United States v. Deuerling

210 F.Supp.3d 717

UNITED STATES of America, Plaintiff,

v.Melissa A. DEUERLING, Defendant, Counterclaimant, and Third Party Plaintiff,

v.G.C. Services, L.P., et al., Third Party Defendants.

Civil No. 14-642

United States District Court, W.D. Pennsylvania.

Filed September 28, 2016

Michael C. Colville, United States Attorney's Office, Pittsburgh, PA, Thomas I. Puleo, KML Law Group, P.C., Philadelphia, PA, for Plaintiff/Third Party Defendants.

Melissa Deuerling, South Park, PA, for Defendant, Counterclaimant, and Third Party Plaintiff.

ORDER

Alan N. Bloch, United States District Judge

AND NOW, this 28th day of September, 2016, in consideration of the Motion to Dismiss Defendant's Amended Counterclaim (Doc. No. 33) and memorandum in support thereof (Doc. No. 34) filed in the above-captioned matter by Plaintiff United States of America and Third Party Defendants United States Department of Justice, United States Department of Treasury, and United States Department of Education ("the Government"), on December 10, 2015, and in further consideration of Defendant Melissa A. Deuerling's brief in opposition thereto (Doc. No. 37), filed in the above-captioned matter on February 17, 2016,

IT IS HEREBY ORDERED that, for the reasons set forth herein, Plaintiff's and Third Party Defendants' Motion is GRANTED. IT IS FURTHER ORDERED, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), that Counts I, II, III, VI, and VII of the Amended Counterclaim/Cross Claim and Third Party Complaint are hereby dismissed.

I. Background

In this action, the United States seeks to collect on student loan debts allegedly incurred by Defendant and owed to the United States. The Amended Complaint contends, quite simply, that Defendant executed a series of promissory notes to secure student loans, and that Defendant defaulted on her obligations and is now indebted to the United States as reinsurer of the loans in the amount of $23,417.93, plus a filing fee, interest, and costs. (Doc. No. 8). In response to the Amended Complaint, Defendant originally filed a Motion to Dismiss (Doc. No. 11), which the Court denied. Subsequently, Defendant filed an "Answer to Amended Complaint, and Counterclaim." (Doc. No. 20). In response, the Government filed a Motion to Dismiss Defendant's Counterclaims. (Doc. No. 22).

Next, rather than filing a brief in opposition to the Government's motion, Defendant filed a Third Party Complaint. (Doc. No. 24). Although Defendant entitled her filing a "Third Party Complaint," the Court noted that it was essentially an amended pleading that elaborated on her previously filed "Answer to Amended Complaint, and Counterclaim." The Court thus declared the Government's Motion to Dismiss moot, since it addressed what was no longer the most recent pleading, and ordered the Government to respond to Defendant's counterclaims contained in the Third Party Complaint. (Doc. No. 25). In response, the Government, once again, filed a Motion to Dismiss Defendant's Counterclaim (Doc. No. 26), to which the Court ordered Defendant to file a response. Again, rather than filing a brief in response to the Government's motion, Defendant filed a new pleading, entitled "Amended Counterclaim/Cross Claim and Third Party Complaint" (Doc. No. 31), which, after several incarnations, now includes claims under the Federal Tort Claims Act, the Fair Debt Collection Practices Act, and the Privacy Act. The Court, once again, denied the Government's most recent Motion to Dismiss and ordered the Government to file a response to the claims in the Amended Counterclaim/Cross Claim and Third Party Complaint ("Amended Counterclaim"). (Doc. No. 32).

On December 10, 2015, the Government filed Plaintiff's and Third Party Defendants' Motion to Dismiss Defendant's Amended Counterclaim, which is the motion that is currently before the Court.

II. Legal Analysis

A. Claim Under the Federal Tort Claims Act

The Government asserts, first, that Defendant's claim against the United States under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 2671 et seq. , is barred by the doctrine of sovereign immunity. As a general rule, the United States and its agencies are immune from suit unless Congress has expressly provided consent to be sued. United States v. Mitchell , 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980). "Absent a waiver, sovereign immunity shields the United States and its agencies...from suit." Williams v. U.S. Dist. Ct. for D.N.J. , 455 Fed.Appx. 142, 143 (3d Cir. 2011). Moreover, a "waiver of sovereign immunity ‘cannot be implied but must be unequivocally expressed.’ " United States v. Mitchell , 445 U.S. at 538, 100 S.Ct. 1349 (quoting United States v. King , 395 U.S. 1, 4, 89 S.Ct. 1501, 23 L.Ed.2d 52 (1969) ). The burden of persuasion rests with the party arguing that the government has waived sovereign immunity. See Koresko v. Solis , 2011 WL 5447435, at *8 (E.D. Pa. Nov. 10, 2011).

