1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 SAFECO INSURANCE COMPANY OF Case No. 20-cv-00211-MMA (AHG) AMERICA, a New Hampshire 12 Corporation, ORDER GRANTING THE UNITED 13 STATES’ MOTION TO DISMISS Plaintiff,
14 v. [Doc. No. 12] 15 LARRY NELSON, an individual, 16 TRACY IRENE GOLDEN, an individual, SYLENA SANDERS, an individual, the 17 UNITED STATES OF AMERICA, and 18 Does 1 – 5, 19 Defendants. 20 21 On January 31, 2020, Plaintiff Safeco Insurance Company of America (“Plaintiff”) 22 filed a complaint against Larry Nelson (“Nelson”), Tracy Irene Golden, Sylena Sanders, 23 and the United States of America. See Doc. No. 1. Plaintiff seeks a declaratory judgment 24 from the Court declaring, amongst other things, that it has no duty to defend its insured, 25 Larry Nelson, in any of the pending suits filed against him by the respective defendants. 26 See Doc. No. 1. at 29–30.1 27 1 All citations refer to the pagination assigned by the CM/ECF system. All docket references refer to the 28 1 The United States moves to dismiss for lack of subject matter jurisdiction pursuant 2 to Federal Rule of Civil Procedure 12(b)(1). See Doc. No. 12. Plaintiff filed an 3 opposition to the United States’ motion, to which the United States replied. See Doc. 4 Nos. 14, 17. The Court took the matter under submission on the papers and without oral 5 argument pursuant to Civil Local Rule 7.1.d.1. See Doc. No. 18; Fed. R. Civ. P. 78(b). 6 For the reasons set forth below, the Court GRANTS the United States’ motion. 7 BACKGROUND 8 The root of this dispute is a suit between two of the defendants in Plaintiff’s 9 declaratory judgment action, the United States and Nelson. See Doc. No. 1; Doc. No. 1-2 10 (“Ex. A”). The United States filed a civil enforcement suit against Nelson on June 11, 11 2019 alleging numerous violations of Title VIII of the Civil Rights Act of 1968, as 12 amended, 42 U.S.C. §§ 3601, et seq. (“the Fair Housing Act”). See Doc. No. 1 ¶ 8; Ex. 13 A. These allegations include “that Nelson has subjected tenants of his residential rental 14 properties to discrimination, based on sex” as well as allegations of sexual harassment 15 towards Nelson’s female tenants. Doc. No. 1 ¶12, 12(a)–(j). 16 Plaintiff is not a party to the United States’ suit against Nelson. See Ex. A. 17 Plaintiff relates to that suit only in that it issued Nelson several insurance policies 18 covering the rental properties at which the alleged statutory violations occurred. See 19 Doc. No. 1 ¶¶ 24–38; Ex. A. Plaintiff agreed to defend Nelson in the United States’ suit 20 against him but subjected that defense “to a full and complete reservation of rights.” 21 Doc. No. 1 ¶ 39. The United States’ suit against Nelson is ongoing. See S.D. Cal. Case. 22 No. 19cv1087-CAB-WVG. 23 Meanwhile, Plaintiff initiated this action against Nelson, the United States, and 24 other individuals who have also sued Nelson based on similar allegations to those of the 25 United States. See Doc. No. 1. Plaintiff alleges that the Court has subject matter 26 jurisdiction over the United States pursuant to 28 U.S.C. § 1332 and the Administrative 27 Procedure Act, 5 U.S.C. § 702. See id. ¶¶ 1, 6. Plaintiff seeks a declaration and 28 1 corresponding judgment establishing that it has no duty to defend or indemnify Nelson 2 against any of the claims brought against him by the United States. See id. ¶ 57. 3 The United States moves to dismiss Plaintiff’s claim against it for lack of subject 4 matter jurisdiction on three grounds. See Doc. No. 12. First, the United States argues 5 that no case or controversy exists between it and Plaintiff. See id. at 3–5. Second, the 6 United States asserts that it has not waived its sovereign immunity and is therefore 7 immune from Plaintiff’s suit. See id. at 5–6. Finally, the United States contends that 8 Plaintiff’s reliance on section 702 of the Administrative Procedure Act “to circumvent the 9 jurisdictional failures in its complaint . . . is also misplaced.” Id. at 6. 