Mikhaylov v. United States

• Citation: 29 F.Supp.3d 260
• Decision Date: 07 July 2014
• Docket Number: No. 13–CV–2606 (PKC).,13–CV–2606 (PKC).
• Parties: Daniel MIKHAYLOV, Plaintiff, v. UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

29 F.Supp.3d 260

Daniel MIKHAYLOV, Plaintiff,

v.UNITED STATES of America, et al., Defendants.

No. 13–CV–2606 (PKC).

United States District Court, E.D. New York.

Signed July 7, 2014.

Jason Mitchell Baxter, New York, NY, for Plaintiff.

Alicia Marie Simmons, U.S. Attorney Office, Andrew Daniel Goldstein, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, William J. Gullotta, United States Attorney's Office, Brooklyn, NY, for Defendants.

MEMORANDUM & ORDER

PAMELA K. CHEN, District Judge:

Before the Court is Defendants' motion to dismiss the amended complaint in this case. The central issue raised by this motion is the Court's authority under the Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), Pub. L. No. 106–185, 114 Stat. 202,codified in part at18 U.S.C. § 983, to decide whether Defendants properly forfeited$195,600 in cash, following its seizure from Plaintiff Daniel Mikhaylov by agents of the Drug Enforcement Administration (the “DEA”).¹ Because the DEA took reasonable steps to notify Mikhaylov of the seizure and because Mikhaylov, in fact, knew of the seizure and the DEA's involvement, Mikhaylov's challenge to the administrative forfeiture under CAFRA is dismissed. In addition, because CAFRA furnishes the exclusive remedy for challenging the administrative forfeiture, Mikhaylov's Bivens claims relating to the forfeiture are dismissed. Because the United States, the DEA, and its individual agents, in their official capacities, may not be sued, Mikhaylov's other Bivens claims against these Defendants are dismissed for lack of subject matter jurisdiction. Finally, Mikhaylov's remaining Bivens claims against the individual DEA agents, in their personal capacities, are improperly venued in the Eastern District, and are transferred to the Central District of California.

I. Background

A. Post–CAFRA Law on Drug–Related Forfeitures

Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970, or the “Controlled Substances Act,” 21 U.S.C. § 801 et seq., permits the DEA to seize and then forfeit any funds associated with drug transactions. Id. §§ 881(a)(6), (b). For drug-related forfeitures, the Controlled Substances Act adopts the same procedures that apply to customs-related forfeitures, as set forth in the Tariff Act of 1930 (the “Tariff Act”), §§ 602–621, 19 U.S.C. §§ 1602–1621.²21 U.S.C. § 881(d); see also U.S. v. $557,933.89, More or Less, in U.S. Funds, 287 F.3d 66, 72 n. 1 (2d Cir.2002) (Sotomayor, J.) (same). By default, these procedures allow the DEA to proceed administratively against such funds. 19 U.S.C. §§ 1607(a)(1), (4).

In conducting the administrative proceeding, the DEA is required to (i) send a written “notice of seizure” to any party “who appears to have an interest” in the funds and (ii) publish notices in a newspaper for “three successive weeks.” ³19 U.S.C. § 1607(a); see18 U.S.C. § 983(a)(1)(A)(i). If, following the written and published notices, no party submits a claim for the funds by the applicable deadline,⁴ the DEA may conclude the administrative proceeding with a “declaration of forfeiture,” which has the same force as a “final decree and order of forfeiture” issued in a judicial proceeding. 19 U.S.C. § 1609. Thereafter, under CAFRA, the “ exclusive remedy for seeking to set aside a declaration of forfeiture” in court is an 18 U.S.C. § 983(e) motion (“ Section 983(e) motion”).⁵Id. § 983(e)(5) (emphasis added); see infra Section II.C.1.

If a party submits a timely claim for the funds, however, the administrative proceeding must be converted into a judicial proceeding. See19 U.S.C. § 1608; 18 U.S.C. § 983(a)(3)(A).⁶ In the judicial proceeding, the DEA carries the burden of proving, based on a “preponderance of the evidence,” that the funds were properly “subject to forfeiture.” 18 U.S.C. § 983(c)(1). If the DEA prevails, the judicial proceeding concludes with the district court's final decree of forfeiture. See U.S. v. 414 Kings Highway, 128 F.3d 125, 127 (2d Cir.1997) (“A ‘decree of forfeiture’ is a declaration made by the Court upon the Government's successful completion of a forfeiture action, vesting the Government's title to the seized res.”). ⁷

B. The Facts⁸

On the afternoon of August 31, 2011, Mikhaylov was “alone in his hotel room” at the JW Marriott Hotel in Los Angeles, California, where he was staying “on a business trip in California to purchase some jewelry” for his business. (Dkt. No. 6 (“Am. Compl.”) ¶ 10; Dkt. No. 19 (“Pl.'s Opp.”), at 1.) At that time, the unnamed DEA agents entered Mikhaylov's room, and seized $195,600 in cash from him. (Am. Compl. ¶¶ 7, 10; Pl.'s Opp., at 1.) The agents also arrested and confined Mikhaylov in the process.⁹ (Am. Compl. ¶¶ 14–17.) The agents did not have a warrant, or Mikhaylov's consent, to conduct the seizure, arrest, or confinement. ( Id. ¶¶ 11–12, 14–15, 17.) After the seizure, the agents told Mikhaylov that he would “receive paperwork regarding the money” and “have the opportunity to make a claim for the money.” ¹⁰ (Dkt. No. 13 (“Pl.'s Decl.”) ¶ 4.)

