United States v. Urban Lot St G 103 , 819 F.3d 1 ( 2016 )

United States Court of Appeals
For the First Circuit
No. 14-2323
UNITED STATES OF AMERICA,
Plaintiff, Appellee,
v.
URBAN LOT ST G 103, GUAYAMA AND OTHER ASSETS,
Defendants in Rem,
MYRNA RIVERA-ORTIZ and ENRIQUE RODRÍGUEZ-NARVÁEZ,
Claimants, Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]
Before
Lynch, Selya and Lipez,
Circuit Judges.
Enrique J. Mendoza Méndez and Mendoza Law Offices on brief
for appellants.
Rosa Emilia Rodríguez-Vélez, United States Attorney, Nelson
Pérez-Sosa, Assistant United States Attorney, Chief, Appellate
Division, and Tiffany V. Monrose, Assistant United States
Attorney, on brief for appellee.
March 14, 2016
SELYA, Circuit Judge. The underlying case is one for
civil forfeiture arising in the aftermath of a 1993 criminal
prosecution mounted in the United States District Court for the
Southern District of New York. There, a federal grand jury
indicted claimant-appellant Enrique Rodríguez-Narváez on drug-
trafficking and money laundering charges.1
In due course, the appellant entered a guilty plea to a
single count charging money laundering violations. The other
counts were dismissed, and the district court sentenced the
appellant. As part of his plea agreement in the criminal case,
the appellant agreed to litigate all forfeiture issues related to
the criminal charges in the District of Puerto Rico (where a
forfeiture action already had been instituted).
The government had filed its forfeiture action in the
United States District Court for the District of Puerto Rico on
March 26, 1993. In that action, the government asserted that
several parcels of real estate and the appellant's interests in
certain businesses were forfeitable, but it did not mention any
interest of the appellant in a professional basketball team called
Los Brujos of Guayama (the Franchise). After some skirmishing
(not relevant here), the parties reached a settlement. The
1 Rodríguez-Narváez's spouse, Myrna Rivera-Ortiz, appears as
an additional claimant and appellant. For ease in exposition, we
treat Rodríguez-Narváez as if he were the lone claimant and
appellant.
- 2 -
settlement agreement did not focus on, or even mention, the
Franchise. The Puerto Rico district court approved the settlement
on September 30, 1996, and the government agreed "to release and
return to [the claimants] all their personal properties that were
seized during the present case."
Years of procedural wrangling followed. Eventually (in
June of 2005), the appellant filed the last in a series of motions
for execution of judgment, seeking compensation for the
government's alleged seizure of the Franchise ancillary to the
criminal case. The government objected, arguing (among other
things) that it had never seized the Franchise. The district court
conducted an evidentiary hearing (taking testimony on two
different days) and denied the appellant's motion in an unpublished
order. This timely appeal ensued.
In this venue, the appellant claims that he owned an
interest in the Franchise; that the government seized that
interest; and that he is entitled to compensation because the
government failed to return the confiscated property to him. The
government does not challenge the first of these claims, but it
denies that it ever seized the appellant's interest in the
Franchise and, accordingly, it also denies that any compensation
is due.
The docket in the criminal case is illuminating. It
shows that, while the criminal case was pending, the government
- 3 -
sought to preserve, as a potentially forfeitable asset, the
appellant's interest in the Franchise. At the government's
request, the New York district court, on June 28, 1993, issued a
post-indictment restraining order prohibiting the appellant from
having any contact with, or influence over, the Franchise.
However, the restraining order specifically permitted the
Franchise to remain in operation.
The government subsequently determined that it was
inadvisable to attempt to preserve the appellant's interest in the
Franchise for potential forfeiture. Thus, at the government's
instance, the court released both the Franchise and the appellant's
interest therein from the restraining order on August 27, 1997.
We find nothing in the court records (or elsewhere, for
that matter) to suggest that the government seized the Franchise
when it obtained the restraining order from the New York district
court. Though that order effectively prevented the appellant from
participating in the affairs of the Franchise, it did not divest
him of his proprietary interest. Rather, the order — in pertinent
part — merely sought to ensure the availability of property (the
appellant's interest in the Franchise) pending disposition of the
criminal charges. See United States v. Monsanto, 491 U.S. 600,
613 (1989). A seizure is "some meaningful interference with an
individual's possessory interests in [the designated] property,"
United States v. Jacobsen, 466 U.S. 109, 113 (1984), and no seizure
- 4 -
occurred here. To the contrary, the restraining order was
carefully drawn to separate the appellant from, but not deprive
him of, the Franchise.
By like token, the subsequent forfeiture action does not
furnish a basis for the appellant's claim that the Franchise was
seized. The complaint in that action did not refer, directly or
indirectly, to the Franchise; and the settlement agreement in the
forfeiture action did not include the Franchise.
If more were needed — and we do not think that it is —
the district court wisely conducted an evidentiary hearing. The
court found that the Franchise belonged to the league, not to any
individual, and that the appellant was merely the holder of the
Franchise. We review that finding for clear error. See United
States v. Guzman, 282 F.3d 56, 58 (1st Cir. 2002). In doing so,
we remain mindful that findings of fact are not clearly erroneous
unless, after reviewing them, we are left with the abiding
conviction that a mistake has been made. See United States v.
U.S. Gypsum Co., 333 U.S. 364, 395 (1948); Fed. Refin. Co., Inc.
v. Klock, 352 F.3d 16, 27 (1st Cir. 2003). Measured against this
benchmark, the district court's finding is not clearly erroneous.
In an effort to blunt the force of this logic, the
appellant suggests that he is entitled to lost Franchise profits
- 5 -
for the period when the restraining order was in effect.2 This
suggestion is groundless.
The district court's findings of fact defenestrate this
claim. The court supportably found that, throughout the pendency
of the restraining order, the Franchise was in substantial debt.
There were, then, no profits to be lost.
The appellant tries to undermine these findings by
noting that paragraph 4(c) of the restraining order authorized the
United States Marshals Service (USMS) to "[o]pen a holding account
into which all profits of the operation of the FRANCHISE shall be
deposited [and] held in escrow pending the disposition of the
criminal and forfeiture proceedings." This initiative falls flat:
the district court supportably found that, regardless of the
authorization, "[n]o profits were ever deposited in any account
because the Government recognized that the basketball franchise
was in substantial debt." In making this finding, the court
credited the testimony of a government official that the USMS never
took any substantial action with respect to the Franchise.
Accepting this testimony, the court made a credibility
determination, and we will not normally disturb the factfinder's
2
The government argues that the claim for lost profits is
stillborn because it should have been brought in the forum where
the restraining order was issued (New York) rather than in Puerto
Rico. Because the claim fails on the merits, we bypass this
procedural riposte. See, e.g., Royal Siam Corp. v. Chertoff, 484
F.3d 139, 144 (1st Cir. 2007).
- 6 -
credibility choices. See United States v. Laine, 270 F.3d 71, 75
(1st Cir. 2001). We have no reason to do so here.
We need go no further. To paraphrase the able district
judge, "a party cannot be ordered to return property that the party
never possessed."
Affirmed.
- 7 -