United States v. Pantelidis ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
7-11-2003
USA v. Pantelidis
Precedential or Non-Precedential: Precedential
Docket No. 02-3436
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PRECEDENTIAL
Filed July 11, 2003
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 02-3436 and 02-4318
UNITED STATES OF AMERICA
v.
JERRY PANTELIDIS,
Appellant No. 02-3426
Appeal from an Order of the District Court
From the Eastern District of Pennsylvania
Denying Motion for Return of Property
in Criminal No. 01-694-01
United States District Judge Herbert J. Hutton
IN RE: JERRY PANTELIDIS
Petitioner No. 02-4318
On Petition for a Writ of Mandamus
From the Eastern District of Pennsylvania
(Related to Crim No. 01-cr-694)
Argued: April 1, 2003
Before: McKEE and SMITH, Circuit Judges,
and COWEN, Senior Circuit Judge
(Opinion filed: July 11, 2003)
2
JAMES M. BECKER, ESQ. (Argued)
JAMES A. KELLER, ESQ.
Saul Ewing LLP
3800 Centre Square West
1500 Market Street
Philadelphia, PA 19102
Attorneys for Appellant/Petitioner
PATRICK L. MEEHAN, ESQ.
United States Attorney
LAURIE MAGID, ESQ.
Deputy United States Attorney
for Policy and Appeals
ROBERT A. ZAUZMER, ESQ.
Assistant United States Attorney
Chief of Appeals
PAUL L. GRAY, ESQ. (Argued)
Assistant United States Attorney
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106
Attorneys for Appellee/Respondent
OPINION OF THE COURT
McKEE, Circuit Judge.
Jerry Pantelidis appeals from the district court’s order
denying his motion for return of property filed under
Fed.R.Crim.P. 41(e). He claims that he is entitled to the
return of certain funds escrowed pursuant to the terms of
a non-prosecution agreement. However, since we conclude
that the agreement is ambiguous, we will vacate the district
court’s order and remand for further proceedings so that
the district court can resolve the ambiguity.
I. FACTS AND PROCEDURAL HISTORY
On November 5, 2001, a federal grand jury returned an
indictment charging Jerry Pantelidis with seven counts of
making false statements to federally insured financial
institutions, in violation of 18 U.S.C. § 1014, two counts of
bank fraud, in violation of 18 U.S.C. § 1344, one count of
3
making a false oath in a bankruptcy proceeding, in
violation of 18 U.S.C. § 152(2), and one count of use of a
false social security number, in violation of 42 U.S.C.
§ 408(a)(7). The false statement and bank fraud counts
charged that Pantelidis advanced his real estate business
interests by making false and fraudulent statements,
including: fraudulently creating fictitious income tax
returns claiming inflated income amounts; creating false
financial statements; and making false declarations of
income and assets in order to secure bank loans and lines
of credit totaling in excess of $3.5 million, and to secure
credit cards and a car lease. The indictment further alleged
that Pantelidis earned hundreds of thousands of dollars
profit from the acquisition, development and resale of
properties which Pantelidis purchased using fraudulently
obtained financing. The indictment also contained a notice
of forfeiture concerning $637,411.40 in proceeds obtained
directly or indirectly from the violations of 18 U.S.C.
§§ 1014 and 1344, and a notification of the government’s
intention, if necessary, to seek forfeiture of substitute
assets, up to the value of the property subject to forfeiture.1
According to the government, the amount of the funds in
the notice of forfeiture in the indictment, viz., $637,441.40,
represents the total net proceeds Pantelidis realized from
the sale of two buildings he purchased or improved using
the fraudulently obtained funds. Those buildings were
located at 311 S. Juniper Street and 1315 Walnut Street in
Philadelphia. This appeal also involves proceeds derived
from the sale of the Barclay Hotel in Philadelphia.