On September 19, 2011, the DEA sent, via certified mail, a written notice of seizure to Mikhaylov at 61–12 99th Street, Apartment 3, Rego Park, New York 11374 (the “Rego Park apartment”). (Am. Compl. ¶ 19; Dkt. No. 12 (“Defs.' Ex.”), Exs. 1–2.) Among other things, the written notice stated that:

(i) Mikhaylov's money (“Asset Id: 11–DEA–552558”) had been “seized by the [DEA] for forfeiture pursuant to Title 21, United States Code (U.S.C.), Section 881,” i.e., the Controlled Substances Act;

(ii) “Pursuant to Title 18, U.S.C., Section 983 and Title 19, U.S.C., Sections 1602–1619, procedures to administratively forfeit [the money] [were] underway”;

(iii) Mikhaylov could file (a) a petition for the “remission (pardon) or mitigation of the forfeiture ... within thirty (30) days of your receipt of this notice,” and (b) “[i]n addition to, or in lieu of petitioning for remission or mitigation,” a claim for his money “by October 24, 2011”;¹¹ and

(iv) The filing of a claim would allow Mikhaylov to “contest the forfeiture” in federal district court.

(Defs.' Ex. 1 (emphasis added).) The DEA sent identical written notices to the JW Marriott Hotel and another individual. (Defs.' Exs. 3–6.)

On October 3, 10, and 17, 2011, the DEA also published weekly notices in The Wall Street Journal regarding the seizure. (Defs.' Ex. 7.) Like the written notices, the published notices stated that (i) the DEA had “seized for forfeiture” Mikhaylov's money, pursuant to the Controlled SubstancesAct, and (ii) Mikhaylov could petition for remission or mitigation and/or file a claim to contest the forfeiture in federal district court. ( Id.) The published notices further stated that a claim must be filed by no later than November 17, 2011.¹² ( Id.)

On December 8, 2011, having failed to receive a claim for Mikhaylov's money by the October 24, 2011 and November 17, 2011 deadlines, the DEA concluded the administrative proceeding with a declaration of forfeiture. (Defs.' Ex. 8.)

As it turned out, Mikhaylov did not receive the written notice in time to make a claim. Although the receipt for the written notice was signed by someone at the Rego Park apartment on September 21, 2011, Mikhaylov had already moved out of that apartment on August 15, 2011, i.e., 16 days before the seizure and about a month before the mailing of the notice. (Am. Compl. ¶ 20; Defs.' Ex. 2.) Mikhaylov, thus, did not receive the written notice from the new occupant of that apartment until January 2, 2012. (Am. Compl. ¶ 21.)

On January 16, 2012, Mikhaylov, by and through his counsel, petitioned for remission or mitigation of the forfeiture. (Am. Compl. ¶ 21; Defs.' Ex. 9.) In response to Mikhaylov's petition, the DEA (i) declined to construe the petition as a claim, because the deadline for the filing of a claim had passed; and (ii) denied the petition, because “once disposal of the forfeited property occurs, a [petition] can no longer be accepted.” ¹³ (Defs.' Ex. 10.)

On October 12, 2012 and December 19, 2012, Mikhaylov filed his original and amended complaints, respectively. (Dkt. No. 1; Am. Compl.) Although Mikhaylov alleges constitutional violations, his amended complaint is more accurately construed as a Section 983(e) motion to set aside the declaration of forfeiture, based on the allegation that the DEA did not reasonably notify him about the seizure of his money. (Am. Compl. ¶¶ 1, 8 & at 6); see Bermudez, 2008 WL 3397919, at *2 & n. 6 (noting that, although the plaintiff “filed his complaint pursuant to 42 U.S.C. § 1983 and § 1988,” this case “should be treated as a forfeiture proceeding pursuant to 18 U.S.C. § 983(e)”). Indeed, several of Mikhaylov's constitutional tort claims under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) (Brennan, J.), aim to achieve the same result as a Section 983(e) motion of undoing the forfeiture. ¹⁴ ( See Am. Compl. ¶¶ 8, 22–28 & at 6 (alleging, as unconstitutional, the DEA's seizure, subsequent administrative proceeding, and denial of the petition for remission or mitigation).) The amended complaint also requests separate monetary relief for Bivens claims stemming from the alleged illegality of Mikhaylov's arrest and confinement. ( Id. ¶¶ 24–25 & at 6.)

On April 2, 2013, Defendants filed their pending motion to dismiss Mikhaylov's amended complaint based, in relevant part, on lack of subject matter jurisdiction and improper venue. (Dkt. No. 16 (“Defs.' Br.”), at 12–13, 19–22.) Defendants also opposed, as a matter of law, the Section 983(e) motion. ( Id. at 5–12.) On April 30, 2013, this case was transferred from the Southern District to the Eastern District. (Dkt. No. 23.)

II. Discussion

A. Legal Standard

1. Section 983(e) Motion

18 U.S.C. § 983(e) provides, in relevant part, that:

(1) Any person entitled to written notice in any nonjudicial civil forfeiture proceeding under a civil forfeiture statute who...