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Drive New Jersey Ins. Co. v. Nebolsky

United States District Court, D. New Jersey

December 31, 2014

DRIVE NEW JERSEY INS. CO., Plaintiff,
v.
MANFRED NEBOLSKY, et al., Defendants.

REPORT AND RECOMMENDATION

MICHAEL A. HAMMER, Magistrate Judge.

I. INTRODUCTION

This matter comes before the Court by way of Defendant the United States' ("United States" or the "Government")[1] motion to dismiss for lack of subject matter jurisdiction. See D.E. 2. Specifically, Defendant asserts that sovereign immunity precludes Plaintiff Drive New Jersey Insurance Company's ("Drive") action seeking a declaratory judgment. Id. at 2. Pursuant to Local Civil Rule 72.1, the Honorable Esther Salas, United States District Judge, referred the motion to this Court for a Report and Recommendation. The Court heard oral argument on October 22, 2014. For the reasons set forth below, the Undersigned respectfully recommends that the District Court grant the United States' motion and dismiss this matter for lack of subject matter jurisdiction.

II. FACTS

A. Background

This litigation arises from an automobile accident, which killed a pedestrian, V.H. Patel ("Patel"). Compl., at 2 ¶ 3, D.E. 1-1. Central Gulf Towing Inc. and Manfred Nebolsky owned and operated a tow truck that struck and killed Mr. Patel, while the tow truck was towing a USPS vehicle. Id. at 2 ¶¶ 3-4. For a period of time prior to the accident, Drive insured Central Gulf and Nebolsky. Id. at 2 ¶ 2. Drive does not contend that the USPS or any USPS employee was negligent in the accident. Instead, Drive contends that any USPS insurance must be made available to it because the tow truck was towing, and thus using, a USPS vehicle when the tow truck struck Mr. Patel. Pltf's Opp'n Br., D.E. 3, at 1.

Patel's Estate initiated a lawsuit in New Jersey Superior Court, Hudson County, against Central Gulf and Nebolsky ("the State Court Action"). Compl., at 2 ¶ 3. Drive then brought a separate declaratory judgment action seeking: (1) a declaration as to its obligation to insure Central Gulf and/or Nebolsky, see id at 2, ¶¶ 4-5; and (2) a declaration that Central Gulf and Nebolsky are entitled to "any liability insurance coverages available to the United States Postal Service, and requiring that insurer to defend and indemnify Nebolsky/Central against that claims at issue in this case" or "in the event the USPS is self insured, pursuant to state and federal statutes, it is responsible to defend and indemnify Nebolsky/Central Gulf commensurate with applicable mandated liability limits[.]" Id. at 3 ¶¶ 3-4.

B. Removal

The USPS removed Drive's Complaint from the New Jersey Superior Court to this Court. See Notice of Removal, D.E. 1. The United States now moves to substitute the USPS and to dismiss for lack of subject matter jurisdiction. See Def. Br. on Mot. to Dismiss, at 1, D.E. 2. Specifically, the United States asserts that Drive's claims sound in tort, and that Drive has failed to show that the Government has waived sovereign immunity from those claims. Id. at 2-3.

Drive responds that Government is not immune because its claims constitute a "declaratory judgment action" that "at its root is a contract action that seeks to adjudicate the nature and extent of any insurance, or self-insurance available for an independent loss involving an accident...." See Pl. Opp'n Br. at 1, D.E. 3. Drive asserts that Hartford Accident & Indemnity Co. v. Travelers Ins. Co., 167 N.J.Super. 335 (Law Div. 1979), establishes that Central Gulf and Nebolsky were "using" a USPS truck at the time of the accident and, as a result, Central Gulf and Nebolsky are entitled to a defense and indemnification pursuant to N.J. Stat. Ann. § 39:6A-3. Id. at 2. The only legal basis that Drive offers for this Court's jurisdiction Drive is 28 U.S.C. § 1442.[2] Id. at 4.

