Renteria v. U.S.
| Citation | 452 F.Supp.2d 910 |
| Decision Date | 11 September 2006 |
| Docket Number | No. CIV 05-532-TUC-CKJ.,CIV 05-532-TUC-CKJ. |
| Parties | Sergio RENTERIA, et al., Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Arizona |
Herbert Beigel, Herbert Beigel & Associates LLC, Tucson, AZ, for Plaintiffs.
Elizabeth Anne Wilson, U.S. Attorney's Office, Tucson, AZ, for Defendant.
On May 16, 2006, Magistrate Judge Charles R. Pyle issued a Report and Recommendation [Doc. # 25] in which he recommended Defendant's Motion to Dismiss [Doc. # 9] be granted in part and denied in part. Plaintiffs and Defendant have filed objections to the Report and Recommendation and Plaintiffs have filed a response to Defendant's Objection. Plaintiffs have requested oral argument. The Court finds, however, resolution of the issues is appropriate without oral argument.
The Magistrate Judge has set forth the factual background and this Court will not repeat it here.
Magistrate Judge Pyle found that, under Arizona law, the Good Samaritan Doctrine is applicable to economic harm as well as physical harm. Lloyd v. State Farm Mutual Auto Insurance Co., 176 Ariz. 247, 250, 860 P.2d 1300, 1303 (App. 1992); Jeter v. Mayo Clinic Arizona, 211 Ariz. 386, 402, 121 P.3d 1256, 1272 (App. 2005) Defendant asserts, however, that the Arizona courts have never applied the doctrine to commercial lending cases and the Arizona courts have not determined whether "a person who gratuitously lends money to a person who relies on the offer will be liable under the Restatement § 323 if the person negligently fails to make the loan, causing economic harm to proposed borrower." Defendant's Objection to Report and Recommendation, p. 3. Lloyd and Jeter make clear that the Good Samaritan Doctrine applies to economic harm. Neither of these cases nor any other Arizona authority excepts lending from that authority. The Good Samaritan Doctrine, therefore, is applicable to the Renterias' claims.
Magistrate Judge Pyle also found that the Renterias' claim regarding the inability to plant alfalfa on a leased farm could go forward because the AMTA payments had apparently been approved and the Renterias could reasonably rely on Defendant to use reasonable efforts to timely distribute the funds. Defendant asserts that the misrepresentation exception should bar the Renterias' claim:
The provisions of this chapter and section 1346(b) of this title shall not apply to—(h) Any claim arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights . . .
28 U.S.C. § 2680(h).
The Renterias assert that, without regard to the misrepresentations, "the defendant's negligent approval of crops that could not be cultivated because of prior use of herbicide is what caused plaintiffs harm, in addition, of course, to the negligent delay in purely ministerial processing of one of the loans causing plaintiffs to lose the benefit of an entire crop season." Plaintiffs' Response to Defendant's Objection to Magistrate's Report and Recommendations, p. 2. Although the Renterias appear to address Defendant's objection as if it is regarding a herbicide claim, Defendant's objection refers to the inability of Plaintiffs to plant alfalfa because of the alleged untimely distribution of funds. The Court will address that objection.
The United States is immune under 28 U.S.C. § 2680(h) from "[a]ny claim arising out of . . . misrepresentation," whether negligent or willful. Mount Homes, Inc. v. United States, 912 F.2d 352, 354 (9th Cir. 1990). The § 2680(h) misrepresentation exception is broadly construed. Frigard v. United States, 862 F.2d 201, 202 (9th Cir. 1988). This Court "must look beyond the characterizations in the pleadings to distinguish misrepresentation from negligence claims, a task which is frequently far from simple." Rich Prods. Corp. v. United States, 804 F.Supp. 1270, 1272 (E.D.Cal. 1992).
