Davinci Aircraft, Inc. v. United States of America et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.November 28, 2016

i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EILEEN M. DECKER United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division ROBYN-MARIE LYON MONTELEONE Assistant United States Attorney Chief, General Civil Section JUSTIN A. OKUN (SBN 230954) Assistant United States Attorney Federal Building, Suite 7516 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-7354 Facsimile: (213) 894-7819 E-mail: Justin.Okun@usdoj.gov Attorneys for Defendant United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION DaVINCI AIRCRAFT, INC., Plaintiff, v. UNITED STATES OF AMERICA; MICHAEL CHRISTMAS, an individual; RODNEY LEWIS, an individual; and DOES 1 Through 10, Inclusive, Defendants. Case No. 2:16-cv-05864 CAS (JCx) DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Hearing on Motion Date: January 9, 2017 Time: 1:30 p.m. Place: Courtroom 8D - First Street Honorable Christina A. Snyder United States District Judge Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 1 of 9 Page ID #:60 ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO DISMISS PLEASE TAKE NOTICE that, on January 9, 2017, at 1:30 p.m., or as soon thereafter as may be heard, in Courtroom 8D of the First Street Courthouse, located at 350 W. First Street, Los Angeles, California, defendant United States of America (“United States”) will, and hereby does, move to dismiss this action pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). This Motion is based on this Notice of Motion and Motion, the attached Memorandum of Points and Authorities, and such other evidence or argument as the Court may consider. This Motion is made following the conference of counsel pursuant to Local Rule 7-3, which took place over November 9-16, 2016. Respectfully submitted, Dated: November 28, 2016 EILEEN M. DECKER United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division ROBYN-MARIE LYON MONTELEONE Assistant United States Attorney Chief, General Civil Section /s/ Justin A. Okun JUSTIN A. OKUN Assistant United States Attorney Attorneys for Defendant United States of America Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 2 of 9 Page ID #:61 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND PROCEDURAL BACKGROUND Plaintiff has brought a complaint for damages against the United States, Special Agent Michael Christmas of the Air Force Office of Special Investigations, in his official capacity, Captain Rodney Lewis, an Air Force contracting officer,1 in his official capacity, and unnamed defendants for five causes of action: (1) fraud, (2) misrepresentation, (3) conspiracy, (4) breach of an implied contract, and (5) conversion. (Doc. 1, ¶¶ 8-10.) Plaintiff purports to bring the suit pursuant to the Federal Tort Claims Act as well as the Fourth and Fifth Amendments to the Constitution. (Doc. 1 ¶ 1.) The crux of the complaint is that the seizure of 10 antennas by the Department of the Air Force pursuant to 18 U.S.C. § 793(d)2 of the Espionage Act was an unlawful seizure and the property should be returned or Plaintiff should receive fair market value for the property, which Plaintiff alleges is $1,250,000. Despite Plaintiff’s characterizations of its suit as comprising five separate causes of action sounding in tort, Plaintiff has in essence brought a takings claim which, under the Tucker Act, must be brought before the Court of Federal Claims. 28 U.S.C. § 1491(a)(1). II. LEGAL STANDARD A motion to dismiss under Federal Rule of Civil Procedure (“Rule”) 12(b)(1) challenges the court’s subject-matter jurisdiction over the asserted claims. Fed. R. Civ. 1 Because Plaintiff has sued the two named federal employee defendants in their official capacity only (Doc. 1 ¶¶ 9-10), undersigned counsel represents the United States only. See Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985) (“Thus, a suit against [federal] employees in their official capacity is essentially a suit against the United States.”) Notably, Plaintiff has attempted to serve named defendant Captain Rodney Lewis by certified mail pursuant to Rule 4(i)(2). (Declaration of Justin A. Okun ¶ 2.) Rule 4(i)(2) allows service by certified mail of a “United States officer or employee sued only in an official capacity.” Fed. R. Civ. P. 4(i)(2). In contrast, Rule 4(i)(3) mandates personal service of a United States officer or employee sued in his or her individual capacity. Fed. R. Civ. P. 4(i)(3). No attempt has been made to serve defendant Special Agent Michael Christmas. (Okun Decl. ¶ 3.) 