Ruth v. Department of Legal Affairs

• Citation: 684 So.2d 181
• Decision Date: 27 November 1996
• Docket Number: No. 86872,86872
• Parties: RICO Bus.Disp.Guide 9189, 21 Fla. L. Weekly S505 Stephen L. RUTH, etc., et al., Petitioners, v. DEPARTMENT OF LEGAL AFFAIRS, Respondent.
• Court: United States State Supreme Court of Florida

Page 181

684 So.2d 181

RICO Bus.Disp.Guide 9189, 21 Fla. L. Weekly S505

Stephen L. RUTH, etc., et al., Petitioners, v. DEPARTMENT OF LEGAL AFFAIRS, Respondent.

No. 86872.

Supreme Court of Florida.

Nov. 27, 1996.

Wofford H. Stidham and Jonathan Stidham of Lane, Trohn, Clarke, Bertrand, Vreeland & Jacobsen, P.A., Bartow, for Petitioners.

Robert A. Butterworth, Attorney General and Jeanne Clougher, Assistant Attorney General, Tampa, for Respondent.

KOGAN, Chief Justice.

We have for review Ruth v. State, Department of Legal Affairs, 661 So.2d 901 (Fla. 2d DCA 1995), wherein the district court certified the following questions to be of great public importance:

1. DOES A CIRCUIT COURT WHICH HAS IN PERSONAM JURISDICTION OVER THE DEFENDANT BUT DOES NOT HAVE IN REM JURISDICTION OVER THE PROPERTY HAVE JURISDICTION TO DETERMINE THE RIGHT TO THE PROPERTY AS BETWEEN THE STATE AND THE DEFENDANT IN A CIVIL FORFEITURE ACTION BROUGHT PURSUANT TO SECTION 895.05(2), FLORIDA STATUTES?

2. DOES A CIRCUIT COURT WHICH HAS IN PERSONAM JURISDICTION OVER THE DEFENDANT BUT DOES NOT HAVE IN REM JURISDICTION OVER THE PROPERTY HAVE JURISDICTION TO ENTER A FINAL JUDGMENT OF FORFEITURE OR MUST THE COURT TRANSFER THE ACTION TO THE CIRCUIT COURT WHICH HAS TERRITORIAL JURISDICTION OVER THE LAND SOUGHT TO BE FORFEITED?

Id. at 904-05. We have jurisdiction. Art. V, § 3(b)(4), Fla. Const. We rephrase the second certified question as follows:

IF THE ANSWER TO QUESTION 1. IS YES, CAN THE COURT RENDER A FINAL JUDGMENT OF FORFEITURE OR MUST THE COURT TRANSFER THE ACTION TO THE CIRCUIT COURT WHICH HAS TERRITORIAL JURISDICTION OVER THE LAND SOUGHT TO BE FORFEITED?

With regard to the first certified question we find that a circuit court having in personam jurisdiction over a defendant in a civil RICO forfeiture action, through which the State seeks to obtain real property owned by the defendant, may determine who is entitled to the property as between the State and defendant. To determine the State's right to the property as against the whole world however the court must have in rem jurisdiction over the property. Likewise, in rem jurisdiction is needed to effect a title transfer. Accordingly, our answer to the second certified question is that a court with only in personam jurisdiction may not issue a forfeiture order in these circumstances. Rather, the court must transfer its order declaring who is entitled to the property as between the State and the defendant to the court that has in rem jurisdiction over the property. The court with in rem jurisdiction, after following the remaining statutory and constitutionally required forfeiture procedures, may then issue an order of forfeiture.

The State of Florida, Department of Legal Affairs filed in Polk County a civil RICO ¹ complaint against Stephen Ruth; Eileen Borg, Ruth's mother; and the M. Eileen Borg Revocable Trust Fund, for which Eileen Borg served as trustee. ² The State sought various forms of relief provided by section 895.05, Florida Statutes (1989), including forfeiture of certain real property Ruth allegedly obtained or used in violation of the RICO Act. ³ Although the real property sought to be forfeited was located in Charlotte County and Sarasota County, the State filed its complaint in Polk County, because Ruth was incarcerated there. The State served Ruth and the other defendants by personal service.

Several months after the State filed its complaint, it moved to transfer the action to Charlotte County. The trial judge denied the State's motion. Ruth then filed a motion for partial summary judgment. During the hearing on Ruth's motion, the trial judge questioned whether the court had jurisdiction to hear the case. After a preliminary review of chapter 895, Florida Statutes, the judge thought the suit might be an in rem proceeding which required resolution by a court in the county in which the property was located.

At this point in the proceedings, Ruth argued that the trial court had jurisdiction, because the conduct resulting in the RICO action occurred in Polk County. The State also contended that the trial court had jurisdiction. The State maintained however that pursuant to the local action rule, the trial court could not order the actual forfeiture. The State did not want to dismiss and refile its complaint in one of the counties in which the property was located though, because it did not want to lose the priority it currently enjoyed on its liens.

