     In the United States Court of Federal Claims
                                         No. 94-522C
                                   (Filed: March 15, 2013)


************************
                               *
FIRST ANNAPOLIS BANCORP, INC., *                       Lack of Standing; Dismissal
                               *                       Without Prejudice; Award of
               Plaintiff,      *                       Costs; 28 U.S.C. § 1919; Rule 54;
                               *                       Prevailing Party; Congressional
          v.                   *                       Reference.
                               *
THE UNITED STATES,             *
                               *
               Defendant.      *
                               *
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      Dale A. Cooter, Cooter, Mangold, et al., 5301 Wisconsin Avenue, N.W., Suite 500,
Washington, D.C. 20015, for Plaintiff.

      Stuart F. Delery, Jeanne E. Davidson, Scott D. Austin, and Vincent D. Phillips,
Department of Justice, Commercial Litigation Branch, Civil Division, P.O. Box 480,
Washington, D.C. 20044, for Defendant. Brian A. Mizoguchi, Department of Justice,
Commercial Litigation Branch, Civil Division, P.O. Box 480, Washington, D.C. 20044, Of
Counsel.

 ____________________________________________________________________________

       MEMORANDUM OPINION AND ORDER DISMISSING ACTION AND
                DENYING DEFENDANT’S MOTION FOR COSTS
____________________________________________________________________________

WILLIAMS, Judge.

                                         Background

         This Winstar-related case comes before the Court following the United States Court of
Appeals for the Federal Circuit’s reversal of this Court’s award of $13,665,907 in restitution
damages, on the ground that Plaintiff lacked standing. First Annapolis Bancorp, Inc. v. United
States, 644 F.3d 1367, 1376 (Fed. Cir. 2011), rev’g 75 Fed. Cl. 263 (2007). Following the
issuance of the mandate, Defendant filed a Bill of Costs seeking $80,978.87. Plaintiff filed
Objections to Defendant’s Bill of Costs. At oral argument the Court requested supplemental
briefing on whether Plaintiff could cure its standing defect and whether the Court should dismiss
this action with or without prejudice.
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        In its supplemental briefing, Plaintiff did not contend that the standing defect was
curable. Instead, Plaintiff advised the Court that this litigation had taken a different turn in that
Plaintiff had begun the process of initiating a Congressional Reference case. As Plaintiff
represented:

       The resolution of [whether the dismissal should be with prejudice or without
       prejudice] traditionally depends on whether a plaintiff can cure its standing
       problem. If the standing problem can be cured, then the dismissal should be
       without prejudice to preserve to the plaintiff the opportunity to cure and bring its
       claim again. If the standing problem cannot be cured, then there is presumably no
       harm to a dismissal with prejudice because there is no further suit to be brought.

       This resolution of the issue in this case, however, does not lend itself to the
       application of such traditional principles. The Federal Circuit’s decision
       reversing this Court’s standing determination has thrown Bancorp into procedural
       quicksand. Because First Federal Savings and Loan Association of Annapolis
       (“First Federal”) no longer existed by the time FIRREA was passed, First Federal
       could not have brought a breach of contract claim based on the passage of
       FIRREA. Although the individual shareholders of Bancorp invested millions of
       dollars in Bancorp, they were not individually parties to any of the promises by
       the Government and they could not bring a claim. The F.D.I.C. eventually
       brought a claim, but its claim was dismissed. That left Bancorp as the only
       potential party. The only claim Bancorp could bring was a breach of contract
       claim because this Court, unlike the federal District Courts, does not have
       jurisdiction over equitable claims. . . . Thus, when the Federal Circuit held that
       Bancorp did not have standing to bring a breach of contract claim, it ensured that
       a claim to redress the Government’s wrongful actions could not be pursued to
       judgment as an Article III “case or controversy.”