A. 311 S. Juniper Street.
Count Two of the indictment charged that Pantelidis
made false statements to Regent National Bank to obtain a
$500,000 loan to purchase and improve upon a property at
311 S. Juniper Street, in violation of 18 U.S.C. § 1014. The
indictment alleged that in late 1994 Pantelidis supplied the
bank with copies of his federal income tax returns for the
1. If the government cannot reach illegal proceeds directly, it can, under
21 U.S.C. § 853(p), seek forfeiture of other property of the defendant,
called “substitute assets,” up to the value of the property.
4
years 1991, 1992 and 1993, on which returns he claimed
adjusted gross income of $107,706, $133,675 and
$162,423, respectively. The indictment further alleged that
Pantelidis had not filed federal income tax returns during
those years, and that the returns he furnished to the bank
were fictitious and contained inflated income. According to
the government, Pantelidis’s actual federal income tax
returns for those years, filed with the IRS in April 1995,
showed true income during 1991, 1992 and 1993, of minus
$9,996, minus $34,878, and minus $59,908, respectively.
On February 3, 1998, Pantelidis’s company, 311 S.
Juniper Street, Inc., sold the property on Juniper Street.
The proceeds check from the sale of the property,
$263,901.40, was seized by the government pursuant to a
seizure warrant executed at the real estate closing. The
indictment seeks the forfeiture of these alleged proceeds of
the § 1014 violation. The proceeds are currently worth
$87,973, as will be explained later.
B. 1315 Walnut Street.
Count Three charged that Pantelidis defrauded Regent
National Bank, while attempting to obtain a $1,300,000
secured line of credit to pay delinquent taxes and make
capital improvements to a property at 1315 Walnut Street,
in violation of 18 U.S.C. § 1344. The indictment alleged that
Pantelidis supplied the bank with a personal financial
statement dated May 10, 1995, in which he claimed to have
filed federal income tax returns for the years, 1991, 1992
and 1993. The indictment alleged that Pantelidis made the
claim knowing that Regent would rely on the fictitious
income tax returns he had previously given the bank in
connection with the Juniper Street property. The
indictment further alleged that Pantelidis did not give the
bank his true 1991, 1992 and 1993 federal income tax
returns, which he had filed with the IRS only sixteen days
earlier on April 24, 1995, but which showed negative
income during the three years, as described above.
After the seizure of the 311 S. Juniper Street proceeds,
the government learned that Pantelidis intended to sell the
1315 Walnut Street property. Pantelidis’s former counsel
5
was aware by then that the government had the same
forfeiture claim to the proceeds of the sale of this property:
the building was improved using a $1,300,000 loan
allegedly obtained through deceiving Regent National Bank.
Rather than cause the government to apply for another
seizure warrant, Pantelidis’s former counsel attended the
April 6, 1999 closing, which was also attended by an FBI
agent, and agreed to have the proceeds of the sale of the
building placed in escrow accounts. As a result of the
agreement, Pantelidis escrowed approximately $447,540.
Approximately $267,180 of this amount remains escrowed.
C. The Barclay Hotel.
Count Eleven charged Pantelidis with making a false oath
before the bankruptcy court during hearings on two
competing plans of reorganization to purchase the Barclay
Hotel from bankruptcy. One of the plans was Pantelidis’s.
Pantelidis is accused of claiming to have “a little under a
million” in cash and readily marketable securities available
to him to secure financing for the project. The indictment
alleged that Pantelidis actually had approximately $101,000
in cash and unpledged securities at the time. The
indictment also alleged that Pantelidis’s financial status
was a material matter to the bankruptcy court.
Neither of the two plans was accepted, which
necessitated the sale of the hotel at auction. At auction,
Pantelidis won the right to purchase the hotel for $5.5
million, which he did in January 1997. According to the
closing documents from the subsequent sale of the hotel in
June 1999, Pantelidis was paid in excess of $9 million for
the hotel less than two and one-half years after he
purchased it for $5.5 million. His profit allowed Pantelidis
to pay off more than $4 million in business and personal
debts.
