U.S. v. Real Property Buildings, 00-1665

• Decision Date: 06 December 2000
• Docket Number: No. 00-1665,00-1665
• Citation: 239 F.3d 78
• Parties: (1st Cir. 2001) UNITED STATES OF AMERICA, Plaintiff, Appellee, v. REAL PROPERTY, BUILDINGS, APPURTENANCES AND IMPROVEMENTS LOCATED AT 221 DANA AVENUE, HYDE PARK, MASSACHUSETTS, Defendant, Appellant, and KATHLEEN GASS, Claimant, Appellant, Heard
• Court: U.S. Court of Appeals — First Circuit

Page 78

239 F.3d 78 (1st Cir. 2001)

UNITED STATES OF AMERICA, Plaintiff, Appellee, v. REAL PROPERTY, BUILDINGS, APPURTENANCES AND IMPROVEMENTS LOCATED AT 221 DANA AVENUE, HYDE PARK, MASSACHUSETTS, Defendant, Appellant and KATHLEEN GASS, Claimant, Appellant,

No. 00-1665

United States Court of Appeals For the First Circuit

Heard December 6, 2000

Decided February 6, 2001

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Patti B. Saris, U.S. District Judge]

[Copyrighted Material Omitted]

Brian M. McMahon for claimant-appellant.

Jennifer Hay Zacks, Assistant United States Attorney, with whom Donald K. Stern, United States Attorney, and Shelbey D. Wright, Assistant United States Attorney, were on brief, for appellee.

Before Boudin, Lynch, and Lipez, Circuit Judges.

LYNCH, Circuit Judge.

Kathleen Gass seeks to stop the government from seizing her family home at 221 Dana Avenue, in Hyde Park, Massachusetts. The government seeks to seize the property because Kathleen Gass' late husband, William Gass, used it for his side business as a drug dealer, unbeknownst to his wife and child. Mrs. Gass first learned her husband had used the ground floor apartment for cocaine deals on the day the government arrested him and raided the property. Mr. Gass, in whose name the house stood, made out a will and left Kathleen Gass the house. Within ten days, he committed suicide.

The government then started forfeiture proceedings. At the close of evidence, the district court granted the government's motion for a directed verdict and denied Kathleen Gass' motion for entry of judgment. The court concluded that Kathleen Gass was not entitled to assert the "innocent owner" defense, see 21 U.S.C.A. § 881(a)(7) (1999), since she did not possess an ownership interest in the property until after she had learned that the property had been used for drug dealing. The court also concluded that forfeiture of the property did not constitute an excessive fine under the Eighth Amendment to the Constitution. We now vacate the decision of the district court and direct dismissal of the government's forfeiture case with prejudice on the ground that claimant has satisfied the requirements of the innocent owner defense.

I.

The facts are undisputed. On February 5, 1990, William Gass purchased the property at 221 Dana Avenue, in Hyde Park, Massachusetts. The deed was issued solely in his name. Kathleen Gass has lived at the property with William Gass since 1990, and currently resides there, along with the couple's eight year old son, Cedric Gass. William and Kathleen Gass were married on January 8, 1995, but William did not convey an interest in the property to Mrs. Gass. For the past decade, Mrs. Gass has worked as an accountant for the Department of Housing and Urban Development, where she earns approximately $30,000 per year. Although she did not contribute money towards the purchase price of the home or to mortgage payments made before or during her marriage to William Gass, Kathleen Gass consistently contributed to other essential financial needs of the household, including food and clothing. Moreover, since her husband's suicide on January 29, 1998, Mrs. Gass has made the mortgage payments on the property and has made improvements to the property.

Mr. Gass operated a taxi cab business out of the home. The office for the business was located in a separate apartment on the first floor. The second floor served as the family home. Mrs. Gass rarely entered the first floor area, and did not even have a key to her husband's office.

In early 1997, the Drug Enforcement Agency and United States Customs Service started an investigation of William Gass for suspected cocaine distribution. In 1997, the agents, with the assistance of a confidential informant, arranged several controlled drug buys with Mr. Gass at the property. On January 8, 1998, Mr. Gass was arrested and charged with cocaine distribution. Later that day, agents executed a search warrant on the property. Mr. Gass confessed and accompanied the agents to the property, where he retrieved and turned over to agents 490 grams of cocaine and $59,000. Agents also found a white bucket and scale which had been used, according to the confidential informant, to weigh the cocaine. The search was the first time Mrs. Gass became aware of her husband's cocaine distribution activities.

On January 19, 1998, William Gass executed a will devising all of his property to his wife. On January 29, 1998, he committed suicide at the property.

