Hiatt v. United States, No. CV-20-02247-PHX-MTL

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Arizona
Writing for the CourtMichael T. Liburdi United States District Judge
PartiesThomas Hiatt, et al., Plaintiffs, v. United States of America, et al., Defendants.
Decision Date16 June 2021
Docket NumberNo. CV-20-02247-PHX-MTL

Thomas Hiatt, et al., Plaintiffs,
United States of America, et al., Defendants.

No. CV-20-02247-PHX-MTL


June 16, 2021


Before the Court is Defendants United States of America and Dat P. Tran's (collectively, "Defendants") Motion to Dismiss (the "Motion") (Doc. 10). This Motion is fully briefed. (Docs. 11, 12.) The Court resolves the Motion as follows.1


The following facts derive from the Complaint. (Doc. 1.) The named Plaintiffs are Thomas Hiatt, Adrian Holguin, James Schiele, and Daily Express, Inc. ("Daily Express") (collectively, "Plaintiffs"). (Id. ¶¶ 3-6.) Hiatt, Holguin, and Schiele are military veterans who were involved in separate motor vehicle collisions. (Id. ¶¶ 24, 27, 36.) Each of them suffered physical injuries requiring emergency medical care and treatment at a non-United States Department of Veterans Affairs ("VA") hospital. (Id.) The United States paid each hospital for their medical care and treatment. (Id. ¶¶ 26, 29-30, 38-39.) Later, Holguin and Schiele both pursued personal injury claims against the responsible drivers.

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(Id. ¶¶ 31-33, 44-46.) They also asserted underinsured motorist claims against their auto-insurance carriers. (Id.) They eventually settled their personal injury and underinsured motorist claims for the available policy limits. (Id.)

Non-party James Marsh is also a veteran and was involved in a motor vehicle collision with a vehicle operated by Daily Express. (Id. ¶¶ 49, 55.) The VA alleges that it made a payment to the non-VA hospital that provided Marsh with emergency medical care and treatment. (Id. ¶ 51.) Marsh asserted personal injury claims against Daily Express. (Id. ¶ 55.) Daily Express settled with Marsh and issued him a payment. (Id. ¶ 56.) Because Daily Express alleged that Marsh was comparatively at fault for causing the collision, its payment to him "was not for his full claimed damages," but "was instead reduced under Arizona's comparative fault system." (Id. ¶ 57.)

The VA then asserted its rights under the Federal Medical Care Recovery Act ("FMCRA"), 42 U.S.C. §§ 2651-53, and 38 U.S.C. § 1729 to recover from the third parties—either the responsible tortfeasor or their insurer—the reasonable value of medical care provided or paid for by the government. Although the United States has a private right of action to litigate these claims against third parties, it has not yet initiated litigation. Instead, the VA provided notices to each injured veteran informing them of the VA's intention to pursue these claims against any responsible party. (See Docs. 11-1, 11-2, 11-3, 11-4.) Plaintiffs then commenced this action to preemptively restrain the United States from moving forward. (Doc. 1.) Plaintiffs admit that the VA is, or may be, "entitled to a lien" against any tort recovery or settlement obtained because of the motor vehicle collisions. (Id. ¶¶ 63-67.) Plaintiffs dispute, however, the "the proper amount of the VA's lien because the VA is asserting a lien in excess of the amount authorized" by statute. (Id.)

The Complaint includes one count for declaratory and injunctive relief, which alleges, among other things, that "the VA routinely asserts liens in excess" of the amount statutorily authorized, certain regulations exceed the "statutory authority granted to the Secretary [of VA] to promulgate regulations," and that "Federal law supports equitable

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apportionment of a recovery subject to a VA lien." (Id. ¶¶ 68-69, 71, 78.) Defendants soon thereafter filed the instant Motion. (Doc. 10.)


