U-Haul Co. of Nevada, Inc. et al v USA, et al.
Filing
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ORDER Denying 38 Defendant United States of America's Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Kent J. Dawson on 7/29/11. (Copies have been distributed pursuant to the NEF - EDS)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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U-HAUL CO. OF NEVADA, INC., et al.,
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Plaintiff,
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v.
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Case No. 2:08-CV-729-KJD-RJJ
UNITED STATES OF AMERICA, et al.,
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ORDER
Defendants.
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Presently before the Court is Defendant United States of America’s (hereinafter referred to as
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“Government”) Motion to Dismiss First Amended Complaint (#38). Plaintiff filed a response in
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opposition (#41) to which Defendant replied (#42). The Court heard oral arguments concerning the
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present motion from both parties on July 27, 2011.
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I. Background
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Beginning in 2004, U-Haul was the respondent in several consolidated unfair labor practice
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proceedings brought by the National Labor Relations Board. During those proceedings, Assistant
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United States Attorney Steven Wamser (“Wamser”) supervised another Assistant United States
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Attorney, Nathan Albright (“Albright”), in the representation of the NLRB. U-Haul was represented
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by Kamer, Zucker, and Abbot (“KZA”). KZA employed paralegal Debra Wilcher (“Wilcher”), who
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was assigned to assist the attorneys at KZA in the NLRB proceeding. Plaintiff alleges that during
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that proceeding, Albright had a sexual relationship with Wilcher (“the Affair”) and that during the
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Affair, Albright and Wasmer sought and obtained attorney/client privileged information from
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Wilcher, including litigation strategy information (“Confidential Information”). Wilcher and
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Albright, who is now deceased, have been sued in separate litigation.
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The present suit includes Plaintiff’s claims against the Government and Wamser in his
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official capacity. Plaintiff’s Amended Complaint (#37) in this action asserts: (i) conversion; (ii)
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trespass to chattels; (iii) negligence/professional negligence; (iv) tortious conspiracy; and (v) concert
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of action. Plaintiff alleges throughout the Amend Complaint that Wasmer assisted Albright in
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obtaining the Confidential Information, personally possessed the Confidential Information, used it to
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the detriment of Plaintiff during the NLRB proceeding, and failed to tell Plaintiff that he and
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Albright had procured the Confidential Information.
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The Government contends that Plaintiff’s claims are barred by the Federal Tort Claims Act
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(“FTCA”) because the true essence of the factual allegations in the complaint are all causes of action
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barred under the FTCA. Specifically, the Government argues that the Plaintiff’s claims essentially
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constitute: 1. abuse of process; 2. misrepresentation and deceit torts; and 3. interference with contract
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rights. Finally, the Government argues that the tortious conspiracy and concert of action claims
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should be barred because they arise out of the allegedly barred claims.
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II. Analysis
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Defendant has moved to dismiss for lack of subject matter jurisdiction under Federal Rule of
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Civil Procedure 12(b)(1). Rule 12(b)(1) attacks on jurisdiction can be either facial, confining the
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inquiry to allegations in the complaint, or factual, permitting the court to look beyond the complaint.
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See White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Here, the Government’s motion is a facial
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challenge, and therefore the Court’s inquiry is confined to the allegations in the Amended Complaint
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(#37). The factual allegations in the complaint are accepted as true solely for the purpose of the
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present motion.
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The main dispute in the present motion is whether the Government has sovereign immunity
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which precludes Plaintiff’s claims. The United States is immune from suit unless it waives its
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sovereign immunity. FDIC v. Meyer, 510 U.S. 471, 474 (1994). “Sovereign immunity is
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jurisdictional in nature.” Id. Therefore, the Government has immunity unless it is shown to have
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been waived.
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In some cases, the FTCA waives sovereign immunity and provides jurisdiction over claims
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that are “cognizable” under 28 U.S.C. § 1346(b). See U.S.C §2679(a); Meyer, 510 U.S. at 474.
