Magnate, LLC v. U.S. Envtl. Prot. Agency

678 F.Supp.3d 767

MAGNATE, LLC, Plaintiff, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Defendant

Civil Action No. 5:22-cv-00040

United States District Court, W.D. Virginia, Harrisonburg Division

Signed June 26, 2023

Bradley Glenn Pollack, Bradley G. Pollack, Attorney at Law, Woodstock, VA, for Plaintiff.

Justin Michael Lugar, United States Attorneys Office, Roanoke, VA, for Defendant.

MEMORANDUM OPINION

Elizabeth K. Dillon, United States District Judge

Plaintiff Magnate, LLC ("Magnate"), brough this Federal Tort Claims Act ("FTCA") action against the U.S. Environmental Protection Agency ("EPA"), claiming that the government damaged Magnate's property in Shenandoah County during its allegedly negligent cleanup of hazardous substances on the property. (Compl., Dkt. No. 1.)

Pending before the court are the government's motion to dismiss for lack of subject matter jurisdiction (Dkt. No. 8) and motion to strike Magnate's surreply (Dkt. No. 14). After a hearing and full briefing, both motions are ripe for resolution. For the reasons stated below, the court will deny the motion to strike but will grant the motion to dismiss.

I. INTRODUCTION¹

Broadly, Magnate alleges that the EPA executed "an unwarranted, unauthorized, and fraudulent Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) response action[,] turning [its] once valuable property into a largely worthless Superfund/Brownfield site." (Compl. ¶ 2 (emphasis omitted).) In the complaint, Magnate insists that the EPA lacked authority to take a response action on the property because there was no release or substantial threat of release of hazardous substances at the time the EPA acted. (Id. ¶¶ 5-6.)

Beyond that, Magnate offers few, if any, details about the property in question or about any actions the EPA took to clean up the property. Instead, the bulk of the complaint describes legal proceedings from other related cases in this court pertaining to the property.

In October 2018, the United States, on behalf of the EPA, brought an action in this court against Magnate under CERCLA, seeking an Order in Aid of Access to Magnate's property so that the EPA could conduct a site investigation and take a response action under CERCLA to remove allegedly hazardous substances from the property. (No. 5:18-cv-00127, Dkt. No. 1.) As Magnate describes it, "EPA appeared in this court on February 12, 2019, to gain access to the property with a Stipulation and Order in Aid of Access." (Compl. ¶ 7; see also No. 5:18-cv-00127, Dkt. No. 23.) Magnate asserts that "[t]he Stipulation and Order prepared by EPA . . . were flawed at best," in that they "claimed conditions that were nonexistent, had no test results to substantiate them, and Magnate had test results to refute the conditions stated."² (Compl. ¶¶ 7-8.) Ultimately, however, all parties agreed to a Stipulation and Order in Aid of Access; that Order was signed by all parties and then signed and entered by the judge assigned to that case on February 12, 2019. (No. 5:18-cv-00127, Dkt. No. 24.) On June 21, 2019, the United States gave notice of its completion of its work on the property associated with the response action. (No. 5:18-cv-00127, Dkt. No. 25.)

In March 2020, the EPA filed in this court a notice of its intent to perfect a federal Superfund lien. (No. 5:20-mc-00009, Dkt. No. 1.) Magnate moved to dismiss the lien on due process constitutional grounds, but there was no complaint or cause of action to adjudicate or dismiss, as recognized by the court in its November 2, 2020 order denying Magnate's motion (No. 5:20-mc-00009, Dkt. No. 17) and as agreed to by all parties when they stipulated to a termination of the matter (No. 5:20-mc-00009, Dkt. No. 18).

With respect to its tort claim, Magnate first brought an administrative action under the FTCA, claiming that the EPA was negligent, fraudulent, and acting without authority in attempting to clean up its property. (Compl. ¶¶ 1, 4.) The EPA denied the claim—albeit outside the six-month limitation period to do so. (Id.) Magnate also alleges that the EPA "failed to appoint a lawyer to review [its] claim and failed to consider [the] case at all."³ (Id. ¶ 1.) On July 8, 2022—within six months of the EPA's denial of that administrative claim—Magnate filed this action.

