941 F.2d 1428 (11th Cir. 1991), 89-7061, United States v. Four Parcels of Real Property in Greene and Tuscaloosa Counties in State of Ala.

Docket Nº:89-7061.
Citation:941 F.2d 1428
Party Name:UNITED STATES of America, Plaintiff-Appellant, v. FOUR PARCELS OF REAL PROPERTY IN GREENE AND TUSCALOOSA COUNTIES IN THE STATE OF ALABAMA, etc., J.C. Pate, Jr., Rita Pate, et al., Defendants. Donald K. Daniel, Claimant-Appellee.
Case Date:August 29, 1991
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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941 F.2d 1428 (11th Cir. 1991)

UNITED STATES of America, Plaintiff-Appellant,

v.

FOUR PARCELS OF REAL PROPERTY IN GREENE AND TUSCALOOSA

COUNTIES IN THE STATE OF ALABAMA, etc., J.C. Pate,

Jr., Rita Pate, et al., Defendants.

Donald K. Daniel, Claimant-Appellee.

No. 89-7061.

United States Court of Appeals, Eleventh Circuit

August 29, 1991

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Frank W. Donaldson, U.S. Atty., James D. Ingram, Birmingham, Ala., for plaintiff-appellant.

John W. Kelly, Sikes & Kelly, Selma, Ala., for claimant-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before TJOFLAT, Chief Judge, FAY, KRAVITCH, JOHNSON, HATCHETT, ANDERSON, CLARK, EDMONDSON, COX, BIRCH and DUBINA, Circuit Judges, and MORGAN [*], Senior Circuit Judge.

TJOFLAT, Chief Judge:

In this civil forfeiture case, the district court granted summary judgment to claimant Donald K. Daniel. A divided panel of this court affirmed. United States v. Four Parcels of Real Property in Greene & Tuscaloosa Counties, 893 F.2d 1245 (11th Cir.1990). We voted to rehear the case en banc and vacated the panel's decision. United States v. Four Parcels of Real Property in Greene & Tuscaloosa Counties, 902 F.2d 24 (11th Cir.1990). On rehearing, we hold that a genuine issue of material fact remains for trial. Accordingly, we vacate the summary judgment and remand the case for further proceedings.

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I.

The civil forfeiture provision at issue here, 21 U.S.C. § 881(a)(6) (1988), provides that property acquired with the proceeds of an illegal drug transaction is forfeit to the United States. 1 On April 4, 1988, the Government filed a verified complaint 2 describing several properties it claimed were subject to civil forfeiture under section 881(a)(6), including the International Hough Model TD12 Dozer at issue in this appeal. The complaint alleged that, in August 1983, J.C. Pate, Jr., an active drug importer, 3 had purchased the dozer, plus equipment and attachments for it, with $65,000 in cash and an unspecified "trade in." In May 1984, according to the complaint, Pate purchased another attachment for the dozer, an International Hough Ripper Model 12RS, for $12,025.70 in cash. Both transactions, "were carried out in the name of Bobby Daniels [sic]," the claimant's brother. The complaint also alleged that Pate's tax return would not support the amount of cash he spent for all the property described in the complaint, including the dozer. 4 In its

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complaint and in a separate motion filed on the same day, the Government asked for a warrant for the arrest of the property. 5

In support of its motion for a warrant, the Government filed the declaration of Ronald R. Brunson, a special agent of the Internal Revenue Service who had verified the complaint. 6 Brunson, who had been investigating Pate's involvement with importing illegal drugs for two years, described the extent of Pate's drug importing operation--Pate had engaged in at least fifty drug transactions during the three-year period from August 1981 to October 1984, or an average of one every three weeks. Brunson also stated that Pate had no visible means of earning large sums of cash, and that Pate's pattern of using grocery bags full of cash to buy property and placing it in others' names was typical of a large-scale narcotics conspiracy. Brunson described Pate's purchase of the dozer in terms similar to those of the complaint. 7

On April 5, 1988, the district court, finding that "probable cause exist[ed] to believe" that the property described in the complaint, including the dozer, was subject to forfeiture under section 881(a)(6), issued a warrant for its arrest and directed the United States Marshal to take custody of it. 8 Daniel filed a verified claim to the dozer and an answer to the complaint. 9 In

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his answer, Daniel asserted that he owned the dozer and its equipment and attachments, and denied that the dozer "was purchased by or for" Pate or that Pate had any interest in the dozer.

