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APPLETON v. U.S.

May 19, 2000

JOHN M. APPLETON, PLAINTIFF,
V.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Urbina, District Judge.

MEMORANDUM OPINION

Denying the Plaintiffs Renewed Motion for Summary Judgment on Count 2; Denying the Defendant's Renewed Motion for Summary Judgment on Count 2

I. INTRODUCTION

In 1994, Mr. Appleton filed five applications for permits to import ammunition originally made for the South-African government. Mr. Appleton did not know exactly who had made the ammunition, so on his applications he listed "State Arsenal, South Africa", a generic term which he claims is accepted by firearms dealers and by the ATF when more specific information is not available. So far as the record currently discloses, it appears that the ATF examiner, Ms. Frances Burroughs,*fn1 did not conduct an investigation into the identity of the manufacturer. The ATF granted Mr. Appleton's import permits in 1994 and 1995. Relying on those permits, Mr. Appleton contracted to resell the ammunition to a businessman in Illinois.

When the ammunition arrived in the United States, however, the ATF investigated to see if it could identify the manufacturer more specifically than "State Arsenal, South Africa." Based on information the ATF requested and received from Mr. Appleton, the agency discovered that the ammunition had been manufactured by Pretoria Metal Pressings ("PMP"), an entity which had been "debarred" by State under the Arms Export Control Act ("AECA"), 22 U.S.C. § 2778 et seq. As a consequence of the debarment, it was illegal to import arms manufactured by PMP. Accordingly, ATF revoked Mr. Appleton's import permits. Because it was illegal to import the ammunition without the permits, Mr. Appleton could comply with the law only by breaching his resale contract, which he did.

Mr. Appleton alleged that the State Department acted arbitrarily by debarring PMP and by doing so without notice. He further alleged that ATF's revocation of his permits interfered with his resale contract. See Compl. Counts 1 and 3. Lastly, he alleged that ATF was negligent in approving his applications in the first place, i.e., in "failing to determine that some state arsenals of South Africa were ineligible for ammunition import permit approval." See Compl. Count 2, ¶ 23. The case is unusual in this respect because Mr. Appleton is essentially arguing that the ATF should have denied his import applications.

Pursuant to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 1346(b)(1), 2671-2680, the Government asked the court to dismiss the complaint for failure to state a claim. Specifically, the Government contended that the FTCA shields it from suit for actions taken in the performance of a "discretionary function", and for actions which allegedly interfere with contract rights. Alternatively, the Government contended that Mr. Appleton was contributorily negligent in the approval of the permits, because he should have supplied more information about the origin of the ammunition. (See Mot. to Dis. at 1-2). Mr. Appleton opposed the motion and filed his own motion for summary judgment.

Counts 1 and 3 Dismissed. By Memorandum Opinion and Order dated August 31, 1999, the court granted in part and denied in part the Government's motion to dismiss. Specifically, the court held that the FTCA's contract interference exception, 28 U.S.C. § 2680(h), barred Mr. Appleton's claim that ATF interfered with his contractual relations with a third party. Accordingly, the court dismissed counts One and Three and denied the plaintiff's motion for summary judgment on those counts.

Count 2: ATF's Discretion. Secondly, the court found that the record left a genuine issue as to whether or not ATF employees exercised discretion in approving Mr. Appleton's import applications. Accordingly, the court denied without prejudice the Government's motion to dismiss count two (the negligence claim) and permitted Mr. Appleton to conduct discovery to obtain evidence on the discretion issue.

Count 2: Negligence and Contributory Negligence. Lastly, the court found there was a genuine issue as to whether or not ATF and/or Mr. Appleton acted negligently. Accordingly, the court denied without prejudice the plaintiffs motion for summary judgment on count 2 and authorized discovery on the issue of each party's negligence.

As directed by the August 31, 1999 Order, Mr. Appleton and the Government conducted supplemental discovery and filed renewed motions for summary judgment on count 2. For the reasons set forth below, the court will deny both parties' motions.*fn2

II. BACKGROUND

Mr. Appleton is an American businessman licensed to buy and sell arms under the Arms Export Control Act ("AECA"), 22 U.S.C. § 2778 and 22 C.F.R. § 120130. In 1994, British arms broker Tony Slatter offered to sell Mr. Appleton ammunition imported from South Africa. Mr. Appleton submitted five "Form 6" import permit applications to ATF listing "State Arsenal, Republic of South Africa" as the manufacturer of the ammunition. (See Appleton Dec. ¶ 6.) ATF approved the permits between October 1994 and January 1995. Mr. Appleton then contracted to resell the ammunition to an arms dealer in Illinois. (See Comp. ¶ 14.)

Mr. Appleton maintains that he supplied all the information he could reasonably obtain about the identity of the manufacturer. Mr. Appleton asked Mr. Slatter for information about Slatter's supplier and about the original manufacturer. Mr. Slatter professed not to know who the manufacturer was and also indicated that he was unwilling to divulge the identity of his supplier for proprietary reasons. In other words, Slatter refused to identify his supplier out of concern that Mr. Appleton would contact the supplier directly and "cut out" Slatter. (See Pl.'s Mot. for Summ.J. at 5-6.)*fn3

Nonetheless, the Government maintains that Mr. Appleton could have asked Mr. Slatter for additional information at the time of their negotiations which would have revealed that the ammunition was in a crate marked "ARMSCOR." ATF was able to determine the manufacturer based on Mr. Appleton's submission of a drawing of the "headstamp" markings on the ammunition during a subsequent investigation. The ATF argues that Mr. Appleton should have requested a sample of the ammunition and/or a reproduction of the headstamp markings from Mr. Slatter before submitting his applications. (See Opp. to Pl.'s Mot. for Summ.J. at 8-10.)

In May 1996, Mr. Appleton filed an administrative claim with ATF. ATF denied the claim in August 1997. Mr. Appleton subsequently initiated the instant action.

III. DISCUSSION

A. Legal ...


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