U.S. v. 5,644,540.00 in U.S. Currency, s. 85-1976
| Citation | 799 F.2d 1357 |
| Decision Date | 16 September 1986 |
| Docket Number | 85-2075,85-2084 and 85-2085,85-2069,Nos. 85-1976,s. 85-1976 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. $5,644,540.00 IN U.S. CURRENCY, 450 One-Ounce Gold Canadian Maple Leaf Coins, 500 One-Ounce Platinum Ingots, Defendants, and Kenneth Cory, Controller, etc., California Franchise Tax Board, Ann Smith Kamali, Nelson Garrett, Douglas Stavoe, and Pearl Lampros, Claimants- Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Sanford Svetcov, Dennis Michael Nerney, Asst. U.S. Attys., San Francisco, Cal., for plaintiff-appellee.
Robert E. Murphy, Deputy Atty. Gen., San Francisco, Cal., for defendants and Cory.
Frederick P. Furth, Thomas R. Fahrner, Michele C. Jackson, Dwayne L. Abbott, Furth, Fahrner, Bluemle & Mason, San Francisco, Cal., for claimants-appellants Kamali and Garrett.
Philip Farley, Franchise Tax Bd., Sacramento, Cal., for claimants-appellants.
John H. Boone, San Francisco, Cal., for claimant-appellant Stavoe.
Law Offices of Melvin M. Belli, Sr., Constance R. Fraenkel, Paul M. Monzione, Philip L. Stimac, San Francisco, Cal., for Lampros.
Appeal from the United States District Court for the Northern District of California.
Before ALARCON and WIGGINS, Circuit Judges, and STEPHENS *, Senior District Judge.
The claimants of the res consisting of $5,644,540.00 in U.S. currency, 450 one-ounce gold coins, and 500 one-ounce platinum ingots appeal from a summary judgment forfeiting the property to the government. We affirm.
Claimants Ann Smith Kamali and Nelson Garrett were supervisory employees of Budget Rent-A-Car at its San Francisco airport office. In early October 1984, Kamali commenced a search for a 1984 white Ford Tempo automobile, which was considered missing from Budget's inventory although the extended rental contract had an expiration date of October 22, 1984. A deputy sheriff had told Kamali that he had seen the car in an airport parking lot.
On October 10, 1984, Kamali asked Garrett to look in the airport parking lot for the car, but he was unable to find it. On October 23, 1984, Kamali again requested that Garrett look for the car. He located it in the parking lot and tried to start the car after obtaining the keys, but was unable to do so. He returned to Budget's office, and then he and Kamali drove another car to the parking lot to retrieve the Ford Tempo. They were able to start the Ford and drove both cars back to the Budget office.
Kamali attempted to contact the individual who had rented the car by dialing the phone numbers listed on the rental documents. She reached an answering service and a Marin County motel, but was unable to reach the renter. On that same afternoon, she drove the Ford Tempo to lunch. As she was leaving the Budget parking lot, she stopped to go through a routine security check. Security Guard Pearl Lampros, who is another claimant, opened the trunk, and they both saw luggage and other packaged items in it.
Kamali returned from lunch in the same car and drove to the back door of the Budget office in order to unload the contents of the trunk. Because the luggage was very heavy, she requested Garrett's help. The trunk contained, among other things, two unlocked duffel bags, two locked, vinyl suitcases, and a cardboard box. Kamali opened one of the duffel bags and discovered that it was filled with U.S. currency. Kamali and Garrett then opened the other duffel bag which also contained U.S. currency. The cardboard box contained gold coins and platinum bars.
Kamali contacted the San Mateo Sheriff's office, and two detectives arrived at the Budget office shortly thereafter. The detectives took custody of all of the contents of the trunk of the Ford Tempo. After reviewing the situation, the sheriff's detectives contacted the Drug Enforcement Administration (DEA), and two agents arrived later and seized and removed all of the property pursuant to 21 U.S.C. section 881(a)(6).
The next day, October 24, 1984, one of the DEA agents, Fiorentino, presented an affidavit for a search warrant to a federal magistrate who issued a warrant authorizing Fiorentino to search the two locked suitcases, which had been found in the trunk. The affidavit recited that DEA agents had counted approximately $1.4 million in $50 and $100 bills in the two duffel bags and that the gold coins and platinum ingots found were valued in excess of $600,000. A previously reliable dog trained to identify narcotics "alerted" on both of the suitcases found in the car, each of which had been placed in line with other pieces of luggage. The missing car had been rented by a person giving his address as Miami, Florida, a known source city for cocaine. The renter's local residence proved to be a Marin County motel which DEA agents knew had been used in the past for drug trafficking. The renter had not been registered there for five months. The car had been rented on August 9, 1984, was renewed twice by telephone, and the rental contract was to expire on October 22, 1984.
