United States District Court, N.D. New York
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City of Syracuse, Office of Corporation Counsel, James P. McGinty, Esq., Shannon T. O'Connor, Esq., of Counsel, Syracuse, NY, for Plaintiff.
Haynes & Boone, LLP, Jonathan D. Pressment, Esq., of Counsel, New York, NY, for Defendant Loomis, Armored US, LLC.
MEMORANDUM-DECISION AND ORDER
MAE A. D'AGOSTINO, District Judge.
On June 8, 2011, Plaintiff filed a complaint in New York State Supreme Court, Onondaga County, alleging causes of action for breach of contract and negligence. On July 1, 2011, Defendant Loomis Armored US, LLC (" Defendant" or " Loomis" ) removed the action to this Court pursuant to 28 U.S.C. § 1446, asserting that the Court possesses jurisdiction over the matter pursuant to 28 U.S.C. § 1332(a) by virtue of the fact that complete diversity exists between the parties and the amount in controversy exceeds $75,000.
On July 8, 2011, Defendant filed a motion to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that the complaint is time barred and that it fails to state any prima facie claims for relief. Thereafter, on July 21, 2011, Plaintiff filed a motion to remand the action back to state court. See Dkt. No. 5. In a December 15, 2011 Memorandum-Decision and Order, 2011 WL 6318370, the Court denied Plaintiff's motion to remand. See Dkt. No. 16.
In a letter dated January 4, 2012, Plaintiff informed the Court that it did not intend to oppose Defendant's motion to dismiss. See Dkt. No. 17. On January 11, 2012, 2012 WL 88332, the Court granted Defendant's motion to dismiss, but granted Plaintiff an opportunity to amend its complaint. See Dkt. No. 19. On January 31, 2012, Plaintiff filed its amended complaint. See Dkt. No. 22. The amended complaint included five claims against Defendant, as well as claims against three new Defendants (Michael Bucci, Sean McGuigan, and Ronald Mancuso). See id.
On February 27, 2012 and March 15, 2012, Defendant and Michael Bucci filed motions to dismiss the amended complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Dkt. Nos. 31 & 35. In a May 24, 2012 Memorandum-Decision and Order, 2012 WL 1900530, the Court denied without prejudice to renew the motions to dismiss and
directed the parties to submit supplemental memoranda of law addressing the Court's jurisdictional concerns. See Dkt. No. 46. Specifically, the Court was concerned that it no longer had jurisdiction over this action because of the addition of several non-diverse Defendants in the amended complaint. See id.
In light of the Court's concerns, Plaintiff submitted two notices of dismissal. In these notices, Plaintiff agreed to voluntarily dismiss Michael Bucci, Sean McGuigan and Ronald Mancuso as Defendants pursuant to Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure. See Dkt. Nos. 52, 54 & 55. On July 11, 2012, the Court granted the dismissal of Ronald Mancuso, who had not yet appeared in this matter, and on July 17, 2012, the parties filed a joint stipulation dismissing Michael Bucci and Sean McGuigan. See Dkt. Nos. 55 & 57. As such, Plaintiff voluntarily withdrew all claims against the non-diverse Defendants and the Court may now proceed to consider the merits of Defendant's renewed motion to dismiss. See Dkt. No. 31 & 32.
Currently before the Court is Defendant's renewed motion to dismiss the amended complaint.
Plaintiff is a New York municipal corporation with its principal place of business located at City Hall, 233 East Washington Street, Syracuse, New York 13202. See Dkt. No. 22 at ¶ 2. Defendant is a Texas limited liability company with its principal place of business located at 2500 City West Boulevard, Suite 900, Houston, Texas 77042. See id. at ¶ 3. Defendant, i.e., Loomis Armored US, LLC, was formerly known as Loomis, Fargo & Co. (" Loomis Fargo" ). See Dkt. No. 31 at Exhibit " B."
In January of 2000, pursuant to General Municipal Law § 103, Plaintiff announced open bidding on contract number 00-0088 (the " 2000 Contract" ) for collection service for parking meters in the City of Syracuse for the Department of Public Works. See Dkt. No. 22 at ¶ 10. The bid specifications required that the successful bidder be able to provide armored vehicles with maximum-security locks, a vault to store meter carts, keys and money, armed uniformed guards and collectors, and that the successful bidder " ‘ shall employ all of the safety procedures and devices necessary to safely transport currency from meters to the Key Bank, Main Office, Syracuse, New York.’ " See id. at ¶ 11. On or about January 12, 2000, Armored Motor Service of America, Inc. (" AMSA" ), a domestic corporation located at 101 Victor Heights Parkway, Victor, New York 14564, bid on the 2000 Contract. See id. at ¶ 12. AMSA operated as an armored car carrier in Onondaga County. See id. On or about March 28, 2000, Plaintiff executed the 2000 Contract with AMSA. See id. at ¶ 15. The duration of the agreement was for two (2) years, plus the option of three (3) one-year extensions. See id. Pursuant to the contract, AMSA agreed to assume " ‘ sole liability for loss or theft of containers or receptacles, and coins while in [its] possession and control.’ " See id. at ¶ 16.
