Babb v. U.S. Drug Enforcement Agency

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-1528
DAVID A. BABB,
Plaintiff - Appellant,
versus
U.S. DRUG ENFORCEMENT AGENCY,
Defendant - Appellee,
and
WILLIAM LUNSFORD, Seizing DEA Agent,
Defendant.
No. 04-1902
DAVID A. BABB,
Plaintiff - Appellee,
versus
U.S. DRUG ENFORCEMENT AGENCY,
Defendant - Appellant.
Appeals from the United States District Court for the District of
South Carolina, at Greenville. Henry M. Herlong, Jr., District
Judge. (CA-97-1553-6-20)
Argued: March 16, 2005 Decided: August 26, 2005
Before TRAXLER and DUNCAN, Circuit Judges, and Frederick P. STAMP,
Jr., United States District Judge for the Northern District of West
Virginia, sitting by designation.
Vacated and remanded by unpublished per curiam opinion.
ARGUED: Brian William Shaughnessy, SHAUGHNESSY, VOLZER & GAGNER,
Washington, D.C., for David A. Babb. Stefan Dante Cassella, UNITED
STATES DEPARTMENT OF JUSTICE, Asset Forfeiture & Money Laundering,
Washington, D.C., for the U.S. Drug Enforcement Agency. ON BRIEF:
J. Strom Thurmond, Jr., United States Attorney, Marvin Jennings
Caughman, Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Columbia, South Carolina, for the U.S. Drug
Enforcement Agency.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
2
PER CURIAM:
In 1993, the government administratively forfeited $57,690 in
cash seized from David Anthony Babb during a drug sting operation.
In 1998, Babb brought an equitable action challenging the
administrative forfeiture. The district court invalidated the
forfeiture, concluding that the government’s attempts to notify
Babb, who was incarcerated at the time, were insufficient for the
government to take advantage of the summary administrative
forfeiture process. Upon learning that the administrative
forfeiture was invalid, the government immediately commenced a
judicial forfeiture proceeding and successfully obtained an order
of forfeiture following a bench trial. On appeal, however, this
court determined that the government’s judicial forfeiture action
was barred by the statute of limitations and declined to apply
equitable tolling to stay the limitations period between 1993 (when
it administratively forfeited the currency) and 1998 (when it first
learned the administrative proceeding was invalid). See United
States v. Babb, 54 Fed. Appx. 772, 774 (4th Cir. 2003) (per
curiam).
Following the appeal in the judicial forfeiture action, Babb
returned to district court and moved for the return of the cash
seized from him, as well as interest and related attorney’s fees.
The district court entered an order awarding Babb the money but
denying him interest and fees. The parties now cross-appeal that
3
order. The primary issue is whether the district court should have
returned the money to Babb in the first place. The government
claims that the district court committed error by returning the
currency to Babb without requiring him to show that he is legally
entitled to the money. Babb, however, claims that he was entitled
to a return of the currency as a result of the government’s failure
to quiet title to the currency through statutory forfeiture
proceedings. We conclude that although a forfeiture proceeding,
with its presumptions in favor of the government, may be the
easiest means to quiet title in seized property, it is not the
government’s exclusive means. The government may still quiet title
by demonstrating that Babb is not lawfully entitled to the
currency. Because there has not yet been a determination as to
whether Babb may lawfully claim this money, we vacate and remand
for the court to make such a determination.
I.
In June 1991, a confidential informant identified for police
officers in Spartanburg, South Carolina, a number of individuals,
including Babb, who were interested in purchasing marijuana.
Officers used the informant to arrange an undercover transaction,
during which Babb was arrested. Immediately after the arrest,
officers seized from Babb $57,960 in cash. State prosecutors
initially retained custody of the cash seized from Babb and
4
commenced a civil forfeiture proceeding, but they later dropped the
proceedings, allowing the Drug Enforcement Agency (the “DEA”) to
pursue the money in federal court.
