United States District Court, S.D. New York
November 7, 2005.
RUNAWAY DEVELOPMENT GROUP, S.A., Plaintiff(s),
PENTAGEN TECHNOLOGIES INTERNATIONAL LIMITED, ET AL., Defendant(s).
The opinion of the court was delivered by: JOHN SPRIZZO, District Judge
MEMORANDUM OPINION AND ORDER
The present controversy involves the question of whether
judgment creditor Pentagen Technologies International Ltd.
("Pentagen" or "creditor") may obtain by motion in the
above-captioned action an Order of Turnover for computer software
allegedly in the possession of third-party transferee United
States of America ("Government" or "transferee") pursuant to
Article 52 of the New York Civil Practice Law and Rules. Because
this motion is the improper vehicle for seeking this relief, and
because Pentagen is barred, for a variety of reasons, from
seeking this relief from the Government, this Court denies
This action, which was commenced in 1991, involved a dispute
about the ownership of the MENTIX software program. That dispute
was settled by a 1993 Stipulation and Order in which plaintiff
Runaway Development Group, S.A. and its affiliates consented to
entry of judgment against them and agreed to deliver to Pentagen
all copies of MENTIX and its documentation. See Stipulation and
Orders for Amendment of Pleadings and Judgments, dated Aug. 2,
Emboldened by its success in this action, Pentagen proceeded to
bring a number of suits against, inter alios, CACI
International, Inc. ("CACI"), Pentagen's former business
associate, alleging copyright infringement, conversion, and
violations of the False Claims Act, see, e.g., United States
ex rel. Pentagen Techs. Int'l, Ltd. v. CACI Int'l Inc., No.
96-7827, 1997 U.S. Dist. LEXIS 12244, 1997 WL 473549 (S.D.N.Y.
Aug. 18, 1997); Pentagen Techs. Int'l, Ltd. v. CACI Int'l Inc., Nos. 93-8512, 94-441, 94-8164, 1996 U.S.
Dist. LEXIS 9903, 1996 WL 435157, at *1-7 (S.D.N.Y. Aug. 2,
1996); United States ex rel. Pentagen Techs. Int'l Ltd. v. CACI
Int'l Inc., No. 94-2925, 1995 U.S. Dist. LEXIS 17512, 1996 WL
11299 (S.D.N.Y. Jan. 4, 1996); CACI Int'l Inc. v. Pentagen
Techs. Int'l, Ltd., No. 93-1631-A, 1994 WL 1752376, 1994 U.S.
Dist. LEXIS 21457, at *1-11 (E.D. Va. June 16, 1994), and the
Government, alleging abuse of process, conversion, and copyright
infringement, see, e.g., Pentagen Techs. Int'l Ltd. v.
United States, 175 F. 3d 1003 (Fed. Cir. 1999); Pentagen Techs.
Int'l Ltd. v. United States, No. 01-3078, 2002 WL 465308,
2002 U.S. Dist. LEXIS 5030 (S.D.N.Y. Mar. 26, 2002); Pentagen Techs.
Int'l Ltd. v. United States, 103 F. Supp. 2d 232 (S.D.N.Y.
Despite bringing "a seemingly endless series of lawsuits,"
Pentagen, No. 01-3078, 2002 U.S. Dist. LEXIS 5030, at *4,
before no less than seven federal judges, Pentagen failed in each
of its attempts to show that CACI or the Government infringed or
converted the MENTIX software. See, e.g., id. at *4-8;
Pentagen Techs. Int'l Ltd. v. United States,
172 F. Supp. 2d 464, 468-70 (S.D.N.Y. 2001). Finally, by Memorandum Opinion and
Order dated November 5, 2001, this Court, faced with Pentagen's
"vexatious litigation strategy and needless occupation of
judicial resources," enjoined Pentagen from filing further
litigation without permission of the Court. Pentagen,
172 F. Supp. 2d at 474.
Faced with an inability to bring another suit, and armed with
allegedly new evidence that purports to show that the Government
received an alternative version of MENTIX which it has failed to
return, see Mem. in Supp. at 2-9, Pentagen breathed new life
into this action by filing a motion, dated April 29, 2005, in
which it seeks to force the Government to return "all versions of
software known as MENTIX in the possession of the United States,"
id. at 1. The Government submitted a response dated June 7,
2005, and the Court heard Oral Argument on creditor's Motion on
July 18, 2005.
Pursuant to Federal Rule of Civil Procedure 69(a) "[t]he procedure on execution, in proceedings supplementary to and in
aid of a judgment, and in proceedings on and in aid of execution
shall be in accordance with the practice and procedure of the
state in which the district court is held." Fed.R.Civ.P.