2 Title 18 U.S.C. § 793(d) makes it unlawful for anyone having lawful possession of an “instrument” or “appliance” “relating to the national defense” to refuse to surrender possession thereof “on demand” by an “officer or employee of the United States entitled to receive it.” Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 3 of 9 Page ID #:62 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 P. 12(b)(1). It is the plaintiff's burden to prove jurisdiction at the time the action is commenced. Tosco Corp. v. Communities for Better Environment, 236 F.3d 495, 499 (9th Cir. 2001). “Dismissal for lack of subject matter jurisdiction is appropriate if the complaint, considered in its entirety, on its face fails to allege facts sufficient to establish subject matter jurisdiction.” In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 546 F.3d 981, 984-85 (9th Cir. 2008). However, a court considering a Rule 12(b)(1) motion to dismiss is not limited to the pleadings, McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988), but may rely on extrinsic evidence to resolve factual disputes relating to jurisdiction. St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). Rule 12(b)(6) provides for the dismissal of a complaint that fails “to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). When ruling on a motion made pursuant to Rule 12(b)(6), a court may consider not just the contents of the complaint but also “evidence on which the complaint ‘necessarily relies’ if: (1) the complaint refers to the document; (2) the documents is central to the plaintiff’s claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). Indeed, such evidence can serve to fatally undermine Plaintiff’s allegations. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001), amended by 275 F.3d 1187 (2001). III. ARGUMENT A. Plaintiff fails to state claims for negligence, misrepresentation, and conspiracy and/or this Court lacks subject matter jurisdiction over such claims. As sovereign, the United States is immune from suit except to the extent that it consents to be sued. Dep’t of the Army v. Blue Fox, Inc., 525 U.S. 255, 260, 119 S. Ct. 687, 142 L. Ed. 2d 718 (1999); United States v. Mitchell, 445 U.S. 535, 538, 63 L. Ed. 2d 607, 100 S. Ct. 1349 (1980). Statutes involving “the Government’s consent to be sued must be construed strictly in favor of the sovereign and not enlarged . . . beyond Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 4 of 9 Page ID #:63 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 what the language requires.” United States v. Nordic Village, Inc., 503 U.S. 30, 33, 117 L. Ed. 2d 181, 112 S. Ct. 1011 (1992). The Federal Tort Claims Act (“FTCA”) “effects a limited waiver of sovereign immunity to allow certain common law tort claims to proceed against the United States.” Tritz v. United States Postal Serv., 721 F.3d 1133, 1140 (9th Cir. 2013). The FTCA does not permit suits for fraud, misrepresentation, or conspiracy involving fraud or misrepresentation. 28 U.S.C. § 2680(h). As the Ninth Circuit has stated, “claims against the United States for fraud or misrepresentation by a federal officer are absolutely barred by 28 U.S.C. § 2680(h),” and this includes conspiracy claims based on fraud or misrepresentation. Owyhee Grazing Ass’n, Inc. v. Field, 637 F.2d 694, 697 (9th Cir. 1981). This is particularly so where the plaintiff suffers an economic, as opposed to a personal, injury. Green v. United States, 629 F.2d 581, 584- 85 (9th Cir. 1980) (“. . . the misrepresentation exception precludes liability where the plaintiff suffers economic loss as a result of a commercial decision which was based on a misrepresentation by government consisting either of false statements or a failure to provide information which it had a duty to provide.”). Accordingly, Plaintiff’s claims for misrepresentation, fraud and conspiracy are barred under the FTCA. Plaintiff does allege in its conspiracy claim that defendants “knowingly conspired to induce Plaintiff to surrender its property without due process.” (Doc. 1 ¶ 57.) This could imply a claim for abuse of process, a claim permitted under the FTCA if the acts are committed by investigative or law enforcement agents, as alleged in Plaintiff’s complaint. 