At the time of closing in June 1999 (which was two
months after the sale of his 1315 Walnut Street property),
and while Pantelidis and the government were in plea
negotiations, the government learned that Pantelidis wished
to sell his interest in the Barclay. As noted in an agreement
reached between Pantelidis and the government concerning
6
the sale, the government was aware of a difficult situation
involving the property and the benefits to be obtained
through the sale. The parties to the sale, and others,
requested that the government clear the way for the sale of
the building.
The government agreed not to seek money laundering
charges against Pantelidis concerning the sale of the
Barclay, primarily on the condition that, from the gross
proceeds of the sale, Pantelidis escrow $850,000 allegedly
owed to Elizabeth McHenry, an elderly benefactor of
Pantelidis, and that he escrow all remaining proceeds from
the sale.
On June 25, 1999, a week after the government agreed
not to seek money laundering charges against him,
Pantelidis sold his interest in the Barclay. The closing
documents for the sale show that, as agreed, Pantelidis
escrowed $855,496.50 for the benefit of Elizabeth McHenry,
and escrowed the net proceeds of the sale, $371,211.35.
Exhibit A to the closing documents shows that company
and personal debts of Pantelidis, well in excess of $4
million, were paid off from the gross proceeds. Among the
debts paid off were: $20,000 to Elizabeth McHenry’s
attorneys; $236,250 to Pantelidis’s civil attorneys; $50,000
to Pantelidis’s accountant; $212,000 to certain of
Pantelidis’s employees; $68,250 to Pantelidis’s criminal
attorney; and $2,255,863 to the Barclay Condo Association.
The Barclay proceeds were also used to pay off three loans
to Pantelidis which were, according to the indictment,
procured by false statements or fraud. These bank loans
are involved in Counts Four, Five and Six of the indictment.
Approximately $150,000 of the $371,211 net proceeds
from the Barclay sale remains in escrow. The government
does not contend that the remaining $150,000 constitutes
direct proceeds of criminal activity. Rather, because the
government says that it cannot recover the entire
$637,441.40 in proceeds from the remaining seized and
escrowed funds available for forfeiture from the Juniper
Street and Walnut Street properties (now approximately
$355, 153), the indictment seeks to forfeit the $150,000 as
substitute assets pursuant to 18 U.S.C. § 982(b) and 21
U.S.C. § 853(p).
7
D. Disposition of the Seized and Escrowed Funds.
The seized and escrowed funds from the three properties
— Juniper Street, Walnut Street and the Barclay — totaled
approximately $1,938,000, including the $850,000 for
Elizabeth McHenry. After the closing of the Barclay sale in
June 1999, Elizabeth McHenry’s attorney began
negotiations to cause the government to pay over to
Elizabeth McHenry two-thirds of the total escrowed funds
from Pantelidis’s real estate sales for what the attorney
claimed was an “equitable interest” that Elizabeth McHenry
(then 90 years old) and her deceased sister, Mary McHenry,
had in Pantelidis’s real estate portfolio. According to the
attorney, this equitable interest arose from an oral
agreement between the McHenry sisters and Pantelidis
early on in Pantelidis’s real estate career whereby the
McHenrys allowed Pantelidis to use their funds to finance
his real estate operations in return for a two-thirds interest
in his real estate business. The government agreed to pay
over two-thirds of the escrowed funds on the condition that
Elizabeth McHenry terminate Pantelidis’s existing power of
attorney over her funds. Ms. McHenry terminated
Pantelidis’s existing power of attorney on May 5, 2000.
Thereafter, the government, with Pantelidis’s agreement,
paid over approximately $1,481,261 for the benefit of Ms.
McHenry.
According to the government, after the disbursement to
Ms. McHenry, the following funds remain held to satisfy
Pantelidis’s possible forfeiture obligations: (a) a $87,973.80
check, plus interest earned, in the custody of the U.S.
