U.S. v. Crozier

• Decision Date: 20 April 1982
• Docket Number: 81-1355 and 81-1484,Nos. 81-1345,s. 81-1345
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Clarence Jay CROZIER, Manuel Isadore Pine, Alan Terry Stein, and Florence Margaret Wolke, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1293

674 F.2d 1293

UNITED STATES of America, Plaintiff-Appellant, v. Clarence Jay CROZIER, Manuel Isadore Pine, Alan Terry Stein, and Florence Margaret Wolke, Defendants-Appellees.

Nos. 81-1345, 81-1355 and 81-1484.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 1, 1982.

Decided April 20, 1982.

Richard E. Hove, Oakland, Cal., Sandra Slaton, Phoenix, Ariz., for plaintiff-appellant.

Billie A. Rosen, Asst. U. S. Atty., Phoenix, Ariz., for defendants-appellees.

On Appeal from Orders of the United States District Court for the District of Arizona.

Before GOODWIN and TANG, Circuit Judges, and SOLOMON, ^* Senior District Judge.

SOLOMON, Senior District Judge:

These three interlocutory appeals arose out of a criminal case against Crozier, Pine, Stein, Wolke, and seven other defendants who were charged with the manufacture and possession of methamphetamine with intent to distribute, in violation of 21 U.S.C. § 841(a)(1). They were also charged with conspiracy and tax evasion, in violation of 26 U.S.C. § 7201. Count Two of the indictment charges Crozier with engaging in a continuing criminal enterprise in violation of 21 U.S.C. § 848 (1976) ¹ (Section 848).

The penalties for violating Section 848 include forfeiture of all profits obtained through the criminal enterprise. The government moved ex parte to restrain the sale, transfer, or encumbrance of virtually all of Crozier's real and personal property, and some property belonging to Florence Wolke, who occupies the same house with Crozier, but who is not named in Count Two. The district court granted the The motions of Crozier and Wolke to dissolve the restraining order were denied without a hearing. They filed interlocutory appeals, ² in which they contend that: (1) Section 848(d) is unconstitutional, particularly as applied in this case, and (2) the Court of Appeals has jurisdiction to decide an interlocutory appeal from the district court's refusal to dissolve the restraining order issued under Section 848(d).

government's request for a restraining order.

In the district court, Crozier, Pine, Stein and Wolke moved to suppress certain items of physical evidence. After a hearing, the district court suppressed the evidence obtained as a result of the following searches:

1. The warrantless entry into the residence of Crozier and Wolke, and the subsequent execution of a search warrant for their residence, all on April 9, 1980.

2. The warrantless entry into the residence of Stein, and the subsequent execution of a search warrant for that residence, all on April 9, 1980.

3. The warrantless seizure and the warrantless search of a 1980 Cadillac El Dorado, on April 10, 1980.

4. The execution of a second search warrant for the residence of Stein on April 11, 1980.

Although the district court did not rule on the validity of the El Dorado seizure, the government concedes that the seizure was the fruit of the April 9 search warrant for the Stein residence.

The government appeals from the district court's order which (1) suppressed the fruits of the search of the residence of Crozier and Wolke on April 9, (2) suppressed chemicals and laboratory apparatus seized from the residence of Stein on April 9, and (3) failed to limit suppression to those defendants who had shown a reasonable expectation of privacy in the areas searched.

The government does not appeal from the order which suppressed the documents and papers seized at the residence of Stein on either April 9 or April 11, 1980.

I. JURISDICTION

As a general rule interlocutory appeals are not permitted, but there are exceptions. In Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 545-47, 69 S.Ct. 1221, 1225-1226, 93 L.Ed. 1528 (1949), the Supreme Court granted review of "collateral orders" affecting rights independent of the merits of the action which were too important to be denied prompt review. The issue was whether a state statute requiring plaintiff's shareholder to post security for litigation costs applied in federal courts. In Abney v. United States, 431 U.S. 651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977), the Supreme Court, in granting interlocutory review of a double jeopardy challenge, extended Cohen to criminal cases.

In this case, without a hearing either before or after the court issued its restraining order under Section 848(d), Crozier and Wolke were restrained from selling or transferring their interest in real property which they jointly own, and from possessing, selling, or transferring a large amount of jewelry and other personal property in which one or both of them have an interest. This restraint will continue until they are tried and a jury returns its verdicts.

