Cernuda v. Heavey

• Decision Date: 18 September 1989
• Docket Number: No. 89-1265-Civ.,89-1265-Civ.
• Citation: 720 F. Supp. 1544
• Parties: Ramon CERNUDA and Editorial Cernuda, Inc., Petitioners, v. George D. HEAVY, Regional Commission, United States Customs Service, and Department of Treasury, United States Customs Service, Respondents.
• Court: U.S. District Court — Southern District of Florida

720 F. Supp. 1544

Ramon CERNUDA and Editorial Cernuda, Inc., Petitioners, v. George D. HEAVY, Regional Commission, United States Customs Service, and Department of Treasury, United States Customs Service, Respondents.

No. 89-1265-Civ.

United States District Court, S.D. Florida, Miami Division.

September 18, 1989.

Charles V. Senatore, Frank Burt, Tew, Jorden Schulte & Beasley, Miami, Fla., for petitioners.

Dexter W. Lehtinen, U.S. Atty., Thomas A.W. Fitzgerald, Asst. U.S. Atty., Miami, Fla., for respondents.

ORDER GRANTING PETITION FOR RETURN OF SEIZED PAINTINGS

RYSKAMP, District Judge.

I. INTRODUCTION

THIS MATTER is before the court on a petition filed June 19, 1989, pursuant to Rule 41(e) of the Federal Rules of Criminal Procedure, seeking the return of approximately 200 paintings and other property seized by the U.S. Customs Service ("the Service") on May 5, 1989.¹ The court heard argument on that petition on July 28, 1989.

For the reasons discussed below, the petitioners' petition for return of the seized property is hereby GRANTED.

II. FACTUAL BACKGROUND

The Service seized the aforementioned property as being violative of the Trading With the Enemy Act, 50 U.S.C.A.App. § 5(b) (1968 and Supp.1989) ("the TWEA"), and the Cuban Asset Control Regulations promulgated thereunder, 31 C.F.R. Pt. 515 (1963, amended 1989) ("the Regulations").

This seizure is part of an on-going controversy surrounding the exhibition and auction of Cuban art organized by the Cuban Museum in Miami. See generally Memorandum of Law in Support of Petition for Return of Property Pursuant to Rule 41(e), Federal Rules of Criminal Procedure ("Petitioners' Memorandum") at 5-11; Appendix 2; Appendix 8. Petitioner Cernuda has served the museum in various executive capacities during the last eleven years. Beginning in late 1987, dissension arose among museum directors and in the community concerning the museum's exhibition and auction of art created by artists now living in Cuba or those who have not renounced allegiance to Fidel Castro.

The dissension focused on a benefit auction planned for April 1988, which was to include such art. Those opposing the auction suggested that it would violate the TWEA, at which point auction organizers withdrew the disputed art to avoid any possible legal violations. Id. at 8.

Despite withdrawal of the works from the auction, the controversy continued regarding the museum. Cernuda and other museum directors were the subject of death threats. A bomb exploded on May 3, 1988, damaging a director's car and the museum itself. Seventeen incumbent board members, opposed to the museum's dealings in art associated with Castro's Cuba, also resigned that month. Because of the controvery, the museum was subjected to city and state audits, which failed to uncover financial impropriety. Nevertheless, the Florida Legislature withdrew its financial support for the museum on May 18, 1988.

After the April 1988 auction, petitioners attempted to comply with the TWEA by seeking licenses to exhibit Cuban works. Thus, in December 1988, Cernuda wrote to the Office of Foreign Asset Control ("OFAC"), the federal agency responsible for enforcing the TWEA, requesting permission to exhibit the work of a Cuban dissident artist. OFAC never responded to this request. Id. at 13.²

The next contact Cernuda had with government officials was on May 5, 1989, when agents of the U.S. Customs Service searched his personal residence and the office of his company, Editorial Cernuda, pursuant to duly executed warrants. The agents seized approximately 200 paintings that appeared to be of Cuban-origin.³ This seizure is the subject of this petition.

At present, the government has issued no criminal indictments against petitioners for TWEA violations surrounding the importation of the disputed paintings, although more than four months have passed since its agents seized the paintings.⁴ Nonetheless, Rule 41(e) gives this court the discretion to hear pre-indictment requests for the return of unconstitutionally seized property. See DiBella v. United States, 369 U.S. 121, 131, 82 S.Ct. 654, 660, 7 L.Ed.2d 614, 621 (1962); Richey v. Smith, 515 F.2d 1239, 1243 (5th Cir.1975).

III. THE STATUTORY AND REGULATORY FRAMEWORK

A. The Trading With the Enemy Act Before Its 1988 Amendment

The Trading With the Enemy Act, 50 U.S.C.A.App. § 5(b), originally provided the President with broad authority to impose comprehensive embargoes on commerce with foreign countries, during both peacetime emergencies and wartime. Trading With the Enemy Act of 1917, ch. 106, 40 Stat. 411 (amended 1977, 1988); Regan v. Wald, 468 U.S. 222, 225-26, 104 S.Ct. 3026, 3029, 82 L.Ed.2d 171, 175-76 (1984).

