Everest National Insurance Co. v. United States

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 19, 2022
• Docket: 21-16082
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 19 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT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,

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.