Thomas v. Family Healthcare Network ( 2024 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 9 EASTERN DISTRICT OF CALIFORNIA 10 11 DEANNE THOMAS, Case No. 1:23-cv-01610-KES-SAB 12 Plaintiff, FINDINGS AND RECOMMENDATIONS RECOMMENDING DENYING 13 v. PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT FOR LACK OF SUBJECT 14 FAMILY HEALTHCARE NETWORK, et al., MATTER JURISDICTION; DISMISSING PLAINTIFF’S COMPLAINT FOR LACK OF 15 Defendants. SUBJECT MATTER JURISDICTION WITH LEAVE TO AMEND 16 ORDER VACATING MAY 8, 2024 17 HEARING 18 (ECF Nos. 1, 16, 19, 20) 19 OBJECTIONS DUE WITHIN FOURTEEN DAYS 20 I. 21 INTRODUCTION 22 Currently before the Court is Plaintiff Deanne Thomas’s (“Plaintiff”) motion for default 23 judgment against Defendants Family Healthcare Network and Narwhals Mating, M.D. (ECF No. 24 16.) The Court finds this matter suitable for decision without oral argument and vacates the 25 hearing scheduled for May 8, 2024. See L.R. 230(g). For the reasons set forth herein, the Court 26 recommends that Plaintiff’s motion for default judgment be denied, and the complaint be 27 dismissed sua sponte with leave to amend to establish subject matter jurisdiction. 1 II. 2 BACKGROUND 3 On November 15, 2023, Plaintiff, a California resident, filed this negligence action 4 against Defendant Family Healthcare Network, a California corporation with its principal place 5 of business in California, and Narwhals Mating, M.D., a California resident. (ECF No. 1.) 6 Plaintiff alleges the Court has diversity jurisdiction under 28 U.S.C. § 1332. (Id.) 7 Both Defendants failed to respond to the complaint. On March 12, 2024, Plaintiff 8 requested entry of default against both Defendants (ECF No. 12), which the Clerk entered on 9 March 13, 2024 (ECF No. 13). 10 On April 12, 2024, Plaintiff filed the instant motion for default judgment against both 11 Defendants. (ECF No. 16.) Upon review of Plaintiff’s motion, the Court had concerns whether 12 diversity jurisdiction existed and, on April 23, 2024, ordered that Plaintiff show cause why the 13 Court should not recommend that the case be dismissed for lack of subject matter jurisdiction. 14 (ECF No. 19.) On April 30, 2024, Plaintiff filed a response to the Court’s order to show cause 15 confirming diversity jurisdiction does not exist. (ECF No. 20 at 2.) Plaintiff requests leave to 16 amend to correct the statement of subject matter jurisdiction and to add the United States as 17 either a Doe Defendant or as a named Defendant. (Id. at 2-3.) 18 II. 19 LEGAL STANDARD FOR DEFAULT JUDGMENTS 20 “Our starting point is the general rule that default judgments are ordinarily disfavored,” 21 as “[c]ases should be decided upon their merits whenever reasonably possible.” NewGen, LLC 22 v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 23 1472 (9th Cir. 1986)). Pursuant to Federal Rule of Civil Procedure (“Rule”) 55, obtaining a 24 default judgment is a two-step process. Entry of default is appropriate as to any party against 25 whom a judgment for affirmative relief is sought that has failed to plead or otherwise defend as 26 provided by the Federal Rules of Civil Procedure and where that fact is made to appear by 27 affidavit or otherwise. Fed. R. Civ. P. 55(a). After entry of default, a plaintiff can seek entry of 1 The decision to grant a motion for entry of default judgment is within the discretion of 2 the court. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002). The 3 Ninth Circuit has set forth the following seven factors (the “Eitel factors”) that the Court may 4 consider in exercising its discretion: (1) the possibility of prejudice to the plaintiff; (2) the merits 5 of the plaintiff’s substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at 6 stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the 7 default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of 8 Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1471–72. 9 Generally, once default has been entered, “the factual allegations of the complaint, except 10 those relating to damages, will be taken as true.” Garamendi v. Henin, 683 F.3d 1069, 1080 (9th 11 Cir. 2012) (quoting Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). 12 Accordingly, the amount of damages must be proven at an evidentiary hearing or through other 13 means. Microsoft Corp. v. Nop, 549 F. Supp. 2d 1233, 1236 (E.D. Cal. 2008). Additionally, 14 “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not 15 established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) 16 (internal citation omitted). The relief sought must not be different in kind or exceed the amount 17 that is demanded in the pleadings. Fed. R. Civ. P. 54(c). 18 IV. 19 DISCUSSION 20 A. Plaintiff’s Motion for Default Judgment 21 Before evaluating the Eitel factors to determine whether default judgment should be 22 entered, “a district court has an affirmative duty to look into its jurisdiction over both the subject 23 matter and the parties.