United States v. City of San Diego

• Court: District Court, S.D. California
• Decided: July 17, 2025
• Docket: 3:23-cv-00541
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, Case No.: 23cv0541-LL-VET

12 Plaintiff, ORDER GRANTING MOTION TO 13 v. DISMISS CITY OF SAN DIEGO’S AMENDED SECOND AND THIRD 14 CITY OF SAN DIEGO, et al. COUNTERCLAIMS WITH 15 Defendants. PREJUDICE FOR LACK OF SUBJECT-MATTER JURISDICTION 16 __________________________________ 17 [ECF No. 111] AND RELATED CROSS-ACTION. 18

19 The Court previously granted Plaintiff/Counter-Defendant United States’ Motion to 20 Dismiss Defendant/Counter-Plaintiff City of San Diego’s Amended Second Through 21 Fourth Counterclaims with leave to amend. ECF No. 89. The City amended some of those 22 counterclaims and, once again, the United States moved to dismiss them. ECF Nos. 96, 23 111. The matter is fully briefed, and the Court deems it suitable for determination on the 24 papers and without oral argument pursuant to Civil Local Rule 7.1. For the reasons below, 25 the Court GRANTS the United States’ Motion to Dismiss under Rule 12(b)(1). 26 I. BACKGROUND 27 The United States sued the City of San Diego, San Diego Unified Port District, and 28 San Diego County Regional Airport Authority under the Comprehensive Environmental 1 Response, Compensation, and Liability Act (“CERCLA”) to recover over sixteen million 2 dollars it spent cleaning up hazardous substances at Installation Restoration Site 12, Boat 3 Channel Sediments, former Naval Training Center in San Diego, California (the “Site”). 4 ECF No. 25 ¶ 1. In case the Site continues to be contaminated, the United States also sought 5 a declaratory judgment to make Defendants liable for more response costs not inconsistent 6 with the National Oil and Hazardous Substances Pollution Contingency Plan. Id. ¶ 2. 7 The United States settled with the Port District and Airport Authority. ECF No. 65. 8 That settlement was reduced to a consent decree and subject to public comment for 9 objections. Id. Receiving no objections, the Court approved the consent decree and entered 10 final judgment between those parties. ECF Nos. 67–69. 11 The remaining party, City of San Diego, brings four counterclaims: (1) contribution, 12 CERCLA § 113(f)(1); (2) recoupment; (3) declaratory and injunctive relief, Administrative 13 Procedure Act; and (4) declaratory relief, CERCLA § 113(g)(2). ECF No. 96 (“Cross- 14 Compl.”). The United States moved to dismiss claims two and three,2 the City opposed, 15 and the United States replied. ECF Nos. 111-1 (“Mot.”), 115 (“Opp.”), 116 (“Reply”). 16 II. LEGAL STANDARD 17 “Federal courts” have “limited jurisdiction,” possessing “only that power authorized 18 by Constitution and statute,” which is “not to be expanded by judicial decree.” Kokkonen 19

20 21 1 Practitioners often cite to specific sections in CERCLA rather than where it is codified in the U.S. Code, e.g., CERCLA § 107(a) instead of 42 U.S.C. § 9607(a). See Crescent Mine, 22 LLC v. Bunker Hill Mining Corp., No. 21-cv-0310-DCN, 2022 WL 612394, at *3 n.2 23 (D. Idaho Mar. 2, 2022) (noting the same). Similarly, this Court uses them interchangeably.

