United States v. $92,203.00 in United States Currency

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 28, 2008
No. 06-51033 Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Petitioner-Appellee
v.
$92,203.00 in United States Currency
Respondent
ROBERTO GARCIA-BAEZA
Claimant-Appellant
Appeals from the United States District Court
for the Western District of Texas
Before PRADO, ELROD, and HAYNES, Circuit Judges.
PRADO, Circuit Judge:
In this appeal, Claimant-Appellant Roberto Garcia-Baeza (“Garcia”)
contends that the district court erroneously ordered him to forfeit to the
Government $92,203.00 in United States currency that was allegedly found on
Garcia’s person and in his vehicle. Although Garcia makes numerous claims on
appeal, we focus on his assertion that the district court relied on inadmissible
evidence when granting summary judgment in favor of the Government.
Concluding that the contested evidence contained inadmissible hearsay, we
REVERSE and REMAND for further proceedings consistent with this opinion.
No. 06-51033
I. FACTUAL AND PROCEDURAL BACKGROUND
According to the United States (“the Government”), on April 20, 2005, a
grand jury indicted Garcia on a single count of violating 31 U.S.C. § 5332, which
makes it a crime to knowingly conceal more than $10,000.00 in cash in order to
evade the currency reporting requirements found in 31 U.S.C. § 5316. Section
5316 mandates that a person file a report with the United States whenever that
person intends to transport more than $10,000.00 in cash out of the country.
The Government asserts that, following a jury trial, Garcia was convicted of
violating 31 U.S.C. § 5332 and was sentenced by the district court to twenty-
seven months in prison.
The Government then filed the instant civil forfeiture action against
$92,203.00 in United States currency—the currency that the Government claims
Garcia concealed in an attempt to avoid the currency reporting requirements.
Garcia, proceeding pro se, asserted a claim to $40,000.00 of the currency. The
Government moved for summary judgment, relying exclusively on an affidavit
by Stephen Pena (“Agent Pena”), a Senior Special Agent with Immigration and
Customs Enforcement (“ICE”). Garcia responded and made several objections,
including that the affidavit was inadmissible because it was not based on the
affiant’s personal knowledge and that the forfeiture violated the Excessive Fines
Clause of the Eighth Amendment. The district court granted the Government’s
motion without addressing Garcia’s arguments and ordered that the money be
forfeited. The district court also did not conduct the analysis described in 18
U.S.C. § 983(g) that is required when a claimant asserts that the forfeiture is
constitutionally excessive.
Garcia moved for post-judgment relief pursuant to Rule 60(b) of the
Federal Rules of Civil Procedure, claiming that newly discovered evidence cast
doubt on the reason put forth by the Government for its decision to detain and
arrest Garcia in the first place. The district court denied Garcia’s motion.
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Garcia timely appealed both the judgment of forfeiture and the denial of his Rule
60(b) motion. The appeals were consolidated and are now before this court. We
have jurisdiction pursuant to 28 U.S.C. § 1291 and now turn to the merits of
Garcia’s arguments.
II. STANDARD OF REVIEW
This court reviews a district court’s order granting summary judgment de
novo. Morris v. Equifax Info. Servs., L.L.C., 457 F.3d 460, 464 (5th Cir. 2006).
Summary judgment is appropriate when “the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine
issue as to any material fact and that the movant is entitled to judgment as a
matter of law.” FED. R. CIV. P. 56(c). The party seeking summary judgment has
the initial burden of informing the court of the basis for its motion and
identifying those parts of the record that demonstrate the absence of a genuine
issue of material fact. Burge v. Parish of St. Tammany, 187 F.3d 452, 465 (5th
Cir. 1999). “If the moving party fails to meet this initial burden, the motion
must be denied, regardless of the nonmovant’s response.” Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam). If, however, the moving
party carries its initial burden, the burden then falls upon the nonmoving party
to demonstrate the existence of a genuine issue of material fact. Burge, 187 F.3d
at 465.