The United States Supreme Court has provided guidance in distinguishing misrepresentation claims from negligence claims in the context of 28 U.S.C. § 2680(h) immunity claims. United States v. Neustadt, 366 U.S. 696, 81 S.Ct. 1294, 6 L.Ed.2d 614 (1961); Block v. Neal, 460 U.S. 289, 103 S.Ct. 1089, 75 L.Ed.2d 67 (1983). Where the plaintiffs relied on an inaccurate written appraisal, prepared by the Federal Housing Administration ("FHA"), the Court held that the plaintiff's claim against the FHA based on this reliance was barred by the misrepresentation exception. Neustadt, 366 U.S. at 710-11, 81 S.Ct. 1294. The Court defined negligent misrepresentation as breach of "the duty to use care in obtaining and communicating information upon which that party may reasonably be expected to rely in the conduct of his economic affairs." Id. at 706, 81 S.Ct. 1294. The Supreme Court also has distinguished the duty to obtain and communicate accurate information from the duty to perform a separate task. Block. In Block, the plaintiff received a loan from the Farmers Home Administration ("FmHA") to build her home. Block, 460 U.S. at 291, 103 S.Ct. 1089. The loan agreement required the FmHA to approve all plans and gave the FmHA the right to inspect and test all materials and workmanship. Id. When plaintiff discovered that the completed house was defective, plaintiff sued FmHA alleging that it had failed properly to inspect and supervise construction. Id. at 297, 103 S.Ct. 1089. The Supreme Court held that FmHA was subject to suit for allegedly breaching a separate duty to supervise the construction of the plaintiffs home, independent of its duty to obtain and communicate information. Id. at 297, 103 S.Ct. 1089. The Supreme Court distinguished Neustadt on the grounds that plaintiffs in Neustadt had alleged no injury that they would have suffered independent of their reliance on the negligent appraisal. Id. In Block, however, the FmHA's misrepresentations were not essential to the claim of negligent supervision. Id. The Supreme Court held that FmHA's "duty to use due care to ensure that the builder adhere to previously approved plans and cure all defects before completing construction [was] distinct from any duty to use due care in communicating information" to the plaintiff. Id. The Court concluded that the misrepresentation exception did not bar the claim in Block. Id
Therefore, in determining whether a claim is barred by the § 2680(h) misrepresentation exception, this Court must look beyond the language in which the complaint is couched and consider the "essence" or "gravamen" of the suit. Rich Products Corp. v. United States, 804 F.Supp. 1270, 1273 (E.D.Cal.1992) (citing Mount Homes, Inc., 912 F.2d at 355). "[I]f the alleged misrepresentation is essential to the claim then the action is barred even though there is some other allied negligence by the government, for example, in gathering the information that proves inaccurate." Id. "When government misinformation is at issue, plaintiff must allege injury independent of that caused by the erroneous information." Id. citing Mount Homes, Inc. 912 F.2d at 356. The misrepresentation exception "particularly protects the United States from suit by commercial entities which claim to have lost money because of reliance on false government information." Id.
In stating a claim of negligence rather than misrepresentation, a plaintiff must eliminate the government's communication of inaccurate information from the essence of the claim. See id. The essence of the Renterias' claim is that the failure of Defendant to timely distribute the funds caused the Renterias to lose the benefit of an entire crop season. The essence of the action is based on negligent, performance of a task separate from any alleged duty to obtain and communicate information. The Renterias' claim regarding the inability to plant alfalfa on a leased farm because the funds were not timely distributed is, not barred by the misrepresentation exception.
The Renterias assert that the Report and Recommendation incorrectly determined that the Renterias had failed to state a claim for the 2000 crop year. The Magistrate Judge determined that the Renterias were not legally entitled to rely on their expectations for a loan to be approved promptly. The Renterias assert that the Magistrate Judge incorrectly considered information outside of the complaint. Although review is limited to the contents of the complaint, Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996), a dismissal is appropriate if some other bar to relief is apparent from the face of the complaint. 2A J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice, ¶ 12.07 at 12-68 to 12-69 (2d ed.1991 & supp. 1191-92), citing Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976). The Court agrees with the Renterias that a determination of whether the Renterias reasonably relied upon receiving a loan is not a question that can be determined in a motion to dismiss. However, if the Renterias did not have a legal right to rely upon receiving the loan, the Court need not reach the issue of whether the reliance was reasonable. Here, the loan could have been denied or not immediately funded.1 The Renterias' apparent attempt to "equate loan eligibility with loan entitlement," Helgeson Bureau of Indian Affairs, 153 F.3d 1000, 1004 (9th Cir.1998), simply does not make the Renterias legally entitled to rely on their expectations of an approved loan. The Court finds that the Renterias have not stated a claim for crop year 2000.
The Renterias object to the Magistrate Judge's consideration of the issue of whether Defendant had a duty to prevent the Renterias from entering into and ultimately...
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