U.S.A. v. Tuthill Rd.

• Decision Date: 05 December 2000
• Docket Number: No. 99-4082,99-4082
• Citation: 233 F.3d 1017
• Parties: (7th Cir. 2000) United States of America, Plaintiff-Appellee, v. 5 S 351 Tuthill Road, Naperville, Illinois, Defendant, Appeal of: John Bochnewych, Claimant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1017

233 F.3d 1017 (7th Cir. 2000)

United States of America, Plaintiff-Appellee, v. 5 S 351 Tuthill Road, Naperville, Illinois, Defendant, Appeal of: John Bochnewych, Claimant.

No. 99-4082

In the United States Court of Appeals For the Seventh Circuit

Argued May 15, 2000

Decided December 5, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 8887--James F. Holderman, Judge. [Copyrighted Material Omitted] Before Flaum, Chief Judge, and Cudahy and Evans, Circuit Judges.

Cudahy, Circuit Judge.

On September 27, 1997, DuPage County Sheriff's Deputy Lance Todd responded to a complaint of barking dogs on Tuthill Road in Naperville, Illinois. At the address reported, he found a dilapidated house. Deputy Todd called the sheriff's office and learned that Peter Boch was the owner of the property at 5 S 351 Tuthill Road. Boch had been arrested and convicted for possession of cannabis earlier that year. Claiming a concern for the health of the occupants, Deputy Todd and Deputy James Mendrick entered the residence. Inside, the deputies found ten closed ziplock bags containing a green leafy substance, another ziplock bag containing partially opened ziplock bags also holding a green leafy substance, a scale, a loaded Marlin 30/30 lever action rifle and about fifteen discharged shotgun cartridges. In the basement they found three plant growing lights hanging from the ceiling, and a dozen ceramic pots filled with soil and connected to canisters of carbon dioxide gas.

Later that day the officers obtained and executed a search warrant for the house. They seized several bags of leafy material, two containers of plant food, twenty-three plant pots with soil, timers, several plant growing lamps, packaging materials, a triple beam scale, seeds packaged in small containers, and an air heater. The leafy material was determined upon analysis to be eight pounds of marijuana. The quantity of marijuana and paraphernalia found in the home were determined to be consistent with manufacturing and distributing marijuana.

On December 23, 1997, the United States filed a verified complaint for forfeiture under 21 U.S.C. sec. 881(a)(7). The property to be forfeited may have looked like a typical residence to the average viewer. But it is, legally, unique in ways that complicated the forfeiture process. First, the property is legally described as "Lots 14 and 15 in Block 3 of Arthur T. McIntosh Co.'s DuPage Farms," and each lot, or parcel, bears a different permanent index number in the DuPage County tax assessment records. The residence is located on parcel number 08- 08-202-012. Parcel 08-08-202-013 is vacant. The two parcels are taxed separately.

Further, although Peter Boch purchased both parcels together, and paid $25,000 to his wife upon their divorce to obtain her interest in the property, Boch had since tried to distance himself from the vacant half of the land. On October 8, 1985, Boch placed the vacant half of the land in trust, and that same day transferred his interest in the trust to his father, John Bochnewych. A Naperville bank serves as trustee. Shortly after the trust was created, in December of 1985, a confidential informant identified Boch as a multi-kilogram distributor of cocaine in Illinois.

The relevant terms of the trust state:

The interest of each and every beneficiary hereunder and of all persons claiming under them or any of them shall be only in earnings, avails, and proceeds arising from the sale or other disposition of said real estate and each interest is hereby declared to be personal property, and no beneficiary hereunder shall have any title or interest, legal or equitable, in or to said real estate as such, but only an interest in the earnings, avails and proceeds thereof as aforesaid.

The trust instrument further states that the trustee shall have, among other things:

[f]ull Power and authority . . . to improve, manage, protect, and subdivide said premises or any part thereof . . . to contract to sell, to grant options to purchase, to sell on any terms, to convey, either with or without consideration, to convey said premises or any part thereof to a successor or successors in trust and to grant to such successor or successors in trust all of the title, estate, powers and authorities vested in said trustee, to donate, to dedicate, to mortgage, pledge or otherwise encumber, said property, or any part thereof, to lease said property or any part thereof from time to time . . . .

Gov't Resp. to Claimant's Motion to Quash and Suppress, Ex. 4A (hereinafter Trust Agreement).

