U.S. v. Michelle's Lounge

Decision Date27 October 1994
Docket NumberNo. 92-3235,92-3235
Citation39 F.3d 684
Parties, 30 Fed.R.Serv.3d 31 UNITED STATES of America, Plaintiff-Appellee, v. MICHELLE'S LOUNGE, 14199 S. Cicero, Crestwood, Illinois, Auto Abbey, 15244 South Broadway, Harvey, Illinois, 15240 South Broadway, Harvey, Illinois, et al., Defendants. Appeal of Biagio J. MESSINO, Clement Messino, Pamela Messino, et al., Claimants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Elizabeth M. Landes, Asst. U.S. Atty., Crim. Div., Chicago, IL (argued), for the U.S.

Joseph P. Storto, Bensenville, IL, E.E. Edwards, III (argued), Edwards & Simmons, Nashville, TN, for Biagio J. Messino, Clement Messino, Pamela Messino, Blaise Messino, Paul Messino, Chris B. Messino, Joseph Salamone, Ted Borowski, B & C Auto Repair, James Simmons, Oak Classic Auto, Mark I Auto.

Joseph P. Storto, Bensenville, IL, E.E. Edwards, III, Edwards & Simmons, Nashville, TN, Fiona M. DiIorio, Bensenville, IL, for Katherine Schultz, Maribeth Messino, Joseph Messino, Sheri Penciak.

Before CUDAHY, ESCHBACH and FLAUM, Circuit Judges. *

CUDAHY, Circuit Judge.

On September 12, 1991, the United States filed under seal an in rem complaint pursuant to 21 U.S.C. Secs. 881(a)(5), (a)(6) and (a)(7), seeking forfeiture of personal property and seven parcels of real estate. The complaint alleged that Clement Messino was a cocaine dealer and had acquired extensive assets with the proceeds of his drug dealing. The real property included Messino's auto shop and garage (the Auto Abbey), which the complaint alleged was a cover for drug dealing; his home, in which he allegedly stored drug proceeds; the home of Messino's girlfriend, Kathy Lewis, at which Messino allegedly stored vehicles acquired with drug proceeds; and a piece of undeveloped property alleged to have been purchased with tainted money. After an ex parte hearing, the district court found probable cause that the property was forfeitable, and granted a warrant for seizure of the defendant property. On September 13, the government seized the real estate, approximately 33 vehicles, and numerous other items of personal property. The appellants are Clement Messino and 11 family members and friends who are claimants to the seized property. 1 Claimant Clement Messino appeals from the decree of forfeiture entered against his property when he became a fugitive, and from the denial of his motion for a hearing or the release of assets to pay attorney's fees. All of the claimants appeal from the district court's denial of their motion to dismiss the complaint.

I. FACTS AND PROCEDURAL HISTORY

After the government seized the defendant property, numerous individuals filed claims of ownership. In November 1991, the claimants filed a motion to dismiss, attacking the sufficiency of the complaint and arguing that the seizure of real property without prior notice and a hearing violated the Due Process Clause of the Fifth Amendment. The claimants also argued that due process required a post-seizure adversary hearing with respect to seized personal property. The motions were not decided until the following summer (the parties dispute the exact date, a matter we discuss below).

In December 1991, the government moved for a stay of discovery to protect a pending criminal investigation (the government had not, at that point, filed any criminal charges against any claimants). The district court denied the motion for a general stay, but stayed a pending deposition of a government agent. R. 101.

On February 26, 1992, Clement Messino was indicted for drug and weapons violations occurring after August 1991, but allegedly involving some of the defendant property. United States v. Messino, No. 92 CR 69, 1994 WL 6872 (N.D.Ill.). Messino was taken into custody, and later pled guilty. After Messino's indictment, the government moved for a general stay on discovery in the civil proceedings. The district court granted the motion in open court on May 28, 1992, although a minute order to that effect was not entered until June 25. Tr. 5/28/92, at 17; R. 169, 184. The district court renewed the stay by a minute order of August 5, 1992. The stay remains in effect.

On March 30, 1992, Messino moved pursuant to United States v. Moya-Gomez, 860 F.2d 706 (7th Cir.1988), cert. denied, 492 U.S. 908, 109 S.Ct. 3221, 106 L.Ed.2d 571 (1989), for the district court to conduct an immediate adversary hearing at which the government would be required to prove the likelihood that the seized assets were subject to forfeiture, or to find that Messino had no meaningful assets not under seizure, and to exempt some of the seized property to pay legal fees in both the civil and pending criminal cases. 2 Messino filed an affidavit claiming he had no assets with which to pay counsel in the upcoming criminal case, and alleging that his counsel in the civil case had not been paid for months.