III. DISCUSSION
Garcia raises numerous issues on appeal, including that summary
judgment was improperly based on inadmissible evidence, that the forfeiture
order violated the Eighth Amendment’s Excessive Fines Clause, and that newly
discovered evidence mandated relief under Rule 60(b). We begin our analysis by
addressing the Government’s use of hearsay during summary judgment in a civil
forfeiture proceeding.
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No. 06-51033
The forfeiture proceedings in this case are governed by the Civil Asset
Forfeiture Reform Act of 2000 (“CAFRA”), Pub. L. No. 106-185, 114 Stat. 202.
To be entitled to forfeiture under CAFRA, the Government must establish by a
preponderance of the evidence that “the property is subject to forfeiture . . . .”
18 U.S.C. § 983(c)(1). As grounds for forfeiture, the Government relies on 31
U.S.C. § 5332(c), which provides that any property involved in a violation of
§ 5332(a) may be seized and forfeited to the Government. As noted above,
§ 5332(a) makes it illegal to knowingly conceal more than $10,000.00 in cash in
order to avoid filing a report with the Government regarding the transportation
of the cash over the border. Thus, the Government must show that the
$92,203.00 at issue was money concealed by Garcia with the intent to evade the
reporting requirements.
As the party moving for summary judgment, the Government was required
to demonstrate that there were no genuine issues of material fact and that it was
entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c); Burge, 187
F.3d at 465. Here, the Government relied solely on an affidavit by Agent Pena
to establish its entitlement to summary judgment. Agent Pena’s affidavit begins
with the statement that “the following information was either gathered in the
course of my official duties or I know this information of my own personal
knowledge.” Agent Pena then goes on to explain that on April 12, 2005, officers
with the Texas Department of Public Safety pulled Garcia over for speeding. A
subsequent consensual search yielded $92,203.00 in cash concealed on Garcia’s
person and inside his vehicle. Agent Pena also stated that Garcia later told law
enforcement officers that he intended to drive his vehicle to Mexico without
reporting the currency to customs officials. The affidavit concludes by noting
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No. 06-51033
Garcia’s conviction under 31 U.S.C. § 5332. The Government submitted no other
evidence in support of its motion for summary judgment.1
Garcia asserts that Agent Pena’s affidavit is inadmissible under Federal
Rule of Evidence 602, which requires that testimony be based on personal
knowledge. We agree that Agent Pena’s affidavit was clearly not based on
personal knowledge but instead was comprised primarily of hearsay statements.
Indeed, it is undisputed that Agent Pena was not present when Garcia was
initially pulled over by Texas law enforcement, so any information regarding
those events could have been obtained only through hearsay. The Government
does not offer any argument to the contrary except to suggest that Garcia’s own
admissions to law enforcement officers, which are described in the affidavit, are
not hearsay. That assertion, however, is incorrect. While Garcia’s admissions
might not be hearsay, see FED. R. EVID. 801(d)(2) (admission of a party-opponent
is not hearsay), the law enforcement officers’ statements to Agent Pena about
Garcia’s admissions are hearsay, see FED. R. EVID. 805 (hearsay within hearsay
is inadmissible unless both parts are shown to be admissible). Therefore, the
affidavit clearly contained hearsay, was not based on personal knowledge, and,
under normal summary judgment procedures, is not admissible. See Bolen v.
Dengel, 340 F.3d 300, 313 (5th Cir. 2003); see also FED. R. CIV. P. 56(e)(1)
(requiring that affidavits be made on personal knowledge).
However, normal summary judgment procedures have not always applied
to civil forfeiture proceedings. In the past, the rule in civil forfeitures was that
1
In response to Garcia’s motion to strike Agent Pena’s affidavit, the Government
included two pages of the transcript from Garcia’s sentencing in his criminal case in which the
district judge found by a preponderance of the evidence that Garcia was responsible for all
$92,203.00 in the vehicle. However, this evidence was submitted after summary judgment
briefing was complete, and a moving party is typically not permitted to submit new evidence
after its initial brief unless the nonmoving party has an opportunity to respond. See Vais
Arms, Inc. v. Vais, 383 F.3d 287, 292 & n.10 (5th Cir. 2004). Garcia had no such opportunity
to respond; therefore, we do not consider this evidence.