The trial judge ordered each party to submit a memorandum of law on the jurisdictional issue. Ruth filed a memorandum in which he changed his position on the issue. While Ruth agreed that venue was proper in Polk County, he argued that the Polk County Circuit Court did not have jurisdiction. Rather, he claimed that the local action rule required that the suit be brought in the counties where the property was located. Because the Polk County Circuit Court lacked jurisdiction, Ruth argued that the court should dismiss the action.

Prior to filing its memorandum on the issue of jurisdiction, the State filed a renewed motion to transfer the action to Sarasota County. The State argued that Polk County was no longer the most convenient forum because Ruth was leaving that county to face a federal indictment. The State instead contended that Sarasota County was now the most convenient forum because the majority of witnesses and the remaining defendants were located there. ⁴

In its memorandum on jurisdiction, the State maintained that the Polk County Circuit Court, through personal service on Eileen Borg, had personal jurisdiction over the trustee of the trust fund containing the property at issue. Consequently, the State argued, the court could order Borg to divest the property which had been fraudulently conveyed by Ruth to avoid forfeiture at an earlier date. The trial judge ruled orally at a subsequent hearing that the court had jurisdiction and proceeded with the case.

Ruth later filed a motion to dismiss alleging as one basis for dismissal that the trial court lacked subject matter jurisdiction pursuant to the local action rule. Ruth also filed a motion for partial summary judgment and a motion for summary judgment. While these motions were pending, the State filed a renewed motion to sever and transfer the action. The trial judge denied all Ruth's motions but granted the State's motion to transfer. The judge then issued two transfer orders--an order transferring the action to Charlotte County and an order transferring the action to Sarasota County.

In response to the denial of his various motions, Ruth filed a petition for writ of certiorari with the district court. ⁵ Ruth again alleged that the trial court lacked subject matter jurisdiction and thus should have granted his motion to dismiss. Ruth also appealed the two transfer orders the trial judge issued. ⁶ The district court consolidated the two cases but subsequently dismissed the petition for certiorari because it determined Ruth had not established that the interlocutory orders would cause material injury throughout the proceeding which could not be corrected on post-judgment appeal. Ruth, 661 So.2d at 902. The court however addressed Ruth's appeal of the non-final transfer orders. Specifically, the district court addressed whether the trial court had jurisdiction to issue the transfer orders. Id. at 903.

The district court found that neither chapter 895 or that statute's legislative history addressed jurisdiction. Id. at 903-4. The court then turned to federal case law for guidance. Id. at 904. The court determined that pursuant to United States v. 11205 McPherson Lane, 754 F.Supp. 1483 (D.Nev.1991), aff'd 32 F.3d 573 (9th Cir.1994), cert. dismissed, 513 U.S. 1010, 115 S.Ct. 536, 130 L.Ed.2d 438 (1994), and United States v. Accounts Nos. 3034504504 & 144-07143, 971 F.2d 974 (3d Cir.1992), cert. denied, 507 U.S. 985, 113 S.Ct. 1580, 123 L.Ed.2d 148 (1993), the trial court in this case, although it did not do so, ⁷ had jurisdiction to adjudicate the right to the property as between Ruth and the State. Ruth, 661 So.2d at 904. That authority, the district court determined, necessarily included jurisdiction to sever and transfer the action. Id.

Although we agree with the district court's conclusion, we disagree with the basis for that conclusion. Like the district court, we find that neither Florida's RICO act nor its legislative history addresses jurisdiction. Thus, we must look elsewhere for guidance on this issue. The district court's decision implies that it looked to case law interpreting the federal RICO act ⁸ for guidance. Id. The cases which the district court cites, however, do not directly address the federal RICO act. Rather, those decisions address several federal civil forfeiture provisions, ⁹ one of which Florida courts have found similar to and looked to in interpreting the Florida Contraband Forfeiture Act. ¹⁰ See In re Forfeiture of Ten Thousand Seven Hundred Eighty-Eight Dollars, 580 So.2d 855, 857 (Fla. 2d DCA 1991); In re Forfeiture of One 1973 Mercedes Benz, 423 So.2d 535, 538 (Fla. 4th DCA 1982).

Moreover, the federal RICO act does not provide us with any guidance. Unlike the Florida RICO act, the federal RICO act does not include a civil forfeiture provision. ¹¹ The federal act classifies forfeiture as part of the criminal penalty against an individual. ¹² Consequently, federal courts view RICO actions as in personam against the defendant. See United States v. Conner, 752 F.2d 566, 576 (11th Cir.), cert. denied, 474 U.S. 821, 106 S.Ct. 72, 88 L.Ed.2d 59 (1985); United States v. Cauble, 706 F.2d 1322, 1349 (5th Cir.1983), cert. denied, 465 U.S. 1005, 104 S.Ct. 996, 79 L.Ed.2d 229 (1984); United States v. L'Hoste, 609 F.2d 796, 813 n. 15 (5th Cir.), cert. denied, 449 U.S. 833, 101 S.Ct. 104, 66 L.Ed.2d 39 (1980); United States v. Huber, 603 F.2d 387, 396 (2d Cir.1979), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980). Because...