274 F.3d 643 (1st Cir. 2001), 00-2455, Larson v. United States

Docket Nº:00-2455
Citation:274 F.3d 643
Party Name:DUANE W. LARSON, Plaintiff, Appellant, v. UNITED STATES, Defendant, Appellee.
Case Date:December 27, 2001
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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Page 643

274 F.3d 643 (1st Cir. 2001)

DUANE W. LARSON, Plaintiff, Appellant,

v.

UNITED STATES, Defendant, Appellee.

No. 00-2455

United States Court of Appeals, First Circuit

December 27, 2001

Submitted April 27, 2001

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Richard G. Stearns, U.S. District Judge

Duane W. Larson on brief pro se.

Donald K. Stern, United States Attorney, Shelbey D. Wright and Jennifer Hay Zacks, Assistant U.S. Attorneys, on brief for appellee.

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Before Campbell, Senior Circuit Judge, Torruella, Circuit Judge, and Stahl, Senior Circuit Judge.

Per Curiam.

Appellant Duane W. Larson ("Larson") filed this action in the district court to recover interest on funds which the federal government had seized for purposes of civil forfeiture but which were ultimately returned to him. The district court awarded to Larson the interest actually earned on his money while it was in the government's hands. This, however, was a fairly minimal amount since for most of the time the government held it, the money was in a non-interest bearing account.

Larson argues on appeal that he should have received the "constructively-earned" interest on his money, i.e., that interest which would have accrued if the government had placed the money in an interest-bearing account. For the first time on appeal, the government argues that it is immune from any award of interest at all. It contends not only that Larson is not entitled to "constructively-earned" interest, but that even the district court's award of the minimal interest actually earned should be set aside and judgment entered for the government.

The appeal presents a matter of first impression in this circuit, although subsequent legislation enacted last year by Congress makes the legal issue here largely irrelevant in future proceedings.

I.

In 1985, Larson was convicted on federal drug and tax evasion charges and ordered to serve a ten-year prison sentence. In 1990, the government began to suspect that Larson was engaged in money laundering from prison (with the assistance of his wife, who was not in prison). In June 1990, the U.S. Customs Service seized a total of $55,584.90 from two bank accounts owned by Larson and began civil forfeiture proceedings.

Larson disputed the seizure. Ultimately the government declined to prosecute Larson and in mid-1994 it agreed to return the money it had seized. Larson then sued to recover interest on the funds.1 The district court agreed that Larson should recover the interest his money actually had earned while it was held by the government. While the government initially represented to the court that the money had earned approximately $10,000 in interest, it later disclosed that for most the four years during which the money was in the government's possession, it had been held in a non-interest bearing account. The total interest actually earned was $891.09.

Larson argued that the government should be liable to him for the amount of interest that would have been earned had the money been deposited in an interest-bearing account during the entire time it was in the government's possession. The court rejected that contention, and it entered judgment for Larson in the amount of $891.09. He filed this timely appeal.

Larson now argues that the government should be liable to him for "constructive interest," i.e., the amount of interest the money would have earned had the government kept it in an interest-bearing account. Although it did not cross-appeal,

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the government in its brief argues for the first time that the district court was without jurisdiction to award any interest at all because the government enjoys sovereign immunity as to interest claims against it. The circuits are split on this issue, and this circuit has never addressed the matter directly.

II.

In Library of Congress v. Shaw, 478 U.S. 310 (1986), the Supreme Court made it clear that "[i]n the absence of express congressional consent to the award of interest separate from a general waiver...

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