Carvajal v. U.S.
| Decision Date | 11 April 2008 |
| Docket Number | No. 06-55868.,06-55868. |
| Parties | Mercedez CARVAJAL, Plaintiff-Appellant, v. UNITED STATES of America, substituted as Defendant in place and instead of individual Federal Defendants, Brett Kelly, Steven Norkus, HI, David Sikorra and Luke Yoo, Defendant-Appellee, and City of Los Angeles; Jason Spizouco; Gerard Kennelly; Ed Gutierrez; Brian Agnew; John Guerrero; Ruben Galvian; Mike Damianikes; Joe Prebe; Armando Sandoval; William J. Bratton, Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Eric Honig, Law Office of Eric Honig, Marina del Rey, CA, and Paul L. Gabbert, Santa Monica, CA, for the plaintiff-appellant.
Carla A. Ford, Assistant United States Attorney, Los Angeles, CA, for the defendant-appellee.
Appeal from the United States District Court for the Central District of California; Percy Anderson, District Judge, Presiding. D.C. No. CV-05-07124-PA.
Before: JOHN R. GIBSON,* DIARMUID F. O'SCANNLAIN, and SUSAN P. GRABER, Circuit Judges.
The main question that we must decide is whether the principles announced in United States v. $277,000 U.S. Currency, 69 F.3d 1491 (9th Cir.1995), survive the enactment of the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA") (codified at 18 U.S.C. §§ 983, 985 and 28 U.S.C. § 2465). We hold that they do. Accordingly, we reverse the district court's dismissal of a claim for accrued interest on currency that the government wrongfully seized and then returned 10 months later, without having instituted judicial forfeiture proceedings.
Because the district court dismissed the relevant claims under Federal Rule of Civil Procedure 12(b)(6), we accept as true the allegations in the complaint. Knox v. Davis, 260 F.3d 1009, 1012 (9th Cir.2001). Plaintiff Mercedez Carvajal sued the United States, the City of Los Angeles, and law enforcement officers, asserting several claims arising from a search of her residence on December 18, 2003, and the seizure of $75,800 of her savings. Plaintiff alleges that the search and seizure occurred without the benefit of a warrant and were unlawful. As the case reaches us, the only remaining defendant is the United States.
On March 11, 2004, Plaintiff submitted administrative claims contesting the seizure of the money. Six days later, Plaintiffs administrative claims were referred to the United States Attorney. On June 15, 2004, the 90-day statutory period expired. The United States neither instituted a timely judicial forfeiture proceeding nor requested an extension of the period within which it could commence a forfeiture proceeding, as required under CAFRA, 18 U.S.C. § 983(a)(3)(A).
On October 6, 2004, Plaintiff filed a motion in the United States District Court for the Central District of California, seeking the return of the $75,800 plus interest and attorney fees. Although the government initially opposed the motion, it returned the money to Plaintiff on October 19, 2004. Following the return of the money, Plaintiff withdrew her motion before the district court had a chance to rule on it, and the case was dismissed. The United States never paid interest to Plaintiff on the $75,800 for the period during which it held the currency, nor did it reimburse her for the $19,906.61 in attorney fees that she incurred in contesting the seizure.
Plaintiff filed a timely complaint against the United States and others, alleging a number of constitutional and statutory violations and reasserting her claims for interest and attorney fees. Plaintiff sought interest on the $75,800 under CAFRA; our holding in $277,000; and the Administrative Procedure Act ("APA"), 5 U.S.C. § 702. She also claimed attorney fees and costs under CAFRA; the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d)(1)(A); and the APA.
The United States moved to dismiss several of Plaintiffs claims, including all of her claims for interest and attorney fees. The district court granted the motion with respect to the claims for interest and attorney fees and dismissed those claims with prejudice. Pursuant to a stipulation of the parties, the district court then dismissed Plaintiffs remaining claims and entered judgment on April 13, 2006. On appeal, Plaintiff challenges only the dismissal of her claims for interest on the currency, based on the principles that we announced in $277,000, and attorney fees under the EAJA.
