United States v. Machinski

• Decision Date: 26 April 2016
• Docket Number: Case No.11-cv-01118-LB
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. ROBERT MACHINSKI, Defendant.
• Court: U.S. District Court — Northern District of California

UNITED STATES OF AMERICA, Plaintiff, v. ROBERT MACHINSKI, Defendant.

Case No.11-cv-01118-LB

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA San Francisco Division

April 26, 2016

ORDER GRANTING PLAINTIFF'S MOTION TO DISMISS

Re: ECF No. 49

INTRODUCTION

This is a student-loan case. The United States Government sued Robert Machinski to collect a student loan in default that Mr. Machinski incurred in 1993.¹ The Government offset a portion of Mr. Machinski's debt by debiting funds from federal payments owed to him and placed liens on his property, liens that still remain.² Mr. Machinski counterclaimed against the United States, asserting that these debt-collection activities violated his Fifth Amendment right to due processand constitute tortious conduct.³ The Government now moves to dismiss Mr. Machinski's counterclaims for lack of jurisdiction and failure to state a claim.⁴

The court finds that it can decide this matter without oral argument under Local Rule 7-1(b) and vacates the hearing set for April 28, 2016. The court grants the Government's motion because sovereign immunity bars Mr. Machinski's claims.

STATEMENT

In March 2011, the United States sued Robert Machinski to collect a student-loan debt guaranteed by the Department of Education.⁵ The United States alleged that Mr. Machinski incurred the debt in 1993 and subsequently defaulted in 1994.⁶ As a result, Mr. Machinski allegedly owed the United States $23,429.49 in principal, which the Government unsuccessfully tried to collect.⁷ Since that time, under the Treasury Offset Program, the Government credited $16,123.87 against Mr. Machinski's debt.⁸ Mr. Machinski received notice of these offsets on May 2, 2008.⁹

At the time the complaint was filed, Mr. Machinski allegedly owed the United States a total of $37,799.49 in principal and interest.¹⁰ Mr. Machinski failed to answer, defend, or otherwise appear in the case and the clerk entered default judgment against him.¹¹ A writ of garnishment was issued in April 2015.¹² But, in December of that same year, the parties stipulated to set aside the default judgment and quash the writ.¹³

Mr. Machinski then answered the complaint and asserts counterclaims against the United States.¹⁴ He asserts two general claims. First, he asserts that the Government's offset against his debt "denied him adequate procedural due process" under the Fifth Amendment and constituted "an unreasonable interference and deprivation of [his] liberty interests to property."¹⁵ Second, he asserts that the government "knowingly reported and refused to remove false and damaging information on [his] credit history, including the information regarding liens on [his] property."¹⁶ As a result of these "unlawful and tortious acts," Mr. Machinski seeks damages in the amount of $30,000 for damage to his "reputation, credit history, and [other] financial consequences."¹⁷

The United States filed the current motion to dismiss Mr. Machinski's counterclaims.¹⁸ The Government asserts that Mr. Machinski's claims are barred by sovereign immunity and the statute of limitations, and also fail to state a claim upon which relief can be granted.¹⁹ Mr. Machinski opposes the motion and seeks leave to amend his counterclaims to bring them within the Government's waiver of sovereign immunity and allege additional factual support.²⁰ Mr. Machinski also requests discovery prior to the disposition of the Government's motion.²¹

GOVERNING LAW

1. Rule 12(b)(1) subject-matter jurisdiction

A complaint must contain a short and plain statement of the ground for the court's jurisdiction (unless the court already has jurisdiction and the claim needs no new jurisdictional support). Fed. R. Civ. P. 8(a)(1). The plaintiff has the burden of establishing jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Farmers Ins. Exchange v. Portage LaPrairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990). A defendant's Rule 12(b)(1) jurisdictional attack can be either facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). "A 'facial' attack asserts that a complaint's allegations are themselves insufficient to invoke jurisdiction, while a 'factual' attack asserts that the complaint's allegations, though adequate on their face to invoke jurisdiction, are untrue." Courthouse News Serv. v. Planet, 750 F.3d 776, 780 n.3 (9th Cir. 2014). This is a facial attack; the court thus "accept[s] all allegations of fact in the complaint as true and construe[s] them in the light most favorable to the plaintiffs." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003).

If a court dismisses a complaint, it should give leave to amend unless the "the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).