In 1977, Congress amended section 5(b) so that it no longer applied to emergency situations during peacetime. Act of December 28, 1977, Pub.L. No. 95-223, 91 Stat. 1625 (1977). But the 1977 amendment contained a grandfather clause, which allowed for the continuation of economic measures taken pursuant to section 5(b) before 1977. See De Cuellar v. Brady, 881 F.2d 1561, 1562-63 (11th Cir.1989).⁵

Pertinent to the present case, the TWEA was the basis for a 1962 embargo on all trade with Cuba after the ascendancy of Fidel Castro. See Proclamation 3447 of Feb. 3, 1962, 27 Fed.Reg. 1085 (1962), 3 C.F.R. 1959-1963 Comp., p. 157. Under authority provided by the embargo, the Secretary of the Treasury promulgated the Cuban Assets Control Regulations to aid in enforcing the TWEA. 31 C.F.R. Pt. 515 (1963). The Regulations generally prohibited any "dealings" in property in which a Cuban national has, or had, a direct or indirect interest after July 8, 1963, in order to prevent the transfer of wealth to Cuba. See 31 C.F.R. § 515.201 (general prohibition as to certain countries and nationals); § 515.305 (Cuba designated as national under TWEA); see also Tagle v. Regan, 643 F.2d 1058, 1059 (5th Cir.1981) (generally describing Regulations applicable to TWEA as amended in 1977).

Notwithstanding the general prohibition of section 515.201, the Regulations prior to 1988 provided for general licenses by application to the Secretary in Subpart E and for specific licenses at the Secretary's discretion in Subpart B. See 31 C.F.R. § 515.801(a), (b). Subpart E provided that a general license could be obtained for the importation of "books and other publications, films, phonograph records, tapes, photographs, microfilm, microfiche and posters of Cuban origin." 31 C.F.R. § 515.545. Imports of these materials for educational purposes had to be approved by the Librarian of Congress or the National Science Foundation, while similar imports for commercial purposes were allowed if the licensee deposited funds into a blocked account and filed certain reports. Id. § 515.545(a), (b). If the Regulations did not provide for a general license, an individual could seek a specific license through either OFAC or the Federal Reserve Bank of New York. Id. § 515.801(b).

B. The TWEA After Its 1988 Amendment

1. Statutory Language. In 1988, Congress passed the Omnibus Trade and Competitiveness Act, which amended TWEA section 5(b) by adding new section 5(b)(4). See Omnibus Trade and Competitiveness Act of 1988, Pub.L. No. 100-418, § 2502(a)(1), 1988 U.S.Code Cong. & Admin.News (102 Stat.) 1107, 1371 (codified at 50 U.S.C.A.App. § 5(b)(4) (Supp.1989)). This 1988 amendment expressly revoked presidential authority to regulate or prohibit the importation or exportation of certain materials. In pertinent part, it provides that:

The authority granted to the President in this subsection does not include the authority to regulate or prohibit, directly or indirectly, the importation from any country, or the exportation to any country, whether commercial or otherwise, of publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, or other informational materials, which are not otherwise controlled for export under section 5 of the Export Administration Act of 1979 section 2404 of this Appendix⁶ or with respect to which no acts are prohibited by chapter 37 of title 18, United States Code.⁷

2. Legislative History. The Omnibus Trade and Competitiveness Act of 1988, which amended the TWEA, was not itself the subject of legislative debate, as it was derived largely from a predecessor bill vetoed because it included a subtitle relating to plant closings. See 1988 U.S.Code Cong. & Admin.News 1547. Nevertheless, the 1988 act specifically provides that the legislative history for the predecessor bill, H.R. 3, generally is treated as its own legislative history.⁸ Omnibus Trade and Competitiveness Act of 1988, Pub.L. No. 100-418, § 2, 1988 U.S.Code Cong. & Admin.News (102 Stat.) 1107, 1119.

Unfortunately, the conference report for H.R. 3 provides little insight as to the interpretation of amended TWEA section 5(b)(4), beyond the bare words of the statute. See H.R.Conf.Rep. No. 576, 100th Cong., 1st Sess., reprinted in 1988 U.S. Code Cong. & Admin.News 1547, 1872. The report merely states that the conference agreement was identical to the House provision, which "clarified that the Trading with the Enemy Act and the International Emergency Economic Powers Act do not authorize regulations on the export or import of informational material not otherwise controlled under the Export Administration Act." Id. The conference report noted that the Senate amendment contained no provision relating to section 2502 of the trade act. Id.

Despite the conference report's brevity, the legislative intent behind new TWEA section 5(b)(4) may be discerned from a report of the House Committee on Foreign Affairs, which accompanied H.R. 3. See 1988 U.S. Code Cong. & Admin.News 1547 (listing various House reports related to Public Law 100-418). According to the Committee:

The committee notes that the American Bar Association House of Delegates approved, in February 1985, the principle that no prohibitions should exist on imports to

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