Boas v. Smith, s. 84-1107

• Decision Date: 27 February 1986
• Docket Number: Nos. 84-1107,84-1560,s. 84-1107
• Citation: 786 F.2d 605
• Parties: Peter D. BOAS, Appellee, v. William French SMITH, Attorney General, United States Department of Justice, Appellant. UNITED STATES of America, Appellant, v. ONE NOTE AS SECURED BY DEED OF TRUST; $20,000 United States Currency, Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 605

786 F.2d 605

54 USLW 2534

Peter D. BOAS, Appellee, v. William French SMITH, Attorney General, United States

Department of Justice, Appellant.

UNITED STATES of America, Appellant, v. ONE NOTE AS SECURED BY DEED OF TRUST; $20,000 United States

Currency, Appellees.

Nos. 84-1107, 84-1560.

United States Court of Appeals Fourth Circuit.

Argued Dec. 2, 1985.

Decided Feb. 27, 1986.

James C. Savage and Larry D. Adams, Asst. U.S. Attys. (J. Frederick Motz, U.S. Atty., Arthur C. Ferguson, Asst. U.S. Atty., and Catherine C. Blake, U.S. Atty., Baltimore, Md., on brief), for appellant.

Marvin D. Miller, Alexandria, Va., for appellee Peter Boas.

John J. Privitera (Asbill, Junkin, Myers & Buffone, Chtd., Washington, D.C., on brief), for appellee Timothy Fuller.

Before PHILLIPS and SNEEDEN, Circuit Judges, and BUTZNER, Senior Circuit Judge.

JAMES DICKSON PHILLIPS, Circuit Judge:

The government appeals the district court's grants of summary judgment for appellees Peter Boas, Timothy Fuller, and Janet McCoy in two proceedings in which the right of the government to the forfeiture of a promissory note, an automobile, and a sum of money allegedly used in a drug smuggling operation were drawn in issue.

We affirm the denial of forfeiture of the automobile and the sum of money, but we reverse the denial of forfeiture of the note.

I

These two civil forfeiture cases stem from the August 1983 convictions of Peter Boas, Timothy Fuller and Alfred Kincaid for conspiracy to import marijuana in violation of the Controlled Substances Act. See United States v. Boas, Criminal Case No. R-82-0053 (D.Md. August 22, 1983). Boas, Fuller, and Kincaid had conspired with undercover agents of an interagency task force of federal and state law enforcement officials to outfit a schooner "Cavale" for smuggling marijuana. The three conspirators needed working capital in order to prepare the boat for drug smuggling. Accordingly, in October of 1982, a government informant introduced to the conspirators as a possible investor in their illegal operation a Drug Enforcement Administration (DEA) agent, Robert O'Leary, using the fictitious name of "Bob Olson."

Boas and Fuller explained during the meeting that they needed $20,000 to prepare the boat. In exchange for this investment, "Olson" would receive $50,000 cash or the equivalent amount of marijuana if the marijuana were successfully imported. If the operation failed, "Olson" would be protected by a $20,000 note signed by Fuller and his wife, Janet McCoy, and collateralized by a deed of trust on their property in New Hampshire. "Olson" indicated that he needed to have his business advisor verify the legitimacy of the collateral.

Accordingly, at a later meeting, on October 29, 1982, "Olson" introduced his alleged business advisor, "Robert H. Kennedy" to Boas, Fuller, and Kincaid. In fact, "Kennedy" was the assumed name of undercover agent Robert Twigg of the FBI. At the meeting, "Kennedy" inspected the note and the documents concerning the New Hampshire property.

"Olson," "Kennedy," Boas, and Fuller held a subsequent meeting at the Annapolis Hilton Hotel on November 3, 1982. At this electronically recorded meeting, "Kennedy" produced copies of an unexecuted loan agreement and deed of trust. These documents were to be signed by Fuller and his wife before the next meeting. "Robert H. Kennedy" was the named payee in the note. Both "Olson" and "Kennedy" repeatedly advised Boas and Fuller that the note would not be filed anywhere because of its illegal nature and that it was legally unenforceable.

Before this meeting, "Olson" and "Kennedy" had watched Boas pull into the Hilton Hotel parking lot in his 1978 BMW 530i automobile. At the meeting, Boas produced a marijuana cigarette, though he did not smoke it.

The next meeting, on November 8, 1982, occurred at the Baltimore-Washington International Airport Motel. Task force officials had the meeting under electronic and visual surveillance and planned that if Boas and Fuller brought the executed note and deed of trust and exchanged these instruments for $20,000, they would be arrested and the BMW automobile seized. Eight agents were stationed outside where the arrest was to occur, and four agents were inside.