Daniel then moved for judgment on the pleadings, see Fed.R.Civ.P. 12(c), 10 asserting that the Government's complaint was insufficient because it did not specifically allege that the dozer was the proceeds of an illegal drug transaction and thus forfeit under section 881(a)(6) or that the dozer was forfeit under any other provision of section 881(a). The district court elected to treat this motion as a summary judgment motion, and so notified the Government and Daniel. 11

In support of his motion for summary judgment, Daniel filed two affidavits, his own and that of his sister-in-law and bookkeeper, Dorothy Daniel. Daniel's position is that although Pate, a convicted drug dealer, purchased the dozer with cash, he did so as Daniel's agent, with money earned by Daniel's legitimate logging business. In his own affidavit, Daniel stated that he had been in the logging business for over ten years. In mid-1983, Daniel asserted, he bought a used dozer from Pate for $16,000 cash in order to clear tracks for his logging trucks. Pate operated this dozer for Daniel without pay. When it broke, Pate hauled it to Tuscaloosa for repair. When it became apparent that the cost of repair would be greater than the value of the dozer, Daniel told Pate to negotiate a trade-in for a new dozer. After Pate informed Daniel that a new dozer would cost $65,000 in excess of the value of the trade-in, Daniel left this sum, in cash, with Dorothy Daniel. Pate picked up the cash and bought the dozer. By mistake, the bill of sale for the dozer was placed in the name of Bobby Daniel, Daniel's brother. When Dorothy Daniel received this bill of sale, she called the mistake to Daniel's attention and prepared a paper correcting the error for Bobby Daniel to sign.

Dorothy Daniel's affidavit corroborated Daniel's account of the transaction. Dorothy stated that, as bookkeeper of Daniel's logging business, she maintained the records and received all the proceeds. According to Dorothy, most of the transactions of the business, including purchases of heavy equipment, were handled in cash. On August 9, 1983, Daniel gave her $65,000 in cash and told her to give it to Pate. Although Daniel did not tell her the purpose of the cash, she assumed that it was to be used to purchase equipment. On August 18, a bill of sale arrived for a new dozer, listing Bobby Daniel--Dorothy's husband--as owner. After Daniel told her that the dozer was his, purchased for him by Pate, she corrected the error by having Bobby Daniel sign a statement that he had no claim to the dozer and replaced his name on the bill of sale with Daniel's. She added that Daniel's business had taken deductions for depreciation of the dozer on its federal and state income tax forms.

In response to Daniel's affidavits, the Government filed the affidavit of Donald W. McArthur, an agent with the Federal Bureau of Investigation. 12 The Government's position, as stated in its verified

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complaint, Brunson's declaration, and McArthur's affidavit, is that Pate, a convicted drug dealer with no visible means of earning large sums of cash, bought the dozer with cash earned through drug dealing, placed it in Bobby Daniel's name to conceal his ownership interest, and, after purchase, used it for his own purposes. In his affidavit, McArthur stated that he had investigated Pate for illegal drug trafficking, and that Pate had entered a guilty plea to a charge of managing a continuing criminal enterprise from 1981 to 1985. McArthur asserted that during this investigation, he discovered that Pate, like many drug traffickers, often concealed his assets by using cash to buy valuables (including several tractors and loaders besides the dozer at issue here) and putting them in others' names. McArthur, moreover, had seen photographs showing Pate riding the dozer at Pate's farm and photographs of the dozer parked at Pate's residence. McArthur also had interviewed Michael Lancaster, whom he described as a long-time associate of Pate's. Lancaster, according to McArthur, stated that Pate had used the dozer on Lancaster's property in exchange for repair work Lancaster did on Pate's truck, that Lancaster had helped Pate buy a trailer on which he transported the dozer, and that Lancaster understood that the dozer belonged to Pate. The dozer was seized at Lancaster's place of business.

McArthur also recounted interviews with (1) Pate, who admitted storing the dozer at his brother's residence, but stated that it belonged to Bobby Daniel; (2) Bobby Daniel, who stated that the rightful owner of the dozer was Donald Daniel and that Bobby had signed a disclaimer indicating that he did not own the dozer; and (3) Dorothy Daniel, who claimed that Daniel gave her a "sack of money" to give to Pate to purchase the dozer; she also asserted that Bobby had disclaimed ownership. Finally, McArthur stated that Pate was a life-long friend of both Donald and Bobby Daniel, and had on numerous occasions used property belonging to the Daniels' as an airstrip to import drugs.

Daniel countered the Government's version of the transaction with a second affidavit. In this affidavit, Daniel stated that because Pate operated the dozer in Daniel's logging business without compensation, transported the dozer to work sites, and was responsible for its operation, Daniel allowed Pate to use the dozer for his own purposes. It was, therefore, "quite possible" that there were photographs of the dozer at Pate's residence and being ridden by Pate, and that Pate had used the dozer at Lancaster's residence in exchange for repair work done by Lancaster.

The district court granted summary judgment to Daniel. It held, first, that the factual and legal allegations of the government's...

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