Marshall and derived from the sale of 311 S. Juniper
Street; (b) approximately $267,180 held in escrow from the
proceeds of the sale of 1315 Walnut Street; and (c)
approximately $150,000 in escrowed proceeds from the sale
of the Barclay Hotel.
E. Pantelidis’s Rule 41(e) motion.
On January 4, 2002, Pantelidis filed a motion for return
of property under Fed.R.Crim.P. 41(e).2 The motion sought
2. When Pantelidis filed his Rule 41(e) motion it provided:
8
the return of approximately $500,000 in potentially
forfeitable funds constituting the proceeds of Pantelidis’s
real estate transactions. All but approximately $87,000 had
been, as noted, voluntarily placed into escrow accounts
before indictment during 1998 and 1999, by Pantelidis
pending plea discussions between the parties. On February
21, 2002, Pantelidis moved for a hearing on his Rule 41(e)
motion. On April 10, 2002, the government responded to
Pantelidis’s motion. And, on May 8, 2002, the government
filed an ex parte motion for a restraining order under 18
U.S.C. § 981 and 21 U.S.C. § 853(e)(1), seeking the pre-trial
restraint of portions of the seized and escrowed funds
obtained directly or indirectly from the violations of 18
U.S.C. §§ 1014 and 1344. The government claimed that it
did not attempt to restrain the $150,000 of Barclay funds
which it considers substitute assets for forfeiture purposes.
On August 12, 2002, Pantelidis moved for an order
directing the government to serve him with a copy of its ex
A person aggrieved by an unlawful search and seizure or by the
deprivation of property may move the district court for the district
in which the property was seized for the return of the property on
the ground that such person is entitled to lawful possession of the
property. The court shall receive evidence of any issue of fact
necessary to the decision of the motion. If the motion is granted, the
property shall be returned to the movant, although reasonable
conditions may be imposed to protect access and use of the property
in subsequent proceedings. If a motion for return of property is
made or comes on for hearing in the district of trial after an
indictment or information is filed, it shall be treated also as a
motion to suppress under Rule 12.
On April 20, 2002, the Supreme Court entered an order amending the
Federal Rules of Criminal Procedure 1 through 60, effective December 1,
2002. As a result, Rule 41(e) became Rule 41(g) and provides:
A person aggrieved by an unlawful search and seizure of property or
by the deprivation of property may move for the property’s return.
The motion must be filed in the district where the property was
seized. The court must receive evidence on any factual issue
necessary to decide the motion. If it grants the motion, the court
must return the property to the movant, but may impose reasonable
conditions to protect access to the property and its use in later
proceedings.
9
parte application. However, on August 26, 2002, the district
court issued an order denying Pantelidis’s Rule 41(e)
motion for return of property. The district court did not
hold a hearing nor did it make any findings concerning the
motion.
On September 3, 2002, Pantelidis filed a notice of appeal
from the district court’s denial of his motion for return of
property. Thereafter, on September 9, 2002, the district
court, at Pantelidis’s request, granted a stay of the criminal
proceedings pending his appeal.3
II. DISCUSSION
Pantelidis argues that (1) the $150,000 Barclay funds be
returned to him because they are substitute assets not
subject to pre-conviction restraint and (2) the district court
erred by not conducting an evidentiary hearing and making
factual and legal findings on his Rule 41(e) motion. The
government agrees with Pantelidis that the district court
erred by not conducting a hearing on Pantelidis’s Rule 41(e)
motion as to the non-Barclay funds. Therefore, we will
remand to the district court so that it can conduct a
hearing on Pantelidis’s motion as to the non-Barclay funds.
However, the government contends that Pantelidis is not
entitled to the return of the Barclay funds because they
have been escrowed pursuant to the terms of the non-
prosecution agreement.
A. Appellate Jurisdiction.
Before beginning the inquiry into whether the Barclay
funds should be returned to Pantelidis, we must first
determine whether we have jurisdiction over his appeal.
