Torres v. $36,256.80 US Currency, 91 Civ. 2436 (PKL).

• Citation: 827 F. Supp. 197
• Decision Date: 07 July 1993
• Docket Number: No. 91 Civ. 2436 (PKL).,91 Civ. 2436 (PKL).
• Parties: Clara TORRES, Plaintiff, v. $36,256.80 U.S. CURRENCY, Drug Enforcement Administration, New York Division, Defendants.
• Court: U.S. District Court — Southern District of New York

827 F. Supp. 197

Clara TORRES, Plaintiff, v. $36,256.80 U.S. CURRENCY, Drug Enforcement Administration, New York Division, Defendants.

No. 91 Civ. 2436 (PKL).

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

July 7, 1993.

Clara Torres, pro se.

Mary Jo White, U.S. Atty., S.D.N.Y., New York City (Ellen Silverman Zimiles, of counsel), for defendant.

OPINION AND ORDER

LEISURE, District Judge

Plaintiff Clara Torres, proceeding pro se, brings this action to vacate a completed civil forfeiture action effected by the Drug Enforcement Administration ("DEA") pursuant to the Comprehensive Drug Abuse Prevention and Control Act. DEA summarily forfeited a $30,000 certificate of deposit in the name of Rafael Torres, plaintiff's husband, following his conviction on a narcotics offense in the United States District Court for the Eastern District of Pennsylvania. Plaintiff frames her complaint as a motion to set aside the civil forfeiture for excusable neglect pursuant to Rule 60(b) of the Federal Rules of Civil Procedure and seeks return of the forfeited funds in the certificate of deposit, claiming to be the "innocent owner" of those funds.

The United States now moves to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, or, in the alternative, for summary judgment pursuant to Rule 56(b). On March 31, 1993, the Honorable Nina Gershon, United States Magistrate Judge, Southern District of New York, issued a Report and Recommendation recommending that this Court grant the government's motion for summary judgment. For the following reasons, the Court adopts Judge Gershon's Report and Recommendation in its entirety and grants summary judgment to the defendant pursuant to Rule 56(b).

BACKGROUND

On August 9, 1988, DEA seized from Chase Manhattan Bank a certificate of deposit registered in the name of Rafael Torres, plaintiff's husband, following his conviction on a narcotic offense. Rafael Torres did not object to the seizure and subsequent civil forfeiture of the certificate and does not join in the instant action. Plaintiff now contests the seizure, alleging that the funds in the certificate were the proceeds of a consumer loan she secured from Chemical Bank and subsequently "loaned" to her husband. Thus, Ms. Torres argues that DEA did not have probable cause to seize the certificate as the proceeds of illegal drug activity.

Plaintiff alleges that on June 5, 1988 she applied for a $30,000 consumer loan from Chemical Bank. Complaint ¶ 14 & Exs. D, E.¹ Ms. Torres asserts that she:

took out the consumer loan at Chemical Bank to assist her husband in re-establishing his credit as a businessman. Rafael Torres has experienced some difficulties in past business ventures and needed to re-establish his credit.

Complaint ¶ 19. Chemical Bank approved the loan and issued a bank check, dated June 30, 1988, in the name of Rafael Torres. Complaint ¶ 15 & Ex. F.

On June 23, 1988, Rafael Torres purchased a $30,000 certificate of deposit from Chase Manhattan Bank. Complaint ¶ 16 & Ex. G. Rafael Torres is the certificate of deposit's only registered owner; the line on the certificate of deposit entitled "Name of Joint Party" is blank. Complaint Ex. G.

Plaintiff asserts that the funds used by Mr. Torres to purchase the certificate on June 23, 1988 were the proceeds of the consumer loan check issued by Chemical Bank and dated June 30, 1988. Complaint ¶¶ 13, 14, 15 & 16. Plaintiff has proffered two explanations for the discrepancy in the dates over the course of this litigation. Originally, she alleged that the date on the loan check was the result of a "typo on the check, for it is dated 6/30/88." Complaint Ex. H, Affidavit of Rafael Torres, dated March 15, 1990, ¶¶ 4, 6 & 7. However, Ms. Torres' evidence in support of her allegation — a letter from Rosa Deliz, a sales representative employed by Chemical Bank — merely states that plaintiff "applied for a $30,00 loan on June 15, 1988," and that "the loan was approved and paid out on June, 1988." Complaint Ex. E. Plaintiff's second explanation for the discrepancy in the dates is that "the check was post-dated June 30, 1988 (which plaintiff failed to recall)" by Chemical Bank on its own initiative and without her approval.² Plaintiff states that she "cannot dictate banking procedures, why Chemical Bank post-dated the check...." Objections to the U.S. Magistrate Report, dated May 20, 1993 ("Objections"), ¶ 4. In support of this second explanation, Ms. Torres submits a second letter from Rosa Deliz of Chemical Bank. This evidence, however, directly contradicts plaintiff's assertion that the post-dating of the check was done at Chemical Bank's own initiative. The letter, dated April 21, 1993, states in pertinent part: "At the customers sic request, the check was made payable to her husband Rafael Torres and post dated June 30, 1988." The government argues that the plaintiff has failed to adequately explain why the loan check was post-dated and why Chase Manhattan Bank would deposit on June 23, 1988 a check that was non-negotiable until June 30, 1988.

