U.S. v. Marion

• Decision Date: 26 March 2009
• Docket Number: No. 08-13884.,08-13884.
• Citation: 562 F.3d 1330
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Isaac L. MARION, Jr., Defendant-Appellee, Patricia A. Gray, Third-Party-Claimant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

562 F.3d 1330

UNITED STATES of America, Plaintiff-Appellant, v. Isaac L. MARION, Jr., Defendant-Appellee, Patricia A. Gray, Third-Party-Claimant-Appellee.

No. 08-13884.

United States Court of Appeals, Eleventh Circuit.

March 26, 2009.

Anita M. Cream, David Paul Rhodes, U.S. Atty., Tampa, FL, for U.S.

David Jonathan Joffe, Joffe & Joffe, P.A., Ft. Lauderdale, FL, for Gray.

Appeal from the United States District Court for the Middle District of Florida.

Before BIRCH, HULL and FAY, Circuit Judges.

PER CURIAM:

This appeal by the United States government involves interpretation of the criminal forfeiture provisions in 21 U.S.C. § 853 and Federal Rule of Criminal Procedure 32.2. At issue is the timeliness of Patricia Gray's third-party petition asserting a claim in properties subject to forfeiture. The government contends that Gray's petition was untimely because it was not filed within thirty days of her receiving notice of the preliminary order of forfeiture. The district court disagreed on grounds that the petition was filed within thirty days from the date that criminal judgment was entered against the defendant, Isaac L. Marion, Jr. ("Marion"). Furthermore, the district court concluded that the government had waived the issue of untimeliness and that its motion to dismiss was itself untimely. Upon thorough consideration of the record, the parties' briefs, and oral arguments, we find reversible error and REVERSE AND REMAND.

I. BACKGROUND

Patricia Gray is Isaac Marion's grandmother. Marion pled guilty in early 2007 to conspiracy to possess with intent to distribute cocaine from at least December 2000 through 18 December 2005. After Marion's guilty plea but before he was sentenced, the government filed a motion for a preliminary order of forfeiture as to two properties identified in the indictment that were allegedly bought with his drug proceeds: (1) 862 Zana Drive, Fort Myers, Florida, and (2) 856 Zana Drive, Fort Myers, Florida. Marion did not file a response.

On 6 June 2007, the district court granted the government's motion and entered a preliminary order of forfeiture as to both properties. The court specifically found that "the United States has met its burden of establishing the sufficiency of the nexus between the offense and the property sought for forfeiture." R1-159 at 1. Accordingly, "all right, title and interest" of Marion in the Zana Drive properties were forfeited to the government. Id. at 2.

The government then provided direct written notice of the preliminary order of forfeiture to all known interested persons. On 18 June 2007, Gray received by certified mail written notices at both Zana Drive homes. Each notice informed Gray that pursuant to Federal Rule of Criminal Procedure 32.2(c) and 21 U.S.C. § 853(n), she must file a petition within thirty days of receipt of the notice if she claimed a legal interest in the forfeited property. Additionally, the notices advised that, "If you fail to file a petition with the [district court], judgment of default may be taken against you, and any interest you may have in the property would be lost forever and forfeited to the United States." R2-239, Exh. D2 at 2; R2-239, Exh. D3 at 2. The government also published notice of the preliminary order of forfeiture in a local newspaper on three occasions, with the last date being 3 July 2007.

On 19 September 2007, the court sentenced Marion to 132 months of imprisonment for his conspiracy conviction and ordered the forfeiture of both Zana Drive properties.¹ It was not until 4 October 2007, three and a half months after receiving her notices, that Gray filed a petition claiming an interest in each Zana Drive property.

The district court scheduled an ancillary hearing to adjudicate Gray's third-party claims. The hearing date was twice postponed, the first time on the government's motion for a continuance so that the parties could conduct discovery. On 28 December 2007, the government moved to dismiss the petition as untimely on grounds that Gray had filed the petition more than thirty days after receiving notices of the preliminary order of forfeiture. On 8 and 9 January 2008, the court conducted an ancillary hearing on Gray's petition.

