Eleventh Circuit Affirms Federal Tort Claims Act Dismissal Relying on Misinformation Provided by the National Vessel Documentation Center to Make a Commercial Decision Fails to State Claim under FTCA
Evergreen Marine, Ltd. v. United States,No. 19-11184, 2019 Fed.Appx. (11th Cir. Oct. 18, 2019).
By: Armando J. Troche Dávila
Evergreen Marine, Ltd. (Plaintiff) filed suit against theUnited States (Defendant) under the Federal Tort Claims Act (FTCA) afterPlaintiff purchased a vessel from OIA Inc., who is not a party in this case.Plaintiff relied on the U.S. Coast Guard’s National Vessel DocumentationCenter’s (NVDC) false information regarding a mortgage on the vessel. Prior toPlaintiff’s purchase of the vessel in March 2012, it contacted the NVDC toinquire about any existing mortgages or liens on the vessel and to obtain thevessel’s Abstract of Title. The NVDC stated that there was no mortgage, whichprompted Plaintiff to purchase the vessel. In 2015, M&T Bank issued anotice to Plaintiff regarding an unsatisfied $683,212.38 mortgage on the vesselrecorded with the NVDC in January of 2003. After M&T Bank foreclosed on themortgage and seized the vessel in November 2015, Plaintiff and M&T Banksettled for $275,000.
Plaintiff alleged $443,441.60 in damages for the settlement of the mortgage, damage to the vessel due to the seizure, and defense costs. In response, Defendant stated that the claims were barred under the FTCA’s misrepresentation exception.[1] A magistrate judge offered a report and recommendation (R&R) which recommended dismissing the case as barred by this exception. The report established that the Coast Guard provided an Abstract of Title that failed to disclose the unpaid mortgage, so the central complaint is a misrepresentation claim on its face. Moreover, the magistrate judge said that any amendments on the Plaintiff’s part would be futile because there is no ability to extricate claims from the exception. The District Court accepted the R&R and dismissed the case for lack of subject matter jurisdiction. Plaintiff appealed.
The FTCA’s misrepresentation exception to the waiver ofsovereign immunity applies when a claim arises from either an intentional ornegligent misrepresentation of a government official where there is reliance onmisinformation.[2] However,the exception will not apply if the injury is independent of the reliance onthe misinformation.[3] Inessence, to show that the FTCA’s misrepresentation exception does not apply,Plaintiff has to show that (1) the government committed a breach that isdifferent from the misrepresentation and unrelated to miscommunication and (2) theinjury occurred because of this breach.[4]
On appeal, Plaintiff argued that the basis of the argument isnot a misrepresentation. Rather, the NVDC’s breach of its federal statutoryduties of (1) maintaining an accurate index of mortgages, and (2) “to notapprove the foreign transfer of a U.S. documented vessel encumbered by amortgage.”[5]However, the Eleventh Circuit Court of Appeals stated that the injuries stemfrom a commercial decision that Plaintiff would not have made had the NVDCcorrectly communicated the existence of the mortgage on the vessel. Therefore,the Eleventh Circuit Court of Appeals ruled that Defendant engaged inmisrepresentation and the FTCA’s exception applies.
[1] See28 U.S.C. § 2680(h) (2018).
[2] See United States v. Neustadt, 366 U.S. 696, 710 (1961); see also Block v. Neal, 460 U.S. 289, 296 (1983).
[3] Block,460 U.S. at 296-97,
[4] Zelaya v. United States, 781 F.3d 1315, 1336 (11th Cir. 2015).
[5] Evergreen Marine, Ltd. v. United States, 2019 U.S. App. LEXIS 31074, at *7(11th Cir. Oct. 18, 2019).
