§930 Forfeitures, Delay in Filing/Waiver
Supreme Court finds pre-seizure notice and hearing required in civil forfeiture of real property. (930) Approximately 4 1/2 years after drugs were found in respondent’s home, the United States filed an in rem action to forfeit the house and surrounding real property. Without prior notice or an adversary hearing, the government seized the property and directed payment of future rents to the United States Marshal. The Ninth Circuit held that the seizure of the property without prior notice and a hearing violated the Due Process Clause and that failure to comply with internal reporting rules could require dismissal of the action as untimely. In a 5-4 decision authored by Justice Kennedy, the Supreme Court agreed in part with the Ninth Circuit’s finding that the Due Process Clause of the Fifth Amendment prohibits the government in a civil forfeiture case from seizing real property without first affording the owner notice and an opportunity to be heard. However, a unanimous Court overruled the Ninth Circuit on the issue of timeliness, finding that filing the action within the statute of limitations suffices to make it timely and that the cause should not be dismissed for failure to comply with certain other statutory directives for expeditious prosecution in forfeiture cases. U.S. v. James Daniel Good Property, 510 U.S. 43, 114 S.Ct 492 (1993).
Supreme Court holds lack of knowledge that home was purchased with drug proceeds is defense to forfeiture. (930) In a plurality opinion announced by Justice Stevens, the Supreme Court concluded that an owner’s lack of knowledge of the fact that her home had been purchased with the proceeds of illegal drug transactions constituted a defense to a forfeiture proceeding under the statute. In 1982 respondent received $240,000 from her boyfriend to purchase a home. In 1989 the government filed an in rem action against the parcel of land on which the home was located. There was probable cause to believe that the funds used to buy the house were proceeds of illegal drug trafficking, but respondent swore she had no knowledge of its origins. The plurality concluded that the “innocent owner” protection is not limited to bona fide purchasers. In addition, the government is not the owner of a property before forfeiture has been decreed. The two concurring Justices concluded that the result was correct because the “relation back” principle recited in 21 U.S.C. section 881(h) is the familiar, traditional one and the term “owner” in section 881(a)(6) bears its ordinary meaning. U.S. v. Parcel of Land Bldgs., Appurtenances and Improvements, Known as 92 Buena Vista Ave., Rumson, N.J., 507 U.S. 111, 113 S.Ct. 1126 (1993).
1st Circuit finds no abuse of discretion in striking untimely filed claim. (930) The 1st Circuit found no abuse of discretion in the court’s striking of claimant’s claim, which was untimely filed 37 days after she received notice of the government’s forfeiture proceedings. Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims requires a claim to be filed within 10 days. The court rejected claimant’s argument that the district court incorrectly believed that it lacked discretion to extend the time period. Although the judge’s order, if read in a vacuum, could be interpreted this way, the judge had before him claimant’s pleading pointing out that discretion was available. Although the government’s opposition initially implied a lack of discretion, it went on to paraphrase case law recognizing such discretion. Thus, the court assumed the judge was aware that under the Rule he had the authority to give claimant more than 10 days in which to file the claim. U.S. v. One Urban Lot, 978 F.2d 776 (1st Cir. 1992).
1st Circuit upholds forfeiture action brought one year after last drug arrest at defendant property. (930) The government instituted a forfeiture action against claimant’s real property based upon 29 drug-related arrests which took place at the property over a four year period. The 1st Circuit rejected claimant’s argument that evidence supporting the forfeiture was “stale” since all of the alleged drug activity took place more than a year prior to the forfeiture action. Claimant did not indicate how the timing of the action prejudiced him or adversely affected the reliability of the evidence. Absent some showing of prejudice, claimant was not entitled to exclude competent evidence in an action commenced well within the five year limitation period. U.S. v. Parcel of Land and Residence at 18 Oakwood Street, 958 F.2d 1 (1st Cir. 1992).
2nd Circuit holds 21-month delay between seizure and forfeiture was not unreasonable. (930) Claimant argued that the 21-month delay between the seizure of his currency and the filing of forfeiture proceedings was unconscionable. The 2nd Circuit held that under the circumstances here, the delay was not unreasonable. Three days after the seizure, the Customs Service informed claimant by letter that he had the right to petition for return of the currency. A month later, claimant’s attorney wrote that claimant wanted to recover the funds, but the attorney did not send the information required for return of the funds. He also did not seek a judicial hearing to require either the return of the funds or the institution of a forfeiture proceeding. The district court measured the delay by the four-part test of Barker v. Wingo, 407 U.S. 514 (1972), and concluded the delay was not unreasonable. U.S. v. U.S. Currency ($145,139.00), 18 F.3d 73 (2nd Cir. 1994).