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999); see also Valdez v. Allstate 24 Ins. Co., 372 F.3d 1115, 1116 (9th Cir. 2004) (noting federal courts are “obligated to consider 25 sua sponte whether [they] have subject matter jurisdiction”). “To avoid entering a default 26 judgment that can later be successfully attacked as void, a court should determine whether it has 27 the power, i.e., the jurisdiction, to enter the judgment in the first place.” In re Tuli, 172 F.3d at 1 Federal courts are courts of limited jurisdiction and their power to adjudicate is limited to 2 that granted by Congress. U.S. v. Sumner, 226 F.3d 1005, 1009 (9th Cir. 2000). Pursuant to 28 3 U.S. C. § 1332, federal courts have original jurisdiction of all civil actions between citizens of 4 different States in which “the matter in controversy exceeds the sum or value of $75,000, 5 exclusive of interest and costs.” 28 U.S.C. § 1332(a). This requires complete diversity of 6 citizenship and the presence “of a single plaintiff from the same State as a single defendant 7 deprives the district court of original diversity jurisdiction over the entire action.” Abrego 8 Abrego v. The Dow Chemical Co., 443 F.3d 676, 679 (9th Cir. 2006) (citations omitted). A 9 corporation is deemed to be a citizen of any State by which it has been incorporated and of the 10 State where it has its principal place of business. Lincoln Prop. Co. v. Roche, 546 U.S. 81, 94 11 (2005) (quoting 28 U.S.C. § 1332(c)(1)). 12 In support of her allegation that this Court possesses diversity jurisdiction over this action 13 under 28 U.S.C. § 1332, Plaintiff argues in her motion for default judgment that “Defendants are 14 citizens of California….Thus, the parties are diverse.” (ECF No. 16 at 5.) Plaintiff, however, 15 fails to account for her own California citizenship. Plaintiff, Defendant Family Healthcare 16 Network, and Defendant Narwhals Mating, M.D. are citizens of California. (ECF No. 1 at 3.) 17 Plaintiff’s motion therefore fails to establish the parties are completely diverse or that this Court 18 otherwise has federal subject matter jurisdiction. In response to the Court’s order to show cause 19 regarding subject matter jurisdiction, Plaintiff concedes the Court lacks diversity jurisdiction in 20 this action. (ECF No. 20 at 2.)1 21 Without subject matter jurisdiction, any default judgment entered by the Court would be 22 23 1 Diversity jurisdiction is a basic federal court practice. Counsel for Plaintiff filed a form complaint that is intended to walk pro se litigants through filing negligence actions specifically under diversity of citizenship. The form 24 complaint includes explanations of the basic requirements of diversity jurisdiction to unrepresented individuals with no legal background or experience. Aside from the issue that counsel for Plaintiff is expected to know the 25 fundamental concept of diversity jurisdiction, counsel for Plaintiff failed to follow the instructions contained within the template pro se complaint. More concerning, however, is that counsel for Plaintiff knew both Defendants and Plaintiff shared the same state of citizenship when the complaint was filed in November 2023, yet filed a motion for 26 default judgment re-asserting the parties were completely diverse. It is not well-taken that counsel for Plaintiff provided no explanation for this clearly incorrect statement of fact and law in his response to the Court’s order to 27 show cause. When practicing in this Court, in fact any court of law for that matter, all counsel are expected to know the law and not be educated by the Court on basic legal concepts. Future conduct may be subject to sanctions as the 1 void. See In re Tuli, 172 F.3d at 712. Accordingly, the Court recommends denying Plaintiff’s 2 motion for default judgment against Defendant Family Healthcare Network, and Narwhals 3 Mating, M.D. for lack of subject matter jurisdiction.2 4 B. Sua Sponte Dismissal and Request for Leave to Amend 5 Given Plaintiff’s complaint alleges subject matter jurisdiction under diversity jurisdiction, 6 the Court also recommends dismissing Plaintiff’s complaint sua sponte for lack of subject matter 7 jurisdiction. However, “a district court may, and should, grant leave to amend when it appears 8 that subject matter jurisdiction may exist—even though the [complaint] inadequately alleges 9 jurisdiction.” Seymour v. The Mut. of New York Life Ins. Co., No. CV 20-7578 PA (JEMX), 10 2021 WL 4497502, at *2 (C.D. Cal. Mar. 1, 2021); see also Gompper v. VISX, Inc., 298 F.3d 11 893, 898 (9th Cir. 2002) (“Dismissal without leave to amend is improper unless it is clear, upon 12 de novo review, that the complaint could not be saved by any amendment”). 13 As a threshold matter, Plaintiff, who is represented in this action, filed a “Pro Se 5” form 14 complaint for civil cases alleging negligence under 28 U.S.C. § 1332. (ECF No. 1.) The form 15 complaint utilized by Plaintiff is templated specifically for actions arising under diversity of 16 citizenship. If Plaintiff chooses to amend her complaint, she must do so without using the same 17 form complaint for negligence actions arising under diversity jurisdiction. 