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No. 06-51033
the United States had the initial burden of demonstrating that probable cause
existed to seize the currency. United States v. $400,000.00 in U.S. Currency, 831
F.2d 84, 87 (5th Cir. 1987). We defined probable cause as “‘reasonable ground
for belief of guilt, supported by less than prima facie proof but more than mere
suspicion.’” United States v. $38,600.00 in U.S. Currency, 784 F.2d 694, 697 (5th
Cir. 1986) (quoting United States v. $364,960 in U.S. Currency, 661 F.2d 319,
323 (5th Cir. 1981)). To that end, we permitted the Government to rely on
hearsay evidence in establishing probable cause. United States v. One Hundred
Twenty-Four Thousand Eight Hundred Thirteen Dollars in U.S. Currency, 53
F.3d 108, 111 (5th Cir. 1995) (per curiam). The burden then shifted to the
claimant to prove a defense by a preponderance of the evidence. Id. The
claimant, however, was not permitted to rely on hearsay to establish his defense.
See United States v. One 1968 Piper Navajo Twin Engine Aircraft, 594 F.2d
1040, 1042-43 (5th Cir. 1979) (per curiam) (adopting district court’s opinion that
refused to admit hearsay evidence in support of claimant’s argument for the
forfeited property).
In 2000, however, Congress enacted CAFRA, which altered the procedures
by which the Government could obtain a civil forfeiture. The new procedures,
which are applicable to this case, provide that “the burden of proof is on the
Government to establish, by a preponderance of the evidence, that the property
is subject to forfeiture . . . .” 18 U.S.C. § 983(c)(1). Further, if the Government’s
theory of forfeiture is that the property was involved in the commission of a
criminal offense, the Government must establish a “substantial connection”
between the property and the offense. Id. § 983(c)(3). The claimant then has the
burden of proving that he is an innocent owner by a preponderance of the
evidence. Id. § 983(d)(1).2
2
The legislative history surrounding CAFRA indicates that Congress was concerned
about the ease with which the Government could seize property through the existing,
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No. 06-51033
This increase in the Government’s burden—from probable cause to
preponderance of the evidence—has caused numerous lower courts to hold that
hearsay evidence is no longer permissible post-CAFRA. United States v. .30 Acre
Tract of Land, 425 F. Supp. 2d 704, 708 n.3 (M.D.N.C. 2006) (“Additionally, the
United States is no longer permitted to rely on hearsay evidence to meet its
burden.”); United States v. One 1991 Chevrolet Corvette, 390 F. Supp. 2d 1059,
1065-66 (S.D. Ala. 2005); United States v. One Parcel of Prop. Located at 2526
Faxon Ave., 145 F. Supp. 2d 942, 950 (W.D. Tenn. 2001).3 Indeed, the
Government does not argue otherwise, and in fact, appears to have conceded this
issue before a different court. See United States v. Six Negotiable Checks in
Various Denominations Totaling One Hundred Ninety One Thousand Six
Hundred Seventy One Dollars and Sixty Nine Cents ($191,671.69), 207 F. Supp.
2d 677, 683 (E.D. Mich. 2002) (“As the Government recognizes in its reply brief,
this elevated standard seemingly precludes any reliance on hearsay, as the
Government could have done in a pre-CAFRA case.”).
Canons of statutory construction also signal a change in the admissibility
of hearsay. Reading the § 983 procedures in their entirety indicates that
hearsay evidence (or any other evidence not admissible under the Federal Rules
of Evidence) is not permitted in deciding the merits of a forfeiture case.
Subsection (j) of § 983 describes the procedures by which the Government may
pre-CAFRA, forfeiture procedures. H.R. Rep. No. 106-192, 1999 WL 406892, at *12 (June 18,
1999) (“The government, under the [pre-CAFRA] approach, need not produce any admissible
evidence and may deprive citizens of property based on the rankest of hearsay and the
flimsiest evidence. This result clearly does not reflect the value of private property in our
society, and makes the risk of an erroneous deprivation intolerable.” (internal quotation marks
omitted)).
