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Starr Indemnity & Liability Co. v. United States

United States District Court, D. Maryland

September 11, 2019

Starr Indemnity & Liability Company, as subrogee of Jet Zee, LLC
v.
United States of America

          MEMORANDUM

          Catherine C. Blake United States District Judge

         This dispute arises from the seizure of an aircraft by the United States Custom and Border Protection ("CBP"). The plaintiff, Starr Indemnity & Liability Company ("Stan-Indemnity"), subsequently brought a tort action against defendant United States of America ("the government") under the Federal Tort Claims Act ("FTCA"). Pending before the court is the government's motion to dismiss the complaint for lack of subject matter jurisdiction. The issues have been briefed and no oral argument is necessary.[1] See Local Rule 105.6 (D. Md. 2018). For the reasons outlined below, the court will grant the motion.

         FACTUAL AND PROCEDURAL HISTORY

         In 2016, Jet Zee, Inc. was the owner of a 1987 Beechjet 400 aircraft ("the aircraft"), which was insured by plaintiff .Starr Indemnity for $750, 000. (Compl. ¶ 2, ECF No. 1). On March 2, 2016, Detective Joseph Grant of the Baltimore County Police Department and Special Agent Milton Lynn of the U.S. Department of Homeland Security applied for a warrant to search the aircraft and seize certain items suspected to be onboard. (Def.'s Mot. to Dismiss ["Def s Mot."] Ex. A at 4-9, ECF No. 10-2). In support of the warrant application, Grant and Lynn provided an affidavit stating that they had probable cause to believe that the aircraft "contain[ed] cocaine, packaging material, fruits and instrumentalities of the crime of possession with intent to distribute [or importation of] cocaine," as well as cash proceeds from suspected drug trafficking (Id). The Honorable John J. Nagle of the Circuit Court for Baltimore County issued the warrant on March 2, 2016. (Id. at 9). Later that day, the aircraft was searched and seized at Martin State Airport in Middle River, Maryland. (Compl. ¶ 3). The search uncovered $1, 039, 205 in U.S. currency, which had been vacuum-packed, sorted by denomination, and stored in a black roller bag in the cargo hold of the aircraft. (Def.'s Mot. Ex. B ¶20, ECF No. 10-3). No cocaine was discovered during the search, but "a Baltimore County Police Department K-9 certified in narcotics odor detection . .. gave a positive indication to the presence of narcotics [] on the plane." (Id. ¶ 18). Starr Indemnity's representative[2] immediately attempted to negotiate the return of the aircraft with the U.S. Attorney's office. (Id. ¶ 15).

         On April 22, 2016, Special Agent Lynn applied for a second search warrant of the aircraft, which was issued by the Honorable Beth P. Gesner of the United States District Court of the District of Maryland. (Def.'s Mot. Ex. B, ECF No. 10-3). Lynn stated that a second search of the aircraft was necessary to perform a thorough search for hidden compartments, or "traps," which "are utilized in the furtherance of bulk cash and drug smuggling." (Id. ¶ 24). According to Lynn, a search for "traps" was not possible during the execution of the original search warrant because, due to short notice, "it was logistically not possible to arrange for the presence of a subject matter expert that could search the plane for hidden compartments without possibly compromising the air-worthiness of the plane." (Id.).

         On or about August 3, 2016, CBP sent a "Seizure Notice" to Starr Indemnity's representative. (Pl's Resp. in Opp. to Def.'s Mot. ["Pl's Resp."] Ex. 3 at 2, ECF 11-3). The seizure notice stated that, pursuant to 18 U.S.C. § 981, [3] CBP had begun forfeiture proceedings with respect to the aircraft because it had probable cause to believe that the aircraft was involved in money laundering in violation of 18 U.S.C. § 1956(a)(7). (Id.). Starr Indemnity subsequently sent responsive notices challenging the validity of the forfeiture to CBP, to which CBP did not respond. (Pl's Resp. at 18).

