Marshall Leasing, Inc. v. U.S.

• Decision Date: 01 March 1990
• Docket Number: No. 87-4344,87-4344
• Citation: 893 F.2d 1096
• Parties: MARSHALL LEASING, INC., a Washington corporation, Plaintiff-Appellant, v. UNITED STATES of America, United States Department of Justice, Drug Enforcement Administration, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1096

893 F.2d 1096

58 USLW 2428

MARSHALL LEASING, INC., a Washington corporation, Plaintiff-Appellant, v. UNITED STATES of America, United States Department of Justice, Drug Enforcement Administration Defendants-Appellees.

No. 87-4344.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Jan. 11, 1989.

Decided Jan. 11, 1990.

As Amended Mar. 1, 1990.

Ronald H. Hoevet, Portland, Or., for plaintiff-appellant.

Jack G. Collins, Asst. U.S. Atty., Portland, Or., for defendants-appellees.

Appeal from the United States District Court for the District of Oregon.

Before SCHROEDER, POOLE, and NELSON, Circuit Judges.

NELSON, Circuit Judge:

Appellant contends that the district court erred in dismissing its action on the grounds that the complaint did not state an equitable claim as required for a waiver of sovereign immunity under 5 U.S.C. Sec. 702 and that appellant had an adequate remedy at law in the Claims Court under the Tucker Act. We find that appellant's complaint sought equitable relief. We reverse the district court's finding that appellant had an adequate remedy at law as to its first three claims alleging a denial of due process under the fifth amendment, and affirm as to the fourth alleging a taking without just compensation. We remand with instructions to the district court to allow appellant to amend its complaint to eliminate its requests in the alternative for monetary relief, for which there is no waiver of sovereign immunity from suit in the district court, and to adjudicate the first three claims on the merits.

FACTUAL AND PROCEDURAL BACKGROUND

Appellant brought this action to challenge an administrative forfeiture of a Mercedes Benz in which appellant claims an ownership or security interest. Appellant is an automobile leasing company. According to the complaint, deputies of the Multnomah County Sheriff's office and agents of the Drug Enforcement Administration (DEA) seized the Mercedes on October 7, 1984 from Mark Gaudry, who was in possession of the Mercedes pursuant to a sales/repurchase agreement with an option to purchase. The seizure was the product of a joint investigation by the DEA and Multnomah County of Mr. Gaudry.

Multnomah County filed a forfeiture action shortly after the October 7, 1984 seizure, alleging that Mr. Gaudry had used the car to facilitate the commission of two drug offenses. Appellant intervened in that action as a party in interest and contested the forfeiture.

On October 12, 1984, Congress enacted changes in the laws governing forfeitures of property seized by customs officers. Sections 1604 and 1607 of title 19 of the U.S.Code, which previously had required judicial forfeiture of property valued at more than $10,000, were amended to permit administrative forfeiture of property valued under $100,000 and to require the Attorney General to initiate judicial forfeiture proceedings (in the absence of a claim and bond filed pursuant to section 1608) only of property valued at more than that amount. The changes were effective October 15, 1984. 19 U.S.C. Secs. 1604, 1607, 1608, 1610.

On July 16, 1985, appellant received written notice from the DEA that it had adopted a seizure of the Mercedes by DEA agents, which the notice stated they had effected on June 12, 1985. The DEA published notice of seizure on August 1, 8, and 15, 1985, and the Mercedes was administratively forfeited.

Appellant filed a timely petition for mitigation or remission of forfeiture of the Mercedes pursuant to 19 U.S.C. Sec. 1618. The petition was denied, as was appellant's subsequent timely petition for reconsideration.

Appellant sought relief in federal district court. Appellant's first three claims constitute a collateral attack on the forfeiture proceeding, and its fourth claim is an appeal from the DEA denial of appellant's petition for remission or mitigation of forfeiture. In the first and second claims appellant alleges it was denied due process of law because the defendants failed to commence judicial forfeiture proceedings, as was required by the forfeiture laws in effect at the time of the seizure, 19 U.S.C. Secs. 1604, 1607. ¹ The third claim alleges that appellant was denied due process under the fifth amendment of the United States Constitution because the notice of seizure was inadequate and misleading. The fourth claim alleges that appellees' denial of appellant's petition violates its rights under the takings clause of the fifth amendment because appellant was an innocent owner and had taken all reasonable steps to prevent the illicit use of its property.

Appellants moved to dismiss pursuant to Federal Rule of Civil Procedure 12 on the ground that the United States had not waived its sovereign immunity with respect to any of the claims and that the court lacked subject matter jurisdiction over the fourth. The magistrate found that appellant's claims were equitable in nature and therefore the sovereign immunity of the United States was waived by section 702 of the Administrative Procedures Act (APA). 5 U.S.C. Sec. 702. He also found that the district court had jurisdiction over an appeal from a denial of a petition for remission or mitigation of forfeiture.

The district court disagreed and granted appellants' motion to dismiss. The court reasoned that the "action is principally an action at law for money damages" and that the APA therefore does not waive sovereign immunity. The court also found that there was an adequate remedy at law.

Appellant timely appealed.

DISCUSSION

I. Standard of Review

This court reviews de novo a district court's determination of subject matter jurisdiction. Clayton v. Republic Airlines, Inc., 716 F.2d 729, 730 (9th Cir.1983).

II. Sovereign Immunity

The district court found that appellant's claims were principally for money damages and that therefore sovereign immunity was not waived under the APA. The United States is immune from suit unless it has consented to be sued, and the terms of its consent to be sued in any court define the jurisdiction of that court to entertain the suit. United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 769, 85 L.Ed. 1058 (1941); accord United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948 953, 47 L.Ed.2d 114 (1976). Section 702 of the APA, 5 U.S.C. Sec. 702, waives sovereign immunity over claims for equitable relief based on agency action. Section 702 of the APA provides:

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial relief thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensible party. The United States may be named as a defendant in any such action, and a judgment or decree may be entered against the United States.

5 U.S.C. Sec. 702.

Appellant's complaint seeks the return of forfeited property or, in the alternative, monetary compensation in the amount of its ownership or security interest. Return of forfeited property is an equitable remedy. See, e.g., Bowen v. Massachusetts, 487 U.S. 879, 108 S.Ct. 2722, 2732-33, 101 L.Ed.2d 749 (1988) (defining an equitable remedy in part as an action for specific relief "which may include an order ... for the recovery of specific property"); Willis v. United States, 787 F.2d 1089, 1092-93 (7th Cir.1986). See generally D. Dobbs, Remedies Sec. 4.4 (1973). A party's request for money damages in the alternative to equitable relief does not alone alter the equitable character of the relief requested.

Appellees nevertheless contend that appellant's action is principally one at law for money damages and that section 702 therefore does not waive sovereign immunity. Section 702 states: "Nothing herein ... (2) confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought." 5 U.S.C. Sec. 702. The Tucker Act grants the Claims Court exclusive jurisdiction over actions against the United States for money damages in excess of $10,000. 28 U.S.C. Sec. 1346(a)(2), 1491; Bedoni v. Navajo-Hopi Indian Relocation Comm'n, 854 F.2d 321, 325 (9th Cir.1988) (stating that "[t]he scope of judicial review of agency decisions by district courts is limited, however, by the 'preclusion-of-review statutes created or retained by Congress' to which 28 U.S.C. Sec. 1331 is subject" and noting that the Tucker Act is such a statute (quoting Califano v. Sanders, 430 U.S. 99, 106, 97 S.Ct. 980, 985, 51 L.Ed.2d 192 (1977))). A party may not avoid the Claims Court's jurisdiction by framing an action against the federal government that appears to seek only equitable relief when the party's real effort is to obtain damages in excess of $10,000. McKeel v. Islamic Republic of Iran, 722 F.2d 582, 590 (9th Cir.1983), cert. denied, 469 U.S. 880, 105 S.Ct. 243, 83 L.Ed.2d 182 (1984). This court has, however, only found that "the real effort of the complaining party is to obtain money [in excess of $10,000]," Rowe v. United States, 633 F.2d 799, 802 (9th Cir.1980), cert. denied, 451 U.S. 970, 101 S.Ct. 2047, 68 L.Ed.2d 349 (1981), when the equitable claim is spurious or "the actual relief resulting from [review of the equitable claim] would be monetary." Id.; see, e.g., McKeel, 722 F.2d at 590 ("The only value to appellants of the declaratory judgment they seek would be to have it serve as res judicata in the Claims Court [where they could obtain money damages]."); Bakersfield City School Dist. v. Boyer, 610 F.2d 621, 628 (9th Cir.1979) (refusing jurisdiction over a claim seeking an order requiring payment of funds improperly deferred, reasoning that the...