D.L. v. Vassiliev, __F3d__, No. 15-15542 (June 5, 2017) (J. Lasnik)

FAILURE TO SERVE NOTICE OF CLAIM CURED WHERE FIRST ACTION VOLUNTARILY DISMISSED AGAINST DEFENDANT DOCTOR FOLLOWED BY PROPER NOTICE OF CLAIM AND SECOND FILING

Plaintiff sued the defendant doctor in state court unaware he was a federal employee. Federal administrative remedies, i.e., a properly served and  denied notice of claim, had not been exhausted. The United States substituted for the doctor and removed the case to federal court where the parties agreed to a dismissal of the case without prejudice. The suit against remaining defendants was then transferred back to state court.

Plaintiff then filed a proper notice of claim with the United States which was denied. Thereafter plaintiff amended his state court action and brought  the defendant doctor back into the case. The United States again substituted and removed the case to federal court and then obtained dismissal on the basis the court lacked subject-matter jurisdiction due to plaintiff's initial failure to exhaust administrative remedies. The Ninth Circuit Court of Appeals reversed and remanded.

A plaintiff who fails to exhaust administrative remedies before filing a Federal Torts Claim is vulnerable to a motion to dismiss for lack of subject-matter jurisdiction. Even if the administrative remedies are ultimately exhausted during the pendency of the action, subject-matter jurisdiction remains lacking due to the initial failure to serve a proper notice of claim. However,  where the action is dismissed against the federal employee and thereafter the administrative remedies are properly exhausted, a new filing or amendment of the still pending state court complaint bringing back in the federal employee is proper and subject-matter jurisdiction is not lacking.