In September 1993, the DEA brought an administrative
forfeiture action, see 19 U.S.C.A. § 1609 (West 1999), a procedure
which enables the government to quiet title to seized property
without judicial process. In this summary forfeiture proceeding,
the agency seeking forfeiture must publish notice that it intends
to declare forfeiture of the seized property and furnish notice to
interested parties. See 19 U.S.C.A. § 1607 (West 1999). If no
person files a timely claim for the property, the government may
declare the property forfeited. See 19 U.S.C.A. § 1609. If,
however, a claim is filed, the government must then commence
judicial forfeiture proceedings. See 19 U.S.C.A. §§ 1608 (West
1999); see also United States v. Minor, 228 F.3d 352, 354 (4th Cir.
2000).1 Because no claim was filed after the government sent its
1
If a claimant files a claim asserting that the seized
property is not subject to forfeiture, then the administrative
proceedings halt and the agency conducting the forfeiture must
refer the case to the United States Attorney for the commencement
of a judicial forfeiture proceeding (under 21 U.S.C.A. § 881 (West
1999) for drug seizures). At that point, the government must show
that there was probable cause to believe that the seized property
was subject to forfeiture. If the government carries this
relatively light burden, a presumption arises that the government
is entitled to the property. The burden then shifts to the
claimant to show either that the property is not subject to
forfeiture or that he is an innocent owner.
5
notice of forfeiture, the DEA declared the $57,960 administratively
forfeited in December 1993.
In 1997, Babb brought an action in federal court to invalidate
the administrative forfeiture, alleging that it was invalid because
he did not receive sufficient notice. On May 20, 1998, the
district court agreed and ordered that “the DEA must either return
the money to Babb or commence judicial forfeiture proceedings in
the district court.” JA 35-36.2
In July 1998, the government commenced a judicial forfeiture
proceeding. Babb moved to dismiss, arguing that the proceeding was
time-barred by 19 U.S.C.A. § 1621, which required the government to
commence a judicial forfeiture action “within five years after the
time when the alleged offense was discovered.”3 The district
court, however, ruled that the statute of limitations was equitably
tolled from the time the DEA initiated administrative proceedings
until the time the administrative proceedings were invalidated.
The district court then conducted a bench trial and found that the
$57,960 should be forfeited to the DEA. The evidentiary basis for
2
The government did not appeal this ruling--only Babb did, and
on a point not relevant here. See Babb v. United States Drug
Enforcement Admin., 172 F.3d 862, 1999 WL 31159 (4th Cir. Jan. 26,
1999) (unpublished).
3
Congress amended the statute to require a forfeiture action
to be commenced “within five years after the time when the alleged
offense was discovered” or “within 2 years after the time when the
involvement of the property in the alleged offense was discovered,
whichever was later.” 19 U.S.C.A. § 1621 (West Supp. 2005).
6
the court’s conclusion included testimony that the “currency was
seized from Babb as he attempted to use it to purchase marijuana,”
that Babb was involved in drug trafficking, and that Babb lacked
employment during the relevant time frame. J.A 42. Babb appealed.
This court reversed, concluding that equitable tolling was not
appropriate because the administrative proceeding was void, having
never been properly commenced by the DEA in the first place. See
United States v. Babb, 54 Fed. Appx. 772, 774 (4th Cir. 2003) (per
curiam). Accordingly, equitable tolling was not available and the
DEA’s judicial forfeiture action was time-barred by 19 U.S.C.A.
§ 1621. We therefore reversed the order of the district court
granting the DEA title to the currency and remanded for further
proceedings.
