U.S. v. Davis

• Citation: 648 F.3d 84
• Decision Date: 03 June 2011
• Docket Number: Docket No. 10–300–cv.
• Parties: UNITED STATES of America, Plaintiff–Appellee,v.Sharyl R. DAVIS, Claimant–Appellant,The Painting Known as “Le Marché,” created by Camille Pissarro, located at Sotheby's, 1334 York Avenue, New York, NY, Defendant–in–Rem.*
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

648 F.3d 84

UNITED STATES of America, Plaintiff–Appellee,

v.Sharyl R. DAVIS, Claimant–Appellant,The Painting Known as “Le Marché,” created by Camille Pissarro, located at Sotheby's, 1334 York Avenue, New York, NY, Defendant–in–Rem.*

Docket No. 10–300–cv.

United States Court of Appeals, Second Circuit.

Argued: Feb. 2, 2011.Decided: June 3, 2011.

Barbara Hoffman, The Hoffman Law Firm, New York, NY, for Claimant–Appellant.Jeffrey Alberts, Assistant United States Attorney (Virginia Chavez Romano, Assistant United States Attorney, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Plaintiff–Appellee.Before: CALABRESI and LYNCH, Circuit Judges, and COTE, District Judge.^**GERARD E. LYNCH, Circuit Judge:

This case involves two parties, both asserting legitimate claims to the same indivisible piece of property. In 1985, claimant-appellant Sharyl R. Davis purchased the Camille Pissarro monotype Le Marché for its fair market value, unaware that it had recently been stolen from a French museum. More than twenty years later, Le Marché's true provenance came to light, and the United States government brought this forfeiture action with the intent of returning the monotype to France. Unlike in the Judgment of Solomon, see 1 Kings 3:16–28, neither party has blinked, and we are therefore in the unenviable position of determining who gets the artwork, and who will be left with nothing despite a plausible claim of being unfairly required to bear the loss. In making that determination, we take comfort in our obligation to follow the rules that Congress has given, and recognize that justice is done by providing the predictable result that Congress intended. Doing so here requires that we affirm both the district court's (Sullivan, J.) final judgment of forfeiture entered on January 19, 2010, and its order of May 25, 2010, denying Davis's motion for attorney's fees.

BACKGROUND

I. Factual Background

Two works of art were stolen from the Musée Faure in Aix–les–Bains, France on November 16, 1981. One of them, the Pissarro monotype Le Marché, made its way to San Antonio, Texas, where Emil Guelton consigned it to J. Adelman Antiques and Art Gallery. On May 1, 1985, the gallery's proprietor, Jay Adelman, sold the monotype for $8,500 to the Sharan Corporation, a now-defunct entity once partially controlled by Davis.

Following the Sharan Corporation's 1992 dissolution, Davis took ownership of Le Marché, which she displayed in her home for more than ten years before consigning it to Sotheby's for sale at an upcoming auction. The French National Police became aware of Le Marché's impending sale and informed United States law enforcement officials that the Pissarro monotype soon to be auctioned off by Sotheby's had been stolen from the Musée Faure twenty-two years earlier. The United States Department of Homeland Security requested that Sotheby's withdraw Le Marché from the auction, and Sotheby's complied.

Around the same time, the French authorities reopened their investigation into the theft in hopes of uncovering sufficient evidence to secure Le Marché's return. As part of those efforts, investigators interviewed Guelton, who admitted selling artwork to Adelman while visiting Texas in the 1980s. Investigators also included Guelton's picture in a photo array that they showed to Jacqueline Rivollet, the museum guard on duty the day of the theft. Rivollet positively identified Guelton as the thief. Armed with this evidence, the United States government filed a verified complaint in the Southern District of New York on November 6, 2006, seeking civil forfeiture of the monotype.

II. District Court Proceedings

The government's complaint alleged three separate claims for forfeiture. First, the government's “customs claim” sought forfeiture under 19 U.S.C. § 1595a, a customs statute enacted as part of the Tariff Act of 1930. Section 1595a authorizes the forfeiture of “[m]erchandise which is introduced ... into the United States contrary to law ... if [the merchandise] ... is stolen, smuggled, or clandestinely imported or introduced.” 19 U.S.C. § 1595a(c)(1)(A). To satisfy the statute's “contrary to law” requirement, the government alleged a violation of the National Stolen Property Act (“NSPA”), which criminalizes, among other things, the possession or sale of stolen goods valued at $5,000 or more that have moved in interstate or international commerce, with knowledge that the goods were stolen. See 18 U.S.C. §§ 2314, 2315. To satisfy the “is stolen, smuggled, or clandestinely imported or introduced” requirement, the government alleged that Guelton took Le Marché from the Musée Faure.

