Everest National Insurance Co. v. United States ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 19 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ELEODORO GARCIA; JONATHAN X. No. 21-16082
ABELL, 21-16427
Plaintiffs, D.C. No. 1:19-cv-00658-KJM
and
MEMORANDUM*
EVEREST NATIONAL INSURANCE
COMPANY, a/s/o Nugate Group, LLC,
Intervenor-Plaintiff-
Appellant,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
ELEODORO GARCIA; JONATHAN X. No. 21-16205
ABELL,
D.C. No. 1:19-cv-00658-KJM
Plaintiffs-Appellants,
and
EVEREST NATIONAL INSURANCE
COMPANY, a/s/o Nugate Group, LLC,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Intervenor-Plaintiff,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Hawaii
Kenneth J. Mansfield, Magistrate Judge, Presiding
Argued and Submitted July 5, 2022
Honolulu, Hawaii
Before: WARDLAW, NGUYEN, and OWENS, Circuit Judges.
Plaintiffs Eleodoro Garcia and Jonathan Abell (“Plaintiffs”) and Everest
National Insurance Company (“Everest”) appeal from the district court’s orders
dismissing their complaints for lack of subject matter jurisdiction and denying their
post-judgment motions for reconsideration and for leave to amend. Reviewing the
district court’s dismissal order de novo, Lam v. United States, 979 F.3d 665, 670
(9th Cir. 2020), we affirm. Reviewing the court’s denial of Plaintiffs’ and
Everest’s motions for reconsideration and for leave to amend for abuse of
discretion, United Nat’l Ins. Co. v. Spectrum Worldwide, Inc., 555 F.3d 772, 780
(9th Cir. 2009), we reverse and remand. As the parties are familiar with the facts,
we do not recount them here.
1. As a preliminary matter, Plaintiffs and Everest contend that the district
2
court erred by construing the government’s Federal Rule of Civil Procedure
12(b)(1) motion to dismiss as a facial attack. Their argument fails for at least two
reasons. First, the government characterized its own motion as a facial attack in its
reply memorandum, and both Plaintiffs and Everest had an adequate opportunity to
respond accordingly at the March 25, 2021 telephonic hearing. Second, Plaintiffs
and Everest must adequately plead subject matter jurisdiction in their respective
complaints. Fed. R. Civ. P. 8. Because the facial sufficiency of their allegations is
evaluated prior to the evidentiary sufficiency of the documents supporting those
allegations, the district court’s decision to resolve the motion on facial grounds was
not erroneous.
2. Nor did the district court err in concluding that it lacked subject matter
jurisdiction under the Discretionary Function Exception (“DFE”) to the Federal
Tort Claims Act (“FTCA”). 28 U.S.C. §§ 1346, 2674, 2680. Although Army
Regulation (“AR”) 350-19 ¶ 4-12(b)(1) and Department of the Army Pamphlet
(“DA Pam”) 385-63 ¶ 2-1(e) appear to require clearance of Unexploded Ordnances
(“UXOs”) from the areas of Makua Military Reservation where access is
permitted, they do not specify the frequency or degree of UXO clearance required.
AR 350-19 ¶ 4-12(c), meanwhile, explicitly grants each Army Installation
discretion to “determine the frequency and degree to which range clearance is
required to support sustainable and safe use of ranges for operational purposes.”
3
AR 350-19 ¶ 4-12(b)(1) and DA Pam 385-63 ¶ 2-1(e)’s mandatory-sounding
language does not overcome the explicit grant of discretion in AR 350-19 ¶ 4-
12(c). See Gonzalez v. United States, 814 F.3d 1022, 1030 (9th Cir. 2016)
(holding that “[v]iewed in context, mandatory-sounding language” need not
overcome the “discretionary character of [a regulation]”).
Because the grant of discretion is express, we may presume that the Army’s
failure to clear Plaintiffs’ worksite of all UXOs was grounded in policy. Lam, 979
F.3d at 681 (citing United States v. Gaubert, 499 U.S. 315, 324 (1991)). But even
without that presumption, the Army points to factors guiding the frequency and
degree of UXO clearance that involve the kind of policy considerations that the
DFE was designed to protect, including: the “explosives hazards” when UXOs
accumulate on the range, AR 350-19 ¶ 4-12(c)(5); the countervailing need to
ensure UXO disposal methods are “practical and safe,” AR 350-19 ¶ 4-12(d); and
economic feasibility, AR 350-19 ¶ 3-19.
To the extent Plaintiffs and Everest contend that the Army must at least have
provided UXO avoidance support under AR 350-19 ¶ 4-8(e), the claim is
unavailing because neither Plaintiffs nor Everest pleaded in its complaint that such
support was not provided.
To the extent Everest argues that the Army violated its own regulations
requiring UXO warning signs to restrict unauthorized access—namely, DA Pam
4
385-63 ¶¶ 2-1(b) and 2-2—the argument fails because, again, Everest alleged no
facts in its complaint suggesting these regulations apply or were violated. The
conclusory allegation that the Army failed to warn Plaintiffs or their employer is
not entitled to a presumption of truth, even on a motion to dismiss. See Ashcroft v.
Iqbal, 556 U.S. 662, 678–79 (2009).
For these reasons, the district court did not err in dismissing Plaintiffs’ and
Everest’s complaints under the DFE, and we affirm the dismissal order.1
3. Nevertheless, we conclude that the court erred in dismissing the
complaint without granting leave to amend and thus abused its discretion in
denying Plaintiffs’ and Everest’s post-judgment motions for reconsideration and
leave to amend. We have previously held that dismissal without leave to amend is
inappropriate unless it is clear that the complaint could not be saved by any
amendment. Hoang v. Bank of Am., N.A., 910 F.3d 1096, 1102 (9th Cir. 2018).
And we have added that “[l]eave to amend can and should generally be given, even
in the absence of such a request by the party.” Id.; see also Ebner v. Fresh, Inc.,
838 F.3d 958, 963 (9th Cir. 2016). Accordingly, we reverse the denial of the
1
Everest also argues that the government breached Section 2.1 of the grounds
maintenance contract by telling Plaintiffs where to cut grass and representing that
their worksite was “free and clear” of UXOs. But Everest does not tie this conduct
to any theory of negligence. To the extent Everest is implying it was a negligent
misrepresentation, the claim is barred by the misrepresentation exception to the
FTCA. See 28 U.S.C. § 2680(h); Esquivel v. United States, 21 F.4th 565, 577-78
(9th Cir. 2021).
5
motions to reopen the judgment, and remand with instructions to grant Plaintiffs
and Everest leave to amend their respective complaints.
AFFIRMED in part, REVERSED in part, and REMANDED.2
2
Each party shall bear its own costs on appeal.
6