Juda v. Nerney ( 2000 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
APR 17 2000
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
OLAF PETER JUDA,
Plaintiff-Appellant,
v. No. 99-2070
(D.C. No. CIV-96-584-JP)
DENNIS MICHAEL NERNEY, (D.N.M.)
Assistant U.S. Attorney, Northern
District of California; STEPHEN R.
KOTZ, Assistant U.S. Attorney,
Albuquerque, New Mexico; JOHN J.
KELLY, U.S. Attorney, Albuquerque,
New Mexico; MICHAEL
YAMAGUCHI, U.S. Attorney, San
Francisco, California; ROBERT L.
HOLLER, District Director, U.S.
Customs Service, El Paso, Texas;
LEONARD S. WALTON, Acting
Assistant Commissioner, U.S. Customs
Service, Washington, D.C.; BONNIE
L. GAY, FOIA Unit, Attorney-in-
Charge, Washington, D.C.; JOHN
AND JANE DOES 1-25; and UNITED
STATES OF AMERICA,
Defendants-Appellees.
ORDER AND JUDGMENT *
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Before BALDOCK , BRISCOE , and LUCERO , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination
of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Plaintiff Olaf Peter Juda, proceeding pro se, appeals from the district
court’s order denying his requests for recovery of forfeited property and damages.
We affirm in part, reverse in part, and remand in part for further proceedings
consistent with this order and judgment.
BACKGROUND
In July 1991, Juda was arrested off the coast of California for attempting to
ship hashish from Asia to Canada. Later, he pled guilty to two counts of drug
smuggling and one count of arson on the high seas. The conviction was affirmed
on appeal. See United States v. Juda , 46 F.3d 961, 969 (9th Cir. 1995). While
Juda was in federal custody, the government seized his real and personal property
located in New Mexico and conducted administrative forfeiture proceedings. 1
1
Administrative forfeiture of property valued at $500,000 or less, furnished
(continued...)
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Juda subsequently filed lawsuits seeking the return of the forfeited property and
damages for alleged violations of his due process rights. The district court
dismissed all of his claims and Juda appealed.
This court affirmed in part, reversed in part, and remanded to the district
court for consideration of specified issues. See Juda v. Nerney , Nos. 97-2192,
97-2326, 1998 WL 317474 (10th Cir. June 16, 1998) (unpublished) ( Juda I ). The
district court was to determine on remand whether the twenty-month delay
between seizure of Juda’s real property and commencement of forfeiture
proceedings against a $150,000 check (representing the proceeds from the sale of
the property) amounted to a due process violation. 2
See id. at **6; see also
1
(...continued)
or obtained in exchange for a controlled substance, is authorized by statute. The
government is required to send written notice of forfeiture proceedings to each
party who may have an interest in the seized property and to publish notice of its
intent to seize the property in a newspaper of general circulation once a week for
three consecutive weeks. A potential claimant then has twenty days in which to
file a claim and to post a bond. See 19 U.S.C. §§ 1608, 1607(a); 21 U.S.C.
§ 881(a).
2
We also determined that the seizure of Juda’s real property without
preseizure process violated Juda’s due process rights, entitling him to an equitable
remedy. See Juda I , 1998 WL 317474, at **5 (relying on United States v. James
Daniel Good Real Property , 510 U.S. 43, 46, 62 (1993), which held that, absent
exigent circumstances, the Due Process Clause requires notice and a meaningful
opportunity to be heard before government seizure of real property). Juda did not
pursue this avenue for relief on remand and it is not at issue in this appeal.
In any event, the remedy for a Good violation is to release to the owner of
the property the profits or rent attributable to the period of the illegal seizure.
(continued...)
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United States v. Eight Thousand Eight Hundred & Fifty Dollars ($8,850) in U.S.
Currency , 461 U.S. 555, 562-68 (1983) (discussing whether dilatory conduct on
the part of the government in initiating civil forfeiture proceedings may violate a
claimant’s due process rights).
Concerning the forfeiture of Juda’s personal property, we concluded that
the government’s failure to send notice to Juda’s place of incarceration rendered
its notice procedure inadequate. See United States v. Clark , 84 F.3d 378, 381
(10th Cir. 1996) (holding that, if the government is aware that an interested party
is incarcerated, it is required to attempt to serve him with notice in prison). 3
Notwithstanding the government’s lack of reasonable efforts to provide notice,
however, the forfeitures were valid if Juda had actual notice of the pending
proceedings. See United States v. Rodgers , 108 F.3d 1247, 1254-55 (10th Cir.