At an initial hearing on the motion, the district court considered different theories under which assets could be released, suggesting that Moya-Gomez might require their release or that the district court could release assets that did not appear to be forfeitable. Tr. 5/28/92, at 26-43. In subsequent hearings, the district court indicated that it preferred not to rule on the basis of Moya-Gomez, but rather sought to determine whether some assets could be released by a partial summary judgment. Tr. 6/23/92 at 7-8, 14-15, 22-23. The district court noted that the latter option would allow for payment of attorney's fees in the present action (the civil case), while Moya-Gomez might only allow the release of fees to pay the attorneys in the upcoming criminal case.

Messino's counsel requested that the district court rule expressly on the basis of Moya-Gomez. Tr. 6/23/92, at 17-21. However, the district court apparently declined to apply Moya-Gomez, choosing instead to determine whether some assets could be released in an abbreviated summary judgment. 3 At the court's suggestion, Messino filed an affidavit listing seized assets that he did not believe were forfeitable (because, for example, they had not been named in the complaint). The district court permitted the government to respond by showing that it had evidence that the assets were somehow connected to the drug operations. The government responded with an affidavit from Agent Michael Priess.

On July 2, 1992, the district court ordered a ring worth about $15,000 released for payment of attorney's fees, but denied the release of any other assets except a 1974 motorcycle to be released in exchange for a $20,000 deposit. 4 R. 173. The district court explained its rationale:

First of all, even though I think that these are assets that are not likely to be subject to forfeiture, if it turns out that they are then the court has the Moya-Gomez principle that potentially forfeitable assets might be releasable if they belong to the defendant for attorney's fees.... Now I recognize, and I will state for the record it is possible that [the ring] is forfeitable. In which case the only justification for my ruling would be that forfeitable assets under Moya-Gomez are sometimes usable for attorney's fees.

Tr. 7/2/94, at 4, 10. With respect to the other items Messino requested be released, the district court found that the government had established a genuine issue of fact as to Messino's claim of ownership. There was some intimation that the district court expected the assets to pay only costs incurred in Messino's criminal suit, id. at 12, 27, but the district court's order made no further mention of the issue. A final judgment was never entered on the released ring and motorcycle.

On July 2, 1992, the day the district court decided the Moya-Gomez issue, Messino fled from federal custody and became a fugitive. Relying upon the fugitive disentitlement doctrine, under which an accused who thwarts the judicial process by becoming a fugitive may not be entitled to seek the benefit of the judicial process in pursuing his claims, see Molinaro v. New Jersey, 396 U.S. 365, 90 S.Ct. 498, 24 L.Ed.2d 586 (1970), the government moved on July 14 for forfeiture of all of Clement Messino's property. R. 174.

The district court granted the motion, ruling that "having become a fugitive, Clement Messino lost his right to contest the forfeiture of his property and his claims filed in this action are hereby stricken." R. 177. On July 16, 1992, the district court entered a final decree of forfeiture of Messino's property, vacated the July 2 order releasing the ring and motorcycle, and struck Messino's claims to the property.

On August 11, 1992 the district court denied Messino's motion to modify or set aside the forfeiture decree of July 16. Messino was captured in Florida on August 14. On August 17, Messino moved to set aside the forfeiture decree in light of his return, but the motion was denied on August 19. On September 15, 1992, the claimants filed a notice of appeal seeking review of several orders.

In November 1993, Clement Messino and claimants Chris Messino, Paul Messino, and Blaise Messino were charged in a 13-count indictment alleging participation in a cocaine distribution conspiracy from 1980-1991. United States v. Christopher Richard Messino, 865 F.Supp. 511 (N.D.Ill.). The indictment is currently pending in the district court. None of the remaining seven individual claimants are defendants in a criminal case.

In the nearly three years between the seizure of assets and our decision in this case, some of the smaller items of personal property have been returned to individual claimants. However, the bulk of seized personal property is still in possession of the government. On March 30, 1994, following the Supreme Court's decision in United States v. James Daniel Good Real Property, --- U.S. ----, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993), the government released control of the defendant real property. Throughout the case, claimants Pam...

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