The government filed a complaint for forfeiture of the property on February 3, 1998. On February 4, 1998, the district court found that probable cause existed to believe the property was subject to forfeiture, and a monition issued.¹ Kathleen Gass was appointed executrix of her husband's will on June 28, 1998.

A jury trial on the forfeiture action started on October 18, 1999. At the close of evidence, the government moved for a directed verdict pursuant to Fed. R. Civ. P. 50. Claimant Kathleen Gass moved for entry of judgment pursuant to Fed. R. Civ. P. 58. Over claimant's objection, the district court dismissed the jury since there were no factual disputes to resolve, and ordered additional briefing. On January 3, 2000, the court granted the government's motion for a directed verdict and denied claimant's motion for entry of judgment.

The court rejected both of claimant's central arguments: (1) that she was an "innocent owner" under 21 U.S.C.A. § 881(a)(7) (1999); and (2) that forfeiture of the property would constitute an excessive fine in violation of the Eighth Amendment. See United States v. 221 Dana Ave., 81 F. Supp. 2d 182 (D. Mass. 2000). As to the "innocent owner" defense, the court held that claimant could not prevail because, although entirely unaware of the illegal activities when they were occurring, she nonetheless knew of the property's tainted character before obtaining an ownership interest in it following her husband's death. Id. at 189 (holding that claimant's knowledge is to be measured "at the time she acquired her property interest as an heir"). Specifically, the court concluded that claimant's spousal right to equitable distribution of marital property upon divorce did not confer an equitable or legal ownership interest independent of a divorce proceeding. See id. at 186-87. The district court also determined that Mrs. Gass had no resulting trust in the home because she did not contribute to the mortgage payments on or the purchase price of the home. See id. at 187. Additionally, the court rejected claimant's argument that her dower interest or, alternatively, her interest as an heir under her husband's will, provided a sufficient ownership interest to enable her to assert the innocent owner defense. See id. at 188-89. In reaching this conclusion, the court accepted the government's contention that to allow a claimant to avoid forfeiture simply by establishing lack of knowledge at the time illegal conduct occurred would create "a major loophole in the forfeiture scheme," whereby "[c]riminals could simply keep family and friends out of the loop, and then transfer property to them to avoid forfeiture." Id. (internal quotation marks omitted).

As to claimant's Eighth Amendment argument, the district court concluded that the fine was not excessive because the harshness of the forfeiture, although significant, was outweighed by, inter alia, the seriousness of her husband's offense, the lengthy sentence and fine he could have received, and the close relationship between the property and the offense. See id. at 191-92 (applying formulation of hybrid instrumentality-proportionality test set forth in United States v. Milbrand, 58 F.3d 841, 847-48 (2d Cir. 1995)).² Additionally, the court rejected claimant's argument that seizing the entire property would constitute an excessive fine in a situation where the illegal activity was confined to a separate first floor apartment in the home. See 221 Dana Ave., 81 F. Supp. 2d at 192 ("A[n] entire parcel of land may be subject to forfeiture under 21 U.S.C. § 881(a)(7) even if only part of it is directly connected to drug activity.").

II.

We review de novo the grant of a Fed. R. Civ. P. 50(a) motion for judgment as a matter of law, using the same standards as the district court. E.g., Russo v. Baxter Healthcare Corp., 140 F.3d 6, 8 (1st Cir. 1998). The evidence and inferences drawn from the evidence are considered in the light most favorable to the non-moving party (here, the claimant), drawing all reasonable inferences in that party's favor. Id.; Collazo-Santiago v. Toyota Motor Corp., 149 F.3d 23, 26 (1st Cir. 1998).

Our principal task is to ascertain whether Congress intended the forfeiture provisions of the old civil forfeiture statute³ to trump the "innocent owner" defense on these facts. The text of the statute does not address the issue; it provides only:

that no property shall be forfeited under this paragraph, to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.

21 U.S.C.A. § 881(a)(7) (1999). This language does not answer a number of questions that arise, such as the nature of the ownership interests that must be held by the innocent "owner" and at what time the "innocence" of the owner (in terms of lack of "knowledge or consent") is to be measured.

The legislative history also offers little guidance, although it does instruct us that "[t]he term 'owner' should be broadly interpreted to include any person with a recognizable legal or equitable interest in the property seized." Joint Explanatory Statement of Titles II and III, Pub. L. No. 95-633, 95th Cong. 2d Sess. (Oct. 7, 1978), reprinted in 1978 U.S.C.C.A.N. 9496, 9518, 9522.

The Supreme Court has construed these statutory terms only once. See United States v. 92 Buena Vista...