2. Sovereign immunity

"It is axiomatic that the United States may not be sued without its consent and that the existence of consent is a prerequisite for jurisdiction." Jachetta v. United States, 653 F.3d 898, 903 (9th Cir. 2011) (quoting United States v. Mitchell, 463 U.S. 206, 212 (1983)). This is the doctrine of sovereign immunity. The Ninth Circuit has explained: "Before we may exercise jurisdiction over any suit against the government, we must have 'a clear statement from the United States waiving sovereign immunity, together with a claim falling within the terms of the waiver.'" Id. (quoting in part United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003)). "[L]imitations and conditions upon which the Government consents to be sued must be strictly observed and exceptions thereto are not to be implied." Mollison v. United States, 568 F.3d 1073, 1075 (9th Cir. 2009) (citing Soriano v. United States, 352 U.S. 270, 276 (1957)) (internal quotations omitted; alteration in original).

Absent a waiver, "a court does not have authority to award relief against the United States or a federal agency . . . ." Isaacs v. United States, No. 13-cv-01394-WHO, 2013 WL 4067597, at *1 (N.D. Cal. Aug. 1, 2013). "As the party asserting a claim against the United States, [the plaintiff] has the burden of 'demonstrating unequivocal waiver of immunity.'" United States v. Park PlaceAssociates, Ltd., 563 F.3d 907, 924 (9th Cir. 2009) (quoting Cunningham v. United States, 786 F.2d 1445, 1446 (9th Cir. 1986)).

ANALYSIS

1. Sovereign immunity bars Mr. Machinski's claims

1.1 Sovereign immunity bars Mr. Machinski's tort claims

The United States moves to dismiss Mr. Machinski's claims to the extent they sound in tort because 1) he failed to exhaust his administrative remedies under 28 U.S.C. § 2675(a) and 2) the FTCA-waiver does not extend to his claims because § 2680(h) excludes "claim[s] arising out of . . . libel, slander, misrepresentation, deceit, or interference with contractual rights."²² Mr. Machinski does not contest the latter and instead seeks leave to amend his complaint to assert a claim for negligence.²³ The court agrees that his claim as pled is excluded from the FTCA's waiver under § 2680(h). See United States v. Andre, No. C 11-04175 WHA, 2012 WL 728737, at *3 (N.D. Cal. March 6, 2012). The issue, then, is whether Mr. Machinski could possibly maintain a claim for negligence at this time and on this record. He cannot and his claims are dismissed.

The Federal Tort Claims Act ("FTCA") waives the United States' sovereign immunity to certain tort claims and is "the exclusive remedy for torts committed by Government employees in the scope of their employment." United States v. Smith, 499 U.S. 160 163 (1991); United States v. Kubrick, 444 U.S. 111, 117-18 (1979); Jachetta v. United States, 653 F.3d 898, 904 (9th Cir. 2011); 28 U.S.C. §§ 1346(b)(1), 2679(b)(1). An FTCA-plaintiff must first exhaust available administrative remedies:

An action shall not be instituted upon a claim against the United States for money damages for injury or loss of property or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, 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 . . . .

28 U.S.C. § 2675(a). The § 2765(a) presentment requirement is satisfied by "(1) a written statement sufficiently describing the injury to enable to agency to begin its own investigation, and (2) a sum certain damages claim." Burns v. United States, 764 F.2d 722, 724 (9th Cir. 1985) (internal quotation marks omitted). The "requirement is jurisdictional in nature and may not be waived." Spawr v. United States, 796 F.2d 279, 280 (9th Cir. 1986) (citing Burns, 764 F.2d at 724).

There is, however, an exception to the presentment requirement: it does not apply to third-party complaints, cross-claims, or counterclaims. 28 U.S.C. § 2675(a). But, "[c]ounterclaims under the FTCA have been permitted only when the principal action by the United States was in tort and the counterclaim was compulsory in nature." Spawr, 796 F.2d at 281. Thus, where "the principal action by the United States is in contract, not in tort, [the] defendant's counterclaim does not fall under the [§] 2675(a) [counterclaim] exemption . . . and is accordingly subject to [the] procedural requirements." Andre, 2012 WL 728737 at *2.

Here, the principal action by the United States is in contract, not in tort, because it is based on Mr. Machinski's contractual obligation to repay his student loans. See Andre, 2012 WL 728737 at *2. Mr. Machinski's counterclaims therefore do not fall within the counterclaim exemption and are subject to § 2675(a)'s presentment requirement. Because he has not shown that he exhausted his administrative remedies, his claims do not satisfy the Government's conditions to the waiver of sovereign immunity — conditions that must be "strictly observed." See Mollison, 568 F.3d...