1997). We therefore remanded for further proceedings to determine whether Juda
had received notice through another channel of communication. See Juda I , 1998
2
(...continued)
See Juda I at **6; see also United States v. Marsh , 105 F.3d 927, 931 (4th Cir.
1997). In the instant case, a monetary award attributable to the government’s
precipitate seizure would have been minimal.
3
The forfeited personal property included a Jeep Cherokee, $40,000
recovered from a safety deposit box in Santa Fe, $50,000 recovered from a safety
deposit box in Taos, $19,830 recovered from an Albuquerque bank, $8,753 from
another Albuquerque bank, $19,882 from a Taos bank, and miscellaneous items
valued at $1,134 taken from a storage locker. See Juda I , 1998 WL 317474, at
**2; R., vol. 2, doc. 32 at 8.
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WL 317474, at **6-7. In the event notice was lacking, the district court was to
proceed to the merits of the forfeiture. See id. at **7 (citing United States v.
Deninno , 103 F.3d 82, 86 (10th Cir. 1996)).
On remand, the district court referred the matter to a magistrate judge.
After conducting an evidentiary hearing, the magistrate judge found that the
twenty-month delay in initiating forfeiture of the proceeds from the sale of Juda’s
real property was attributable to legitimate concerns that civil discovery could
jeopardize the criminal prosecution and also affect national security interests in
nondisclosure of techniques for tracking suspects across international boundaries.
Moreover, Juda failed to demonstrate that the postponement prejudiced his ability
to contest the forfeiture proceedings. The magistrate judge concluded that the
delay did not rise to the level of a due process violation.
With regard to the personal property forfeitures, the government did not
attempt to show that Juda had actual knowledge or notice of the proceedings.
Instead, it put on its proof that the seized personal property constituted the
proceeds of criminal activity. Based on the evidence before him, the magistrate
judge found that the seized personal property constituted the proceeds of criminal
activity and was subject to forfeiture.
Consequently, the magistrate judge recommended the dismissal of all
claims. Upon Juda’s objections, the district court considered the issues de novo
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and adopted the magistrate judge’s order recommending dismissal with prejudice.
This appeal followed.
DISCUSSION
Generally, we review a district court’s denial of a motion for return of
forfeited property for an abuse of discretion. See Deninno , 103 F.3d at 84.
A de novo standard applies, however, to the ultimate conclusion of whether a
claimant’s due process rights have been violated. See United States v. One Parcel
of Real Property Described as Lot 41, Berryhill Farm Estates , 128 F.3d 1386,
1391 (10th Cir. 1997). We construe the pleadings and papers of a pro se
appellant liberally. See Haines v. Kerner , 404 U.S. 519, 520-21 (1972) (per
curiam).
Real property issues
The Supreme Court has explained that, in determining whether delayed
forfeiture proceedings violate a claimant’s due process rights, courts should
balance the interests of the claimant and the government. See Eight Thousand
Eight Hundred & Fifty Dollars , 461 U.S. at 555-56. The following four factors
are relevant: (1) the length of delay; (2) the reason for the delay; (3) the
claimant’s assertion of the right to a judicial determination; and (4) prejudice to
the claimant. See id. at 556, 64. In the instant case, the district court properly
considered the factors and concluded that Juda was afforded due process in
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connection with the real-property forfeiture. Although a twenty-month delay is
significant, the three other factors support the district court’s determination that
no constitutional violation occurred.
Personal property issues
In instructing the district court to “proceed to evaluate the merits of Juda’s
arguments as to why the property is not subject to forfeiture” if notice of the
personal property forfeitures was constitutionally inadequate, we relied on
Deninno , 103 F.3d at 86. Juda I , 1998 WL 317474, at **7. In Deninno , a panel
of this court stated that “[u]psetting the forfeitures because of the alleged
procedural faults, when [claimant] appears to have no basis for the return of the
property once the faults are remedied in new proceedings, would serve no purpose
other than to waste limited judicial resources.” 103 F.3d at 86.
After the filing of the order and judgment in Juda I , however, another panel
issued Clymore v. United States , 164 F.3d 569 (10th Cir. 1999), which
distinguished Deninno on the ground that “there was no statute of limitations
problem apparent in Deninno ,” id. at 573. Clymore held that, in the Tenth
Circuit, the consequence of constitutionally ineffective notice is that an
administrative forfeiture is “void and must be vacated,” because the statute of
limitations has expired to prevent the refiling of a new forfeiture proceeding. 164
F.3d at 573. A void action is “‘nugatory and ineffectual so that nothing can cure
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it.’” Easley v. Pettibone Mich. Corp. , 990 F.2d 905, 909 (6th Cir. 1993) (quoting
Black’s Law Dictionary 1573 (6th ed. 1990)). To obtain entitlement to the
contested property, the government must initiate and complete a new forfeiture
proceeding.
