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Spinelli v. City of New York

August 7, 2009



Appeal by Plaintiffs from a judgment entered in the United States District Court for the Southern District of New York (Richard C. Casey, Judge), granting Defendants' motion for summary judgment and dismissing Plaintiffs' due process, Fourth Amendment, and tortious interference with business relations claims. On appeal, we AFFIRM the district court's dismissal of Plaintiffs' Fourth Amendment claim. The district court's dismissal of the due process claim is REVERSED, and the case is REMANDED for the district court to enter summary judgment in favor of Plaintiffs and to calculate damages on that claim. The dismissal of the tortious interference claim is VACATED and REMANDED for further consideration.

The opinion of the court was delivered by: John M. Walker, Jr., Circuit Judge

Argued: January 22, 2009

Before WALKER and CALABRESI, Circuit Judges.*fn1

Plaintiffs-Appellants Angela Spinelli and Olinville Arms, Inc. (collectively "Spinelli") appeal from a judgment of the district court (Richard C. Casey, Judge), granting summary judgment to Defendants-Appellees City of New York and New York City Police Sergeant Pasquale Carabella (collectively "the City") dismissing Plaintiffs' Fourth Amendment, due process, and tortious interference with business relations claims that were based on the City's confiscation of Spinelli's firearms inventory and suspension of her dealer's license. On appeal, Spinelli argues that the existence of material issues of fact on the Fourth Amendment and due process claims preclude summary judgment, and that the district court should have exercised supplemental jurisdiction over her state-law tortious interference claim.

We conclude that the district court properly dismissed Spinelli's Fourth Amendment claim because the City's warrantless search of Olinville Arms was objectively reasonable and performed pursuant to established regulations. However, the City violated due process by denying Spinelli constitutionally sufficient notice and the opportunity for a post-deprivation hearing. Therefore, we reverse the grant of summary judgment in favor of the City on the due process claim, and remand to the district court to enter summary judgment in favor of Spinelli and determine damages on that claim. We also remand for further consideration of Plaintiffs' tortious interference claim.


Olinville Arms, Inc. ("Olinville") is a gun shop, shooting range, and travel agency located in Bronx County, New York, owned and operated by Angela Spinelli. Olinville's license was issued by the New York City Police Department ("NYPD") License Division (the "License Division" or the "Division"). The license is conditioned upon compliance with regulations under Title 38 of the Rules of the City of New York ("Rules") that require gun dealers to adhere to certain security restrictions and provide that the licensee's "premises and firearms[] shall be subject to inspection at all times by members of the Police Department." See 38 RCNY § 4-06(a)(3). If a gun dealer fails to comply with the Rules, the Division may suspend or revoke the dealer's license "for good cause by the issuance of a Notice of Determination Letter to the licensee, which shall state in brief the grounds for the suspension or revocation and notify the licensee of the opportunity for a hearing." 38 RCNY § 4-04(l).

In the wake of the September 11, 2001 terrorist attacks, the 47th Precinct of the NYPD was tasked with providing "enhanced security to sensitive locations within its boundaries," known as "Omega posts" or "Omega watches." The Omega post program extended through October 2001, and Olinville was an Omega post.

On October 8, 2001, Captain Charles McSherry, an officer from the 47th Precinct, entered Olinville under the Omega post program without a warrant or Spinelli's permission and searched the premises. The search revealed the security at Olinville to be "grossly inadequate." Security issues included an unwatched counter area, a large hole in Olinville's backyard fence, and two unlocked safes.

On October 9, 2001, the License Division advised Spinelli by letter that, "as a result of failure to provide adequate security for [Olinville]," her dealer's license was suspended. The letter directed Spinelli to surrender all firearms "pending the conclusion of the [License Division's] investigation," which would determine whether Olinville's license would be "continued, suspended, or revoked." The letter told Spinelli that Sergeant Michael Kaplon was assigned to her case and provided Kaplon's contact number, but did not notify Spinelli of the opportunity for a hearing, as required by the Rules. See 38 RCNY § 1-04(f). Officers from the 47th Precinct seized approximately 300 weapons from Olinville, many of which, according to Spinelli, had already been sold to customers who later demanded a refund.

