U.S. v. $184,505.01 in U.S. Currency

• Decision Date: 29 December 1995
• Docket Number: Nos. 94-3528,94-3674 and 94-3675,s. 94-3528
• Citation: 72 F.3d 1160
• Parties: UNITED STATES of America v. $184,505.01 IN U.S. CURRENCY Reginald D. McGlory, Claimant-Appellant, UNITED STATES of America v. $14,548.50 IN U.S. CURRENCY Reginald D. McGlory, Claimant-Appellant, UNITED STATES of America v. ONE MARBLE INDIAN STATUE, One Replica Remington Rattlesnake Statue, Reginald D. McGlory, Claimant-Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 1160

72 F.3d 1160

UNITED STATES of America v. $184,505.01 IN U.S. CURRENCY Reginald D. McGlory, Claimant-Appellant, UNITED STATES of America v. $14,548.50 IN U.S. CURRENCY Reginald D. McGlory, Claimant-Appellant, UNITED STATES of America v. ONE MARBLE INDIAN STATUE, One Replica Remington Rattlesnake

Statue, Reginald D. McGlory, Claimant-Appellant.

Nos. 94-3528, 94-3674 and 94-3675.

United States Court of Appeals, Third Circuit.

Argued Sept. 13, 1995.

Decided Dec. 29, 1995.

Michael A. Young (Argued), New York City, for Claimant-Appellant.

Frederick W. Thieman, United States Attorney, Bonnie R. Schlueter, Assistant United States Attorney, Mary M. Houghton, Assistant Before: SLOVITER, Chief Judge, ALITO, Circuit Judge, and RENDELL, District Judge ^*

United States Attorney (Argued), Pittsburgh, Pennsylvania, for Appellee.

OPINION OF THE COURT

ALITO, Circuit Judge:

In these appeals, Reginald D. McGlory challenges the district court's refusal to set aside default judgments in three separate civil in rem forfeiture proceedings brought under 21 U.S.C. Sec. 881(a)(6). ¹ McGlory raises five separate issues--lack of notice, double jeopardy, wrong standard in refusing to set aside default judgments, insufficient reasons for refusing to set aside default judgment, and misstatement or fraud on the part of the government. Because we find that the government violated McGlory's due process rights by failing to provide him with adequate notice of two of the proceedings, we reverse the district court's judgments in those proceedings and remand those cases for further proceedings. However, we reject McGlory's double jeopardy argument and therefore affirm the district court's judgment in the remaining proceeding. We also reject McGlory's remaining arguments.

I.

On September 8, 1989, as part of a criminal investigation of McGlory, federal Drug Enforcement Administration ("DEA") and Internal Revenue Service ("IRS") agents executed a search warrant at 4265-67 Bryn Mawr Road in Pittsburgh. Among other things, the agents seized the items that are the subject of the three proceedings on appeal: $14,584.50 in cash ("$14K"); ² three statues; ³ and an apparently separate collection of $184,505.01 in cash ("$184K"). ⁴ The agents also arrested McGlory. He was eventually convicted of conspiracy to distribute heroin and to possess heroin with the intent to distribute it, in violation of 21 U.S.C. Sec. 846; possession of heroin with intent to distribute, in violation of 21 U.S.C. Secs. 841(a)(1), (b)(1)(C); possession of a firearm by a convicted felon, in violation of 18 U.S.C. Sec. 922(g)(1); using a firearm in a drug trafficking operation, in violation of 18 U.S.C. Sec. 924(c)(1); and laundering drug proceeds, in violation of 18 U.S.C. Sec. 1956(a)(1)(A)(i) and 18 U.S.C. Sec. 2. See United States v. McGlory, 968 F.2d 309, 314-15 (3d Cir.1992), cert. denied, 507 U.S. 962, 113 S.Ct. 1388, 122 L.Ed.2d 763 (1993).

The DEA began separate administrative forfeiture proceedings against the $14K and the statues. ⁵ McGlory, who was incarcerated, received notice of both proceedings in prison, Supplemental Appendix ("Supp.App.") ⁶ at 60, 23, but filed no administrative claims in either proceeding. Id. Upon the filing of administrative claims by Sandra McGlory (McGlory's wife) and Ola Mae McGlory (his mother) to the $14K and the statues, respectively, Supp.App. 52, 55, 60, 23, the DEA referred the forfeitures to the United States Attorney, who filed complaints for civil forfeiture on February 7, 1990 (for the $14K) and February 28, 1990 (for the statues).

The government served McGlory with the complaints via first class and certified mail at the Bryn Mawr Road address, where his mother signed both certified mail receipts. Supp.App. 43, 213-16, 4. In her affidavit, McGlory's mother claimed not to remember receiving the notices but stated that she would have turned any such notices over to the attorney who was representing McGlory on the criminal charges, Thomas Ceraso, Esq. Appendix ("App.") at 117. The government did not serve McGlory in prison, and made no attempt to do so.