Pantelidis’s appeal is from the district court’s denial of his
Rule 41(e) motion to return the escrowed and seized funds.
Rule 41(e) provides, in relevant part:
3. On November 7, 2002, Pantelidis filed a petition for a Writ of
Mandamus. By an order dated February 5, 2003, we consolidated that
petition with this appeal. However, in his brief, Pantelidis does not
address his petition for a writ of mandamus. Therefore, we must assume
that he has abandoned that petition.
10
A person aggrieved by an unlawful search and seizure
or by the deprivation of property may move . . . for the
return of the property on the ground that such person
is entitled to lawful possession of the property.
Fed.R.Crim.P. 41(e).4 As a general principle, “[a]n order
denying return of property would not be final and
appealable if the government were holding the property as
evidence in a potential criminal prosecution.” Government of
the Virgin Islands v. Edwards, 903 F.2d 267, 272 (3d Cir.
1990) (citing DiBella v. United States, 369 U.S. 121 (1962)).
Nonetheless, the government argues that we have
jurisdiction under 28 U.S.C. § 1292(a)(1). It is undisputed
that asset restraint orders are to be treated like injunctions
which are immediately appealable under § 1292(a)(1). In re
Assets of Martin, 1 F.3d 1351, 1356 (3d Cir. 1993). In the
government’s view, because the practical effect of the
district court’s denial of Pantelidis’s Rule 41(e) motion is to
continue the pretrial restraint of the escrowed Barclay
funds, the district court’s order is appealable as if it were
an injunction under § 1292(a)(1).
In spite of the logical appeal of the government’s
argument, our decision in United States v. Furina, 707 F.2d
82 (3d Cir. 1983), prevents us from analogizing the denial
of Pantelidis’s Rule 41(e) motion to an injunction for
jurisdictional purposes under 1292(a)(1). In Furina,
business records and other documents belonging to the
defendants, who had not been arrested or indicted, were
seized by federal agents pursuant to search warrants for
presentation to a grand jury. The defendants moved under
Rule 41(e) for the return of the seized materials, claiming
that the search warrants were defective. The district court
denied the motion and the defendants appealed. On their
appeal, the appellants argued, inter alia, that we had
jurisdiction under § 1292(a)(1) “for in effect the district
court has denied appellants an interlocutory injunction.” Id.
at 84-85. We refused to accept the analogy and “reject[ed]
this attempt to sidestep the policy against piecemeal
appeals by dressing the motion in ‘equitable garb’.” Id. at
85 (quoting Smith v. United States, 377 F.2d 739, 742 (3d
4. See n.2, supra.
11
Cir. 1967)). Furina has not been overruled or limited, and
it is indistinguishable from this case. Therefore, § 1292(a)(1)
does not provide us with jurisdiction over this appeal.
However, we do believe that we have jurisdiction under
28 U.S.C. § 1291. In DiBella v. United States, 369 U.S. 121(1962), the Supreme Court held that, generally, the denial
of a pre-indictment Rule 41(e) motion to suppress evidence5
allegedly procured through an unreasonable search and
seizure is not final for purposes of appeal under § 1291.
However, the Court in DiBella “recognized an exception for
appeals from independent proceedings.” Furina, 707 F.2d at
84. Under the DiBella exception, there is sufficient
independence to allow an immediate appeal “[o]nly if the
motion is solely for the return of property and is in no way
tied to a criminal prosecution in esse against the movant.”
