U.S. v. $38,570 U.S. Currency

• Citation: 950 F.2d 1108
• Decision Date: 15 January 1992
• Docket Number: 90-2982,Nos. 90-2667,s. 90-2667
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. $38,570 U.S. CURRENCY, Defendant, Francisco Flores, Jr., Claimant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1108

950 F.2d 1108

UNITED STATES of America, Plaintiff-Appellee, v. $38,570 U.S. CURRENCY, Defendant Francisco Flores, Jr., Claimant-Appellant.

Nos. 90-2667, 90-2982.

United States Court of Appeals Fifth Circuit.

Jan. 15, 1992.

Melvyn Carson Bruder, Dallas, Tex., for claimant-appellant.

Henry K. Oncken, U.S. Atty., Peggy Morris Ronca, Asst. U.S. Atty., Houston, Tex., for plaintiff-appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before POLITZ, KING and JOHNSON, Circuit Judges.

KING, Circuit Judge:

Francisco Flores, Jr. ("Flores") appeals an order of the district court finding that Flores failed to establish standing to claim $38,570 seized following his arrest by Drug Enforcement Administration ("DEA") agents, and striking his claim to the currency and his answer to the government's complaint. We find that the district court erred regarding Flores' standing but did not abuse its discretion in striking his claim and answer. We therefore affirm.

I. STATEMENT OF THE CASE

Pursuant to 21 U.S.C. § 881(a)(6), DEA agents seized $38,570 from Laura Hernandez, a passenger ¹ in a vehicle driven by Flores. The two, along with three other individuals, had been under surveillance by agents since the preceding day. The group had been observed going in and out of two hotel rooms, switching vehicles, and changing rental cars. One of the group was observed sampling cocaine from the trunk of one of the vehicles. The group eventually left the hotel in various vehicles. The vehicle driven by Flores was pulled over by DEA agents when he was seen driving at a high rate of speed, at which point the currency was seized.

Flores, Hernandez, and Flores' attorney were each served with a complaint for forfeiture in rem, a notice of intent to forfeit the $38,570, and a "warrant of seizure and monition." Service of process was by registered mail, sent on March 9, 1990, with a signed return receipt indicating that actual notice was received by each of the three on March 12, 1990. The marshal's return of service of process was filed with the clerk of court on March 15, 1990. Public notice of the seizure was published in The Houston Chronicle on March 23, March 31, and April 6, 1990. Flores filed an answer to the complaint for forfeiture in rem and a demand for jury trial on April 9, 1990. He then filed a claim for the currency on April 11, 1990.

The district court struck Flores' claim to the $38,570 and his answer to the government's complaint for failure to comply with the Supplemental Rules for Certain Maritime and Admiralty Claims, 28 U.S.C. Supplemental Rule C ("Supplemental Rules" or "S.R."). ² The district court also found that even if Flores' claim had been timely filed, it still would have failed because Flores' bare assertion, "I own the currency," without more, did not satisfy his burden of establishing standing to contest the forfeiture under Supplemental Rule C(6).

Because Flores' claim was the only claim to the $38,570, the district court entered a default judgment and decree of forfeiture. Flores first appealed the district court's order striking his claim and answer, and subsequently filed a timely notice of appeal of the default judgment and decree of forfeiture. These appeals were consolidated.

II. DISCUSSION

A. Requirements of Verified Claim

Flores contends that the district court erred in concluding that he failed to establish standing to contest the forfeiture. "Standing ... is literally a threshold question for entry into a federal court." ³ U.S. v. $321,470 in U.S. Currency, 874 F.2d 298, 302 (5th Cir.1989). The issue of standing is one of law, and our review is plenary. Public Interest Research Group of New Jersey, Inc. v. Powell Duffryn Terminals, Inc., 913 F.2d 64, 71 (3d Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1018, 112 L.Ed.2d 1100 (1991).

Supplemental Rule C(6) requires that a claim be verified under oath, and that it state the claimant's interest in the property, the right by which he demands restitution, and the right by which he defends the action. S.R. C(6). To contest a forfeiture action, an individual bears the burden of "demonstrat[ing] an interest in the seized item sufficient to satisfy the court of his standing" as a claimant. U.S. v. $47,875 in U.S. Currency, 746 F.2d 291, 293 (5th Cir.1984); see also U.S. v. $364,960 in U.S. Currency, 661 F.2d 319, 326 (5th Cir.1981).