Until that time, the government will not be required to show that any of this property was acquired with illicit profits or to show who owns the property as between Crozier and Wolke. This is particularly important here because Wolke is not named in Count Two, the count that charges a violation of Section 848, and her property may not be subject to forfeiture.

A crucial issue is whether the defendants' rights may be irreparably lost or impaired if an interlocutory appeal is denied. Crozier and Wolke assert that as a We agree. The rights of Crozier and Wolke may be irreparably lost or impaired if the appeal is denied. The disputed issues-the propriety of the issuance of the restraining order and which property, if any, is subject to forfeiture-are collateral to and separate from their guilt or innocence.

result of the restraining order and the seizure of their property, their financial condition has worsened; they have been unable to prevent the foreclosure of one parcel of jointly held property, and they have no income to pay living or litigation expenses. They also assert that their property has been seized and restrained without a hearing on the propriety of the seizure. Unless an interlocutory appeal is granted, their due process challenge to the order will become moot after the jury returns a verdict. As a result, the constitutional question will evade review.

One reason for the policy against interlocutory review is excessive delay. It is likely that an appeal may be used as a dilatory tactic because ordinarily the trial court loses its power to proceed once a party files a notice of appeal. United States v. Burt, 619 F.2d 831, 838 (9th Cir. 1980).

Here, however, the resolution of the issues raised in the appeal is collateral to and has no bearing on the outcome of the criminal trial. Under these circumstances a district court may retain jurisdiction during the interlocutory appeal and proceed with the criminal trial. See United States v. Leppo, 634 F.2d 101, 105 (3rd Cir. 1980).

We hold that this court has jurisdiction to hear the interlocutory appeal, and the district court retains jurisdiction to proceed with the trial.

II. VALIDITY OF THE RESTRAINING ORDER

Crozier and Wolke assert that Section 848(d) fails to provide for notice and hearing either before or after the seizure of property or the entry of a restraining order affecting the property. They therefore contend that, even if no loss results from the restraining order, they will be unable to sell or encumber their property until the case is concluded.

The government contends that the due process constitutional safeguards that accompany seizure of property in civil cases do not apply to criminal cases because a seizure under Section 848 must be initiated by a grand jury. The government also asserts that in a forfeiture case the notice and hearing requirements do not apply when the government seizes the property.

A grand jury determination is not an adequate substitute for an adversary proceeding because a defendant has no opportunity to cross-examine witnesses and the government does not assume the burden of proof. The prohibition against taking property without due process of law applies equally to sanctions administered under the authority of both criminal and civil statutes.

Even when exigent circumstances permit an ex parte restraining order, the government may not wait until trial to produce adequate grounds for forfeiture. See Ivers v. United States, 581 F.2d 1362, 1368 (9th Cir. 1978). Here, the property of both Crozier and Wolke has already been restrained for more than a year, and the criminal trial may be many months away. If they are acquitted, they will have been unjustly deprived of their property for more than two years, with no remedy for their loss.

Section 848(d) authorizes the district court to enter such restraining orders as it deems proper. The section does not specify requirements for determining when a restraining order should issue. In the absence of specific language to the contrary, the district court must apply the standards of Rule 65 of the Federal Rules of Civil Procedure, which requires an immediate hearing whenever a temporary restraining order has been granted ex parte.

In United States v. Long, 654 F.2d 911 (3rd Cir. 1981), the district court enjoined Before a court can issue such a restraining order, however, the government must demonstrate that it is likely to convince a jury, beyond a reasonable doubt, of two things: one, that the defendant is guilty of violating the Continuing Criminal Enterprise statute and two, that the profits or properties at issue are subject to forfeiture under the provisions of section 848(a)(2). See 21 U.S.C. § 848(d) .... In addition, these determinations must be made on the basis of a full hearing; the government cannot rely on indictments alone.

the transfer of an airplane which the defendant had allegedly purchased with the proceeds of illicit drug sales. The government obtained an ex parte restraining order under Section 848(d) and shortly thereafter a hearing was held, at which the district court found that the airplane was subject to forfeiture. The appellate court affirmed the district court's denial of the motion to dissolve the restraining...