U.S. v. 141st Street Corp. by Hersh

• Decision Date: 17 August 1990
• Docket Number: No. 1195,D,1195
• Citation: 911 F.2d 870
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. 141ST STREET CORPORATION, by Mark HERSH, Managing Agent of the defendant in Rem, Appellant, All Right, Title and Interest in Real Property and Buildings Known as 617 West 141st Street, Defendant. ocket 89-6268.
• Court: U.S. Court of Appeals — Second Circuit

Page 870

911 F.2d 870

59 USLW 2157

UNITED STATES of America, Plaintiff-Appellee, v. 141ST STREET CORPORATION, by Mark HERSH, Managing Agent of

the defendant in Rem, Appellant,

All Right, Title and Interest in Real Property and Buildings

Known as 617 West 141st Street, Defendant.

No. 1195, Docket 89-6268.

United States Court of Appeals, Second Circuit.

Argued April 20, 1990.

Decided Aug. 17, 1990.

Rosemary Carroll, New York City (Kliegerman & Friess, New York City, of counsel), for appellant.

Pamela L. Dempsey, Asst. U.S. Atty., Southern District of New York, New York City (Otto G. Obermaier, U.S. Atty., Paul K. Milmed, Marla Alhadeff, Asst. U.S. Attys., Southern District of New York, New York City, of counsel), for plaintiff-appellee.

Before TIMBERS, MESKILL and PIERCE, Circuit Judges.

MESKILL, Circuit Judge:

This appeal presents several questions, both constitutional and statutory, that arise from the forfeiture of an apartment building used to facilitate narcotics distribution. The government seized the building in question after obtaining a warrant through an ex parte application to a magistrate, and then instituted this civil forfeiture action under 21 U.S.C. Sec. 881(a)(7). ¹ The forfeiture action was tried in the United States District Court for the Southern District of New York before Conboy, J., and a jury. The jury returned a verdict in favor of the government, and the owner of the building, West 141st St. Realty Corporation (Realty Corp.), appeals. For the reasons set forth below, we affirm.

BACKGROUND

The Property and the Evidence of Drug Activity

The forfeited property is a six story building with forty-one apartments, located at 617 West 141st Street in Manhattan. Realty Corp. is the record owner of the building. Mark Hersh, the president and principal stockholder of Realty Corp., is the building's managing agent. Hersh's uncle, Morris Nahmias, is the superintendent of the building, although he performs many functions generally associated with a managing agent such as entering into leases and collecting rent.

The testimony at trial established that, from December 1986 through May 1988, the New York City police received complaints of narcotics trafficking in twenty-four of the forty-one apartments in the building. Apartments on all six floors of the building were the subjects of complaints. The common areas of the building were littered with crack vials and with broken pipes designed for smoking crack, and lookouts constantly were posted both in front of the building and along the block where it is located. In addition, several "steerers," those who direct potential drug customers to the place where the drugs are located, were repeatedly observed loitering outside the building and in the lobby.

Officer Richard Lagarda of the New York City police testified that he spoke with Morris Nahmias three times during the summer of 1987 regarding the drug problem at the building. Lagarda asked that Mark Hersh contact him to see what could be done about the drug activity. Lagarda also attempted to telephone Hersh directly on two occasions, each time leaving a message, but Hersh never returned his calls. Officer Victor Mendoza similarly testified that he sent a letter to Mark Hersh in July 1987 asking that he come to the police precinct to discuss narcotics trafficking at the building, but that Hersh never responded. Officer Mendoza and his partner each telephoned Hersh on three occasions and left messages, but never heard from him. Hersh testified that he received no messages from the police.

In May 1988, Lieutenant Kenneth Becker of the New York City police took charge of an investigation into the narcotics sales in the building. Given the level of drug activity in the building and Hersh's failure to respond to previous inquiries by the police, Lieutenant Becker chose not to contact Hersh regarding the drug activity because he felt that "the owner was possibly aware of [the narcotics trafficking], if not working directly with the narcotic traffickers in th[e] building." Under Lieutenant Becker's direction, undercover police officers purchased narcotics in various apartments. The officers discovered that an alarm system, the purpose of which was to alert the occupants of apartments to police presence, was wired from a central connection box on the roof of the building into the apartments searched. Based on the knowledge gained through these purchases, search warrants were issued for eight apartments. These warrants were executed on June 2, 1988. The police arrested twenty-six people and recovered drugs, weapons and cash.

Approximately two weeks later, undercover officers purchased narcotics in nine additional apartments and, based on these purchases, obtained search warrants for these nine units. The officers also obtained a seizure warrant for the entire building by applying ex parte to a United States Magistrate as authorized by 21 U.S.C. Sec. 881(b). The seizure warrant ordered the United States Marshal to take control of the premises and the leasehold interests of fifteen tenants within the building.

The government executed the search and seizure warrants on June 29, 1988, recovering more contraband and arresting twelve people. Pursuant to the seizure warrants, the officers sealed the fifteen apartments and evicted the occupants. The federal government entered into occupancy agreements with the residents of the remaining units.

Proceedings in the District Court

The government filed a complaint seeking forfeiture of the building pursuant to 21 U.S.C. Sec. 881(a)(7) on July 7, 1988.

Shortly thereafter, Realty Corp. filed a claim to the building and asserted the "innocent owner" defense recognized by section 881(a)(7). The district court ruled prior to trial that, as a matter of law, any knowledge of or consent to illegal activity in the building by Morris Nahmias was imputed to Realty Corp. because Nahmias acted as an agent of the corporation. The court also determined that the government had met its initial burden of establishing probable cause to believe that the building was used to facilitate felony violations of the federal narcotics laws. See 21 U.S.C. Sec. 881(d); 19 U.S.C. Sec. 1615. Thus, the only issue submitted to the jury was whether the building should not be forfeited because the narcotics trafficking took place "without the knowledge or consent" of Realty Corp. See 21 U.S.C. Sec. 881(a)(7). The jury returned a verdict in favor of the government, and Realty Corp. appeals.

DISCUSSION

Realty Corp. argues that the judgment of forfeiture should be vacated for four reasons: (1) section 881(a)(7) is unconstitutional as applied because seizure of the building without prior notice is a deprivation of property without due process of law; (2) the district court misapplied the innocent owner defense by ruling that Nahmias' knowledge of narcotics activity was imputed to Realty Corp. and by giving erroneous jury instructions; (3) forfeiture of the entire building is not permitted by section 881(a)(7) and violates the Eighth Amendment because only certain apartments were involved in narcotics distribution; and (4) the district court's conduct deprived Realty Corp. of a fair trial. We find none of these claims persuasive.

A. Due Process

Realty Corp. does not contend that 21 U.S.C. Sec. 881 is unconstitutional on its face. Rather, Realty Corp. asserts that the statute as applied in this case--seizure pursuant to a warrant obtained by ex parte application to a magistrate as authorized by 21 U.S.C. Sec. 881(b) and Fed.R.Crim.P. 41--violates the Due Process Clause of the Fifth Amendment. There is no question that Realty Corp. had a protected property interest in the forfeited building and that the seizure in and of itself was a deprivation of that property. The questions before us are what process was due and whether that process was accorded Realty Corp.

As a general rule, due process requires that the government give notice and an opportunity to be heard before taking an individual's liberty or property. See, e.g., Zinermon v. Burch, --- U.S. ----, 110 S.Ct. 975, 984, 108 L.Ed.2d 100 (1990); Boddie v. Connecticut, 401 U.S. 371, 378-79, 91 S.Ct. 780, 786-87, 28 L.Ed.2d 113 (1971). In some situations, however, "an important government interest, accompanied by a substantial assurance that the deprivation is not baseless or unwarranted may justify postponing the opportunity to be heard until after the initial deprivation." Strong v. Board of Educ., 902 F.2d 208, 212 (2d Cir.1990). We conclude that the present case is one of these situations.

Realty Corp. relies primarily on United States v. Premises and Real Property at 4492 South Livonia Road, Livonia, New York, 889 F.2d 1258 (2d Cir.1989), reh'g denied, 897 F.2d 659 (1990) (per curiam). In Livonia Road, we held that seizure of a home used to facilitate felony narcotics violations pursuant to a warrant issued ex parte by a magistrate is a deprivation of property without due process. Id. at 1265. To reach this result, we balanced the three factors articulated in Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976), i.e., the private interest involved; the risk of an erroneous deprivation of that interest through the procedures used and the probable value of additional procedural safeguards; and the government's interest, including the burden that additional procedural requirements would have. 889 F.2d at 1264-65. Livonia Road is distinguishable, however, because the balance of factors in this case favors seizure with no prior notice to the owner.

The private interest at stake in Livonia Road was the claimant's freedom from governmental intrusion in his home, an interest that has long been recognized to "merit[ ] special constitutional protection." 889 F.2d at 1264; see Silverman v. United States, 365 U.S. 505, 511, 81 S.Ct. 679, 682, 5 L.Ed.2d 734 (1961). In contrast, the private interest involved here is...