Nguyen v. United States

Background

The government removed this case from state court after Phuong Nguyen added Joseph King III, an employee of the U.S. Small Business Administration, as a defendant. The government certified that King was acting within the scope of his employment. Under the cited federal statutes, the action was therefore treated as an action against the United States, and the United States was substituted as the defendant.

The case continued an earlier related proceeding. In that earlier proceeding, the court had dismissed claims against the government for conclusory allegations and lack of subject-matter jurisdiction because the plaintiff had not exhausted the Federal Tort Claims Act’s administrative-remedies requirement. The earlier proceeding was then remanded to state court.

Phuong Nguyen and Michael Flores were proceeding without lawyers. Nguyen DDS, identified in the opinion as a corporation, appeared through counsel. Flores filed cross-claims against, among others, the government. His amended cross-claim asserted state and federal claims, including claims under the Racketeer Influenced and Corrupt Organizations Act.

Motion and legal standards

The government moved to strike the pleadings under Federal Rule of Civil Procedure 12(f) or, alternatively, to dismiss under Rule 12(b). The court concluded that the government’s arguments were properly evaluated under Rule 12(b), rather than as a motion to strike. The court considered facial challenges to subject-matter jurisdiction under Rule 12(b)(1) and failure to state a claim under Rule 12(b)(6), accepting well-pleaded allegations as true for those purposes.

Phuong Nguyen’s claims

The government argued that Nguyen’s claims should be dismissed for lack of subject-matter jurisdiction because she had not exhausted the administrative remedies required by the Federal Tort Claims Act. It also argued that claim preclusion barred the claims. Claim preclusion is a rule that prevents a party from relitigating claims that were already adjudicated.

The court held that both arguments were valid. It relied on its reasoning from the earlier related proceeding, stating that Nguyen had brought the same third amended complaint against the government in this case. The court also held that the prior adjudication barred relitigation. Naming a different Small Business Administration employee did not change the result because the United States had been substituted as the defendant in both proceedings.

Because the court lacked subject-matter jurisdiction over Nguyen’s claims against the government, it remanded the case to state court. It rejected requests to retain supplemental jurisdiction over claims involving nongovernmental defendants, explaining that there was no federal subject-matter jurisdiction to support supplemental jurisdiction. The court also said that, even if supplemental jurisdiction existed, it would decline to exercise it.

Michael Flores’s cross-claims

The court dismissed Flores’s cross-claims against the government under Rule 12(b)(6). It found that his allegations were largely conclusory and did not explain how the government committed fraud, shared a common purpose with nongovernmental defendants, or conspired with them.

The court treated negligence as the strongest possible theory in the cross-claims but held that Flores had not plausibly alleged that the Small Business Administration owed him a duty. The court noted that Flores described himself as someone who planned to buy the property from Nguyen and found no special relationship supporting a duty to protect him. It held that amendment on the duty issue would be futile and dismissed Flores’s cross-claims against the government with prejudice.

Because dismissing Flores’s claims against the government eliminated the only basis for federal removal, the court declined to exercise supplemental jurisdiction over his cross-claims against the remaining cross-defendants.

Disposition

The court granted the government’s motion to dismiss. The order states that both Nguyen’s claims against the government and Flores’s cross-claims were dismissed with prejudice. The court remanded the case to state court and stated that it expressed no opinion on the merits of the nongovernmental defendants’ pending motions to dismiss. The order disposed of Docket No. 18.