U.S. v. Real Property Located at Incline Village

• Decision Date: 30 January 1997
• Docket Number: No. CV-N-90-0130-ECR.,CV-N-90-0130-ECR.
• Citation: 958 F.Supp. 482
• Parties: UNITED STATES of America, Plaintiff, v. REAL PROPERTY LOCATED AT INCLINE VILLAGE et al., Defendants.
• Court: U.S. District Court — District of Nevada

958 F.Supp. 482

UNITED STATES of America, Plaintiff, v. REAL PROPERTY LOCATED AT INCLINE VILLAGE et al., Defendants.

No. CV-N-90-0130-ECR.

United States District Court, D. Nevada.

January 30, 1997.

COPYRIGHT MATERIAL OMITTED

Harry A. Harbin, Assistant Chief, and Mark D. Rubino, Trial Attorney, U.S. Department of Justice, Criminal Division, Asset

Forfeiture and Money Laundering Section, for plaintiff United States of America.

Lawrence S. Robbins, Alan E. Untereiner, and Robert L. Bronston, Mayer, Brown and Platt, Washington, DC, for claimant Brian J. Degen.

ORDER

EDWARD C. REED, Jr., District Judge.

Introduction

This civil forfeiture action against certain property of Claimant Brian Degen is before the court on remand from the United States Supreme Court and the United States Court of Appeals for the Ninth Circuit. Briefly, the history of this matter is as follows: On October 24, 1989 this court unsealed both an indictment charging Claimant Degen with numerous federal narcotics and money-laundering offenses, and a forfeiture complaint in rem against some five million dollars' worth of property, some real and some personal, owned by Claimant in California, Nevada, and Hawai'i. The forfeiture complaint alleged that the property had been either purchased with the proceeds of Degen's illicit narcotics business, or had been used to facilitate illegal sales of narcotics. Degen, however, who is a citizen both of the United States and of the Swiss Republic, had fled to Switzerland in 1988. He has never returned to this country to defend against the criminal charges; there is apparently no treaty between the United States and Switzerland requiring Degen's extradition.

Nevertheless, Degen did file defensive pleadings in the civil forfeiture action. This court refused to permit Degen to pursue his claims to the defendant property in the civil forfeiture action. The court ruled that he was barred from contesting the forfeiture under the "fugitive disentitlement" doctrine, and therefore granted both the government's motion to strike the defensive papers Degen had filed in the forfeiture action, and the government's motion for summary judgment on Brian Degen's claims to the property. United States v. Real Property Located at Incline Village, 755 F.Supp. 308 (D.Nev. 1990). Karyn Degen, Brian's wife, was permitted to litigate her claims to the property; eventually this court entered judgment against her, and vesting title to the subject property in the United States.

The court's judgment was affirmed by the Court of Appeals, United States v. Real Property Located at Incline Village, 47 F.3d 1511 (9th Cir.1995), but reversed by the Supreme Court. Degen v. United States, ___ U.S. ___, 116 S.Ct. 1777, 135 L.Ed.2d 102 (1996). Writing for a unanimous Court, Mr. Justice Kennedy found error in this court's application of the fugitive disentitlement doctrine to Brian Degen's claims. The Court reversed the judgment of the Court of Appeals and ordered the matter remanded so that Degen might be afforded the opportunity to litigate his claims to the property in the in rem forfeiture action. Degen, ___ U.S. at ___ - ___, 116 S.Ct. at 1782-83. On July 1, 1996, The Court of Appeals remanded the matter to this court for further proceedings consistent with the decision of the Supreme Court. United States v. Real Property Located at Incline Village, 87 F.3d 400 (9th Cir.1996).

The motion presently submitted for decision is a motion (Doc. # 135) by Claimant Degen for return of rents and other proceeds derived from the property seized by the United States in 1989. The government has filed its brief (Doc. # 139) in opposition to Claimant's motion, and Claimant has replied (Doc. # 141)

Degen seeks to recover any and all rents and other proceeds derived from the property seized by the government from him in 1989. He claims the seizure was effected in violation of his federal constitutional right to due process of law, and that therefore he should be entitled to any income produced by the seized property in the interim, see United States v. James Daniel Good Real Property, 510 U.S. 43, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993). In addition, Degen requests that the court dismiss the forfeiture complaint, and further seeks an order excluding from admission in this or any other forfeiture action regarding the defendant property all evidence acquired by the government in the course of seizing the property.

