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HALLOCK v. U.S.

March 21, 2003

SUSAN HALLOCK, AS PRESIDENT AND 100% STOCKHOLDER OF FERNCLIFF ASSOCIATES, INC., D/B/A MULTIMEDIA TECHNOLOGY CENTER; AND FERNCLIFF ASSOCIATES, INC., D/B/A MULTIMEDIA TECHNOLOGY CENTER, PLAINTIFFS,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: David Hurd, District Judge.

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

Plaintiffs, Susan Hallock ("Hallock"), as President and sole shareholder of Ferncliff Associates, Inc., d/b/a Multimedia Technology Center, and Ferncliff Associates ("Ferncliff"), Inc., d/b/a Multimedia Technology Center, brought suit against defendant United States of America ("United States") pursuant to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 1346, alleging six causes of action: (1) negligent destruction of property; (2) conversion of property; (3) negligent bailment; (4) larceny; (5) misfeasance; and (6) personal injury (mental pain and suffering).

The United States filed a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), and failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6). Sovereign immunity is the grounds for this relief. Plaintiffs oppose. Oral argument was heard February 14, 2003, in Utica, New York. Decision was reserved.

II. FACTUAL BACKGROUND

The following are the facts, taken from the pleadings, or, where undisputed, from the moving papers.

On June 8, 2000, United States Customs Service agents, along with other federal agents acting in a law enforcement capacity, served and executed a search warrant on the premises located at 194 Ferncliff Road in Mohawk, New York. Said premises served as the residence of Hallock and her husband, and as business offices for Ferncliff. Hallock is the sole stockholder of Ferncliff, a corporation authorized to do business in New York State. Pursuant to the search warrant, the agents seized computer equipment, software, and hard disk drives that allegedly had been, or were being, used by Hallock's husband to commit certain child pornography offenses in violation of 18 U.S.C. § 2252, 2252A.*fn1 Plaintiff alleges that the property taken included their "Computer Software Intellectual Property, all computerized Proprietary Computer Software Design Documents, all Computerized Personal Records, all Computerized Business Records, all Computerized Accounts, Client Files, and Business as well as Technological Trade Secrets belonging to [p]laintiffs." (First Restated and Amended Complaint for Damages, Docket No. 10, ¶ 6).

After some disputes regarding the terms of the return of the property, on December 21, 2000, plaintiffs' property was returned to Hallock's husband. Upon arriving home, plaintiffs allege that Hallock's husband discovered that "four of the nine computer systems [seized] were damaged to the extent of being totally unusable and that the loss of three of these computers necessitated the discontinuance of normal business operations of plaintiffs." (Plaintiffs' First Amended Memorandum of Law in Opposition to the United States' Motion to Dismiss, Docket No. 20, pp. 2-3). Further, plaintiffs allege that "five computer hard disk drives were damaged to the point of complete loss of all stored data," which included all of plaintiffs' "intellectual property, software design documents, and business and personal files." (Id. at 3). Plaintiffs claim that "[i]ndependent third party reviews by fully qualified and licensed hard drive data recovery companies indicate the data stored on [the] hard disk drives is completely lost and unrecoverable for all time." (First Restated and Amended Complaint for Damages, Docket No. 10, ¶ 9).

After being unable to resolve the issue with the United States Attorney's Office, plaintiffs filed an administrative claim for damages with the United States Customs Service, the United States Treasury, the United States Department of Justice, the United States Postal Service, and the United States Marshals Service in the amount of $3,219,670.00. (See Administrative Claim for Damage, Injury, or Death, attached as part of Exh. 1 to Docket No. 10). After no action was taken on the administrative claim, plaintiffs filed a Complaint for Damages against the United States. (See Docket No. 1). Plaintiff thereafter filed a First Restated and Amended Complaint for Damages, amending, inter alia, the amount of damages sought to $4,421,700.00. (See Docket No. 10).

III. DISCUSSION

A. MOTION TO DISMISS STANDARD

As noted above, the United States has moved, pursuant to both Fed.R.Civ.P. 12(b)(1) and 12(b)(6), to dismiss the First Restated and Amended Complaint for Damages. While "`the court should consider the Rule 12(b)(1) challenge first since if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and objections become moot and do not need to be determined'" when a party moves pursuant to both subsections of Rule 12, Rhulen Agency, Inc. v. Alabama Ins. Guar. Assn., 896 F.2d 674, 678 (2d Cir. 1990) (internal citations omitted), the United States' motion is well taken even under the more lenient Rule 12(b)(6). In deciding such a motion, a court "must accept the allegations contained in the complaint as true, and draw all reasonable inferences in favor of the non-movant; it should not dismiss the complaint `unless it appears beyond a reasonable doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief.'" Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir. 1994) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)); see also Kaluczky v. City of White Plains, 57 F.3d 202, 206 (2d Cir. 1995). However, conclusory allegations that merely state the general legal conclusions necessary to prevail on the merits and are unsupported by factual averments will not be accepted as true. See, e.g., Clapp v. Greene, 743 F. Supp. 273, 276 (S.D.N.Y. 1990); Albert v. Carovano, 851 F.2d 561, 572 (2d Cir. 1988).

B. SOVEREIGN IMMUNITY

It is well established that the United States is entitled to sovereign immunity and can therefore not be sued without its consent. See Honda v. Clark, 386 U.S. 484, 501, 87 S.Ct. 1188, 18 L.Ed.2d 244 (1967); Wilson v. United States, 959 F.2d 12, 14 (2d Cir. 1992) (citing Lehman v. Nakshian, 453 U.S. 156, 160, 101 S.Ct. 2698, 69 L.Ed.2d 548 (1981); Akutowicz v. United States, 859 F.2d 1122, 1125 (2d Cir. 1988)). "To alleviate the harshness of this rule, Congress enacted the Federal Tort Claims Act which permits civil actions against the United States for personal injury and property damage 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.'" Lambertson v. United States, 528 F.2d 441, 443 (2d Cir. 1976). Because the FTCA is considered a waiver of the United States' sovereign immunity, it is "strictly construed, in terms of its scope, in favor of the sovereign." Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996). Indeed, several different claims against the United States cannot lie under the FTCA, pursuant to enumerated exceptions to its invocation found in 28 U.S.C. ยง ...


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