U.S. v. One 1980 Rolls Royce, VIN No. SRL 39955

• Decision Date: 10 July 1990
• Docket Number: No. 89-4335,89-4335
• Citation: 905 F.2d 89
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. ONE 1980 ROLLS ROYCE, VIN # SRL 39955, One 1984 Mercedes Benz, VIN # 1237200037, and the Premises Known as Lot 4, Cypress Acres, Washington County, Mississippi, Defendants-Appellants, and Frederick Dotson, Claimant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 89

905 F.2d 89

UNITED STATES of America, Plaintiff-Appellee, v. ONE 1980 ROLLS ROYCE, VIN # SRL 39955, One 1984 Mercedes Benz, VIN # 1237200037, and the Premises Known as Lot 4, Cypress Acres, Washington County Mississippi, Defendants-Appellants and Frederick Dotson, Claimant-Appellant.

No. 89-4335.

United States Court of Appeals Fifth Circuit.

July 10, 1990.

Rabun Jones, Dyer, Dyer, Dyer & Jones, George Hollowell, Jr., Greenville, Miss., for defendants-appellants.

Jim M. Greenlee, Paul D. Roberts, Asst. U.S. Attys., Robert O. Whitwell, U.S. Atty., John R. Hailman, Asst. U.S. Atty., Oxford, Miss., for plaintiff-appellee.

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

Before CLARK, Chief Judge, THORNBERRY, and JONES, Circuit Judges.

THORNBERRY, Circuit Judge:

Claimant Frederick Dotson appeals the district court's grant of summary judgment in favor of the United States permitting forfeiture of three properties that claimant purchased in part with money from drug transactions. Because legitimate funds were also used to purchase the properties, we hold that summary judgment permitting complete forfeiture of the properties was erroneous, and thus we reverse and remand.

Facts and Procedural History

The defendant properties in this action are a 1980 Rolls Royce, a 1984 Mercedes Benz, and a parcel of land. Claimant purchased these properties in 1984 at a total cost of $117,000. Claimant produced evidence of legitimate income and savings totaling $102,470 during that year. Thus, claimant had a shortfall of approximately $15,000, not including living expenses. Claimant admits that in 1984 he was a drug dealer and that the remaining $15,000 needed to purchase the properties was drug money.

Although for purposes of summary judgment the district court did not dispute the above figures, it held that because claimant used drug money to purchase each of the properties, ¹ they are completely forfeitable under 21 U.S.C. Sec. 881(a)(6). Thus, the court granted summary judgment in favor of the United States. The primary issue before us is whether section 881(a)(6) provides for the complete forfeiture of properties even though they were purchased in part with legitimate funds. We hold that such an interpretation is erroneous, and accordingly reverse and remand for a trial to allow claimant to avoid forfeiture to the extent that he can prove what portions of the properties were purchased with legitimate funds.

Discussion

Section 881(a)(6) provides for the forfeiture of "[a]ll moneys, negotiable interests, securities, or other things of value ... furnished by any person in exchange for a controlled substance in violation of this subchapter, [and] all proceeds traceable to such an exchange...." 21 U.S.C. Sec. 881(a)(6). As an admitted drug dealer, claimant never disputed that the government met its initial burden of demonstrating "probable cause for belief that a substantial connection exists between the property to be forfeited and a crime under Title 21 of the United States Code." United States v. $64,000.00 in U.S. Currency, 722 F.2d 239, 244 (5th Cir.1984). Thus, the burden of proof shifts to claimant to prove by a preponderance of the evidence that the money used to purchase the properties in question came from an independent, non-drug-related source. United States v. One 1986 Nissan Maxima GL, 895 F.2d 1063, 1065 (5th Cir.1990).

Although the district court found and the government does not dispute that legitimate funds went into each of the properties, the government argues that if one dollar of drug money was used to purchase an asset, the entire asset is forfeitable. Claimant contends that the legitimate portions of the properties are not subject to forfeiture. We agree with the claimant.

In United States v. Pole No. 3172, Hopkinton, 852 F.2d 636 (1st Cir.1988), the First Circuit dismissed the government's complaint seeking forfeiture of the entire interest in real property on the grounds that the claimant made some mortgage payments with drug money. The court noted that the very earliest indication of involvement with drugs occurred two years after the purchase of the property, and that the property was purchased with a downpayment constituting 20.8% of its value. "Since that 20.8% interest was acquired two years before the earliest indication of drug activity there is absolutely no reason to believe it is forfeitable." Id. at 639.

The court also rejected the argument that the entire property was nevertheless forfeitable because mortgage payments were made with drug money:

We agree that the interest acquired as a result of mortgage payments made with the proceeds of drug transactions should be forfeitable. We do not believe, however, that forfeitability spreads like a disease from one infected mortgage payment to the entire interest in the property acquired prior to the payment. After all, only the actual proceeds of drug transactions are forfeitable. Unless section 881(a)(6) deprives persons accused of dealing drugs of the right to own any property, the existence of an undivided interest in a felon's property which constitutes proceeds cannot mean that his entire property is proceeds.

Id. at 639-40. See United States v. Certain Real Property Located at 2323 Charms Rd., 726 F.Supp. 164, 169-70 (E.D.Mi.1989) (disallowing forfeiture of all of claimant's personalty where claimant had a legitimate part-time occupation, and complaint failed to specifically allege how some items of personalty were acquired with drug funds); United States v. Property Known as 6 Patricia Dr., 705 F.Supp. 710, 719-20 (D.R.I.1989) (disallowing complete forfeiture of real property titled in name of claimant's parents where claimant and his family earned in excess of $37,000 in legitimate income per year, and government failed to identify which portions were subject to forfeiture); see also United States v. Banco Cafetero Panama, 797 F.2d 1154, 1161 n. 9 (2d Cir.1986) (noting in dicta that "if $100 from the sale of drugs is deposited in an account funded with untainted money, $100 in the account and each $100 withdrawal are all vulnerable to forfeiture, but the Government can obtain only a single forfeiture of $100"); D. Smith, Prosecution and Defense of Forfeiture Cases p 4.03[a] at 17 (Supp. Jan. 1990) ("If part of a piece of property is 'proceeds' under section 881(a)(6) and part of the property was acquired with clean money, only that portion which...