A party may move under Rule 12(b)(1) of the Federal Rules of Civil Procedure to dismiss claims in which the court lacks subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). A Rule 12(b)(1) challenge may be either facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). When a defendant argues that the claims in the complaint, even if true, are insufficient to establish subject-matter jurisdiction, the challenge is a facial one. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a facial challenge to subject-matter jurisdiction under Rule 12(b)(1), courts must accept all material allegations in the complaint as true and construe the complaint in favor of the plaintiff. White, 227 F.3d at 1242; Maya v. Centex Corp., 658 F.3d 1060, 1068 (9th Cir. 2011). By contrast, in a factual attack to subject-matter jurisdiction, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction. Safe Air for Everyone, 373 F.3d at 1039. Courts may look beyond the complaint only when a defendant brings a factual attack against jurisdiction. White, 227 F.3d at 1242. Further, when evaluating a Rule 12(b)(1) motion, the plaintiff bears "the burden of proof that jurisdiction does in fact exist." Thornhill Publ'g Co., Inc. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979) (citation omitted).

To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief" such that the defendant is given "fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 545, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47 (1957)).2 Dismissal under Rule

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12(b)(6) "can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988).


A. Subject Matter Jurisdiction

As a threshold matter, Defendants argue that Plaintiffs' Complaint fails to allege (1) a valid basis for subject-matter jurisdiction; and (2) that the United States has waived its sovereign immunity in these particular circumstances. (Doc. 10 at 9-10.) Generally speaking, the United States enjoys sovereign immunity; it cannot be sued without its consent and such consent is a prerequisite for jurisdiction. Conrad v. United States, 447 F.3d 760, 764 (9th Cir. 2006). Plaintiffs have the "burden of pointing to . . . an unequivocal waiver of [sovereign] immunity." Prescott v. United States, 973 F.2d 696, 701 (9th Cir. 1992) (citation omitted).

The Complaint alleges that subject-matter jurisdiction "for this action arises under 28 U.S.C. § 1346(a)(2)." (Doc. 1 ¶ 1.) Section 1346(a)(2), known as the Little Tucker Act (the "Act"), constitutes a limited waiver of the government's sovereign immunity. It also provides the United States District Courts concurrent jurisdiction with the United States Court of Federal Claims over any non-tort civil action or claim against the United States seeking damages not exceeding $10,000. 28 U.S.C. § 1346(a)(2). The Act creates a "presumption of exclusive jurisdiction in the Court of Federal Claims, but that presumption can be overcome by an independent statutory grant of jurisdiction to another court." Tritz v. U.S. Postal Serv., 721 F.3d 1133, 1137 (9th Cir. 2013). Importantly here, "the Act has long been construed as authorizing only actions for money judgments and not suits for equitable relief against the United States." Richardson v. Morris, 409 U.S. 464, 465 (1973).

Plaintiffs here do not seek money damages. (See Doc. 1.) The sole cause of action seeks declaratory and injunctive relief. (Id.) The Court, therefore, finds that the Act does not waive Defendants' sovereign immunity or provide this Court with subject-matter

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jurisdiction. See Santucci v. U.S. State Dep't, No. CV-04-2499-PHX-SRB, 2005 WL 3113173, at *4 (D. Ariz. Nov. 21, 2005) ("The Act provides jurisdiction over awards of damages but not equitable relief such as injunctive or declaratory relief or mandamus.").3

Perhaps recognizing that § 1346(a)(2) does not establish subject-matter jurisdiction, Plaintiffs, for the first time in their response, contend that subject-matter jurisdiction exists through the Administrative Procedure Act ("APA"). (Doc. 11 at 9-11.) Plaintiffs admit that the APA was "not specifically cited in the Complaint," but argue that "notice pleading requirements do not require a plaintiff to identify the 'statutory or constitutional source of the claim raised in order to survive a motion to dismiss.'" (Id. at 9 n.3 (citing Alvarez v. Hill, 518 F.3d 1152, 1157 (9th Cir. 2008)).) Defendants contend that Alvarez is inapposite. (Doc. 12 at 4.)

In Alvarez, a pro se plaintiff brought religious exercise claims under the First Amendment. 518 F.3d at 1154-55. After the government moved for summary judgment, the plaintiff clarified, for the first time in his response, that he intended to sue under the Religious Land Use and Institutionalized Persons Act ("RLUIPA"). Id. at 1155. The district court rejected that argument and declined to apply RLUIPA's more plaintiff-friendly standards. Id. at 1155-56. The Ninth Circuit reversed, finding that the pro se plaintiff did not need to plead each statute or legal theory he intended to pursue. Id. at 1158. The panel held that RLUIPA's relatedness to a First Amendment claim established that the...

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