69(a). Article 52 of the New York Civil Practice Law and Rules
governs the enforcement of judgments in New York, and therefore
is applicable here. See N.Y.C.P.L.R. art. 52; Alliance Bond
Fund, Inc. v. Grupo Mexicano De Desarrollo, S.A., 190 F. 3d 16,
20, 21 n. 4 (2d Cir. 1999).
Section 5225 sets forth the procedures for the return of
property. Under section 5225(a), a judgment creditor can seek
turnover of property held by the judgment debtor "[u]pon motion"
in the original action. N.Y.C.P.L.R. 5225(a). However, when the
property sought is in the possession of someone other than the
judgment debtor, the judgment creditor must follow the procedure
set forth in section 5225(b), which requires that the creditor
"commence an action against the person in possession," Alliance
Bond Fund, Inc., 190 F.3d at 21, instead of merely filing a
motion in the original action, see N.Y.C.P.L.R. 5225(b); David
D. Siegel, Practice Commentaries, N.Y.C.P.L.R. 5225, at 264-65
(McKinney 1997) (explaining that subsection (b) requires a
special proceeding "bearing its own caption").
In this case, the Government contends that "Pentagen cannot
proceed by mere motion against the Government to enforce its
judgment against Runaway" and therefore "Pentagen's motion should
be denied. Mem. in Opp'n at 15.
This Court agrees. Pentagen now seeks the turnover of the
MENTIX software from the Government, a non-party to this action.
Because Rule 69(a) of the Federal Rules of Civil Procedure
dictates that state procedures be followed, and because section
5225(b) is applicable to this situation, Pentagen is required to
commence a new action against the Government in order to attain
the sought-after relief. Therefore the present motion is an
improper vehicle for seeking this relief and must be denied.
In addition to this procedural defect, the Government asserts that a number of additional bars preclude the relief that
Pentagen seeks. The Government argues that any suit based on this
subject matter would be barred by sovereign immunity and by the
doctrines of claim and issue preclusion.
Under the doctrine of sovereign immunity, the "United States,
as sovereign, is immune from suit save as it consents to be
sued." United States v. Sherwood, 312 U.S. 584, 586 (1941). The
United States has consented to suit pursuant to the
Administrative Procedure Act ("APA"), 5 U.S.C. § 702, which
provides for "final agency actions to be reviewed by federal
courts if there is a claim `that an agency or an officer or
employee thereof acted or failed to act in an official capacity
or under color of legal authority,' and the relief sought is
other than money damages," U.S. Envtl. Prot. Agency v. Gen.
Elec. Co., 197 F.3d 592, 598 (2d Cir. 1999) (quoting
5 U.S.C. § 702).*fn1
Here, Pentagen asserts that the Government's failure to
turnover MENTIX is final agency action. See Mem. in Supp. at
16; Tr., dated July 18, 2005, at 5.
That argument is dubious at best. In order to be deemed final
agency action, "`the action must mark the consummation of the
agency's decisionmaking process.'" New York v. U.S. Envtl. Prot.
Agency, 350 F. Supp. 2d 429, 434 (S.D.N.Y. 2004) (quoting
Bennett v. Spear, 520 U.S. 154, 177-78 (1997)). Paradigmatic
examples of final agency actions include agency rules and
rulemaking procedures, see, e.g., id. at 435 (collecting
cases), as well as specific agency decisions, see, e.g.,
17 U.S.C. § 701(e). Here, unlike in the typical APA case, the
Government's actions are not the result of its "decisionmaking
process," and they do not reflect a process whereby the
Government had "a full opportunity to consider and correct its
own mistakes," Sec. & Exch. Comm'n ex rel. Glotzer v. Stewart,
374 F.3d 184, 192 n. 8 (2d Cir. 2004). Rather, the Government has
failed to return MENTIX to Pentagen because, as it has repeatedly
indicated, it does not possess MENTIX and, if it once did, it currently has
no knowledge as to the whereabouts of the software. See Mem. in
Opp'n at 17; Tr. at 14-15; Mem. in Supp. of Mot. to Quash, dated
Oct. 4, 2004 ("Mot. to Quash"), at 8; Mot. to Quash, Ex. A,
Certification of Guri Glass, dated Apr. 19, 2004; Mot. to Quash,
Ex. B, Resp. to Court Directed Interrog., dated June 10, 2004.
The Government's failure to produce something that it does not
have is simply not final agency action reviewable under the
Pentagen's reliance on Levitt v. Fed. Bureau of
Investigation, 70 F. Supp. 2d 346 (S.D.N.Y. 1999), is
unpersuasive. In Levitt, the FBI acknowledged that it possessed
a sculpture in which it had no ownership interest. Id. at 347.