10 In response, Plaintiff sets forth two arguments. See Doc. No. 14. First, Plaintiff 11 asserts that a case or controversy exists between it and the United States because the 12 United States is “a third-party claimant and potential judgment creditor under California 13 Insurance Code section 11580(b)(2).” Id. at 5; see id. at 5–7. Second, Plaintiff contends 14 that section 702 of the Administrative Procedure Act constitutes a waiver of sovereign 15 immunity for actions seeking declaratory relief and the United States is properly subject 16 to suit as a result. See id. at 5, 7–9. 17 LEGAL STANDARD 18 Federal Rule of Civil Procedure 12(b)(1) allows for dismissal of a complaint for 19 lack of subject matter jurisdiction. “[F]ederal courts are courts of limited jurisdiction.” 20 Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978), superseded by statute 21 on other grounds, 28 U.S.C. § 1367, as recognized in LaSalle Nat’l Trust, NA v. 22 Schaffner, 818 F. Supp. 1161, 1165 (N.D. Ill. 1993). “A federal court is presumed to lack 23 jurisdiction in a particular case unless the contrary affirmatively appears.” Stock West, 24 Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 25 1989) (citing Cal. ex rel. Younger v. Andrus, 608 F.2d 1247, 1249 (9th Cir. 1979)). 26 Subject matter jurisdiction must exist when the action is commenced. Morongo Band of 27 Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988) 28 (citing Mollan v. Torrance, 22 U.S. (9. Wheat.) 537, 538 (1824)). Further, subject matter 1 jurisdiction may be raised “at any stage of the litigation.” Arbaugh v. Y&H Corp., 546 2 U.S. 500, 506 (2006); see also Fed. R. Civ. P. 12(h)(3) (“If the court determines at any 3 time that it lacks subject-matter jurisdiction, the court must dismiss the action.”). 4 A facial attack on jurisdiction asserts that the allegations in a complaint are 5 insufficient to invoke federal jurisdiction. Safe Air for Everyone v. Meyer, 373 F.3d 6 1035, 1039 (9th Cir. 2004). In resolving a facial challenge to jurisdiction, a court accepts 7 the allegations of the complaint as true and draws all reasonable inferences in favor of the 8 plaintiff. Doe v. Holy See, 557 F.3d 1066, 1073 (citing Wolfe v. Strankman, 392 F.3d 9 358, 362 (9th Cir. 2004)). 10 DISCUSSION 11 I. Sovereign Immunity 12 The United States moves for dismissal on the grounds that it has not waived its 13 sovereign immunity from suit and Plaintiff’s reliance on the Administrative Procedure 14 Act (“APA”) to establish such a waiver is inapposite. See Doc. No. 12 at 5–7. Plaintiff 15 responds by reiterating its reliance on the general waiver of sovereign immunity 16 articulated in section 702 of the APA. Plaintiff asserts that the United States’ “coercive 17 action against [Plaintiff’s] insured” constitutes a “final agency action” subjecting the 18 United States to suit within the meaning of the APA. See Doc. No. 14 at 9. 19 It is an unquestioned principle that the United States is a sovereign entity that is not 20 amenable to suit without its consent. See, e.g., McGuire v. United States, 550 F.3d 903, 21 910 (9th Cir. 2008). It is also well-established that the burden of overcoming sovereign 22 immunity lies with the party bringing suit against a sovereign. See Dunn & Black P.S. v. 23 United States, 492 F.3d 1084, 1088 (9th Cir. 2007) (citing Cunningham v. United States, 24 786 F.2d 1445, 1446 (9th Cir. 1986)). That is, absent a positive demonstration that 25 sovereign immunity does not apply, this Court must presume that the United States is not 26 amenable to suit. See Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985) (“Where 27 a suit has not been consented to by the United States, dismissal of the action is 28 required.”); see also United States v. Mitchell, 463 U.S. 206, 212 (1983) (“It is axiomatic 1 that the United States may not be sued without its consent and that the existence of 2 consent is a prerequisite for jurisdiction.”). 