5th Circuit affirms that claimant had notice of judicial default in forfeiture case. (930) In a forfeiture action brought against a truck, the 5th Circuit affirmed the district court’s denial of claimant’s motion to set aside a default judgment. The vehicle was seized in August 1990 when claimant drove it across the border from Mexico. In November, 1990, claimant aided by his attorney, filed a bond and claim with Customs, and both were notified that judicial forfeiture proceedings would be filed. In February, 1990 these proceedings were instituted, and notice was published. An Assistant U.S. Attorney called claimant’s attorney at least twice prior to April 4, and left messages concerning the vehicle. On April 4, the Assistant U.S. Attorney wrote a letter advising that on April 8 he intended to file a motion for default. Claimant admits he received this letter on April 9. On April 10, the Assistant U.S. Attorney mailed to the attorney his motion for entry for entry of default. On April 10, the attorney called but the Assistant U.S. Attorney was unavailable. The determination that defendant had adequate and timely notice of the forfeiture proceedings and failed to demonstrate good cause for not filing a claim sooner, was supported by the record. U.S. v. One 1988 Dodge Pickup, 959 F.2d 37 (5th Cir. 1992).
5th Circuit affirms striking of untimely claim. (930) Claimant received notice March 12 of the seizure of certain cash in which he had an interest. The marshal’s return of service was filed March 15, indicating that process had been executed against the res March 9. Claimant filed an answer on April 9, and a claim for the currency on April 11. The 5th Circuit affirmed the district court’s decision to strike claimant’s claim and answer as untimely. A claimant must file a verified claim within 10 days after process has been executed. Although the warrant served on claimant did not give the precise date of execution of process, it put him on notice that execution on the res had recently occurred or was imminent. Claimant had constructive notice on March 15 (the date the marshal’s return of service was filed), that process had been executed March 9, and that he had until March 19 to file a claim. Even if the language of the warrant served on claimant suggested he had 10 days after publication to file his claim, this would have given him only until April 2 to file his claim. There was no abuse of discretion in striking claimant’s answer. An answer is to be filed within 20 days after filing the claim, and defendant filed his answer two days before filing his claim. U.S. v. $38,570 U.S. Currency, 950 F.2d 1108 (5th Cir. 1992).
8th Circuit upholds default judgment where claimants’ papers did not comply with rules. (930) At claimants’ request, the time to file a verified claim and answer to the forfeiture complaint was extended until November 18, 1991. Claimants never filed the claim or answer. Instead, on July 30, 1992, one claimant filed a pro se “Claim for Said Property” on behalf of himself and other individuals. After this filing, claimants submitted a number of papers, none of which complied with Rule C(6). The 8th Circuit upheld a default judgment entered against the property on March 3, 1993. The purported claims were not filed with court permission for an out-of-time filing. The submissions also only made a general attempt to state the nature of the interest being asserted by claimants. It is not an abuse of discretion for the district court to require strict compliance with Rule C(6). U.S. v. One Hundred Four Thousand Six Hundred Seventy-Four Dollars ($104,674.00), 17 F.3d 267 (8th Cir. 1994.
8th Circuit holds notice must advise claimant of deadline for filing a claim and bond. (930) On November 23, the DEA seized $66,700 from claimant. His attorney immediately notified the agency of claimant’s intent to contest any forfeiture. On January 23, the DEA sent to claimant a notice of intent to forfeit, advising him to file a bond and claim within 20 days after notice was published in the Wednesday edition of USA Today. The notice was not published until February 15, and claimant missed it. Despite several conversations during this time, no one at DEA mentioned that the 20-day period had begun. On March 17, claimant submitted a claim and bond, and the DEA rejected the claim as untimely. The 8th Circuit held that the January 23 notice of the DEA’s intent to forfeit did not satisfy 19 U.S.C. § 1607(a)’s requirement of “information on the applicable procedures” for contesting the forfeiture. It omitted the most critical piece of information — the deadline for filing a claim and bond. The court suggested that DEA acted in bad faith. Glasgow v. U.S. Drug Enforcement Administration, 12 F.3d 795 (8th Cir. 1993).
