Dambach v. United States

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit

12-19-2006

Dambach v. USA
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-2708

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 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________

NO. 06-2708
________________

FREDERICK H. DAMBACH;
KYLE R. DAMBACH;
JUDITH A. DAMBACH,

Appellants

v.

UNITED STATES OF AMERICA;
UNITED STATES DEPARTMENT
OF VETERANS AFFAIRS
________________

On Appeal From the United States District Court
for the District of New Jersey
(D.C. Civ. Nos. 05-03334, 05-03335, 05-03336)
District Judge: Honorable Garrett E. Brown, Jr.
________________

Submitted Under Third Circuit LAR 34.1(a)
October 27, 2006

Before: RENDELL, AMBRO and ROTH, Circuit Judges

(Filed: December 19, 2006)
________________

OPINION
________________

PER CURIAM

Frederick H. Dambach (“Mr. Dambach”), his wife, Judith A. Dambach, and his
son, Kyle R. Dambach, (collectively “the Dambachs”) instituted separate civil actions

arising from the same factual nexus against the United States and the United States

Department of Veterans Affairs (“DVA”). Soon after the Dambachs filed their original

complaints, each Dambach filed almost identical amended complaints.

Mr. Dambach’s nine-year odyssey to win disability benefits from the DVA began

in 1993. From 1993 until April 17, 2002, when the DVA ultimately awarded Mr.

Dambach full disability benefits, the DVA denied his claim more than thirteen times.

(Complaint at ¶¶ 27, 30.) See, e.g. Dambach v. Gober, 223 F.3d 1376, 1377-79 (Fed. Cir.

2000) (presenting further background and describing some aspects of the first seven years

of decisions, appeals, reversals, and remands).

The Dambachs purported to bring their claims under the Federal Tort Claims Act

(“FTCA”) and the Fifth Amendment to the United States Constitution. (Complaint at

¶ 3.) The Dambachs summarized their complaint as follows:

The gravamen of [the] complaint, is that for more than nine years,
from 1993 to April 17, 2002, due to their gross negligence, wrongful
acts, omissions, and frivolous conduct, in the scope of their official
duties, while performing “Ministerial Acts” not subject to their
discretion, certain DVA employees trampled [Mr. Dambach’s]
Constitutional Right to Due Process as guaranteed by the Constitution
of the United States, by and through Deprivation of Property; that
property being [Mr. Dambach’s] “Property Interests” in his Service-
connected disability benefits.

(Complaint at ¶ 28.)

The Dambachs generally alleged “gross negligence and other wrongful acts,”

“blatant omissions,” and unspecified “numerous Outrageous and Tortious Acts” by the

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DVA and its employees. (Complaint at ¶¶ 12, 21, 23, 24, 29.) They also more

specifically alleged that Mr. Dambach’s claim for benefits “was wrongfully denied more

than thirteen times . . . [because of] the failure to consider established or admitted facts . .

., erroneous facts not in the record and finally and most importantly the failure to apply

controlling federal statutory law.” (Complaint at ¶ 30.) The DVA employees failed to

apply “‘the shifting of evidence rule’ provided by 38 U.S.C. § 1154(b).” (Id. at ¶¶ 35-

43.) The Dambachs sought significant money damages.

When neither Defendant responded to the Dambach’s amended complaints within

60 days of service, the Dambachs requested that the District Court Clerk enter a default in

each case pursuant to Federal Rule of Civil Procedure 55(a). The Clerk granted their

requests. Shortly thereafter, Defendants moved to vacate the Clerk’s entries of default

and moved to consolidate the three cases. The District Court set aside the defaults,

consolidated the three cases, and permitted Defendants to answer, move, or otherwise

respond to the Dambachs’ consolidated suit. (Order of Jan. 23, 2006.)

Defendants moved to dismiss the Dambachs’ suit for lack of jurisdiction and for

failure to state a claim. The District Court granted their motion, holding that sovereign

immunity barred the Dambachs’ claims “based on Defendants’ alleged deprivation of

their property rights without due process.” (Memorandum, 4.) The Dambachs appeal.

We have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of the order

dismissing the Dambachs’ action is plenary. See Gould Elecs., Inc. v. United States, 220

F.3d 169, 176 (3d Cir. 2000); Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996). Upon

3
review, we will affirm, albeit partially on grounds different from the basis on which the

District Court relied. See Erie Telecomms. v. Erie, 853 F.2d 1084, 1089 (3d Cir. 1988)

(holding that an appellate court may affirm on an alternative basis supported by the

record).

