Langbord v. U.S. Dep't of the Treasury

• Decision Date: 17 April 2015
• Docket Number: No. 12–4574.,12–4574.
• Citation: 783 F.3d 441
• Parties: Roy LANGBORD; David Langbord; Joan Langbord v. UNITED STATES DEPARTMENT OF THE TREASURY; United States Bureau of the Mint; Secretary of the United States Department of The Treasury; Acting General Counsel of the United States Department of the Treasury; Director of the United States Mint; Chief Counsel United States Mint; Deputy Director of the United States Mint; John Doe Nos. 1 To 10 “John Doe” Being Fictional First And Last Names; United States Of America United States Of America, Third Party Plaintiff v. Ten 1933 Double Eagle Gold Pieces; Roy Langbord; David Langbord; Joan Langbord, Third Party Defendants Roy Langbord, David Langbord, Joan Langbord, Appellants
• Court: U.S. Court of Appeals — Third Circuit

783 F.3d 441

Roy LANGBORD;

David Langbord;

Joan Langbordv.UNITED STATES DEPARTMENT OF THE TREASURY;

United States Bureau of the Mint;

Secretary of the United States Department of The Treasury;

Acting General Counsel of the United States Department of the Treasury;

Director of the United States Mint;

Chief Counsel United States Mint;

Deputy Director of the United States Mint;

John Doe Nos. 1 To 10 “John Doe” Being Fictional First And Last Names;

United States Of America

United States Of America, Third Party Plaintiff

v.Ten 1933 Double Eagle Gold Pieces;

Roy Langbord;

David Langbord;

Joan Langbord, Third Party Defendants

Roy Langbord, David Langbord, Joan Langbord, Appellants

No. 12–4574.

United States Court of Appeals, Third Circuit.

Argued: Nov. 19, 2014.

Opinion Filed: April 17, 2015.

Rehearing En Banc Granted, Opinion Vacated July 28, 2015.

Barry H. Berke, Esq. [Argued], Eric A. Tirschwell, Esq., Kramer, Levin, Naftalis & Frankel, New York, N.Y., Kevin J. Kotch, Esq. Walter M. Phillips, Jr., Esq., Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, PA, Attorneys for Appellants.

Jacqueline C. Romero, Esq., Nancy Rue, Esq., Robert A. Zauzmer, Esq. [Argued], Office of United States Attorney, Philadelphia, PA, Attorneys for Appellees.

Before: McKEE, Chief Judge, RENDELL, SLOVITER, Circuit Judges.

OPINION

RENDELL, Circuit Judge:

Congress passed the Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), Pub.L. No. 106–185, 114 Stat. 202, as a “react[ion] to public outcry over the government's too-zealous pursuit of civil and criminal forfeiture” and as an “effort to deter government overreaching.” United States v. Khan, 497 F.3d 204, 208 (2d Cir.2007).¹ To that end, Congress crafted a statutory scheme that requires the Government, if it has seized property that someone else purports to own, to file a complaint for judicial forfeiture within 90 days of receipt of a claim (known as a “seized asset claim”) or else to return the property. 18 U.S.C. § 983(a)(3)(A). CAFRA also imposes on the Government a heightened burden of proof to establish its right to the property in such proceedings. United States v. Sum of $185,336.07 U.S. Currency, 731 F.3d 189, 196 (2d Cir.2013).

Here, the Government failed to follow CAFRA's procedure, which requires it to file a complaint for judicial forfeiture within 90 days of the filing of a seized asset claim. Accordingly, we will reverse the portion of the District Court's July 29, 2009 order denying the appellants' cross- motion for partial summary judgment concerning the applicability of CAFRA. We will vacate all orders at issue on appeal that postdate the July 29, 2009 order, including the jury verdict and the District Court's order entering judgment. Further, we will remand for the District Court and instruct it to grant the appellants the relief required by this Opinion.

I. Background

The ownership of the property in question and how the appellants obtained possession of it are hotly disputed, but the facts relevant to the disposition of this appeal are not. The property consists of ten coins that were minted in 1933. Each coin is a double eagle, which is a $20 gold coin. The 1933 double eagle is alleged to be “the most valuable ounce of gold in the world” and “America's most beautiful coin.” (J.A. 609.) There were 445,500 double eagles minted in 1933; however, those coins were generally not released into circulation. Instead, in an effort to halt the banking crisis during the Great Depression, President Franklin D. Roosevelt issued an executive order in 1933 removing gold coins from circulation. See Exec. Order No. 6102 (Apr. 5, 1933).² The U.S. Mint (“Mint”) was forbidden from releasing any more gold coins, and, over the next few years, began melting the coins into gold bricks. Nonetheless, a number of 1933 double eagles left the Mint; some were unlawfully smuggled out and at least two left the Mint lawfully.