The statute under which the property was seized, 21 U.S.C. § 881(a)(6), provides the following:

(a) The following shall be subject to forfeiture to the United States and no property right shall exist in them:

. . . . .

(6) All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter, except that no property shall be forfeited under this paragraph, to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner (emphasis added).

We have construed this language to suggest that only "owners" have standing to contest a forfeiture proceeding under section 881. U.S. v. One Parcel of Real Property, 831 F.2d 566, 567-68 (5th Cir.1987). ⁴

The district court found Flores' assertion, "I own the currency," to be insufficient to establish ownership. On appeal, Flores argues that the assertion is sufficient because it was made under oath. The government, on the other hand, argues that, because it must publish notice of the forfeiture proceeding in the newspaper, anyone could file a claim based on such an assertion. Some indicia of reliability, argues the government, are required to reduce the likelihood of a false or frivolous claim.

We recognize that Flores need not prove his case to establish standing to bring suit. See $321,470, 874 F.2d at 302. This court has held that, to establish standing, "[a] claimant need not prove the merit of his underlying claim, but he must be able to show at least a facially colorable interest in the proceedings sufficient to satisfy the case-or-controversy requirements...." Id. We must therefore address how much, if any, evidence Flores must produce in order to meet the threshold requirements of standing.

"[A] claimant seeking to challenge the government's forfeiture of money ... used in violation of federal law must first demonstrate an interest in the seized item...." $47,875, 746 F.2d at 293. In $47,875, this court held that claimants who lent money to the individual from whom it was seized, and who failed to establish that the money was given in furtherance of a joint venture with the individual, did not demonstrate a legal or equitable interest in the currency sufficient to establish standing. Id. In $321,470, we extended this principle, noting that "property may be forfeited ... if the only claimant is unable or unwilling to provide evidence supporting his assertion of an interest in the property [sufficient to establish standing]." 874 F.2d at 303 (emphasis added). There, we found that a claimant who denied ownership of seized currency and put forth no evidence of his ownership failed to establish standing. Id. at 304. Indeed, in that case we labeled the claimant's need to "demonstrate" an ownership interest as a "burden of proof." Id.; cf. U.S. v. One 1976 Cessna Model 210L Aircraft, 890 F.2d 77, 80 (8th Cir.1989) ("To prove this threshold issue, a claimant must prove that he or she is the owner of the property subject to the forfeiture action.") (emphasis added); U.S. v. 2511 E. Fairmount Ave., 722 F.Supp. 1273, 1279 (D.Md.1989); U.S. v. $280,505, 655 F.Supp. 1487, 1495 (S.D.Fla.1986) (claimant must demonstrate her interest in property by a preponderance of the evidence to establish standing). Finally, in U.S. v. One Parcel of Land, Known As Lot 111-B, 902 F.2d 1443, 1445 (9th Cir.1990), the Ninth Circuit held that the claimant had no standing where he failed to present documentary evidence regarding the purchase of the real property or the payment of taxes on the property subject to the forfeiture action.

We note that these decisions indicate that the claimant must come forth with some evidence of his ownership interest in order to establish standing to contest a forfeiture. We agree with the reasoning of these cases, and hold that a bare assertion of ownership of the res, without more, is inadequate to prove an ownership interest sufficient to establish standing. ⁵ Cf. 2511 E. Fairmount Ave., 722 F.Supp. at 1279 ("The mere assertion of legal title to property may not be sufficient to establish standing, for issues of actual possession, control, and financial stake must also be considered.").

Ordinarily, therefore, a claimant is required to submit some additional evidence of ownership along with his claim in order to establish standing to contest the forfeiture. In this case, however, Flores need not have supplemented his claim with additional evidence, because the government had admitted Flores' relationship to the currency in its complaint. We recognize that ownership can be evidenced in a variety of ways. Courts generally look to indicia of dominion and control such as possession, title, and financial stake. Cf. U.S. v. One 1981 Datsun 280ZX, 563 F.Supp. 470, 474 (E.D.Pa.1983) (holding that claimant failed to establish standing where evidence indicated that claimant had no financial stake in the res and did not possess it). Here, the government admitted, and the district court explicitly found, facts indicating Flores' involvement with the currency. ⁶ The district court noted Flores' presence at the scene of the seizure and the circumstances surrounding Flores' alleged relationship to the...