28 U.S.C. § 2680(h). However, under the facts alleged in the complaint, the abuse of process claim would be preempted by 28 U.S.C. § 2680(c), which bars any FTCA claim arising out of “the detention of any goods, merchandise or other property by . . . [a] law enforcement officer” unless “the property was seized for the purpose of forfeiture.” 28 U.S.C. § 2680(c); Ramirez v. United States, 604 Fed. Appx. 567, 567-68 (9th Cir. 2015). In this case, Plaintiff alleges that a special agent of the Air Force Office of Special Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 5 of 9 Page ID #:64 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Investigations (Doc. 1 ¶ 9; Doc. 1-1 at 13) seized goods, merchandise or other property, namely, 10 antennas. The letter authorizing the seizure specifically states that the seizure was made “pursuant to 18 USC 793 (d)” and “without prejudice to any claims by [Plaintiff] for their fair market value.” (Doc. 1-1 at 13.) Accordingly, the antennas were not seized for the purpose of forfeiture. Therefore, an FTCA claim based on abuse of process would be barred under 28 U.S.C. § 2680(c). Lastly, by stating that its suit is brought under the Fourth Amendment, Plaintiff appears to imply that it is perhaps alleging a constitutional tort against the two Air Force employees sued in their official capacity. (Doc. 1 ¶ 1.) However, the United States has not waived sovereign immunity so as to allow constitutional tort claims against it or its employees in their official capacities. See Consejo de Desarollo Economico de Mexicali v. United States, 482 F.3d 1157, 1173 (9th Cir. 2007) (constitutional tort action can be maintained against a defendant in his or her individual capacity only, and not in his or her official capacity). Id. As in Consejo, Plaintiff has sued federal employees in their official capacities. (Doc. 1 ¶¶ 9-10.) “Therefore, [this Court] lack[s] subject matter jurisdiction over [any alleged or implied constitutional torts] claims because the United States has not consented to its officials being sued in their official capacities” for such alleged constitutional torts. Consejo, 482 F.3d at 1173. B. This Court lacks subject matter jurisdiction over Plaintiff’s claims for breach of an implied contract and conversion. The Court of Federal Claims has exclusive jurisdiction over civil actions against the United States founded upon any implied contract with the United States where alleged damages are in excess of $10,000. 28 U.S.C. §§ 1346(a)(2), 1491(a)(1). Here, Plaintiff’s fourth claim for relief seeks $1,250,000 for breach of an implied contract with the United States. Accordingly, this Court lacks subject matter over Plaintiff’s fourth claim for relief for this reason. The gravamen of Plaintiff’s suit is its fifth claim for relief based on conversion. Plaintiff seeks the alleged $1,250,000 fair market value of the seized antennaes as Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 6 of 9 Page ID #:65 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 compensation for their seizure or, in the alternative, for the antennaes to be returned to Plaintiff. (Doc. 1 at 15-17.) However, this is in its essence a takings claim under the Fifth Amendment in an amount greater than $10,000 and, therefore, must be brought before the Court of Federal Claims. 28 U.S.C. §§ 1346(a)(2), 1491(a)(1). First, as noted above, 28 U.S.C. § 2680(c) bars an FTCA claim arising out of “the detention of any goods, merchandise or other property by . . . [a] law enforcement officer” unless “the property was seized for the purpose of forfeiture.” 