Mantilla v. U.S.

• Decision Date: 03 September 2002
• Docket Number: No. 99-5923.,99-5923.
• Citation: 302 F.3d 182
• Parties: Eduardo MANTILLA, Appellant v. UNITED STATES of America; U.S. Customs Service
• Court: U.S. Court of Appeals — Third Circuit

302 F.3d 182

Eduardo MANTILLA, Appellant v. UNITED STATES of America; U.S. Customs Service

No. 99-5923.

United States Court of Appeals, Third Circuit.

Argued February 4, 2002.

Filed September 3, 2002.

Mark H. Lynch, Keith Noreika (Argued), Covington & Burling, Washington, DC, for Appellant.

Robert J. Cleary, United States Attorney, Colette R. Buchanan (Argued), Assistant U.S. Attorney, Office of United States Attorney, Newark, NJ, for Appellee.

Before: SLOVITER, and AMBRO, Circuit Judges POLLAK,^* District Judge.

OPINION OF THE COURT

AMBRO, Circuit Judge.

Eduardo Mantilla filed this civil action seeking the return of funds that the United States Customs Service ("Customs") obtained from him and his co-conspirators during an undercover operation. Finding that public policy bars the return of funds that are voluntarily exchanged during a narcotics transaction, the United States District Court for the District of New Jersey granted summary judgment in favor of Customs.¹

We affirm the District Court's judgment. Mantilla lacks standing to seek the return of one portion of the funds. As to the remaining amount, we agree with the District Court that an extension of the in pari delicto² concept prevents Mantilla from seeking its return.

I. Background

In early 1991, Customs began an undercover narcotics investigation of Mantilla, Robert Jonas, Michael Mittenberg, and Enidio Abreu. Through negotiations with Mantilla and/or Jonas, undercover Customs agents, posing as drug smugglers, transported large quantities of cocaine and marijuana from Colombia to the United States in exchange for $9,000,000. Of this amount the agents required a payment of $1,000,000 "up front" prior to releasing the narcotics to Mantilla and his co-conspirators.

The parties agreed to meet at a specific location in Jersey City, New Jersey to complete the arrangement. There, Mantilla and his co-conspirators would deliver a truck containing $1,000,000 to the agents. The agents would then drive away in the truck, take the fee, and return the truck filled with cocaine.

The transaction occurred on May 30, 1991. Abreu drove the truck to the pre-arranged site. He parked the truck and handed the keys to Mantilla, who in turn handed them to an agent. The transaction continued as planned until the agent discovered that the truck contained only $900,000. Extensive, and presumably intense, negotiations ensued, after which Mantilla and his co-conspirators represented that the missing $100,000 would be available later that day.

The parties agreed to complete the transaction at a diner in nearby Elizabeth, New Jersey. Mittenberg and Jonas traveled in a van and followed the agents to the location. However, before the final transfer occurred, the agents stopped the van and arrested both passengers. Upon searching the vehicle the agents "found nearly all of the missing money in a paper bag under the rear seat" — approximately $95,500. The agents subsequently arrested Mantilla in the diner parking lot.

On June 19, 1992, a jury sitting in the United States District Court for the District of New Jersey found Mantilla guilty of three counts of conspiring to import, distribute, and/or possess with an intent to distribute, cocaine and marijuana in violation of 21 U.S.C. §§ 846 and 963.

Customs never instituted administrative forfeiture proceedings against the money obtained from the co-conspirators. Instead, it deposited the funds into its undercover operation account pursuant to 19 U.S.C. § 2081.³ The five-year statute of limitations for initiating forfeiture proceedings lapsed after May 31, 1996. 19 U.S.C. § 1621.

Eventually, Mantilla filed a Freedom of Information Act complaint, through which he received information regarding the status of the confiscated funds. On February 10, 1997, Mantilla filed his initial return of property complaint in the United States District Court for the Southern District of Florida. That Court dismissed the action for improper venue, and the United States Court of Appeals for the Eleventh Circuit affirmed on January 4, 1999. Mantilla v. United States, 168 F.3d 506 (11th Cir.1999) (unpublished table decision).

On February 19, 1999, Mantilla filed this action, his second return of property complaint, in the United States District Court for the District of New Jersey. Customs responded by filing a motion to dismiss for lack of subject matter jurisdiction, insufficiency of service of process, and failure to state a claim upon which relief can be granted. Because Customs attached a supporting affidavit, the District Court construed the pleading as a motion for summary judgment. See Fed.R.Civ.P. 12(b) (stating that if, on a Rule 12(b)(6) motion, "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56").