One 1933 double eagle was sold to King Farouk of Egypt, a coin collector, in 1944. This coin had been unlawfully smuggled out of the Mint, but the Government “had improvidently issued an export license,” which muddied the issue of who rightfully possessed the coin. (J.A. 28.) In 1995, an English coin dealer, Stephen Fenton, purchased that coin for approximately $200,000. Fenton then contacted a coin dealer in the United States, who subsequently became a confidential informant for the U.S. Secret Service (“Secret Service”). The confidential informant convinced Fenton to bring the coin to the United States in 1996. The Secret Service seized the coin from Fenton in New York City, and litigation ensued. The Government ultimately settled with Fenton, agreeing to sell the coin at auction and divide the proceeds equally. The Fenton coin was auctioned in 2002 for nearly $7.6 million.

The appellants in this case are Joan Langbord and her sons, Roy and David Langbord (collectively, the “Langbords”). Shortly after the Fenton coin sold at auction, Joan Langbord allegedly discovered ten 1933 double eagles (the “Double Eagles”) in a safe deposit box originally belonging to her deceased father, Israel Switt. Several decades earlier, the Secret Service suspected that Switt, an antique dealer in Philadelphia, and George McCann, a former Philadelphia Mint cashier, unlawfully smuggled 1933 double eagles out of the Philadelphia Mint; however, Switt's involvement in this scheme was never proven.

In 2004, the Langbords' counsel informed the Mint about the Double Eagles that the Langbords had discovered. The Langbords sought an agreement similar to the Fenton coin compromise. The Mint's attorneys stated that they “would be willing to discuss the matter” and that they were “amenable to a discussion” on that topic. (J.A. 142.) The Langbords, explicitly reserving their rights to the Double Eagles, made the coins available to the Government for the sole purpose of authentication. (J.A. 806.) Shortly thereafter, the agencies involved—i.e., the U.S. Attorney's Office for the District of Columbia, the Secret Service, the U.S. Department of the Treasury (“Treasury”), and the Mint—met to discuss how to proceed. A memorandum summarizing the meeting states that “[a]ll the agencies involved, with the exception of the U.S. Mint, are in favor of pursuing forfeiture.” (J.A. 818.) Only the Mint “assert[ed] that the coins are government property and should be returned [to the Mint] without the need for forfeiture.” (Id. )

The Double Eagles were authenticated, and the Treasury sided with the Mint, deciding not to institute a judicial civil forfeiture proceeding. When the Langbords' counsel requested return of the Double Eagles, the Mint's counsel wrote to him, stating, “[t]he United States Mint has no intention of seeking forfeiture of these ten Double Eagles because they already are, and always have been, property belonging to the United States; this makes forfeiture proceedings entirely unnecessary.” (J.A. 823.) In response, the Langbords' counsel submitted a “seized asset claim” on September 9, 2005, demanding the return of the Double Eagles or the institution of a judicial civil forfeiture proceeding. (J.A. 828–35.) As described below, a seized asset claim starts the process whereby the Government must either institute a judicial civil forfeiture proceeding or return the seized property. Nevertheless, in response to the seized asset claim, the Mint responded that it was “returning these documents ... without action,” again stating that “[t]here is simply no basis for the Government to initiate forfeiture proceedings on property to which the United States holds title.”³ (J.A. 837.)

In the face of the Government's refusal, the Langbords instituted this civil action in December 2006. The Langbords asserted two claims for violations of the Administrative Procedure Act (“APA”), a claim for violation of CAFRA, a Fifth Amendment claim, a Fourth Amendment claim, a claim for mandamus, and two claims under the Federal Tort Claims Act (“FTCA”) for replevin and conversion.

The parties filed cross-motions for summary judgment. On July 29, 2009, the District Court ruled in favor of the Government on the CAFRA claim, holding that CAFRA's 90–day deadline in § 983(a)(3) did not apply because it applies only to nonjudicial civil forfeitures and no such forfeiture had occurred here. It reasoned that: (1) a “non-judicial civil forfeiture ‘is commenced when the Government sends notice of the forfeiture proceeding to potential claimants' ”; (2) “the Government never sent [the Langbords] such a notice”; and thus (3) “the Government never began an administrative forfeiture proceeding⁴ and therefore the requirements of § 983(a) [namely, the 90–day deadline] do not apply.” (J.A. 146 (quoting Stefan D. Cassella, Asset Forfeiture Law in the United States 143 (1st ed.2007) [hereinafter Cassella First Edition] ).) The District Court did find, however, that the Government had violated the Langbords' Fourth Amendment right against unreasonable seizures and their Fifth Amendment due process right by taking the Double Eagles contrary to the parties' agreement. It held that the remedy for these constitutional violations was for the Government either to return the coins or to institute a judicial civil forfeiture proceeding, which is the same result that § 983(a)(3) demands, but without the 90–day deadline. The District Court granted the Government's summary judgment motion on the APA claims and postponed ruling on the FTCA claims.

As ordered by the District Court, the Government sought leave to file a judicial civil forfeiture complaint on September 28, 2009. The complaint alleged that the Double Eagles were “embezzled, stolen, purloined, knowingly converted to private use, or taken from the United States Mint in Philadelphia without authority, and [were] concealed and retained with the intent to convert [them] to private use or gain” in violation of 18 U.S.C. § 641. (J.A. 1178.) The Government's proposed complaint also included a declaratory judgment claim that ...