369 U.S. at 131-32. See also In re Search Warrant (Sealed),
810 F.2d 67, 70 (3d Cir. 1987) (“A significant exception,
however, allows for immediate appeal of orders that are
sufficiently independent from the anticipated criminal
proceeding.”); United States v. Premises Known as 608
Taylor Ave., 584 F.2d 1297, 1300 (3d Cir. 1978) (“The
5. At the time DiBella was decided, Rule 41(e) provided:
A person aggrieved by an unlawful search and seizure may move the
district court for the district in which the property was seized for the
return of the property and to suppress for use as evidence anything
so obtained on the ground that (1) the property was illegally seized
without warrant, or (2) the warrant is insufficient on its face, or (3)
the property seized is not that described in the warrant, or (4) there
was not probable cause for believing the existence of the grounds on
which the warrant was issued, or (5) the warrant was illegally
executed. The judge shall receive evidence on any issue of fact
necessary to the decision of the motion. If the motion is granted the
property shall be restored unless otherwise subject to lawful
detention and it shall not be admissible in evidence at any hearing
or trial. The motion to suppress evidence may also be made in the
district where the trial is to be had. The motion shall be made before
trial or hearing unless opportunity therefor did not exist or the
defendant was not aware of the grounds for the motion, but the
court in its discretion may entertain the motion at the trial or
hearing.
369 U.S. at 122 n.1.
12
Supreme Court has indicated that the finality of an order
relating to a potential criminal prosecution is governed by
the independence of the order from the criminal
proceeding.”); Government of the Virgin Islands v. Edwards,
903 F.2d at 272 (“[A]n order is final if the essential
character of the motion is for the return of property which
is not intimately involved in the criminal process.”) (citation
omitted).
In this case, both requirements of the DiBella exception
are satisfied. First, Pantelidis’s Rule 41(e) motion sought
only the return of the Barclay Funds and did not seek to
suppress the evidentiary value of those assets. See
Premises Known as 608 Taylor Avenue, 584 F.2d at 1300.
Second, the Barclay Funds are “in no way tied to a criminal
prosecution in esse against” Pantelidis. The Barclay Funds
are substitute assets. See 18 U.S.C. § 982 (b) and 21 U.S.C.
§ 853(p). The substitute asset provisions will become
operative only if Pantelidis is convicted of the crimes
charged in the indictment and only if the profits he received
directly or indirectly from those crimes cannot be otherwise
recovered. 21 U.S.C. §§ 853(p)(1)(A) - (E) and 853(p)(2).
Therefore, in a very real sense, substitute assets are “assets
not associated with the crime.” United States v. Field, 62
F.3d 246, 247 (8th Cir. 1995). Accordingly, the order
denying Pantelidis’s Rule 41(e) motion is independent from
the criminal proceeding and we have jurisdiction under
§ 1291.
B. The Barclay Funds.
Approximately $150,000 of the proceeds from the Barclay
sale remain in escrow. The Barclay funds are substitute
assets and the government seeks their forfeiture as such
under 18 U.S.C. § 982(b) and 21 U.S.C. § 853(p). Pantelidis
argues that the district court erred by not releasing the
Barclay funds to him because, as substitute assets, they
are not subject to pre-conviction restraint.6 The government
concedes, as it must, that substitute assets are not subject
6. Pantelidis claims that he needs the Barclay funds to pay his legal fees
and living expenses. The government claims that Pantelidis sought the
return of the Barclay funds only after pre-indictment negotiations failed.
13
to pretrial restraint.7 United States v. Field, 62 F.3d 246(8th Cir. 1995); United States v. Floyd, 992 F.2d 498 (5th
Cir. 1993); see also In re Assets of Martin, 1 F.3d 1351 (3d
Cir. 1993) (pre-conviction restraint of substitute assets
impermissible under RICO forfeiture provisions). However,
the government argues that the Barclay funds are subject
to pretrial restraint because the non-prosecution agreement
that Pantelidis entered into allows the funds to remain
escrowed for purposes of forfeiture. Not unexpectedly,
Pantelidis claims that he never agreed to the pretrial
restraint of the Barclay funds.
