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

NOTICE OF MOTION AND MOTION to Dismiss Case without Leave to Amend

C.D. Cal.March 20, 2017

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 SANDRA R. BROWN Acting 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 DAVID PINCHAS (SBN 230954) Assistant United States Attorney Federal Building, Suite 7516 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-2920 Facsimile: (213) 894-7819 E-mail: david.pinchas@usdoj.gov Attorneys for Defendant United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION DA VINCI 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. CV 16-05864 CAS (JCx) DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Hearing on Motion Date: April 17, 2017 Time: 10:00 a.m. Place: Courtroom 8D – First Street Courthouse Honorable Christina A. Snyder United States District Judge Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 1 of 10 Page ID #:182 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 NOTICE OF MOTION AND MOTION TO DISMISS PLEASE TAKE NOTICE that, on April 17, 2017, at 10:00 a.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 the First Amended Complaint (“FAC”) and the action against the United States 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 on March 1, 2017. Respectfully submitted, Dated: March 20, 2017 SANDRA R. BROWN Acting 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/ David Pinchas DAVID PINCHAS Assistant United States Attorney Attorneys for Defendant United States of America Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 2 of 10 Page ID #:183 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 On January 30, 2017, the Court granted the United States’ motion to dismiss the original complaint in this action. See Order Granting Motion (Dkt # 18.) With respect to Plaintiff’s claims for fraud, negligent misrepresentation and conspiracy involving fraud or misrepresentation, the Court noted that such claims against the United States are barred pursuant to 28 U.S.C. § 2680 (h), which sets forth an exception to the Federal Tort Claims Act’s (“FTCA”) waiver of the United States’ sovereign immunity. When § 2680 applies, the Court lacks subject matter jurisdiction over such claims. See Sabow v. United States, 93 F.3d 1445, 1451 (9th Cir. 1996). Accordingly, the Court dismissed Plaintiff’s claims arising from alleged fraud and misrepresentation for lack of jurisdiction. See January 30, 2017 Order at 6-7. The Court also dismissed Plaintiff’s claim for conspiracy related to abuse of process. Id. at 8-9. The Court reasoned that it lacked jurisdiction over Plaintiff’s claim pursuant to 28 U.S.C. § 2680(c), which strips the Court of jurisdiction for claims for loss arising out of the detention of property1 by any law enforcement officer. See Order at 9. The Court also found that Plaintiff’s conversion claim was similarly barred by § 2680(c). Id. In addition, the Court found that it lacked jurisdiction over Plaintiff’s breach of implied contract claim, finding that it could only be brought in the Federal Court of Claims. See Order at 10 (citing 28 U.S.C. § 1346(a)(2)). The Court also dismissed Plaintiff’s purported claims under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971) against Michael Christmas, Special Agent in Charge Air Force Office of Special Investigations, Eglin Air Force base (“AFB”), and Captain Rodney Lewis, Contracting Officer of the Air Force, Eglin AFB, because the 1 The property in question are ten Joint Air to Surface Standoff Missile (“JASSM”) antennae. Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 3 of 10 Page ID #:184 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 Complaint only purported to sue these individuals in their official, rather than their individual, capacities. See Order at 11. Moreover, the Court noted that further amendment appeared to be futile, because such claims would be preempted by the Tucker Act, 28 U.S.C. § 1491. See Order at 11. On February 21, 2017, Plaintiff filed the FAC, which contains six causes of action against the United States of America, Michael Christmas, Captain Lewis, and a new individual defendant, Joel S. Russell.2 (Dkt # 19.) The first claim for relief seeks recovery for “conversion” of Plaintiff’s equipment. Plaintiff asserts that “Defendants have offered no compensation of any kind to “Plaintiff DaVinci [who] has demanded the immediate return of the 10 JASSM Antennae, or the equivalent fair market value.” FAC ¶ 54. Plaintiff again relies on the FTCA despite the Court’s ruling citing § 2680 (c). The FAC also raises an alleged misuse of classification procedures in violation of Presidential Executive Order 13526. See FAC ¶ 49. Although Plaintiff claims that this Order “has the force of law,” id., Plaintiff overlooks the fact that the Executive Order expressly