Borchardt Rifle Corp. v. Cook, No. CIV 08-1188 JB/WDS

CourtUnited States District Courts. 10th Circuit. District of New Mexico
Writing for the CourtJAMES O. BROWNING
Citation727 F.Supp.2d 1146
PartiesBORCHARDT RIFLE CORP., Plaintiff, v. Nancy F. COOK, Director of Industry Operations, Bureau of Alcohol, Tobacco, Firearms and Explosives, Defendant.
Decision Date27 February 2010
Docket NumberNo. CIV 08-1188 JB/WDS
727 F.Supp.2d 1146

BORCHARDT RIFLE CORP., Plaintiff,
v.
Nancy F. COOK, Director of Industry Operations, Bureau of Alcohol, Tobacco, Firearms and Explosives, Defendant.


No. CIV 08-1188 JB/WDS.

United States District Court,
D. New Mexico.


Feb. 27, 2010.

727 F.Supp.2d 1147

John James D'Amato, Jr., Albuquerque, NM, Richard E. Gardiner, Fairfax, VA, for Plaintiff.

Gregory J. Fouratt, United States Attorney, Jan Elizabeth Mitchell, Assistant United States Attorney, United States Attorneys Office, Albuquerque, NM, for Defendant.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on the Defendant's Motion for Summary Judgment Pursuant to Fed.R.Civ.P. 56, filed October 27, 2009 (Doc. 13). The Court held a hearing on February 5, 2010. The primary issues are: (i) whether the Court has sufficient evidence to conduct a de novo review of Defendant Nancy Cook's revocation of Plaintiff Borchardt Rifle Corp.'s federal firearms license; and (ii) whether Plaintiff Borchardt Rifle Corp. willfully violated 18 U.S.C. § 923(g) of the Gun Control Act of 1968, 18 U.S.C. §§ 921 to 931, which gave rise to grounds for Cook's revocation. Because the Court finds that the Administrative Record and the transcript of the Administrative Hearing provide it with sufficient evidence to make a determination as a matter of law, and because the Court finds that the evidence demonstrates that, with respect to at least one Count in the Petition for Judicial Review, filed December 23, 2009 (Doc. 1), Borchardt Rifle willfully violated 18 U.S.C. § 923, the Court will grant Cook's motion for summary judgment and affirm the revocation.

FACTUAL BACKGROUND

On October 2, 2009, Cook, in her capacity as the Director of Industry Operations for the United States Department of Justice, Bureau of Alcohol, Tobacco, Firearms

727 F.Supp.2d 1148
and Explosives ("ATF"), Phoenix Field Division, filed a certified copy of the Administrative Record with the Court. See Notice of Lodging of Administrative Record, filed October 2, 2009 (Doc. 12). The Administrative Record contains Exhibits, designated by GX and specific page numbers, and the transcript of the Administrative Hearing. In her motion for summary judgment, Cook submitted a statement of undisputed material facts, based upon the Administrative Record and the Administrative Hearing. Borchardt Rifle's response did not include a statement of disputed facts. In its Petition for Judicial Review, filed December 23, 2008 (Doc. 1), Borchardt Rifle did not challenge Cook's factual findings relating to Count I, Count IV, Count V, Counts VI-X, and Count XII. Borchardt Rifle challenged the factual findings as to Count II, Count III, and Count XI. To the extent that Borchardt Rifle disputes the facts as to those Counts, the Court will address the dispute. Otherwise, the Court adopts the facts as Cook has stated them, and as supported by the Administrative Record.

1. Background Information.

At the time of the violations that form the basis for this license revocation, Albert Story, acting individually or as a corporate officer, had been continuously licensed by the ATF as a dealer and/or manufacturer of firearms other than destructive devices for approximately fifteen years. See Administration Record GX-6 at 17, GX-7 at 20, GX-8 at 23-24, GX-10 at 29, GX-13 at 38-50. In 1992, Story, doing business as Story's Guns and Machine, obtained a license, identified by License Number 5-85-017-07-4L-00203, from the ATF as a dealer in firearms other than destructive devices at the premises of 9732 Highway 180 West, Silver City, New Mexico. That license expired in 2005. See License Revocation Hearing, In the Matter of Borchardt Rifle Corporation at 14:5-8 (taken September 16, 2008)("Admin. Hearing Tr.")(DeLuna); Administrative Record GX-6 at 17. In 2001, Story applied for a new license as a manufacturer. See Admin. Hearing Tr. at 14:9-10 (DeLuna). That license expired in 2004. See GX-7 at 20. In 2002, Borchardt Rifle, a New Mexico corporation, filed an application with ATF for a license as a manufacturer of firearms other than destructive devices at the premises of 9732 Highway 180 West, Silver City, New Mexico. See Admin. Hearing Tr. at 14:13-19 (DeLuna); Administrative Record GX-8, at 23, GX-9 at 26, GX-13 at 36. Story is the president and sole operator of Borchardt Rifle. See Admin. Hearing Tr. at 8:3-23 (DeLuna, Karmgard); Administrative Record GX-8 at 24, GX-10 at 29, GX-13 at 36.

