U.S. v. One 1985 Cadillac Seville

• Decision Date: 31 January 1989
• Docket Number: No. 87-2307,87-2307
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. ONE 1985 CADILLAC SEVILLE, and Approximately $434,097.00 in United States Currency, Defendant, and Michael Miroyan, Claimant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1142

866 F.2d 1142

UNITED STATES of America, Plaintiff-Appellee, v. ONE 1985 CADILLAC SEVILLE, and Approximately $434,097.00 in

United States Currency, Defendant,

and

Michael Miroyan, Claimant-Appellant.

No. 87-2307.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 4, 1988.

Decided Jan. 31, 1989.

Stanley P. Gimbel, Milwaukee, Wis., and Doron Weinberg, Larson & Weinberg, San Francisco, Cal., for claimant-appellant.

David L. Denier, Asst. U.S. Atty., Tax Div., San Francisco, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before NELSON, BEEZER and HALL, Circuit Judges.

BEEZER, Circuit Judge:

Claimant-appellant Michael Miroyan appeals the district court's order of summary judgment, and denial of his motion for declaratory judgment, forfeiting United States currency and an automobile to the United States under 21 U.S.C. Sec. 881 (1982) for involvement with controlled substances. Miroyan argues that an Internal Revenue Service ("IRS") lien on the property at issue represents a prior equitable interest of the IRS in the res that is superior to any claim unperfected as of the date of lien. He attempts to assert the lien priority. He also objects to the forfeiture on constitutional and statutory grounds. We affirm the district court's order forfeiting an automobile, and reverse and remand the order forfeiting currency for further jurisdictional findings.

I

On March 8, 1985, the California Highway Patrol stopped Michael Miroyan for erratic driving. The officers determined that Miroyan was under the influence of drugs, and arrested him for driving while under the influence. A subsequent search of Miroyan and his 1985 Cadillac Seville automobile revealed cocaine, marijuana, and $434,097 in cash. The Highway Patrol turned over the vehicle and the seized evidence to the Santa Cruz County Narcotics Enforcement Team.

On March 11, 1985, the District Attorney of Santa Cruz County filed a complaint for forfeiture of $434,000, pursuant to Cal.Health & Safety Code Ann. Sec. 11470 (West Supp.1988), in the California Superior Court for the County of Santa Cruz. On March 12, 1985, Judge Donald O. May of the Superior Court ordered the $434,000 delivered to the Santa Cruz County Treasurer for deposit in an interest-bearing account pending final adjudication of the case. Disposition of the state case is not apparent on the record before us.

Also on March 11, the IRS issued jeopardy and termination assessments against Miroyan. On March 12, the IRS filed a tax lien in the total amount of $665,940 against Miroyan. The next day, March 13, the IRS served a notice of levy on the Santa Cruz County Sheriff's Department.

Another claimant to the cash soon appeared. The Drug Enforcement Administration ("DEA") seized the $434,097 on March 19, 1985, as narcotics-related property subject to forfeiture under 21 U.S.C. Sec. 881. The circumstances of the seizure are unclear; we do not speculate as to whether some cooperative arrangement was in place between state and federal authorities. The automobile was also seized at this time from an unknown party in San Jose, Santa Clara County.

On August 1, 1985, the United States filed a complaint in the district court for forfeiture of approximately $434,097.80 ¹ and one 1985 Cadillac Seville automobile. On September 4, 1986, the government moved for summary judgment. Miroyan failed to respond to the motion in a timely fashion by stating specific facts, supported by affidavit or other evidence, showing that there was a genuine issue for trial. Fed.R.Civ.P. 56(e). Rather, he filed a memorandum of points and authorities, one footnote of which indicated his intention to contest the forfeiture on the grounds that the IRS lien took precedence. He sought a continuance until criminal proceedings in state court had concluded. Miroyan also filed a "motion for declaratory judgment" that the tax lien was superior to the DEA forfeiture claim. Miroyan replied to the government's summary judgment motion after a deadline set by the court. On April 22, 1987, the district court granted a government motion to strike Miroyan's reply, granted summary judgment of forfeiture, and denied Miroyan's motion for declaratory judgment.

Miroyan does not contend that any material fact is at issue. Rather, he appeals the order of summary judgment and the dismissal of his motion for declaratory judgment as a matter of law. We have jurisdiction over this timely appeal of a final judgment. 28 U.S.C. Sec. 1291; Fed.R.App.P. 4(a)(1). We review a grant of summary judgment de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir.1986).

II

The threshold question is whether the district court properly exercised jurisdiction in rem over the $434,097 res. We may raise a jurisdictional question on our own motion. Fiester v. Turner, 783 F.2d 1474, 1475 (9th Cir.1986).

