U.S. v. Puig, 04-2687.

• Citation: 419 F.3d 700
• Decision Date: 09 August 2005
• Docket Number: No. 04-2687.,04-2687.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Jay Michael PUIG, Defendant. Michael Hance, Claimant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

419 F.3d 700

UNITED STATES of America, Plaintiff-Appellee, v. Jay Michael PUIG, Defendant.

Michael Hance, Claimant-Appellant.

No. 04-2687.

United States Court of Appeals, Eighth Circuit.

Submitted: December 15, 2004.

Filed: August 9, 2005.

Patrick Dinneen, argued, Silver Bay, Minnesota, for appellant.

James S. Alexander, argued, Minneapolis, Minnesota, for appellee Asst. U.S. Attorney.

Before BYE, HANSEN, and GRUENDER, Circuit Judges.

HANSEN, Circuit Judge.

Following the district court's¹ entry of a Final Order of Forfeiture in the criminal prosecution of Jay Michael Puig, which included the forfeiture of a motorcycle and motorcycle parts now claimed to be owned by the appellant in this case, Michael Hance, Mr. Hance filed a third-party petition seeking adjudication of his asserted claim to the forfeited property. The district court dismissed the third-party petition as untimely. Rather than appeal that order, Hance filed a Federal Rule of Civil Procedure 60(b) motion seeking to reopen the Final Order of Forfeiture. The district court denied the motion, and Hance appeals that denial. We affirm.

I.

Puig and others were indicted for conspiracy to defraud the government related to a motorcycle "chop shop" run by Puig. The indictment included a forfeiture charge related to property involved in the chop shop. Puig pleaded guilty to the charged offenses and agreed to forfeit all motorcycles, parts, tools, and equipment that were seized during the investigation. The government agreed to return any items that Puig could show were not the instrumentalities or proceeds of criminal activity.

A Preliminary Order of Forfeiture was entered in Puig's case on December 30, 2002, forfeiting all of Puig's interest in property listed on Attachment A of the Order, including the motorcycle and motorcycle parts now claimed to be legally owned by Hance, who owned a legitimate motorcycle business in St. Louis. Puig's counsel at the time, Patrick Dinneen, was served with the preliminary order. Pursuant to 21 U.S.C. § 853(n) (2000), the United States published a Notice of Forfeiture in three issues of Finance and Commerce on January 17, 24, and 31, 2003, delineating the property to be forfeited and prescribing the process by which a third party could claim an interest in the listed property. No claims were filed with the court within 30 days of the last publication.

On March 6, 2003, the United States sent Mr. Dinneen a proposed Amended Preliminary Order of Forfeiture, reflecting changes to the list of forfeited property pursuant to discussions between the United States and Mr. Dinneen, but still listing the motorcycle and motorcycle parts now claimed by Hance. The Final Order of Forfeiture was filed on March 31, 2003, and was served on Mr. Dinneen as counsel for Puig.

Hance first attempted to contest forfeiture of the claimed property by letters to the United States dated March 12, 2003, and April 4, 2003, from his counsel, Mr. Dinneen.² The United States responded in a letter dated May 13, 2003, that it believed the property belonged to Puig, and was therefore properly forfeited. Hance filed his third-party petition asserting an interest in the motorcycle and motorcycle parts on July 7, 2003, which the district court dismissed as untimely. Hance then filed a motion under Rule 60(b), seeking to reopen the Final Order of Forfeiture. The district court denied the motion without discussion, and Hance appeals.

II.

Hance appeals from the district court's denial of his Rule 60(b) motion to reopen the Final Order of Forfeiture. We review a district court's denial of a Rule 60(b) motion for an abuse of discretion. Hunter v. Underwood, 362 F.3d 468, 474 (8th Cir.2004). The United States does not dispute the use of Rule 60(b) to collaterally attack the criminal forfeiture order, and we proceed to review the district court's disposition of the Rule 60(b) motion. See United States v. Estevez, 845 F.2d 1409, 1411 (7th Cir.1988) ("[T]he government agrees that the provisions of Rule 60(b) of the Federal Rules of Civil Procedure are available to a third-party claimant seeking to vacate the final judgment of forfeiture."); Fed.R.Crim.P. 32.2(c) advisory committee notes (noting that a third-party claimant may file a Rule 60(b) motion to reopen the ancillary proceeding allowed by 21 U.S.C. § 853(n)).