24 2 The United States also moved to dismiss claims one and four “to the extent they reallege 25 a cost recovery claim under CERCLA § 107(a).” Mot. at 25. The City clarified that it “does not attempt to reallege § 107(a) claims” in light of “the Court’s previous [dismissal] order.” 26 Opp. at 21. Still, since the Cross-Complaint’s language includes § 107(a) as a basis to 27 recover the City’s alleged response costs, the Court DISMISSES WITH PREJUDICE Counterclaims 1 and 4 to the extent that they reallege a § 107(a) claim, which this Court 28 1 v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A party may therefore move 2 to dismiss a claim based on “lack of subject-matter jurisdiction.” Fed. R. Civ. P. 12(b)(1). 3 The “party asserting jurisdiction” bears “the burden” of showing that we have jurisdiction 4 to decide the matters before us. Kokkonen, 511 U.S. at 377. For facial challenges to subject- 5 matter jurisdiction, as here, courts accept the nonmoving party’s well-pled “allegations as 6 true,” draw “all reasonable inferences” in its favor, and determine “whether the allegations 7 are sufficient as a legal matter to invoke the court’s jurisdiction.” Leite v. Crane Co., 749 8 F.3d 1117, 1121 (9th Cir. 2014). 9 Still, the “United States can be sued only to the extent that it has waived its sovereign 10 immunity,” and those suing it must show that such waiver was “unequivocal.” Baker v. 11 U.S., 817 F.2d 560, 562 (9th Cir. 1987). The United States, in other words, “may not be 12 sued without its consent and the terms of such consent define the court’s jurisdiction.” Id.; 13 Lane v. Pena, 518 U.S. 187, 192 (1996) (“A waiver of the Federal Government’s sovereign 14 immunity must be unequivocally expressed in statutory text,” “will not be implied,” and 15 “will be strictly construed, in terms of its scope, in favor of the sovereign.”). 16 For example, Congress unequivocally waived sovereign immunity on CERCLA 17 claims when it penned that the United States “shall be subject to, and comply with, this 18 chapter in the same manner and to the same extent, both procedurally and substantively, as 19 any nongovernmental entity.” CERCLA § 120(a)(1); 42 U.S.C. § 9620(a)(1). This is how 20 the Court has jurisdiction over the City’s first and fourth counterclaims—both are pled 21 under CERCLA. By contrast, the City’s second and third counterclaims are not pled under 22 CERCLA, which raises the jurisdictional questions before us. 23 III. DISCUSSION 24 A. Recoupment (Counterclaim 2) 25 The City alleges that the United States is co-liable for co-contaminating the Site, 26 so the City is “entitled to recoupment diminishing or defeating” any recovery against itself. 27 See Cross-Compl. ¶ 72. The City says this counterclaim is permissible as the United States 28 waived its immunity on recoupment when it sued the City under CERCLA. See id. ¶ 73. 1 “Under a theory of recoupment,” one who is sued “by the government” may “assert 2 any counterclaim arising from the same transaction or occurrence as the government’s 3 action, even though the counterclaim otherwise would be barred by sovereign immunity.” 4 U.S. v. Iron Mountain Mines, Inc., 881 F. Supp. 1432, 1452–53 (E.D. Cal. 1995). This is 5 due to the common-law “notion that the government waives sovereign immunity” when “it 6 brings suit.” Id. at 1453. 7 However, courts routinely decline to extend the recoupment doctrine to CERCLA. 8 “Waivers of sovereign immunity may not be implied,” for starters, “and CERCLA nowhere 9 purports to waive a governmental agency’s immunity from suit under other laws.” Id. at 10 1456. Indeed, “CERCLA itself expressly limits its waiver of sovereign immunity to 11 CERCLA counterclaims,” not common-law recoupment. Id. There is also “no compelling 12 need for application of the recoupment doctrine in the context of a government cost 13 recovery action under CERCLA because CERCLA itself permits the defendant in a suit by 14 the government to seek contribution and make claims against the government.” Id. This is 15 precisely what the City seeks against the United States in counterclaim one for contribution 16 under CERCLA § 113(f)(1)—similarly serving to diminish or defeat any recovery against 17 the City—which the United States did not move to dismiss. Finally, “to permit a claim 18 made under another legal regime, brought by way of recoupment, simply because the 19 government brought suit under CERCLA, could well undermine CERCLA’s scheme of 20 allocating cleanup