8th Circuit affirms that forfeiture action was not barred by statute of limitations. (930) The 8th Circuit affirmed that a civil forfeiture action against real property used in an illegal gambling operation was not barred by the five-year statute of limitations in 19 U.S.C. section 1621. The government has five years from the date it discovers an illegal gambling operation to bring a section 1955 forfeiture action. The newspaper articles and local police department reports cited by claimant did not show that the FBI was aware of the gambling operation in 1984. The newspaper articles concerned a 1980 robbery at the property. Although the articles noted that some gambling occurred at the property, and even if the information from the local paper could be imputed to federal investigators, there was nothing in the stories that would have alerted the FBI that a section 1955 violation took place at the property. The local police reports generated during the 1984 investigation of a murder did contain information about the gambling operation, but did not prove FBI knowledge of their contents. U.S. v. Premises Known as 318 South Third Street, 988 F.2d 822 (8th Cir. 1993).
8th Circuit affirms granting government’s untimely motion to strike claimant’s pleadings. (930) Twenty-seven days after being served with forfeiture papers, claimant filed a verified claim and answer and motion for an extension of time to file the claim and answer. These pleadings were untimely filed. Thirty-six days later, the government filed a motion to strike claimant’s claim as untimely. This motion was also untimely, since Fed. R. Civ. P. 12(f) requires a motion to strike to be filed within 20 days after service of the pleadings upon the party. The 8th Circuit affirmed the court’s decision to grant the government’s motion to strike, and to deny claimant’s motion for an extension of time. Rule 12(f) authorizes the court to act “upon the court’s initiative at any time,” which has been interpreted to allow the court to consider untimely motions to strike if the motion has merit. With respect to claimant’s request for an extension, he did not file his pleadings within the applicable time or offer any reason for his delay other than his other legal problems. U.S. v. Lot 65 Pine Meadow, 976 F.2d 1155 (8th Cir. 1992).
9th Circuit says 11-month delay between seizure and filing forfeiture proceeding did not violate due process. (930) The government seized $874,938 in U.S. currency from Restrepo’s residence but did not file forfeiture proceedings against the currency for eleven months. To determine whether the delay violated due process, the 9th Circuit applied the four factor test of U.S. v. $8,850 U.S. Currency, 461 U.S. 555, 564 (1983): (1) the length of the delay; (2) the reason for the delay; (3) the claimant’s assertion of his rights; and (4) prejudice to the claimant by the delay. Under the facts of the case the court found the eleven month delay was reasonable and the district court did not err in denying Restrepo’s motion for summary judgment. U.S. v. $874,938.00 U.S. Currency, 999 F.2d 1323 (9th Cir. 1993).
9th Circuit awards attorneys’ fees for delay in investigating whether currency had innocent source. (930) There was probable cause for the government to seize $12,248 in U.S. currency found in the claimant’s house during a search that uncovered drugs and guns. Nevertheless, the claimant explained that the money was from a Home Maintenance and Improvement Loan that he had obtained from the City of Oakland to renovate his home. The government disbelieved the claimant’s story, but conducted no other investigation, and waited 15 months before filing forfeiture proceedings. Four years later, after a trial, the court found that the currency came from the loan and that the government had unreasonably delayed instituting and prosecuting the forfeiture, thus violating the claimant’s due process rights. The court awarded attorneys fees for 160 hours at the rate of $102 per hour. On appeal, the 9th Circuit affirmed, agreeing that there was no substantial justification for the delay in the proceedings and that the claimant had been prejudiced. Judge Farris dissented. U.S. v. $12,248 U.S. Currency, 957 F.2d 1513 (9th Cir. 1991).
10th Circuit upholds default judgment where claimant did not file claim for one year. (930) The government commenced a forfeiture action in July 1991. Claimant did not attempt to file a claim or otherwise assert any claim of ownership to the property until almost a year later, after the government had moved for default. The 10th Circuit held that the district court did not abuse its discretion in refusing to grant claimant additional time in which to file a claim and answer. Claimant knew of the action, but purposely waited until after criminal proceedings were concluded before filing a claim so as not to become entangled in the criminal action. In light of claimant’s failure to file a timely claim and answer, it was not necessary to address claimant’s argument that the government’s forfeiture complaint failed to be stated with sufficient particularity as required by Supplemental Rule E(2)(a). U.S. v. 51 Pieces of Real Property, 17 F.3d 1306 (10th Cir. 1994).