In reply, the United States first argues that Drive has failed to explain how it can sue the United States based upon a New Jersey state law regarding motor vehicle insurance. See Def. Reply Br. at 2, D.E. 4. Additionally, the United States argues that if this is a contract action, then 28 U.S.C. § 1346(a)(2) precludes this Court from exercising jurisdiction over any express or implied contract with the United States that exceeds $10, 000. Id . Furthermore, if this is a contract action, Drive lacks privity of contract with the United States. Id. at 2-3. The United States also asserts that, because the USPS is self-insured, there is no contract for the Court to review. Id. at 3.

C. Remand

After the instant motion was fully briefed, Drive moved to remand this matter. Contained in Drive's brief in support of removal are additional arguments in support of this Court's subject matter jurisdiction. See Pl. Br. on Mot. to Remand, D.E. 6-4.[3] Drive asserts that the USPS, and not the United States, is the proper defendant in this action per the Postal Reorganization Act ("PRA"). Id. at 3. In addition, Drive claims, for the first time in any submission, that 39 U.S.C. § 401 waives the USPS's sovereign immunity. Id . Finally, Drive asserts that the USPS is bound to defend or indemnify Central Gulf and Nebolsky under N.J. Stat. Ann. § 39:6A-3. Id. at 4.

With respect to the motion to remand, Drive argues that under the PRA, United States District Courts do not have exclusive jurisdiction over actions involving the USPS, and thus, this case should be remanded. Id. at 5. Drive further asserts that this matter "involves issues directly related to the New Jersey statutory scheme regulating motor vehicle insurance, as well as a state court action to recover for wrongful death allegedly resulting from an accident that occurred while the USPS vehicle was being used...." Id.

In opposition to the motion to remand, the United States offers four main arguments. First, the United States argues that while 39 U.S.C. § 401 does waive the USPS's sovereign immunity, this waiver is not absolute and the Court must instead conduct a two-part analysis of Drive's claims as set forth in U.S. Postal Service v. Flamingo Industries (USA) Ltd., 540 U.S. 736 (2004), and FDIC v. Meyer, 510 U.S. 471 (1994). Def. Opp'n Br. at 4-5, D.E. 10. The Government asserts that because Drive has failed to set forth a basis for suit pursuant to the second part of the Meyer framework, Drive has not established the Court's subject matter jurisdiction over this suit. Id. at 6. The United States also asserts that the PRA, on which Drive now relies to establish jurisdiction, incorporates the Federal Tort Claims Act ("FTCA"). Id . Therefore, even as to tort claims against the USPS, the FTCA remains the sole vehicle for tort recovery. Id . Lastly, the United States asserts that the PRA does not make any provision for the USPS to be sued in state court on a contract or implied contract claim. Id. at 7.

The United States also reiterates its contention that Drive's claim is a tort, not contract, action, and that Drive cannot circumvent the FTCA by "putting a different label on the pleading." Id. at 9 (quoting Brown v. General Services Admin., 425 U.S. 820, 833 (1976)). Separately, the United States argues that this case cannot be considered a contract action as the USPS does not have auto insurance and there is no contract to be construed. Id. at 8. The Government heavily relies upon Continental Ins. Co. v. United States, 335 F.Supp.2d 532 (D.N.J. 2004), for the propositions that the USPS is not required to carry auto insurance under New Jersey law and, while the Government has consented to be sued as a private person under the FTCA, it has not consented to be sued as an insurer. Id. at 10. The United States argues that because Drive is pursuing the Government's self-insurance, and Drive's claim therefore is based upon the Government's status as a self-insurer (as opposed to a "private person"), the Government's sovereign immunity cannot be waived. Id.

Third, the United States argues that the USPS is not subject to a state law claim for damages caused by a third-party's negligence and that the United States has not "clearly and affirmatively" consented to be subject to the ...


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