California Marine Cleaning, Inc. v. United States

• Court: District Court, S.D. California
• Decided: July 26, 2023
• Docket: 3:22-cv-00741
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CALIFORNIA MARINE Case No.: 22-cv-741-LAB-BLM CLEANING, INC., 12 ORDER Plaintiff, 13 v. 1) DENYING MOTION TO 14 DISMISS, [Dkt. 9]; and UNITED STATES OF AMERICA, 15 through the DEPARTMENT OF 2) GRANTING IN PART AND 16 THE NAVY, DENYING IN PART 17 Defendant. REQUEST FOR JUDICIAL NOTICE, [Dkt. 12-1] 18

19 Plaintiff California Marine Cleaning, Inc. (“Cal Marine”) sued the United 20 States, through the Department of the Navy (the “Navy”), in connection with the 21 July 2020 fire aboard the USS Bonhomme Richard (“BHR”), which at the time of 22 the fire was pier-side at Naval Base San Diego. Cal Marine alleges that the Navy 23 failed to take reasonable care in fire safety, prevention, and suppression aboard 24 the ship, and is liable for damages stemming from its negligent actions. The suit 25 invokes the Public Vessels Act (“PVA”), 46 U.S.C. §§ 31101, et seq., and the Suits 26 in Admiralty Act (“SIAA”), 46 U.S.C. §§ 30901, et seq. 27 The United States moves to dismiss for lack of subject matter jurisdiction 28 under Federal Rule of Civil Procedure 12(b)(1) (the “Motion”), arguing that 1 because the dispute relates to the execution of a government contract, Cal Marine 2 was required to exhaust its administrative remedies under the Contract Disputes 3 Act (“CDA”), 41 U.S.C. § 7102, prior to filing this suit, which the United States 4 alleges it hasn’t done. (Dkt. 9). Cal Marine opposes the Motion, arguing that 5 because this case is based in tort, not contract, the CDA’s exhaustion 6 requirements don’t apply, and this Court has federal question jurisdiction over Cal 7 Marine’s federal admiralty claims. (Dkt. 12). Cal Marine also filed a request for 8 judicial notice in support of its opposition. (Dkt. 12-1). 9 I. BACKGROUND 10 On September 4, 2018, the Naval Sea Systems Command awarded 11 National Steel and Shipbuilding Co. (“NASSCO”) a contract to perform repair work 12 onboard the BHR. (See Dkt. 9-2). NASSCO, in turn, subcontracted part of the 13 repair work—namely flushing, cleaning, and making gas-free tanks throughout the 14 ship—to Cal Marine. (See Dkt. 9-8). This work was ongoing when, in July 2020, a 15 fire broke out on the BHR, destroying some of Cal Marine’s equipment and 16 preventing it from completing the project. (Dkt. 1, Compl. ¶¶ 3, 42–44). 17 On October 18, 2021, the Navy’s Major Fires Review released a report 18 assessing the July 2020 fire and ultimately attributing the fire in part to several 19 failures by the Navy to follow its own policies, including failing to exclude 20 unauthorized individuals from entering the vessel, properly responding to the fire, 21 adhering to fire safety standards, and properly handling and stowing hazardous 22 and combustible materials. (Id. ¶ 19). The report also broadly discusses 23 ineffective day-to-day training, insufficient oversight and accountability, and 24 inconsistent attention and resourcing on pier-side fire safety and damage control 25 readiness. (Id. ¶ 20). Following the fire, the Navy commenced disciplinary 26 proceedings against multiple sailors, officers, and admirals. (Id. ¶ 21). Cal 27 Marine’s Complaint asserts three causes of action against the United States for 28 negligence, ultrahazardous activity, and respondeat superior liability. (Id. 1 ¶¶ 22–40). Cal Marine asserts these under the PVA and, in the alternative, under 2 the SIAA. (Id. ¶ 1). 3 II. LEGAL STANDARD 4 “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life 5 Ins. Co. of Am., 511 U.S. 375, 377 (1994). “Subject matter jurisdiction must exist 6 as of the time the action is commenced.” Morongo Band of Mission Indians v. Cal. 7 State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988). Rule 12(b)(1) of 8 the Federal Rules of Civil Procedure allows a defendant to move for dismissal on 9 the grounds that the court lacks subject matter jurisdiction over a case. Fed. R. 10 Civ. P. 12(b)(1). The burden is on the plaintiff to establish that the court has 11 subject matter jurisdiction over an action. Assoc. of