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Some claims cognizable under § 1346(b), however, are excluded from the FTCA’s coverage.
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Specifically, 28 U.S.C. § 2680(h) precludes waiver of sovereign immunity for “[a]ny claim arising
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out of . . . abuse of process, . . . misrepresentation, deceit, or interference with contract rights. . .”
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A. Sovereign Immunity for Conversion, Trespass to Chattels, and Negligence/Professional
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Negligence Claims
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When applying § 2680(h) exclusions, the Court must look beyond the literal meaning of the
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complaint and “ascertain the real cause of the complaint.” Id. 366 U.S. at 703; Snow-Erlin v. United
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States, 470 F.3d 804, 808 (9th Cir. 2006)(“If the gravamen of Plaintiff’s complaint is a claim for an
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excluded tort under § 2680(h), then the claim is barred.”). Here, the Government asserts that it has
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not waived its sovereign immunity because the true essence or “gravamen” of Plaintiff’s complaints
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under the Federal Tort Claim Act (“FTCA”) fall under the abuse of process, misrepresentation,
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deceit, and interference with contractual rights exceptions of 28 U.S.C. § 2680(h).
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1. Abuse of Process
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The Government asserts that the true essence or “gravamen” of Plaintiff’s Complaint is abuse
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of process. Plaintiff contends that the facts alleged do not constitute abuse of process under Nevada
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law.
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Abuse of process is a state law claim and therefore Nevada law applies. See, Kohlrautz v.
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Oilmen Participation Corp., 441 F.3d 827, 835 (9th Cir. 2006). Under Nevada law, abuse of process
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requires (1) an ulterior purpose for bringing a legal action other than resolving a dispute, and (2) a
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willful act in the use of the legal process not proper in the regular conduct of the proceeding. Las
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Vegas Fetish & Fantasy Halloween Ball, Inc.,v. Ahern Rentals, Inc., 182 P.3d 764, 767 (2008).
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Here, Plaintiff does not allege that Wasmer used a legal process to commit the alleged actions.
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Plaintiff alleges that Wasmer took the property of U-Haul by condoning and benefitting from his
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colleague’s affair with a paralegal. Obtaining confidential information from opposing counsel
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without the consent or knowledge of opposing counsel is not a legal process with a designated
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purpose. Additionally, the Government does not allege what ulterior purpose Plaintiff may have had
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for bringing this legal action. Therefore, the alleged actions do not constitute abuse of process under
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Nevada law.
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2. Misrepresentation and Deceit
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The § 2680(h) misrepresentation and deceit exceptions to the FTCA apply “when the plaintiff
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suffers an economic loss as a result of a commercial decision based on a misrepresentation consisting
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of either false information or a failure to provide information [which the government] had a duty to
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provide.” FDIC v. Craft, 157 F.3d 697, 707 (9th Cir. 1998) quoting Mt. Homes, Inc. v. United
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States, 912 F.2d 352, 356 (9th Cir. 1990); see also Frigard v. United States, 862 F.2d 201, 202 (9th
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Cir. 1988). The tort of conversion “is a distinct act of dominion wrongfully exerted over personal
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property in denial of, or inconsistent with, title or rights therein or in derogation, exclusion or
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defiance of such rights.” Edwards v. Emperor's Garden Restaurant, 122 Nev. 317, 328 (2006). A
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Defendant has committed the tort of trespass to chattels if: “(a) he dispossesses the other of the
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chattel, or (b) the chattel is impaired as to its condition, quality, or value, or (c) the possessor is
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deprived of the use of the chattel for a substantial time, or (d) bodily harm is caused to the possessor,
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or harm is caused to some person or thing in which the possessor has a legally protected interest.”
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Cerros v. North Las Vegas Police Dept., 2008 WL 608641, *4 (D.Nev. 2008) (quoting Restatement
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(Second) of Torts § 218).