Boch possesses all of the deeds, contracts, insurance policies and other official documents relating to the property. Boch secured a mortgage on the property and made the payments. Boch also paid the taxes and utilities on the property. Additionally, Boch permitted friends and acquaintances to store their vehicles on the vacant land without securing his father's permission for them to do so.

Bochnewych had not been inside the house on the defendant property for approximately twenty years and believes it to have been vacant since 1994. Bochnewych stated that he does not know any details of the mortgage. Bochnewych is unaware of the dates of any leases or rentals of the property, and the only information he could provide was, "I know [Peter] rented [it]." Appellant's Motion to Dismiss, Ex. B at 17 (hereinafter Bochnewych Dep.). Bochnewych never received any rent on the property. Bochnewych stated that he does not know what obligations or rights Boch retained after placing the property in trust.

Bochnewych claims to have known nothing about the illegal activity on the property. When asked whether he did anything to assure that the use of the property was legal Bochnewych stated, "I don't know that. It's all [Peter's]." Id. at 60.

In October of 1997, Boch contracted to sell the property to William and Mayling Tein. The contract did not mention Bochnewych or the trust and Bochnewych did not sign the agreement. On the other hand, Bochnewych did execute, along with Boch, a direction to the trustee to convey the property to William Tein. The sale was never completed because of a lien on the property.

Bochnewych contested the forfeiture, claiming he was the owner of the vacant parcel, and an innocent owner at that. Based on his professed innocent ownership, Bochnewych moved to quash the search warrant regarding the property at 5 S 351 Tuthill Road and to suppress the evidence obtained by the search. The district court denied the motion.

The parties filed cross motions for summary judgment. The district court denied Bochnewych's motion for summary judgment due to his failure to submit a Local Rule 12(M) statement. Because of this failure, the district court deemed the facts in the government's Local Rule 12(M) statement admitted. Based on those facts the district court found that Bochnewych lacked Article III standing to contest the forfeiture and granted the government's motion for summary judgment. The district court denied Bochnewych's motion for reconsideration and made a final entry of judgment of forfeiture. Bochnewych appeals from the judgment granting the government's motion for summary judgment and the denial of Bochnewych's motion for summary judgment. The decree of forfeiture to the United States was made subject to the interests of Allegiant Bank, FSB, the holder of a mortgage interest in the property, and subject to the interest of the DuPage County Treasurer in the unpaid real estate taxes on the property.

I. Article III Standing

We must first resolve whether Bochnewych, as the beneficiary of a land trust, has standing to challenge the government's effort to forfeit the land that is the subject of the trust. Bochnewych's standing to contest the forfeiture is a question of law, which we review de novo. See United States v. 5000 Palmetto Drive, 928 F.2d 373, 375 (11th Cir. 1991).

In order to decide whether Bochnewych's interest in the land gives rise to standing, we must clarify what that interest is. State law defines and classifies property interests for purposes of the forfeiture statutes, while federal law determines the effect of the property interest on the claimant's standing. See United States v. Lester, 85 F.3d 1409, 1412 (9th Cir. 1996). The garden variety Illinois land trust gives trust beneficiaries "full powers of direction and control," and deems these rights to be personal property. Quinn v. Pullman Trust & Sav. Bank, 98 Ill.App.2d 402, 404 (1968). Had Boch set up such a trust here, the case would be easier because Bochnewych would essentially be the owner of the property. That was the situation the Fourth Circuit confronted in United States v. Santoro, 866 F.2d 1538 (4th Cir. 1989). Upon divorcing his wife, a man conveyed his one-half interest in property to his wife with the understanding that it would be used for the maintenance and education of the children. See id. at 1544. The court concluded that the children were beneficial owners of one-half of the property, and therefore had standing. See id. at 1545.

But Boch appears to have established an unorthodox land trust. While beneficiary Bochnewych has an interest in the "earnings, avails, and proceeds arising from the sale or other disposition of said real estate," the beneficiary does not have the power to manage, lease or sell the property. Moreover, a trust provision permits the trustee to sell the property "on any terms, with or without consideration." So unlike the children in Santoro, whose trustee presumably had an obligation to maximize the proceeds from the land, Bochnewych's trustee may sell the land for a peppercorn if he wishes. It is not exactly right, therefore, to call Bochnewych a beneficial owner of the land. This was essentially the basis for the district court's decision; it reasoned that because Bochnewych did not have legal or equitable title to the real estate...