Magnate asserts that its damages due to the EPA's response action "are ongoing in the form of a claimed $1,200,000 EPA lien, and fraudulent postings on the property, in violation of both Virginia Code § 18.2-340.37 and 18 U.S. Code § 1001[⁴], causing prospective purchasers and/or tenants to refuse to have anything to do with the property." (Compl. ¶ 3.) As relief, Magnate seeks $6.2 million in damages, as well as "the removal of the $1,2000,000 lien, and permission to remove all fraudulent postings on Magnate's property."⁵ (Compl. at 5.)

The EPA now moves to dismiss the complaint for lack of subject matter jurisdiction (Dkt. No. 8), arguing that the discretionary-function exception to the FTCA's waiver of sovereign immunity applies here and bars this suit entirely.

II. LEGAL STANDARDS

A. Subject Matter Jurisdiction

Federal courts have limited subject matter jurisdiction and are empowered to act only in the specific instances authorized by Congress. Bowman v. White, 388 F.2d 756, 760 (4th Cir. 1968). A motion to dismiss under Rule 12(b)(1) tests the court's subject matter jurisdiction over a plaintiff's claim. The court must determine questions of subject matter jurisdiction before it can address the merits of a case. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

A defendant may challenge federal subject matter jurisdiction in two ways. See Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009). First, a defendant may attack the face of the complaint and contend "that a complaint simply fails to allege facts upon which subject matter jurisdiction can be based." Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). In evaluating a facial challenge to subject-matter jurisdiction, "the plaintiff, in effect, is afforded the same procedural protection as he would receive under a Rule 12(b)(6) consideration." Id. Second, a defendant may attack subject-matter jurisdiction as a matter of fact and argue "that the jurisdictional allegations of the complaint [are] not true." Id. Under those circumstances, a plaintiff receives less procedural protection, and "the district court is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R.R. v. United States, 945 F.2d 765, 768 (4th Cir. 1991).

In its briefing, the government does not specify whether its motion asserts a facial or factual challenge to the court's subject matter jurisdiction, but it did submit a declaration from Myles Bartos (an EPA employee), the consideration of which would effectively require the court to treat the motion as a factual challenge. However, at the hearing on the motion to dismiss, counsel for the government clarified that the Bartos declaration merely provides further context about the EPA's cleanup processes in the event the court needed additional information. Because neither the declaration nor the government's briefing necessarily challenges the truth of Magnate's well-pleaded, non-conclusory allegations, the court construes the motion to dismiss as asserting a facial challenge to subject matter jurisdiction and will not consider the Bartos declaration.⁶

Nevertheless, the plaintiff bears the burden of proving that subject matter jurisdiction exists. Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999) (citing Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991)). If the plaintiff cannot do so, then the court must dismiss the complaint. Arbaugh v. Y&H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006).

B. Federal Tort Claims Act; Discretionary-Function Exception to the FTCA's Waiver of Sovereign Immunity

Federal courts do not have jurisdiction over actions against the United States unless Congress has expressly waived the federal government's sovereign immunity. United States v. Sherwood, 312 U.S. 584, 586-87, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). A waiver of sovereign immunity "will be strictly construed, in terms of its scope, in favor of the sovereign." Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996).

Here, Magnate asserts a cause of action under the Federal Tort Claims Act. The FTCA constitutes an express waiver of sovereign immunity and provides limited circumstances in which the United States may be held liable for the negligence of its employees. 28 U.S.C. § 1346(b)(1); see McGhee v. United States, No. 7:13-cv-00123, 2014 WL 896748, at *2 (W.D. Va. Mar. 6, 2014). However, this waiver does not apply to claims "based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused." 28 U.S.C. § 2680(a). The plaintiff bears the burden of proving that the discretionary-function exception does not apply to the function or duty at issue. Indem. Ins. Co. of N. Am. v. United States, 569 F.3d 175, 180 (4th Cir. 2009). If the exception does apply, a court must dismiss the claim for lack of subject-matter jurisdiction. Id.

To determine if the discretionary-function exception applies, the court must perform a two-step analysis. Clendening v. United States, 19 F.4th 421, 432 (4th Cir. 2021). First, the court must decide whether the challenged conduct "involves an element of judgment or choice." Suter v. United States, 441 F.3d 306, 310 (4th Cir. 2006) (citation omitted). Conduct does not involve an element of judgment or choice if a federal statute, regulation, or policy...