Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00882/USCOURTS-caed-2_06-cv-00882-2/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1441 Petition for Removal- Personal Injury

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

ROGER CLINE and CAROL CLINE,

CIV NO. 06-00882 FCD EFB

Plaintiffs,

v. MEMORANDUM AND ORDER

WILLIAM “CHIP” DELLAPENNA,

BRENDA DELLAPENNA, and DOES 1

through 50, inclusive,

Defendants.

 

WILLIAM “CHIP” DELLAPENNA,

BRENDA DELLAPENNA,

Third-Party Plaintiffs

and Counterclaimants,

v.

CAPITAL HOLDINGS INT. LLC;

UNITED STATES OF AMERICA;

VALDERMERE BOUGH, individually

and dba Senior Insurance 

Services and dba Bough Insurance

Group; CHUCK LEWIS aka CHARLES

LEWIS, ROGER CLINE; CAROL CLINE,

Third-Party Defendants

and Counterdefendants.

----oo0oo----

Case 2:06-cv-00882-FCD-KJM Document 24 Filed 09/07/06 Page 1 of 7
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1 Because oral argument will not be of material assistance,

the court orders this matter submitted on the briefs. See E.D.

Cal. Local Rule 78-230(h).

2

This case is before the court on third-party defendant

United States of America’s motion to dismiss for lack of subject

matter jurisdiction pursuant to Federal Rule of Civil Procedure

12(b)(1). Third-party plaintiffs William “Chip” Dellapenna and

Brenda Dellapenna (“plaintiffs”) filed a timely notice of

opposition and plaintiffs and counterdefendants Roger Cline and

Carol Cline filed a notice of non-opposition. For the reasons

set forth below,1 the defendant’s motion is GRANTED.

BACKGROUND

This case originated in California state court in the County

of Eldorado, where it has been pending for two years. Plaintiffs

Roger and Carol Cline claim they were induced by their longtime

acquaintances, the Dellapennas, to invest in a “Ponzi” scheme,

which operated under the name Capital Holdings International, LLC

(“Capital Holdings”). The Clines invested $50,000 after being

assured by the Dellapennas, and by Mr. Dellapenna in particular,

that the investment was secure and legitimate. (Pls.’ Fourth Am.

Compl., filed Nov. 15, 2005 [“FAC”] at 2:12-23.) Plaintiffs

claim that in reality, Mr. Dellapenna was a “paid sales person or

finder” for Capital Holdings. (FAC at 2:9-11.) 

Shortly after the Clines invested their money, the federal

government initiated a forfeiture action against the bank

accounts of Capital Holdings and other related entities and

individuals in the United States District Court for the District

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2 The court hereby takes judicial notice of the docket,

settlement stipulation, and judgment in the forfeiture action,

United States of America v. Certain Bank Accounts, No. 1:03-cv00403-REB-CBS (D. Colo.)(hereinafter “Dist. Colo. Action”), which

are attached as exhibits to the United States’ motion to dismiss.

3

of Colorado,2 seizing all the funds in those accounts and

securing indictments against the principal parties responsible

for the scheme. (FAC at 4:27-5:4.) The forfeiture action was

completed on February 17, 2005, and legal title to the money was

transferred to the United States. (Final Order of Forfeiture and

J., filed Feb. 17, 2005, Dist. Colo. Action.) The monies are

currently being held in trust for distribution to the victims of

the scheme. (Settlement Agreement, filed Feb. 16, 2005, Dist.

Colo. Action, at 1-2.)

On June 7, 2005 the Clines filed this suit in state court

against the Dellapennas, alleging counts of intentional

misrepresentation, negligent misrepresentation, negligence,

misrepresented securities, conspiracy, and violations of

California law. (FAC at 11-12.) After almost a year of

litigation, the Dellapennas filed a countersuit and third-party

complaint on April 1, 2005, stating counterclaims against the

Clines and third-party claims against the United States and other

individuals. (Defs.’ Cross-Compl., filed Apr. 1, 2005 [“CC”].) 

The claims asserted against the United States are for indemnity,

apportionment of fault, and declaratory relief. (CC at 2-3, ¶¶ 7-

9.)

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4

STANDARD

I. Rule 12(b)(1)

The Eleventh Amendment limits the subject matter

jurisdiction of the federal courts. See Seminole Tribe of

Florida v. Florida, 517 U.S. 44, 53-54 (1996). Lack of subject

matter jurisdiction may be asserted by either party or the court,

sua sponte, at any time during the course of an action. Fed. R.

Civ. P. 12(b)(1). Once challenged, the burden of establishing a

federal court’s jurisdiction rests on the party asserting the

jurisdiction. See Farmers Ins. Exch. v. Portage La Prairie Mut.

Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990). There are two forms

of Rule 12(b)(1) attacks on subject matter jurisdiction: facial

and factual attacks. See Thornhill Publ’g Co. v. General Tel. &

Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979). In an action

such as this, where defendants contend that the lack of federal

jurisdiction appears from the “face of the complaint,” the

allegations in the complaint are taken as true for the purposes

of the motion. Id.

ANALYSIS

It is axiomatic that the United States has sovereign

immunity and cannot be sued without its consent. United States

v. Mitchell, 463 U.S. 206, 212 (1983)(“Mitchell I”); see also

United States v. Dalm, 494 U.S. 596, 608 (1990); Honda v. Clark,

386 U.S. 484. 501 (1967); United States v. Sherwood, 312 U.S.

584, 586 (1941). Sovereign immunity is not a defense, but a

complete jurisdictional bar in circumstances where it has not

been waived. Mitchell I, 463 U.S. at 212; Fed. Deposit Ins.

Corp. v. Meyer, 510 U.S. 471, 475 (1994). Any waiver must be

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3 The power of the United States to remove the case to

federal court is separate from the issue of whether this court

has subject matter jurisdiction to hear the case. The two “are

analytically distinct inquiries and should not be confused.” 

Neb. ex rel. Dep’t of Soc. Servs. v. Bentson, 146 F.3d 676, 679

(9th Cir. 1998).

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clear and unequivocal; waivers will not be implied. Hollowman v.

Watt, 708 F.2d 1399, 1401 (9th Cir. 1983) (citing United States

v. Mitchell, 445 U.S. 535, 538 (1980)(“Mitchell II”). It is the

burden of the party attempting to bring suit against the United

States to show the existence of a definitive waiver of sovereign

immunity. Baker v. United States, 817 F.2d 560, 562 (9th Cir.

1987); Hollowman, 708 F.2d at 1401. 

The plaintiffs have not shown the existence or applicability

of any waiver of sovereign immunity that would make the United

States amenable to suit. While the Federal Tort Claims Act

(“FTCA”)(28 U.S.C. 1346(b)) served as the basis of removal for

this case from the state court,3 plaintiffs concede that they “do

not proceed against the [United States] on any theory of tortious

conduct by the [United States].” (Pls.’ Mem. of P&A in Opp’n to

Mot. to Dismiss [“Opp’n”], filed Aug. 18, 2006, at 2.) Thus,

because claims brought under the FTCA must be predicated on some

theory of tort liability, the FTCA does not apply and,

consequently, will not serve as a waiver of sovereign immunity

for plaintiffs’ claims.

Plaintiffs instead seek to bring their claims under the

Federal Declaratory Judgment Act (“FDJA”), 18 U.S.C. 2201. 

(Opp’n at 5-6.) However, plaintiffs fail to cite to any

authority which interprets the FDJA as a waiver of sovereign

immunity. To the contrary, the Ninth Circuit has held that the

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FDJA is not a waiver of sovereign immunity. White v.

Administrator of Gen. Svcs. Admin., 343 F.2d 444 (9th Cir. 1965);

see also Eric v. Secretary of U.S. Dep’t of Hous. & Urban Dev.,

464 F.Supp. 44, 48 (D. Alaska 1978); Hous. Auth. of S.F. v. U.S.

Dep’t of Hous. & Urban Dev., 340 F. Supp. 654, 656 (N.D. Cal.

1972). 

Plaintiffs also contend that California Code of Civil

Procedure section 1060 provides for an equitable remedy against

the federal government. While section 1060 may provide a very

broad remedy to those seeking “a declaration of their rights and

duties with respect to another” (Opp’n at 4-5), it is not broad

enough to abrogate sovereign immunity. Hoyt v. Bd. of Civ. Serv.

Comm’n, 21 Cal. 2d 399, 401 (1942) (stating that statutes

providing for declaratory relief, such as Cal. Code of Civ. Proc.

§ 1060, “do not authorize a determination of liability against

the sovereign outside the terms of statutory provisions accepting

liability and subjection to suit”). 

Finally, plaintiffs make the novel assertion, without

citation to a single authority, that “the fact of seizure by the

[United States], and the holding of the funds by the [United

States] creates jurisdiction under federal law.” (Opp’n at 5.) 

From this, plaintiffs posit a theory of “implied indemnity”. 

(Opp’n at 6.) Implied indemnity “implies a contractual

obligation to indemnify despite the absence of an express

indemnity agreement where equitable considerations make it just

to shift the loss to the other party.” Kramer v. CEDU

Foundation, Inc., 93 Cal. App. 3d 1, 12 (1979). As discussed

above, this court is not at liberty to imply a waiver of

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sovereign immunity nor can it create a waiver based upon

equitable principles. See Mitchell II, 445 U.S. at 538 (waivers

of sovereign immunity cannot be implied); Westbay Steel, Inc. v.

U.S., 970 F.2d 648, 651 (9th Cir. 1992)(barring equitable claims

for unjust enrichment and injunctive relief against United

States). Furthermore, plaintiffs have not identified any facts

or other equitable considerations that would justify shifting any

responsibility for the Clines’ loss to the United States. 

Therefore, in the absence of an express waiver of sovereign

immunity by the United States of America, plaintiffs’ suit is

barred.

CONCLUSION

For the foregoing reasons, the United States’ motion to

dismiss third-party plaintiff’s complaint is GRANTED. Because

the United States removed this action to federal court based upon

the claims set forth in third-party plaintiff’s complaint, and

because such claims have been dismissed, this case is REMANDED to

the Superior Court of California, County of El Dorado.

IT IS SO ORDERED.

DATED: September 7, 2006

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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