Am. Med. Colls. v. United 12 States, 217 F.3d 770, 778–79 (9th Cir. 2000). In resolving an attack on its 13 jurisdiction, a court may go outside the pleadings and consider evidence beyond 14 the complaint relating to jurisdiction without converting the motion to dismiss into 15 a motion for summary judgment. Safe Air For Everyone v. Meyer, 373 F.3d 1035, 16 1039 (9th Cir. 2004). If the district court ultimately determines it has no jurisdiction 17 over the subject matter, “the action should [be] dismissed, regardless of the 18 parties’ preference for an adjudication in federal court.” Morongo Band of Mission 19 Indians, 858 F.2d at 1380. 20 III. ANALYSIS 21 A. Statutory Framework 22 Under the SIAA, the United States’ sovereign immunity is waived “in cases 23 where ‘a civil action in admiralty could be maintained’ against a private person in 24 the same situation.” Ali v. Rogers, 780 F.3d 1229, 1233 (9th Cir. 2015) (quoting 25 46 U.S.C. § 30903(a)). The SIAA permits a party to bring a civil action in personam 26 in admiralty against the United States where (1) the “vessel is owned by the United 27 States or operated on its behalf,” and (2) there is a “remedy cognizable in 28 admiralty for the injury.” Id. The SIAA “does not itself provide a cause of action. It 1 merely operates to waive the sovereign immunity of the United States in admiralty 2 suits.” Dearborn v. Mar Ship Operations, Inc., 113 F.3d 995, 996 n.1 (9th Cir. 3 1997). 4 Like the SIAA, the PVA also provides for the statutory waiver of federal 5 sovereign immunity in the admiralty context. The PVA applies to “civil action[s] in 6 personam in admiralty . . . for damages caused by a public vessel of the United 7 States.” 46 U.S.C. § 31102(a)(1). The Ninth Circuit has interpreted the phrase 8 “damages caused by a public vessel” broadly “to encompass all tort and contract 9 claims ‘arising out of the possession or operation of the ship.’” Tobar v. United 10 States, 639 F.3d 1191, 1198 (9th Cir. 2011) (emphasis in original) (quoting 11 Thomason v. United States, 184 F.2d 105, 107 (9th Cir. 1950)); see Canadian 12 Aviator, Ltd. v. United States, 324 U.S. 215, 224 (1945) (holding “[t]he consent to 13 suit embodied in the [PVA] thus extends to cases where the negligence of the 14 personnel of a public vessel in the operation of the vessel causes damage to other 15 ships, their cargoes, and personnel”). “The [SIAA] and the subsequently adopted 16 [PVA] are complementary jurisdictional statutes providing for admiralty suits 17 against the United States.” Aliotti v. United States, 221 F.2d 598, 602 (9th Cir. 18 1955). “[B]y virtue of their interrelated status, the SIAA and the PVA together 19 provide original and exclusive admiralty jurisdiction in the United States district 20 courts.” Guidry v. Durkin, 834 F.2d 1465, 1472 (9th Cir. 1987) (internal citation 21 and footnote omitted). 22 B. Admiralty Jurisdiction 23 The United States argues that dismissal is appropriate here because, 24 despite styling this as a tort case, Cal Marine’s claims actually sound in contract, 25 and as such, Cal Marine was required to first exhaust its administrative remedies 26 pursuant to the CDA, 41 U.S.C. §§ 7101 et seq., before bringing suit in federal 27 court. The United States represents that NASSCO submitted a Request for 28 Equitable Adjustment (“REA”) on Cal Marine’s behalf to the Navy, and this claim 1 is still pending before the Navy’s Contracting Officer. Cal Marine disputes this, 2 stating that it doesn’t have a REA claim with the Navy1 and, contrary to the United 3 States’ characterizations, its claims are entirely based in admiralty tort, thus falling 4 within the purview of this Court’s jurisdiction. The Court agrees with Cal Marine. 