Garcia, Floriberto v. Meza, Gus , 235 F.3d 287 ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1578
Floriberto Garcia and Galilia Rivera,
Plaintiffs-Appellants,
v.
Gus Meza, Special Agent, Immigration and
Naturalization Services, Angela Alonso,
Special Agent, Immigration and Naturalization
Services, and United States of America,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 98 C 1908--William J. Hibbler, Judge.
Argued September 19, 2000--Decided December 11, 2000
Before Bauer, Manion, and Kanne, Circuit Judges.
Manion, Circuit Judge. Plaintiffs, Floriberto
Garcia and Galilia Rivera, sued the defendants,
Gus Meza and Angela Alonso, agents of the
Immigration and Naturalization Service ("INS"),
under the Federal Tort Claims Act, 28 U.S.C.
sec.sec. 1346(b), 2671-80, seeking recovery of
money seized from their home. Defendants moved to
dismiss the plaintiffs’ complaint for lack of
subject matter jurisdiction. The district court
granted the defendants’ motion to dismiss. The
plaintiffs appeal. We reverse and remand.
I. Facts
Floriberto Garcia and his wife, Galilia Rivera,
live in a small apartment in Villa Park, Illinois
with several extended family members. On June 6,
1997, INS and United States Secret Service agents
entered without a warrant and searched their
apartment pursuant to a joint investigation into
the manufacture and distribution of counterfeit
identification in the Chicago area. Agent Alonso
participated in the investigation and actual
search of the Villa Park apartment. Agent Meza
was one of the team leaders in charge of the
investigation, but he did not actually enter the
plaintiffs’ apartment.
During the search of the apartment, the
government agents found $21,700.00 in cash on top
of a dresser located in a bedroom. The agents
also found other items including a notebook, a
Social Security card and some counterfeit
identification cards./1
That evening, Garcia called the local INS
facility and spoke with Agent Meza. The parties
dispute the content of this conversation, but
they agree that Garcia expressed his desire to
get his money back. Later that week, the
plaintiffs retained an attorney who contacted
Agent Meza and identified herself as the legal
representative of Garcia and Rivera. Agent Meza
claims that he directed the attorney to contact
the Secret Service since all funds had been
turned over to it for disposition. The
plaintiffs’ attorney disputes this, but, in any
event, it does not appear that she contacted the
Secret Service.
On July 17, 1997, the plaintiffs filed a
complaint for conversion against defendants Meza
and Alonso in the Circuit Court of Cook County,
Illinois. The government, upon certification that
the agents were acting within the scope of
employment at the time of the alleged events,
removed the lawsuit to federal court. The
government then moved to dismiss the action based
on plaintiffs’ failure to exhaust the required
administrative remedies under the Federal Tort
Claims Act ("FTCA"), which provides that no tort
suit may be initiated against the United States
until the plaintiff first presents a claim to the
appropriate federal agency and his claim is
denied. If an agency does not make a final
disposition of a claim within six months after it
is filed, it is considered a final denial of the
claim. 28 U.S.C. sec. 2675(a). As the government
had suggested in their motion to dismiss, the
plaintiffs filed an administrative FTCA claim
with the INS on September 12, 1997. Therefore, on
October 14, 1997, the district court dismissed
the lawsuit for lack of subject matter
jurisdiction, stating: "[w]e assume that the
government will act promptly on the claim and
give proper notice of any administrative
proceeding."
In the meantime, while the plaintiffs were
actively seeking the return of their money in
this underlying tort action (and apparently
awaiting the expiration of the statutory six-
month period under the FTCA), the government was
methodically pursuing administrative forfeiture
proceedings. Shortly after it seized the funds
from the plaintiffs’ home in June 1997, the INS
turned the funds over to the Secret Service for
further disposition. On October 17, 1997 (one
month after the plaintiffs filed their
administrative claim with the INS), the Secret
Service sent written notice of the impending
forfeiture proceedings via Federal Express
priority overnight delivery to all persons it
deemed had a claim to the seized funds./2 Five
days later, the Secret Service received each of
the letters it had sent out back from Federal
Express, with the indication that they were
"undeliverable." The Secret Service also
published notice of the intended forfeiture
proceedings in the New York Times on October 19,
1997, October 26, 1997, and November 2, 1997. On
February 5, 1998, the Secret Service
administratively forfeited the funds. The
government never charged either Garcia or Rivera
with any involvement in a counterfeiting
operation or with any other illegal activity.
Meanwhile, the plaintiffs were waiting for the
six-month statutory period to elapse so that they
could re-file their FTCA claim, which they did
when they filed this present action on March 27,
1998./3 The government filed a motion to dismiss
arguing that the administrative forfeiture
proceeding that had already been completed
divested the district court of subject matter
jurisdiction over the matter. On August 28, 1998,
the plaintiffs filed an amended complaint adding
a Bivens claim against the two agents. In March
1999, the district court denied the motion to
dismiss without prejudice, stating that the
record contained insufficient evidence to support
the government’s assertion that notice of the
forfeiture proceeding was sent. The government
then brought a motion for reconsideration,
attaching exhibits verifying that it had sent
notice via Federal Express and published notice
in the New York Times. Accordingly, on November
1, 1999, the district court granted the motion
for reconsideration and dismissed the lawsuit,
with prejudice, pursuant to Rule 12(b)(1).