We first consider whether the United States has waived sovereign immunity.

See FDIC v. Meyer, 510 U.S. 471, 484 (1994). Only if the United States has waived its

immunity do we consider “whether the source of substantive law upon which the claimant

relies provides an avenue for relief.” Id. The FTCA generally permits claims against the

United States for damages

for injury or loss of property, or personal injury or death caused by the
negligent or wrongful act or omission of any employee of the Government
while acting within the scope of his office or employment, under
circumstances where the United States, if a private person, would be liable
to the claimant in accordance with the law of the place where the act or
omission occurred.

28 U.S.C. § 1346(b). State law provides the source of substantive liability under the FTCA.

See Meyer, 510 U.S. at 478. Because federal law is the source of liability for the

deprivation of a federal constitutional right, the United States is not liable under

§ 1346(b) for constitutional tort claims. See id. at 477-78. Furthermore, in any event, the

Dambachs could not bring their constitutional claims in a cause of action implied under

Bivens v. Six Unknown Named Agents of the FBI, 403 U.S. 388 (1971). A Bivens action

is not available against the United States or one of its agencies. See Corr. Servs. Corp. v.

Malesko, 534 U.S. 61, 72 (2001); Meyer, 510 U.S. at 486 & n.11; Jaffee v. United States,

4
592 F.2d 712, 717 (3d Cir. 1979). Accordingly, the District Court properly dismissed the

Dambachs’ constitutional claims.

However, we do not read the Dambachs’ complaints so narrowly as to conclude

that they only include claims of a constitutional tort. Although the common crux of the

amended complaints is the allegation of a deprivation of due process, liberally construed,

see Haines v. Kerner, 404 U.S. 519, 520 (1972), the complaints include claims that the

United States and the DVA, through their employees, negligently handled and wrongfully

denied Mr. Dambach’s claim for benefits. More specifically, the Dambachs alleged that

Defendants failed to consider established facts and to apply controlling federal statutory

law, including a “shifting of evidence rule.”

Before we even consider whether the Dambachs stated cognizable state law claims

under the FTCA, we note that the only party potentially answerable for any injury is the

United States. Although the FTCA waives the sovereign immunity of the United States

for certain torts committed by federal employees, a federal agency cannot be sued in its

own name. See 28 U.S.C. § 2679(a); Meyer, 510 U.S. at 475-76; Nazzaro v. United

States, 304 F. Supp. 2d 605, 616 (D.N.J. 2004). Accordingly, the District Court properly

dismissed all claims against the DVA.

To the extent that the Dambachs pleaded claims beyond federal constitutional

violations against the United States, we conclude that the District Court properly

dismissed them, too, because the District Court was without subject-matter jurisdiction to

consider them pursuant to 38 U.S.C. § 511. Section 511 provides that, subject to

5
exceptions not relevant here, the decision of the Secretary as to any question of law or

fact necessary to a decision under a law that affects the provisions of veterans’ benefits is

final and conclusive and may not be reviewed by any court. 38 U.S.C. § 511. The

Dambachs argue that § 511 is inapplicable because they do not challenge the ultimate

DVA decision to grant benefits to Mr. Dambach. However, as described above, the

Dambachs challenge earlier denials of a claim for benefits as well as related decisions on

questions of fact and law. Such challenges are not within the purview of judicial review

in the District Court.

Other courts have rejected similar claims. For example, in Menendez v. United

States, a plaintiff alleged that the DVA was negligent in failing to determine initially or

over twelve years of litigation that the plaintiff’s condition was service-related, and that

the DVA was negligent in maintaining and safe-keeping his medical records. See 67 F.

Supp. 2d 42, 44 (D.P.R. 1999). The district court held that it was without jurisdiction to

consider plaintiff’s claims, however described, because the determination of the issue of

negligence served as a precursor to a determination “regarding the propriety of the denial

of benefits to plaintiff.” Id. at 47. See also Thomas v. Principi, 394 F.3d 970, 975 (D.C.

Cir. 2005) (describing as barred those claims based on an underlying denial of benefits);

Price v. United States, 228 F.3d 420, 422 (D.C. Cir. 2000) (per curiam) (holding that a

district court was without subject-matter jurisdiction to determine whether the DVA acted

“in bad faith or with negligence” because the district court would first need to determine

whether the DVA properly handled a request for benefits); Weaver v. United States, 98

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F.3d 518, 520 (10th Cir. 1996) (holding that a district court properly dismissed claims of

conspiracy, fraud, and misrepresentation against the DVA because, through those claims,

plaintiff sought review of actions taken in connection with the denial of a claim for

benefits); Quarles v. United States, 731 F. Supp. 428, 431-32 (D. Kan. 1990) (holding

that § 511 barred a claim for damages based on the alleged negligence of the National

Archives in failing to maintain service records, because it related to the claim whether

“but for the missing records, plaintiff should have been awarded disability benefits”). Cf.