In January 2004, Babb filed a “Motion for Return of Property,”
seeking an order directing that the government return the currency
and pay “interest on the corpus since the date of the seizure,” as
well as related attorney’s fees. J.A. 50. Babb filed this motion
under the same caption and civil action number as his action to set
aside the administrative forfeiture. Indeed, the motion for return
of the $57,960 was based solely upon the order of the district
court entered in that action on May 20, 1998, directing the DEA to
return the money to Babb or commence judicial forfeiture
proceedings. Babb requested interest and attorney’s fees pursuant
to the Civil Asset Forfeiture Reform Act(“CAFRA”) of 2000, see 28
7
U.S.C.A. 2465 (West Supp. 2005), and the Equal Access to Justice
Act, see 28 U.S.C.A. § 2412 (West 1994 & Supp. 2005).
On March 1, 2004, the district court denied Babb’s request for
interest and attorney’s fees, but did not address Babb’s motion for
the currency itself. Babb then filed a pro se motion to alter or
amend the judgment, seeking a more specific ruling with respect to
the currency still held by the DEA. On May 21, 2004, the district
court issued an order reaffirming its denial of interest and fees,
but adding a directive that judgment be entered on behalf of Babb
in the amount of $57,960.
Babb appeals from the district court’s order denying interest
and attorney’s fees on the $57,960 seized from Babb during the drug
transaction. The government cross-appeals the district court’s
judgment awarding Babb the currency. We address the government’s
cross-appeal first because Babb’s claim for interest and attorney’s
fees arises only if he is entitled to the currency in the first
place.
II.
The government argues that, despite its unsuccessful attempts
to use the shortcuts and presumptions afforded through statutory
administrative and judicial forfeiture proceedings, Babb is not
entitled to the return of the $57,960 seized from him during the
undercover drug sale. Relying on decisions by the Second and Tenth
8
Circuits, the government argues that its failure to quiet title to
the currency by means of civil forfeiture proceedings does not
automatically vest title in Babb, because such a result would give
Babb presumptive ownership rights in currency seized in connection
with illegal drug trafficking and relieve him of the burden of
proving lawful entitlement to the currency. See Alli-Balogun v.
United States, 281 F.3d 362, 371-72 (2nd Cir. 2002); United States
v. Clymore, 245 F.3d 1195, 1200 (10th Cir. 2001). We agree with
the government for two interrelated reasons.
First, a civil forfeiture proceeding is not the exclusive
means for the government to quiet title to property it has seized
in connection with criminal activity. For example, the government
may quiet title to such property as part of a criminal proceeding
wherein it alleges a forfeiture count in the indictment and proves,
by a preponderance of the evidence, that the subject property was
“derived from the proceeds of illegal drug activities, or . . .
used in any way to facilitate the commission of such violations.”
United States v. Tanner, 61 F.3d 231, 233 (4th Cir. 1995); see 21
U.S.C.A. § 835(a) (West 1999). The government may also settle the
issue of title to the confiscated property as a defendant or
respondent in an equitable proceeding brought by the claimant for
the return of the property. See United States v. Minor, 228 F.3d
352, 355-57 (4th Cir. 2000) (holding that an equitable cause of
action lies for a claimant seeking to invalidate an administrative
9
forfeiture and recover currency seized during drug arrest); see
also Alli-Balogun, 281 F.3d at 371 (explaining that alternative to
forfeiture proceedings is “opposi[tion] [to] a . . . civil
equitable motion filed by the claimant”); Clymore, 245 F.3d at 1200(“The government . . . does not have to quiet title to § 881
property only through civil forfeiture proceedings. . . [T]he
government may [instead] be awarded quiet title to confiscated
property in a civil equitable proceeding . . . brought by one who
alleges a lawful right to possession.”).
Because this latter means of quieting title to seized
property--responding to a claimant’s equitable action--is
essentially a back-door method for the government to retain the
property, it presents greater procedural obstacles to the
government. When the government fails to utilize the statutory
forfeiture process, it
can still perfect its title to the seized property, but
rather than do so by means of a judicial forfeiture
proceeding in which the government’s case is assisted by
presumptions, it is relegated to opposing a Rule 41(e) or
civil equitable motion filed by the claimant in which the
government “los[es] the benefit of the opportunity to
perfect its right to title by using the statutory
shortcuts, presumptions, and statutory burdens of proof.”
