LM Bus. Assocs., Inc. v. State of New York

The State Insurance Fund, the State Police, and the Workers’ Compensation board investigated Mark Boerman for fraudulent activities. During the investigation, the State Police were granted a search warrant and searched the claimants’ offices on April 5, 2001. During execution of the warrant, a number of computers that were vital to the claimants’ businesses were removed from the office. Mr. Boerman was indicted over a year later and moved to have the computers returned. At no time before Mr. Boerman’s indictment did the claimants bring a motion to have the property returned. Following Mr. Boerman’s indictment in April 2003, the court granted the motion to have the computers returned, but the computers weren’t returned for several months. The claimants argued that the loss of computers for that time period resulted in the business failing.

The claimants brought suit seeking damages for conversion of the seized computers, negligent misrepresentation, and constitutional tort. The negligent misrepresentation claim stemmed from alleged promises made by agents during the search and in the days following that the computers would be returned as soon as possible following the copying of the data on the computers. After hearing the case, the Court of Claims in a non-jury trial determined that the defendant was liable for conversion and negligent misrepresentation.

The court explained that conversion takes place when a person intentionally and without authority exercises control over the property of another person; however, in this case, the defendant received a search warrant, which specifically authorized seizure of the computers, and the warrant placed no time limits on the amount of time the defendant could retain the property for. Because the claimants never challenged the search warrant, the search warrant provided authorization to seize the property until the County Court ordered the property be returned following Mr. Boerman’s motion. This case can be distinguished from other cases, such as Della Pietra v. State of New York, because the property in this case was seized pursuant to a valid search warrant. Even if the defendant did not have a legitimate purpose in retaining the seized computers, the defendants did not have the power to return the property without judicial authorization.

The claim for negligent misrepresentation would fail as a matter of law because the relationship between an investigator and the target of his investigation, as is present in this case, does not qualify as special relationship of confidence and trust, which would be required under the statute. The court reversed the judgment and dismissed the amended claim.

990 N.Y.S.2d 619 (4th Dep’t. 2015)

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