U.S. v. $57,960.00 in U.S. Currency

• Decision Date: 28 July 1999
• Docket Number: No. 7:98-2126-20AK.,7:98-2126-20AK.
• Citation: 58 F.Supp.2d 660
• Parties: UNITED STATES of America, Plaintiff, v. $57,960.00 IN UNITED STATES CURRENCY, Defendant.
• Court: U.S. District Court — District of South Carolina

Page 660

58 F.Supp.2d 660

UNITED STATES of America, Plaintiff, v. $57,960.00 IN UNITED STATES CURRENCY, Defendant.

No. 7:98-2126-20AK.

United States District Court, D. South Carolina, Spartanburg Division.

July 28, 1999.

Marvin Caughman, Assistant United States Attorney, Columbia, SC, for Plaintiff.

David A. Babb, pro se.

ORDER

HERLONG, District Judge.

This matter is before the court with the Report and Recommendation of United States Magistrate Judge William M. Catoe, Jr., made in accordance with 28 U.S.C. § 636(b) and Local Rule 73.02 DSC.¹ The United States alleges that the $57,960.00 is subject to forfeiture under 21 U.S.C. § 881(a)(6). The claimant, David Anthony Babb ("Babb"), proceeding pro se, contends that he is the lawful owner of the subject property. A number of motions have been filed and are pending before the court. The Report and Recommendation was filed on May 28, 1999, and it recommends dismissal due to the running of the statute of limitations.² The United States objected to the recommendation on June 11, 1999. Babb objected to a "factual finding" in the recommendation on June 14, 1999.

I. STATEMENT OF THE FACTS

The currency was originally seized from Babb on June 4, 1991, by officers of the Spartanburg, South Carolina Police Department when they arrested Babb in a reverse sting operation. The officers had used an informant to arrange the sale of marijuana to Babb and others for a price of $60,000.00. Babb was charged with, among other crimes, trafficking marijuana. The solicitor of the Seventh Judicial Circuit for the State of South Carolina ("Spartanburg solicitor") filed a forfeiture proceeding against the $57,960.00 that was seized from Babb.

In 1993, after Babb pled guilty to the distribution of cocaine in violation of 21 U.S.C. § 841(a)(1) and was sentenced to eighty months in federal prison, the Drug Enforcement Administration ("DEA") began making efforts to adopt the state seizure for federal forfeiture proceedings. Although the Spartanburg solicitor had filed a forfeiture proceeding in 1991, he had not taken any further action on the matter. On February 19, 1993, agent William K. Lunsford ("Lunsford") of the DEA, upon approval by the Spartanburg Public Safety Department, assumed seizure of the money pursuant to 21 U.S.C. § 881. After receiving no response to attempted notices, the DEA on December 3, 1993, issued a declaration of forfeiture, which stated that the $57,960.00 was administratively forfeited pursuant to 19 U.S.C. § 1609.

II. PROCEDURAL HISTORY

Several years passed before Babb initiated an effort to invalidate the forfeiture. Babb filed a complaint in United States District Court on May 30, 1997, claiming that his constitutional right to due process had been violated because he failed to receive adequate notice of the administrative forfeiture. See Babb v. DEA, No. 97-1553 (D.S.C. May 13, 1998) (order voiding administrative forfeiture), aff'd, 172 F.3d 862 (4th Cir.1999). On May 13, 1998, the court determined that Babb's right to due process had been violated and that the administrative forfeiture was void as a matter of law. See id. at 6. Accordingly, the court ordered the DEA to return the money or to commence judicial forfeiture proceedings. See id. at 6-7.³

On July 22, 1998, the DEA commenced judicial forfeiture proceedings, which constitutes the instant action. Rather than file an answer, Babb filed a series of motions under Rule 12(b) of the Federal Rules of Civil Procedure. The United States has responded with various motions of its own. The pending motions are as follows: (1) Babb's motion to dismiss for prejudicial delay in filing complaint in violation of due process (filed 11/16/98); (2) Babb's motion to dismiss for lack of jurisdiction due to the statute of limitations (filed 11/16/98); (3) Babb's motion to dismiss for lack of jurisdiction over the res (filed 11/16/98); (4) Babb's motion to stay adjudication of the foregoing motion number (3) until the Fourth Circuit has heard the direct appeal of civil action number 97-1553 (filed 11/16/98); (5) Babb's motion for leave to file reply to plaintiff's response to motions to dismiss (filed 12/18/98); (6) Babb's motion for protective order (filed 2/10/99); (7) Babb's motion to set aside order compelling the claimant to respond to interrogatories propounded by the government (filed 2/11/99); (8) United States' motion to strike (filed 2/24/99); (9) United States' motion for default judgment against Babb (filed 2/24/99); (10) United States' motion for entry of order denying Babb's motion for a protective order (filed 2/24/99); (11) Babb's motion for Rule 11 sanctions (filed 3/8/99); (12) Babb's motion to strike insufficient defense (filed 5/12/99). For the reasons outlined below, all motions (except Babb's motion to set aside an earlier order of the court) are denied.

