Foreign Subcontractor Has Standing to Sue Government for Fifth Amendment Taking; Paktin Construction Company v. United States, COFC No. 19-1817

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Government’s motion to dismiss a Fifth Amendment takings claim is dismissed. The plaintiff, a subcontractor on a government project in Afghanistan, alleged the government had taken its equipment. The government argued that plaintiff could not assert a Fifth Amendment claim because it was a foreign corporation that lacked standing to sue the government. The court found that the plaintiff, through it work as a government contractor, had established significant connections with the United States, which gave the company standing to sue for a Fifth Amendment violation. The government also alleged that the plaintiff’s claim was barred by the statute of limitations. But the court, applying the accrual suspension rule, found that the plaintiff’s claim was inherently unknowable at the time it accrued. Going from the date the plaintiff actually knew of its claim, the suit was fell within the limitations period.

Paktin Construction is an Afghan company. Between 2004 and 2006, Paktin worked as a subcontractor on US-AID funding projected. Between 2007 and 2011, Paktin worked as a primary contractor on several U.S. projects. The government had recognized the quality of Paktin’s work on those projects in letters of recommendation.

In 2011, the Army Corps of Engineers entered a contract with Supreme Ideas-Highland Al Hujaz JV (SI-HAH) for a construction project. SI-HAH hired Paktin to work as a subcontractor on the project. Pursuant to the subcontractor agreement, Paktin moved supplies and equipment on to the worksite.

But a few months into the project, the Corps ordered SI-HAH to stop work on the project. SI-HAH told Paktin to vacate the premises. SI-HAH also told Paktin to leave its equipment on the site while until an inventory procedure had been arranged with the Corps. Paktin did as instructed.

Over a year later in July 2013, Paktin had still not been able to retrieve its equipment. Paktin asked the government about its equipment. The government said Paktin could remove some its equipment from the site. When Paktin’s CEO went to the site to remove its equipment, government personnel told him he could not remove the equipment and that he would be arrested if he tried.

Over the next few months, Paktin attempted to communicate with military personnel about the equipment. But the company got the run-around with officials stating they would contact the person up the food chain and get back to Paktin.

In December 2013, the Corps informed Paktin that It was investigating the matter and that it would return the equipment by January 2014. Later, however, the Corps informed Paktin that it had given the company’s equipment to the Afghan National Army. The Corps told Paktin that it “should not ask about this matter anymore.”

In November 20198, Paktin filed a suit against the government in the Court of Federal Claims seeking just compensation under the Fifth Amendment for the value of the equipment taken by the Corps. The government moved to dismiss the suit. The government argued that Paktin’s suit was barred by the six-year statute of limitations. As an alternative argument, the government argued that Paktin was a foreign company that did not have standing to sue the United Stated for a violation of the Fifth Amendment.

The court first addressed the standing argument. The protections offered by the Fifth Amendment are limited when claims involve a foreigner alleging a taking outside the territorial jurisdiction of the United States. When a plaintiff alleging a Fifth Amendment violation is a foreign national and seeks restitution for a taking that occurred outside of the United States, the plaintiff must demonstrate “significant connections” to the United to establish standing.

The government argued that Paktin did not have sufficient connections with the U.S. to assert a Fifth Amendment claim because the company did not have a direct relationship with the government. The court, however, found that Paktin’s alleged injury stemmed from a construction project in which Paktin was a subcontractor approved by the Corps. Paktin attended and participated in weekly meetings with the Corps. The company’s job site was subject to control by the government, and its work had to be inspected and approved by the government. The court found that this was sufficient to establish a direct relationship with the government.

What’s more, the court noted that Paktin had a history of connections with the government. It had worked as a subcontractor on various US-AID projects. The company had been a prime contractor for the government on a variety of projects, and the government had specifically recognized the quality of Paktin’s work. Between 2007 and 2011, Paktin was in direct privity with the government and was a preferred vendor for the United States for construction projects in Afghanistan. This long-standing relationship also satisfied the “substantial connections” test.

The government argued that to receive constitutional protections, a plaintiff must have substantial connections such that the plaintiff is part of the U.S. community. The court reasoned that it didn’t need to determine whether Paktin was part of the U.S. community, but the court noted that Paktin had worked on at least 15 contracts with the government between 2004 and 2012. The government had made a point of recognizing the quality of Paktin’s work. This demonstrated that the government acknowledged that Paktin had contributed to government projects. The court opined that this indicated Paktin was part of the U.S. community.

Next, the court addressed the government’s statute of limitations argument. Under 28 U.S.C. § 2501, a plaintiff has six years, from the time the right of action accrues, to file a civil action against the government. The government argued that Paktin’s takings claim had accrued in July 2013. At that point, the government contended, its interference with Paktin’s property rights was open and notorious, so the company should have had notice of the taking. Paktin, however, only filed suit in November 2019, which was more than six year after the alleged taking.

But the court noted that under the accrual suspension rule, a claim against the United States will be suspended when the accrual date has been ascertained, but the plaintiff does not know of the claims. It applies when the plaintiff’s injuries are inherently unknowable at the time the cause of action accrues.

While the government believed that Paktin’s claim had accrued in July 2013, the court noted that throughout August and September 2013, Paktin had making continuous efforts to recover its property. In response to these efforts, the government made inconclusive statements, indicated that it was investigating the matter. This demonstrated that at least through the Fall of 2013, the taking of Paktin’s property was inherently unknowable. The claim was not knowable until December 2013 when the government told Paktin that it had given the company’s property equipment to the Afghan Army. Thus, under the accrual suspension rule, Paktin’s claim fell within the statute of limitations.

Paktin is represented by Daniel Marino and Tillman Finley of Marino Finley LLP. The government is represented by Miles Karson, Robert E. Kirschman, Jr., and Kenneth Dintzer of the Department of Justice as well as James Van Debergh of the Army Corps of Engineers.

COFC - Patkin Construction