Spinelli hired attorney John Chambers, who had experience in gun licensing matters, to help retrieve her license and firearms. According to Chief Inspector Benjamin Petrofsky of the License Division, "[a dealer's] license [is] . . . normally suspended for the duration of the investigation. That's the norm." Instead of requesting a formal hearing, which Chambers believed could take months to years to decide, Chambers contacted members of the License Division on an informal basis "through negotiations and conversations" that included letters to the Division requesting the immediate return of Spinelli's property. Chambers also "was*fn2 imminently prepared to file a lawsuit against the Police Department" to retrieve Spinelli's property.

After retaining Chambers, Spinelli received a second letter from the License Division, dated October 19, 2001, that suspended Olinville's shooting range license pending investigation of the October 8 incident report. Chambers promptly met with the License Division, and argued that "there were no sufficient stay or security issues that [he] saw, vis-à-vis [the] gun range." One day later, the shooting range license was reinstated.

On November 7, 2001, Sergeant Kaplon re-inspected Olinville, but found that "there was nothing done to repair the deficiencies with the lack of security within the store." According to Kaplon, Olinville exhibited "total disregard for the rules and regulations of maintaining a Gun Dealer License." On the same day, Chambers sent a letter to the License Division, informing the Division of planned security improvements at Olinville. These improvements were tailored to remedy McSherry's specific complaints, and they included assurances by Spinelli that she would "restore the fences in the backyard area," install video surveillance in the store, renovate Olinville's counter area, and build a "large concrete room where her gun safes are housed."

On November 16, 2001, Chief Inspector Petrofsky recommended the reinstatement of Olinville's license. Petrofsky concluded that, "[c]onsidering Olinville has been in business for over 30 years," it was in the "best interests of fairness" to return Spinelli's property immediately and allow her thirty days to make the required security improvements. On November 20, 2001, License Division Deputy Inspector Thomas Galati concurred in recommending the return of Olinville's license and firearms. On December 5, 2001, the Division sent Spinelli a letter advising her of the license reinstatement, thereby permitting her to reopen her gun shop. According to Spinelli, "Defendants' actions resulted in Plaintiffs' loss of approximately two months of sales and profits" that included the "unexplained" time lag between the recommendation of license reinstatement on November 20 and the official notice of reinstatement on December 5.

On November 8, 2002, Spinelli filed the instant suit against the City pursuant to 42 U.S.C. § 1983. Spinelli alleged that "Defendants' confiscation of Plaintiffs' licenses and weapons was illegal and violated Plaintiffs'" due process and Fourth Amendment rights. Specifically, Spinelli alleged that Defendants had violated due process by seizing Olinville's weapons and suspending its license without providing the "required notice or hearing," and the Fourth Amendment by performing a search of Olinville's premises "without probable cause or justification." Spinelli also claimed that "[b]y reason of their acts and omissions, Defendants . . . intentionally interfered with Plaintiffs' business relationships" in violation of New York state law.

After both parties moved for summary judgment, the district court granted the City's motion. First, the district court concluded that the City's search of Olinville's premises, seizure of the firearms, and suspension of Olinville's license were reasonable due to "the apparent security lapses at Olinville," and therefore did not violate the Fourth Amendment, which prohibits only "unreasonable . . . seizures."

With respect to Spinelli's due process claim, the district court, citing Sanitation & Recycling Industries v. City of New York, 107 F.3d 985, 995 (2d Cir. 1997), concluded that Spinelli did not have a protectable property interest in her gun dealer license. The district court further determined that, in any event, Spinelli had "received all the process that was due" through notice and "an opportunity to be heard," despite, as the court noted, the absence of a formal hearing and the failure of the City's letters to explain what rules and regulations Olinville had violated. Although the district court found that Spinelli had a protected property interest in the seized firearms, it concluded that, under the balancing test articulated in Mathews v. Eldridge, 424 U.S. 319, 335 (1976), there was no due process violation in light of the "opportunity to be heard" and exigent circumstances. Finally, having dismissed Spinelli's constitutional claims, the district court declined to exercise supplemental jurisdiction over Spinelli's tortious interference state law claim.*fn3

Spinelli appealed to this court.


I. Legal Standards

On appeal, we review the district court's grant of summary judgment de novo. Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 200 (2d Cir. 2004). The district court may grant summary judgment only "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is material if it "might ...

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