US v. Lot Numbered One Of The Lavaland Annex

• Citation: 256 F.3d 949
• Decision Date: 12 June 1941
• Docket Number: PLAINTIFF-APPELLEE
• Parties: (10th Cir. 2001) UNITED STATES OF AMERICA,, v. LOT NUMBERED ONE (1) OF THE LAVALAND ANNEX, A SUBDIVISION OF A TRACT OF LAND IN SCHOOL DISTRICT NO. 28, BERNALILLO COUNTY, NEW MEXICO, AS THE SAME IS SHOWN AND DESIGNATED ON THE MAP OF SAID SUBDIVISION, FILED IN THE OFFICE OF THE COUNTY CLERK OF BERNALILLO COUNTY, NEW MEXICO, ON
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 949

256 F.3d 949 (10th Cir. 2001)

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE, v. LOT NUMBERED ONE (1) OF THE LAVALAND ANNEX, A SUBDIVISION OF A TRACT OF LAND IN SCHOOL DISTRICT NO. 28, BERNALILLO COUNTY, NEW MEXICO, AS THE SAME IS SHOWN AND DESIGNATED ON THE MAP OF SAID SUBDIVISION, FILED IN THE OFFICE OF THE COUNTY CLERK OF BERNALILLO COUNTY, NEW MEXICO, ON JUNE 12, 1941, AND ALL IMPROVEMENTS, APPURTENANCES, AND FIXTURES THEREON, DEFENDANT, AND RELAX MOTEL, INC., CLAIMANT-APPELLANT.

No. 00-2072

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

July 9, 2001

Appeal from the United States District Court for the District of New Mexico (D. C. No. CIV-98-295-LH/JHG) Ahmad Assed (Debrah Davidson and Laura Hague, with him on the briefs), Albuquerque, New Mexico, for Appellant.

Stephen R. Kotz, Assistant United States Attorney (Norman C. Bay, United States Attorney, with him on the brief), Office of the United States Attorney, Albuquerque, New Mexico, for the Appellee.

Before Ebel and Henry, Circuit Judges, and Rogers, District Judge. ^*

Henry, Circuit Judge

This appeal arises out of a civil forfeiture action brought by the United States pursuant to 21 U.S.C. § 881(a)(7). The defendant property was purchased by Relax Motel, Inc. (RMI) in 1984. RMI, the claimant- appellant in this appeal, had its rights in the defendant property ordered forfeited by the district court. Certain lienhold interests were not ordered forfeited. RMI now argues that the district court erred in interpreting and applying the innocent owner defense under § 881(a)(7) and in rejecting its contention that the forfeiture violated the Excessive Fines Clause of the Eighth Amendment.

For the reasons set forth below, we agree with RMI that the district court erred in applying the innocent owner defense, and we therefore vacate the order of forfeiture and remand the case for further proceedings consistent with this opinion. However, we further conclude that the district court properly rejected RMI's Eighth Amendment challenge to the forfeiture.

I. BACKGROUND

The defendant property is located at 5501 Central Avenue, N.W., in Albuquerque, New Mexico. The Relax Motel is on the property. RMI, which owns the property, is a closely held New Mexico corporation. Sixty-five percent of the stock is owned by Anverali Nagji and his wife Maiwesh. The rest of the stock is owned by Anverali's brother. In 1992, Altaf Nagji, a son of Anverali Nagji, entered into a lease with RMI by which he gained the operating interest in the Relax Motel in return for monthly payments of $2,255.00. Under the lease, after fifteen years Altaf Nagji is granted the option of buying the motel from RMI for $1.00. Altaf's brother Aliap helped to manage the motel.

The Relax Motel, a small establishment, was openly and obviously used for illegal drug trafficking from 1995 through 1998. Drug transactions occurred in front of, inside, and behind the motel during the day and night at such high frequency that at times people and vehicles were lined up outside of rooms and in the parking lot to participate. RMI, Altaf Nagji, and Aliap Nagji were not involved in the drug trafficking on the property and did not profit from it.

Prior to trial, RMI filed a motion to dismiss, arguing in part that forfeiture of the property would constitute an excessive fine in violation of the Eighth Amendment. The district court denied the motion.

At trial, the government presented evidence from law enforcement agents regarding the extent of the drug trafficking at the Relax Motel. In response, Anverali Nagji testified that, when his sons informed him of illegal activities there, he told them to call the police. He acknowledged that he did not ask his sons for details, did not call the police himself, and did not make any further inquiries. No evidence was presented that any other officer or director of RMI called the police about illegal activity on the property.

Anverali Nagji also testified that he served as vice-president of the Albuquerque Independent Motel Owner Association and that the Association had issued a poster that warned tenants that, if they used rooms for criminal activities, they would be subject to eviction and the police would be notified. However, no evidence was presented that this poster was actually posted at the Relax Motel.

