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PAN TECH MGMT. CORP. v. UNITED STATES HUD

April 7, 1992

PAN TECH MANAGEMENT CORP. and DAVID M. GRAHAM, Plaintiffs, against THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT and MARK KLEIN, Defendants.


The opinion of the court was delivered by: DENIS R. HURLEY

MEMORANDUM AND ORDER

 HURLEY, District Judge

 The above-referenced action is before this Court to decide defendants' motion to dismiss the complaint.

 The complaint in this action arose out of an audit report (the "Report") conducted by the Office of the Inspector General ("OIG") of the United States Department of Housing and Urban Development ("HUD"). The Report reflected a limited review of costs billed by plaintiff Pan Tech to the Town of Babylon ("Babylon"). Babylon had contracted the planning and administrative services for its Community Development Block Grant ("CDBG") Program to plaintiff Pan Tech.

 The review revealed that plaintiff Pan Tech over-billed Babylon for overhead expenses and also billed Babylon for ineligible expenses. It further found that Babylon failed to comply with federal regulations by, among other things, improperly procuring Pan Tech's services by failing to provide for full and open competition; including a cost-plus-a-percentage-of-cost feature in the contract; and failing to review Pan Tech's billings to ensure they were reasonable.

 As a result, the Report recommended that Babylon be directed to, among other things, establish a competitive bidding process for awarding contracts and periodically review the contractor's accounts. It further recommended that the HUb Commissioner review and make an eligibility determination as to Pan Tech's overhead and salary charges, both of which were apparently in excess of regulatory limits. The Report concluded that Babylon should then reimburse the CDBG grant for any amounts determined to be excessive. In response to these findings, Babylon ceased doing business with Pan Tech.

 Plaintiffs' complaint alleges that HUD was negligent in failing to follow the accounting procedures set forth in the Code of Federal Regulations and that defendants intentionally inflicted emotional distress upon plaintiff David Graham, the president of Pan Tech. *fn1" Defendants assert that the complaint should be dismissed in its entirety for lack of subject matter jurisdiction, failure to name the proper party, and failure to state a claim for relief.

 According to defendants, this Court lacks subject matter jurisdiction because plaintiffs have improperly failed to exhaust their administrative remedies pursuant to the Federal Tort Claims Act (the "FTCA"). Plaintiffs do not contest that they are subject to the FTCA and thus must first exhaust administrative remedies, but they claim that they have done so.

 For the reasons stated below, the Court finds that plaintiffs have failed to exhaust their administrative remedies. Thus, defendants' motion to dismiss is granted on the ground of lack of subject matter jurisdiction. The Court does not address defendants' other grounds for dismissal, nor does the Court have the jurisdiction to do so. *fn2"

 II. Discussion

 Absent a waiver of immunity, the United States cannot be sued in tort. Partial waiver, as found in the Federal Tort Claims Act (the "FTCA"), exists wholly by virtue of congressional consent. The partial waiver specifically fixes the conditions pursuant to which a suit may be instituted. The controlling provision is 28 U.S.C. § 2675(a), which reads in pertinent part as follows:

 An action shall not be instituted upon a claim against the United States for money damages for injury or loss of property or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, unless the claimant shall have first presented the claim to the appropriate Federal agency and his claim shall have been finally denied by the agency in writing.

 28 U.S.C. § 2675(a). Thus, a claimant must seek administrative review prior to filing an action in ...


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