         On or about October 13, 2016, Starr Indemnity filed a claim against CBP for damages under the FTCA. (Compl. ¶ 20; Pl's Resp. Ex. 7). CBP did not respond to this claim. (Compl. ¶ 21). On February 28, 2017, Starr Indemnity filed a motion with this court under Federal Rule of Civil Procedure 41(g) seeking the return of the aircraft, claiming, inter alia, that the original seizure of the aircraft violated the search warrant issued on March 2, 2016. (Compl. ¶ 22; Starr Indemnity & Liability Co. v. United States CBP, No. 17-00579-JFM, ECF No. 1 ¶ 11). On or about June 13, 2017, the parties reached a settlement whereby CBP returned the aircraft to Starr Indemnity. (Compl. ¶ 23). The settlement agreement specifically provided that Starr Indemnity "[did] not release any claim that may be brought under the Federal Torts Claim Act for damages" arising from CBP's seizure of the aircraft. (Id. ¶ 24-25). CBP returned the aircraft on June 29, 2017. (Id. ¶ 4). Starr Indemnity examined the damage to the aircraft, determined that it was a "total loss," and made payments to Jet Zee, Inc. pursuant to their insurance agreement. (Id. ¶ 26-27). Consequently, Starr Indemnity became subrogated by operation of law to Jet Zee, Inc.'s interest in the aircraft. (Id. ¶ 6).

         On or about November 30, 2017, Starr Indemnity filed a final administrative claim for damages under the FTCA. (Id. ¶ 28). Starr Indemnity received a letter from CBP on August 6, 2018, denying the claim. (Id. ¶ 40). CBP stated that "the claim .. . falls squarely within specific exceptions to the waiver of sovereign immunity afforded by the FTCA. .. Absent an express waiver of sovereign immunity, the United States cannot be held liable." (Id. ¶ 41).

         Starr Indemnity filed its complaint in the instant action on October 30, 2018. (ECF No. 1). The government filed a motion to dismiss for lack of jurisdiction, Starr Indemnity filed its response in opposition, and the government filed a reply to Starr Indemnity's response. On April 9, 2019, Starr Indemnity requested a hearing on the government's motion to dismiss.

         STANDARD OF REVIEW

         A motion to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) "addresses whether [the plaintiff] has a right to be in the district court at all and whether the court has the power to hear and dispose of his claim." Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 452 (4th Cir. 2012). The plaintiff bears the burden of establishing subject matter jurisdiction. Demetres v. East West Const., Inc., 776 F.3d 271, 272 (4th Cir. 2015). A defendant may challenge subject matter jurisdiction in two ways: (1) "by attacking the veracity of the allegations contained in the complaint"; or (2) "by contending that, even assuming that the allegations are true, the complaint fails to set forth facts upon which jurisdiction is proper." Durden v. United States, 736 F.3d 296, 300 (4th Cir. 2013). When a defendant uses the latter method to contest subject matter jurisdiction, the plaintiff "is afforded the same procedural protection as he would receive under Rule 12(b)(6) consideration." Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (quoting Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). Accordingly, "the facts alleged in the complaint are taken as true, and the motion must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction." Id[4]

         ANALYSIS

         I. The Re-Waiver Provision

         The government asserts that Starr Indemnity's claim must be dismissed for lack of subject matter jurisdiction because the government has not waived sovereign immunity. (Def.'s Mot. at 5). "Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit." Federal Deposit Ins. Co. (FDIC) v. Meyer, 510 U.S. 471, 475 (1994); see also Global Mail Ltd. v. United States Postal Service,142 F.3d 208, 210 (4th Cir. 1998). The FTCA waives the government's sovereign immunity for certain torts committed by federal employees, 28 U.S.C. § 1346(b); FDIC, 510 U.S. at 475, but the waiver is limited by several exceptions. One exception (the "detention of goods" exception) pertains to claims arising from "the detention of any goods, merchandise, or other property by any officer of customs... or any other law enforcement officer." 28 U.S.C. § 2680(c), Kosak v. United States,465 U.S. 848, 854 (1984). In 2000, Congress passed the Civil Asset Forfeiture Reform Act ("CAFRA"), which amended § 2680(c) and created an "exception to the exception." Ali v. Federal Bureau of Prisons,552 U.S. 214, 221, 239 (2008). Pursuant to ยง 2680(c)(1) ...


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