Penn Millers Ins. Co. v. U.S., 5:06-CV-16-D(3).

• Decision Date: 18 January 2007
• Docket Number: No. 5:06-CV-16-D(3).,5:06-CV-16-D(3).
• Citation: 472 F.Supp.2d 705
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: PENN MILLERS INSURANCE COMPANY, as Subrogee of S & C Construction Co. and Garland Farm Supply, Plaintiff, v. UNITED STATES of America, Department of Defense, Department of the Army, Defendants.

472 F.Supp.2d 705

PENN MILLERS INSURANCE COMPANY, as Subrogee of S & C Construction Co. and Garland Farm Supply, Plaintiff, v. UNITED STATES of America, Department of Defense, Department of the Army, Defendants.

No. 5:06-CV-16-D(3).

United States District Court, E.D. North Carolina, Western Division.

January 18, 2007.

John E. Spainhour, McAngus, Goudelock & Courie, PLLC, Charlotte, NC, for S & C Construction Company doing business as Garland Farm Supply, Penn Millers Insurance Company as subrogee of S & C Construction Co. and Garland Farm Supply Co., Plaintiff's.

Joshua B. Royster, U.S. Department of Justice, Raleigh, NC, for United States of America, Department of Defense, Department of the Army, Defendants.

ORDER

DEVER, District Judge.

Justice Holmes wrote for a unanimous Supreme Court that "[m]en must turn square corners when they deal with the Government. If it attaches even purely formal conditions to its consent to be sued those conditions must be complied with." Rock Island, A. & L.R. Co. v. United States, 254 U.S. 141, 143, 41 S.Ct. 55, 65 L.Ed. 188 (1920). In this Federal Tort Claims Act ("FTCA") action, the United States has filed a motion to reconsider this court's August 30, 2006, order, and alternatively moved to dismiss plaintiff's amended complaint. Essentially, the United States contends that each plaintiff (both the original one and the substituted one) failed to "turn square corners" in connection with the FTCA; therefore, the action must be dismissed.

In the court's August 30 order, the court granted plaintiff S & C Construction Company, d/b/a Garland Farm Supply's ("S & C Construction") motion to amend its complaint. In the motion to amend, S & C Construction sought to add or substitute "Penn Millers Insurance Company, as subrogee of S & C Construction Co. and Garland Farm Supply Co." (hereinafter "Penn Millers") as plaintiff. The court permitted the substitution of Penn Millers as plaintiff and also held that the amended complaint related back to the date on which the original complaint was filed.

Upon reflection and having heard oral argument on January 4, 2007, both the original and the substituted plaintiff did not comply with the FTCA. Under the FTCA, the non-compliance precludes subject matter jurisdiction. Thus, the motion to reconsider is granted, the motion to dismiss the amended complaint is granted, and the action is dismissed. Because the action is dismissed, the United States' second motion to stay discovery is denied as moot.

I.

S & C Construction entered into a contract with the Department of the Army to perform certain work on Fort Bragg. Compl. ¶ 4. In performing the contract, S & C Construction placed two pieces of large construction equipment on Fort Bragg. Id. ¶ 15. On or about April 26, 2004, the Army performed bombing exercises near where S & C Construction had placed its equipment. Id. ¶ 6. "As a result of the bombing exercises, the defendant set fire to the forest in which [S & C Construction's] construction equipment ... was parked and the fire destroyed [the] equipment." Id. S & C Construction claims that it was damaged in the amount of approximately $96,419.60. Id. ¶ 8. S & C Construction alleges that the United States is liable under the FTCA and the Military Claims Act and that S & C Construction complied with all statutes of limitations in filing this action. Id. ¶ 11.

The complaint does not mention exhaustion of administrative remedies. In its opposition to the motion to dismiss, S & C Construction described the administrative process as follows. See S & C Constr. Resp. in Opp. to Mot. to Dismiss 2-4. On April 30, 2004, the Department of the Army responded to S & C Construction's request for a torts packet. Id., Ex. A. The Army's letter stated, "you have two years from the date of the incident to file your claim." Id. On January 24, 2005, the Army responded to Penn Millers Insurance Company's request for a torts packet. Id., Ex. B. The Army's letter stated, "you have two years from the date of the incident to file your claim." Id.

On April 8, 2005, Penn Millers Insurance Company sent the Army an administrative claim. Id., Ex. C. The claim contained a Standard Form 95 and identified "Penn Millers Insurance Company" as the claimant. Id., Ex. C, Box 2. The Standard Form 95 identified "Garland Farm Supply (S & C Construction Company)" as the "NAME AND ADDRESS OF THE OWNER, IF OTHER THAN THE CLAIMANT." Id., Ex. C, Box 9. The amount of the claim was $96,419.06. Id., Ex. C, Box 12a, 12d. The claim did not state that Penn Millers Insurance Company was an agent or legal representative of S & C Construction.