Fuller, who had claimed at the previous meeting that he needed to return to Massachusetts in order to obtain his wife's signature on the note and deed of trust, produced the signed and notarized documents. ¹ Fuller and Boas were handed an envelope containing $20,000 in official government funds, though they did not look into or count the envelope's contents.

After the exchange of the money and documents, Boas and Fuller were arrested as they left the hotel. The documents and money were seized without warrants simultaneously with the arrest. A detective also seized the BMW automobile without a warrant.

On December 13, 1982, the government sent, by registered mail, a notice of forfeiture of the BMW to its registered owner, Mrs. Ann Boas, a Maine resident and the mother of Peter Boas. The government failed to send Boas, himself, a forfeiture notice, though the evidence established that the government was fully aware that the vehicle belonged to, and was used by, Boas.

After learning of Mrs. Boas' notice of forfeiture in mid-January 1983, counsel for Boas contacted an Assistant United States Attorney. Boas' counsel expressed his surprise that neither he nor his client received notice of the forfeiture and explained that Boas, who was claiming the vehicle as his own, intended to contest the forfeiture. Boas' counsel asked the government to allow him to oppose the forfeiture and to delay the forfeiture proceedings until termination of the pending criminal prosecution.

Six days later, on January 25, 1983, the automobile was declared forfeit by the government. The next day, the government sent Boas' counsel a letter explaining that the vehicle had already been forfeited and was being used by the DEA. The letter explained that the federal district court had no jurisdiction over the matter, even with the posting of a bond and that Boas' only remedial course lay in a Petition for Remission or Mitigation.

On February 11, 1983, Boas filed the Petition for Remission or Mitigation, but the petition was denied in March as untimely filed pursuant to 21 C.F.R. Sec. 1316.80. On February 23, 1983, Boas filed, in No. 84-1107, an action seeking declaratory and injunctive relief. Boas sought a declaration that the seizure and forfeiture were illegal and that the forfeiture was void. He asked that the forfeiture be set aside and that an injunction issue preventing the government from continuing to use and waste his car. In March 1983, the court ordered the government to take the vehicle out of operation and to store it. The forfeiture case was then stayed pending resolution of the criminal trial.

After the August 1983 convictions of Boas, Fuller and Kincaid, Boas filed a motion for summary judgment in his pending declaratory action. The government evidently did not dispute Boas' appraisal of the BMW car as worth more than $10,000 before the lower court. Indeed, in granting summary judgment for Boas and ordering the return of his car, the court noted that "the government does not dispute the plaintiff's contention that the BMW was worth more than $10,000." Summary administrative forfeiture, therefore, the court concluded, was improper under 21 C.F.R. Sec. 1316.77 which requires the United States Attorney to institute judicial condemnation proceedings if the appraised value of a seized item exceeds $10,000. The court also invalidated the forfeiture for violation of Boas' due process rights, as well as a finding that the government was collaterally estopped from asserting that the forfeiture was proper under 21 U.S.C. Sec. 881(b)(4). In December 1983, the district court modified its November order, directing return of the car to Boas, remanding title to registry of the court, and directing Boas to post a bond pending appeal.

On November 28, 1983, the government filed, in No. 84-1560, a Complaint in Forfeiture for One Note Secured by Deed of Trust and for $20,000 United States Currency. Boas, Fuller, and McCoy, as well as the government, filed motions for summary judgment. The court granted the motion filed by Boas, Fuller, and McCoy and denied the government's motion. The court found that the $20,000 in currency was not subject to forfeiture as it never left the government's control and that the note was "spurious," lacked consideration and value and, therefore, was also not forfeitable.

These appeals by the government followed.

II

We look first to the validity of the automobile forfeiture. The district court concluded that the use of administrative, rather than judicial, forfeiture proceedings, as well as the denial of Boas' due process rights in failing to notify him of the pending proceedings, invalidated forfeiture of the BMW automobile. Without reaching the constitutional question, we agree that administrative forfeiture was invalid under the relevant statutes.

Boas' automobile was seized pursuant to the forfeiture provisions of the Controlled Substances Act, 21 U.S.C. Sec. 881, hence pursuant to statutes and regulations governing customs forfeitures. See 21 U.S.C. Sec. 881(d). Under these regulations, property whose value exceeds $10,000 must be judicially forfeited in a condemnation proceeding. On the other hand, property valued at $10,000 or less, can be summarily forfeited in an...