3 The question, then, is whether Plaintiff has affirmatively pleaded around the 4 United States’ sovereign immunity. The Court concludes that Plaintiff has not. 5 In its opposition to the United States’ motion, Plaintiff offers two statutory grounds 6 for establishing a waiver of sovereign immunity, the Declaratory Judgment Act, 28 7 U.S.C. § 2201, and section 702 of the APA. See Doc. No. 14 at 7. However, the 8 Declaratory Judgment Act functions solely as a procedural mechanism. See Aetna Life 9 Ins. Co. of Hartford v. Haworth, 300 U.S. 227, 240 (1937) (“[T]he operation of the 10 Declaratory Judgment Act is procedural only.”). The Declaratory Judgment Act is 11 neither a waiver of sovereign immunity nor an independent grant of jurisdiction. See 12 Brownell v. Ketcham Wire & Mfg. Co., 211 F.2d 121, 128 (9th Cir. 1954); see also 13 Fiedler v. Clark, 714 F.2d 77, 79 (9th Cir. 1983) (per curiam) (“The Declaratory 14 Judgment Act does not provide an independent jurisdictional basis for suits in federal 15 court.”); Walton v. Fed. Bureau of Prisons, 533 F. Supp. 2d 107, 114 (D.D.C 2008) 16 (citing Balistrieri v. United States, 303 F.2d 617, 618 (7th Cir. 1962)) (finding that the 17 Declaratory Judgment Act does not waive sovereign immunity). Rather, it “merely 18 provides an additional remedy in cases where jurisdiction is otherwise established.” 19 Staacke v. U.S. Sec’y of Labor, 841 F.2d 278, 280 (9th Cir. 1988) (citing Luttrell v. 20 United States, 644 F.2d 1274, 1275 (9th Cir. 1980)). 21 Additionally, Plaintiff alleges that section 702 of the APA establishes the United 22 States’ waiver of sovereign immunity. Section 702 states in relevant part: 23 A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the 24 meaning of a relevant statute, is entitled to judicial review 25 thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or 26 an officer or employee thereof acted or failed to act in an official 27 capacity or under color of legal authority shall not be dismissed 28 1 nor relief therein denied on the ground that it is against the United States or that the United States is an indispensable party. 2
3 4 5 U.S.C. § 702. 5 The Ninth Circuit has conflicting interpretations of the scope of this provision.2 6 For example, in one case, the Ninth Circuit interpreted section 702 as a general waiver of 7 sovereign immunity “in actions seeking nonmonetary relief against legal wrongs for 8 which governmental agencies are accountable.” Presbyterian Church (U.S.A.) v. United 9 States, 870 F.2d 518, 525 (9th Cir. 1989) (footnote omitted). In so doing, the Ninth 10 Circuit held that section 702’s application was not limited to the context of “agency 11 action” as the APA defines the term. Id. (“This waiver was clearly intended to cover the 12 full spectrum of agency conduct, regardless of whether it fell within the technical 13 definition of ‘agency action’ contained in § 551(13).”). However, in a subsequent 14 opinion, the Ninth Circuit recognized that “the APA’s waiver of sovereign immunity 15 contains several limitations.” Gallo Cattle Co. v. U.S. Dep’t of Agric., 159 F.3d 1194, 16 1198 (9th Cir. 1998). Among these limitations is section 704’s requirement that agency 17 action either be made reviewable by statute or constitute “final agency action.” See id. 18 (quoting 5 U.S.C. § 704). 19 The Ninth Circuit has acknowledged the conflict between these opinions, going so 20 far as to state that there is “no way to distinguish The Presbyterian Church from Gallo 21 Cattle,” but nevertheless has declined to resolve the issue. Gros Ventre Tribe v. United 22 States, 469 F.3d 801, 809 (9th Cir. 2006); see also EEOC v. Peabody W. Coal Co., 610 23 F.3d 1070, 1086 (9th Cir. 2010) (recognizing the tension between Presbyterian Church 24 and Gallo Cattle and stating “[w]e similarly need not resolve this tension here.”). In any 25 26 2 “The question of how [section 702] should be interpreted has generated intra-and inter-circuit splits 27 and general confusion.” Kathryn E. Kovacs, Scalia’s Bargain, 77 Ohio St. L.J. 1155, 1170 (2016). Moreover, “[o]n the question of how the waiver of sovereign immunity in § 702 relates to the other 28 1 event, the Court applies the principles expressed in both opinions and finds Plaintiff’s 2 invocation of section 702 misplaced under both standards. 