5 A plaintiff’s “[t]ort claims may sound in admiralty jurisdiction if they satisfy a 6 test with three components showing that the claim has the requisite maritime 7 flavor.” Ali, 780 F.3d at 1235 (citing Christensen v. Georgia-Pacific Corp., 279 8 F.3d 807, 814 (9th Cir. 2002)). The relevant tort or harm must’ve “(1) taken place 9 on navigable water (or a vessel on navigable water having caused an injury on 10 land), (2) a potentially disruptive impact on maritime commerce, and (3) a 11 substantial relationship to traditional maritime activity.” Id. (citing Jerome B. 12 Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534 (1995) 13 (internal quotations omitted)). Cal Marine’s tort claims sound in admiralty 14 jurisdiction because the fire occurred aboard the BHR while it was docked at the 15 Naval Base San Diego undergoing repairs and maintenance, a fact that isn’t 16 disputed by either party. See Sisson v. Ruby, 497 U.S. 358, 367 (1990) (finding a 17 fire that erupted on a yacht during the storage and maintenance of such a vessel 18 on navigable waters is related to maritime activity). As in Sisson, Cal Marine has 19 satisfied all three requirements for admiralty jurisdiction: (1) the fire occurred 20 aboard the BHR while it was docked at Naval Base San Diego, (2) the fire had a 21 potentially disruptive impact on maritime commerce by spreading to nearby 22 vessels or making the marina inaccessible while the fire was being contained and 23 extinguished over four days, and (3) maintenance or repairs of a vessel at a 24 marina on navigable waters is related to maritime activity. 25 // 26 27 1 NASSCO filed an REA claim, but Cal Marine has requested any claim involving 28 1 1. Applicability of CDA 2 A plaintiff “may not avoid the jurisdictional bar of the CDA merely by alleging 3 his contract dispute in the language of tort.” See Mendenhall v. Kusicko, 857 F.2d 4 1378, 1379 (9th Cir. 1988). The United States argues that Cal Marine’s tort claims 5 arose from and relate to a contract between the Navy and NASSCO, which 6 NASSCO then individually subcontracted to Cal Marine. According to the 7 Government, this limits the waiver of immunity in the PVA and SIAA. (Dkt. 9 at 15). 8 The Government contends, “the SAA and PVA provide general waivers of 9 sovereign immunity in maritime cases such as this, but because the losses in this 10 case relate to performance under a government contract, the more specific waiver 11 of sovereign immunity in the CDA applies.” (Id. at 16). The Court disagrees with 12 this position, and finds the case law cited in support of this proposition 13 unpersuasive. 14 Specifically, the United States quotes Southwest Marine, Inc. v. United 15 States for the proposition that the CDA “has been carefully drafted to give 16 jurisdiction to federal district courts after the administrative remedies mandated 17 by the CDA have been exhausted. . . . Then, and only then, can the contractor file 18 suit in federal district court if the CDA claim arises out of a maritime contract.” 926 19 F. Supp. 142, 144 (N.D. Cal. 1995). Southwest Marine is distinguishable because 20 it involved only claims for breach of government procurement contracts that were 21 subject to the CDA. Id. at 143. The Ninth Circuit has rejected the conclusion “the 22 CDA provides the exclusive basis for litigation of claims relating to government 23 contracts.” Wright v. U.S. Postal Serv., 29 F.3d 1426, 1428 (9th Cir. 1994). So 24 long as there is another statute that provides an independent grant of jurisdiction 25 to the district courts, the CDA doesn’t preempt a subcontractor from bringing its 26 action under that other statute, even where the contracts at issue are within the 27 scope of the CDA. Id. at 1430. Here, Cal Marine brings maritime tort claims that 28 1 provide an independent basis for jurisdiction. 2 Although NASSCO can’t sue the United States directly for contract claims 3 until it exhausts its remedies provided by the CDA, this doesn’t preclude Cal 4 Marine from bringing its maritime tort claims. The United States relies on Eastern, 5 Inc. v. Shelley’s of Delaware, Inc., 721 F. Supp. 649 (D.N.J. 1989), for the 6 proposition that subcontractors can’t access district courts when the CDA 7 preempts contractors from bringing its contract disputes to district courts. (Dkt. 9 8 at 12). In Eastern, the plaintiff alleged breach of contract, among other claims, and 9 argued that as an unpaid subcontractor it held an interest in the contract balance 10 owed by the U.S. Postal Service to Shelley’s and/or its sureties. 