U.S. v. Kelly, 02-2226.

• Decision Date: 24 July 2003
• Docket Number: No. 02-2226.,02-2226.
• Citation: 337 F.3d 897
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Paul KELLY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

337 F.3d 897

UNITED STATES of America, Plaintiff-Appellee, v. Paul KELLY, Defendant-Appellant.

No. 02-2226.

United States Court of Appeals, Seventh Circuit.

Argued January 13, 2003.

Decided July 24, 2003.

Rehearing and Rehearing En Banc Denied September 19, 2003.

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Patrick Pope (argued), Office of U.S. Atty., Chicago, IL, for Plaintiff-Appellee.

Ronald Hanna (argued), Hamm & Hanna, Peoria, IL, for Defedant-Appellant.

Before POSNER, KANNE, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

Paul Kelly pleaded guilty to conspiracy to import cocaine and heroin into the United States in violation of 21 U.S.C. § 963. The plea agreement provided that he would cooperate fully with the investigation of his associates, and in return the government would recommend a sentence of two-thirds of the low end of the applicable sentencing guidelines, pursuant to U.S. Sentencing Guidelines (U.S.S.G.) § 5K1.1 and 18 U.S.C. § 3553(e). When Kelly refused to accompany authorities on a trip to identify the residence of a possible co-conspirator, however, the government asserted that Kelly had breached the agreement. The district court, without making a formal determination that Kelly's actions amounted to a substantial breach, declared the plea agreement to be null and void and reinstated a plea of not guilty. Kelly then quickly entered a second plea of guilty when the district court suggested that "all" of his previous statements would be admissible against him at trial. Kelly now seeks specific performance of the original plea agreement, challenging both the district court's failure to make a formal determination of the materiality of his alleged breach of the first agreement and also properly to ascertain the voluntariness of his second plea. Having considered his arguments, we conclude that the district court did not err in either respect, and we therefore affirm its judgment.

I

In late 1998 and early 1999, Paul Kelly initiated a drug smuggling operation using young women and babies as mules. Heroin and cocaine were smuggled into the United States either in cans of baby formula or in packages inserted into the women's vaginas. Using this scheme, Kelly organized at least seven different trips to Panama to obtain drugs. This continued until May 1999, when U.S. Customs stopped one of Kelly's female drug couriers and discovered the drugs.

Through the cooperation of the intercepted courier, Kelly was arrested and charged with a single count of conspiracy to import illegal substances in violation of 21 U.S.C. § 963. Kelly pleaded guilty pursuant to a plea agreement. This agreement detailed Kelly's involvement in each of the seven trips, including Kelly's recruitment of female couriers, his purchase of plane tickets for them, his payment of their other travel expenses, his provision of transportation to the airport, his setting up the meetings between the couriers and his drug source in Panama, and his taking possession of drugs upon their return to the United States. In at least one case, the agreement continued, Kelly traveled along with one of his couriers. In addition, the agreement provided that Kelly would "fully and truthfully cooperate with the government in any matter" in which he was called upon to cooperate. In return, the government agreed to "make known to the sentencing judge the extent of defendant's cooperation, and, assuming the defendant's full and truthful cooperation, shall move the Court, pursuant to Sentencing Guideline 5K1.1 and 18 U.S.C. § 3553(e), to depart from the applicable... range" and to recommend a sentence of "two-thirds of the low end of the applicable sentencing guideline range."

At sentencing, the government informed the district court that it would not move for a downward departure because Kelly had failed to cooperate fully pursuant to the plea agreement. The alleged failure of cooperation stemmed from Kelly's unwillingness to travel with government agents to a Chicago neighborhood to locate the residence of a possible co-conspirator known only as "Debbie." Kelly's outright refusal to take part in this expedition led to the following exchange:

THE COURT: Well, the problem is that I can't downwardly depart unless the government moves, and the government isn't prepared to move. It would certainly seem to me that it would make life simpler for everybody, particularly Mr. Kelly, if he just went out and did the best he could.

MR. LEVINE (for the United States): That's all we are asking.

MR. BEAL (for the defense): Perhaps I should confer with Mr. Kelly.

[Discussion off the record.]

MR. BEAL: Your Honor, our position has not changed. I'm sorry.

THE COURT: Well, if that's the case, then the government isn't going to move for a downward departure. If the government doesn't move for a downward departure, then that voids the plea agreement. We reinstate a plea of not guilty and go back to square one, although all the statements that you have made, Mr. Kelly, they don't get expunged.

