United States District Court, D. Arizona
JOHN CLANCY, a single man; EDWARD MCMULLEN, a single man; and LAS CIEN CASAS, LLC., an Arizona company, Plaintiffs,
UNITED STATES OF AMERICA; and UNITED STATES AIR FORCE, Defendants.
Honorable Lynette C. Kimmins United States Magistrate Judge.
United States of America and United States Air Force move to
dismiss the Complaint filed by Plaintiffs John Clancy, Edward
McMullen, and Las Cien Casas, LLC for lack of subject matter
jurisdiction. (Doc. 12.) Plaintiffs filed an Objection to
Motion to Dismiss and Defendants replied. (Docs. 13-2, 16.)
Plaintiffs filed and later withdrew their response to
Defendants' Reply. (Docs. 17, 18.) Plaintiffs filed a
Motion to Supplement, and the motion was
granted. (Docs. 19, 25.) Defendants replied to the
supplementary documents. (Doc. 26.) Both parties consented to
Magistrate Judge Kimmins's authority to render a final
judgment. (Doc. 23.) For the reasons discussed below, the
Court grants in part and denies in part the Motion to
AND PROCEDURAL BACKGROUND
filed a complaint against Defendants, asserting the Federal
Tort Claim Act (the “FTCA”), 28 U.S.C.
§§ 1346(b), 2671-2680, as the basis for the
Court's jurisdiction. (Doc. 1.) The following facts are
taken from Plaintiffs' Complaint. Plaintiffs allege that,
on or about February 8, 2016, an airman of the United States
Air Force inadvertently started a fire on the real property
known as Parcel number 302-24-007 (the
“Property”) and caused damage to the Property. On
March 9, 2016, Plaintiffs filed an administrative claim with
Defendants pursuant to the FTCA. On April 13, 2016,
Defendants offered Plaintiffs $2, 500 to settle the claim.
Plaintiffs requested reconsideration. On July 13, 2017,
Plaintiffs' administrative claim was denied. Plaintiffs
sue for negligence and seek damages. The Property is owned by
Las Cien Casas, LLC. Mr. Clancy and Mr. McMullen are the sole
owners of Las Cien Casas, LLC.
moved to dismiss for lack of subject matter jurisdiction.
First, Defendants argue that, because the Property is owned
by Las Cien Casas, LLC, Mr. Clancy and Mr. McMullen have not
been injured and do not have standing to sue. Second,
Defendants contend that, although Las Cien Casas, LLC owns
the Property, it failed to file an administrative claim with
Defendants pursuant to the FTCA.
submitted to the Court: (1) a copy of the SF-95 Claim Form as
originally submitted to Defendants; (2) a copy of the deed of
the Property submitted along with the SF-95 Claim Form; and
(3) Defendants' settlement offer. (Doc. 25.)
Mr. Clancy and Mr. McMullen
the Property is owned by Las Cien Casas, LLC, Mr. Clancy and
Mr. McMullen have not been injured and do not have standing
to sue. It is a “fundamental rule” that even
though a stockholder owns all of the stock in a corporation,
he cannot sue as an individual for injury to the corporation.
Erlich v. Glasner, 418 F.2d 226, 228 (9th Cir.
1969); Sherman v. British Leyland Motors, Ltd., 601
F.2d 429, 439-40 (9th Cir. 1979); Shell Petroleum, N.V.
v. Graves, 570 F.Supp. 58, 62 (N.D. Cal),
aff'd, 709 F.2d 593 (9th Cir. 1983). In
responding to the Motion to Dismiss, Plaintiffs Mr. Clancy
and Mr. McMullen did not dispute Defendants' argument
based on standing. (Doc. 13-2.) Mr. Clancy and Mr. McMullen
will be dismissed.
Las Cien Casas, LLC
FTCA provides that “[a]n action shall not be instituted
. . . unless the claimant shall have first presented the
claim to the appropriate Federal agency and his claim shall
have been finally denied by the agency in writing and sent by
certified or registered mail.” 28 U.S.C. §
2675(a). Administrative exhaustion is a jurisdictional
prerequisite to filing a FTCA suit. McNeil v. United
States, 508 U.S. 106, 113 (1993). Federal Courts are
courts of limited jurisdiction, and the burden of
establishing such jurisdiction rests upon the party bringing
the case to federal court. Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 377 (1994).
argue that Las Cien Casas, LLC failed to file an
administrative claim and the Court should enforce strict
adherence with the exhaustion requirement. See
McNeil, 508 U.S. at 113 (“[E]xperience teaches
that strict adherence to the procedural requirements
specified by the legislature is the best guarantee of
evenhanded administration of the law.” (quoting
Mohasco Corp. v. Silver, 447 U.S. 807, 826 (1980))).
Defendants note that Box 2 on the SF-95 Claim Form asks for
“claimant's personal representative if any”
and directs the filer to the instructions on the reverse,
which state that “[a] claim presented by the agent or
legal representative must be presented in the name of
claimant” and that “[i]f the incident involves
more than one claimant, each claimant should submit a
separate claim.” (Doc. 25-1.) The SF-95 Claim Form at
issue only listed Mr. McMullen as the Claimant, with no
indication that he was filing on behalf of the LLC or any
evidence of his authority to act on behalf of the company.
When asked for the name and address of the owner, if other
than the claimant, Mr. McMullen wrote “same as
claimant.” Therefore, Defendants allege that the
administrative claim was filed on behalf of Mr. McMullen
personally, not on behalf of Las Cien Casas, LLC.
counter that Mr. McMullen, at all times, was acting on behalf
of Las Cien Casas, LLC, and Defendants were aware that the
administrative claim was filed on behalf of the LLC. The deed
that Plaintiffs submitted to Defendants with the SF-95 Claim
Form states that the Property is owned by Las Cien Casas,
LLC. The Court also reviewed a copy of Defendants'
settlement letter to Mr. McMullen. The relevant part of
Defendants' offer states: “I note that the property
is actually owned by Las Cien Casas, LLC. Therefore, an
authorized officer will have to sign the settlement agreement
even if that officer is you, and the payment will be made to
Las Cien Casas.”
Court finds that Plaintiff Las Cien Casas, LLC met its burden
with respect to the exhaustion requirement. The exhaustion
requirement serves two general purposes: to avoid unnecessary
litigation by making it possible for the government to
“expedite the fair settlement” of the claims, and
to provide for a “more fair and equitable
treatment” of private parties when they have claims
against the government. Shipek v. United States, 752
F.2d 1352, 1354 (9th Cir. 1985). These two purposes are
served when the claim gives the government sufficient notice
to commence investigation, and the claimant places a value on
the claim. Id. The Ninth Circuit held that only
“minimal notice” is required to satisfy the
exhaustion requirement. Id.; Avery v. United
States, 680 F.2d 608, 611 (9th Cir. 1982) (reasoning