from the United States District Court for the Southern
District of Texas
JONES, BARKSDALE, and COSTA, Circuit Judges.
HAWKINS BARKSDALE, Circuit Judge:
at issue in this appeal by Kuwait Pearls Catering Co., WLL
(KPCC), from its action's being dismissed is whether the
political-question doctrine renders nonjusticiable a contract
dispute between Kellogg Brown & Root Svc., Inc. (KBR), a
general contractor supporting the Government's military
operations in Iraq, and KPCC, one of its subcontractors. At
issue is the 2010 contract for, inter alia,
KBR's leasing, with an option to purchase, a dining
facility (the facility) constructed by KPCC in Iraq. In 2011,
KBR informed KPCC the Government deemed the facility was
property belonging to the government of Iraq, under a 2008
security agreement between the two governments. KPCC alleges
KBR continued using the facility for another year, without
paying rent or purchasing it. This action requires construing
a contract and determining whether it was, inter
alia, breached; there is, inter alia, no
nonjusticiable political question. VACATED and REMANDED.
United States' military began operations in Afghanistan
shortly after the 11 September 2001 al Qaeda attacks in the
United States. To assist, in part, with those operations, the
Government issued contracts through its
logistical-civil-augmentation program (LOGCAP III) to private
entities, including its 14 December 2001 contract with KBR.
Under KBR's LOGCAP III contract, the Army issued orders
for services, primarily on a cost-reimbursement basis.
to the United States' invasion of Iraq in 2003, the
Government began issuing orders to KBR to perform support
services for the mission there, including base-life services
(BLS) for forward-operating bases (FOBs). KBR was contracted
to provide, inter alia, food services for dining
facilities at various FOBs in Iraq. KBR's BLS contracts
allowed it to subcontract services.
regard, KBR contracted in 2007 with KPCC for it to administer
food services at FOB Warrior (7) in Kirkuk, Iraq. The
complaint alleges: KPCC constructed a "removable"
facility after KBR's 2006 request; and, in 2007, KBR
began using the facility under the contract. After the
contract between KBR and KPCC expired, a new one was entered
in September 2010. This second contract (the contract) is at
the contract, KBR continued leasing the facility and
equipment necessary to operate it. KBR also held the option,
for leased assets, "at its sole discretion at any time
during the lease, [to] unilaterally opt to purchase the
Assets". If KBR exercised its option, "title to the
asset passe[d] to [KBR] upon full payment of the Purchase
Price minus lease payments". The facility, according to
KPCC's briefing-but without citation to the record-was a
"temporary structure that could be assembled and
disassembled as needed". Moreover, citing provisions of
the contract, KPCC asserts the contract provided for it to
deconstruct and remove, inter alia, the facility if
KBR did not exercise its purchase option.
complaint alleges the following occurred through the end of
2011. In 2010, after the contract was in effect, KBR
initiated negotiations with KPCC to purchase the facility,
but these talks fell through. By April 2011, however, KPCC
was informed by KBR of its intention to formally re-open the
purchase-discussion. This second round of negotiations
continued as late as July 2011. Again, no agreement was
reached. That November, KBR provided formal notice to KPCC,
not only that the Government no longer wished to purchase the
facility, but also that this decision was based on the
Government's determination the facility was "real
property", and, accordingly, was the property of the
Iraqi government pursuant to a security agreement between the
security agreement, executed 17 November 2008, took effect 1
January 2009, and governed the terms of the United
States' military withdrawal from Iraq, and the transition
to future security arrangements. Article five of the security
agreement settled the ownership of certain property as
between the two governments: "Iraq owns all buildings,
non-relocatable structures, as well as assemblies connected
to the soil that exist on agreed facilities and
areas, including those that are used, constructed,
altered, or improved by the United States Forces".
(Emphasis added.) As provided in the security agreement, the
"agreed facilities" to be returned to Iraq would be
"based on two lists": one was to take effect upon
entry of the security agreement; the second, no later than 30
June 2009. These two lists, however, are not part of the
record; and, at oral argument here, the parties represented
the lists have never been located.
asserts it first became aware of the Government's
position regarding the security agreement's application
to the facility in an October 2011 email to KBR from the
deputy program director for LOGCAP. (The email is an exhibit
to KBR's motion to dismiss.) Through email correspondence
with the Government, KBR initially pushed back against the
Government's position, and advised the reclassification
could result in a breach of the contract and liability in
excess of the purchase price. Ultimately, however, the
Government maintained its position, and KBR gave formal
notice to KPCC.
complaint alleges: KPCC was required by KBR to vacate the
facility in February 2012, without being allowed to remove
the structure; and KBR continued using the facility through
2013, while not making lease payments to KPCC during that
time period and denying its claim for reimbursement of the
cost of building the facility.
