v. United States, 14 F.3d 36, 37 (9th Cir. 1994) (citing North Side Lumber v. Block, 753 F.2d 1482, 1486 (9th Cir. ...