The government’s position is straightforward. It argues
that Pantelidis and the government agreed to allow the
Barclay sale to proceed and each party gave consideration
for their respective promises. The government agreed to
“refrain from initiating criminal charges against Pantelidis
or his corporate entity charging a money laundering
violation from the monetary and/or financial transaction
which is the sale.” App. 30a. In return, Pantelidis agreed to
have the proceeds of the sale to be used to satisfy certain
claims, and agreed to “[e]scrow all remaining proceeds from
the sale.” App. 31a. Moreover, the government expressly
reserved its right to seek forfeiture with respect to any
criminal offenses which pre-dated or post-dated the sale.
App. 30a. At the same time, Pantelidis and the government
entered into an escrow agreement, which provided in part:
Escrow Agent will release funds upon the following
conditions:
1) An Agreement between Jerry Pantelidis and the
United States Government; or
2) Final unappealable Judicial Order by a court of
competent jurisdiction.
App. 32a.
In the government’s view, by entering into the non-
prosecution agreement, Pantelidis consented to the
restraint of the Barclay funds beyond that permitted by the
law with respect to substitute assets. According to the
7. Pantelidis calls it “pre-conviction restraint” and the government calls
it “pretrial restraint.”
14
government, Pantelidis received valuable consideration for
that concession in the form of the government’s agreement
not to initiate money laundering charges against him. The
government also notes that it lived up to its part of the
agreement. However, argues the government, if the Barclay
funds are returned to Pantelidis, the government will not
receive the benefit of the bargain struck between it and
Pantelidis.
Pantelidis’s argument that he did not agree to the pretrial
restraint of the Barclay funds is equally straightforward. He
first argues that the agreement contains a reservation of
rights which provides: “Pantelidis reserves all rights with
respect to the disposition of the proceeds of the Barclay
sale.” App. 31 (Pantelidis’s emphasis). According to
Pantelidis, one such reserved right is the right to use the
Barclay funds prior to trial. He next argues that neither the
non-prosecution agreement nor the escrow agreement
provides that the Barclay funds must remain in escrow
until the criminal prosecution is completed. He claims that
the above-quoted language of the escrow agreement means
that, in the absence of an agreement between the parties,
either party is free to seek a court order determining the
disposition of the funds. And, says Pantelidis, that’s
precisely what he has done. He contends that if the
government had intended for the funds to remain in escrow
until the criminal prosecution was completed, then the
government, as the drafter of the agreements, would have
included an explicit provision to that effect. He notes that
neither the agreement nor the escrow agreement contains
any such provision. Therefore, he argues that he is entitled
to seek recovery of the Barclay Funds.
Although the agreements rise against the backdrop of a
criminal prosecution, they are nevertheless, contracts. In
resolving a contract dispute, “the initial determination is
whether the contract is ambiguous concerning the dispute
between the parties.” Sumitomo Machinery Corp. of America,
Inc. v. AlliedSignal, Inc., 81 F.3d 328, 332 (3d Cir. 1996).
The determination of whether a contract is ambiguous is a
question of law. Taylor v. Continental Group Change In
Control Severance Pay Plan, 933 F.2d 1227, 1232 (3d Cir.
1991). A contract is ambiguous “where the contract is
15
susceptible of more than one meaning,” Sumitomo
Machinery, 81 F.3d at 332, or “if it is subject to reasonable
alternative interpretations.” Taylor, 933 F.2d at 1232.
After reading the disputed language, and considering the
conflicting arguments of the parties, we frankly come to the
conclusion that the government’s reading and Pantelidis’s
reading of the non-prosecution agreement are both
reasonable alternative interpretations. Therefore, the non-
prosecution agreement is, by definition, ambiguous as to
Pantelidis’s entitlement to the Barclay Funds.
Consequently, a remand is warranted to enable the district
court to resolve that ambiguity in the first instance. On
remand, the district court can resolve the ambiguity by
applying the framework we outlined in In re New Valley
Corp., 89 F.3d 143, 149-150 (3d Cir. 1996).
III. CONCLUSION
For the above reasons, we will remand to the district
court for proceedings consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit