United States v. Guy Gannaway, Stephen J. Spencer

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 11-13506 MAY 23, 2012
Non-Argument Calendar JOHN LEY
________________________ CLERK
D.C. Docket No. 8:10-cr-00059-JSM-MAP-3
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
GUY GANNAWAY,
STEPHEN J. SPENCER,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(May 23, 2012)
Before HULL, MARTIN and KRAVITCH, Circuit Judges.
PER CURIAM:
The Clean Air Act empowers the Environmental Protection Agency (EPA)
to establish standards for the safe and proper handling and removal of asbestos
during renovation work. 42 U.S.C. § 7412(h)(1). Companies involved in
renovation work are subject to these standards. 40 C.F.R. §§ 61.141, 61.145. The
failure to adhere to these standards can result in civil and criminal sanctions.
In 2004, Stephen Spencer and his partners purchased an apartment complex
in Indian Shores, Florida, with the intent of turning the apartments into resort
condominiums and reselling them at a profit. Spencer’s group hired contractor
Guy Gannaway and his company Gannaway Builders to renovate the apartments.
The majority of the apartments contained regulated asbestos-containing material
(RACM)1 in the form of popcorn ceiling texture. The EPA’s standards required
Gannaway to survey for asbestos, notify the EPA of the intent to remove the
RACM, remove all the RACM before any renovation work began, and have a
trained supervisor on-site to oversee the project. Removal of the RACM involves
wetting the asbestos materials and carefully lowering them to the floor before
disposing of them. 40 C.F.R. § 61.145.
The EPA has also established disposal requirements detailing how to
1
RACM is defined in 40 C.F.R. § 61.141 and includes friable asbestos material, which
means material containing more than one percent asbestos that, when dry, can be crumbled or
reduced to powder by hand pressure.
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collect, package, and transport the removed asbestos materials, and requiring
contractors to keep records of the disposal. Id. § 61.150. In Florida, the EPA has
delegated its regulation and inspection powers to the Pinellas County Air Quality
Division of the Department of Environmental Management.
Between 2004 and 2006, Gannaway and Spencer, along with two others,
conspired to violated the Clean Air Act’s RACM provisions by failing to properly
remove the RACM during the renovations. Specifically, there was no asbestos
survey prior to the renovations, Gannaway, at Spencer’s direction, covered the
popcorn ceiling with drywall, Gannaway disposed of asbestos waste material in
on-site dumpsters, and Gannaway conducted all the removal and renovations
without the presence of a trained on-site asbestos supervisor. When confronted
with the violations by the EPA and the Pinellas County Air Quality Division, the
conspirators made false statements about the project. Gannaway eventually
admitted civil liability and paid a fine to cover the violations.
Gannaway and Spencer were later indicted for conspiracy to violate the
Clean Air Act, in violation of 18 U.S.C. § 371 (Count 1);
violating the Clean Air Act by: failing to properly remove the RACM (Count 2),
conducting removal without an on-site supervisor (Counts 3 and 9), improperly
disposing of the RACM (Count 7), and failing to remove the RACM (Count 8), all
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under 42 U.S.C. § 7413. Gannaway was also charged with failing to adequately
wet the RACM during the renovations (Count 4), failing to carefully lower the
RACM to the floor (Count 5), and failing to adequately seal and label the RACM
(Count 6), in violation of § 7413, and making a false statement in a letter to the
Pinellas County Air Quality Division (Count 11), in violation of 18 U.S.C. § 1001.
The alleged false statement in Count 11 was a statement in a letter to the Air
Quality Division that Gannaway Builders “took great care to handle the removal
of and working around the asbestos in the popcorn ceiling.” Finally, Spencer and
Gannaway were charged with making a false statement in a separate letter to Air
Quality officials (Count 10), in violation of § 1001.
Following a jury trial, Gannaway was convicted of Counts 1 through 7 and
11, and acquitted of the remaining counts. Spencer was convicted of Counts 1
and 3, and acquitted of the remaining counts. The court sentenced Gannaway to 3
months’ imprisonment and 36 months’ supervised release, and Spencer to 60
months’ probation.
Gannaway makes three arguments on appeal: (1) the admission of
statements he made during settlement of civil liability violated the Fifth
Amendment; (2) the proffer of his admission of civil liability failed the balancing
test in Rule 403 of the Federal Rules of Evidence; and (3) the evidence was
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insufficient to convict him of making a false statement. Spencer challenges only
whether the evidence was sufficient to support his convictions. We will address
each defendant in turn.
I. Gannaway’s convictions
A. Fifth Amendment
During the renovation project, the Pinellas County Air Quality Division
determined that Gannaway Builders was violating several standards for the
handling of RACM. It issued a warning letter and a notice of violation to
Gannaway Builders, and Gannaway ultimately admitted that he was civilly
responsible. The same violations later formed the basis of the criminal charges.
At the criminal trial, a witness from the Pinellas County Air Quality division
testified that Gannaway Builders admitted civil liability for the RACM violations.
Gannaway argues that the government violated his Fifth Amendment
privilege against self-incrimination by admitting his statements accepting civil
liability for the RACM violations. He contends that the state compelled him to
assume civil responsibility because, if he had not, the Air Quality Division would
have economically sanctioned him by either fining him or shutting down the
renovation.
Because Gannaway raises this issue for the first time on appeal, we review
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for plain error. United States v. Crawford, 906 F.2d 1531, 1533 (11th Cir. 1990).
To demonstrate plain error, Gannaway must show that there is (1) error, (2) that is
plain, and (3) that affects substantial rights. United States v. Turner, 474 F.3d
1265, 1276 (11th Cir. 2007). If all three conditions are met, we may then exercise
our discretion to notice a forfeited error, but only if the error seriously affects the
fairness, integrity, or public reputation of judicial proceedings. Id. “Errors . . .
affect a substantial right of a party if they have a substantial influence on the
outcome of a case or leave grave doubt as to whether they affected the outcome of
a case.” Id. (internal quotation marks omitted). There can be no plain error
“where the explicit language of a statute or rule does not specifically resolve an
issue,” and “there is no precedent from the Supreme Court or this Court directly
resolving it.” United States v. Lejarde-Rada, 319 F.3d 1288, 1291 (11th Cir.
2003).
The Fifth Amendment provides that no person “shall be compelled in any
criminal case to be a witness against himself.” U.S. Const. amend. V. The
amendment protects an individual from being called as a witness against himself
in a criminal prosecution, and also privileges a witness not to answer official
questions asked of him during any other proceeding if the answers may
incriminate him in future criminal proceedings. Minnesota v. Murphy, 465 U.S.
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420, 426 (1984).
The Fifth Amendment protection against self-incrimination is not
self-executing. United States v. Vangates, 287 F.3d 1315, 1320 (11th Cir. 2002).
Indeed, a witness’s answers to government questions generally cannot be
“compelled” within the meaning of the Fifth Amendment unless the witness
invokes his Fifth Amendment right and the government nevertheless requires the
witness to answer. Id.
An exception to this general rule arises when assertion of the Fifth
Amendment privilege “is penalized so as to foreclose a free choice to remain silent
or give incriminating testimony.” Id. (internal quotation marks omitted). This
may occur if the state compels an individual to appear and testify and also
threatens to impose economic or other sanctions “capable of forcing the
self-incrimination which the Amendment forbids” if the individual does not forgo
his Fifth Amendment rights. Murphy, 465 U.S. at 434 (quotation omitted). Where
an individual succumbs to this pressure and fails to assert the privilege, any
information the individual gives the state is still protected by the Fifth
Amendment. Id. at 434-35.
Further, because the “touchstone of the Fifth Amendment is compulsion,”
the use of both direct and indirect economic sanctions used to compel testimony
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are violative of the Fifth Amendment. Lefkowitz v. Cunningham, 431 U.S. 801,
806 (1977); see also Vangates, 287 F.3d at 1321 (alteration and internal quotation
marks omitted). For a witness’s statements to be protected under the Fifth
Amendment when the witness has not invoked the privilege, the witness must
show (1) that he subjectively believed that he was compelled to give a statement
upon a threat, and (2) that his belief was objectively reasonable at the time the
statement was made. Id. at 1322. In making this determination, we examine the
totality of the circumstances surrounding the testimony. Id.
Here, the state did not directly threaten to penalize Gannaway if he invoked
his Fifth Amendment right. The evidence showed that the Air Quality Division
notified Gannaway and the owners of the violations. The Air Quality Division did
not target Gannaway specifically, and it would have settled with either party,
allowing the parties involved to decide who would take responsibility. Moreover,
the Air Quality Division had no authority to shut down the renovations without
judicial involvement. In light of this evidence, Gannaway cannot show that his
subjective belief that he was compelled to make the statements was objectively
reasonable. Thus, Gannaway has not shown that plain error occurred.
B. Rule 403
Gannaway argues that the admission of his statements of civil liability were
8
more prejudicial than probative under Rule 403 because this evidence likely
caused the jury to find that he was criminally liable for those same acts.2
Ordinarily, a district court’s preserved evidentiary rulings are reviewed for
abuse of discretion. United States v. Gamory, 635 F.3d 480, 492 (11th Cir.), cert.
denied, 132 S. Ct. 826 (2011). But when a defendant fails to preserve an
evidentiary ruling by contemporaneously objecting, we only review for plain error.
Id.
Under Rule 408, statements made during compromise negotiations about a
claim are ordinarily inadmissible “except when offered in a criminal case and
when the negotiations related to a claim by a public office in the exercise of its
regulatory, investigative, or enforcement authority.” Fed. R. Evid. 408(a)(2). The
admission of evidence under Rule 408 is subject to the balancing test in Rule 403,
and the district court may exclude relevant evidence if its “probative value is
substantially outweighed by a danger of . . . unfair prejudice.” Fed. R. Evid. 403.
In evaluating a district court’s ruling under Rule 403, we view the evidence in the
light most favorable to admission, maximizing its probative value and minimizing
2
Gannaway also argues that the evidence was inadmissible under Old Chief v. United
States, 519 U.S. 172 (1997), and Rule 404(b). Neither of these rules entitle Gannaway to relief.
First, Old Chief does not apply to this case because Gannaway did not offer to stipulate to
anything at trial. 519 U.S. at 186-87. Further, Rule 404(b) does not apply because the
challenged evidence was intrinsic to the offenses charged in the indictment, as opposed to
extrinsic. United States v. Saintil, 753 F.2d 984, 987 (11th Cir. 1985).
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its undue prejudicial impact. United States v. Bradberry, 466 F.3d 1249, 1253
(11th Cir. 2006).
Here, there was no error in the court’s admission of Gannaway’s statements
that he would accept responsibility for the civil violations. Gannaway’s
admissions were relevant to proving various counts of the indictment, including
the conspiracy charge. Although this evidence was also likely prejudicial, when
the evidence is viewed in the light most favorable to its admission, the evidence’s
probative value was not substantially outweighed by this prejudice. Accordingly,
no plain error occurred in this respect.
C. Sufficiency of the evidence
Gannaway argues that the evidence at trial was insufficient to establish that
he made a false statement under § 1001. At issue was the statement that
Gannaway Builders “took great care to handle the removal of and working around
the asbestos in the popcorn ceilings.” He contends that the statement was vague
but not “false,” and that the evidence at trial did not establish that he made the
statement in a transaction over which a federal agency had the power to exercise
its authority.
We generally review both a challenge to the sufficiency of the evidence and
the denial of a motion for judgment of acquittal de novo. Gamory, 635 F.3d at
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497. But where, as here, the defendant moved for judgment of acquittal but did
not raise the specific ground to the district court,3 review of the district court’s
decision to deny the motion is only for plain error. United States v. Hunerlach,
197 F.3d 1059, 1068 (11th Cir. 1999).
It is unlawful to knowingly make a materially false statement or
representation to a government agency in a matter within its jurisdiction. 18
U.S.C. § 1001; United States v. Boffil-Rivera, 607 F.3d 736, 740 (11th Cir. 2010).
To sustain a conviction against a defendant for a violation of § 1001, the
government must prove that: (1) the defendant made a statement; (2) the
statement was false; (3) the statement was material; (4) the statement was made
with specific intent; and (5) the statement was made in a matter within the
jurisdiction of a federal government agency. Boffil-Rivera, 607 F.3d at 740.
“Falsity under section 1001 can be established by a false representation or
by the concealment of a material fact.” United States v. Calhoon, 97 F.3d 518,
524 (11th Cir. 1996). Falsity through concealment exists where disclosure of the
3
To preserve an issue for appeal in a judgment of acquittal, “one must raise an objection
that is sufficient to apprise the trial court and the opposing party of the particular grounds upon
which appellate relief will later be sought.” United States v. Straub, 508 F.3d 1003, 1011 (11th
Cir. 2007) (internal quotation marks omitted). The objection must be raised “in such clear and
simple language that the trial court may not misunderstand it.” Id. (internal quotation marks
omitted).
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concealed information is required by a statute, government regulation, or form. Id.
at 526.
The government must also prove that the false statement was made in a
matter within the jurisdiction of a federal government agency. Boffil-Rivera, 607
F.3d at 740; 18 U.S.C. § 1001. For the purposes of § 1001, the term “jurisdiction”
is construed broadly. United States v. Rodgers, 466 U.S. 475, 479 (1984). The
government is not required to prove that the false statement was made with actual
knowledge of federal agency jurisdiction. United States v. Yermian, 468 U.S. 63,
69-70 (1984). Nevertheless, we have recognized that the term “jurisdiction” does
have limits. Blankenship, 382 F.3d at 1136. The key inquiry is whether the
agency could “exercise authority” over the particular situation in which the
statement was made. Id. at 1136-38.
After review, we find no plain error in the district court’s decision to deny
Gannaway’s motion for judgment of acquittal. Former Gannaway Builders Vice
President James Edwards testified that when he learned of asbestos in the ceiling,
he notified Gannaway, who ordered him to clean it up. Edwards explained that the
crews then removed the asbestos by throwing it over the second-floor railing to a
dumpster below. When the Pinnellas County Air Quality Division later
questioned how the company handled the asbestos, Edwards submitted a letter
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stating that the company “took great care.” Edwards admitted that the statement
was not true and that he wrote it at Gannaway’s direction. He further testified that
Gannaway reviewed the letter before Edwards submitted it to the Air Quality
Division.
The evidence at trial also showed that prior to the removal of the RACM,
Gannaway’s consultant had tested the ceiling and found it contained at least ten
percent asbestos, which was considered high. Gannaway did not report the
removal of the asbestos to the Air Quality Division and did not provide his
workers with any training prior to the removal.
Although Gannaway argues that the statement was ambiguous because there
was some period of time that “great care” was arguably taken, and the asbestos
problem related only to one building, we disagree. Based on the evidence, a
reasonable jury could infer that Gannaway was aware that the statement in the
letter was false and that, by assisting in preparing the letter and reviewing it,
Gannaway furthered the offense and acted with the intent to aid in the commission
of the offense. Further, a jury could find that the statement was false in light of
evidence that showed that asbestos-containing materials were thrown over the
railing into an open dumpster on the first floor, that none of the workers was
trained to handle asbestos material, and no trained supervisor was present during
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the removal. Because the relevant statutes required Gannaway to adhere to
specific procedures for the handling and removal of the RACM, the jury could
easily conclude that the statement at issue was made to conceal the true facts, thus
satisfying the “falsity” element.
Moreover, the false statement was made in the context of the local
enforcement agency’s investigation into the asbestos violations that were listed in
the notice of violations. The EPA was able to exercise power over the local
agency’s investigation because the EPA could bring its own civil or criminal
enforcement action at any time. 42 U.S.C. § 7412(l)(1), (7). Because there is no
controlling case that indicates this is insufficient to satisfy the jurisdiction element
of § 1001, there can be no plain error.
II. Spencer’s convictions
We review both a challenge to the sufficiency of the evidence and the denial
of a Rule 29 motion for judgment of acquittal de novo. Gamory, 635 F.3d at 497.
In considering the sufficiency of the evidence, we view the evidence in the light
most favorable to the government, with all inferences and credibility choices made
in the government’s favor, and affirm the conviction if, based on this evidence, a
reasonable jury could have found the defendant guilty beyond a reasonable doubt.
Id. It is not necessary that the evidence presented at trial exclude every reasonable
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hypothesis of innocence or is wholly inconsistent with every conclusion except
that of a defendant’s guilt. Id. A jury’s rendering of inconsistent verdicts is
irrelevant to our sufficiency determination. United States v. Veal, 153 F.3d 1233,
1252-53 (11th Cir. 1998).