       Given the foregoing, this case is appropriate for resolution by Congressional
       Reference. Sections 1492 and 2509 of Title 28 of the United States Code provide
       that the Congress may refer a bill to this Court to consider and determine
       equitable claims that a party may have and over which this Court would not
       otherwise have jurisdiction. Bancorp invested over $13,000,000 in return for
       what turned out to be broken promises by the Government. Justice requires that
       the Government return the money it took more than twenty-five years ago.

Pl.’s Supplemental Br. 1-3 (footnote omitted).

         The Government contends that “Bancorp’s current pursuit of a congressional reference in
no way alters the finality of the Federal Circuit’s dismissal for lack of jurisdiction.” Def.’s Resp.
3 (Feb. 6, 2013). From this, Defendant submits that because this action has reached finality, it is
appropriate to dismiss this action with prejudice and clear the way for awarding Defendant its
litigation costs.




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                                             Discussion

        Whether this action is dismissed with or without prejudice has significance for the
resolution of Defendant’s pending petition for costs. A dismissal with prejudice triggers the
application of Rule 54(d)(1), which states that the Court “should” award costs to the prevailing
party. On the other hand, where the Court dismisses an action without prejudice, 28 U.S.C. §
1919 applies and permits the Court to award “just costs” in actions dismissed for lack of
jurisdiction where there is no prevailing party. 28 U.S.C. § 1919 (2006); Otay Land Co. v.
United Enters. Ltd., 672 F.3d 1152, 1156 (9th Cir. 2012); see also Miles v. California, 320 F.3d
986, 988 n.2 (9th Cir. 2003) (“Where the underlying claim is dismissed for want of jurisdiction,
the award of costs is governed by 28 U.S.C. § 1919. Unlike Rule 54(d), § 1919 is permissive,
allows the district court to award ‘just costs,’ and does not turn on which party is the ‘prevailing
party.’”); Callicrate v. Farmland Indus., Inc., 139 F.3d 1336, 1340 n.8 (10th Cir. 1998)
(“[U]nlike costs awarded under Rule 54, costs awarded under § 1919 are not subject to a
presumption that they shall be awarded to a prevailing party.”) (citing Edward W. Gillen Co. v.
Hartford Underwriters Ins. Co., 166 F.R.D. 25, 27 (E.D. Wis. 1996)); Ericsson GE Mobile
Commc’ns, Inc. v. Motorola Commc’ns & Elecs. Inc., 179 F.R.D. 328, 334 (N.D. Ala. 1998)
(quoting the same authority).

        In its reversal and mandate, the Federal Circuit did not indicate whether this Court was to
dismiss this action with or without prejudice. However, the Federal Circuit has “repeatedly
emphasized that a dismissal for lack of standing should generally be without prejudice,
particularly when the defect [in standing] is curable.” Univ. of Pittsburgh v. Varian Med. Sys.,
Inc., 569 F.3d 1328, 1332 (Fed. Cir. 2009). “On occasion, however, a dismissal with prejudice is
appropriate, especially where ‘it [is] plainly unlikely that the plaintiff [will be] able to cure the
standing problem.’” Fieldturf, Inc. v. Sw. Recreational Indus., Inc., 357 F.3d 1266, 1269 (Fed.
Cir. 2004) (quoting H.R. Tech., Inc. v. Astechnologies, Inc., 275 F.3d 1378, 1385 (Fed. Cir.
2002)) (alterations in original).

         Plaintiff apparently concedes that technically it cannot cure its standing defect by refiling
its action in this forum or in alternative judicial fora due to jurisdictional obstacles. Nonetheless,
Plaintiff asks the Court to dismiss the action without prejudice and deny costs because it may
succeed on the merits of its claim in the Congressional Reference forum where the lack of
standing is not an impediment. Plaintiff’s point is well taken. In the Congressional Reference
setting, there is no requirement that there be an Article III case or controversy. See Wolfchild v.
United States, 77 Fed. Cl. 22, 28 (2007). Rather, in a Congressional Reference case, the Court of
Federal Claims is to provide a report to Congress for its use in deciding whether a private claim
warrants legislative relief. 28 U.S.C. § § 1492, 2509 (2006). It would be inappropriate to
dismiss this action with prejudice and award costs to Defendant where the merits of the
controversy remain undecided. As such, the Court deems it prudent to dismiss this action
without prejudice.