3
There are a few district courts in our circuit that have continued to state that hearsay
evidence is permissible; however, in those cases, it does not appear that the parties made
hearsay an issue. See, e.g., United States v. $93,029.50 in Currency, Civ. A. No. 07-1097, 2008
WL 1766684, at *2 (W.D. La. Apr. 17, 2008); United States v. 1999 Kenworth Tractor, Civ. A.
No. C-04-284, 2005 WL 2648023, at *2 (S.D. Tex. Oct. 17, 2005).
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No. 06-51033
seek a temporary restraining order (“TRO”) or injunction in order to seize,
secure, maintain, or preserve the property subject to forfeiture (to be followed by
a decision on the merits). CAFRA sets the Government’s burden at a TRO
hearing as probable cause and explicitly provides that “[t]he court may receive
and consider, at a hearing held pursuant to this subsection, evidence and
information that would be inadmissible under the Federal Rules of Evidence.”
18 U.S.C. § 983(j)(3)-(4). If hearsay (or other evidence that is normally
inadmissible) was intended to be admissible in all forfeiture procedures under
CAFRA, there would be no need for Congress to expressly state that otherwise
inadmissible evidence is admissible in TRO hearings. In other words, reading
CAFRA as permitting the use of hearsay evidence at all times renders subsection
(j)(4) (which applies only to TROs) superfluous. We are to “read a statute as a
whole, so as to give effect to each of its provisions without rendering any
language superfluous.” Waggoner v. Gonzales, 488 F.3d 632, 636 (5th Cir. 2007)
(internal quotation marks omitted). Adherence to that rule suggests that
hearsay is no longer admissible for purposes of a merits decision in a civil
forfeiture case.
In sum, we conclude that the increase in the Government’s burden of proof
and the decision to single out TRO hearings as exempt from the Federal Rules
of Evidence clearly demonstrate that, by enacting CAFRA, Congress intended
to end the practice of reliance on hearsay in civil forfeiture decisions. The
Government’s only argument to the contrary rests on outdated cases that use the
pre-CAFRA probable cause standard, which obviously does not apply to this
post-CAFRA proceeding. We therefore agree with the lower courts that have
directly addressed this issue and hold that courts may no longer rely on hearsay
(absent an exception to the hearsay rule) when deciding the merits of a civil
forfeiture proceeding brought under CAFRA. Instead, any affidavits submitted
by the parties must be based on personal knowledge.
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No. 06-51033
Consequently, the district court erred in this case by not striking Agent
Pena’s affidavit at the request of Garcia. Without Agent Pena’s affidavit, the
Government is left with no admissible evidence in support of its motion for
summary judgment and has not established that it is entitled to a judgment of
forfeiture as a matter of law.4 Therefore, we must reverse the judgment of the
district court and remand for further proceedings consistent with this opinion.
See Little, 37 F.3d at 1075 (holding that if movant fails to meet its burden of
proof, the motion for summary judgment must be denied).
Because we are reversing and remanding, we need not address Garcia’s
claim that the forfeiture violated the Eighth Amendment’s Excessive Fines
Clause. Instead, we leave that question for the district court to decide in the
first instance. See Austin v. United States, 509 U.S. 602, 622-23 (1993)
(“Prudence dictates that we allow the lower courts to consider [the
excessiveness] question in the first instance.”). On remand, the district court
will be required to conduct the excessiveness analysis described in 18 U.S.C.
§ 983(g). Our ruling also makes Garcia’s claim under Rule 60(b) regarding newly
discovered evidence moot, as he will now have an opportunity to present that
evidence to the district court. Thus, we decline to address that issue.
IV. CONCLUSION
Because the district court erred in granting summary judgment to the
Government in this civil forfeiture case, we REVERSE and REMAND for further
proceedings consistent with this opinion.
REVERSED and REMANDED.
4
To the extent the Government asserts that Garcia’s conviction for violating § 5332(a)
is sufficient proof in this case, its argument is unavailing. Not only did the Government not
introduce any admissible evidence of Garcia’s conviction, a conviction for concealing “more than
$10,000 ” is not sufficient to demonstrate a substantial connection to the $92,203.00 at issue
in this case.
9