Thereafter, the plaintiffs filed a motion for
reconsideration which was denied by the district
court on February 1, 2000. The plaintiffs
appealed.
II. Discussion
The district court dismissed the plaintiffs’
lawsuit concluding that it lacked subject matter
jurisdiction over their suit because the
government had instituted, and completed,
administrative forfeiture proceedings. We review
that determination de novo. Linarez v. United
States Dep’t. of Justice, 2 F.3d 208, 211 (7th
Cir. 1993).
The federal government is authorized to forfeit
monies that constituted or were derived from
proceeds traceable to counterfeiting operations.
See 18 U.S.C. sec. 981(a)(1)(C). Procedurally, to
institute a forfeiture action, the government
must comply with the procedures sent forth in 19
U.S.C. sec. 1607. See 18 U.S.C. sec. 981(d).
Section 1607 provides that "the appropriate
customs officer shall cause a notice of the
seizure . . . and the intention to forfeit . . .
to be published for at least three successive
weeks . . . . Written notice of seizure . . .
shall be sent to each party who appears to have
an interest in the seized article." 19 U.S.C.
sec. 1607(a).
If the government complies with the notice
requirements under Section 1607, the property
owner has twenty days from the date of the first
publication of the notice to file a claim and
post a bond. 19 U.S.C. sec. 1608. If the property
owner does not do so, the forfeiture proceeds
administratively and the district courts are
divested of jurisdiction to review it. 19 U.S.C.
sec. 1609; Linarez, 2 F.3d at 211. If a
plaintiff’s claims could have been raised in the
administrative proceeding, but were not, the
forfeiture cannot be challenged in the district
court under any legal theory. Id. at 213.
However, as we have recognized, federal courts
always possess jurisdiction to review whether the
notice given in the administrative forfeiture
proceeding afforded the claimant constitutional
due process. Krecioch v. United States, 221 F.3d
976, 980 (7th Cir. 2000), cert. denied, ___ U.S.
___, 2000 WL 1630130 (Nov. 27, 2000). If the
notice fails to comport with the requirements of
due process, the underlying forfeiture action is
void. The district court considered this issue,
and concluded that the plaintiffs had not been
deprived of due process.
Thus, the key issue before us is whether the
notice provided the plaintiffs satisfies the
minimal requirements of due process.
Specifically, we address whether the written
notice sent via Federal Express to Garcia, and
returned to the government five days later marked
undeliverable, satisfies minimum constitutional
due process requirements. Constitutional due
process standards require that notice be
"reasonably calculated, under all the
circumstances, to apprise interested parties of
the pendency of the action and afford them an
opportunity to present their objections." Mullane
v. Central Hanover Bank & Trust Co., 339 U.S.
306, 314 (1950).
Written notice of forfeiture by certified mail
to the claimant’s residence generally satisfies
due process even if the claimant does not receive
actual notice. Krecioch, 221 F.3d at 981; see
also Linarez, 2 F.3d at 210 (where DEA sent
notice of seizure by certified mail to Linarez’s
last known address and received a signed
certified mail receipt, no challenge to due
process allowed). While "due process is not
satisfied ’if the notifying party knew or had
reason to know that notice would be ineffective,’"
Krecioch, 221 F.3d at 980 (quoting Sarit v.
United States Drug Enforcement Admin., 987 F.2d
10, 14 (1st Cir. 1993)), typically, the
"operative question is whether notice was
adequate at the time that the notice was sent . .
." Krecioch, 221 F.3d at 980. In the present
case, the notice to plaintiffs was adequate at
the time it was sent, and yet the government
learned shortly thereafter (five days) that it
was never received. The question becomes whether
in such a case due process requires the
government to do more.
Other circuits have answered this question in
various ways. See, e.g., Sarit, 987 F.2d at 14-15
(absent exceptional circumstances, mailing notice
to the address from which property is seized
after notifying claimant’s counsel that
forfeiture proceeding would ensue is sufficient,
despite the government’s later discovery that
mailed notice was ineffective); Small v. United
States, 136 F.3d 1334, 1337 (D.C. Cir. 1998)
(stating that since notice must be an attempt to
actually inform the addressee of the pending
forfeiture, "[a] reasonable person presented with
a letter that has been returned to sender will
ordinarily attempt to resend it if it is
practicable to do so . . ."); United States v.
Rodgers, 108 F.3d 1247, 1252-53 (10th Cir. 1997)
(placing an affirmative duty upon the government
to take reasonable steps to locate a civil
claimant when its initial mailings were returned
unclaimed).