KPCC filed this action in Texas state court, KBR removed to
district court, and KPCC filed its first amended complaint,
subject to its motion to remand. In that complaint, KPCC
presented the following three claims: breach of contract;
fraud; and promissory estoppel.
support of the breach-of-contract claim, the complaint
provides: KPCC "entered into a valid and binding
agreement" with KBR; it breached the contract when it
"exercised its option to purchase the . . .
facility"; and it "refused and continues to refuse
to pay for the . . . facility", despite
"continu[ing] to utilize the facility and refus[ing] to
allow KPCC to take the facility and its equipment back to
Kuwait". The complaint maintains KPCC suffered damages
"[a]s a result" of this claimed breach, as well as
"because KBR unlawfully took the building and continued
to use it".
regard to fraud, the complaint states: KBR's
representation in 2011 that "it would exercise the
option to purchase the building" under the contract
"was material and false"; KBR "made the
representation at a time it knew the representation was false
or . . . recklessly as a positive assertion without knowledge
of its truth . . . with the intent KPCC would act upon
it"; and, in reliance on KBR's representation, KPCC
negotiated for the sale of the facility, "instead of
preparing to demobilize the facility in advance of the end of
the contract". Additionally, the complaint maintains:
"KBR's continued reliance on [the security
agreement] means that in 2010 [when the contract with KPCC
was entered] its promises to purchase the [f]acility were
false and/or made with reckless disregard for the
truth". The complaint claims KPCC suffered damages as a
result of its reliance on KBR's fraudulent
promissory-estoppel claim, the complaint provides: if the
facility is subject to the security agreement, it became the
property of Iraq in June 2009, and, therefore, the contract
"fails for lack of mutuality"; and "KPCC
relied on KBR's promises to lease and purchase the
[f]acility to its detriment . . . [because] KPCC could have
removed the facility in 2010, or earlier".
moved to dismiss on numerous grounds, including
nonjusticiability pursuant to the political-question doctrine
articulated in Baker v. Carr, 369 U.S. 186 (1962),
and the related act-of-state doctrine. It also asserted
derivative immunity under Yearsley v. W.A. Ross Const.
Co., 309 U.S. 18 (1940).
very detailed and comprehensive opinion, the district court
denied remand and granted KBR's motion to dismiss.
Kuwait Pearls Catering Co., WLL v. Kellogg Brown &
Root Svcs., Inc., No. 4:15-cv-754, 2016 WL 1259518, at
*14, *22 (S.D. Tex. 31 Mar. 2016). The court stated in
dicta: "[T]he government contract defense, the
political question doctrine . . . and the act of state
doctrine all apply under the facts here to preclude the
[c]ourt from ruling on the issues in this case".
Id. at *22. Ultimately, however, the court based its
decision on "only the political question doctrine, in
which the act of state doctrine is grounded[, ] . . . [and
which] deprives the [c]ourt of subject matter jurisdiction so
as to trigger application of [Federal Rule of Civil
Procedure] 12(b)(1)". Id. Accordingly, the
court dismissed the complaint, without prejudice, "based
on the political question and act of state doctrines".
challenges only the dismissal; in other words, the
remand-denial is not contested. As for the dismissal, KPCC
presents two challenges: its claims do not involve a
nonjusticiable political question; and the act-of-state
doctrine does not apply. It maintains, additionally, KBR is
not entitled to derivative sovereign immunity. Although KBR
abandons the act-of-state doctrine as a basis for affirmance,
it counters that a nonjusticiable political question is
involved, and that derivative immunity presents an
alternative basis for affirmance.
12(b)(1) dismissal is reviewed de novo, taking the
well-pled factual allegations of the complaint as true,
viewed in the light most favorable to plaintiff.
E.g., Lane v. Halliburton, 529 F.3d 548,
557 (5th Cir. 2008). The district court's factual
findings are reviewed for clear error; its conclusions of
law, de novo. Id. KPCC, as the party
asserting jurisdiction, bears the burden of establishing it.
E.g., Ramming v. United States, 281 F.3d
158, 161 (5th Cir. 2001).
considering a Rule 12(b)(1) motion, a court may find a
plausible set of facts by considering any of the following:
(1) the complaint; (2) the complaint, supplemented by
undisputed facts evidenced in the record; or (3) the
complaint, supplemented by undisputed facts, plus the
court's resolution of disputed facts. Lane, 529
F.3d at 557. The third approach is utilized in this instance.
In short, "we must determine by viewing the allegations
in the most favorable light, whether [KPCC] can prove any
plausible set of facts that would permit recovery against KBR
without [, inter alia, ] compelling the court to
answer a nonjusticiable political question".
political-question doctrine forecloses as nonjusticiable
actions which would improperly require judicial review of
decisions exclusively within the purview of the political
branches of government. See Baker, 369 U.S. at 210-
11. The Court's Baker analysis requires a
"discriminating inquiry into the precise facts and
posture of the particular case", rather than
"semantic cataloguing" of issues as implicating
"foreign policy" or "national security".
Lane, 529 F.3d at 558 (quoting Baker, 369
U.S. at 216). To that end, the Court prescribed six factors
for determining whether a nonjusticiable political question
(1) "a textually demonstrable constitutional commitment
of the issue to a coordinate political department";
(2) "a lack of judicially discoverable and manageable
standards for resolving it";
(3) "the impossibility of deciding without an initial
policy determination of a kind clearly for nonjudicial
(4) "the impossibility of a court's undertaking the
independent resolution without expressing lack of the respect
due coordinate ...