       Because Defendant is not considered a prevailing party when an action is dismissed
without prejudice, 28 U.S.C. § 1919, rather than Rule 54(d)(1), governs the instant cost dispute.
Section 1919 of Title 28 of the U.S. Code states: “Whenever any action or suit is dismissed in
any district court, the Court of International Trade, or the Court of Federal Claims for want of

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jurisdiction, such court may order the payment of just costs.” (emphasis added). While the
Federal Circuit has not addressed the scope of the Court of Federal Claims’ authority to award
costs under § 1919,1 the Ninth Circuit has recognized that in assessing whether a cost award
would be just, courts should consider what is most fair and equitable under the totality of the
circumstances. Otay Land Co., 672 F.3d at 1157.

        In determining whether it would be “fair and equitable” to award costs to a defendant
under § 1919, courts apply “a ‘case-by-case approach’ based on ‘the circumstances and equities
of each case.’” Id. (quoting 10 Charles Alan Wright, Arthur R. Miller, Mary Kay Kane &
Richard L. Marcus, Federal Practice and Procedure § 2668 at 230-31 (3d ed. 1998)). There is no
mechanical checklist a court must follow. Id. As the Ninth Circuit has cautioned, an award of
costs “cannot be presumed simply because a party was successful on a threshold ground and the
costs were incurred.” Id. at 1160. The mere fact that authority is now granted under Section
1919 does not mean that costs are mandated. Id. at 1158; see also Callicrate, 139 F.3d at 1340
n.8.

       Further, courts should consider whether a plaintiff asserted plausible, though mistaken,
grounds for jurisdiction in federal court. Otay Land Co., 672 F.3d at 1158 (“[T]he strength of
the plaintiff’s jurisdictional claim is a legitimate consideration, albeit not definitive,” in
determining “just costs” under § 1919.) (citing Ericsson GE, 179 F.R.D. at 334). Here, Plaintiff
made a “plausible” legal call when it named Bancorp as the plaintiff -- given that Bancorp had
infused $13 million into First Annapolis to permit the merger to go forward, and Plaintiff is
seeking restitution damages.

        Finally, and importantly here, an award of costs to a defendant may be “speculative and
premature” where a plaintiff who had claims dismissed in federal court advances the same claims
in another forum. Callicrate, 139 F.3d at 1342 (vacating cost award after a dismissal for lack of
diversity because plaintiff had filed an action in state court). Here, Plaintiff has represented that
it is pursuing a Congressional Reference matter seeking to recoup the same damages for the
same breach of contract -- a proceeding it can maintain even though its action in this Court was
dismissed for lack of standing. Wolfchild, 77 Fed. Cl. at 28. As such, an award of costs to
Defendant here would be premature given that the merits of Plaintiff’s claim remain undecided.

                                            Conclusion

       In accordance with the mandate of the Federal Circuit, this Court dismisses this action
without prejudice for lack of standing and denies Defendant’s request for costs pursuant to 28
U.S.C. § 1919.



       1
           In Johns-Manville Corp. v. United States, 893 F.2d 324, 327 (Fed. Cir. 1989), the
Federal Circuit reversed the Claims Court’s award of costs under § 1919 because the version of §
1919 then in effect did not mention the Claims Court -- only the Court of International Trade and
the district courts. However, Congress amended § 1919 in 1992, to specifically authorize the
Court of Federal Claims to award costs. See Federal Courts Administration Act of 1992, Pub. L.
No. 102-572, Title IX, § 908(a), (b)(1), 106 Stat. 4519 (1992).
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       The Clerk of the Court is directed to vacate the October 28, 2009 judgment and to
dismiss this action without prejudice.


                                               s/Mary Ellen Coster Williams
                                               MARY ELLEN COSTER WILLIAMS
                                               Judge




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