Alli-Balogun, 281 F.3d at 371 (quoting Clymore, 245 F.3d at 1201).
The Tenth Circuit provided this concise comparison:
In a forfeiture action, if the government establishes
probable cause to seize the subject property, the
claimant bears the burden of proving that the requested
forfeiture does not fall within the four corners of the
statute [and i]f no such rebuttal is made, a showing of
10
probable cause alone will support a judgment of
forfeiture. A claimant in a Rule 41(e) or equitable
proceeding, on the other hand, must prove only a right to
lawful possession of the property and an equitable right
to its return, and no presumptions exist in favor of the
government.
Clymore, 245 F.3d at 1201.
Second, as the foregoing discussion suggests, a party who
claims that the government must return seized property still must
demonstrate lawful entitlement to the property and an equitable
right to its return. Even when the claimant does not face the more
daunting task of challenging forfeiture, he must make at least a
threshold showing of lawful entitlement. See United States v.
Maez, 915 F.2d 1466, 1468 (10th Cir. 1990). Usually, this showing
is minimal, as “the person from whom the property was seized is
presumed to have a right to its return.” United States v.
Chambers, 192 F.3d 374, 377 (3rd Cir. 1999). The burden then
shifts to the government, which must “demonstrate that it has a
legitimate reason to retain the property.” Id. The government
meets this burden if, “at a hearing on the Rule 41(e) or civil
equitable motion, [it] establishes that the property is § 881(a)
property--i.e., proceeds traceable to illegal drug transactions.”
Alli-Balogun, 281 F.3d at 372. At that point, “the claimant cannot
prove a right to lawful possession and an equitable right to its
return unless the claimant is an innocent owner.” Id.If the currency seized from Babb was automatically returned to
him because it was not forfeited, Babb would essentially enjoy an
11
irrebutable presumption of ownership in property seized in
connection with a drug transaction. Such a result does not square
with federal law, under which “no property right shall exist in .
. . moneys . . . furnished or intended to be furnished by any
person in exchange for a controlled substance,” “proceeds traceable
to such an exchange,” or “moneys . . . used or intended to be used
to facilitate any violation of [drug trafficking laws].” 21
U.S.C.A. § 881(a)(6) (West 1999).4 There is no exception to the
prohibition against property rights in § 881(a)(6) property that
applies when the government does not quiet title through forfeiture
proceedings. Only an innocent owner can claim ownership rights
when such property was lawfully seized.5
In sum, even when the government is foreclosed from perfecting
its title to drug-related currency via forfeiture proceedings, or
fails to pursue forfeiture in the first place, the government may
4
In fact, when the government seizes property connected to a
narcotics offense, “it holds an unperfected right to title to it,
and ownership will retroactively vest in the government from the
time the illegal act was committed upon a judicial quieting of
title to the property in favor of the government.” Clymore, 245
F.3d at 1200; see Alli-Balogun, 281 F.3d at 371.
5
At the time that the government seized the currency at issue
here, section 881(a)(6) excepted money “furnished or intended to be
furnished . . . in exchange for a controlled substance” from the
scope of forfeiture “to the extent of the interest of an owner” if
the forfeiture was “by reason of any act or omission established by
that owner to have been committed or omitted without the knowledge
or consent of that owner.” See 21 U.S.C.A. § 881(a)(6); see United
States v. Federal Nat’l Mortgage Ass’n, 946 F.2d 264, 265 (4th Cir.
1991).
12
retain the property until the claimant files an equitable action or
motion and demonstrates that he is lawfully entitled to the return
of the property. In response to such an action or motion, the
government may still establish its ownership by demonstrating the
property at issue is § 881(a) property. See Mantilla v. United
States, 302 F.3d 182, 187 (3rd Cir. 2002); Alli-Balogun, 281 F.3d
at 371; Clymore, 245 F.3d at 1201; Kadonsky v. United States, 216
F.3d 499, 507 (5th Cir. 2000). The district court made no
determination that Babb was lawfully entitled to the return of the
currency seized by the government, and Babb points to no evidence
in the record that would support such a conclusion. The remaining
question, therefore, is whether the government is foreclosed from
making its argument at this time.
