U.S. v. $186,416.00 in U.S. Currency

• Decision Date: 10 August 2007
• Docket Number: No. CV 05-6703 SVW (SHx).,CV 05-6703 SVW (SHx).
• Citation: 527 F.Supp.2d 1103
• Court: U.S. District Court — Central District of California
• Parties: UNITED STATES of America, Plaintiff, v. $186,416.00 IN U.S. CURRENCY, Defendant. United Medical Caregivers Clinic, Inc., Claimant.

527 F.Supp.2d 1103

UNITED STATES of America, Plaintiff, v. $186,416.00 IN U.S. CURRENCY, Defendant United Medical Caregivers Clinic, Inc., Claimant.

No. CV 05-6703 SVW (SHx).

United States District Court, C.D. California.

August 10, 2007.

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Greg Parham, Office of U.S. Attorney, Asset Forfeiture Division, Los Angeles, CA, for Plaintiff.

Charles L. Lindner, Charles L. Lindner Law Offices, Paul L. Gabbert, Paul L. Gabbert Law Offices, Santa Monica, CA, David B. Smith, English & Smith, Alexandria, VA, for Claimant.

ORDER DENYING CLAIMANT UNITED MEDICAL CAREGIVERS CLINIC, INC.'S CONVERTED MOTION FOR, SUMMARY JUDGMENT [42, 50]

STEPHEN V. WILSON, District Judge.

I. INTRODUCTION

In evaluating this unusual case, the Court and the parties have encountered complicated and thorny questions at every turn. This converted motion for summary judgment is no different. The Government filed its verified complaint on September 12, 2005, against the defendant $186,416.00 in United States currency. This federal civil forfeiture action arose from the Los Angeles Police Department's ("LAPD") seizure, pursuant to a state search warrant; of marijuana, currency, and other items from claimant United Medical Caregivers Clinic, Inc. ("UMCC"). UMCC is, or was, a non-profit medical marijuana dispensary in Los Angeles, located at 4520 Wilshire Boulevard. The verified complaint for forfeiture was brought under 21 U.S.C. § 881(a)(6), with the Government alleging that the defendant currency was traceable to federal narcotics violations pursuant to 21 U.S.C. §§ 841, 846.

On August 16, 2006, ("August 16 Order") this Court granted UMCC's motion to quash the search warrant and suppress the defendant currency. The Court held that the evidence seized during the search had to be suppressed because: (1) there was no probable cause to issue the state warrant for a violation of state law; and (2) even assuming that the warrant was issued in response to a violation of federal law, Federal Rule of Criminal Procedure 41(b)'s procedural requirements were not observed.

UMCC asked this Court to enter judgment in its favor immediately after the August 16 Order was issued. The Court deemed this request to be premature. See United States v. One 1977 Mercedes Benz, 708 F.2d 444, 450 (9th Cir.1983) ("[A]ny evidence which is the product of an illegal search or seizure must be excluded at trial, but ... forfeiture may proceed if the Government can satisfy the requirements for forfeiture with untainted evidence.").¹ Given the case's uncertain status, the Court issued an Order on November 21, 2006. This Order stayed discovery in order to permit UMCC the opportunity to file a dispositive motion. UMCC subsequently filed a motion for judgment on the pleadings. However, the Court determined that this motion was procedurally awkward,² and converted it to a summary judgment motion.

Importantly, this converted motion for summary judgment involves a narrow inquiry: whether the Government had sufficient evidence to initiate the lawsuit against the defendant currency on September 12, 2005. The question is whether, as of that date, the Government had untainted probable cause connecting the defendant currency to federal narcotics violations. This motion does not consider whether the Government could meet its burden of proof of establishing forfeitability by a preponderance of the evidence at trial.

For the reasons discussed below, UMCC's converted motion for summary judgment is DENIED.

II. FACTS

The Government filed its verified complaint on September 12, 2005. (CL MJOP Brief Ex. 1.) The complaint alleges that the defendant currency was seized while the Los Angeles Police Department ("LAPD") conducted a search of UMCC's premises, and that it was traceable to narcotics violations codified at 21 U.S.C. §§ 841, 846. Given the posture of this converted motion, it is imperative that the Court limit its analysis to the evidence known to the Government as of September 12, 2005. The underlying and material facts³ a are undisputed, but the resulting implications have been vigorously argued by counsel.

A. Events Leading to the Seizure

In January 2005, Sergeant Lopez began receiving complaints of marijuana smoking near the UMCC facility. (Lopez Decl. ¶ 3.) The complainants observed marijuana being carried in small brown paper bags. (Id.)