Rule 60(b) provides that "the court may relieve a party . . . from a final judgment, order, or proceeding" for a variety of reasons, one of them being excusable neglect. Fed.R.Civ.P. 60(b)(1). "Excusable neglect means good faith and some reasonable basis for noncompliance with the rules." Ivy v. Kimbrough, 115 F.3d 550, 552 (8th Cir.1997) (internal mark omitted) (affirming denial of Rule 60(b) motion where attorney failed to respond to summary judgment motion, noting that "an attorney's ignorance or carelessness does not constitute `excusable neglect'"). Hance argues that his failure to file a timely petition for an ancillary proceeding to adjudicate his right to the forfeited property should be excused because the United States failed to provide him with adequate notice of its intent to forfeit the property, and therefore he was unaware of the need to file a petition, and because he relied on the government's representations that it would return the property once he provided ownership documentation.

Section 853 of Title 21 of the United States Code governs the criminal forfeiture of property involved in criminal offenses. A criminal judgment of conviction that includes a forfeiture count conclusively determines the property rights as between the government and the criminal defendant, but the government does not receive clear title to the forfeited property as against the rest of the world until the government complies with the requirements of § 853(n). Following entry of a forfeiture order, § 853(n)(1) requires the government to publish notice of the order and of its intent to dispose of the property as prescribed by the Attorney General. The government may also, but is not required to, provide direct written notice to any person known to have alleged an interest in the property. Id. Third parties claiming an interest in the property then have 30 days to file a petition with the district court for a hearing to adjudicate the claimed interest. § 853(n)(2). If no third parties file a petition within the 30 days provided in paragraph (2), "the United States shall have clear title to property that is the subject of the order of forfeiture." § 853(n)(7). A § 853(n) ancillary proceeding is the only avenue by which a third-party claimant may seek to assert an interest in property that has been included in an indictment alleging that the property is subject to forfeiture. § 853(k) (providing a bar against intervening in a criminal case or commencing either a legal or equitable action against the United States, except as allowed in subsection (n)).

Hance argues that the government's published notice of its intent to forfeit and dispose of the property at issue was inadequate as to him because the government should have been aware of his claimed interest based on information in the criminal file, and therefore the government had a duty to personally notify him of the forfeiture proceedings as a "person known to have alleged an interest in the property." He relies on the district court case of United States v. Bouler, 927 F.Supp. 911, 914-15 (W.D.N.C.1996),³ which held that the mandatory notice provisions contained in 19 U.S.C. § 1607(a) (2000) applied to proceedings under § 853(n). The Bouler court granted a Rule 60(b) motion challenging a criminal forfeiture order to a third-party claimant who held record title to the forfeited real estate but did not receive particularized notice of the forfeiture. Bouler, 927 F.Supp. at 917.

We need not, and do not, delve into the issues of whether § 1607's requirement of particularized notice to parties alleging an interest in forfeited property applies to § 853(n) ancillary proceedings, or whether the lack of particularized notice violates the constitutional protections of due process. Assuming without deciding that Hance was entitled to particularized notice, he received actual notice sometime before March 12, 2003, when his attorney wrote a letter to the government asserting his rights to the property. The final order was then entered on March 30, 2003, and served on his attorney, conclusively notifying Hance of the government's forfeiture of the property. Even Hance admits that he knew that the government had no intention of returning the property upon receipt of the May 13, 2003, letter, wherein the government severed its discussions with him and informed him of his right to file a petition for an ancillary proceeding. (Add. at 13.) Yet, he filed nothing with the court challenging the government's forfeiture until July 7, 2003, well over 30 days after any of the dates discussed above. See § 853(n)(2) (providing a 30-day period for bringing a petition for an ancillary hearing following notice of the government's intention to forfeit property).

The Seventh Circuit allowed a claimant to use a Rule 60(b) motion to reopen a forfeiture order where the claimant established that the published notice was insufficient to give him notice that his property was subject to forfeiture because the notice was limited to the criminal defendant's interest in the property to be forfeited. See Estevez, 845 F.2d at 1410. The claimant in Estevez received actual notice by mail to his attorney on June 24 and moved to vacate the July 7 final forfeiture order on July 14. Notably, the court stated that the date of actual receipt "should be considered to commence the thirty-day period to file a claim under 21 U.S.C. § 853(n)." Id. at 1412.

Applying this rationale to Hance's situation, even if we give Hance the greatest leeway possible, the time for filing a petition started to run at the very latest upon receipt of the letter of...