U.S. v. Premises Located at Route 13

• Citation: 946 F.2d 749
• Decision Date: 31 October 1991
• Docket Number: No. 90-7788,90-7788
• Parties: UNITED STATES of America, Plaintiff-Appellant, Manufacturers Hanover Servicing, Inc., Plaintiff-Intervenor, v. PREMISES LOCATED AT ROUTE 13, Kilburn Beach, Florence, Alabama, et al., Defendants, Premises Located at Highway 13/5, Phil Campbell, Alabama; Premises Located at 207 West Washington Street, Athens, Alabama, Defendants-Appellees, Thomas Ray Smith, Andy Smith, Leland Sharp, Rose Sharp, Claimants-Appellees, Lyndon Letson, Sandra Letson, Robbie W. Johnson, Colonial Bank, Claimants.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 749

946 F.2d 749

UNITED STATES of America, Plaintiff-Appellant Manufacturers Hanover Servicing, Inc., Plaintiff-Intervenor, v. PREMISES LOCATED AT ROUTE 13, Kilburn Beach, Florence Alabama, et al., Defendants Premises Located at Highway 13/5, Phil Campbell, Alabama Premises Located at 207 West Washington Street, Athens, Alabama, Defendants-Appellees, Thomas Ray Smith, Andy Smith, Leland Sharp, Rose Sharp, Claimants-Appellees, Lyndon Letson, Sandra Letson, Robbie W. Johnson, Colonial Bank, Claimants.

No. 90-7788.

United States Court of Appeals, Eleventh Circuit.

Oct. 31, 1991.

As Amended Nov. 5, 1991.

Frank W. Donaldson, U.S. Atty., James D. Ingram, Asst. U.S. Atty., Birmingham, Ala., for plaintiff-appellant U.S.

William Cater Elliott, Parnell, Crum & Anderson, P.A., Montgomery, Ala., for plaintiff-intervenor Manufacturers Hanover Servicing, Inc.

J. Stephen Salter, Kimberly R. West, Birmingham, Ala., for defendants, claimants-appellees, Land and Smith.

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

Before JOHNSON and EDMONDSON, Circuit Judges, and DYER, Senior Circuit Judge.

JOHNSON, Circuit Judge:

This appeal involves a civil forfeiture proceeding under 18 U.S.C.A. § 1955(d). The Government, as part of a criminal investigation of alleged gambling activities by the appellees, seized certain real property allegedly used in an illegal gambling operation pursuant to section 1955. The case presents the question of whether the civil forfeiture procedure provided in section 1955 reaches real property. The district court held that it does not, and we now reverse. We also reverse the district court's entry of summary judgment on alternative due process grounds.

I. STATEMENT OF THE CASE

A. The Facts

On October 2, 1989, the United States government filed its initial complaint pursuant to 18 U.S.C.A. § 1955(d), ¹ seeking the forfeiture of four properties allegedly used for illegal gambling purposes. On the same day, the Government filed a motion for an order for an arrest warrant for the four defendant properties ("Parcels"). On October 17, 1989, the Marshal commenced execution of the warrant and notice to interested parties. Leland and Rose Marie Sharpe, Colonial Bank, and Manufacturer's Hanover all filed claims on Parcel 2. ² Andy and Thomas Ray Smith filed a claim on Parcel 4. ³ The Government eventually voluntarily dismissed its claims against Parcels 1 and 3.

On January 4, 1990, the district court ordered a probable cause hearing for March 30, 1990. On January 22 and January 31, 1990, the appellees filed discovery requests for tapes and transcripts gathered in the criminal investigation. On February 20, 1990, the Government moved to stay the whole proceeding including the probable cause hearing. United States v. Premises located at 207 W. Washington St., 732 F.Supp. 1128, 1130 (N.D.Ala.1990). On February 22, 1990, the Smiths objected to the Government's motion to stay and moved to compel discovery because the Government had not replied to their request for discovery in the time allowed by Fed.R.Civ.P. 34(b). On March 12, 1990, the district court denied the stay and granted the Smiths' motion to compel discovery. Id. at 1132. The district court noted, however, that the Smiths would have to comply with legitimate discovery requests by the Government on the merits after the probable cause hearing, which was still scheduled for March 30, 1990. Id. at 1131, 1132. Although the court did not grant the Government's motion for a stay, the court implied that if the Smiths did not withdraw their objection to the stay, they might have to waive their possible Fifth Amendment privilege against self-incrimination in order to comply with the Government's discovery requests. The Smiths withdrew their objection to the stay on March 16, 1990. On March 19, 1990, the district court vacated its order scheduling the probable cause hearing for March 30, 1990, and imposed a stay on the whole proceeding until a claimant moved to remove the stay or until June 29, 1990, whichever came first.