On March 15, 2005, Lopez received another complaint that for the first time identified UMCC as the source of the marijuana activity. (Id. ¶ 4.) He drove to the area in the early evening, and found a flyer that referenced "UMCC." (Id.) The flyer informed UMCC patrons to leave the premises after purchasing their marijuana, but did not include an address. (Id.) After asking some locals about the flyer, he eventually was led to 4520 Wilshire Bouleyard. (Id.) As he approached the building's entrance, he noticed that an individual (possibly a private security guard) with a walkie-talkie was following him and spoke the following words into his headset: "LA's finest is here." (Id. ¶ 15.) Inside the building, Sergeant Lopez smelled the odor of marijuana and observed a number of people leaving the building with small brown paper bags. (Id. ¶ 16.) When he ascended to the second floor, he saw a sign that advised UMCC customers to show their identification cards⁴ before entering. (Id.) He also noticed that he was being followed by the same security agent. (Id.) At approximately this time, Michael E. Bryan, a private security consultant who was then working for UMCC, states that he told Lopez that UMCC was a "legal dispenser of medical marijuana." (Bryan Decl. ¶ 3.)

Sergeant Lopez was then "buzzed" in to UMCC's offices. Once inside, the smell of marijuana grew stronger and more individuals were seen leaving with brown paper bags. (Lopez Decl. ¶ 7.) After asking to speak with the "person in charge," he met with Gabriella Jaramillo. (Id. ¶ 8.) Jaramillo told Lopez that UMCC was a medical marijuana provider, had a business license, and was operating lawfully. (Id.) However, she was unable to produce a business license at that moment. Lopez states that "Mater, in the course of the investigation, a faxed copy of a City of Los Angeles Tax Registration Certificate was produced." (Id.) Jaramillo contacted UMCC's owner by phone, who stated that he would fax the entity's business license. (Id.) The owner also stated that UMCC was a legitimate medical marijuana provider, and that he had no legal problems with his other location in West Hollywood. As Lopez continued to wait for backup, he witnessed additional individuals leaving the area with small brown paper bags. (Id. ¶ 10.) Lopez's backup arrived within approximately 30 minutes and secured the area pending the issuance of a search warrant. (Id. ¶ 11.)

Jaramillo also submitted a declaration as part of UMCC's motion to quash the search warrant and to suppress the currency. She states that as of March 15, 2005, all registered patients were required to present a UMCC ID card or a doctor's recommendation letter before they were admitted through the locked second floor door. (Jaramillo Decl. ¶ 3.) The ID card or doctor's note would then be presented to a UMCC employee at the front desk before they could be "buzzed" into the waiting room. (Id.) After signing in on a roster sheet, the patients would be admitted to the dispensary through a third locked door. (Id.)

Jaramillo claims that she was about to leave UMCC's premises at around 6:00 p.m. on March 15, 2005, when she was told by a security guard (Bryan) and another employee that a police officer wanted to see UMCC's business license. (Id. ¶ 4.) UMCC's CEO, Scott Fell, also called Jaramillo at this time. (Id.) He was at another location, but saw on his security monitor that a police officer was in the lobby. (Id.) Feil told Jaramillo, upon her request, that he would fax over the necessary information. (Id.)

Jaramillo further asserts that at this point she began speaking with Lopez, who "asked us what kind of place this was and if we had a license to operate." (Id. ¶ 6.) She informed him that this was a medical marijuana clinic operating under Proposition 215. (Id.) Lopez reportedly told Jaramillo that he was not familiar with California's medical marijuana laws.⁵ (Id.) She states that at about this time she:

received the faxes from Mr. Feil which included UMCC's corporate papers (Exhibit 6) a completed copy of its application for a City of Los Angeles Tax Registration Certificate, and a City of Los Angeles Tax Registration Certification (Exhibit 7 & 7a) which [she] handed to Officer Lopez.

(Id.) The city registration certificate lists UMCC as involved in "retail sales." (Id. Ex. 7.) The Articles of Incorporation list Scott Feil as UMCC's agent for service of process. (Id. Ex. 6.) Jaramillo also pointed Lopez to a flyer that was reportedly in his hand. (Id. ¶ 6.) The flyer included the following language:

Anyone caught smoking, distributing, sharing, selling or using by any means, any item received under the guidelines of Proposition 215 (California Compassionate Care Act of 1996) Health & Safety Code §§ 11362.5 and 11362.7 et seq. on the street or neighborhood within a five block radius of UMCC, your membership in this clinic will be immediately revoked for a period of one year from the date of violation without notification.

(Id. Ex. 5a.) UMCC hired security officers to police the adjacent neighborhood in order to ensure that this rule was observed. (Id. ¶ 6.) Jaramillo claims that Lopez received a call on his phone at this time, and he said "words to the effect that he had something that looked like a license. `It says retail and this is supposed to be a clinic.'" (Id. ¶ 8.) Lopez told Jaramillo that his supervisor would be arriving. (Id.) At this time, Jaramillo asked if she could show Lopez some paperwork on the California medical marijuana laws. (Id. ¶ 9.) She provided him with a packet of...