3 Plaintiff interprets section 702 as waiving the United States’ “sovereign immunity 4 for any action stating a claim against the United States and seeking relief other than 5 money damages,” and cites to Presbyterian Church in support. See Doc. No. 14 at 7-8 6 (emphasis in original) (citing Presbyterian Church, 870 F.2d at 525–26). While the 7 Ninth Circuit has observed that “[t]his waiver was clearly intended to cover the full 8 spectrum of agency conduct, regardless of whether it fell within the technical definition 9 of ‘agency action’ contained in § 551(13),” Presbyterian Church, 870 F.2d at 525, there 10 are fundamental differences between Presbyterian Church and the present case that 11 preclude the extension of the section 702 waiver here. 12 Presbyterian Church involved alleged First and Fourth Amendment violations 13 perpetrated by the agency during the course of an investigation targeting the plaintiff 14 religious institutions. See 870 F.2d at 520–24. The plaintiffs’ constitutional claims were 15 premised on “agency action” directed specifically against the plaintiffs, not against a 16 third party. Moreover, the constitutional nature of the plaintiffs’ claims provided an 17 underlying basis for subject matter jurisdiction which is simply not present in this case. 18 Second, as already noted, the Ninth Circuit has established that section 702 applies 19 to “legal wrongs for which governmental agencies are accountable.” Id. The D.C. 20 Circuit has provided persuasive guidance defining the term “legal wrong” within the 21 meaning of the APA. According to the D.C. Circuit “‘legal wrong’ means such wrong as 22 particular statutes and the courts have recognized as constituting grounds for judicial 23 review.” Kansas City Power & Light Co. v. McKay, 225 F.2d 924, 932 (D.C. Cir. 1955). 24 In other words, “the invasion of a legally protected right” is a “legal wrong.” See Pa. 25 R.R. Co. v. Dillon, 335 F.2d 292, 294 (D.C. Cir. 1964) (citing Gonzales v. Freeman, 334 26 F.2d 570, 576 n.6 (D.C. Cir. 1964)). 27 Here, it is far from clear that the United States has committed a legal wrong against 28 Plaintiff. Plaintiff’s suit is a contract dispute between it and its insured, and the United 1 States is not a party to their agreement. See Doc. No. 1; Doc. No. 12. The Court is 2 reluctant to classify a civil enforcement action brought by the United States under the 3 auspices of the Fair Housing Act against an insured as a “legal wrong[] for which 4 governmental agencies are accountable” to the insurer. See Presbyterian Church, 870 5 F.2d at 525. Further, Plaintiff cannot rely on the Fair Housing Act to supply such a 6 wrong or assert that it has been “adversely affected or aggrieved by agency action” as 7 stated in section 702. See 5 U.S.C. § 702. By its own terms, the Fair Housing Act 8 defines “aggrieved person” as someone who “claims to have been injured by a 9 discriminatory housing practice,” 42 U.S.C. § 3602(i)(1), or “believes that such person 10 will be injured by a discriminatory housing practice that is about to occur.” Id. § 11 3602(i)(2). Plaintiff is neither. Nor can Plaintiff claim to be a “respondent” within the 12 meaning of the Fair Housing Act. According to section 3602, a “respondent” is “the 13 person or other entity accused in a complaint of an unfair housing practice,” id. § 14 3602(n)(1), or “any other person or entity identified in the course of investigation as 15 required with respect to respondents so identified under section 810(a).” Id. § 16 3602(n)(2). Because Plaintiff was not sued by the United States in its enforcement action 17 and has not established that section 3602(n)(2) applies, it cannot claim to be a 18 “respondent.” See Doc. No. 1 Ex. 1; Doc. No. 12 at 4; § 3602(n). Plaintiff has provided 19 no other theories through which it might have suffered a “legal wrong” as a result of 20 agency action. See Doc. No. 14. Thus, Plaintiff cannot claim a waiver of sovereign 21 immunity under section 702 in accordance with Presbyterian Church. 22 The case for dismissing the United States is even clearer under the principles 23 articulated in Gallo Cattle. In Gallo Cattle, the Ninth Circuit held that section 704 of the 24 APA limits section 702’s waiver of sovereign immunity. 