The FTCA creates a limited waiver of sovereign immunity in civil actions or claims for monetary damages for certain tortious conduct, described as "injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." 28 U.S.C. §§ 1346(b)(1), 2679(b)(1). Although the FTCA provides a waiver of sovereign immunity for such conduct, it also requires that—before a claimant can bring an action against the United States—he must first have exhausted his administrative remedies by presenting "the claim to the appropriate Federal agency and his claim shall have been finally denied." 28 U.S.C. § 2675(a) ; Sanon v. Dep't of Higher Educ. , 2010 WL 1049264, at *3 (E.D.N.Y. Mar. 18, 2010). This claim requirement is jurisdictional and cannot be waived. See Keene Corp. v. United States , 700 F.2d 836, 841 (2d Cir. 1983).

In the case at bar, however, Defendant has not alleged that she filed any such administrative claim. Instead, she contends that her claim is not subject to the FTCA's prerequisite procedural requirements because her counterclaim is compulsory. (Doc. No. 37, at 2). While it is true that Section 2675(a) provides an exemption for counterclaims, Defendant's claim is not a counterclaim within the meaning of Federal Rule of Civil Procedure 13(d). See Spawr v. United States , 796 F.2d 279, 281 (9^th Cir. 1986). In defining compulsory counterclaims, Rule 13(a)(1) states that, generally, "[a] pleading must state as a counterclaim any claim that—at the time of its service—the pleader has against an opposing party if the claim...arises out of the transaction or occurrence that is the subject matter of the opposing party's claim." Rule 13(d) further provides that, although a defendant generally may assert a counterclaim against a plaintiff, the right of a party to assert a counterclaim does not trump the sovereign immunity of the United States. Thus, "[w]hen the United States institutes an action, the defendant may assert only compulsory counterclaims." Spawr , 796 F.2d at 281 (citing Northridge Bank v. Comm'y Eye Care Ctr. , 655 F.2d 832, 835–36 (7^th Cir. 1981) ). In fact, "[c]ounterclaims under the F.T.C.A. have been permitted only when the principal action by the United States was in tort and the counterclaim was compulsory in nature." Id.

First, the Government's action here is not based in tort, but is based in contract. Specifically, the Government's claim is based upon the terms of promissory notes that Defendant allegedly executed when she took out student loans, whereas Defendant's counterclaim purportedly sounds in tort. Therefore, Defendant's counterclaim does not fall under the exemption cited by Defendant. See id. ; United States v. Andre , 2012 WL 728737, at *2 (N.D. Cal. Mar. 6, 2012).¹

Second, Defendant's claim is not a compulsory counterclaim, as she contends. Quite simply, her claim does not arise "out of the transaction or occurrence that is the subject matter" of the Government's claim. Fed. R. Civ. Pro. 13(a)(1). In this case, the Government's claim arises from the loan transaction, discussed supra , in which, allegedly, Defendant agreed to borrow money, money was disbursed, and Defendant failed to repay her loan. On the other hand, Defendant's counterclaim is wholly unrelated to the transaction that is the subject of the Government's claim, neither to the validity of those promissory notes, nor to any of the duties or rights arising under those instruments. Instead, Defendant's counterclaim seeks contribution, indemnification, or a declaratory judgment based on facts related to a separate action to which Defendant is not even a party.² That case, United States ex rel. Washington v. Education Management, LLC , No. 07–461 (W.D. Pa. filed Apr. 5, 2007), involves allegations that the school which Defendant attended violated the False Claims Act by submitting false certifications of compliance as to its eligibility to receive federal student funding. The Government's claim and Defendant's counterclaim thus arise out of completely different "transactions or occurences." Accordingly, Defendant's claim is not a compulsory counterclaim, and does not fall under the exemption cited by Defendant.

Additionally, although Defendant contends, on the one hand, that she is excused from having to exhaust her administrative remedies because she has filed a compulsory counterclaim, she also asserts in her brief that her counterclaim, as drafted, technically seeks "indemnification and contribution," which courts have held generally fall within the FTCA's waiver of sovereign immunity. (Doc. No. 37, at 1). "Contribution," however, is generally understood as "[t]he right that gives one of several persons who are liable on a common debt the ability to recover ratably from each of the others when...