Murrhee v. Principi, 364 F. Supp. 2d 782, 789 (C.D. Ill. 2005) (holding that a district

court has subject-matter jurisdiction over only one type of claim relating to veterans’

benefits – “the facial constitutional challenge to the veterans’ benefits statutes

themselves”).

For the reasons given above, we conclude that the District Court was without

subject-matter jurisdiction to consider the Dambachs’ claims. Accordingly, we will

affirm the order dismissing their consolidated action. In doing so, we also conclude that

the District Court did not err in entering its earlier order of January 23, 2006, vacating the

entries of default.1

1
We consider but reject Defendants’ argument that we do not have jurisdiction to
consider the Dambachs’ appeal from the January 23, 2006 order. Although Rule 3 of the
Federal Rules of Appellate Procedure provides that a notice of appeal must “designate the
judgment, order, or part thereof being appealed,” Fed. R. App. P. 3(c)(1)(B), we liberally
construe the Rule’s requirements. See Pacitti v. Macy’s, 193 F.3d 766, 776 (3d Cir.
1999). An appeal from a final judgment puts in question all earlier non-final orders.
See id. at 776-77. We have reviewed orders not designated in the notice of appeal when
“(1) there is a connection between the specified and unspecified order, (2) the intention to

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 A district court may set aside an entry of default for good cause shown. See Fed.

R. Civ. P. 55(c); see also Fed. R. Civ. P. 77(c) (“[T]he clerk’s action may be suspended or

altered or rescinded by the court upon cause shown.”). We review the District Court’s

order vacating the entries of default for abuse of discretion. See United States v.

$55,518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984). In exercising its

discretion to set aside a default, a district court must consider (1) whether the plaintiff will

be prejudiced; (2) whether the defendant has a meritorious defense, that is, whether the

defendant’s allegations, if established at trial, would constitute a complete defense to the

action; and (3) whether the default was the result of the defendant’s culpable conduct.

See id. at 195.

As the defaults were entered not long after the filing of the complaints, and as

Defendants moved to vacate the defaults shortly after their entry, the Dambachs were not

prejudiced by the order vacating the entries of default. Furthermore, Defendants, in

appeal the unspecified order is apparent, and (3) the opposing party is not prejudiced and
has a full opportunity to brief the issues.” See id. at 777.

In their notice of appeal, the Dambachs identify only the District Court’s order
granting Appellees’ motion to dismiss. However, there is a connection between the
specified order and the earlier order, as the District Court’s order vacating the entries of
default opened the way for Defendants to move to dismiss the Dambachs’ suit.
Defendants had notice of the Dambachs’ intent to appeal the earlier order because the
Dambachs argued the merits of the order vacating the entries of default in their opening
appellate brief. See Pacitti, at 193 F.3d at 777. Furthermore, the Dambachs previously
sought to appeal the order vacating the entries of default. Defendants do not appear
prejudiced, and they have taken advantage of a full opportunity to brief the issues.
Accordingly, we will review the District Court’s order vacating the entries of default.

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essence, had a meritorious defense to the action - one that the District Court would have

been obligated to consider sua sponte before entering default judgment - the lack of

subject-matter jurisdiction. See also Fed. R. Civ. P. 55(e). Also, Defendants’ failure to

timely answer or otherwise respond to the complaint did not result from culpable actions

(such as willful or bad faith conduct or deliberate trial strategy, see Gross v. Stereo

Component Systems, Inc., 700 F.2d 120, 124 (3d Cir. 1983); Zawadski De Bueno v.

Bueno Castro, 822 F.2d 416, 419 (3d Cir. 1987)); it resulted from an oversight in light of

the sudden hospitalization of counsel’s parent. Defendants do not appear to have

perpetuated a fraud on the court, as the Dambachs insist. Accordingly, the District Court

did not abuse its discretion in vacating the entries of default.

In sum, although the Dambachs are understandably distressed by the lengthy

process they endured to recover Mr. Dambach’s disability benefits, they do not have a

right to recover against the United States on the theories they presented to the District

Court. As we explained, the District Court lacked subject-matter jurisdiction to consider

their claims. Accordingly, we will affirm the District Court’s dismissal.

9