A federal forfeiture action under 21 U.S.C. Sec. 881 is an in rem action. United States v. $57,480.05 United States Currency and Other Coins, 722 F.2d 1457, 1458 (9th Cir.1984). A California statutory forfeiture action against defendant property under the Health and Safety Code likewise is in rem. People v. One 1941 Chevrolet Coupe, 37 Cal.2d 283, 231 P.2d 832, 834 (1951) (per curiam). ² The California proceeding commenced before the federal one. The last recorded order of the state court we have seen requires the money to be held by state authorities pending disposition. We know of no disposition.

A common-law rule of long standing prohibits a court, whether state or federal, from assuming in rem jurisdiction over a res that is already under the in rem jurisdiction of another court. Penn Gen. Casualty Co. v. Pennsylvania, 294 U.S. 189, 195, 55 S.Ct. 386, 389, 79 L.Ed. 850 (1935); United States v. $79,123.49 in United States Cash and Currency, 830 F.2d 94, 95 (7th Cir.1987); Knaefler v. Mack, 680 F.2d 671, 675 (9th Cir.1982) (dictum); Butler v. Judge of United States Dist. Ct., 116 F.2d 1013, 1015 (9th Cir.1941); cf., United States v. One 1977 Mercedes Benz, 708 F.2d 444, 450 n. 5 (9th Cir.1983), cert. denied, 464 U.S. 1071, 104 S.Ct. 981, 79 L.Ed.2d 217 (1984). The purpose of the rule is the maintenance of comity between courts; such harmony is especially compromised by state and federal judicial systems attempting to assert concurrent control over the res upon which jurisdiction of each depends. See Penn General, 294 U.S. at 195, 55 S.Ct. at 389.

The rule against concurrent in rem proceedings is not a constitutional limitation upon the jurisdiction of the federal courts. Rather, it is a prudential limitation applied by the Supreme Court in the interest of judicial harmony. This does not mean, however, that the matter is within the discretion of the district court. The language of Penn General indicates that a federal court must yield to a prior state proceeding. Penn General, 294 U.S. at 195, 55 S.Ct. at 389 (" [T]he jurisdiction of one court must of necessity yield to the other.").

The Seventh Circuit recently applied the rule against concurrent in rem jurisdiction to facts similar to ours. $79,123.49, 830 F.2d at 94. The court required a federal forfeiture proceeding under 21 U.S.C. Sec. 881 to be dismissed because the district court had assumed jurisdiction over a res already the subject of a Wisconsin forfeiture case. Id. at 99. We find the Seventh Circuit's application of the rule to be persuasive.

We decline to distinguish $79,123.49 on the grounds suggested by the government: that while Wisconsin sought return of the res, and the federal order of summary judgment conflicted with the state disposition, here the state case is apparently inactive, and California does not seek the res. See id. at 95-96. Admittedly, if there is no conflict between judicial systems, the evils the rule is designed to avoid do not arise, and we have less reason to apply it. We have no facts before us to indicate that the state court relinquished jurisdiction, however.

Whether California executive authorities approved the DEA seizure is irrelevant. The rule is intended to promote comity between courts, not executives. See Penn General, 294 U.S. at 195, 55 S.Ct. at 389. We have found no authority indicating that a failure on the part of the state court to protest the federal proceeding, or by the state to prosecute, allows the district court to assume jurisdiction. Rather, some affirmative act of abandonment is required. See One 1977 Mercedes, 708 F.2d at 450 n. 5; C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure: Jurisdiction 2d Sec. 3631 (1985). In cases in which there is in fact no dispute between state and federal courts, such affirmative proof should not be hard to obtain.

In addition we reject, as did the Seventh Circuit, the argument that the fact of federal possession of the res takes jurisdiction from the state court and bestows it upon the district court. See $79,123.49, 830 F.2d at 98. Although we are familiar with the maxim, "possession is nine-tenths of the law," we prefer to apply the remaining one-tenth and decline to "substitute a rule of force for the principle of mutual respect embodied in the prior exclusive jurisdiction doctrine." Id. The district court must decline federal jurisdiction over money taken from the state court's jurisdiction in such a manner.

We thus reverse the order of summary judgment forfeiting $434,097. We remand for further factual determination by the district court as to whether an affirmative disposition by the state court may have allowed the district court to assume in rem jurisdiction.

III

The 1985 Cadillac Seville automobile was the subject of neither the state forfeiture complaint nor of any state court order. The district court had proper jurisdiction over it, ³ and we may proceed to the merits of the appeal. Miroyan does not contest the validity of the seizure of his cash and automobile by state authorities on ...