Despite the availability of an interpleader action to resolve the
dispute, Judge Kaplan found that sovereign immunity had been
waived under the APA, presumably after assuming that the FBI's
failure to return the sculpture constituted final agency action.
Id. at 348-50. Assuming arguendo that Levitt correctly stands
for the proposition that the Government's failure to turnover
property in its possession is final agency action, see id.;
see also Marshall Leasing, Inc. v. United States,
893 F.2d 1096, 1098-1100 (9th Cir. 1990), that finding is simply not
persuasive here because the Government has repeatedly indicated
that it does not have MENTIX and that it has no knowledge as to
its whereabouts. See supra.
Finally, assuming that Pentagen could bring this action against
the Government, this suit would be barred by the doctrines of
claim and issue preclusion.
Claim preclusion operates to bar claims that arise from the
same set of operative facts as a previous claim between the same
parties which has been resolved by a final judgment on the
merits. See Corbett v. MacDonald Moving Servs., Inc.,
124 F. 3d 82, 87-90 (2d Cir. 1997); Interoceanica Corp. v. Sound
Pilots, Inc., 107 F. 3d 86, 90-91 (2d Cir. 1997).
Here, Pentagen seeks relief that is identical to the relief
that it sought against the Government in an action filed in 2001.
See Pentagen Techs. Int'l Ltd. v. United States, No. 01-3078,
2002 WL 465308, 2002 U.S. Dist. LEXIS 5030, at *15-16 (S.D.N.Y.
Mar. 26, 2002). Judge Stein, in dismissing that action, in part
based on the preclusive effect of a judgment issued by the Court
of Federal Claims, see Pentagen Techs. Int'l Ltd. v. United
States, 175 F.3d 1003 (Fed. Cir. 1999), ruled that "any request
for the physical return of the software used in the government's
test arises from the same transaction, and Pentagen cannot raise
the claim now after failing to do so in the Court of Federal
Claims action," Pentagen, No. 01-3078, 2002 U.S. Dist. LEXIS
5030, at *16.
Issue preclusion operates to bar "the relitigation of issues
actually litigated and decided in the prior proceeding, as long
as that determination was essential to that judgment," Cent.
Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A.,
56 F.3d 359, 368 (2d Cir. 1995), and there was "a full and fair
opportunity for litigation in the prior proceeding," Levy v.
Kosher Overseers Assoc. of Am., Inc., 104 F. 3d 38, 41 (2d Cir.
In this case, in order to successfully seek turnover of MENTIX
from the Government, Pentagen would need to prove that "[its]
rights to [MENTIX] are superior to those of the [Government]."
N.Y.C.P.L.R. 5225(b). A number of courts have already passed upon
this question, and each time have determined that Pentagen has no
enforceable rights to MENTIX as against the Government or its
purported transferor, CACI. For example, following a ruling that
there was no evidence that CACI had engaged in copyright
infringement, CACI Int'l Inc., 1994 U.S. Dist. LEXIS 21457, at
*14, Judge Mukasey determined that Pentagen could not state a valid conversion claim against CACI,
Pentagen, Nos. 93-8512, 94-441, 94-8164, 1996 WL 435157, at
*14. Based on these earlier rulings, Judge Stein determined that
Pentagen was barred from bringing a conversion claim against the
Government "[b]ecause it has been decided that Pentagen has no
claim for conversion or copyright infringement against CACI in
relation to CACI's marketing of software to the government."
Pentagen, No. 01-3078, 2002 U.S. Dist. LEXIS 5030, at *17-18.
In addition, Pentagen cannot avoid the issue preclusive effect
of these determinations by claiming that there is new evidence
that was not available in the prior proceedings. Pentagen's new
evidence, the April 2000 deposition of Mr. Edgar F. Brasseur,
see Mem. in Supp. at 2, has already been passed upon by two
courts and has been deemed insufficient to overcome the previous
rulings. See Pentagen, No. 01-3078, 2002 U.S. Dist. LEXIS
5030, at *18; Pentagen, 103 F. Supp. 2d at 238. Additional
depositions taken by Pentagen are of a similar character and they
do not call into question the fairness of the prior proceedings.
In sum, Pentagen's motion is improperly brought, barred by
sovereign immunity, and precluded by a multitude of previous
actions and rulings. Given the injunction issued against
Pentagen, Pentagen, 172 F. Supp. 2d at 474, and the series of
adverse rulings in this and related cases, it is this Court's
hope that this is the final word in an affair that has become an
obsession for some and a thorn in the side of the federal courts.
Based on the foregoing, Pentagen's Motion to Order Turnover
shall be and hereby is denied.
© 1992-2005 VersusLaw Inc.