McGlory did not file any claim or answer in either proceeding, App. 1-6, 27, 31, and the district court entered default judgments against him on May 29, 1990, and July 23, 1990, forfeiting the $14K and the statues, respectively. App. 21-22. McGlory filed motions to set aside the default judgments on April 21, 1994. App. 34, 43. After referring the matter to a magistrate judge, who recommended that the default judgments not be reopened, the district court denied McGlory's motions. App. 3, 9.

The government filed a complaint for civil forfeiture of the $184K on November 21, 1989. App. 7, 17. The government served the complaint on McGlory via first class and certified mail at the Bryn Mawr Road address, as well as on Mr. Ceraso. Supp.App. 19. When McGlory again failed to file any claim or answer, the government obtained a default judgment. Supp.App. 99, 111. On McGlory's behalf, Mr. Ceraso then filed a claim of ownership and a motion to set aside the entry of default, which the government did not oppose, and the court set aside the judgment. Supp.App. 102-10, 112. McGlory again failed to file an answer within the time allotted by the court, and the court entered another default judgment against him on April 12, 1991. Supp.App. 129; App. 23. On July 15, 1994, McGlory filed a motion to set aside this second default judgment, which the district court denied.

II.

McGlory first argues that his due process rights were violated in that the government failed to provide him with adequate notice of the civil forfeiture proceedings against the $14K and the statues. Relying primarily on the Supreme Court's decision in Robinson v. Hanrahan, 409 U.S. 38, 93 S.Ct. 30, 34 L.Ed.2d 47 (1972), McGlory argues that the Due Process Clause required that the government serve him with notice of the forfeiture proceedings in prison. ⁷

By virtue of 28 U.S.C. Sec. 2461, civil in rem forfeiture proceedings are governed by Rule C of the Supplemental Rules for Certain Admiralty and Maritime Claims. As the government notes, Rule C(4) requires only publication, not personal service of process. However, for due process purposes, publication alone is not sufficient when the government can reasonably ascertain the names and addresses of interested parties. Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983).

McGlory argues, in our view persuasively, that Robinson and Adams together required that the government at least make an attempt to serve him with notice of the forfeiture proceedings in prison. In most important respects, Robinson appears indistinguishable from the present case. In Robinson,

the State knew that appellant was not at the address to which the notice was mailed and, moreover, knew also that appellant could not get to that address since he was at that very time confined in ... jail. Under these circumstances, it cannot be said that the State made any effort to provide notice which was "reasonably calculated" to apprise appellant of the pendency of the forfeiture proceedings.

Robinson, 409 U.S. at 40, 93 S.Ct. at 31 (quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950)); see also United States v. Woodall, 12 F.3d 791, 794 (8th Cir.1993) (when government knows of party's actual whereabouts, due process requires sending of notice to that address, especially where party is incarcerated); accord United States v. Giraldo, 45 F.3d 509, 511 (1st Cir.1995).

The government's counterarguments are unavailing. The government cites Rule C(4) to show that it had no statutory duty to inform McGlory, but this argument is not dispositive for due process purposes. Equally unpersuasive is the actual notice of the administrative forfeiture proceedings that McGlory received while he was in prison, since the judicial forfeiture proceedings were separate proceedings from the administrative actions.

The government also claims that its actions satisfied the Mullane standard, and attempts to distinguish Robinson by noting that the defendant in Robinson did not receive notice of the proceeding until after it had concluded, whereas McGlory had actual notice of the proceedings from two sources: the notice of the administrative proceedings and the notice of the civil proceedings received by his attorney from McGlory's mother. As noted above, we do not find the notice of the administrative proceedings that McGlory received while in prison to be significant for purposes of the subsequent judicial proceedings. Furthermore, the government's arguments concerning the notice received by McGlory's attorney are flawed. ⁸

The government, citing United States v. Indoor Cultivation Equipment, 55 F.3d 1311 (7th Cir.1995), argues that the receipt of notice by McGlory's attorney constituted actual notice to McGlory. However, Indoor Cultivation Equipment and the case it cited, United States v. Di Mucci, 879 F.2d 1488, 1495 (7th Cir.1989), involved situations where the litigation had already begun and the party's attorney had received notice of an important fact or deadline but had failed to act on it. The important Supreme Court cases in this area, Link v. Wabash R. Co., 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962), and Smith v. Ayer, 101 U.S. 320, 25 L.Ed. 955 (1879), also involved such situations, as opposed to initial service of process on a defendant.

The situation presented here--where the proceedings had not yet begun, McGlory was therefore not yet a party, ⁹ and Mr. Ceraso was not yet his attorney in these proceedings--is easily distinguishable from that in Indoor Cultivation and the other cases cited above. Plainly stated, for purposes of the civil forfeiture proceedings against the $14K and the statues, McGlory did not have an attorney at the time process was received by Mr. Ceraso; hence, service on Mr. Ceraso...