provides that: This order is not intended to and does not create any right or benefit, substantive or procedural, enforceable at law by a party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. Executive Order § 6.2(d) (emphasis added). Plaintiff also asserts Bivens claims for seizure of property in violation of the Fourth Amendment (second claim for relief) and the Fifth Amendment (third claim for relief). Despite the Court’s prior admonition that a Constitutional tort remedy will not lie in this case due to the comprehensive remedial scheme provided by the Tucker Act, the FAC alleges that “Defendants failed to provide an alternative means of obtaining 2 The FAC states that these individuals are sued in their individual and official capacities. Plaintiff has not served these defendants with process and they do not appear by this motion. Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 4 of 10 Page ID #:185 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 compensation for the property they wrongfully seized.” FAC ¶ 75. The FAC is silent as to why Plaintiff did not seek the available relief in the Court of Claims. Next, Plaintiff re-filed its claim for “conspiracy-abuse of process” (fourth claim for relief). In this claim, Plaintiff asserts that Defendants made false and fraudulent representations to the Plaintiff: that the government was authorized to take possession of the JASSM Antennae under compulsion of law pursuant to 18 U.S.C. § 793(d), and that the antennae were “no good” and “not worth the price DaVinci was asking.” FAC ¶¶ 80-81. Plaintiff also claims that it relied on these alleged misrepresentations. Id. ¶ 82. Nevertheless, the FAC also avers that Plaintiff rejected the Air Force’s subsequent offers of compensation, on the grounds that the price was too low. Id. ¶¶ 32, 33. Furthermore, Plaintiff retained counsel who advised Defendant’s agents that there were “no legal grounds for taking the antennae.” Id. ¶ 28. Thus, it is unclear how Plaintiff could have relied on what it calls “misrepresentations.” These same alleged misrepresentations on the part of the Defendants are also the basis of Plaintiff’s renewed claims for fraud (fifth claim for relief) and negligent misrepresentation (sixth claim for relief). As discussed below, Plaintiff’s FAC suffers from the same fatal deficiencies that the Court identified in the original Complaint. Therefore, the United States requests that the Court dismiss the FAC without leave to amend. II. ARGUMENT A. Plaintiff fails to state claims arising from fraud or misrepresentation, and/or this Court lacks subject matter jurisdiction over such claims As a sovereign, the United States is immune from suit except to the extent that it consents to be sued. See Dep’t of the Army v. Blue Fox, Inc., 525 U.S. 255, 260 (1999); United States v. Mitchell, 445 U.S. 535, 538 (1980). Statutes involving the Government’s consent to be sued must be construed strictly in favor of the sovereign. See Sossamon v. Texas, 563 U.S. 277, 288 (2011). Although the FTCA “effects a limited waiver of sovereign immunity to allow Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 5 of 10 Page ID #:186 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 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 any claims “arising out of …misrepresentation or deceit.” 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. See Owyhee Grazing Ass’n, Inc. v. Field, 637 F.2d 694, 697 (9th Cir. 1981). Even though Plaintiff was given the opportunity to re-plead its claims, the FAC makes it clear that Plaintiff’s claims for conspiracy – abuse of process, fraud and negligent misrepresentation each arise out of Defendant’s supposed misrepresentation or deceit. As such, the FAC’s fourth, fifth and sixth causes of action should be dismissed. Because Plaintiff has been unable to state a viable theory for these claims for the second time, it is reasonable to conclude that further amendment would be futile. Thus, dismissal of these claims should be without leave to amend. B. Plaintiff fails to state claims for conspiracy, abuse of process and conversion and/or this Court lacks subject matter jurisdiction over such claims As the Court previously ruled, civil conspiracy is not an independent cause of action. See January 30, 2016 Order at 7 (citing Copelan v. Infinity Ins. Co., 192 F.Supp.3d 1063 (C.D. 2016)). Therefore, Plaintiff’s claims based on an alleged conspiracy fail to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). With respect to conversion and abuse of process, the Court has already dismissed such claims pursuant to 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.” This reasoning should also apply to dismiss the FAC’s first claim for conversion, and fourth claim for abuse of process (to the extent it is not based on misrepresentation, and subject to dismissal on that basis, as indicated supra). See January 30, 2016 Order at 8-10. Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 6 of 10 Page ID #:187 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 Under California law, conversion is “the wrongful exercise of dominion over the personal property of another.” 14A Cal.Jur.3d, Conversion § 1. Although the FAC asserts that the antennae were “taken by compulsion”, FAC ¶ 40, the Espionage Act, 18 U.S.C. § 793(d) expressly permits the government to seize instruments or appliances relating to “national defense” pursuant “to an official demand that possession be surrendered.” See Dubin v. United States, 289 F.2d 651, 654-55 (Ct.Cl. 1961) (Dubin I). The record establishes that the JASSM antennae were certified as classified. See declaration of Martin D. Hemmingsen at § 3 (Dkt # 17-1). A claim for conversion will not lie in such a situation. See Dubin v. United States, 363 F.2d 938, 942 (Ct.Cl. 1966) (Dubin II) (“[t]the fact that the equipment repossessed was classified by the proper authority, coupled with the nature of the equipment itself, leaves no room for doubt that it was related to the national defense”). As noted, however, Plaintiff is not without a remedy: it can seek relief in the Federal Court of Claims for a taking of its property. The Federal Court of Claims has ruled that the measure of damages of a bona fide purchaser under Plaintiff’s circumstances is its out-of-pocket expenses. See AST/Servo Systems, Inc. v. United States, 449 F.2d 789, 792 (Ct.Cl. 1971). See also Matter of Williams, 1992 WL 194742 (Comptroller General, July 24, 1992). Thus, to the extent, Plaintiff may be forum shopping in the hope that it can obtain greater damages in this Court, this is not a proper reason to bring an FTCA and Bivens action before this Court. Accordingly, Plaintiff’s claims for conversion and abuse of process should be dismissed for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. Again, because the Plaintiff has been unable to state a viable claim under these theories, despite being given an opportunity to amend, it can and should be inferred that further amendment would be futile. Thus, these claims should be dismissed without leave to amend. C. Plaintiff cannot maintain a claim for misclassifying equipment The FAC also asserts that the classification of the repossessed equipment was an Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 7 of 10 Page ID #:188 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 artifice to avoid the “contractual procurement of these goods.” FAC at 6 and footnote 3.3 However, Plaintiff may not challenge a decision to classify on national security grounds pursuant to the FTCA’s discretionary function exception, which provides that the United States has not consented to suit regarding an act or omission of the United States: …based upon the exercise or performance or the failure to exercise a discretionary function or duty on the part of a federal agency or an employee of the government whether or not the discretion involved be abused. 28 U.S.C. § 2680(a). Determining whether this exception applies involves a two-part analysis. See United States v. Gaubert, 499 U.S. 315, 324-25 (1991). First, a court must ask whether the act or omission involves an element of judgment or choice. Id. at 322. If the answer is yes, then the court must ask whether that judgment is of the kind that the discretionary function exception was designed to shield. Id. at 321-23. In other words, the conduct must be of a discretionary nature and must implicate some social, economic or political policy. See Weissich v. United States, 4 F.3d 810, 812 (9th Cir. 1993). Loughlin v. United States, 286 F.Supp.2d 1, 23 (D.D.C. 2003) is particularly instructive. There, the Court noted that “[s]triking the appropriate balance between such competing concerns of secrecy and safety, national security and public health, is the essence of governmental policy decision-making, and protecting government officials in carrying out such difficult choices is the purpose of the discretionary function exception. This is true even if with the benefit of hindsight, one might conclude that the government's decision was not a wise one, for the exception is designed to preclude judicial second-guessing of such core military policy judgments.” 3 Although Plaintiff states that it is unable to identify any precedent for “retroactive classification,” Complaint at footnote 3, it is noteworthy that some of former Secretary of State Hillary Clinton’s emails were retroactively classified. If this were not permissible, then no mistake in classification could ever be corrected. Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 8 of 10 Page ID #:189 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 Executive Order 13526, the very authority on which Plaintiff relies, establishes that there is an element of choice in making a classification decision. Thus, it must be presumed that the decision to classify military equipment was grounded in policy. See Gaubert, 499 U.S. at 324. Even if Plaintiff argues that the Defendants had some subjective ill intent in classifying the equipment, under the discretionary function exception, “the focus of the inquiry is not on the agent’s subjective intent in exercising the discretion conferred by statute or regulation, but on the nature of the actions taken and on whether they are susceptible to policy analysis.” Id. at 325. See also § 2680(a). In addition, the FTCA only provides liability “under circumstances, where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.” 28 U.S.C.§ 1346(b)(1) (emphasis added). Furthermore, the FTCA does not “extend to conduct ‘governed exclusively by federal law or to conduct of a governmental nature or function, that has no analogous liability in the law of torts.’” Akutowicz v. United States, 859 F.2d 1122, 1125 (2d Cir. 1988). Therefore, Plaintiff cannot contest the propriety of the decision to classify the equipment in question under the FTCA because no private analog to that activity exists. See Jayvee Brand, Inc. v. United States, 721 F.2d 385, 390 (2d Cir. 1983) (quasi- adjudicative action by an agency of the United States is action of the type that private persons could not engage in and hence could not be liable under local law). D. Plaintiff cannot maintain a Constitutional tort claim against the United States Finally, Plaintiff improperly purports to assert Constitutional tort claims against “All Defendants”, including the United States. See FAC at 14, 16. The United States has not waived its sovereign immunity to be sued for Constitutional torts. See FDIC v. Meyer, 510 U.S. 471, 484 (1994). Accordingly, the second and third claims in the FAC should be dismissed against the United States without leave to amend. Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 9 of 10 Page ID #:190 8 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 III. CONCLUSION For all the foregoing reasons, Defendant United States of America respectfully requests that the FAC and this action be dismissed. Plaintiff’s inability to sue the United States for a Constitutional tort or under any of the above enumerated common law tort theories is not a mere defect of pleading, but rather, an unredeemable violation of federal sovereign immunity principles. As the defects are not subject to cure, the dismissal should be without leave to amend. See Taylor v. United States PTO, 551 Fed. Appx. 341 (9th Cir. 2013) (a district court does not abuse its discretion by denying leave to amend an FTCA complaint when doing so would be futile). Respectfully submitted, Dated: March 20, 2017 SANDRA R. BROWN Acting 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/ David Pinchas DAVID PINCHAS Assistant United States Attorney Attorneys for Defendant United States of America Case 2:16-cv-05864-CAS-JC Document 26 Filed 03/20/17 Page 10 of 10 Page ID #:191 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 SANDRA R. BROWN Acting 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 DAVID PINCHAS (SBN 230954) Assistant United States Attorney Federal Building, Suite 7516 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-2920 Facsimile: (213) 894-7819 E-mail: david.pinchas@usdoj.gov Attorneys for Defendant United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION DA VINCI 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. CV 16-05864 CAS (JCx) ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITHOUT LEAVE TO AMEND Date: April 17, 2017 Time: 10:00 a.m. Place: Courtroom 8D – First Street Courthouse Defendant United States of America’s Motion to Dismiss Plaintiff’s First Amended Complaint and action came before the Court on April 17, 2017. The Court, having considered the pleadings and the arguments of the parties, finds that the Plaintiff’s First Amended Complaint fails to establish the Court’s subject matter jurisdiction and fails to state a claim upon relief can be granted. Case 2:16-cv-05864-CAS-JC Document 26-1 Filed 03/20/17 Page 1 of 2 Page ID #:192 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 The Court previously granted Plaintiff the opportunity to amend its complaint to address the deficiencies found in the Court’s January 30, 2017 Order. It is clear that Plaintiff is unable to correct these deficiencies and granting further amendment would be futile. Accordingly, the Plaintiff’s Complaint and action are hereby DISMISSED without leave to amend. IT IS SO ORDERED. Dated: ____________________________________ UNITED STATES DISTRICT JUDGE Case 2:16-cv-05864-CAS-JC Document 26-1 Filed 03/20/17 Page 2 of 2 Page ID #:193