III.
Regardless of whether the government ordinarily has means
other than forfeiture to establish its right to retain currency
seized during a drug transaction, Babb argues that the government
is barred from pursuing these means in this case. Specifically,
Babb views the district court’s order of May 20, 1998, directing
that the government return the seized funds to Babb or commence
judicial forfeiture, as dispositive of the issue of his right to
the currency. Babb argues that we lack jurisdiction to review the
government’s cross-appeal because the government is, in essence,
13
bringing an untimely appeal of the district court’s May 20, 1998,
order. Alternatively, Babb argues the government is barred from
pursuing its cross-appeal by the doctrines of claim preclusion,
issue preclusion, and waiver, or by the mandate rule.
A.
Babb contends that the government’s notice of appeal, filed
July 22, 2004, was untimely, leaving us without appellate
jurisdiction over the cross-appeal. See, e.g., Browder v.
Director, Dep’t of Corr., 434 U.S. 257, 264 (1978) (explaining that
the filing of a timely notice of appeal is “mandatory and
jurisdictional”). Babb views the government’s cross-appeal as
nothing more than a challenge to the May 1998 order which directed
the government to return the money or commence a forfeiture action
in district court. Thus, Babb claims the government’s notice of
cross-appeal is far too late to afford us jurisdiction to review
the district court’s May 1998 order.
The government’s notice of appeal specifies the district
court’s order of judgment entered May 24, 2004, as the subject of
its cross-appeal. With respect to that order, the notice of appeal
is unquestionably timely. Nothing contained in the notice of
appeal or the briefs filed by the government suggests that the
government is attempting to appeal the May 1998 order. Therefore,
we cannot agree with Babb’s contention that the government is
14
appealing the 1998 order. Moreover, in this circuit, a notice of
appeal is not a strict jurisdictional requirement for purposes of
a cross-appeal, as Babb suggests. Rather, we treat the notice of
cross-appeal requirement as a non-jurisdictional rule of practice.
See LaFaut v. Smith, 834 F.2d 389, 394 n.9 (4th Cir. 1987); Tug
Raven v. Trexler, 419 F.2d 536, 548 (4th Cir. 1969).6
We conclude that the government’s notice of appeal is not
defective and in no way deprives us of jurisdiction to review the
cross-appeal. The crux of Babb’s objection to the cross-appeal is
not the timeliness of the notice of appeal, but rather that the
government is trying to raise an issue -- Babb’s entitlement to the
cash -- that, in Babb’s view, was or could have been settled
previously. Hence, Babb offers several preclusion theories as a
bar to the government’s claims. These theories, however, are not
jurisdictional in nature. See, e.g., Castro v. United States, 540
U.S. 375, 384 (2003) (explaining that “[t]he law of the case
doctrine . . . simply expresses common judicial practice; it does
not limit the courts’ power” (internal quotation marks omitted));
6
The circuits are divided over this question. Compare
Mendocino Environmental Center v. Mendocino County, 192 F.3d 1283,
1298 (9th Cir. 1999) (treating the cross-appeal requirement as non-
jurisdictional); Texport Oil Co. v. M/V Amolyntos, 11 F.3d 361, 366
(2nd Cir. 1993) (same); Spann v. Colonial Village, Inc., 899 F.2d
24, 33 (D.C. Cir. 1990) (same), with Johnson v. Teamsters Local
559, 102 F.3d 21, 29 (1st Cir. 1996) (cross-appeal is
jurisdictional); Francis v. Clark Equip. Co., 993 F.2d 545, 552-53
(6th Cir. 1993) (same); Rollins v. Metro. Life Ins. Co., 912 F.2d
911, 917 (7th Cir. 1990) (same).