“Where obvious statute of limitations problems exist, . . . the offending
forfeiture should be vacated and the statute of limitations allowed to operate,
subject, of course, to any available government arguments against it.” Clymore ,
164 F.3d at 574. The district court may adopt the Dennino approach and evaluate
the merits of a procedurally-defective forfeiture only if there is no apparent
limitations problem. See id. at 572 & n.4,5.
The limitations provision for forfeiture proceedings requires the
commencement of proceedings “within five years after the time the alleged
offense was discovered.” 19 U.S.C. § 1621. In this instance, Juda’s crimes were
discovered in 1991. “[A]bsent the application of laches or equitable tolling
principles,” the limitations period has expired to prevent the filing of a new
forfeiture proceeding. United States v. Marolf , 173 F.3d 1213, 1217-18 (9th Cir.
1999).
Clymore dictates the resolution of this issue. Although we cannot fault the
district court’s conclusions, we must apply the law in effect at the time we issue
our decision. See First Nat’l Bank of Turley v. Fidelity & Deposit Ins. Co. , 196
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F.3d 1186, 1188 (10th Cir. 1999). Moreover, “this panel cannot overturn the
decision of another panel of this court. We are bound by the precedent of prior
panels absent en banc reconsideration or a superseding contrary decision by the
Supreme Court.” United States v. Meyers , 200 F.3d 715, 720 (10th Cir. 2000)
(citations omitted).
Clymore not only addressed the statute of limitations issue raised in this
case, it explicitly distinguished Deninno . See id.164 F.3d at 573. Additionally,
the Clymore panel stated that any “broader reading of Deninno to the effect that
constitutionally defective notice of a forfeiture merely renders the subsequent
forfeiture voidable rather than void would be contrary to our [prior case law]. Id.
at 573, n.5. 4
4
We note that the Ninth Circuit has adopted the Clymore rule. See United
States v. Marolf , 173 F.3d 1213, 1217 (9th Cir. 1999). However, the Sixth
Circuit has recently disagreed with it:
[W]e think that inadequate notices should be treated as
voidable, not void, and that the proper remedy is simply to restore the
right which [timely notice] would have conferred on the claimant:
the right to judicially contest the forfeiture and to put the
Government to its proofs under a probable cause standard. Thus, the
Government is not required to institute “new” forfeiture proceedings,
and the applicable statute of limitations, § 1621, therefore has no
bearing.
United States v. Dusenbery , Nos. 98-4014, 98-4036, 2000 WL 19121, *5 (6th Cir.
Jan. 13, 2000). The Second Circuit has taken a position similar to the Sixth
Circuit’s. See Adames v. United States , 171 F.3d 728, 732-33 (2d Cir. 1999)
(continued...)
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Under the dictates of Clymore , we vacate the forfeitures of Juda’s personal
property and again remand the matter to the district court. On remand, the district
court is to determine whether the government has a valid argument against the
operation of the statute of limitations. If the government has no such argument,
the forfeited personal property, or its monetary equivalent, should be returned to
Juda.
CONCLUSION
The district court’s ruling concerning the forfeiture of the proceeds from
Juda’s real property is AFFIRMED. The court’s ruling on the forfeiture of Juda’s
personal property is REVERSED and REMANDED for further proceedings
consistent with this order and judgment. Juda’s motion for a limited remand is
DENIED as moot.
4
(...continued)
(upholding a defective forfeiture where the statute of limitations had expired, but
defendant had admitted in plea agreement that all of his assets were subject to
forfeiture); Boero v. DEA , 111 F.3d 301, 305-07 (2d Cir. 1997) (vacating
forfeiture due to inadequate notice and requiring district court to entertain judicial
forfeiture proceeding notwithstanding apparent expiration of statute of
limitations). The First Circuit, in an unpublished case, overlooked inadequate
notice where the claimant had no merits defense, but declined to express an
opinion on whether it would reach the same result if the statute of limitations had
expired. United States v. Gagliardi , No. 98-1078, 1999 WL 1338351, *4 & n.7
(1st Cir. June 24, 1999) (unpublished).
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Entered for the Court
Bobby R. Baldock
Circuit Judge
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