U.S. v. Bailey

• Decision Date: 22 October 2003
• Docket Number: No. 601CV875ORL22KRS.,601CV875ORL22KRS.
• Citation: 288 F.Supp.2d 1261
• Parties: UNITED STATES of America, Plaintiff, v. F. Lee BAILEY, Defendant.
• Court: U.S. District Court — Middle District of Florida

288 F.Supp.2d 1261

UNITED STATES of America, Plaintiff, v. F. Lee BAILEY, Defendant.

No. 601CV875ORL22KRS.

United States District Court, M.D. Florida. Orlando Division.

October 22, 2003.

Ralph J. Lee, U.S. Attorney's Office, Middle District of Florida, Jacksonville, FL, Anita M. Cream, U.S. Attorney's Office, Middle District of Florida, Orlando, FL, for United States of America, plaintiff.

Richard Lee Barrett, Barrett, Chapman & Ruta, P.A., Orlando, FL, F. Lee Bailey, Lynn, MA, for F. Lee Bailey, defendant.

ORDER

CONWAY, District Judge.

I. INTRODUCTION

In this civil action brought by the Plaintiff, the United States of America, against the Defendant, F. Lee Bailey (hereinafter, "Bailey"), Bailey has filed a Motion for Reconsideration of the Court's Grant of Summary Judgment in Favor of the Government in its Order of January 24, 2003 (Doc. No. 82, filed April 29, 2003), and a Motion Under Rule 29(b) to Set Aside Punitive Damage Jury Verdict as Unwarranted by the Evidence, and the Circumstances of the Case (Doc. No. 84, filed April 29, 2003). The Plaintiff, the United States of America (hereinafter, "the United States" or "the Government"), responded (Doc. No. 93) on May 20, 2003. The motions were heard on June 18, 2003 (Doc. No. 96). The issue now before this Court is: can the relation back doctrine, a legal fiction created by federal statutory law satisfy the essential element of possession under Florida's tort of conversion and civil theft law.

II. BACKGROUND

Following a Special Verdict of Forfeiture, forfeiting a $2 million fee (hereinafter, "the Legal Trust Fund") that the McCorkles transferred to Bailey for their legal defense in USA v. McCorkle, et al, Bailey filed a third-party petition claiming superior title in the Legal Trust Fund.¹ United States District Judge Patricia C. Fawsett treated Bailey's petition as a "claim" pursuant to 21 U.S.C. § 853(n)(6)(B). That section provides that if a court determines a petitioner has established by a preponderance of evidence that he is a "bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture ... the court shall amend the order of forfeiture in accordance with its determination."² Judge Fawsett referred the matter to Magistrate Judge James G. Glazebrook for a hearing and for issuance of a Report and Recommendation.³

From October 18-29, 1999, Judge Glazebrook conducted an evidentiary hearing on Bailey's claim to the Legal Trust Fund.⁴ Thereafter, in a sixty-seven page Report and Recommendation (R & R), Judge Glazebrook found in favor of the Government, determining that Bailey failed to establish that he had a legal right, title, or interest in the Legal Trust Fund that rendered the forfeiture invalid.⁵

On June 29, 2000, Judge Fawsett adopted virtually all of Judge Glazebrook's R & R, ruling that pursuant to 21 U.S.C. § 853(c)⁶, the Government "holds `clear title' to the Fund, which is the `property that is the subject of the order of forfeiture,' which `relates back' to the date that the Fund was laundered in violation of 18 U.S.C. §§ 1956 & 1957."<sup>7</sup> However, Judge Fawsett found that since Bailey "caused the `property that is the subject of the order of forfeiture' to be unavailable"⁸ ... she did not have the power to order Bailey to "forfeit property other than the property which is expressly subject to forfeiture under sections 853(a), (c), and (p)."⁹ Consequently, Judge Fawsett concluded that the Government "may do the following: (1) seek forfeiture of `substitute assets' of the defendant; (2) seek forfeiture of property in the hands of a third party which is traceable to the forfeited party; and (3) pursue a civil action against the third party for the full amount of the funds transferred to him or her."¹⁰

On July 24, 2001, the Government filed the instant action against Bailey alleging causes of action for conversion (Count I) and civil theft (Count II).¹¹ The count alleging conversion included a claim for punitive damages.¹² The count alleging civil theft sought treble damages pursuant to Fla. Stat. § 772.11(1).¹³