Plaintiff does not claim to have obtained a security interest in Mr. Torres' property in exchange for the $30,000 "loan" to him, nor does Ms. Torres claim to have executed a written agreement with Mr. Torres detailing the conditions of the "loan" to her husband. Plaintiff does allege that "after the maturization sic of the certificated of deposit, it was agreed upon, that Rafael Torres would repay the total amount of the certificate of deposit with interest accrued to the claimant." Complaint ¶ 19. In his affidavit, Mr. Torres states that "this money is hers. She took out the loan to assist me in re-establishing my credit, but it was agreed that I would repay her the full amount of the certificate of deposit upon maturization sic in June 1991." Complaint Ex. H, ¶ 11.

On August 9, 1989, DEA agents seized the certificate of deposit from Chase Manhattan Bank pursuant to a warrant of seizure. Complaint ¶ 3 & Ex. A; Notice of Motion, dated March 16, 1992, Declaration of William J. Snider, Forfeiture Counsel, Drug Enforcement Administration, United States Department of Justice, dated March 12, 1992 ("Snider Dec."), ¶ 4(a). Pursuant to section 881(a)(6) of Title 21 of the United States Code,³ DEA determined that there existed probable cause to seek the civil forfeiture of the certificate as the proceeds of illegal drug activity.⁴ Snider Dec. ¶ 4(b).

On August 24, 1988, a Notice of Seizure letter was sent via certified mail, return receipt requested, to Mr. Torres at his last known location of incarceration at the Chester County Prison in Pennsylvania and also to Mr. Torres' last known residence, which is also plaintiffs current residence.⁵ Snider Dec. ¶ 4(b). Although the Notice of Seizure letter was received at the Chester County Prison, it was returned to DEA marked "Not at Chester County Prison." Snider Dec. ¶ 4(b) & Ex. 3. Mr. Torres is currently incarcerated at the Federal Correctional Institution in Petersburg, Virginia. Complaint Ex. H. The letter sent to the residence was returned to DEA marked "Return to Sender" with a notation indicating that the letter had not been claimed. Snider Dec. ¶ 4(b) & Ex. 2.

Beginning on September 7, 1988, pursuant to 19 U.S.C. § 1607(a), DEA published notice of the seizure of the certificate in USA Today; the published notice ran for three weeks. Snider Dec. Ex. 4. Both the letter notice and published notice explained that two procedures were available to a claimant seeking to avoid forfeiture. First, a claimant could contest the forfeiture of the property in federal court by filing a claim no later than September 27, 1988 and posting a bond. See 19 U.S.C. § 1608. Both forms of notice also explained that a claimant could file a petition for remission or mitigation of the forfeiture.⁶ Snider Dec. Ex. 4. On October 31, 1988, the deadline for the filing of claims having passed with no claim having been filed, DEA declared the certificate to be administratively forfeited pursuant to 19 U.S.C. § 1609(a). Snider Dec. Ex. 5; see 19 U.S.C. § 1609(b) ("A declaration of forfeiture under 19 U.S.C. § 1609(a) shall have the same force and effect as a final decree and order of forfeiture in a judicial forfeiture proceeding in a district court of the United States.").

Plaintiff alleges that she did not realize that the certificate had been forfeited until "a stop payment was made on a check on 6/22/89 to close down the certificate in my husband's behalf, then I realized that something was wrong." Plaintiff's Affidavit in Opposition to Defendant's Motion for Summary Judgment and or Dismissal, dated April 21, 1993 ("Opposition"), ¶ 7 & Ex. (bank check stamped "PAYMENT STOPPED"). Ms. Torres, however, failed to immediately file a claim because she was unaware that DEA regulations and statutory authority provide certain procedures to contest a forfeiture. She delayed seeking relief until December 1990, when a friend suggested that she could recover the forfeited certificate of deposit. Complaint ¶¶ 7, 8; Snider Dec. ¶ 4(e).

In a letter dated January 2, 1991, plaintiff challenged the forfeiture of the certificate.⁷ Complaint Ex. B. DEA responded on January 22, 1991, informing Ms. Torres that DEA required the case number or seizure identifier to investigate her challenge to the forfeiture. Snider Dec. Ex. 6. Plaintiff submitted the required information by letter dated February 1, 1991. Complaint Ex. B. In a February 14, 1991 letter, DEA notified plaintiff that the "case is now closed," because the time to file a claim to challenge the forfeiture had expired. Snider Dec. Ex. 8. Plaintiff filed the instant case on April 8, 1991, alleging that she is the owner of the certificate and that the certificate was wrongly forfeited.

DISCUSSION

I. Standard for Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the...