According to Plaintiff, Sean McGuigan began employment with AMSA in 1996 as an armored car guard and was eventually assigned the downtown or Armory Square route under the parking meter collection contract. See id. at ¶ 19. Moreover, Plaintiff claims that each armored car guard engaged in work duties before and after each route, including, but not limited to, signing out trucks, weapons, radios, and, pursuant to AMSA's contract with Plaintiff, keys to open the meters. See id. at ¶ 20. The armored guards used a key to unlock the parking meters and a canister with parking meter revenue was
dropped into a sealed and locked container on wheels. See id. at ¶ 22. Once the sealed container was full, the armored guard would drive the armored truck to Key Bank located in downtown Syracuse. See id. Key Bank was in possession of the key that would unlock the sealed container holding the coins to be counted. See id. at ¶ 23. Upon arrival at the bank, the armored guard provided the bank with a blank manifesto that Key Bank would sign and fill out with the time of arrival and the number of bags of coins delivered by AMSA. See id. Thereafter, Key Bank would sort and count the coins collected and would credit Plaintiff's account. See id.
In June of 2001, Plaintiff requested that Defendant increase the meter collection pickups and deposits from one-day per week to three-days per week in the Armory Square and St. Joseph area. See id. at ¶ 24. According to Plaintiff, Key Bank decided to close its money room and outsource the counting of money or coin to an outside agency. See id. at ¶ 25. AMSA was awarded this contract sometime between 2001 and 2003, which resulted in AMSA providing all of the counting and sorting of coin and money for Key Bank customers, including Plaintiff. See id. Moreover, Plaintiff claims that the money it collected pursuant to its contract with AMSA was now stored at AMSA's vault and that the key for the sealed containers, which was originally in Key Bank's possession, was now in AMSA's possession. See id. In April of 2003, Plaintiff exercised its option to extend the 2000 Contract with AMSA. See id. at ¶ 26.
On or about June 17, 2003, Defendant purchased all of the " tangible and intangible assets of AMSA," including the service contract with Plaintiff and " the Key Bank counting room." See id. at ¶¶ 27, 110. AMSA had approximately 115 employees at their East Syracuse office. See id. at ¶ 29. Defendant, which was then named Loomis, Fargo & Co., retained all of these employees, including Sean McGuigan. See id.
On or about July 1, 2003, Defendant notified Plaintiff that all future payments for services rendered under the 2000 Contract should be paid to it and not AMSA. See id. at ¶ 31. On or about December 9, 2003, Plaintiff exercised its final extension of the 2000 Contract. See id. at ¶ 32.
On or about December 21, 2004, Plaintiff opened bidding on contract number 05-088 (the " 2005 Contract" ) for the collection service of parking meters for its Department of Public Works. See id. at ¶ 33. Defendant bid on and was awarded the 2005 Contract on or about January 1, 2005 and it was executed in April of 2005. See id. Similar to the 2000 Contract, Plaintiff's contract with Defendant included the option for three (3) one-year extensions of the contract. See id.
The scope of services to be provided under the 2005 Contract was based upon the collection of 1,100-1,600 single meters, as well as the collection of money from 38-200 pay stations. See id. at ¶ 34. Pursuant to the 2005 Contract, under the subheading " Keys," the contractor agreed that any keys " ‘ shall be safeguarded by the contractor and returned to the Department of Public Works upon termination.... In the event of a lost key ... contractor will be responsible for the costs of replacement ... [and] any lost keys by the contractor shall be immediately reported to the Bureau of Transportation. The Contractor shall not make or acquire duplicates of any City Keys, except as authorized by the Commissioner of Public Works.’ " See id. at ¶ 35 (quotation omitted). Moreover, the 2005 Contract required Defendant to ensure that collections were made " ‘ in a sealed container
unit furnished by the contractor.’ " See id. at ¶ 36 (quotation omitted). Moreover, Defendant agreed to " ‘ assume sole liability for loss or theft of containers or receptacles, and coins while in his possession of control, such liability to be measured by the average amount of collection per can or receptacle for the previous four (4) weeks collection. However, the limit of liability for theft shall be twenty thousand dollars per day aggregate.’ " See id. at ¶ 37 (quotation omitted).
By correspondence dated November 17, 2005, Plaintiff's Office of Budget and Management extended the 2005 Contract through March 1, 2006. See id. at ¶ 38. In January of 2006, Plaintiff opened bidding on contract number 06-113 (the " 2006 Contract" ), for the collection service of parking meters. See id. at ¶ 39. On or about February 1, 2006, Plaintiff sent Defendant a notice of intent to award letter indicating that the estimated contract price was $95,040, and that a certificate of insurance was required to award and execute the contract. See id. at ¶ 40. The parties executed the 2006 Contract on July 7, 2006. See id.