MR. KELLY: Okay.

THE COURT: The government can still use those.

MR. KELLY: Okay, I understand that.

At the conclusion of this exchange, Kelly entered a blind plea of guilty based on the facts stipulated in the original plea agreement. The district court then conducted a Rule 11 colloquy and sentenced Kelly to 192 months in prison. Kelly now appeals.

II

Kelly advances two claims on appeal, both of which arise from the district court's comments we just quoted. First, Kelly contends that the district court violated his right to due process by failing to enter a formal finding that Kelly's refusal to participate in the ride-along amounted to a substantial breach of the plea agreement, in direct contravention of United States v. Lezine, 166 F.3d 895 (7th Cir.1999). Second, Kelly argues that the district court's suggestion near the end of the colloquy that "all the statements" made by Kelly would be admissible at trial rendered involuntary his decision to enter a second guilty plea.

A

We turn first to the question whether the district court erred by failing to make a formal finding that Kelly's refusal to go on the ride-along with federal investigators placed him in substantial breach of the plea agreement. This is a question of law subject to de novo review. See Lezine, 166 F.3d at 900.

Kelly's principal argument is that the district court's failure to make a formal determination that he had substantially breached the plea agreement is directly contrary to our holding in Lezine. In that case, the district court made no formal determination that the defendant's lack of cooperation amounted to a substantial breach of a plea agreement that was nearly identical to the one entered into by Kelly. We held that due process requires that the district court hold an evidentiary hearing and make a formal finding of breach prior to voiding a plea agreement. Id. at 901; see also United States v. Ataya, 864 F.2d 1324, 1330 (7th Cir.1988); United States v. Verrusio, 803 F.2d 885, 888-89 (7th Cir.1986).

Our task here is made easier by the government's concession that the district court indeed did not meet its obligations under Lezine, and so we can jump immediately to the question whether that failure amounts to reversible error. On this point, we agree with the government that Kelly's refusal to take part in the ride-along amounted to substantial breach of the agreement, rendering harmless any error the court may have made in this respect.

Plea agreements are treated like contracts, see United States v. Ingram, 979 F.2d 1179, 1184 (7th Cir.1992); Ataya, 864 F.2d at 1329, and so our determination of breach must be made "in light of the parties' reasonable expectations" upon entering the agreement, see United States v. Schilling, 142 F.3d 388, 395 (7th Cir.1998); Ataya, 864 F.2d at 1330. In general, a defendant's substantial breach of an unambiguous term of a plea agreement frees the government to rescind the deal. See United States v. Ramunno, 133 F.3d 476, 484 (7th Cir.1998); United States v. Hauptman, 111 F.3d 48, 51 (7th Cir.1997). In addition, in order to pull out of a plea agreement, the government need only prove substantial breach on the part of the defendant by a preponderance of the evidence. See United States v. Frazier, 213 F.3d 409, 419 (7th Cir.2000); Ataya, 864 F.2d at 1337.

With these principles in mind, we turn to the question whether the lack of a finding on the substantiality of Kelly's breach amounted to harmless error. In our view, the agreement Kelly signed contemplated Kelly's cooperation in whatever way the government reasonably requested, including assistance in determining the whereabouts of co-conspirators. Indeed, both parties should have been able to anticipate ex ante that this would be one of the principal forms that cooperation would take. See Ataya, 864 F.2d at 1331 (noting that the defendant's cooperation in an investigation related to his counterfeiting operations was undoubtedly a part of the government's "reasonable expectations" in entering the agreement). This is particularly the case here, since Kelly does not contend that the government's request was made in bad faith, or that Kelly's participation would endanger Kelly or his family. Indeed, Kelly's only response—both at the sentencing hearing and on this appeal—is that he was not in substantial breach of the plea agreement because he would not have been able to identify the house of the mysterious "Debbie," rendering his participation pointless. We are unmoved by this argument. The standard for assessing the reasonable expectations of the parties is an objective one. See United States v. Fields, 766 F.2d 1161, 1168 (7th Cir.1985), and so Kelly's subjective beliefs about the utility of his cooperation is simply not relevant to our inquiry. Instead, we find that Kelly's participation in a ride-along to help finger potential co-conspirators was consistent with the reasonable expectations of the...