III. DISCUSSION OF THE LAW

A. Babb's Motions to Dismiss

Babb's motions to dismiss are without merit. Babb moves the court to dismiss the case on three bases: (1) the statute of limitations has run, (2) prejudicial delay, and (3) lack of jurisdiction over the res. The magistrate judge recommends that the court dismiss the case on the basis of the running of the five-year statute of limitations. The court disagrees with the magistrate judge's conclusion and rejects the recommendation.

1. Statute of Limitations

The applicable limitations period is five years under 19 U.S.C. § 1621. This statute also provides that the period is tolled during the absence of the person subject to the forfeiture or during any concealment or absence of the property. See id. The currency was seized by state government officials in 1991, transferred to the custody of the DEA on February 19, 1993, and declared administratively forfeited on December 3, 1993. Babb brought suit against the United States on May 30, 1997, in a successful effort to collaterally attack the administrative forfeiture. Babb ultimately prevailed on May 13, 1998, when this court declared the forfeiture failed to comport with due process. This ruling was upheld by the Fourth Circuit on January 26, 1999. See Babb v. DEA, 172 F.3d 862 (4th Cir.1999) (unpublished table decision).⁴ Babb also requested this court to clarify its order, which the court denied in an order filed September 25, 1998. See Babb v. DEA, No. 97-1553 (D.S.C. Sept. 25, 1998) (order denying motion to clarify).

Babb insists that the statute of limitations has run because even if an accrual date of February 19, 1993, is used (i.e. the date that the federal government seized the currency), the limitations period would end by February 19, 1998. The instant action was not filed until July 22, 1998. The DEA, on the other hand, argues that the limitations period should be equitably tolled. The court agrees with the DEA that the law provides for the equitable tolling of the statute, but not for the reasons set forth by the DEA. The court holds that the five-year limitations period was tolled from December 3, 1993 (when the United States filed the declaration of administrative forfeiture), until May 13, 1998 (when the court declared the administrative forfeiture to be void).

a. Lack of Controlling Precedent

No Fourth Circuit case discusses whether judicial forfeiture proceedings may be instituted beyond the five-year limitations period of 19 U.S.C. § 1621. There are several cases outside the Fourth Circuit, however, which address this issue. In Boero v. DEA, 111 F.3d 301 (2d Cir.1997), an administrative forfeiture was void due to lack of notice. Although the five-year limitations period of section 1621 had passed, the Second Circuit determined the proper remedy to be a hearing on the merits in district court. See id. at 305, 307. This approach was adopted by the Central District of California in United States v. Marolf, 973 F.Supp. 1139 (C.D.Cal.1997), aff'd in part and rev'd in part, 173 F.3d 1213 (9th Cir.1999), yet the Ninth Circuit reversed the district court on this issue and held that "absent the application of laches or equitable tolling principles, courts may not ignore the statute of limitations simply because they opine that a given action is not stale or that a particular defendant's repose has already been broken." Marolf, 173 F.3d at 1218 (inner quotations omitted).⁵ The Ninth Circuit took its lead from the Tenth Circuit, which concluded during the pendency of the Marolf appeal that "[w]here obvious statute of limitations problems exist, we think the offending [i.e. inadequately noticed] forfeiture should be vacated and the statute of limitations allowed to operate, subject, of course, to any available government arguments against it." Clymore v. United States, 164 F.3d 569, 574 (10th Cir.1999).

The court agrees with the approach of the Ninth and Tenth Circuits in Marolf and Clymore. The court already implicitly rejected the Boero approach when it declared the administrative forfeiture void and ordered the government either to return the property to Babb or to initiate judicial forfeiture proceedings (i.e. the court did not order a hearing on the merits as in Boero). Rather, as in Marolf and Clymore, the five-year limitations period must be given an opportunity to operate. Even so, the Ninth and Tenth Circuits recognized that "government arguments," Marolf, 173 F.3d at 1218, such as "laches or equitable tolling principles," Clymore, 164 F.3d at 574, may operate against the limitations period.

b. Equitable Tolling

The United States contends that equitable tolling is applicable in the instant case. Marolf and Clymore did not consider whether equitable tolling applied in the specific situations before them, and the court is not aware of any court addressing the application of equitable tolling principles to the five-year limitations period of 19 U.S.C. § 1621. Thus, it is an issue of first impression, and the court holds that equitable tolling is appropriate.

The equitable tolling doctrine is read into every federal statu...