No claimant moved to remove the stay and the June 29, 1990 deadline passed. On July 12, 1990, the Smiths moved for summary judgment on due process and self-incrimination grounds. On July 25, 1990, at a hearing on the Smiths' summary judgment motion, the Government notified the district court that it was ready to proceed with discovery. On July 27, 1990, the Sharpes moved for summary judgment on the same grounds asserted by the Smiths. On September 12, 1990, the district court granted both the Smiths' and the Sharpes' summary judgment motions. United States v. Premises Located at Highway 13/5, 747 F.Supp. 641, 652 (N.D.Ala.1990).

B. The District Court Decision

The lower court granted summary judgment to the appellees on two separate grounds. First, the district court held that section 1955(d) did not apply to real property. Id. at 644-45. Second, in alternative holdings, the district court held that because the appellees had been deprived of their statutory and constitutional due process rights, id. at 645-49, and their privilege against self-incrimination, id. at 649-52, the court would immediately restore their property. ⁴ This appeal followed.

II. ANALYSIS

We now reverse the district court on both of its proffered grounds for summary judgment. The district court misread section 1955(d). We conclude that 18 U.S.C.A. § 1955(d) does apply to real property. Furthermore, summary judgment on the alternative grounds was improper because genuine issues of material fact existed.

A. Applicability of Section 1955(d) to Real Property

Section 1955(d) applies, by its own terms, to "any property." The three other circuits that have considered the issue of whether this language includes real property have concluded that it does. United States v. On Leong Chinese Merchants Ass'n Bldg., 918 F.2d 1289 (7th Cir.1990); United States v. South Half of Lot 7 & Lot 8, etc., 910 F.2d 488 (8th Cir.1990) (en banc), cert. denied, --- U.S. ----, 111 S.Ct. 1389, 113 L.Ed.2d 445 (1991); United States v. Premises and Real Property at 614 Portland Ave., 846 F.2d 166 (2d Cir.1988) (affirming and adopting the reasoning in United States v. Premises and Real Property at 614 Portland Ave., 670 F.Supp. 475 (W.D.N.Y.1987)). We find the reasoning of our fellow circuits persuasive, and therefore join in their conclusion that section 1955 reaches real property.

The plain meaning of the words "any property" necessarily encompasses real property. See On Leong, 918 F.2d at 1297; South Half, 910 F.2d at 489; 614 Portland Avenue, 670 F.Supp. at 478. Furthermore, at the time of its enactment, section 1955 was part of the Organized Crime Control Act of 1970 ("OCCA") which also included the RICO and CCE statutes. The civil forfeiture provisions of RICO and CCE contain similar language to that found in § 1955(d). 18 U.S.C.A. § 1963 (1984) (RICO) ("any interest in ... property ... of any kind"); 21 U.S.C.A. § 848 (1981) (CCE) (same). The RICO and CCE provisions have both been interpreted to apply to real property. See United States v. Zielie, 734 F.2d 1447, 1458-59 (11th Cir.1984) (applying § 1963 to real property), cert. denied, 469 U.S. 1189, 105 S.Ct. 957, 83 L.Ed.2d 964 (1985); United States v. Mannino, 635 F.2d 110, 118 (2d Cir.1980) (applying § 848 to real property). Thus, we conclude that just as the forfeiture provisions enacted contemporaneously with section 1955(d) reach real property, so too does section 1955.

In coming to this conclusion, we are not unaware that Congress amended the RICO and CCE forfeiture provisions in 1984 to expressly include real property, and that Congress did not also amend section 1955(d) to expressly reach real property at that time. This fact, however, does not dissuade us from our initial conclusion that section 1955 reaches real property. The three other circuits that have addressed this issue have uniformly rejected any negative implication from this Congressional failure to act. On Leong, 918 F.2d at 1297-98; South Half, 910 F.2d at 491; 614 Portland Ave., 670 F.Supp. at 478. ⁵ We agree that the plain meaning of the words "any property" is not subject to an artificial limitation drawn by implication from what Congress failed to say.

For the foregoing reasons, we find that the district court erred in holding that real property is beyond the scope of section 1955. We hold that 18 U.S.C.A. § 1955 applies to real property just as it applies to any other property interest.

B. Statutory Procedural Requirements

Appellees contend that the district court's opinion should be read as granting summary judgment on the basis of the Government's violations of four statutory procedures. These alleged violations of statutory procedures include: (1) failure of the description of Parcel 4 in the amended complaint to specify the county or counties in which the parcel lies; (2) failure to seek an amended order of arrest warrant; (3) failure to serve appellees with the amended complaint; and (4) failure to provide adequate notice by publication.

Regarding the first and second alleged violations, neither the appellees nor the district court specified what statute or rules these omissions violated. Moreover, regarding the second alleged violation, the Government asserts that there was no reason to seek another warrant because the property at issue had already been seized. On remand, the appellees must clarify these grounds for relief and clearly establish what statutory commands these alleged acts violated. Otherwise, the lower court should dismiss these grounds.

Concerning the third alleged violation, the record shows that the Marshals in fact served the amended complaint on the appellees. This entirely contradicts the district court's finding that there was no evidence that the amended complaint was served. Highway 13/5, 747 F.Supp. at 647. Because the discrepancy between the district court's finding and the...