28 U.S.C. § 2680(c); Ramirez, 604 Fed. Appx. at 567-68. On this basis alone, Plaintiff’s conversion claim fails under the FTCA. See Foster v. United States, 522 F.3d 1071, 1074 (9th Cir. 2008) (“the FTCA maintains sovereign immunity for the entire universe of claims against law enforcement officers arising in respect of the detention of property”) (quoting Ali v. Fed. Bureau of Prisons 128 S. Ct. 831, 841, 169 L. Ed. 2d 680 (2008) (emphasis in original). Second, Plaintiff asserts, without any citation, that 18 U.S.C. § 793(d) was only “intended to be applied to actual cases of espionage and serious misuse of national security information.” (Doc. 1 at 2.) However, the few cases addressing the seizure of property pursuant to 18 U.S.C. § 793(d) contradict Plaintiff’s assertion. See Dubin v. United States (Dubin I), 153 Ct. Cl. 550 (1961); Dubin v. United States (Dubin II), 176 Ct. Cl. 702 (1966); AST/Servo Systems, Inc. v, United States, 196 Ct. Cl. 150 (1971). None of these cases involved espionage or serious misuse of national security information. In Dubin I, the Court of Claims held that the plaintiff was required to surrender the property in question even though the government had mistakenly sold the property and plaintiff was in lawful possession of it. Dubin I, 153 Ct. Cl. at 554. In Dubin II, the Court of Claims held that 18 U.S.C. § 793(d) could be used to seize property which had been sold as surplus and was declassified. Dubin II, 176 Ct. Cl. at 705-09. In AST/Servo, the Court of Claims again noted that 18 U.S.C. § 793(d) permitted seizure of property that was improperly sold as surplus. AST/Servo, 196 Ct. Cl. at 151-53. Notably, all three cases were brought before the Court of Claims and, in Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 7 of 9 Page ID #:66 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the Dubin cases, it was specifically stated that the suit was brought “under the Fifth Amendment to the Constitution” for “just compensation.” Dubin I, 153 Ct. Cl. at 551. Thus, contrary to Plaintiff’s assertion, seizure pursuant to 18 U.S.C. § 793(d) need not involve espionage or “serious misuse of national security information” and the appropriate forum for seeking compensation is the Court of Federal Claims. Lastly, Plaintiff’s characterization of the taking as a conversion cannot serve to transform the claim into a tort action cognizable under the FTCA. See Myers v. United States, 323 F.2d 580, 583 (9th Cir. 1963) (“The repeated characterization by the appellants of the takings by the United States as one of trespass and the commission of waste upon the lands in question does not convert the claims to cases sounding in tort and thereby confer jurisdiction on the District Court under the Federal Tort Claims Act.”). As in Myers, Plaintiff’s claim for conversion is “in the nature of inverse condemnation” and the Court of Federal Claims has exclusive jurisdiction over the claim. Id. This is highlighted by the fact that Plaintiff asserts it has brought its suit pursuant to the Fifth Amendment and seeks compensation in the form of “fair market value” for the antennas “taken” by Defendant. (Doc. 1 ¶¶ 1, 96.) // // // // // // // // // // // // Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 8 of 9 Page ID #:67 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. CONCLUSION For the foregoing reasons, Defendant respectfully requests that this action be dismissed. As the defects are not subject to cure, the dismissal should be with prejudice. See Taylor v. United States PTO, 551 Fed. Appx. 341 (9th Cir. 2013) (“The district court did not abuse its discretion by denying [Plaintiff] leave to amend his complaint to allege fraud because the United States and its agencies are immune from claims of fraud under the Federal Tort Claims Act, and, therefore, [Plaintiff]’s proposed amendment would have been futile.”). Respectfully submitted, Dated: November 28, 2016 EILEEN M. DECKER United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division ROBYN-MARIE LYON MONTELEONE Assistant United States Attorney Chief, General Civil Section /s/ Justin A. Okun JUSTIN A. OKUN Assistant United States Attorney Attorneys for Defendant United States of America Case 2:16-cv-05864-CAS-JC Document 12 Filed 11/28/16 Page 9 of 9 Page ID #:68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EILEEN M. DECKER United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division ROBYN-MARIE LYON MONTELEONE Assistant United States Attorney Chief, General Civil Section JUSTIN A. OKUN (Cal. Bar No. 230954) Assistant United States Attorney Federal Building, Suite 7516 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-7354 Facsimile: (213) 894-7819 E-mail: justin.okun@usdoj.gov Attorneys for Defendant United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION DaVINCI AIRCRAFT, INC., Plaintiff, v. UNITED STATES OF AMERICA; MICHAEL CHRISTMAS, an individual; RODNEY LEWIS, an individual; and DOES 1 Through 10, Inclusive, Defendants. Case No. 2:16-cv-05864 CAS (JCx) DECLARATION OF JUSTIN A. OKUN IN SUPPORT OF DEFENDANT UNITED STATES OF AMERICA’S MOTION TO DISMISS Case 2:16-cv-05864-CAS-JC Document 12-1 Filed 11/28/16 Page 1 of 4 Page ID #:69 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I, Justin A. Okun, hereby declare: 1. I am an Assistant United States Attorney for the Central District of California, and the attorney primarily responsible for representing the United States in this action. 