We review de novo a district court's dismissal of a complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Ohel Rachel Synagogue v. United States, 482 F.3d 1058, 1060 (9th Cir.2007).
In $277,000, 69 F.3d at 1498, an opinion that predates the enactment of CAFRA by about five years, we held that sovereign immunity does not bar a claim against the United States for interest on wrongfully seized money. In reaching our conclusion, we acknowledged the general rule "that `interest cannot be recovered in a suit against the government in the absence of an express waiver of sovereign immunity.'" Id. at 1493 (quoting Library of Congress v. Shaw, 478 U.S. 310, 311, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986)). But we characterized that rule as applicable to "inchoate interest, as an item of damages in a forfeiture action." Id. at 1497. By contrast, we explained, the payment of interest on wrongfully seized money is not a payment of damages, but instead is the disgorgement of a benefit "actually and calculably received from an asset that[the government] has been holding improperly." Id. at 1498. As a result, no express waiver of sovereign immunity was necessary, and the plaintiff was entitled to the payment of interest actually or constructively earned by the government during the period the asset was wrongfully held. Id.
The United States first requests that we read into $277,000, as the district court did, the requirement of a court order before interest accrues on improperly seized money. Under such an interpretation, Plaintiff would not be entitled to interest because the United States eventually returned Plaintiffs money without a court order. Although the district court and the United States correctly identify a factual distinction between this case and $277,000, our holding in $277,000 rested on a different point.
Interest earned, whether actually or constructively, is part of the res that must be returned to the owner. Id. at 1496. Had the district court's order for the return of the money served as the trigger for a right to interest, we would have ruled in $277,000 that the plaintiff was entitled to interest from the date of that order. Instead, we held that the plaintiff was entitled to interest accruing from a date eight years earlier. Id. We reasoned from the common law: "If the government seized ... a pregnant cow and was ultimately found not to be entitled to the cow after it had given birth, it could hardly be contended that the government had fulfilled its duty by returning the nowbarren cow, but retaining the calf." Id. (footnote omitted). Thus, the plaintiff had a right to the interest even in the absence of a court order and, moreover, the right existed in the absence of an express waiver of sovereign immunity.
The United States' voluntary return of Plaintiffs $75,800, along with its concession that it did not have a right to the money, obviated the need for a court order to that effect. Under the government's rationale, the United States could avoid the disgorgement of interest — no matter how long it wrongfully held funds — by voluntarily returning seized money at the very last minute before such an order is entered. Permitting the United States to retain the proverbial calf would be inconsistent with our holding in $277,000. As a result, we are bound by that decision unless and until clearly irreconcilable intervening authority requires a different result. Miller v. Gammie, 335 F.3d 889, 893 (9th Cir.2003) (en banc).
The United States next argues that CAFRA, "as a comprehensive statute governing forfeiture procedures," supersedes $277,000 and does not provide for the return of interest in this case. In support, the government cites 28 U.S.C. § 2465(b)(2)(A), which states that "[t]he United States shall not be required to disgorge the value of any intangible benefits nor make any other payments to the claimant not specifically authorized by this subsection." The government reads that phrase to mean that CAFRA preempts all other types of recovery in seizure cases and, because CAFRA does not provide for the payment of interest in the absence of a civil forfeiture proceeding, see id. § 2465(b)(1)(C) (), Plaintiffs claim must fail as a matter of law.
In determining whether CAFRA superseded our holding in $277,000, we turn to the text of the statute, as well as its object and policy, to discern congressional intent. See United States v. $493,850.00 in U.S. Currency, 518 F.3d 1159, 1166-67 (9th Cir.2008) (). We also consider the legislative history of the statute. Tahara v. Matson Terminals, Inc., 511 F.3d 950, 953 (9th Cir.2007).
In relevant part, 28 U.S.C. § 2465 provides:
(a) Upon the entry of a judgment for the claimant in any proceeding to condemn or forfeit property seized or arrested under any provision of Federal law
—
(1) such property shall be returned forthwith to the claimant or his agent; and
(2) if it appears that there was reasonable cause for the seizure or arrest, the court shall cause a proper certificate thereof to be...
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