JIREH CONSULTING INC. (doing business as The Writing Company) v. United States

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
is not citable as precedent. It is a public record.
United States Court of Appeals for the Federal Circuit
05-5040
JIREH CONSULTING INC. (doing business as The Writing Company),
Plaintiff,
and
JERROLL M. SANDERS,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
___________________________
DECIDED: February 7, 2006
___________________________
Before GAJARSA, DYK and PROST, Circuit Judges.
PER CURIAM.
Jerroll M. Sanders, appearing pro se, seeks review of the decision of the United
States Court of Federal Claims ("Court of Claims"), Jireh Consulting, et al. v. United
States, No. 04-0046C (Fed. Cl. Oct. 22, 2004), dismissing her complaint for lack of
subject matter jurisdiction. We affirm.
BACKGROUND
On March 3, 1998, Jireh Consulting (doing business as The Writing Company or
“TWC”) and the Internal Revenue Service (“IRS”) entered into a contract for rewriting
IRS taxpayer notices. The IRS terminated the contract pursuant to a “termination for

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convenience clause” on February 24, 1999. Under the termination clause, the
government was required to pay TWC an amount representing costs incurred and
reasonable profit. TWC submitted a proposed amount of $526,802.07. The contracting
officer (“CO”), however, determined that amount was too high, and issued a final
determination on May 7, 2001, in the amount of $263,784.87.
Dissatisfied with the amount, TWC appealed the CO’s decision to the General
Services Board of Contract Appeals (“the Board”) on July 26, 2001. After twice failing to
meet deadlines for filing its complaint, TWC indicated that it “prefer[red] to have [the]
case adjudicated in [another] judicial forum.” J.A. at 3. The Board advised TWC that it
could seek dismissal, but that under the so called election doctrine, TWC might not be
able to pursue its claims in another forum. TWC never formally requested dismissal,
nor did it respond to the IRS’ subsequent discovery requests. The Board deemed
TWC’s failure to respond to discovery requests to be admissions, and denied TWC any
recovery, finding that the CO’s settlement was “fair and complete.”
Sanders, the president and sole shareholder of TWC, and TWC then filed a
complaint under the Tucker Act, 28 U.S.C. § 1491, in the Court of Federal Claims, on
January 16, 2004, seeking breach of contract damages and also alleging defamation
and other tortious conduct. The plaintiffs alleged that various government officials
sought to “terminate TWC’s contract” through “sabotage, fraud, slander and libel,
discrimination, tortious interference, and agency-wide abuse.” J.A. at 14-15. They
alleged, for example, that the government had launched fraudulent investigations
relating to various contrived charges; “implied that TWC was guilty of billing
improprieties”; and “insult[ed] . . . TWC’s performance without justification,” including by
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falsifying results of IRS’s inspections of TWC’s work product. J.A. at 23, 25. Sanders
also alleged that IRS’s termination of the contract under the termination clause was
“arbitrary and capricious.” J.A. at 29.
The Court of Federal Claims dismissed the action for lack of subject matter
jurisdiction. It held that it could not entertain TWC’s claims because “TWC, a corporate
plaintiff, may not appear pro se, and Plaintiff Sanders is not an attorney.” J.A. at 1, 6. It
also held that TWC’s contract claims were barred by the election doctrine because the
TWC had elected to pursue those claims before the Board. As for Sanders’ claims in
her individual capacity, the court held that her tort claims did not fall within the court’s
jurisdiction and that she had not been a party to the contract with the IRS. The court
also held that Sanders, the shareholder of TWC, did not have standing to assert breach
of contract claims on behalf of TWC.
Sanders then appealed to this court. She requested permission to represent
TWC, but her request was denied in an April 6, 2005, order that instructed Sanders that
she could not represent TWC in the appeal because she is not an attorney. The order
instructed Sanders to file a replacement brief confined to her individual claims. She
filed her replacement brief on October 17, 2005.
DISCUSSION
We review the Court of Claims' jurisdictional determination without deference.
Applegate v. United States, 25 F.3d 1579, 1581 (Fed. Cir. 1994).
Under RCFC 83.1(c)(8), “[a] corporation may only be represented by counsel.”
Sanders is not an attorney. Thus we limit our review to claims that Sanders asserts in
her individual capacity.
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Sanders’ individual claims sound in tort and contract. Insofar as her claims
sound in tort, they are barred by the well-settled rule that the Court of Federal Claims
does not possess jurisdiction to entertain tort claims. 28 U.S.C. § 1491(a)(1) (granting
the Court of Federal Claims jurisdiction over claims “not sounding in tort”); LeBlanc v.
United States, 50 F.3d 1025, 1030 (Fed. Cir. 1995).1
With respect to Sanders’ breach of contract claims, the contract at issue was
between TWC and the IRS, not between Sanders and the IRS. Thus Sanders was not
in privity of contract with the IRS. As a general rule, the "government consents to be
sued only by those with whom it has privity of contract." First Hartford Corp. Pension
Plan & Trust v. United States, 194 F.3d 1279 (Fed. Cir. 1999) (quoting Erickson Air
Crane Co. of Wash. v. United States, 731 F.2d 810, 813 (Fed. Cir. 1984)). In certain
cases, “[a] party standing outside of privity by contractual obligation stands in the shoes
of a party within privity.” However, “[a] shareholder lacks any such contractual
obligation.” Id. Accordingly, the so called shareholder standing rule “generally prohibits
shareholders from initiating actions to enforce the rights of the corporation . . . .”
Franchise Tax Bd. of Cal. v. Alcan Aluminium Ltd., 493 U.S. 331, 336 (1990); Algonac
Mfg. Co. v. United States, 428 F.2d 1241, 1249 (Ct. Cl. 1970). The rule is no different
for a sole shareholder. See, e.g., Algonac, 428 F.2d at 1249.
1 Sanders cites cases holding that the Court of Federal Claims has
jurisdiction over tortious breach of contract claims. See, e.g., CTA Inc. v. U.S., 44 Fed.
Cl. 684 (1999). However, the court only has jurisdiction over such cases when “the
substance of the claim is in contract.” Id. at 698 (internal quotation marks omitted); see
also, e.g., Gregory Lumber Co. v. United States, 9 Cl. Ct. 503, 518, 520, 525-26 (1986)
(tortious breach of contract styled as misrepresentation in the inducement is breach of
contract reviewable under Tucker Act). As discussed below, Sanders did not contract
with the federal government.
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Sanders appears to argue that her case falls within an exception to the rule
against shareholder standing that allows “a shareholder with a direct, personal interest
in a cause of action to bring suit even if the corporation's rights are also implicated.”
Franchise Tax Bd., 493 U.S. at 331. Although Sanders claims to have suffered “directly
and personally,” Pet. Br. at 2, she fails to allege any “direct injuries [that are]
independent of [her] status as [a] shareholder[ ],” as the exception requires. Franchise
Tax Bd., 493 U.S. at 336-37. We therefore agree with the Court of Federal Claims that
Sanders may not assert breach of contract claims stemming TWC’s contract with the
IRS.
We have reviewed Sanders’ remaining claims, including her claim that the trial
judge improperly failed to recuse herself, and find them to be without merit.
For the foregoing reasons, the judgment of the Court of Federal Claims is
affirmed.
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