US v. Real Property

• Citation: 807 F. Supp. 581
• Decision Date: 27 August 1992
• Docket Number: No. Civ 92-0230 PHX RCB.,Civ 92-0230 PHX RCB.
• Parties: UNITED STATES of America, Plaintiff, v. REAL PROPERTY KNOWN AS 953 EAST SAHARA, LAS VEGAS, NEVADA, Defendant.
• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Arizona

807 F. Supp. 581

UNITED STATES of America, Plaintiff, v. REAL PROPERTY KNOWN AS 953 EAST SAHARA, LAS VEGAS, NEVADA, Defendant.

No. Civ 92-0230 PHX RCB.

United States District Court, D. Arizona.

August 27, 1992.

Linda A. Akers, Reid C. Pixler, U.S. Atty., Phoenix, AZ, for plaintiff.

John Coombes, Newport Beach, CA, for Curci Revocable Trust.

Edward S. Coleman, Las Vegas, NV, for Joseph A. Critelli.

Richard McKnight, Las Vegas, NV, pro se.

Kirby Rollin Wells, Wells Kravitz Schnitzer Sloane, Las Vegas, NV, pro se.

Daryl M. Williams, Robert Bauer, Murphy & Posner, Phoenix, AZ, for Haberman Group.

Terrance G. Reed, Asbill, Junkin & Myers, Washington, DC, and Michael D. Kimerer, Allen, Kimerer & LaVelle, Phoenix, AZ, for Plaza Celebrities.

Thomas N. Crowe, Crowe & Scott, P.A., Phoenix, AZ, for Marlene Michaels.

ORDER

BROOMFIELD, District Judge.

Claimant Plaza Celebrities, Inc. ("claimant") moves to dismiss this in rem civil forfeiture action for lack of jurisdiction over the res. Plaintiff opposes the motion. None of the other claimants in this action responded to the motion. After consideration of the briefs and oral argument, the court now rules.

I. FACTS¹

Plaintiff asserts that beginning in November, 1991, Marlene Michaels engaged in a series of meetings in Maricopa County with undercover police officers in which Michaels proposed a complex money laundering scheme involving defendant property. Because defendant property was scheduled to be sold on or about December 20, 1991, plaintiff obtained a seizure warrant from a United States Magistrate Judge for the District of Nevada to seize the interests of Michaels in the proposed real estate transaction. At this time, a notice of lis pendens was filed, but no arrest warrant was issued or served.

On or about January 9, 1992, a criminal complaint was filed in the District of Arizona against Michaels, charging Michaels with money laundering. Based on this criminal complaint, plaintiff filed a verified complaint for forfeiture in rem on February 5, 1992, creating this civil action. On or about February 19, 1992, Michaels was indicted in the District of Arizona for two counts of money laundering. On or about February 20, 1992, this court issued an arrest warrant in rem and service was made on defendant property by the United States Marshal for the District of Nevada.

In its verified complaint, plaintiff asserts that this court has jurisdiction pursuant to 28 U.S.C. §§ 1345 and 1355.² Plaintiff also asserts venue in Arizona pursuant to 18 U.S.C. § 981(h). In claimant's answer, claimant³ admitted both jurisdiction and venue.

II. ANALYSIS

Claimant asserts that the court lacks in rem jurisdiction over defendant because in rem jurisdiction lies only in the district where defendant property is seized. Claimant further argues that this court has not seized and can not seize defendant and can not serve process on defendant. Plaintiff argues that the court should deny claimant's motion to dismiss because it is untimely under Fed.R.Civ.P. 12 and because the court has jurisdiction over defendant property even though the property is not located in the District of Arizona.

A. Timeliness of Motion to Dismiss

Plaintiff argues that under Fed. R.Civ.P. 12(h), claimant waived the defenses of venue and jurisdiction because plaintiff filed its answer before filing its motion to dismiss for lack of jurisdiction and venue. Under Rule 12, a party loses the defenses of lack of jurisdiction over the person and improper venue if these defenses are (1) not included in a motion pursuant to this rule,⁴ (2) not included in a responsive pleading, or (3) not included in an amendment permitted by Fed.R.Civ.P. 15(a).⁵ The defense of lack of subject matter jurisdiction, however, may be raised at any time. Fed.R.Civ.P. 12(h)(3).

In this case, claimant answered before filing this motion to dismiss, and admitted jurisdiction and venue rather than asserting the defense of lack of jurisdiction or improper venue. Furthermore, claimant did not amend its answer as permitted by Fed.R.Civ.P. 15(a) and more than twenty days have elapsed since service. Thus, the court finds that claimant has waived the defenses of improper venue and lack of personal jurisdiction.

Plaintiff appears to assume, without citing any authority, that similar to personal jurisdiction, in rem jurisdiction may be waived. Claimant argues that filing an answer does not relieve the court of its duty to determine its jurisdiction over defendant property. Claimant refers the court to a Ninth Circuit case which holds that because "forfeiture proceedings are in rem, the court's subject matter jurisdiction is dependent on its continuing control over the property." United States v. 66 Pieces of Jade and Gold Jewelry, 760 F.2d 970, 973 (9th Cir.1985) (emphasis added). Thus, lacking any authority to the contrary, the court holds that claimant did not waive its right to argue that this court lacks in rem jurisdiction over defendant property.

B. Jurisdiction of Court over Defendant Property

Both parties agree that this court's jurisdiction over defendant property is limited by the court's ability to control the property. Claimant, however, argues that this court's control is limited to property located within this district because the applicable statutes and rules limit service of process to within the district. Plaintiff argues that this court's control over property is not limited to property located within the district because Congress specifically has expanded the court's control to encompass property located outside the district and because this court has exercised this control by issuing an arrest warrant which was executed by the United States Marshal.

In support of its argument, claimant directs the court to the civil forfeiture statute, 18 U.S.C. § 981(b)(2), which requires that property be seized according to the Supplemental Rules for Certain Admiralty and Maritime Claims ("Supplemental Admiralty Rules").⁶ Supplemental Admiralty Rule E(3)(a) provides that process in rem shall be served only within the district. Thus, claimant concludes that as this court was not authorized to arrest property in Nevada, it never obtained in rem jurisdiction over defendant property.

Plaintiff refers the court to a different subsection of the same civil forfeiture statute, 18 U.S.C. § 981(h), and argues that this subsection provides the court with in rem jurisdiction over defendant property. Section 981(h) provides:

In addition to the venue provided for in section 1395 of title 28⁷ or any other provision of law, in the case of property of a defendant charged with a violation that is the basis for forfeiture of the property under this section, a proceeding for forfeiture under this section may be brought in the judicial district in which the defendant owning such property is found or in the judicial district in which the criminal prosecution is brought.

18 U.S.C. § 981(h). Plaintiff reasons that to limit the application of section 981(h) to property located within the district as suggested by claimant and Supplemental Admiralty Rule E(3)(a) would nullify 18 U.S.C. § 981(h). Plaintiff contends that interpreting § 981(h) as urged by claimant would defeat the purpose of the enactment of the statute because it would necessitate multiple litigation of forfeiture actions in all judicial districts in which property may be located, rather than one action where the criminal defendant was indicted. Plaintiff argues that the court should assume that Congress intended its enactment to have meaningful effect and should construe § 981(h) to give it such effect.

Plaintiff also argues that Fed.R.Civ.P. 4(f) provides that service of process may be modified by Congress and that as Rule 4(f) is not inconsistent with the Supplemental Admiralty Rules, Rule 4(f) is applicable to this situation.⁸ Thus, plaintiff concludes that Supplemental Admiralty Rule E(3)(a) which limits service of process to within the district is modified by 18 U.S.C. § 981(h) to include extra territorial service of process.

Claimant argues that § 981(h) is merely a venue provision, and does not expand the court's in rem jurisdiction. Claimant argues that this conclusion is supported by the fact that plaintiff has submitted to Congress a proposed amendment to the money laundering statutes which would grant jurisdiction in any district where venue lies. H.R. 26, 102d Cong., 2d Sess. at Title III, Sec. 301. Claimant notes that the legislative proposal seeks to amend the jurisdiction statute, and not § 981(h), which refers to venue. Claimant asserts that the proposed amendment is a tacit admission that such jurisdiction currently does not exist.

Neither party refers the court to any circuit decision which addresses the specific issue at hand. Both parties, however, do refer the court to district court opinions which have addressed the same or similar issues. While these district court decisions appear split, the majority of decisions support plaintiff's argument.

Claimant refers the court to a Nevada District case which refused to interpret 21 U.S.C. § 881(j), a venue statute identical to 18 U.S.C. § 981(h), as a jurisdictional one. See United States v. Real Property at 11205 McPherson Lane, 754 F.Supp. 1483 (D.Nev.1991). The McPherson court reasoned that Congress knew how to clearly authorize nationwide service of process when it wanted to, and the fact that Congress had not done so with § 881(j) "argues forcefully that such authorization was not its intention." Id. at 1487 (quoting Omni Capital International v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987)).⁹

Plaintiff refers the court to several civil forfeiture cases which, contrary to the McPherson court, hold that 21 U.S.C. § 881(j) does grant territorial jurisdiction over property located outside of the district of the court. United States v. Premises Known as Lots 50 & 51, 2050 Brickell Avenue,...