U.S. v. $38,000.00 in U.S. Currency

• Citation: 816 F.2d 1538
• Decision Date: 18 May 1987
• Docket Number: No. 86-8417,86-8417
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. $38,000.00 IN UNITED STATES CURRENCY, Defendant, David English and Michael William English, Claimants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1538

816 F.2d 1538

UNITED STATES of America, Plaintiff-Appellee, v. $38,000.00 IN UNITED STATES CURRENCY, Defendant David English and Michael William English, Claimants-Appellants.

No. 86-8417.

United States Court of Appeals, Eleventh Circuit.

May 18, 1987.

Jerome J. Froelich, Jr., Atlanta, Ga., for claimants-appellants.

Robert L. Barr, U.S. Atty., Atlanta, Ga., Amy D. Levin, Asst. U.S. Atty., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before RONEY, Chief Judge, KRAVITCH and EDMONDSON, Circuit Judges.

KRAVITCH, Circuit Judge:

This is an appeal from the grant of summary judgment for the government in a forfeiture action pursuant to 21 U.S.C. Sec. 881(a). Under section 881(a) the United States may obtain forfeiture of all moneys furnished or intended to be furnished in exchange for a controlled substance in violation of Title 21 of the United States Code, as well as all proceeds traceable to, and all moneys used or intended to be used to facilitate, such an exchange. 21 U.S.C. Sec. 881(a)(6).

There are, unfortunately, no procedural rules specifically designed to govern section 881 forfeiture actions. Rather than enact rules to govern these actions, Congress borrowed the forfeitures rules of both the customs laws, 19 U.S.C. Secs. 1595-1627a, and the Supplemental Rules for Certain Admiralty and Maritime Claims [hereinafter the Supplemental Rules]. 21 U.S.C. Sec. 881(d), Supplemental Rule A. Neither of these procedural rules, however, are directly applicable to section 881 forfeitures. ¹ Nor are they easily applied in concert with each other. ² In fact, the application of these rules to section 881 forfeitures has created a procedural morass--a morass in which the parties to the instant action became hopelessly entangled.

I. Background

On May 23, 1984, Paul Markonni, a special agent with the Drug Enforcement Administration (DEA), and a sheriff's deputy of Clayton County, Georgia, seized the defendant $38,000 in United States currency from Darrell Scott Woods in the Atlanta Hartsfield Airport. According to Markonni, Woods told him that the currency belonged to Woods' boss, appellant David English. Woods said that David had asked him to take the money to David's mother in Miami, Florida.

Immediately following the seizure, David called Markonni and, asserting that the currency was his, demanded its return. Subsequent deposition testimony of appellants, however, revealed that the currency belongs to David's brother, appellant Michael English and that Michael had transferred the currency to David, allegedly so that David could send it their mother in Miami.

On June 25, 1984, the Clayton County District Attorney's office filed a condemnation petition in Clayton County Superior Court. According to David and Michael, they both made verified claims to the money. On April 17, 1985, the state court dismissed the action as not being timely commenced under the Georgia forfeiture laws. According to appellants, they again requested the return of the currency. It was not returned.

In May, 1985, appellants filed a motion pursuant to Rule 41(e), Fed.R.Crim.P., in federal district court demanding return of currency. This motion eventually was dismissed. ³ On July 17, 1985, the United States filed a verified complaint in federal district court seeking forfeiture of the defendant currency pursuant to 21 U.S.C. Sec. 881(a)(6). That day, the government mailed the complaint and a summons to David, who the government allegedly thought owned the currency. The complaint was not accompanied by a warrant to arrest the property as the government had not yet obtained a warrant pursuant to Supplemental Rule C(3). The government did not notify Michael of the forfeiture action. Nor, according to the district court, did the government issue the requisite publication notice of either the seizure or the forfeiture.

The government's complaint states that Agent Markonni seized the defendant $38,000 in the Atlanta airport from a man who identified himself as Darrell Scott Woods. It then recites the probable cause language of section 881. Neither the complaint nor Markonni's accompanying affidavit contain any facts to support the government's claim of probable cause. ⁴

The summons states that David must file an answer to the complaint within twenty days and that failure to do so will result in the entry of summary judgment against him. The summons does not specify which procedural rules govern the action. The acknowledgment and receipt accompanying the summons and complaint state that they were served pursuant to Rule 4(c)(2)(C)(ii) of the Federal Rules of Civil Procedure. The Supplemental Rules are not mentioned.

On July 30, David filed both a claim to the currency and a motion to dismiss the government's complaint. In his claim David demanded that the currency "be returned to me immediately"; he did not, however, specify his relationship to the currency.

Approximately one week after David filed his motion to dismiss, and almost three weeks after the government filed its forfeiture complaint, the government obtained from the clerk of the court a warrant for the arrest of the currency. This warrant was sent by certified mail to David's attorney, who also was, and is, Michael's attorney. The warrant states that David is required to file a claim within ten days of service of the complaint, ⁵ as opposed to service of the warrant, and that David must file his answer within twenty days after filing his claim.

On August 22, 1985, the district court denied David's motion to dismiss the government's complaint as being without merit. The court dismissed David's claim that the government's complaint lacks the requisite factual particularity, along with several other claims, in a footnote. ⁶ The court did not mention the Supplemental Rules.

On September 5, 1985, David filed an answer to the forfeiture complaint. ⁷ On November 13, 1985, Michael filed a claim to the defendant currency; he filed an answer approximately two weeks later. In his claim, Michael alleged that he had borrowed the currency and therefore it belongs to him. He asserted, however, that both he and David have an interest in the currency because he had transferred the currency to David.

On March 17, 1986, the government filed a motion for summary judgment alleging that neither David nor Michael have standing. The district court granted the motion on May 6, 1986, concluding that neither claimant has standing under Supplemental Rule C(6). ⁸ The district court found, based in part on deposition testimony of appellants, that Michael owns the currency and that David had been acting as Michael's bailee. Neither side contests this finding. The court then concluded that David lacks standing because David failed to specify in his claim that he was acting as a bailee for Michael, as required under Supplemental Rule C(6). The court dismissed Michael's claim on the ground that it was not timely filed under Supplemental Rule C(6). The court reasoned that, although the government had not satisfied the notice requirements of Supplemental Rule C(4), Michael was obligated to file a claim pursuant to Supplemental Rule C(6) within ten days of July 24, 1985--the date Michael received actual notice of the forfeiture complaint through his and David's attorney. The court therefore concluded that the claim Michael filed in November was untimely under Supplemental Rule C(6).

Having dismissed the claims of the only two claimants to the property, the court granted summary judgment for the government. ⁹ David appeals the denial of his motion to dismiss. Both David and Michael appeal the grant of summary judgment.

II. Standing as a Threshold Issue

Appellants argue on appeal that it was improper for the district court to consider standing prior to determining whether the government has the requisite probable cause to obtain forfeiture of the defendant currency. Although we reject appellants' claim that probable cause, not standing, is the threshold issue, we reverse the district court on the standing issue because both appellants have satisfied the standing requirements applicable to them.

A. Article III Standing

There are two different forms of standing at issue in this case: Article III standing and statutory standing. It is well established that in order to contest a forfeiture, a claimant first must demonstrate a sufficient interest in the property to give him Article III standing; otherwise, there is no "case or controversy," in the constitutional sense, capable of adjudication in the federal courts. United States v. One 18th Century Columbian Monstrance, 802 F.2d 837, 838 (5th Cir.1986) (denying petition for rehearing and rehearing en banc); see United States v. Five Hundred Thousand Dollars, 730 F.2d 1437, 1439 (11th Cir.1984) (per curiam); United States v. Three Hundred Sixty-Four Thousand Nine Hundred Sixty Dollars ($364,960.00) in United States Currency, 661 F.2d 319, 326 (5th Cir. Unit B Nov.1981); ¹⁰ United States v. One 1977 36 Foot Cigarette Ocean Racer, 624 F.Supp. 290, 294 (S.D.Fla.1985) (standing is a threshold issue). Thus, contrary to appellants' argument, unless they have Article III standing, ¹¹ federal courts lack jurisdiction to consider their claims, including their claim that the government did not have the requisite probable cause to seize the defendant property. ¹² See Five Hundred Thousand Dollars, 730 F.2d at 1439.

There can be no doubt that Michael, as owner of the currency, has Article III standing, and the government does not argue otherwise. The government, however, does argue that David does not have Article III standing to contest this forfeiture because David neither owns nor was in actual possession of the currency at the time it was seized. We disagree.

A claimant need not own the property in order to have standing to contest its forfeiture; a lesser property interest, such as a possessory...