U.S. v. $39,000 In Canadian Currency

• Decision Date: 17 September 1986
• Docket Number: Nos. 84-1757,84-2081 and 84-2601,s. 84-1757
• Citation: 801 F.2d 1210
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. $39,000 IN CANADIAN CURRENCY, Defendant, Charles Duguet, Claimant-Appellee. UNITED STATES of America, Plaintiff-Appellant, v. ONE 1983 VOLVO GL TURBO VIN # YVlAX4741D1918785, Defendant, Albert B. Stork, Claimant-Appellee. UNITED STATES of America, Plaintiff-Appellant, v. ONE 1982 SAAB 900 TURBO, ID # YS3AT34S2C10264423, Defendant, David William Foster, Claimant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1210

801 F.2d 1210

UNITED STATES of America, Plaintiff-Appellant, v. $39,000 IN CANADIAN CURRENCY, Defendant, Charles Duguet, Claimant-Appellee.

UNITED STATES of America, Plaintiff-Appellant, v. ONE 1983 VOLVO GL TURBO VIN # YVlAX4741D1918785, Defendant, Albert B. Stork, Claimant-Appellee.

UNITED STATES of America, Plaintiff-Appellant, v. ONE 1982 SAAB 900 TURBO, ID # YS3AT34S2C10264423, Defendant, David William Foster, Claimant-Appellee.

Nos. 84-1757, 84-2081 and 84-2601.

United States Court of Appeals Tenth Circuit.

Sept. 17, 1986.

Robert N. Miller, U.S. Atty., and F. Joseph Mackey III, Asst. U.S. Atty., Denver, Colo., for plaintiff-appellant.

Michael L. Bender and Laurie L. Martin of Bender & Treece, P.C., Denver, Colo., for claimant-appellee Duguet.

Lee D. Foreman and Jay P.K. Kenney of Haddon, Morgan & Foreman, P.C., Denver, Colo., for claimant-appellee Stork.

Charles Szekely, Asst. Federal Public Defender (Michael F. DiManna of DiManna & Jackson, on brief), Denver, Colo., for claimant-appellee Foster.

Before SEYMOUR, and SETH, Circuit Judges, and SEAY, ^* District Judge.

SEYMOUR, Circuit Judge.

The United States appeals from three district court orders dismissing without prejudice civil forfeiture complaints brought under 21 U.S.C. Sec. 881 (1982). Complaints under this section must comply

with the procedural requirements of the Supplemental Rules for Certain Admiralty and Maritime Claims (the Supplemental Rules). Id., Sec. 881(b). The district courts ruled that the Government's complaints failed to allege with sufficient particularity the facts and circumstances underlying the claims for forfeiture and therefore did not comply with the applicable pleading rules. We consolidated the appeals, and we affirm.

I. BACKGROUND

The issues raised by United States v. $39,000 in Canadian Currency, No. 84-1757, and United States v. One 1983 Volvo GL Turbo, No. 84-2081, are identical to those raised by United States v. One 1982 Saab 900 Turbo, No. 84-2601. Although we discuss in detail only the first two actions, our reasoning and conclusions apply to all three.

A. The Canadian Currency

On March 14, 1983, the Government filed a civil forfeiture action against Canadian currency in an unknown amount under 31 U.S.C. Sec. 5317 (1982), which permits the forfeiture of monetary instruments over $5,000 imported without a report to the Secretary of the Treasury. The complaint stated:

"1. The Court has jurisdiction under 28 U.S.C. Secs. 1345, 1355 and 31 U.S.C. Sec. 5317.

"2. On January 27, 1983, January 28, 1983, and March 14, 1983, certain Canadian currency in the total approximate amount of $90,000 was converted to U.S. currency at Denver banks by individuals whose exact identity at this time is unknown.

"3. On March 14, 1983, one of the aforesaid individuals, believed to be Charles Duguet, appeared at Intrawest Bank and Colorado National Bank and converted or attempted to convert approximately $39,000 in Canadian currency to U.S. currency. Said individual was unable to produce a Customs Form 4790, a report of International Transportation of Currency or Monetary Instruments.

"4. Pursuant to 31 U.S.C. Sec. 5316, the importation of monetary instruments in excess of $5,000 must be reported to the Secretary of the Treasury on Form 4790. On information and belief, there is in the custody of the aforesaid Charles Duguet Canadian currency which has been introduced into the United States of America in violation of 31 U.S.C. Sec. 5316. Said currency is in the District of Colorado.

"5. Title 31, Sec. 5317, provides for seizure and forfeiture of monetary instruments such as defendant when a report under Sec. 5316 has not been filed.

"WHEREFORE, the United States of America prays that due process issue to enforce the forfeiture of defendant and that due notice be given to all interested parties to appear and show cause why the forfeiture should not be decreed."

Rec., vol. I, at 1-2. The next day the district judge issued an order for warrant of arrest in rem. Agents of the United States Customs Service then seized the currency from Charles Duguet, who subsequently filed a claim for its return.