2. June 2002 Application and Compliance Inspection.

On June 26, 2002, ATF Industry Operations Investigator Arturo Chapa conducted a compliance inspection of the business premises and records relating to the existing license in Story's name, along with an application inspection relating to the Borchardt Rifle application. See Admin. Hearing Tr. at 15:9-21 (DeLuna); Administrative Record GX-10 at 29-30. On that same date, Story signed an Acknowledgment of ATF Rules and Procedures, acknowledging that an ATF inspector explained to Story the regulatory requirements relating to federal firearms licensees, including the requirements relating to Forms 4473 1 and acquisition and disposition

727 F.Supp.2d 1149
books 2, and that the ATF Inspector answered any questions he had. See Administrative Record GX-11 at 31. Following the June 2002 compliance inspection, Chapa cited Story for errors in five of the fifteen Forms 4473 Story had on file. The errors included: (i) two of the Forms 4473 contained incorrect or duplicate transaction serial numbers 3; (ii) two Forms 4473 were missing Story's signature and dates; (iii) one Form 4473 lacked the firearm description information; and (iv) one Form 4473 was missing a customer's signature. See Administrative Record GX-10, ¶¶ 8, 10 at 30. Chapa informed Story that five forms with errors out of fifteen forms was a high rate of error. See Administrative Record GX-10, ¶ 8 at 30. Chapa noted in his inspection report that "Mr. Story appeared to want to do things right and was willing to correct his errors and welcomed the inspector to return for a follow-up inspection." Administrative Record GX-10, ¶ 12 at 30. A written Report of Violations listed the violations and necessary corrective actions. See Administrative Record GX-12 at 32. On July 24, 2002, ATF issued License Number 5-85-017-07-8H-00280 to Borchardt Rifle as a manufacturer of firearms other than destructive devices. See Administrative Record GX-8 at 23.

3. August 2007 Compliance Inspection.

On August 27, 2007, ATF Industry Operations Investigator Norma DeLuna conducted a second compliance inspection of Borchardt Rifle's premises. See Admin. Hearing Tr. at 9:17-18 (DeLuna); Administrative Record GX-13 at 36-50. DeLuna gave no advance notification of the inspection. See Administrative Record GX-13 at 36. The building premises for Borchardt Rifle is a detached machine shop located next to Story's home residence, located approximately fifteen miles from Silver City, New Mexico. See Admin. Hearing Tr. at 7:21-25 (DeLuna); Administrative Record GX-13 at 36. As a licensed manufacturer of firearms other than destructive devices, Borchardt Rifle may manufacture firearms, sell firearms, and engage in gunsmithing. See Admin. Hearing Tr. at 9:3-6 (DeLuna).

At the time of the inspection, the acquisition and disposition book listed five firearms. See Administrative Record GX-13 at 39. DeLuna physically counted three firearms in the inventory and recognized a discrepancy of two firearms. See Administrative Record GX-13 at 39; Admin. Hearing Tr. at 9:25-10:4 (Karmgard, DeLuna). Story's acquisition and disposition book

727 F.Supp.2d 1150
noted that one of the firearms had been missing for about two months, and that he was still searching for it. Story stated to DeLuna that the other firearm was transferred to a customer named Wayne Billings, and that he forgot to have Billings fill out a Form 4473, and that he is waiting for the customer to return to fill out the form. See Administrative Record GX-13 at 39.

For the inspection period of January 2004 to August 2007, DeLuna's compliance inspection revealed the following: (i) Borchardt Rifle manufactured twenty firearms-three in 2004, nine in 2005, five in 2006, and four in 2007; (ii) Borchardt Rifle sold or otherwise disposed of a total of fifty-nine firearms; and (iii) Borchardt Rifle had a total of twenty-two firearms in inventory for repairs. See Administrative Record GX-13 at 36. Borchardt Rifle maintained separate bound books for manufacturing, dealing, and gunsmithing. See Admin. Hearing at 9:7-8 (DeLuna).

During the inspection, DeLuna found fifty-two Forms 4473 on file on Borchardt Rifle's premises for the period of January 2004 to August 2007. See Admin. Hearing Tr. at 43:7-12 (DeLuna). For 2004, Borchardt Rifle had thirteen Forms 4473 on file and all thirteen had errors. For 2005, there were seven Forms 4473 and all seven had errors. For 2006, DeLuna reviewed twenty Forms 4473 and fourteen had errors. For 2007, Borchardt Rifle had twelve Forms 4473 on file and nine of them contained errors. See Admin. Hearing at 43:7-12 (DeLuna). In total, forty-three of the fifty-two Borchardt Rifle Forms 4473 on file for the period of January 2004 to August 2007 contained errors and/or omissions.