We decline to adopt a per se rule which only
examines notice at the time it was sent and turns
a blind eye to subsequent events. On the other
hand, we also decline to impose an affirmative
duty upon the government to seek out claimants in
each case where its initial notice is returned
undelivered or to require actual notice in every
case. Instead, we believe the correct approach is
a fact-specific analysis under the due process
standard set forth by the Supreme Court in
Mullane, which requires us to consider all the
circumstances of each case to determine whether
the notice provided is reasonably calculated to
apprise the claimant of the impending proceeding.
In the present case, the government, even
without a warrant, was able to find its way to
the plaintiffs’ residence and enter their bedroom
to seize their money. And yet, after its only
written notice was returned undelivered five days
after it was sent, the government did not even
attempt to locate the plaintiffs or to send them
a second written notification. Meanwhile, the
plaintiffs and their attorney were actively,
albeit unsuccessfully, pursuing the seized
currency through numerous phone calls,
administrative claims and lawsuits. It is ironic
that the government was involved in extended
litigation with the plaintiffs, pointedly
admonishing them to exhaust their administrative
remedy under the FTCA, and yet was unable to
provide the plaintiffs with actual notice of its
ongoing forfeiture proceeding. The government
certainly had reason to believe that its one
attempt at written notice had not effectively
apprised these plaintiffs of the impending
action. As we have stated, notice is "inadequate
if the government knew that the claimant would
not receive it." Krecioch, 221 F.3d at 980. While
the government may have believed at the time of
sending the FedEx that it was providing adequate
notice, five days later it was specifically
notified that the attempted delivery by Federal
Express was not successful. Thus, three months
before the government administratively forfeited
the plaintiffs’ property, it knew for a fact that
the plaintiffs had never received written notice
of the impending proceeding instructing them how
to correctly petition for the return of their
property. In this context, we believe that
another attempt at written notice would have been
reasonable, even necessary, under the
circumstances and would not have been too
burdensome on the government. After considering
all of those circumstances, we find that the
unsuccessful written notice provided to Garcia
via Federal Express did not meet the minimum due
process standards required under Mullane./4
The plaintiffs also argue that publication
notice in the New York Times was improper. Even
if the publication notice was proper, it cannot
cure the deficiencies in due process caused by
the inadequate written notice. "Notice by
publication is not sufficient with respect to an
individual whose name and address are known or
easily ascertainable." Robinson v. Hanrahan, 409
U.S. 38, 40 (1972).
III. Conclusion
We conclude that the district court did not lack
subject matter jurisdiction over the
administrative forfeiture proceedings because the
notice to Garcia did not satisfy the minimum due
process requirements set out by the Supreme Court
in Mullane v. Central Hanover Trust. In light of
the inadequate written notice, even proper
publication notice is insufficient by itself to
satisfy the requirements of due process.
Accordingly, the district court must set aside
the forfeiture declaration and order the
government to either return the money to the
plaintiffs or to commence judicial forfeiture in
the district court, at which time the plaintiffs
may raise whatever defenses are available to
them./5 United States v. Woodall, 12 F.3d 791,
795 (8th Cir. 1993).
/1 The plaintiffs do not claim that they are
entitled to the return of these other items, and,
accordingly this appeal only relates to the
seized currency.
/2 The Secret Service sent the notice by Federal
Express to Odilia Rivera, Oscar Rivera and
Floriberto Garcia, other residents of the
plaintiffs’ apartment and family members who the
government believed might have an interest in the
seized property. It did not send written notice
to Galilia Rivera.
/3 Unfortunately, the plaintiffs lost a great deal
of time trying to retrieve their money under the
FTCA. In the action below, the parties disputed
the actionability of the tort of conversion in
the forfeiture context under the FTCA. See 28
U.S.C. sec. 2680(c) (excluding from the FTCA
"[a]ny claim arising in respect of . . . the
detention of any goods or merchandise by any
officer of customs or excise or any other law-
enforcement officer"). Since the district court
determined that it lacked jurisdiction under 19
U.S.C. sec. 1607, it did not reach the FTCA
question. Without addressing that issue
ourselves, we have stated that the correct
jurisdictional basis to challenge a civil
forfeiture is 28 U.S.C. sec. 1331. See United
States v. Duke, 229 F.3d 627, 629 (7th Cir.
2000).
/4 Co-plaintiff Rivera argues that the government
failed to give her written or published notice.
The government responds that it was unaware that
she had an interest in the seized money. The
district court found that the government’s
efforts to notify Garcia were reasonably
calculated to give notice to his wife. In light
of our holding that the notice to Garcia was
inadequate, we need not decide whether adequate
written notice is effective to notify a spouse
with an interest in the seized property. Clearly,
the government is now aware that Rivera claims to
have an interest in the money. Likewise, we need
not address plaintiffs’ argument that
constitutional due process requires that written
notice be sent to a claimant’s attorney.
/5 Plaintiffs unsuccessfully sought to amend their
complaint to include a Bivens action against the
federal agents. On appeal, plaintiffs argue that
we should remand this action to give them leave
to amend their complaint. Because we remand to
the district court to set aside the
administrative forfeiture and to order the
government to either return the money or initiate
a judicial forfeiture, there is no need to
address this argument.