15
Andrews v. Daw, 201 F.3d 521, 524 n.1 (4th Cir. 2000) (noting that
the res judicata doctrine is an affirmative defense subject to
waiver); United States v. Matthews, 312 F.3d 652, 657 (5th Cir.
2002) (observing that the “mandate rule” is not jurisdictional).
B.
We now turn to Babb’s alternative position that even if we
have jurisdiction to consider the cross-appeal, the government’s
arguments are barred by either the doctrine of res judicata or the
doctrine of waiver and the mandate rule. Res judicata includes the
related concepts of claim preclusion and issue preclusion. Issue
preclusion “forecloses the relitigation of issues of fact or law
that are identical to issues which have been actually determined
and necessarily decided in prior litigation.” Sedlack v. Braswell
Servs. Group, Inc., 134 F.3d 219, 224 (4th Cir. 1998) (internal
quotation marks and citation omitted). Claim preclusion bars
claims in later litigation arising from the same cause of action as
an earlier case in which final judgment on the merits has been
entered. It is broader, extending to claims that were not but
“might have been presented” in the earlier case. In re Varat
Enters., Inc., 81 F.3d 1310, 1315 (4th Cir. 1996). Both doctrines
serve to limit relitigation of issues settled in separate, prior
litigation.
16
The mandate rule is closely related to the doctrine of the law
of the case. See South Atlantic Ltd. P’ship of Tenn. v. Riese, 356
F.3d 576, 583 (4th Cir. 2004) (noting that the mandate rule is “a
more powerful version of the law of the case doctrine” (internal
quotation marks omitted)). The law of the case doctrine, too,
proscribes relitigation of issues that were previously settled;
however, the focus is on ensuring that “when a court decides upon
a rule of law, that decision should continue to govern the same
issues in subsequent stages in the same case.” Christianson v.
Colt Indus. Operating Corp., 486 U.S. 800, 816 (1988) (emphasis
added) (internal quotation marks omitted).
Because we view the district court’s May 20, 1998, order as
having been entered in an earlier stage of this litigation, not in
a prior separate action, we find that the mandate rule and the
doctrine of waiver fit better analytically than res judicata.
After the district court directed that “the DEA must either return
the money to Babb or commence judicial forfeiture proceedings in
the district court,” J.A. 35-36, the government immediately
commenced a separate forfeiture action. When this court
subsequently determined that the forfeiture action was barred by
the statute of limitations, See United States v. Babb, 54 Fed.
Appx. 772, 774 (4th Cir. 2003) (per curiam), Babb returned to
district court in January 2004 and filed his motion for return of
the property under the original caption and civil action number as
17
his equitable action to invalidate the administrative forfeiture.
Babb’s motion merely sought to bring to a conclusion his equitable
claim for the money.7 Babb contends that the government should
have challenged the district court’s May 20, 1998, order at the
time it was entered, and that its failure to do so amounted to a
waiver of its ability to challenge the directive that the money be
returned to Babb. Babb contends further that the district court
was barred by the mandate rule from reconsidering its directive.
The mandate rule provides that “a lower court generally may not
consider questions that the mandate has laid to rest.” See South
Atlantic Ltd. P’ship, 356 F.3d at 583-84. The mandate rule
“forecloses litigation of issues decided by the district court but
foregone on appeal or otherwise waived.” United States v. Bell, 5
F.3d 64, 66 (4th Cir. 1993).
We cannot agree that the government has waived the issue of
Babb’s lawful right to possess the currency by failing to raise it
in a prior appeal. A brief review of the procedural history
demonstrates that the district court did not decide this issue in
its May 20, 1998, order. In 1997, Babb filed his pro se action
challenging the administrative forfeiture proceedings which were
completed in December 1993. The complaint alleged that Babb owned
the money, that the DEA seized it, and that the DEA failed to
7
Our opinion in 2003 addressed only the statute of limitations
issue and did not pass explicitly or implicitly on any other issue
relevant to this appeal.