On 16 January 2008, the district court entered an order denying the government's motion to dismiss Gray's petition as untimely. First, the court found that the government had waived the issue of untimeliness because it failed to mention this issue in its motion for continuance of the ancillary hearing. Second, the court found that the government's motion was itself untimely. The court noted that Rule 32.2(c)(1)(A), (B) suggests that a motion to dismiss should be filed before the discovery process and the ancillary hearing, whereas the government filed its motion after the first two scheduled hearing dates. Finally, the court found that Gray's petition was filed within thirty days of 19 September 2007, the date that criminal judgment was entered against Marion and the government had obtained any interest of Marion's in the properties. The court opined, "Obviously, there could be no ancillary hearing until the government obtained the interest from [Marion]." R3-253 at 7. The court further found no prejudice to the government as a result of the petition's filing date and therefore denied the government's motion to dismiss.

Additionally, the district court granted Gray's petition on grounds that her interest in the Zana Drive properties was superior to the government's interest. The government contended that Marion used drug proceeds to purchase the Zana Drive properties, that Gray was a nominee owner for him, and that Gray had not shown a legitimate source of funds for her purchase of the properties. The government's trial brief pointed out that Marion had told a CS that he liked to invest drug proceeds in real estate and had placed the properties in the names of his grandmother and other relatives. Marion also had shown a CS the Zana Drive properties as properties he owned. The district court rejected the government's argument based on its findings that Gray was the legal title holder of the Zana Drive properties, that she was presumed to be the owner of the Zana Drive properties under Florida law as the legal title holder, and that "[w]hile the evidence was not sufficient to determine precisely how petitioner financed the purchase and construction, the government failed to produce evidence establishing a lack of legitimate potential sources of money for petitioner's use." Id. at 20. The court subsequently amended the preliminary order of forfeiture to reflect that Gray had a legal right, title, and interest in both properties as the legal owner.²

The government filed a motion to amend the judgment pursuant to Federal Rule of Civil Procedure 59(e), which the district court denied. The government now appeals the order denying its motion to dismiss and granting Gray's third-party petition as well as the order denying its motion to amend the judgment.

II. DISCUSSION

We review a district court's legal conclusions regarding third-party claims to criminally forfeited property de novo and its factual findings for clear error. See United States v. Watkins, 320 F.3d 1279, 1281 (11th Cir.2003). We will affirm the denial of a motion to amend the judgment absent an abuse of discretion. See Arthur v. King, 500 F.3d 1335, 1343 (11th Cir. 2007) (per curiam), cert. denied, ___ U.S. ___, 128 S.Ct. 660, 169 L.Ed.2d 511 (2007). "The only grounds for granting [a Rule 59] motion are newly-discovered evidence or manifest errors of law or fact." Id. (quotation marks and citation omitted).

The Zana Drive properties were initially forfeited to the government pursuant to 21 U.S.C. § 853. That statute provides that any person convicted of a drug-law violation punishable by more than one year of imprisonment "shall forfeit to the United States ... any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as a result of such violation." 21 U.S.C. § 853(a)(1). Third-party interests in the properties are governed, inter alia, by the following provisions:

(1) Following the entry of an order of forfeiture under this section, the United States shall publish notice of the order and of its intent to dispose of the property in such manner as the Attorney General may direct. The Government may also, to the extent practicable, provide direct written notice to any person known to have alleged an interest in the property that is the subject of the order of forfeiture as a substitute for published notice as to those persons so notified.

(2) Any person, other than the defendant, asserting a legal interest in property which has been ordered forfeited to the United States pursuant to this section may, within thirty days of the final publication of notice or his receipt of notice under paragraph (1), whichever is earlier, petition the court for a hearing to adjudicate the validity of his alleged interest in the property. The hearing shall be held before the court alone, without a jury.

Id. § 853(n)(1), (2) (emphasis added). Thus, the statute establishes a thirty-day window during which any third parties who wish to assert an interest in criminally forfeited property must file a petition for a hearing. Id. § 853(n)(2).

In addition to the latter statute, Federal Rule of Criminal Procedure 32.2 outlines the procedure a court must follow for criminal forfeitures. See Fed.R.Crim.P. 32(k)(2). Rule 32.2 requires the court to determine what property is subject to forfeiture "[a]s soon as practicable after a verdict or finding of guilty, or after a plea of guilty or nolo contendere is accepted." Id. 32.2(b)(1). For specific property, this determination is based on the government's establishment of a nexus between the property and the offense. See id. Once this determination has been made, the court "must promptly enter a preliminary order of forfeiture ... directing...