The government based its second and third forfeiture claims on 18 U.S.C. § 981, under which property constituting or “derived from proceeds traceable to a violation of ... any offense constituting ‘specified unlawful activity’ ” is forfeitable to the United States. 18 U.S.C. § 981(a)(1)(C). Because NSPA violations are “specified unlawful activity,” see 18 U.S.C. §§ 1956(c)(7)(A), 1961(1), the government asserted the same factual predicate to support its forfeiture claims under Section 981 as it did to support its customs claim, namely that Le Marché constituted the proceeds of Guelton's theft.

Following discovery, the government moved for summary judgment on its customs claim. Davis responded by filing a cross-motion for summary judgment on all three of the government's forfeiture claims in which she asserted that her status as an “innocent owner” of Le Marché entitled her to continued possession of the monotype. In support of that proposition, Davis directed the district court to 18 U.S.C. § 983(d), which provides that “[a]n innocent owner's interest in property shall not be forfeited under any civil forfeiture statute.”

At a hearing on June 17, 2009, the district court ruled on several issues relevant to the government's customs claim. First, it found that forfeiture actions brought pursuant to 19 U.S.C. § 1595a are not subject to an innocent-owner defense. Second, it concluded that the burden-shifting approach found in 19 U.S.C. § 1615 ¹ applied, and therefore the initial burden rested on the government to demonstrate probable cause to believe that Le Marché was subject to forfeiture. Third, the district court found—based on Rivollet's eyewitness identification of Guelton and the undisputed fact that Guelton had sold the monotype to Adelman while in Texas—that the government had made a showing of probable cause for forfeiture. The burden therefore shifted to Davis to establish by a preponderance of the evidence that the monotype was not stolen merchandise introduced into the United States contrary to law. See 19 U.S.C. §§ 1595a(c), 1615.

As for the government's forfeiture claims under 18 U.S.C. § 981, the district court found that Davis had established that she was an innocent owner of the monotype within the meaning of 18 U.S.C. § 981(d)(3)(A), and was therefore entitled to summary judgment on those claims. The government has not appealed that ruling.

In January 2010, the district court held a jury trial to resolve the two remaining disputed issues of material fact: whether Davis could demonstrate by a preponderance of the evidence that Le Marché “(1) was not transported in interstate or foreign commerce; (2) with knowledge that the property was stolen.” ² At trial, Davis called Rivollet to the stand. She testified to being a mere “meter and a half” from Guelton on the day of the theft and to looking him in the eyes as he entered the museum. On cross examination, Rivollet explained that she later heard Guelton running down the stairs, and then saw him emerge from the stairwell “with something under [his] parka.” After calling the police, Rivollet inventoried the museum's collection and discovered that Le Marché had been removed from its spot on the wall. Additional evidence demonstrated that Guelton later transported Le Marché into the United States and consigned it to Adelman.

Jury deliberations began the morning of January 11, 2010. Later that day, the jury returned a unanimous verdict for the government. Specifically, the jury found that Davis had failed to prove (1) that Le Marché was “not the work of art stolen from the Faure Museum” on November 16, 1981, (2) that Le Marché “was not transported, transmitted or transferred in interstate or foreign commerce” by Guelton, or (3) that “Guelton did not receive, possess, conceal, store, barter, sell, or dispose of [ Le Marché ], knowing it was stolen, after [ Le Marché ] crossed a United States or state border.” On January 19, 2010, the district court entered a final judgment of forfeiture, and on May 25, 2010, it denied Davis's motion for attorney's fees. This appeal followed.

DISCUSSION

On appeal, Davis brings a host of challenges to the proceedings below. We begin by addressing Davis's argument that the government failed to demonstrate probable cause to believe that Le Marché was subject to forfeiture under 19 U.S.C. § 1595a. Next, we turn to Davis's argument that she was entitled to additional substantive and procedural protections that the district court found inapplicable to forfeiture actions brought pursuant to 19 U.S.C. § 1595a. We then resolve Davis's constitutional challenges, before finally addressing the issue of attorney's fees.

I. 19 U.S.C. § 1595a and the National Stolen Property Act

Section 1595a authorizes the forfeiture of merchandise “introduced into the United States contrary to law,” if that property “is stolen, smuggled, or clandestinely imported or introduced.” 19 U.S.C. § 1595a(c)(1)(A). To satisfy the statute's “contrary to law” requirement, the government alleged that Guelton violated the NSPA by stealing Le Marché from the Musée Faure, transporting it into the United States, and then consigning it to Adelman. See 18 U.S.C. §§ 2314, 2315. Davis submits that the district court committed three errors in...