costs and of setting standards for liability for government activities.” Id. 21 As a seminal case on this issue summarized it: 22 In short, there is nothing in CERCLA that can be read to exact a waiver of governmental sovereign immunity from claims under other laws as to 23 which it is immune as the price of bringing a cost recovery action under 24 CERCLA. Recoupment doctrine, with its tenuous basis in the common law, cannot serve as a substitute for a clearly expressed congressional 25 intent to subject the United States and California to state or non-CERCLA 26 federal law counterclaims, as to which they would otherwise be immune, in the context of a CERCLA action, when CERCLA itself expressly limits 27 its waiver of sovereign immunity to CERCLA counterclaims. 28 Id. 1 The Court finds no cases within the Ninth Circuit to undermine this well-reasoned 2 opinion exercising judicial restraint. Dismissing the City’s recoupment counterclaim for 3 lack of jurisdiction is therefore warranted. See id. at 1457 (dismissing “recoupment” 4 counterclaims against the government in “CERCLA” action for lack of jurisdiction); 5 Cal. Dep’t of Toxic Substances Control v. NL Indus., Inc., No. 20-cv-1293-SVW-AGR, 6 2021 WL 6496813, at * 2 (C.D. Cal. Dec. 22, 2021) (same). 7 B. Declaratory and Injunctive Relief under the APA (Counterclaim 3) 8 A “person suffering legal wrong because of [final] agency action” may open a case 9 in federal court seeking “review” of that action, even when it is “against the United States.” 10 5 U.S.C. §§ 702, 704 (Administrative Procedure Act). Still, the APA’s waiver of sovereign 11 immunity is subject to three limitations: (1) one must seek “relief other than money 12 damages,” (2) one must have “no other adequate remedy,” and (3) the relief sought must 13 not be “expressly or impliedly forbid[den]” by “any other statute.” See id. §§ 702, 704. 14 Before determining whether the City sufficiently pled an APA counterclaim, 15 appreciating the City’s core grievance is needed. The City alleges it conveyed land to the 16 United States in 1916 so it could construct and use what came to be known as the Naval 17 Training Center. Cross-Compl. ¶ 13. The NTC closed around 1997. Id. ¶ 14. Beginning in 18 2000 the United States conveyed NTC parcels back to the City and other entities for 19 redevelopment, but the United States continued to own the NTC Boat Channel along with 20 nearby properties like the Marine Corps Recruit Depot. Id. ¶ 15. 21 In 2000 the City and the United States entered into a Memorandum of Agreement. 22 Id. ¶ 16. The MOA lays out terms under which the City agrees to accept Parcels IIIB and 23 VII from the United States, an area which the City says is the same as the NTC Boat 24 Channel and includes the Site in the complaint, too. Id. Because the MOA states that these 25 parcels are “believed to contain sediments impacted with various contaminants,” it directs 26 the United States to (1) “take all remedial action necessary to protect human health and the 27 environment” and (2) “obtain site closure from appropriate regulatory authorities based on 28 the projected use of Parcel[s] IIIB [and VII]” before transfer to the City. Id. 1 In 2019 the United States sent a final remedial action completion report to the San 2 Diego Regional Water Quality Control Board for its cleanup. Id. ¶¶ 24, 40, 46–59. In 3 accepting it the Water Board said it had “no further comment” instead of “no further action” 4 needed. Id. The City alleges that, at best, the Board’s lukewarm response forecloses 5 liability for the Site, not Parcels IIIB and VII entirely. Id. According to the City this is 6 because the investigation and remediation failed to include the parcels’ banks, slopes, rip 7 rap, shoreline, and shallow areas. Id. If the United States transfers the parcels to the City 8 and if the Board requires additional remediation to current state standards, the City fears 9 liability. See id. By not taking all remedial action necessary to protect the environment and 10 not obtaining complete closure from the Water Board, the City argues that the United States 11 breaches the MOA each time it tries transferring Parcels IIIB and VII to it. See id. The City 12 has thus repeatedly refused to accept the parcels, prompting in part this litigation. 13 Against this backdrop, the City alleges that it is “aggrieved” by the United States 14 and Water Board’s “Record of Decision, Remedial Action Plan, and Remedial Action 15 Completion Report,” for which it seeks declaratory and injunctive relief. See ¶¶ 75–82. 