The scope of the collection services of the 2006 Contract included transportation in an armored vehicle with maximum security locks, a vault to store meter carts, keys, and money, armed uniformed guards and collectors, and required Defendant to " ‘ employ all of the safety procedures and devices necessary to safely transport currency from meters' " to its offices. See id. at ¶ 41 (quotation omitted). Moreover, the 2006 Contract provided that Defendant would " ‘ assume sole liability for the loss or theft of containers or receptacles, and coins while in his possession or control, such liability to be measured by the average amount of collection per can or receptacle for the previous four (4) weeks collection. However, the limit of liability for theft shall be twenty thousand ($20,000) dollars per day aggregate.’ " See id. at ¶ 42 (quotation omitted).
Similar to the 2005 Contract, in the 2006 Contract Defendant agreed to safeguard all keys necessary to perform the services required by the contract and to report any lost keys to Plaintiff immediately. See id. at ¶ 44 (citation omitted). Further, the 2006 Contract provided that " ‘ [t]he Contractor shall not make or acquire duplicates of any City Keys, except as authorized by the Commissioner of Public Works.’ " See id. (quotation omitted). It also provided that " ‘ [c]ollections shall be made in a sealed container unit furnished by the contractor.... Said complete collection units to be provided by the Contractor shall include the keyhead devices, the carts, and the coin containers.’ " See id. (quotation omitted). Plaintiff exercised its option to extend the 2006 Contract three times through September 2, 2010. See id. at ¶¶ 45-46 (citations omitted). On March 31, 2011, Plaintiff terminated its contract with Defendant for parking meter collections. See id. at ¶ 47.
A. Factual allegations surrounding Plaintiff's discovery of the parking meter thefts, FBI investigation, concealment of the crime, and the criminal sentencing of Sean McGuigan and Ronald Mancuso
In unrelated federal litigation, the United States Attorney's Office for the Northern District of New York indicted Paul and Steven Mancuso (Ronald Mancuso's brothers) for their involvement in illegally removing asbestos from central New York properties. See id. at ¶¶ 80-81. At some point between October 28, 2009 and May 24, 2010— the date of conviction and sentencing, respectively— Paul and Steven Mancuso informed FBI agents of the parking meter thefts as a means of punishing
Ronald Mancuso for testifying against them in the federal case and to seek leniency at their sentencings. See id. at ¶¶ 84-85. At some point in late November 2009, the FBI opened an investigation into the coin thefts. See id. at ¶ 86. On November 25, 2009, Ronald Mancuso confessed to the parking meter theft scheme. See id. at ¶ 87. On or about February 7, 2010, federal agents interviewed Sean McGuigan and obtained a confession regarding his involvement in the thefts. See id. at ¶ 89.
In late November of 2009, federal agents informed an employee of Plaintiff's Department of Public Works about the parking meter thefts. See id. at ¶ 90. Plaintiff claims that, " [u]pon information and belief, federal agents specifically told this employee not to inform anyone of the thefts because of an on-going criminal investigation into the matter." See id. During an interview with the FBI, Plaintiff claims that Sean McGuigan explained how he was able to remove the key to the padlock, which opened the sealed container holding the coins, without any questions or detection by management. See id. at ¶ 91. Plaintiff claims that the key was hanging on the wall at Defendant's office, which allowed Sean McGuigan to remove the key, keep it overnight, make a copy of it at Home Depot, and return it the next morning. See id. at ¶¶ 92-93.
According to Plaintiff, the coin theft scheme operated as follows:
-Plaintiff requested an increase in parking meter collections sometime in 2001 for the Armory Square and St. Joseph Hospital area of the city.
-The collection schedule increased from one day per week to three days per week.
-The scheduled collections and deposits were now on Monday, Tuesday, and Friday.
-Defendant's management assigned Sean McGuigan to the collection and deposit routes in Armory Square.
-Every Tuesday Ronald Mancuso would drive from Utica, New York in an off-white van, a similar color to the armored trucks in Defendant's fleet, to meet Sean McGuigan along his parking meter collection route after he completed his job duties.
-Sean McGuigan would enter the rear of the van, unlock the padlock on the sealed canister and empty the coin into bags, which would take several minutes.
-Upon completion, Sean McGuigan would exit the van and continue on his collection route and Ronald Mancuso would drive back to Utica, New York to sort the coins.
-Upon his return to Utica, New York, Ronald Mancuso would sort the coins because they only intended to steal the quarters.
-Once the quarters were separated, Ronald Mancuso would convert some but not all of the coins to paper currency.
-Sean McGuigan and Ronald Mancuso would then meet in Utica, New York on Wednesday or Thursday to split the proceeds.
-The following Tuesday, Ronald Mancuso would deliver the nickels and dimes that were sorted out back to Sean McGuigan while working on his collection route.
-Once the contents of Sean McGuigan's canister had been emptied in the rear of the van, these nickels and dimes from the previous Tuesday's collection were then placed in the collection cart.
-Initially, Sean McGuigan's share was approximately $200 per week from the thefts, but, as the scheme progressed,
his share per week rose to $1,000 ...