On November 1, 1983, over seven months later, the Government amended the complaint by adding a second claim for forfeiture under section 881, which permits forfeiture of property furnished for or traceable to an exchange for a controlled substance. See 21 U.S.C. Sec. 881(a)(6) (1982). ¹ The second claim stated:

"6. Plaintiff repeats paragraphs 1 through 5.

"7. On March 14, 1983, pursuant to a warrant issued by the United States District Court for the District of Colorado, agents of the United States Customs Service seized the defendants from Charles Duguet. The defendants are $39,000 of Canadian currency.

"8. The defendants are things of value furnished or intended to be furnished by a person in exchange for a controlled substance, or are proceeds traceable to such an exchange in violation of Title 21 U.S.C., in that Charles Duguet or confederates of Charles Duguet intended to convert the Canadian currency into U.S. dollars for the acquisition of controlled substances.

"9. Under the provisions of 21 U.S.C. Sec. 881(a), no property right exists in the defendants, and they have become and are forfeited to the United States of America.

"WHEREFORE, the United States of America prays that due process issue to enforce the forfeiture of defendant and that due notice be given to all interested parties to appear and show cause why the forfeiture should not be decreed."

Rec., vol. I, at 12.

Duguet filed a motion to dismiss the second claim on the ground that it failed to state the underlying circumstances with particularity, which he alleged was required by the Supplemental Rules. The district court granted the motion and dismissed the claim, without prejudice, on the ground that the complaint was "insufficient in its factual allegations to be in compliance with Rule E(2) of the Supplemental Rules which govern this action ...." Rec., vol. I, at 31. In order to appeal this dismissal, the Government moved to dismiss the first claim, based on 31 U.S.C. Sec. 5317. The district court granted the motion and dismissed that claim with prejudice.

B. The Volvo

On or about February 8, 1984, agents of the Drug Enforcement Administration seized without warrant a 1983 Volvo GL Turbo automobile. On March 6, the Government filed a civil forfeiture action against the Volvo under sections 881(a)(4) and (a)(6), alleging:

"FIRST CLAIM FOR RELIEF

"1. That the court has jurisdiction under 28 U.S.C. Secs. 1345 and 1355.

"2. That the defendant vehicle is valued at more than ten thousand dollars and is described as follows:

One 1983 Volvo, GL Turbo, VIN # YV1AX4741D1918785, blue, 4 door, 130 cu. engine, with Colorado license plate VAK-996.

"3. That defendant property has as its registered owner Carol Jean Nanninga, P.O. Box 44, Bailey, Colorado 80421.

"4. That the defendant vehicle was seized by the United States Government by duly authorized agents of the United States Drug Enforcement Administration on or about February 8, 1984, on land within the District of Colorado.

"5. That notice of seizure will be sent by certified mail to Carol Jean Nanninga and Albert Stork, also known as Alberto Miguel Marchetti, 11874 Cochise Circle, Conifer, Colorado, last known address, on or about the week of March 5, 1984.

"6. That on or before February 8, 1984, Albert Stork was engaged in the sale, distribution, and dispensing of a controlled substance to wit: cocaine and marihuana, in violation of 21 U.S.C. Secs. 841(a)(1) and 846.

"7. That on and before February 8, 1984, proceeds received in exchange for a controlled substance in violation of law outlined above constituted the majority of the income of Carol Jean Nanninga and Albert Stork.

"8. That defendant property was purchased using proceeds traceable to exchanges for a controlled substance, on and before July 18, 1983, in violation of 21 U.S.C. Sec. 881(a)(6). Therefore, defendant property is subject to forfeiture to the United States of America and no other property right shall exist in it.

"SECOND CLAIM FOR RELIEF

"The plaintiff repeats paragraphs one through eight.

"9. That defendant 1983 Volvo was used, and intended for use, to transport, or in any manner to facilitate the transportation, sale, receipt, possession, or concealment of a controlled substance, to wit: cocaine, on or before October 14, 1983, in violation of 21 U.S.C. Sec. 881(a)(4).

"WHEREFORE, plaintiff, United States of America, prays this Honorable Court to adjudge and decree as follows:

"1. That defendant property be proceeded against for forfeiture in accordance with the law and regulations and rules of the Court and that due notice be given to all interested parties to appear and show cause why forfeiture should not be decreed.

"2. That the Court for the reasons set forth hereinabove, order, adjudge, and decree that said property be forfeited to the United States of America and disposed of according to law and regulations and that the Court provide such other relief as is just and appropriate.

"3. That costs of said action be assessed against the defendant."

Rec., vol. I, at 1-2.

Albert Stork filed a claim to the Volvo and moved to dismiss the complaint on the ground that it failed to allege underlying facts with sufficient particularity. After permitting the Government several amendments, ² the district court dismissed the claim for failure to comply with the requirements of the Supplemental Rules. The court found:

"That the complaint filed in the above-referenced matter does not comport with the requirements of Rule E(2)(a) of the Supplemental Rules for Certain Admiralty and Maritime Claims, even as amended on June 21, 1984, in that it does not state with sufficient particularity as is required under Rule E(2)(a), the circumstances upon which it is based. See, e.g., Wright & Miller, Federal Practice and...