721 F. Supp. at 11 650. Unlike the plaintiff in Eastern, Cal Marine hasn’t alleged any breach of 12 contract claims against the Navy that would require it to adhere to the CDA first to 13 exhaust its administrative remedies or wait for NASSCO to sponsor its claims. 14 The United States also points to Shaver Transportation Co. v. United States, 15 which states that “the CDA not only applies to PVA and SAA cases, but 16 supersedes those statutes when their terms conflict.” 948 F. Supp. 2d 1193, 1199 17 (D. Or. 2013). However, unlike in this case, the plaintiff in Shaver, a subcontractor, 18 brought a breach of contract claim against the United States in district court 19 without first proceeding through the administrative remedies of the CDA. See id. 20 The court in Shaver reasoned: (1) exhaustion of administrative remedies was a 21 prerequisite to its jurisdiction over contract claims brought under the CDA; (2) as 22 a subcontractor lacking privity with the United States, plaintiff was unable to 23 pursue the CDA’s administrative remedies; and (3) therefore the court lacked 24

25 2 The United States also argues the “Exhaustion Doctrine” serves three main purposes that promote judicial economy. (Dkt. 9 at 9–10). One benefit is that the 26 Navy may settle all claims through the REA process, thereby avoiding the time 27 and expense of costly litigation. However, if the Navy was going to settle the claims, there is no reason why it can’t settle with Cal Marine through the litigation 28 1 jurisdiction. See id. at 1201–02. Importantly, the Shaver court also mentions “the 2 CDA is not necessarily ‘the exclusive basis for litigation of claims relating to 3 government contracts’ before the U.S. District Courts. . . . [E]quitable claims 4 related to government contracts can be entertained in the district courts (rather 5 than in the U.S. Court of Federal Claims) as long as there is an independent basis 6 for jurisdiction separate from the CDA.” Id. at 1201 (internal citation omitted). 7 Cal Marine hasn’t claimed any contractual right or obligation. In fact, it 8 doesn’t have a contract with the Navy. Absent a contract between the United 9 States and Cal Marine, officials who administer CDA claims don’t have jurisdiction 10 over any claims brought by Cal Marine directly. NavCom Def. Elecs., Inc. v. Ball 11 Corp., 92 F.3d 877, 879 (9th Cir.1996) (holding “contracting officers have 12 jurisdiction only over claims by contractors against the government, not over 13 claims brought directly by subcontractors”). Instead, the Complaint refers to 14 common law negligence principles as a source of rights. Negligence, strict liability 15 based on ultrahazardous activity, and respondeat superior all lie outside of 16 contract law, rendering the CDA inapplicable to Cal Marine’s tort claims. 17 2. Claims Arising During Performance of a Contract 18 The duty to exercise reasonable care to prevent risks of harm to others is 19 based upon tort law. See Rayonier Inc. v. United States, 352 U.S. 315, 319–20 20 (1957); see also Restatement (Third) of Torts: Phys. and Emot. Harm § 7 (2010). 21 The United States argues that while there isn’t privity of contract between the Navy 22 and Cal Marine, the dispute arises from and relates to the BHR contract because 23 the contract “imposes a duty on both the government and the contractor to protect 24 the vessel from fire.” (Dkt. 9 at 17). However, the fact that a contract requires 25 specified safety precautions doesn’t negate liability for a tort claim where the 26 contractor fails to follow those specifications. See Rooney v. United States, 634 27 F.2d 1238, 1244 (9th Cir. 1980). 28 The United States also argues that Cal Marine equipment was present on 1 the ship only due to contractual relations. While true, this doesn’t affect the tortious 2 nature of the claim. That the alleged tort occurred in the context of contractual 3 relationships doesn’t per se render the claim contractual in nature. Aleutco Corp. 4 v. United States, 244 F.2d 674, 679 (3d Cir. 1957) (holding court had jurisdiction 5 where elements of both contract and tort were involved in the claim) (internal 6 citations omitted). Access to federal courts shouldn’t be denied to a plaintiff “who 7 pleads and proves a classic in tort” because this would go against Congress’ intent 8 to waive the United States’ sovereign immunity in certain cases. Id. 9 Finally, the United States points to the Defense Financial Acquisition 10 Regulation (“DFAR”) provisions incorporated into Cal Marine’s contract with the 11 prime contractor, NASSCO, which states that the parties agreed to settle all 12 disputes through the CDA process. DFAR 252.243-7002 lays out the proper 13 procedure for requests for equitable adjustment of contract pricing changes. 