In its September 29, 1999 memorandum opinion and order, the District Court granted summary judgment for Customs, finding that an extension of the in pari delicto concept prevented it from enforcing an illegal contract by returning funds that Mantilla voluntarily delivered to undercover Customs agents. The Court also held that Mantilla had no viable claim under § 704 of the Administrative Procedure Act ("APA") because the voluntary transfer, rather than seizure, of the funds did not constitute "agency action" necessary to trigger "the limited abrogation of sovereign immunity provided by the APA." To the extent the complaint sought equitable relief, the District Court denied the claim as against public policy. Finally, the District Court rejected Mantilla's Fifth Amendment unlawful taking and due process arguments, neither of which Mantilla raises on appeal.

II. Jurisdiction

We reject Customs' contention that no statutory provision authorizes our jurisdiction over Mantilla's claim. We have previously held that a claimant's "collateral[] attack [of] an inadequately noticed administrative forfeiture" presents a proper federal question, thereby conferring jurisdiction under 28 U.S.C. § 1331. Foehl v. United States, 238 F.3d 474, 478 (3d Cir.2001) (citation omitted); United States v. McGlory, 202 F.3d 664, 670 (3d Cir.2000) (en banc). Such challenges usually arise where the Government attempted, but failed to take all measures necessary under due process, to give notice of forfeiture. Foehl, 238 F.3d at 478-80; McGlory, 202 F.3d at 671-74. We agree with Mantilla that his claim is a natural extension of these decisions. Indeed, this case involves the most inadequate notice possible: Customs failed to initiate forfeiture proceedings altogether, and thus never attempted to give notice of the funds' status.⁴

III. Standing

We turn next to Mantilla's standing, an issue that we must address even though the District Court did not reach it. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990). To prove standing, Mantilla must show that he has a colorable ownership or possessory interest in the funds. United States v. Contents of Accounts Nos. 3034504504 and 144-07143, 971 F.2d 974, 985 (3d Cir.1992). Because Customs obtained the two amounts — $900,000 and $95,500 — under distinct circumstances, Mantilla must establish his standing as to each. See Kadonsky v. United States, 216 F.3d 499, 508 (5th Cir.2000).

As to the first amount, it is undisputed that a co-conspirator drove the truck containing the $900,000, parked the vehicle, and handed the keys to Mantilla. Mantilla then handed the keys to the Customs agent. Thus, Mantilla did possess the funds at the time of transfer. Customs contends that Mantilla is a "straw owner" of the funds, in which case mere possession — without "some explanation or contextual information regarding the claimant's relationship to the seized property" — would be insufficient to establish standing. United States v. $515,060.42, 152 F.3d 491, 498 (6th Cir.1998); see Contents of Accounts Nos. 3034504504 and 144-07143, 971 F.2d at 985 (expressing disapproval of "standing claims put forward by nominal or straw owners"). Nevertheless, we shall assume that Mantilla's possessory interest is enough to confer standing as to the $900,000 amount.

However, we conclude that Mantilla lacks standing to seek the return of the $95,500 amount. The facts show that Customs agents confiscated this amount from a vehicle that Mantilla did not own, possess, or occupy. Further, Mantilla offers no evidence from which a reasonable trier of fact could discern his colorable interest in this amount.⁵ Accordingly, Mantilla has no standing to pursue its return.

IV. Procedural Issues

With Mantilla's cause of action now limited to the $900,000 sum, we address Customs' arguments that three procedural hurdles — sovereign immunity, the statute of limitations, and laches — bar his claim.

A. Sovereign Immunity

Sovereign immunity presents no barrier to Mantilla, as Foehl dictates that he may properly assert his equitable claim "via the waiver of sovereign immunity found in section 702 of the Administrative Procedure Act." 238 F.3d at 478; see also United States v. 1461 W. 42nd St., Hialeah, Fla., 251 F.3d 1329, 1340 (11th Cir.2001) ("[C]laims for equitable relief, such as the return of property ..., do not impinge upon sovereign immunity.").

B. Statute of Limitations

28 U.S.C. § 2401 imposes a six-year statute of limitations on Mantilla's return of property claim. This six-year period begins "at the close of forfeiture proceedings" or "if no forfeiture proceedings were conducted, at the end of the five-year limitations period during which the government is permitted to bring a forfeiture action." Polanco v. DEA, 158 F.3d 647, 654 (2d Cir.1998); 19 U.S.C. § 1621 (establishing five-year statute of limitations for Customs to institute forfeiture proceedings). The latter circumstance arose in this case, and therefore Customs' statute of limitations lapsed after May 30, 1996, five years following...