Spencer was convicted of conspiracy to violate the Clean Air Act and
violating the act by failing to have a trained supervisor on site during the RACM
removal. To show a conspiracy under 18 U.S.C. § 371, “the Government must
prove the existence of an agreement to achieve an unlawful objective, the
defendant’s knowing and voluntary participation in the conspiracy, and the
commission of an overt act in furtherance of it.” United States v. Campa, 529 F.3d
980, 1001-02 (11th Cir. 2008) (internal quotation marks omitted). The agreement
may be proved by either direct or circumstantial evidence, and a common object
may be inferred from the conduct of the participants or from other circumstances.
United States v. Hansen, 262 F.3d 1217, 1246 (11th Cir. 2001).
The government must also prove beyond a reasonable doubt that each
defendant had a “deliberate, knowing, specific intent to join the conspiracy.”
United States v. Adkinson, 158 F.3d 1147, 1153 (11th Cir. 1998) (internal
quotation marks omitted). The government does not have to prove that each
conspirator participated in all aspects of the conspiracy, knew each phase or every
15
detail of the conspiracy, or knew all of the participants. Hansen, 262 F.3d at 1247.
Rather, a conspirator may be convicted “if he participates in some affirmative
conduct designed to aid the success of the venture with knowledge that his actions
would further the venture.” Id. (internal quotation marks and alteration omitted).
Under 18 U.S.C. § 2, an individual may be indicted as a principal for the
commission of a substantive crime and convicted upon evidence that he only aided
and abetted another in the commission of the offense. United States v. Walser, 3
F.3d 380, 387-88 (11th Cir. 1993). Our test is to determine whether there was an
act by the defendant which contributed to and furthered the offense, and whether
the defendant intended to aid its commission. Id. at 388.
We have long recognized that the knowledge element of a criminal statute
can be proved by demonstrating either actual knowledge or deliberate ignorance.
United States v. Hristov, 466 F.3d 949, 952 (11th Cir. 2006). A party is deemed to
have deliberate ignorance where his suspicion is aroused, but he then deliberately
decides not to inquire further because he wishes to remain ignorant. Thus, to act
knowingly “is not necessarily to act only with positive knowledge, but also to act
with an awareness of the high probability of the existence of the fact in question.”
Id. at 952-53 (quotation omitted).
The EPA and the Pinnellas County Air Quality Division, through the
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standards contained in 40 C.F.R. § 61.145(c), regulate in minute detail the
handling of asbestos in building renovation sites. United States v. Ho, 311 F.3d
589, 595 (5th Cir. 2002). One such regulation requires a foreman or
management-level officer, trained in complying with these standards, to be present
at any site before workers may handle or disturb any material containing asbestos.
Id.
The evidence at trial showed that, after Spencer discovered that the
apartments contained asbestos, he decided that the ceilings should be
encapsulated, which involved attaching drywall directly to the ceilings by way of
screws. Spencer elected this method because it was less expensive than removal.
Inspectors with the Air Quality Division testified to the manner in which asbestos
is encapsulated and opined that it could not be done without disturbing the
asbestos in the ceiling. In light of the testimony presented, a reasonable jury could
have found that Spencer knew, or should have known, that encapsulation would
disturb asbestos, such that a trained on-site supervisor had to be present during the
process. See 40 C.F.R. § 61.145(c)(8).
Further, a reasonable jury could also find that Spencer and Gannaway
agreed to encapsulate the ceilings without the presence of an on-site supervisor
trained in handling RACM, that Spencer knowingly and voluntarily participated in
17
that agreement, and that he acted in furtherance of the conspiracy by researching
the encapsulation method and determining the details of encapsulation. Further,
because there is evidence that Gannaway’s workers actually performed the
encapsulation process without the presence of an on-site supervisor , the evidence
is also sufficient to support Spencer’s conviction for the substantive offense under
an aiding and abetting theory. Walser, 3 F.3d at 387-88.
III. Conclusion
Based on the forgoing, we AFFIRM Gannaway’s and Spencer’s
convictions.
AFFIRMED.
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