In order to establish a claim for conversion of money under Florida law, a plaintiff must demonstrate, by a preponderance of the evidence: (1) specific and identifiable money; (2) possession or an immediate right to possess that money; (3) an unauthorized act which deprives plaintiff of that money; and (4) a demand for return of the money and a refusal to do so. See Navid v. Uiterwyk Corp., 130 B.R. 594, 595-596 (M.D.Fla.1991); see also Challa v. Challa (In re Challa), 186 B.R. 750, 759 (Bankr.M.D.Fla.1995). Neither knowledge nor intent are required. In re Challa, 186 B.R. 750, 759 ("Additionally, courts have found that `neither knowledge nor intent' is required to maintain an action for conversion"); Navid, 130 B.R. 594, 596 (accord); Florida Farm Bureau Casualty Ins. Co. v. Patterson, 611 So.2d 558, 559 (Fla. 1st DCA 1992) (accord); Eagle v. Benefield-Chappell, Inc., 476 So.2d 716, 718 (Fla. 4th DCA 1985) ("Liability for conversion does not require proof of knowledge or intent to deprive one of his property"); but see Small Bus. Admin., 864 F.Supp. 1254, 1262 (holding that conversion requires possession in conjunction with a present intent to deprive a person entitled to possession of their property). In other words, "[t]he tort may be established despite evidence that the defendant took or retained property based upon the mistaken belief that he had a right to possession." Seymour v. Adams, 638 So.2d 1044, 1047 (Fla. 5th DCA 1994); City of Cars, Inc. v. Simms, 526 So.2d 119, 120 (Fla. 5th DCA), rev. denied, 534 So.2d 401 (Fla.1988) ("Any act of a person in asserting a right of dominion over a chattel which is inconsistent with the right of the owner and deprives the owner of the right of possession to which the owner is entitled may constitute a conversion, whether the act is accomplished with, or without, any specific wrongful mental intent"). Evidence of wrongful intent need only be established where punitive damages are sought in connection with the tort. See Ciamar Marcy, Inc. v. Monteiro Da Costa, 508 So.2d 1282, 1283-1284 (Fla. 3rd DCA 1987); see also Sporting Goods Distribs. v. Whitney, 498 F.Supp. 1088, 1092 (N.D.Fla. 1980) (holding that punitive damages are appropriate on a conversion claim "where the circumstances surrounding the conversion are such to show fraud, actual malice, deliberate violence, or oppression, or such gross negligence as to indicate a wanton disregard of the rights of others") (internal citations and quotations omitted); Foley v. Dick, 436 So.2d 139, 141 (Fla. 2nd DCA 1983) (accord).

In order to establish a claim of civil theft, a plaintiff must demonstrate, by clear and convincing evidence, that the defendant knowingly obtained or used the plaintiff's property with the intent to, either temporarily or permanently deprive the plaintiff of a right to the property or a benefit therefrom, or alternatively, with the intent to appropriate the property to his own use or to the use of any person not entitled thereto. See Anthony Distribs., Inc. v. Miller Brewing Co., 941 F.Supp. 1567, 1575 (M.D.Fla.1996); Florida Standard Jury Instructions, 720 So.2d 1077, 1078 (Fla.1998). Upon such a showing, a plaintiff is entitled to threefold the actual damages sustained in addition to reasonable attorney's fees and court costs in the trial and appellate courts. See Fla. Stat. § 772.11(1).

Although Bailey received only $777,545.71 from the Legal Trust Fund (the remainder—$1,222,454.29—went to other lawyers on the McCorkle defense team), the Government's action for conversion and civil theft sought the entire $2,000,000 from Bailey.¹⁴

On July 29, 2002, the Government moved for summary judgment on both counts.¹⁵ That motion was granted, in part, after this Court found as a matter of law that "the Government has demonstrated that it had a right to possess the money in the Legal Trust Fund at the time it was wrongfully converted by Bailey."¹⁶

In reaching that conclusion, this Court declared Judge Fawsett's application of the relation back doctrine codified in 21 U.S.C. § 853(c) to be law of the case.¹⁷ On that subject, the Court stated:

[U]nder Florida law, a necessary element of common law conversion is that the plaintiff must have had a present or immediate right to possession of the allegedly converted property at the time of the conversion ... Pursuant to law of the case, Judge Fawsett's application of the relation back doctrine codified in § 853(c) requires a finding that the Government had a right to possess the Legal Trust Fund at the time of the conversion. In other words, although the Government did not actually have a present or immediate right to possession of the Legal Trust Fund at the time of the suspect withdrawals, the relation back doctrine necessarily establishes this element since tainted assets vest in the Government at the time of the criminal act. No provision of the [Comprehensive Forfeiture Act] suggests that § 853(c) cannot be relied upon to establish one element of a conversion action.¹⁸

Ultimately, this Court's summary judgment order adjudicated Bailey liable to the Government for converting the entire contents of the Legal Trust Fund.¹⁹ Excepting those issues relating to Bailey's intent with respect to the punitive damage and civil theft claims, the Court determined that the elements of the Government's actions were satisfied.²⁰ In that connection, the Court remarked as follows:

The common law conversion claim will proceed only on the Government's request for punitive damages. In order to obtain punitive damages for Bailey's conversion, the Government must make a showing of fraud, actual malice, deliberate violence, or oppression, or such gross negligence on the part of Bailey as to indicate a wanton disregard of the Government's right to the Legal...