18
provide him sufficient notice of its intent to forfeit the currency
and thereby deprived him of his opportunity to contest forfeiture.
Although Babb requested the return of the currency seized by the
government, his complaint, construed liberally, sought an order
invalidating the administrative forfeiture. The complaint also
asserted that William Lunsford, a DEA agent who took custody of the
seized currency from state officials, was individually liable for
the currency.
Instead of filing an answer, the government moved immediately
to dismiss the complaint on the grounds that the district court did
not have subject matter jurisdiction over Babb’s claims and that
Agent Lunsford was protected by qualified immunity. The district
court dismissed the claims against Agent Lunsford, but concluded
that it had jurisdiction to consider a challenge to the sufficiency
of the notice of forfeiture given to Babb.
Babb then filed a motion for summary judgment. On May 20,
1998, the district court entered an order granting summary judgment
for Babb on his claim of insufficient notice, concluding that “the
administrative forfeiture is void as a matter of law” because “the
DEA’s attempts at notice did not comport with due process.” J.A.
35. In light of this conclusion, the district court declined to
address Babb’s alternative basis for voiding the administrative
forfeiture -- that the DEA lacked in rem jurisdiction over the
currency. The district court ultimately concluded that “the DEA
19
must either return the money to Babb or commence judicial
forfeiture proceedings in the district court.” J.A. 35-36. The
government did not appeal this ruling. See Babb v. United States
Drug Enforcement Admin., 172 F.3d 862, 1999 WL 31159 (4th Cir. Jan.
26, 1999) (unpublished) (affirming the dismissal of Babb’s claims
against Agent Lunsford individually).
The district court’s ruling simply permitted Babb to have his
day in court to contest the government’s right to the money and
precluded the government from holding the money indefinitely
without affording Babb due process. The effect of the district
court’s order was to place Babb in the position he would have
occupied if he had received sufficient notice of the administrative
forfeiture proceedings and had filed a claim--participating as a
claimant in a judicial forfeiture proceeding in which the
government’s ownership interest, not Babb’s, was at issue. See
United States v. $557,933.89, 287 F.3d 66, 77 (2nd Cir. 2002) (“It
must be remembered that what is adjudicated in a judicial civil
forfeiture proceeding is the government’s right to the property,
not the claimant’s . . . . [T]he claimant’s ownership of the
defendant property is not at issue in determining the primary
question of the government’s right to forfeiture.”). Hence, the
district court directed the government only to “commence” judicial
forfeiture proceedings, not to obtain an order of forfeiture. The
court did not discuss, much less reach, an alternate holding in the
20
event forfeiture proceedings failed. Such a holding would have
been superfluous given that forfeiture is not the exclusive method
for the government to establish ownership of the currency. We also
note that the court entered its order before the government could
even file an answer to Babb’s complaint. Thus, in our view, the
district court reasonably left open the issue of whether Babb was
legitimately entitled to the money if the government was unable to
establish title through forfeiture proceedings. And, because the
issue was left open, the government did not waive it by failing to
raise it previously, nor is the government barred by the mandate
rule from taking this position in this appeal.
Because there has been no determination as to whether Babb is
lawfully entitled to the currency, we remand Babb’s claim to the
district court. The government asserts that Babb cannot make the
requisite showing that he has a lawful right to the money because
it is undisputed that Babb and his associates intended the $57,960
in cash to be furnished in exchange for drugs. Thus, Babb can have
“no property right” in the money. 21 U.S.C.A. § 881(a)(6). We
decline to make findings in the first instance on the incomplete
record before us.
IV.
We conclude that the district court prematurely ordered that
the currency be returned to Babb without determining whether he was
21
lawfully entitled to it. Accordingly, we need not address Babb’s
argument that the district court erred in denying his claim for
interest and attorney’s fees.
VACATED AND REMANDED
22