16 Specifically, through the APA, the City seeks to bar the United States from relying upon 17 the “flawed” data within these so-called completion reports, for doing so to justify transfer 18 “violates the obligations and conditions precedent it agreed to in the MOA.” See id. The 19 United States argues that such a claim for relief is impliedly forbidden by another statute, 20 namely the Tucker Act, 28 U.S.C. § 1491(a)(1). See Mot. at 14–19; Reply at 5–8. 21 “The Tucker Act grants exclusive jurisdiction to the Court of Federal Claims over 22 breach-of-contract actions for money damages.” United Aeronautical Corp. v. U.S. Air 23 Force, 80 F.4th 1017, 1027 (9th Cir. 2023). The Ninth Circuit has also interpreted the 24 Tucker Act to “impliedly forbid” an APA action seeking “injunctive and declaratory relief” 25 when it is a “disguised” breach-of-contract claim. Id. at 1026. To unearth this, we look to 26 (1) “the source of the rights upon which the plaintiff bases its claims” and (2) “the type of 27 relief sought (or appropriate).” Id. For instance, “if rights and remedies are contractually 28 based then only the Court of Federal Claims” has jurisdiction, “even if the plaintiff formally 1 seeks injunctive relief.” Id. “This test imposes something akin to a well-pleaded complaint 2 rule for Tucker Act-adjacent APA actions.” Id. 3 The Court finds the rights and remedies underlying the City’s APA counterclaim to 4 be contractually based. For one, the City alleges that it is entitled to relief under the APA 5 in light of the MOA. See Cross-Compl. ¶ 79 (“The Remedial Action Completion Report is 6 arbitrary and capricious because it is inconsistent with the requirement of the MOA that 7 the USA take all remedial action necessary to protect human health and the environment.”); 8 id. ¶¶ 80–81 (seeking to “set aside” and “prevent” the United States from “relying” on the 9 “arbitrary and capricious actions” in “a manner that violates the obligations and conditions 10 precedent it agreed to in the MOA”). The source of the rights upon which the City bases 11 its APA counterclaim is thus contractual. See United Aeronautical Corp., 80 F.4th at 1030 12 (noting that “easily-spotted breach-of-contract claims” in Tucker Act-adjacent APA 13 actions include rights “flowing from” the “performing of contracts” (alterations omitted)); 14 Buckovetz v. U.S. Dep’t of the Navy, No. 23-cv-1942-CAB-MMP, 2024 WL 253630, at *2 15 (S.D. Cal. Jan. 23, 2024) (finding that “the source of the rights on which Plaintiff bases his 16 claim” was his “contract” with the federal government when the core issue was whether 17 the contract “means what it says”). 18 The type of relief sought is also contractual. See id. Prayer for Relief ¶ 2 (seeking an 19 order “prohibiting” the United States “from transferring NTC Boat Channel Parcels VII 20 and III-B to the City” unless it can show that “(1) it has taken all remedial action necessary 21 to protect human health and the environment and (2) it has obtained site closure from 22 appropriate regulatory authorities”); id. ¶ 3 (seeking an order “compelling” the United 23 States to fulfill those transfer conditions); id. ¶ 4 (seeking an order “declaring” that “the 24 City has no legal duty to accept transfer” of the parcels “due to the breach” of “the MOA”). 25 The two transfer conditions are copied from the MOA verbatim, and no other counterclaim 26 deals with how to resolve the parcel transfers, so the City seeks such specific performance 27 and other contractual relief under the APA. See United Aeronautical Corp., 80 F.4th at 28 1026, 1030 (noting that “an injunction directing the Army to execute the [contract]” is “a 1 thinly veiled request for specific performance,” a “traditional” breach-of-contract remedy); 2 Buckovetz, 2024 WL 253630, at *2 (finding a “claim for equitable relief based on contract” 3 when the plaintiff alleged that the federal government “provided less than the advertised 4 and contract-defined 4’ x 4’ x 8’ of unobstructed storage space”). 5 Because the rights and remedies under the City’s APA counterclaim are contractual, 6 the Tucker Act impliedly forbids this Court from deciding it. Dismissal is warranted. 