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Henry v. United States Department of Agriculture Rural Development

United States District Court, N.D. New York

February 13, 2014

KIMERLY G. HENRY et al., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF AGRICULTURE RURAL DEVELOPMENT NEW YORK STATE, Defendant.

DAVID B. COTTER, ESQ., Cotter & Cotter, P.C., Williamsville, NY, for the Plaintiff.

WILLIAM F. LARKIN, Assistant U.S. Attorney, RICHARD S. HARTUNIAN, United States Attorney, Syracuse, NY, for the Defendants.

MEMORANDUM-DECISION AND ORDER

GARY L. SHARPE, Chief Magistrate Judge.

I. Introduction

Plaintiffs Kimerly G. Henry and H.O. Properties Group, Inc. commenced this Federal Tort Claims Act[1] (FTCA) action against the United States Department of Agriculture Rural Development New York State (hereinafter "the Department"), alleging eight claims. (Compl. ¶¶ 35-50, Dkt. No. 1.) Pending is the Department's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and (6). (Dkt. No. 9.) For the reasons that follow, the motion is granted and the complaint is dismissed.

II. Background

A. Facts[2]

In September 2003, H.O. purchased approximately thirty-three housing projects all participating in the Department's Rural Development Program. (Compl. ¶¶ 13.) Approximately two years later, Mark Ogiony, the former minority shareholder in H.O., was terminated from employment with it. ( Id. ¶¶ 8, 15.) Ogiony commenced suit against plaintiffs in New York State Supreme Court in March 2007, which ultimately concluded in a January 22, 2008 stipulation requiring Ogiony to sell his shares to Henry. ( Id. ¶¶ 14, 22.) Apparently as a result of the Ogiony lawsuit and his termination from employment with H.O., the Department was notified more than once by plaintiffs not to provide any copies of correspondence to Ogiony. ( Id. ¶¶ 16, 20.)

In late 2007, the Department made certain demands of H.O., including that H.O. terminate its maintenance supervisors, "which created a major interruption to [its] operation." ( Id. ¶¶ 18-19, 21.) On May 27, 2008, a Department employee, Bonnie Biel, made negligent misrepresentations about H.O.'s management of its properties and suggested that it acted fraudulently in a letter that was copied to Ogiony. ( Id. ¶ 23.) Biel sent an email in late May 2008 "to area specialists to produce three back to back servicing letters with deadlines, " which contained negligent misrepresentations that "had a drastic effect on the negotiations between the shareholders and had a devastating impact on the lawsuit [involving Ogiony]." ( Id. ¶¶ 24-25.) On June 19, 2008, Biel sent yet another correspondence with disastrous and damaging effect to plaintiffs; this particular letter, which was also copied to Ogiony, terminated the management on all of H.O.'s projects. ( Id. ¶¶ 27-29.) Biel's June 19, 2008 letter harmed H.O.'s business relations and assets, created a great diminution in value, caused H.O. to lose income, forced a sale of H.O.'s assets at less than market value, and caused H.O. to incur additional legal fees in the Ogiony lawsuit. ( Id. ¶¶ 30-33.)

B. Procedural History

This action was commenced on May 31, 2012. ( See generally Compl.) In their complaint, plaintiffs allege claims of: (1) tortious interference with business relations; (2) negligent infliction of emotional distress; (3) intentional infliction of emotional distress; (4) negligent denial of due process of law; (5) prima facie tort; (6) trespass to chattel; (7) intentional tort; and (8) injury to reputation. (Compl. ¶¶ 35-50.) Plaintiffs seek compensatory damages in the amount of $4, 962, 952.93. (Compl. at 8-9.) Following joinder of issue, (Dkt. No. 5), the Department moved to dismiss the complaint in its entirety in the motion that is now pending, (Dkt. No. 9).

III. Standard of Review

The standards of review under Rules 12(b)(1) and 12(b)(6), which are "substantively identical, " Lerner v. Fleet Bank, N.A., 318 F.3d 113, 128 (2d Cir. 2003), are well settled and will not be repeated. For a full discussion of those standards, the parties are referred to the court's decisions in Unangst v. Evans Law Associates, P.C., 798 F.Supp.2d 409, 410 (N.D.N.Y. ...


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