U.S. v. All Right, Title and Interest in Real Property and Appurtenances

• Decision Date: 26 February 1996
• Docket Number: D,No. 934,934
• Citation: 77 F.3d 648
• Parties: UNITED STATES of America, Plaintiff-Appellee, Millar Elevator Service Company, Plaintiff, v. ALL RIGHT, TITLE AND INTEREST IN REAL PROPERTY AND APPURTENANCES, thereto known as 143-147 East 23rd Street, New York, New York, Listed as Block 879, Lot 27, which includes the Kenmore Hotel, Defendants, Jude Hotel Corporation, Claimant-Appellant. ocket 95-6157.
• Court: U.S. Court of Appeals — Second Circuit

Page 648

77 F.3d 648

UNITED STATES of America, Plaintiff-Appellee, Millar Elevator Service Company, Plaintiff, v. ALL RIGHT, TITLE AND INTEREST IN REAL PROPERTY AND APPURTENANCES, thereto known as 143-147 East 23rd Street,

New York, New York, Listed as Block 879, Lot 27, which

includes the Kenmore Hotel, Defendants,

Jude Hotel Corporation, Claimant-Appellant.

No. 934, Docket 95-6157.

United States Court of Appeals, Second Circuit.

Argued Jan. 8, 1996.

Decided Feb. 26, 1996.

Ellen Silverman Zimiles, Assistant United States Attorney, New York City (Mary Jo White, United States Attorney for the Southern District of New York, Kenneth M. Karas, Steven M. Haber, Assistant United States Attorneys, New York City, on the brief), for Plaintiff-Appellee.

Doris G. Traub, New York City (Traub & Traub, New York City, on the brief), for Claimant-Appellant.

Before: VAN GRAAFEILAND, KEARSE, and MINER, Circuit Judges.

KEARSE, Circuit Judge:

Claimant Jude Hotel Corporation ("Jude") appeals from a final judgment of the United States District Court for the Southern District of New York, Milton Pollack, Judge, ordering the forfeiture of certain of Jude's real property, which includes the Kenmore Hotel (the "Kenmore" or the "Hotel"), to the United States pursuant to 21 U.S.C. § 881(a)(7) (1994) on the ground that the Hotel was used to facilitate narcotics activity with the knowledge of Jude and without meaningful efforts by Jude to prevent that activity. After the parties informed the court that there would be no need for a trial and that the only issue would be whether or not the forfeiture violated the Excessive Fines Clause of the Eighth Amendment to the Constitution, the district court granted

                summary judgment to the government, finding no violation of that Clause.   On appeal, Jude contends (1) that summary judgment was inappropriate because there existed genuine issues of fact to be tried, and (2) that the court erroneously found that there was no Eighth Amendment violation.   We conclude that the first contention has been waived and that neither has any merit
                

I. BACKGROUND

Following several years of investigations by federal and local law enforcement officials into narcotics trafficking at the Kenmore Hotel in Manhattan, and after several attempts by local law enforcement officials to have Jude take steps to impede use of the Hotel for narcotics activity, the government commenced the present action in June 1994 seeking civil forfeiture of the Hotel. Following a period of discovery, the government moved for summary judgment. The motion was preceded by a conference with the district judge and a letter to the judge, from the government and Jude jointly, stating that there would be no need for a trial because the only issue was whether the requested forfeiture would violate the Eighth Amendment's Excessive Fines Clause:

As the parties explained to Your Honor this past Monday, the parties believe that the case can be resolved on papers and need not involve a trial. To avoid a trial, the parties were going to agree on undisputed facts and brief the alleged excessiveness of the forfeiture of the Kenmore.

(Government's letter to the district court dated April 20, 1995, at 1, co-signed by Jude's attorney with the notation "Agreed to By: Barry M. Fallick, Esq. Counsel for Jude Hotel Corp." ("Joint Government-Jude Letter").) The letter went on to state that, although the parties would not provide the court with a stipulation, Jude would not dispute the government's statement of the facts. It stated that, following one additional deposition,

the Government will move for summary judgment on the forfeiture of the building and submit in support of its motion a statement of undisputed facts, pursuant to Local Rule 3(g). The Government will also brief the issue of the purported excessiveness of the civil forfeiture of the defendant premises.

Claimant Jude Hotel Corporation will brief the excessiveness issue, but will not submit its own set of undisputed facts. In short, there will be no need for a trial.

(Joint Government-Jude Letter at 1-2 (emphasis added).)