159 F.3d at 1198. As a result, 25 the sovereign immunity waiver would only apply in instances of “final agency action.” 26 See id.; §704. The Ninth Circuit has held that civil actions filed by the United States, 27 such as civil asset forfeiture suits, do not qualify as “final agency action.” See City of 28 Oakland v. Lynch, 798 F.3d 1159, 1166 (9th Cir. 2015) (“The Government’s decision to 1 file the forfeiture action is not ‘final,’ because it is not an action ‘by which rights or 2 obligations have been determined, or from which legal consequences will flow.’”). This 3 principle has been applied by other district courts, including in cases where the FTC has 4 filed civil actions. See Am. Fin. Benefits Ctr. v. FTC, No. 17-04817, 2018 WL 3203391, 5 at *7–9, (N.D. Cal. May 29, 2018). The United States’ civil enforcement action under 6 the Fair Housing Act is analogous to these proceedings and therefore also fails to qualify 7 as “final agency action.” See id.; Lynch, 798 F.3d at 1166; Ex. A. Thus, Plaintiff’s 8 assertion of a waiver of sovereign immunity through section 702 misses the mark under 9 Gallo Cattle as well. 10 Lastly, conflating sovereign immunity and jurisdiction,3 Plaintiff argues that in 11 cases where a plaintiff is seeking declaratory relief but “does not raise a federal question, 12 it may stake the federal court’s jurisdiction on ‘a defense to a claim that would raise a 13 federal question and that defendant could have asserted in a coercive action.’” See Doc. 14 No. 14 at 8 (quoting Bell & Beckwith v. United States, 766 F.2d 910, 912 (6th Cir. 15 1988)). As such, Plaintiff contends that “in declaratory judgment actions, ‘federal 16 question jurisdiction exists if such jurisdiction would have existed in a coercive action by 17 the defendant.’” Id. (quoting Bell & Beckwith, 766 F.2d at 912). Plaintiff reasons that 18 since the United States has already filed suit against Nelson on the basis of a federal 19 question, this requirement is met. See id. at 9. The Court disagrees for two reasons. 20 First, both cases cited by Plaintiff in support of the aforementioned argument 21 pertain to interpleader actions. See Bell & Beckwith, 766 F.2d 910; Morongo, 858 F.2d 22 1376. This, however, is not an interpleader action. See Doc. No. 1. Thus, Bell & 23 Beckwith’s reliance on Federal Rule of Civil Procedure 22 to establish federal question 24 jurisdiction is inapplicable here. See 766 F.2d at 913–17. Second, the Supreme Court 25
26 3 As one administrative law scholar has clearly and concisely explained, “[t]o sue the United States, a complaint must state a basis for jurisdiction, a cause of action, and a waiver of sovereign immunity. A 27 single statute may provide all three, but they are distinct requirements. Subject matter jurisdiction implicates ‘the courts’ statutory or constitutional power to adjudicate the case.’ The APA does not 28 1 has stated that “[f]ederal courts have regularly taken original jurisdiction over declaratory 2 judgment suits in which, if the declaratory judgment defendant brought a coercive action 3 to enforce its rights, that suit would necessarily present a federal question.” Franchise 4 Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 19 5 (1983), superseded by statute on other grounds 28 U.S.C. § 1441(e), as recognized in 6 Marda v. Klein, 865 F.2d 782, 783 (6th Cir. 1989). The Supreme Court indicated that, 7 for example, declaratory judgment actions pertaining to patent rights met this standard. 8 See id. at 19 n. 19 (citing E. Edelman & Co. v. Triple-A Specialty Co., 885 F.2d 852 (7th 9 Cir. 1937)). Here, the United States has filed no such action against Plaintiff. The 10 “coercive action” at issue has been filed against Nelson. 11 The Supreme Court also noted its previous dicta “that a declaratory judgment 12 plaintiff could not get original federal jurisdiction if the anticipated lawsuit by the 13 declaratory judgment defendant would not ‘arise under’ federal law.” Id. (citing Pub. 14 Serv. Comm’n of Utah v. Wycoff Co., 344 U.S. 237, 248 (1952)) (emphasis in original). 