The two suitcases were opened and searched pursuant to the warrant on October 24, 1984. One suitcase contained 100 pounds of $100 bills, amounting to $4 million, and the other contained three shopping bags of currency in $100, $50, $20 and $10 denominations, totalling $245,540. When the suitcase containing the shopping bags was opened, the agents detected the odor of processed cocaine, and after removing the money, they saw flakes of white powder in the top and bottom sections of the liner. A DEA chemist confirmed that the substance was cocaine; fifteen milligrams were recovered from the suitcase.
After further investigation, DEA agents discovered that the person who rented the car on August 9, 1984, had used a fraudulent Florida driver's license and gave a false name and address in Miami. The occupant of the residence address given in Miami did not know the individual who had rented the car, but had returned mail that had been addressed to him at the house to the post office.
The suspect had opened a mail and telephone answering service in Marin County on January 1, 1984, listing a Delaware corporation as his business address and using another identity. The corporation's address turned out to be a vacant lot in San Antonio, Texas. The suspect also used a false social security number to obtain a Visa credit card. His Visa records disclosed that he had travelled by car from Miami to the Atlanta airport for a flight to the West Coast. This was consistent with the practice of cocaine dealers seeking to avoid the high level of police supervision at the Miami airport.
The suspect, using yet another false name, traded 500 gold coins for 500 platinum ingots at a coin shop in southern California on July 5, 1984. The coin dealer identified a photograph of the suspect obtained from the fraudulent Florida driver's license. The identity of the suspect became known to the government through the persons mentioned above. He is not in custody.
On October 25, 1984, the government filed a civil complaint for forfeiture of $5,644,540 in cash, 450 one-ounce gold coins, and 500 one-ounce platinum ingots. The government alleged that the res was involved in a cocaine transaction. Notice by publication was executed on November 15, 1984.
In November and December 1984, claimants Kamali, Garrett, Lampros, Kenneth Cory, Controller of the State of California, and the California Franchise Tax Board all filed timely answers. The district court treated a motion to intervene by Lampros as a timely claim. Claimant State Controller Cory alleged that the res is unclaimed property and as such should escheat to the state under California Code of Civil Procedure section 1520. Claimants Kamali, Garrett and Lampros alleged that they are finders of lost property under California Civil Code section 2080, et seq. Claimant Franchise Tax Board asserted that eleven percent, or $657,711.00 in California income tax is due on the res. Claimant Douglas Stavoe, another Budget employee, filed an untimely claim and answer as a finder on February 5, 1985. The sole basis for his claim is his allegation that he saw the Tempo automobile in an airport parking lot on October 15, 1984, and reported the sighting to his supervisor in a written inventory of missing cars.
Budget Rent-A-Car also filed a timely claim, alleging that it was a finder and possessor of the res. 1 In February 1985, Budget filed interrogatories and a request for production of documents and noticed the depositions of two DEA agents and the DEA chemist. Between November 1984 and March 1, 1985, no other claimant sought discovery.
On March 1, 1985, the government moved to stay discovery and also moved for summary judgment. The affidavit of DEA Agent Fiorentino supporting the motion for summary judgment was offered to establish probable cause that the money had been used in an illegal drug transaction and was filed under seal to protect the criminal investigation.
Claimants filed memoranda in opposition to summary judgment, but only claimants Kamali and Garrett filed affidavits pursuant to Federal Rule of Civil Procedure 56(f) seeking a continuance to permit discovery until the completion of the criminal investigation.
On April 22, 1984, the district court decided that the government had demonstrated probable cause that the res had been involved in a drug transaction. The court denied discovery and a continuance and granted the government's motion for summary judgment. Claimant Stavoe's claim was dismissed as untimely. Appellants challenge the district court's order granting summary judgment to the government and denying a continuance to permit discovery.
At the outset, we must determine whether we have jurisdiction over this appeal. Federal Rules of Civil Procedure 54(b) provides that a judgment on fewer than all claims...
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