2. Attached hereto as Exhibit A is a true and correct copy of a letter sent to defendant Captain Rodney Lewis, U.S. Air Force, at his work address at Elgin Air Force Base. As noted on the letter, counsel for Plaintiff sent it by certified mail and attempted service pursuant to Federal Rule of Civil Procedure 4(i)(2), which allows for service by certified mail to “a United States officer or employee sued only in an official capacity.” Fed. R. Civ. P. 4(i)(2). 3. Service has not been made on defendant Special Agent Michael Christmas, Air Force Office of Special Investigations. I declare under penalty of perjury pursuant to 28 U.S.C. § 1746 that the foregoing is true and correct. Executed this 28th day of November, 2016, at Los Angeles, California. /s/ Justin A. Okun JUSTIN A. OKUN Assistant United States Attorney Case 2:16-cv-05864-CAS-JC Document 12-1 Filed 11/28/16 Page 2 of 4 Page ID #:70 EXHIBIT A Case 2:16-cv-05864-CAS-JC Document 12-1 Filed 11/28/16 Page 3 of 4 Page ID #:71 September 6, 2016 BAUM LAW CORPORATION 1875 Century Park East, Suite 700 Los Angeles1 California 90067 Tel. 310 552 9100 •Fax 310 552 9101 David(t/lDBaumLaw .com Rodney Lewis, Captain, USAF Contracting Officer AFLCMC/EBJK (JASSM) 205 West D. Avenue, Suite 433 Eglin AFB, FL 32542 Re: Da Vinci Aircraft, Inc. vs. United States, et al. Case No.: 2:16-cv-5864 Capt. Lewis: Certified Mail. RRR You are a named individual in the above mentioned lawsuit. Pursuant to F.R.C.P. 4 (i)(2), enclosed are copies of the Summons, Complaint (with exhibits), as well as Notice of Case Assignment and Notice to Parties of court-directed ADR Program issued by the clerk in this matter: DB/mt Enclosures Very truly yours, BAUM LAW CORPORA TTON Case 2:16-cv-05864-CAS-JC Document 12-1 Filed 11/28/16 Page 4 of 4 Page ID #:72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EILEEN M. DECKER United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division ROBYN-MARIE LYON MONTELEONE Assistant United States Attorney Chief, General Civil Section JUSTIN A. OKUN (Cal. Bar No. 230954) Assistant United States Attorney Federal Building, Suite 7516 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-7354 Facsimile: (213) 894-7819 Email: justin.okun@usdoj.gov Attorneys for Defendant United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION DaVINCI AIRCRAFT, INC., Plaintiff, v. UNITED STATES OF AMERICA; MICHAEL CHRISTMAS, an individual; RODNEY LEWIS, an individual; and DOES 1 Through 10, Inclusive, Defendants. Case No. 2:16-cv-05864 CAS (JCx) [PROPOSED] ORDER GRANTING MOTION TO DISMISS Honorable Christina A. Snyder United States District Judge Case 2:16-cv-05864-CAS-JC Document 12-2 Filed 11/28/16 Page 1 of 2 Page ID #:73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [PROPOSED] ORDER GRANTING MOTION TO DISMISS On November 28, 2016, Defendant United States of America filed a Motion to Dismiss in the above-captioned action pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). Having considered the Motion and its supporting Memorandum of Points of Authorities, as well as the arguments in opposition to the Motion and all other matters properly presented to the Court, IT IS HEREBY ORDERED that Defendant’s Motion is GRANTED, and this action is dismissed with prejudice. Dated: CHRISTINA A. SNYDER UNITED STATES DISTRICT JUDGE Presented By: EILEEN M. DECKER United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division ROBYN-MARIE LYON MONTELEONE Assistant United States Attorney Chief, General Civil Section /s/ Justin A. Okun JUSTIN A. OKUN Assistant United States Attorney Attorneys for Defendant United States of America Case 2:16-cv-05864-CAS-JC Document 12-2 Filed 11/28/16 Page 2 of 2 Page ID #:74