15 The fact remains that Plaintiff is not a party to the United States’ suit against Nelson and 16 the focus of this action is Plaintiff’s contractual obligation to Nelson under its policies. 17 See Doc. No. 1 Ex. A; Doc. No. 1. Thus, the United States’ separate suit against Nelson 18 does not cause this declaratory action to “arise[] under federal law.” See Doc. No. 14 at 19 8–9; Franchise Tax Bd., 463 U.S. at 19, 19 n.19. 20 In sum, neither the Declaratory Judgment Act, section 702 of the APA, nor the 21 separate suit against Nelson provide the requisite waiver of the United States’ sovereign 22 immunity or otherwise establish a proper basis for jurisdiction over the United States in 23 this action. 24 II. Case or Controversy 25 The United States also argues that Plaintiff’s claim should be dismissed for lack of 26 subject matter jurisdiction because no case or controversy exists between the parties. See 27 Doc. No. 12 at 3–5. 28 1 As the Court noted above, “the operation of the Declaratory Judgment Act is 2 procedural only.” Aetna Life Ins. Co. of Hartford v. Haworth, 300 U.S. 227, 240 (1937). 3 Thus, the Ninth Circuit has established that “[a] lawsuit seeking federal declaratory relief 4 must first present an actual case or controversy within the meaning of Article III, section 5 2 of the United States Constitution.” Gov’t Emps.’ Ins. Co. v. Dizol, 133 F.3d 1220, 1222 6 (9th Cir. 1998) (citing Aetna, 300 U.S. at 239–40). In order for a controversy to exist, the 7 dispute in question cannot be “hypothetical or abstract.” See Aetna, 300 U.S. at 240. 8 Rather, “[t]he controversy must be definite and concrete, touching the legal relations of 9 parties having adverse legal interests,” and “must be a real and substantial controversy 10 admitting of specific relief through a decree of a conclusive character.” Id. at 240–41 11 (citations omitted). 12 Plaintiff contends that there is a controversy between the parties over Plaintiff’s 13 duty to defend or indemnify Nelson for the United States’ claims against him. See Doc. 14 No. 12 at 4; Doc. No. 1 ¶ 49. The United States argues that the real controversy in this 15 action is between Plaintiff and Nelson. See Doc. No. 12 at 4. The United States further 16 contends that “[c]ontrary to [Plaintiff’s] assertions, none of the United States’ allegations 17 against Mr. Nelson in the underlying complaint allege the existence of coverage 18 obligations on behalf of [Plaintiff].” Id. Finally, the United States argues that Plaintiff’s 19 “policies are contracts between [Plaintiff] and Nelson” to which the United States is not a 20 party and that it brought its suit against Nelson “without regard to the language of any 21 insurance contracts Nelson may have.” Id. 22 Plaintiff responds that a case or controversy does exist between it and the United 23 States because the Government is a potential third-party claimant on Nelson’s insurance 24 policies within the meaning of California Insurance Code section 11580(b)(2).4 See Doc. 25
26 4 California Insurance Code section 11580 details several provisions that must be included in insurance policies. Section 11580(b)(2) requires the following: 27 A provision that whenever judgment is secured against the insured or the executor or 28 1 No. 14 at 6. To support this argument, Plaintiff relies primarily on authority from the 2 Eastern District of California. See id. at 6 (citing Atain Specialty Ins. Co. v. Slocum, No. 3 1:19-CV-0247 AWI SKO, 2019 WL 2917729, (E.D. Cal. July 8, 2019)). However, the 4 dispute at issue in Atain involved private parties. See 2019 WL 2917729. In contrast, the 5 present suit involves a sovereign entity, the United States. 6 The Ninth Circuit’s opinion in Fidelity & Cas. Co. v. Reserve Ins. Co., 596 F.2d 7 914 (9th Cir. 1979), is instructive here. Fidelity involved a set of facts that is generally 8 analogous to those presently before this Court. In Fidelity, the United States sued one of 9 Fidelity’s insureds to recover damages for a fire on federal land. See 596 F.2d at 916. 