18 The Court also briefly addresses the additional jurisdictional requirements of alleging a 19 claim under the FTCA. In response to the Court’s order to show cause regarding subject matter 20 jurisdiction, Plaintiff states that after further investigation, she has discovered that “Defendant 21 Family Healthcare Network is a Federally Qualified Health Center, a Health Center Program 22 grantee under 42 U.S.C. 254b, and a deemed Public Health Service employee under 42 U.S.C. 23 233(g)-(n)” and that “Defendant Family Healthcare Network receives Health and Human 24 Services funding and has Federal Public Health Service deemed status with respect to certain 25 health or health related claims, including medical malpractice claims, for itself and its covered 26 individuals (which includes Defendant Narwhals Mating, M.D.).” (ECF No. 20 at 2.) Plaintiff 27 2 Because the Court finds it does not have subject matter jurisdiction over this action as currently pleaded, the Court 1 contends she has “initiated the process for this claim through the Federal Tort Claims Act (28 2 USC § 1346(b)) and it is Plaintiff’s understanding that such actions must be brought in federal 3 courts.” (Id.) Plaintiff maintains that “Defendants Narwhals Mating, M.D. and Family 4 Healthcare Network are the proper actors at issue in this case,” but that it also “appears that the 5 Federal Tort Claim Act (28 USC § 1346(b)) requires that the United States also be named as a 6 party.” (Id.) Plaintiff therefore requests leave to add the United States as a Defendant in this 7 action. (Id. at 2-3.) 8 The Court notes that amending the complaint to add the United States as a Defendant, 9 without more, would not cure the jurisdictional deficiencies. The FTCA limits federal court 10 jurisdiction to hear actions for damages against the United States. Warren v. U.S. Dep’t of 11 Interior, 724 F.2d 776, 777-78 (9th Cir. 1984). Before a plaintiff can file an FTCA action in 12 federal court, she must exhaust the administrative remedies for her claim. See 28 U.S.C. § 13 2675(a) (“An action shall not be instituted upon a claim against the United States for money 14 damages ... unless the claimant shall have first presented the claim to the appropriate Federal 15 agency[.]”). “An administrative claim is deemed exhausted once the relevant agency finally 16 denies it in writing, or if the agency fails to make a final disposition of the claim within six 17 months of the claim's filing.” D.L. by & through Junio v. Vassilev, 858 F.3d 1242, 1244 (9th 18 Cir. 2017) (citing 28 U.S.C. § 2675(a)); Warren, 724 F.2d at 778 (“The plaintiff is permitted to 19 sue the United States only after the claim is denied or six months have elapsed without final 20 disposition by the agency”) (emphasis added). “Exhaustion of the claim procedures established 21 under the [FTCA] is a prerequisite to district court jurisdiction.” Johnson v. United States, 704 22 F.2d 1431, 1442 (9th Cir. 1983). “Because the requirement [to file an administrative claim] is 23 jurisdictional, ‘it must be strictly adhered to. This is particularly so since the FTCA waives 24 sovereign immunity.’ ” Brady v. United States, 211 F.3d 499, 502 (9th Cir. 2000) (quoting 25 Jerves v. United States, 966 F.2d 517, 521 (9th Cir. 1992)); McNeil v. United States, 508 U.S. 26 106, 113 (1993) (“The FTCA bars claimants from bringing suit in federal court until they have 27 exhausted their administrative remedies.”). 1 Federal Tort Claims Act,” she fails to proffer any information as to whether she exhausted her 2 administrative remedies by filing an administrative tort claim with the appropriate federal agency 3 under 28 U.S.C. § 2675(a). The Court is therefore unaware whether Plaintiff can cure the 4 jurisdictional defect. However, if she can do so, amendment would not be futile. Accordingly, 5 the Court recommends that Plaintiff be granted leave to amend to establish subject matter 6 jurisdiction and demonstrate that her claim arises under the FTCA, if she believes she can do so 7 in good faith. See Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). 8 IV. 9 CONCLUSION AND RECOMMENDATION 10 Accordingly, IT IS HEREBY RECOMMENDED that: 11 1. Plaintiff’s motion for default judgment against Defendants Family Healthcare 12 Network and Narwhals Mating, M.D. be DENIED for lack of subject matter 13 jurisdiction; and 14 2. Plaintiff’s complaint be DISMISSED with leave to amend to establish subject 15 matter jurisdiction. 16 / / / 17 / / 18 / / / 19 / / / 20 / / / 21 / / / 22 / / / 23 / / / 24 / / / 25 / / / 26 / / / 27 / / / 1 These findings and recommendations are submitted to the district judge assigned to this 2 | action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court’s Local Rule 304. Within fourteen 3 | (14) days of service of these recommendations, the parties may file written objections to the findings and recommendations with the Court. Such a document should be captioned 5 | “Objections to Magistrate Judge’s Findings and Recommendations.” The District Judge will 6 review the Magistrate Judge’s findings and recommendations pursuant to 28 U.S.C. § 7 | 636(b)(1)(C). The parties are advised that failure to file objections within the specified time may 8 | result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 2014) 9 | (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 10 i IT IS SO ORDERED. FA. ee 12 | Dated: _ May 6, 2024 UNITED STATES MAGISTRATE JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28