14 (Dkt. 9-22 at 14). DFAR 5252.233-9103 further delineates the required 15 information for any CDA administrative remedy filed in relation to “any other act 16 or omission to act on the part of the Government.” (Id. at 8). The most natural 17 reading of these regulations is that they extend requirements about what 18 information should be included in CDA administrative claims to all such claims 19 and prohibit contractors from withholding any relevant information on the basis 20 that the request didn’t relate to a “change order” or an engineering change. The 21 United States denies otherwise applicable tort relief against the Government to all 22 subcontractors, but these DFAR regulations shouldn’t be read to radically alter 23 tort liability or sovereign immunity across the vast web of government contracts. 24 None of the cases cited by the government indicate that an otherwise 25 well-plead tort claim brought by a subcontractor against the United States must 26 first exhaust the CDA’s administrative remedies for contractual disputes. Nor is 27 there any clear indication by Congress that the CDA should limit the United States’ 28 traditional maritime tort liability. In fact, there is no reference to tort in the CDA. 1 The only reference to maritime affairs in the CDA is a provision, 41 U.S.C. § 2 7102(d), stating district courts have jurisdiction over appeals from the 3 administrative remedy for maritime contracts. If anything, the statute indicates 4 deference to district court jurisdiction over claims in admiralty. Because this Court 5 has jurisdiction over Cal Marine’s admiralty tort claims, the United States’ Motion 6 is DENIED. 7 IV. REQUEST FOR JUDICIAL NOTICE 8 Courts may “judicially notice a fact that is not subject to reasonable dispute 9 because it: (1) is generally known within the trial court’s territorial jurisdiction; or 10 (2) can be accurately and readily determine from sources whose accuracy cannot 11 reasonably be questioned.” Fed. R. Evid. 201(b). Proper subjects of judicial notice 12 may include legislative documents and publicly accessible websites. Anderson v. 13 Holder, 673 F.3d 1089, 1094 n.1 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 14 629 F.3d 992, 998–99 (9th Cir. 2010). Cal Marine’s request is GRANTED IN 15 PART as to the following facts: (1) the USS BHR is a vessel owned by the United 16 States; (2) a fire occurred on the BHR in July 2020; (3) damages were caused by 17 the fire; and (4) the BHR was in navigable waters at the time of the fire in July 18 2020. (Dkt. 12-1 ¶¶ 1–4). Although the United States objects to Cal Marine’s 19 request for judicial notice, it doesn’t contest that a fire occurred on the BHR in July 20 2020 at Naval Base San Diego, (Dkt. 4 ¶ 3), and damages were caused by the 21 fire, (Dkt. 9 at 5). Cal Marine’s request is DENIED IN PART AS MOOT as to the 22 remaining facts as those facts are irrelevant to the determination of subject matter 23 jurisdiction.3 24 25 3 Although Cal Marine requests the Court take judicial notice of the United States’ 26 admittance of subject matter jurisdiction, a party can’t forfeit or waive subject 27 matter jurisdiction because it involves a court’s power to hear a case. Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006); United States v. Cotton, 535 U.S. 625, 630 28 1 CONCLUSION 2 The United States’ motion to dismiss for lack of subject matter jurisdiction is 3 ||/DENIED. (Dkt. 9). The Court GRANTS IN PART and DENIES IN PART Cal 4 ||Marine’s request for judicial notice. (Dkt. 12-1). 5 IT IS SO ORDERED. 6 7 ||Dated: July 26, 2023 lau A. (buy WN 8 Honorable Larry Alan Burns 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28