In contrast, Altaf Nagji testified that he had notified law enforcement authorities when he observed people selling drugs in the parking lot. However, he added that he ceased reporting the drug sales after a police sergeant came to the motel office and told him not to call the police anymore. Additionally, he testified that when he would ask people to leave the premises, they would sometimes threaten him.

On February 22, 2000, the district court issued findings of fact and conclusions of law. The court concluded that there were three reasonable steps that could have prevented illegal use of the property: (1) erecting a barrier to prevent vehicles from driving to the rear portion of the motel; (2) hiring a security guard; and (3) restricting occupancy of the motel to actual customers. Because there was no evidence that RMI or Altaf Nagji took any reasonable steps to prevent drug trafficking-other than calling the police-the court concluded that they knew that the defendant property was used to facilitate felony drug violations and thus consented to the illegal activity. It therefore ordered the right, title, and interest of RMI and Altaf Nagji to be forfeited to the United States.

II. DISCUSSION

At the time of the acts at issue, § 881(a)(7) authorized the government to seek the forfeiture of real property used to facilitate illegal drug dealing:

All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year's imprisonment [shall be subject to forfeiture] except that no property shall be forfeited under this paragraph, to the extent of an interest of an owner, 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.

21 U.S.C. § 881(a)(7) (emphasis added). ¹

In this appeal, RMI first argues that the district court erred in concluding that it consented to the illegal drug dealing at the Relax Motel. It further argues that forfeiture of its interest in the property constitutes an excessive fine in violation of the Eighth Amendment. We consider each of these arguments in turn.

A. Innocent Owner Defense

The final clause of § 881(a)(7) provides that an owner may defeat a forfeiture action if it can establish that the violation of the drug laws alleged by the government occurred "without the knowledge or consent of that owner." 21 U.S.C. § 881(a)(7). As the parties note, courts have disagreed as to whether the lack-of-knowledge and lack-of- consent provisions should be read conjunctively or disjunctively. If the provisions are read conjunctively, then the claimant is required to prove that it lacked knowledge of the illegal activity on the property and that it did not consent to that activity. In contrast, under a disjunctive reading, the owner may establish the defense by proving either that it did not know about the illegal activity or that, even if it did know, it did not consent. The Ninth and Eleventh Circuits have adopted the conjunctive reading, see United States v. One Single Family Residence Located at 6960 Miraflores Ave., 995 F.2d 1558, 1561 (11th Cir. 1993); United States v. One Parcel of Land, Known as Lot 111-B, Tax Map Key 4-4-03-71(4), Waipouli, Kapaa, Island & County of Kauai, State of Haw., 902 F.2d 1443, 1445 (9th Cir. 1990), while the Second and Third Circuits have adopted the disjunctive reading. See United States v. 141st Street Corp., 911 F.2d 870, 877-78 (2d Cir. 1990); United States v. Parcel of Real Property Known as 6109 Grubb Rd., Millcreek Township, Erie County, Pa., 886 F.2d 618, 626 (3rd Cir. 1989). Our circuit has not yet reached this question.

The courts have also considered how the element of "consent" should be defined under § 881(a)(7). Some courts have adopted a broad definition, concluding that an owner consents to illegal drug use on its property if it fails "to take all reasonable steps to prevent illicit use of premises once [it] acquires knowledge of that use." 141st Street, 911 F.2d at 879; see also United States v. One Parcel of Real Estate at 1012 Germantown Road, 963 F.2d 1496, 1505 (11th Cir. 1992) (adopting the same definition of "consent" under § 881(a)(7)). ² Other courts and scholars have criticized this standard. See United States v. Lots 12, 13, 14 & 15, Keeton Heights Subdivision, Morgan County, Ky., 869 F.2d 942, 947 (6th Cir. 1989) (stating that § 881(a)(7) imposes "no requirement that a person who claims the status of an `innocent owner' establish that he has done all that he could reasonably be expected to do to prevent the proscribed use of his property"); Robert E. Blacher, Clearing the Smoke from the Battlefield: Understanding Congressional Intent Regarding the Innocent Owner Provision of 21 U.S.C. § 881(a)(7), 85 J. of Crim. Law & Criminology 502, 526 (1994) (stating that, "as the statute is written, claimants ought to be able to demonstrate a lack of consent simply by showing that they gave no express approval to the illegal activity"). Again, the Tenth Circuit has not yet addressed the proper definition of consent under the innocent owner defense set forth in § 881(a)(7).

In this case, the district court cited Second Circuit precedent and adopted both the disjunctive reading of the knowledge and consent elements and the broad definition of "consent." See Aplts' App. vol. II, at 366 (district court order, filed Feb. 22, 2000) ...