10 Fidelity then sued one of its insured’s other insurers seeking a declaratory judgment 11 clarifying which insurer was implicated in the suit, and also named the insured and the 12 United States as defendants. See id. The Ninth Circuit grounded its analysis in 28 U.S.C. 13 § 13455 and found that it lacked jurisdiction over the United States. See id. at 916–17. 14 The court reasoned that while the United States “may subject itself to various compulsory 15 and permissive counterclaims” when it files suit, there was no precedent “in which 16 jurisdiction has been extended to a separate suit.” Id. at 917 (footnote and citations 17 omitted). The court dismissed the United States on the grounds that it was not an 18 indispensable party because it was “neither the insured nor the insurer; it is, at best, an 19 unnamed contingent beneficiary of the policies.” Id. at 918. 20 The Fidelity court also considered the validity of exercising jurisdiction over the 21 United States on California Insurance Code section 11580(b)(2). Basing its argument on 22 section 11580(b)(2), which requires insurance policies to include a provision allowing 23 property damage, then an action may be brought against the insurer on the policy and 24 subject to its terms and limitations, by such judgment creditor to recover on the judgment. 25 § 11580(b)(2). 26 5 Section 1345 addresses federal courts’ jurisdiction over suits brought by the United States as a plaintiff 27 and provides in pertinent part: “Except as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United 28 1 judgment creditors to sue insurers to recover for “bodily injury, death, or property 2 damage,” the defendant insurer contended that “the only way a complete declaratory 3 judgment, binding upon all the parties including the United States” could be granted was 4 for a federal court to exercise jurisdiction. Fidelity, 596 F.2d at 917, 917 n.2. Further, it 5 argued that issuing a declaratory judgment that was not binding on the United States 6 would leave it free to subsequently sue the insurers regardless of the outcome of the 7 declaratory action. See id. at 917 n.2. The Ninth Circuit responded as follows: 8 9 While this may be true, the government’s right to sue arises only after judgment has been obtained against the insured. If the 10 insurers wished to avoid the possibility of inconsistent 11 adjudications regarding coverage they might have waited to be sued by the United States . . . or sought to intervene in the action 12 commenced by the United States. When Fidelity filed a separate 13 lawsuit, rather than seeking to intervene in the government’s action, it voluntarily abandoned its best argument for waiver of 14 sovereign immunity and the existence of federal subject matter 15 jurisdiction.
16 17 Id. at 917 n.2. 18 While Fidelity makes clear that Plaintiff would have had jurisdiction over the 19 United States, as well as means of overcoming sovereign immunity, had it intervened in 20 the United States’ suit against Nelson, it has not done so. See id. at 917–18. As a result, 21 it has “voluntarily abandoned its best argument for waiver of sovereign immunity and the 22 existence of federal subject matter jurisdiction.” Id. at 917 n.2. Fidelity also forecloses 23 any possibility of Plaintiff alleging jurisdiction based on section 1345, which is relevant 24 because, as discussed below, Plaintiff may not assert jurisdiction over the United States 25 under section 1332. See Fidelity, 596 F.2d at 916–18. 26 Furthermore, even though the Fidelity court acknowledged that a controversy 27 existed in the case before it, and “that the United States [was] a proper party defendant” 28 in that case as well, the court nevertheless declined to exercise jurisdiction over the 1 United States. See id. at 918 (“All the same, it does not follow that resolution of the 2 controversy between the insurers is reasonably required for a complete determination of 3 the original suit by the United States against the insured.”). Fidelity also undermines 4 Plaintiff’s reliance on California Insurance Code section 11580(b)(2). See id. at 917; 5 Doc. No. 14 at 6. Even if “bodily injury, death, or property damage” within the meaning 6 of section 11580(b)(2) encompasses a suit for discrimination brought by the United States 7 under the Fair Housing Act, the Court need not decide that issue in order to dispose of 8 Plaintiff’s argument. After all, the Ninth Circuit declined to extend jurisdiction over the 9 United States in Fidelity where the United States’ underlying claim was for property 10 damage. See 596 F.2d at 916, 917–18. Accordingly, the Court rejects Plaintiff’s 11 argument that jurisdiction may be exercised because of section 11580(b)(2). 