7 See 5 U.S.C. § 702 (stating that a limitation on the APA’s waiver of sovereign immunity 8 is that the relief sought must not be “impliedly forbid[den]” by “any other statute”); United 9 Aeronautical Corp., 80 F.4th at 1029 (“Thus, where the government’s waiver includes a 10 limitation about ‘what courts’ may hear a claim against it, we cannot defer to the plaintiff’s 11 choice of court; instead, we must ‘strictly’ construe the waiver to effectuate Congress’s 12 limitation on it.”); Buckovetz, 2024 WL 253630, at *2 (S.D. Cal. Jan. 23, 2024) (dismissing 13 Tucker Act-adjacent APA action with prejudice since “the waiver of sovereign immunity 14 in the APA does not apply”). 15 IV. LEAVE TO AMEND 16 Courts have discretion to grant leave to amend a complaint “when justice so 17 requires.” Fed. R. Civ. P. 15(a)(2). This discretion is guided by the strong federal policy 18 favoring dispositions on the merits and permitting amendments with “extreme liberality.” 19 DCD Programs Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). Courts consider five 20 factors during this deliberation: (1) “undue delay,” (2) “bad faith or dilatory motive on the 21 part of the movant,” (3) “repeated failure to cure deficiencies by amendments previously 22 allowed,” (4) “undue prejudice to the opposing party,” and (5) “futility of amendment.” 23 Foman v. Davis, 371 U.S. 178, 182 (1962). “The district court’s discretion to deny leave 24 to amend is particularly broad where plaintiff has previously amended the complaint.” 25 Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989). 26 The City filed counterclaims against the United States in June 2023. ECF No. 8. 27 After the United States amended its complaint, the City amended its counterclaims in 28 September 2023. ECF No. 31. Then, after the Court granted the United States’ motion to 1 dismiss the first amended counterclaim, the City filed this second amended counterclaim. 2 ECF No. 96. But instead of materially supplementing its factual allegations to try and cure 3 the deficiencies, the City predominately swapped out its old legal theories with new ones. 4 Compare ECF No. 38 (alleging Cost Recovery under § 107(a), Breach of Contract, and 5 Equitable Indemnity) with Cross-Compl. (alleging Recoupment and Declaratory/Injunctive 6 Relief under the APA). Fact and expert discovery are closed, pretrial deadlines have 7 already been extended, the United States’ motions for partial summary judgment are 8 pending, and the parties will file any further motions for summary judgment within 30 days 9 after the Court’s ruling on this matter. See ECF Nos. 118, 152, 154, 176. 10 Under these circumstances, the Foman factors tip against amendment. To explain, 11 first and foremost, the City “failed to correct [the] deficiencies in its Second Amended” 12 Cross-Complaint, which is a “strong indication” that it has “no additional facts to plead.” 13 See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009). This is a 14 “repeated failure to cure deficiencies by amendments previously allowed,” and the Court 15 further finds that “any attempt to amend would be futile.” See id. (reasoning similarly to 16 affirm the district court’s dismissal of the complaint with prejudice). Nor does the City 17 justify why it waited to raise its “new theories,” which, as here, are “not reviewed favorably 18 when the facts and the theory have been known to the party seeking amendment since the 19 inception of the cause of action.” See Acri v. Int’l Ass’n of Machinists & Aerospace 20 Workers, 781 F.2d 1393, 1398 (9th Cir. 1986). Because discovery is closed, pretrial 21 deadlines have already been extended, the United States’ motions for partial summary 22 judgment are pending, and any further motions for summary judgment will be filed within 23 30 days of this Order, the Court also finds that another amendment would cause undue 24 delay and prejudice to the United States. See Campbell v. Emory Clinic, 166 F.3d 1157, 25 1162 (11th Cir. 1999) (“Prejudice and undue delay are inherent in an amendment asserted 26 after the close of discovery and after dispositive motions have been filed, briefed, and 27 decided.”); In re Silva, No. 17-cv-3535-SJO, 2017 WL 8186267, at *3 (C.D. Cal. Nov. 13, 28 2017) (citing the same). The City may not amend its counterclaims for a third time. 1 CONCLUSION 2 Accordingly, the Court GRANTS the United States’ Motion to Dismiss. The City’s 3 || Counterclaim 2 (recoupment) and Counterclaim 3 (declaratory and injunctive relief under 4 ||the APA) are DISMISSED WITH PREJUDICE for lack of subject-matter jurisdiction. 5 IT IS SO ORDERED. 6 ||Dated: July 17, 2025 NO

g Honorable Linda Lopez 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28