On April 20, 2005, the Army wrote Penn Millers Insurance Company and stated that "[y]our claim was received on April 19, 2005, and has been designated claim number 05-301-T114. Your claim will be processed under the Federal Tort Claims Act (28 U.S.C. §§ 2671-2680)." Id., Ex. D.

On July 6, 2005, the Army notified Penn Millers Insurance Company of its "final administrative action on the tort claim you filed against the United States in the amount of $96,419.06...." Id., Ex. E. The Army's letter described the subject of the letter as "Claim of Penn Millers Insurance Company as subrogee of S & C Construction Company, 05-301-T114." Id., Ex. E. In the letter, the Army denied the claim under the Military Claims Act (10 U.S.C. § 2733) and the FTCA. Id., Ex. E. The Army sent the letter on July 6, 2005, by certified mail, return receipt requested. Rouse Decl. ¶ 2 (1/4/07). Penn Millers Insurance Company received the letter on July 11, 2005.

On August 10, 2005, Penn Millers' counsel wrote the Army "on behalf of Penn Millers Insurance Company to appeal the administrative action letter denying our claim." S & C Constr. Resp. in Opp. to Mot. to Dismiss, Ex. F. The Army treated that letter as a request for reconsideration under 32 C.F.R § 536.80 or 28 C.F.R. § 14.9(b). See Rouse Decl. ¶ 3 (1/4/07). On October 31, 2005, Penn Millers' counsel again wrote the Army concerning its appeal of the letter denying "Penn Millers Insurance Company's subrogation claim." S & C Constr. Resp. in Opp. to Mot. to Dismiss, Ex. H. In that letter, Penn Millers Insurance Company's counsel stated that if Penn Millers Insurance Company did not receive payment by November 23, 2005, then it would file suit. Id. The Army did not respond to either letter.

On January 11, 2006, "S & C Construction Company, d/b/a Garland Farm Supply" filed suit against the United States. In the complaint, S & C Construction sought $96,419.06, plus costs, interests, and attorneys' fees. Compl., Prayer for Relief. S & C Construction also sought punitive damages for the defendant's "reckless and willful disregard of the rights and safety of others pursuant to North Carolina General Statute § 1D-5 et seq." Id. The complaint does not mention Penn Millers Insurance Company.

On February 20, 2006, S & C Construction's counsel (who is also counsel for Penn Millers Insurance Company) sent a certified letter, return-receipt requested, to the U.S. Attorney for the Eastern District of North Carolina. The letter stated: "This law firm represents plaintiff in this action. Enclosed for service of process pursuant to Rule 4 of the Federal Rules of Civil Procedure, I am serving you with the enclosed Summons and Complaint for the abovereferenced action". The "RE:" line in the letter said: "Garland Farm Supply, Inc. and Penn Millers Insurance Company v. U.S. Department of Defense." S & C Const. Resp. in Opp. to Mot. to Dismiss, Ex. I. The "RE:" line also referenced "15-301-T114" and identified the "Date of Incident" as "April 26, 2004." Id., Ex., I.

On April 25, 2006, the United States moved to dismiss the action for lack of subject matter jurisdiction. The United States argued that S & C Construction never filed an administrative claim with the Department of the Army; therefore, this court lacked subject matter jurisdiction under the FTCA. See Gov't Mem. in Support of Mot. to Dismiss 2-4; 28 U.S.C § 2675(a) ("An action shall not be instituted upon a [negligence] claim against the United States ... 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. ..."). S & C Construction responded that it satisfied the FTCA's administrative exhaustion requirement when Penn Millers Insurance Company, as subrogee of S & C Construction, submitted a tort claim to the Department of the Army relating to the destroyed equipment. S & C Const. Resp. in Opp. to Mot. to Dismiss 2-6; see Ex. E. Defendant replied that because S & C Construction had filed suit, then S & C Construction (rather than Penn Millers Insurance Company) had to have filed an administrative claim in order to satisfy 28 U.S.C. § 2675(a). See Gov't Reply 3-8.

On July 24, 2006, pursuant to Federal Rule of Civil Procedure 15, S & C Construction moved to amend its complaint and have the amendment relate back. Specifically, S & C Construction moved to add or substitute "Penn Millers Insurance Company, as subrogee of S & C Construction Co. and Garland Farm Supply Co." as party-plaintiff in this action. S & C Constr. Mot. to Amend. 1.

On August 30, 2006, the court granted S & C Construction's motion. The court noted that plaintiff could amend its complaint as a matter of course because defendant had not yet filed a responsive pleading. See S & C Construction Co. v. United States, No. 5:06-CV-16-D(3), Order at 2-3 (E.D.N.C. Aug. 30, 2006) (discussing Fed. R.Civ.P. 15(a)). Accordingly, "Penn Millers Insurance Company, as subrogee of S & C Construction Co. and Garland Farm Supply Co." was substituted as the party-plaintiff in the action effective August 30, 2006. Id. at 3. Further, the court analyzed Rule 15(c)(3) and held that the amendment related back to the date on which the original complaint was filed. Id. at 3-5.

On October 3, 2006, the United States filed a motion to reconsider...