12 Finally, it is axiomatic that an action for declaratory relief against the United States 13 “must also fulfill statutory jurisdictional prerequisites.” Dizol, supra, 133 F.3d at 1222– 14 23 (citing Skelly Oil v. Phillips Petroleum Co., 339 U.S. 667, 672 (1950)). The Supreme 15 Court has made clear that section 702 of the APA does not provide an independent 16 conferral of jurisdiction. See Califano v. Sanders, 430 U.S. 99, 104–07 (1977). As such, 17 Plaintiff must meet the requirements of 28 U.S.C. § 1332, the only other statutory basis 18 upon which it alleges this Court has subject matter jurisdiction. See Doc. No. 1 ¶¶ 1–2. 19 But Plaintiff’s invocation of jurisdiction over the United States under 28 U.S.C. § 1332 is 20 21 6 The Ninth Circuit cited to two cases to support the conclusions regarding the existence of a controversy 22 and the United States’ status as a proper defendant––Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270 (1941) and Franklin Life Ins. Co. v. Johnson, 157 F.2d 653 (10th Cir. 1946). See Fidelity, 596 23 F.2d at 918. However, the Court declines to give these references persuasive weight in the present case for the following reasons. First, the Ninth Circuit’s reference to these cases in Fidelity was dicta and as 24 such is not binding on this Court. See id. Second, neither of the cases cited in Fidelity involved disputes 25 to which the United States was a party. See Md. Cas. Co., 312 U.S. 270; Johnson, 157 F.2d 653. Third, both cases involved cases where there were parallel proceedings between state and federal courts. See 26 Md. Cas. Co., 312 U.S. at 271, 274; Johnson, 157 F.2d 655–56. As such, both cases invoked concerns that are not at play here. See id. Finally, the Court has found a plethora of reasons to dismiss the United 27 States from this suit. Even if the Court were to delve deeper into the general principles espoused by these cases, it would not change the outcome. Therefore, the Court declines to engage in further analysis on 28 1 || fatally flawed. See Doc. No. 1 §{§| 1-2. Section 1332 requires, among other things, that 2 || the parties to a suit be “[c]itizens of different states.” However, “the United States is not 3 ||a citizen for diversity purposes” and cannot be sued under section 1332. See Commercial 4 || Union Ins. Co. v. United States, 999 F.2d 581, 584 (D.C. Cir. 1993). Thus, Plaintiff’ 5 || assertion of diversity jurisdiction over the United States presents sufficient grounds by 6 ||1tself to dismiss the United States from this action. 7 CONCLUSION 8 For the foregoing reasons, the Court GRANTS the United States’ motion to 9 || dismiss for lack of subject matter jurisdiction. Dismissal is without prejudice and without 10 ||leave to amend. See Mo. ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir. 2017); 11 || Freeman y. Oakland Unified Sch. Dist., 179 F.3d 846, 847 (9th Cir. 1999) (order) 12 || (“Dismissals for lack of jurisdiction should be without prejudice so that a plaintiff may 13 reassert his claims in a competent court.” (internal quotation marks and ellipsis omitted)); 14 || Chaset v. Fleer/Skybox Int'l, LP, 300 F.3d 1083, 1088 (9th Cir. 2002) (affirming trial 15 || court’s denial of leave to amend where plaintiffs could not cure a basic flaw in their 16 ||pleading). Accordingly, the Court DIRECTS the Clerk of Court to terminate this action 17 |/as to the United States. 18 IT ISSO ORDERED. 19 || DATED: June 24, 2020 20 Yl bal lk - Loldp ff 5 21 HON. MICHAEL M. ANELLO 9 United States District Judge 23 24 25 26 27 28