Borchardt Rifle maintained its Forms 4473 by transaction serial number, but DeLuna found that the Forms 4473 were not properly maintained because they had the following errors: (i) Borchardt Rifle assigned duplicate transaction serial numbers on the Forms 4473 in six instances, see Admin. Hearing Tr. at 35:23-39:25 (DeLuna, Karmgard); Administrative Record GX-17 at 60; GX-17A at 72; GX-26 at 100 and GX-27 at 103; GX-40 at 153 and GX-41 at 133; GX-49 at 157 and GX-50 at 161; GX-58 at 187 and GX-59 at 190; (ii) Borchardt Rifle assigned triplicate transaction serial numbers on Forms 4473 in two instances, see Admin. Hearing Tr. at 40:5-41:6; Administrative Record GX-17 at 60; GX-17A at 72; GX-38 at 126, GX-39 at 128,...

To continue reading

Request your trial
8 practice notes
  • Sec. & Exch. Comm'n v. Goldstone, No. CIV 12-0257 JB/GBW
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • 22. August 2015
    ...do not constitute evidence at the summary judgment stage. See Starrett MSJ Reply at 11 (citing Borchardt Rifle Corp. v. Cook, 727 F. Supp. 2d 1146, 1157 (D.N.M. 2010)(Browning, J.)). She contends that the OTTI analysis' complexity is fatal to the SEC's recklessness allegation. See Starrett ......
  • Nunes v. Rushton, Case No. 2:14–cv–00627–JNP–DBP
    • United States
    • U.S. District Court — District of Utah
    • 9. März 2018
    ...state of mind, whether an official had knowledge may be inferred from circumstantial evidence."); Borchardt Rifle Corp. v. Cook , 727 F.Supp.2d 1146, 1163 n.9 (D. N.M. 2010) ("Rarely is there direct evidence of scienter, and generally scienter is proved by circumstantial evidence."). While ......
  • United States v. Rodella, No. CR 14-2783 JB
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • 21. September 2014
    ...difficult to prove. It is almost always proved by circumstantial evidence rather than direct evidence. Borchardt Rifle Corp. v. Cook, 727 F. Supp. 2d 1146, 1163 n.9 (D.N.M. 2010)(Browning, J.)("Rarely is there direct evidence of scienter, and generally scienter is proved by circumstantial e......
  • The Gun Shop LLC v. U.S. Dep't of Justice, Case No. 4:10CV01459MLM
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • 3. Juni 2011
    ...under the GCA. On Target Sporting Goods, 472 F.3d at 575; Sturdy, 129 F.3d at 122; see also Borchardt Rifle Corp. v. Cook, 727 F. Supp. 2d 1146, 1163 (D.N.M. 2010) ("Courts have consistently found that willfulness under the Gun Control Act may be inferred based upon circumstantial evidence ......
  • Request a trial to view additional results
8 cases
  • Sec. & Exch. Comm'n v. Goldstone, No. CIV 12-0257 JB/GBW
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • 22. August 2015
    ...do not constitute evidence at the summary judgment stage. See Starrett MSJ Reply at 11 (citing Borchardt Rifle Corp. v. Cook, 727 F. Supp. 2d 1146, 1157 (D.N.M. 2010)(Browning, J.)). She contends that the OTTI analysis' complexity is fatal to the SEC's recklessness allegation. See Starrett ......
  • Nunes v. Rushton, Case No. 2:14–cv–00627–JNP–DBP
    • United States
    • U.S. District Court — District of Utah
    • 9. März 2018
    ...state of mind, whether an official had knowledge may be inferred from circumstantial evidence."); Borchardt Rifle Corp. v. Cook , 727 F.Supp.2d 1146, 1163 n.9 (D. N.M. 2010) ("Rarely is there direct evidence of scienter, and generally scienter is proved by circumstantial evidence."). While ......
  • United States v. Rodella, No. CR 14-2783 JB
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • 21. September 2014
    ...difficult to prove. It is almost always proved by circumstantial evidence rather than direct evidence. Borchardt Rifle Corp. v. Cook, 727 F. Supp. 2d 1146, 1163 n.9 (D.N.M. 2010)(Browning, J.)("Rarely is there direct evidence of scienter, and generally scienter is proved by circumstantial e......
  • The Gun Shop LLC v. U.S. Dep't of Justice, Case No. 4:10CV01459MLM
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • 3. Juni 2011
    ...under the GCA. On Target Sporting Goods, 472 F.3d at 575; Sturdy, 129 F.3d at 122; see also Borchardt Rifle Corp. v. Cook, 727 F. Supp. 2d 1146, 1163 (D.N.M. 2010) ("Courts have consistently found that willfulness under the Gun Control Act may be inferred based upon circumstantial evidence ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT