U.S. v. A Parcel of Land, Bldgs., Appurtenances and Improvements, Known as 92 Buena Vista Ave., Rumson. N.J.

• Decision Date: 13 August 1991
• Docket Number: No. 90-5823,90-5823
• Citation: 937 F.2d 98
• Parties: UNITED STATES of America v. A PARCEL OF LAND, BUILDINGS, APPURTENANCES AND IMPROVEMENTS, KNOWN AS 92 BUENA VISTA AVENUE, RUMSON, NEW JERSEY and Beth Ann Goodwin, Claimant, Beth Ann Goodwin, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 98

937 F.2d 98

60 USLW 2019

UNITED STATES of America v. A PARCEL OF LAND, BUILDINGS, APPURTENANCES AND IMPROVEMENTS,

KNOWN AS 92 BUENA VISTA AVENUE, RUMSON, NEW JERSEY

and Beth Ann Goodwin, Claimant,

Beth Ann Goodwin, Appellant.

No. 90-5823.

United States Court of Appeals,

Third Circuit.

Argued April 2, 1991.

Decided June 17, 1991.

Rehearing Denied Aug. 13, 1991.

Michael Chertoff, U.S. Atty., Neil R. Gallagher (argued), Asst. U.S. Atty., Newark, N.J., for appellee.

James A. Plaisted, (argued), Jeffrey A. Walder, Shalom D. Stone, Walder, Sondak, Berkeley & Brogan, Roseland, N.J., for appellant.

Before MANSMANN and HUTCHINSON, Circuit Judges, and O'NEILL, District Judge. ^*

OPINION OF THE COURT

MANSMANN, Circuit Judge.

In this appeal arising out of a civil forfeiture action, at least nominally civil in nature, we are presented with the very interesting question of whether the donee of monies, which the government has established probable cause to believe are traceable to drug transactions and which were used by the donee to purchase the premises that the government seeks to forfeit, may assert an innocent owner defense pursuant to 21 U.S.C. Sec. 881(a)(6). ¹ The district court found that the donee, Beth Ann Goodwin, could not assert such a defense because she admitted that the money with which she bought the premises was a gift and therefore she was not a bona fide purchaser for value. We conclude that the district court erred as a matter of law because Goodwin was entitled to assert an innocent owner defense even though she was not a bona fide purchaser for value. Additionally, we shall address three other questions that have been certified by the district court pursuant to 28 U.S.C. Sec. 1292(b).

I.

Joseph Anthony Brenna and Beth Ann Goodwin shared a close personal relationship, akin to marriage, from the late 1970's until 1987. In early November of 1982, Brenna had approximately $216,000 transferred by wire to Goodwin's attorneys in New Jersey which Goodwin used to purchase the real property known as 92 Buena Vista Avenue, Rumson, New Jersey. Goodwin has held title to these premises and has resided there since 1982.

On April 3, 1989, the government filed a verified complaint pursuant to 21 U.S.C. Sec. 881 et seq. seeking the seizure and forfeiture of the premises. The forfeiture proceeding was brought by the government as a consequence of the indictment of Joseph Anthony Brenna. The indictment alleged that from on or about January 1982, Brenna and others engaged in a continuing criminal enterprise in violation of 21 U.S.C. Sec. 848, engaged in a conspiracy to import more than 1,000 kilograms of marijuana into the United States in violation of 21 U.S.C. Sec. 963, and knowingly imported in excess of 1,000 kilograms of marijuana into the United States in violation of 21 U.S.C. Sec. 952(a), and 18 U.S.C. Sec. 2. On April 12, 1989, upon the ex parte application of the United States, the United States District Court for the District of New Jersey reviewed the verified complaint and determined that there was probable cause to believe that the premises were subject to forfeiture. The court thus issued a Summons and Warrant For Arrest and soon thereafter a United States Marshal seized the premises. Goodwin remains in possession of the premises pursuant to an Occupancy/Tenant Agreement with the United States Marshals Service.

On June 15, 1989, Goodwin filed an Answer, Claim and Counterclaim. On May 29, 1990, a hearing was held before the district court at which Goodwin moved to dismiss the complaint and seizure or, in the alternative, to grant summary judgment in her favor with respect to the United States' claim for forfeiture. The United States opposed the motion and crossmoved for a stay of the forfeiture proceedings. The district court denied Goodwin's motions and granted the United States' motion for a stay pending the criminal trial of Brenna and his co-defendants in the Southern District of Florida. The district court further ordered that if Brenna's trial were severed from the remaining defendants because of his fugitive status, Goodwin could move for relief from the stay after the trial of the remaining defendants. On July 13, 1990, the district court issued an order pursuant to 28 U.S.C. Sec. 1292(b) certifying for appeal four questions:

(1) Whether the seizure of the home of the claimant, Beth Ann Goodwin, was unconstitutional because there was no preseizure hearing and, if so, whether the forfeiture proceedings involving the home should be dismissed as a result;

(2) Whether an innocent owner defense may be asserted by a person who is not a bona fide purchaser for value concerning a parcel of land where the government has established probable cause to believe that the parcel of land was purchased with monies traceable to drug proceeds;

(3) Whether the verified complaint in this action was based, in part, upon immunized testimony and if so, whether the forfeiture proceedings must be dismissed as a result; and

(4) Whether the United States' claims in this action are barred by the applicable statute of limitations and/or undue delay.

Because these certified questions involve questions of law, we shall exercise plenary review.

II.

Goodwin asserts that the government's seizure of her home pursuant to 21 U.S.C. Sec. 881 et seq. without pre-seizure notice and hearing is in violation of the United States Constitution. In support of this argument, Goodwin cites United States v. Property at 4492 S. Livonia Road, Livonia, New York, 889 F.2d 1258 (2d Cir.1989). In South Livonia, the Court of Appeals for the Second Circuit specifically considered whether 21 U.S.C. Sec. 881(a)(7) was unconstitutionally applied in the context of the seizure of the claimant's home without notice and a hearing. Despite the fact that the court concluded that the claimant's interest in his home and the lack of exigent circumstance surrounding the seizure made the seizure unlawful, the court nevertheless determined that the forfeiture was not improper. Based on decisions from other courts of appeals, the Court of Appeals for the Second Circuit held that "the illegal seizure of property, standing alone, [does] not immunize that property from forfeiture, so long as impermissibly obtained evidence is not used in the forfeiture proceeding." South Livonia, 889 F.2d at 1265.

In keeping with the analysis used in South Livonia, we agree that the government's seizure of Goodwin's home pursuant to section 881 without notice and a hearing may have been unlawful. Nonetheless, the unlawfulness of the seizure does not require dismissal of the forfeiture proceedings provided that probable cause to seize the premises can be supported by untainted evidence. United States v. One 1978 Mercedes Benz, Four-Door Sedan, 711 F.2d 1297, 1302-03 (5th Cir.1983). Indeed, the indictment of Brenna, which establishes probable cause to believe that he was involved in a drug importation scheme, and other inferential evidence obtained independently of the illegal seizure suffice to establish that the district court had "reasonable grounds to believe that the property probably was derived from drug transactions." United States v. Parcels of Land, 903 F.2d 36, 39 (1st Cir.1990). Accordingly, the district court correctly declined to dismiss the forfeiture action, "because the government [did] establish[ ], by permissible evidence, that probable cause exist[ed] to subject the premises to forfeiture." U.S. v. 92 Buena Vista Ave., 738 F.Supp. 854, 857 (D.N.J.1990).

III.

Goodwin also argues that the district court erred in holding that Goodwin could not invoke an "innocent owner" defense pursuant to section 881(a)(6) because she was not a bona fide purchaser for value. Section 881(a)(6) provides for an innocent owner defense in the following language:

.... no property shall be forfeited ... to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.

21 U.S.C. Sec. 881(a)(6). Goodwin admits that the money provided to her by Brenna to purchase the premises was a gift, but she asserts that she did not know that such money was the proceeds of drug transactions.

The district court articulated three specific bases in support of its conclusion that an innocent owner defense may only be invoked by a bona fide purchaser for value: (1) the criminal forfeiture statute, 21 U.S.C. Sec. 853(c), explicitly protects only transferees who are bona fide purchasers for value; (2) those who do not have legal title to property may not validly transfer it to others except when the transferee is a bona fide purchaser for value; and (3) in the case of fraudulent conveyances, bona fide purchasers for value may be protected, but recipients of gifts are not. The district court further noted that from a common sense standpoint it was unlikely that Congress intended that a drug dealer should be able to distribute, with impunity, the proceeds from his drug transactions, even to innocent parties.

Despite the appeal of this analysis, the plain language of the innocent owner provision speaks only in terms of an "owner" and in no way limits the term "owner" to a bona fide purchaser for value. Furthermore in United States v. Parcel of Real Property Known as 6109 Grubb Road, 886 F.2d 618 (3d Cir.1989), we determined, after reviewing the legislative history of section 881(a)(6), that "the term 'owner' should be broadly interpreted to include any person with a recognizable legal or equitable interest in the property seized." Id. at 625 n. 4 (quoting 1978 U.S.Code Cong. & Admin.News at 9522-23). Limiting the term "owner" to a bona fide purchaser for value and thereby excluding a recipient of a gift from being considered an "owner" would contravene the express legislative intent that we interpret "owner" broadly.

Moreover, as the district court pointed out, the...