A. The Undisputed Facts

On April 29, 1995, the government moved for summary judgment, supported by, inter alia, affidavits of law enforcement agents and deposition testimony from several individuals involved in the operation of the Hotel. The latter group included Truong Dinh Tran ("Truong") who was Jude's president and majority shareholder; Cham Nguyen ("Cham"), Truong's longtime girlfriend who managed the Kenmore Hotel and lived with their children on the second floor of the Hotel, and was a shareholder in Jude; and Leon Aptekar, who had been employed at the Hotel for some 25 years prior to 1994 and who, as the night auditor, had responsibility for billing, record-keeping, and petty cash disbursements. The motion was supported by a 54-paragraph statement pursuant to Rule 3(g) of the Civil Rules for the United States District Courts for the Eastern and Southern Districts of New York ("Rule 3(g)") of the material facts as to which the government contended there was no genuine dispute ("Rule 3(g) Statement"). The Rule 3(g) Statement, thoroughly annotated with citations to the affidavits and the depositions, set out undisputed facts, including those recounted below, with regard to, inter alia, Jude's ownership of the Kenmore, the current value of Jude's equity interest in the property, the narcotics activity at the Hotel in 1991-1994, and Jude's knowledge of and responses to that activity.

1. Narcotics Activity at the Kenmore Hotel

The 22-story Kenmore Hotel is the largest commercial single-room-occupancy ("SRO") building in New York City, comprising more than 600 single-occupancy units. Many of its residents are elderly, infirm, and/or on public Prior to its purchase by Jude, there had been "few if any problems with narcotics trafficking at the Kenmore." (Rule 3(g) Statement p 25.) After Jude bought the Hotel, Truong reduced the staff and insisted that as many rooms as possible be rented, without regard to the identities of the individuals. The staff thereafter rented rooms to all comers, without obtaining identification or conducting any inquiry into their backgrounds.

                assistance.   Jude, which was incorporated to purchase the Hotel and was owned principally by Truong, bought the Hotel in 1985, not expecting it to make a profit but anticipating that it would be a tax shelter for other companies owned by Truong.  "TRUONG had no intention of spending any substantial money on improvements at the Kenmore for at least the first ten years" after Jude purchased the property.  (Rule 3(g) Statement p 6.)
                

Beginning at least as early as 1991, the Kenmore was a beehive of narcotics-related activities, including the sale, distribution, preparation, packaging and/or possession of narcotics. According to the records of the New York City Police Department ("NYPD") and the Manhattan District Attorney's Office (collectively the "local authorities"), from January 1, 1991 through June 6, 1994, there were 189 narcotics arrests and/or incidents of reported narcotics-related activity at the Hotel. NYPD officers patrolling the halls and responding to police calls during that period made numerous seizures of crack cocaine and narcotics paraphernalia, including crack vials, plastic baggies used to bundle vials in packages of 50, and implements for "cooking" cocaine into crack. During that 3 1/2-year period, more than 100 individuals were arrested and/or involved in the drug activity; some 70 of them were convicted.

2. Jude's Knowledge of and Response to the Narcotics Activity

After learning of narcotics activity in and around the Hotel, Aptekar, the night auditor, notified Cham, the Hotel's manager and part-owner. When Aptekar learned that some of the "security guards" were taking bribes from individuals seeking entry into the building, he informed Cham of that fact as well.

In November 1992, Assistant District Attorney ("ADA") Anne B. Rudman, Director of the Manhattan District Attorney's Office Asset Forfeiture Unit, wrote to Truong about the substantial drug activity at the Hotel. The letter requested a meeting with Truong at the earliest possible time. No such meeting was held until four months later, on February 22, 1993. Truong did not attend but sent his representative, La D. Tran ("Tran").

At this meeting, Tran was advised there had been at least sixty-five drug arrests during the previous two years, thirty-three arrests for other types of crimes stemming from drug activity, and at least three drug related homicides at the building.... Tran was told the likely cause of the crime problem in the building was that the building itself was being used to facilitate drug trafficking.... Tran claimed the family had owned the Kenmore Hotel since 1985, that the hotel had not been profitable, that they were aware of the drug problem and had a security booth to check people and they try to evict persons involved with drugs....

(Rule 3(g) Statement p 29 (emphasis added).) At that meeting, Rudman

advised Tran to take reasonable steps to try to stop the drug activity, such as: 1) hire full-time uniformed security guards, in that the then current security people at the hotel ... charge people money to come in and purchase drugs, 2) screen prospective tenants, 3) use a surveillance camera, 4) provide a photo identification card for tenants and 5) consider hiring a temporary management team to take over the hotel and clean up the hotel.

(Rule 3(g) Statement p 30.) Rudman followed up this meeting with a letter dated February 25, 1993,

memorializ[ing] to Tran the recommendations made during the meeting of February 22, 1993, to combat drug activity at the Kenmore Hotel, which included the following:

Carefully screen every applicant for an apartment Keep every building entrance including the front door locked and install a buzzer system in the front door;

Permit only identified tenants, verified...