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According to the Government, the gravamen of Plaintiff’s conversion and trespass to chattels
claims is actually misrepresentation and deceit, because the basis of Plaintiff’s Complaint is that
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Wasmer’s failure to tell U-Haul about the Affair and the Confidential Information he and Albright
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obtained, caused U-Haul to lose money during the NLRB proceedings. The Government argues that
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failure to provide information is at the core of Plaintiff’s allegations, and therefore the
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misrepresentation and deceit exception of the FTCA bars Plaintiff’s claims.
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Plaintiff contends that its complaint is not based on misrepresentation and deceit because the
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facts go beyond Wasmer’s failure to disclose that he had the Confidential Information. Rather, the
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facts assert that Wasmer wrongly took, possessed, and used the Confidential Information, which was
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the property of Plaintiff, and the Confidential Information was impaired and lost its value once it was
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in Wasmer’s possession. The facts, Plaintiff argues, allege the necessary elements of conversion and
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trespass to chattels, not misrepresentation and deceit.
Here, the facts are sufficient to state a claim for conversion and trespass to chattels.
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Plaintiff’s allegations include that Wasmer recieved the Confidential Information, possessed it, used
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it, and in doing so the Confidential Information lost all its value. As pled, the allegations go beyond
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the assertion that Wasmer failed to provide U-Haul information. While Plaintiff’s counsel admitted
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having no evidence that Wasmer had any role in the taking of the Confidential Information, the
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factual allegations in the Complaint are sufficient to state a claim for tortuous conduct.
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3. Interference With Contractual Rights
The Government asserts that the gravamen of Plaintiff’s negligence/professional negligence
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claim is actually interference with contractual rights, because the basis of Plaintiff’s Complaint is
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that Wasmer and Albright induced Wilcher to breach contractual and fiduciary duties. Plaintiff
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contends that the facts allege Wasmer committed professional negligence by violating separate and
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distinct professional duties, including the duty to oversee Albright.
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The Court agrees. Plaintiff’s allegations involve Wasmer’s duties as a supervisor and as
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counsel, not Wilcher’s duties to U-Haul. Although the Complaint includes factual allegations that
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imply Wilcher violated her duties, that does not preclude bringing claims against Wasmer. As pled,
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the facts indicate that Wasmer could have violated separate and distinct duties. Accordingly,
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Plaintiff’s factual allegations do not fit as squarely into the abuse of process, misrepresentation,
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deceit, or interference with contract rights exceptions to sovereign immunity as the Government
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asserts and thus, they are not barred by § 2680(h).
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B. Sovereign Immunity for Tortious Conspiracy and Concert of Action Claims
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Plaintiff’s last two claims of Tortious Conspiracy and Concert of Action are also not barred.
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The Government has moved for dismissal of these claims on the basis that § 2680(h) bars all claims
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“arising out of” the barred torts it lists. If the underlying tort is barred by § 2680(h), the conspiracy
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and concert of action claims are barred as well because they arise out of the barred tort. Deloria v.
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Veterans Administration, (27 F.2d 1009, 1011-12 (7th Cir. 1991) (claim for conspiracy barred
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because the gravamen of underlying tort was excluded under § 2680(h)); see also Owyhee Grazing
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Ass’n, Inc. v. Field, 637 F.2d 694, 697 (9th Cir. 1981)(claim for conspiracy to defraud barred
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because fraud excluded under § 2680(h)).
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Here, however, Plaintiff’s conspiracy and concert of action claims are based in claims that are
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not barred for reasons discussed above. Therefore, the conspiracy and concert of action claims are
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also not barred because they arise out of properly pled tort claims. Accordingly, the Court denies
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dismissal of the Amended Complaint (#37).
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II. Conclusion
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Accordingly, IT IS HEREBY ORDERED that Defendant the United States of America’s
Motion to Dismiss (#38) is DENIED;
DATED this 29th day of July 2011.
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_________________________
Kent J. Dawson
United States District Judge
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