Resolution of the pending motion first requires some inquiry into the mechanism by which Claimant Degen has sought relief from an unconstitutional seizure of his real property. In United States v. James Daniel Good Real Property, 510 U.S. 43, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993), the Supreme Court for the first time in the history of in rem civil forfeiture declared that the Due Process Clause of the Fifth Amendment to the Constitution of the United States requires the government to afford the owner of real property notice and a meaningful opportunity to be heard before it seizes the property. The Court of Appeals for the Ninth Circuit has interpreted Good as establishing such an owner's right to a remedy for an unconstitutional seizure; under United States v. Real Property Located at 20832 Big Rock Drive, 51 F.3d 1402, 1406 (9th Cir. 1995), that remedy is the exclusion of evidence derived from the illegal seizure and the return of rents accrued in the interim.

Neither the Supreme Court nor the Ninth Circuit has indicated by what precise procedure a forfeiture claimant who is the victim of an unconstitutional seizure of realty should attempt to obtain relief under Good. See Good, 510 U.S. at 61-63, 114 S.Ct. at 505 (finding that ex parte seizure of realty in connection with in rem civil forfeiture "violated due process," without suggesting appropriate remedy); United States v. Real Property Located in El Dorado, California, 59 F.3d 974, 981 (9th Cir.1995) (instructing district court on remand to "make a determination of the appropriate monetary or other relief, if any, for loss of use and enjoyment to which [the claimant] is entitled for the illegal seizure of h[er] property"); Big Rock Drive, 51 F.3d at 1406 & n. 3 (ruling that Fifth Amendment requires exclusion of illegally seized evidence and holding the government "responsible for any rents accrued during the illegal seizure"); United States v. James Daniel Good Property, 971 F.2d 1376, 1384 (9th Cir.1992) (refusing to dismiss complaint but ruling Good claimant was "entitled to the rents accrued on his home after seizure"), rev'd in part on other grounds, 510 U.S. 43, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993).

In the present matter, it does not appear to the court inappropriate for Claimant Degen to have articulated his claim to relief under Good by way of motion. The Courts of Appeals which have resolved Good claims have all done so in this manner. See, e.g., United States v. One Parcel of Real Property Located at 9638 Chicago Heights, 27 F.3d 327, 330 (8th Cir.1994) (ruling proper remedy for Good violation is dismissal of in rem forfeiture complaint, and implying propriety of seeking such relief by motion); United States v. Premises and Real Property at 4492 South Livonia Road, 889 F.2d 1258, 1265-66 (2d Cir.1989) (denying claimant's motion to dismiss under Fed.R.Civ.P. 12(b)(6), and denying claimant's motion for return of property under Fed.R.Crim.P. 41(e), despite finding seizure to have been unconstitutional, on ground that only remedy available for Good violation is suppression of evidence acquired via the unlawful seizure, and the government offered no such evidence).

Generally, procedure in civil in rem forfeiture actions is governed by the Federal Rules of Civil Procedure to the extent consistent with the Supplemental Rules for Certain Admiralty and Maritime Claims, and otherwise by the Supplemental Rules themselves. See 18 U.S.C. § 981(b)(2); 21 U.S.C. § 881(b); United States v. One 1978 Piper Cherokee Aircraft, 37 F.3d 489, 493 (9th Cir. 1994). Fortunately the Admiralty Rules set out the procedure whereby the owner of seized property may contest the seizure:

Whenever property is arrested or attached, any person claiming an interest in it shall be entitled to a prompt hearing at which the plaintiff [in in rem civil forfeiture, the United States] shall be required to show cause why the arrest or attachment should not be vacated or other relief granted consistent with these rules.

Fed.R.Civ.P.Supp.R. E(4)(f).

According to the Advisory Committee Notes, Rule E(4)(f) was expressly "designed to satisfy the constitutional requirement of due process by guaranteeing to the shipowner a prompt post-seizure hearing at which [s]he can attack the complaint, the arrest, the security demanded, or any other alleged deficiency in the proceedings." Fed.R.Civ.P. Supp. R. E(4)(f) advisory committee note to 1985 amend. Moreover, a motion under this rule may be made via "an oral or written application similar to that used in seeking a temporary restraining order." Ibid.

The Rule E(4)(f) hearing thus appears to constitute an appropriate vehicle for resolving a Good claim in the context of an ongoing forfeiture action; the rule permits the claimant to apply for relief either orally or in writing. In a proceeding under the Rule the government might, for example, make its showing of exigent circumstances justifying ex parte seizure, see Good, 510 U.S. at 51-63, 114 S.Ct. at 500-05, and the claimant may seek dismissal, see El Dorado, 59 F.3d at 981 n. 5, or "other relief," i.e. return of rents, see Big Rock Drive, supra. The court therefore treats Claimant Brian Degen's motion (Doc. # 135) for return of rents as one for release from arrest under Fed.R.Civ.P.Supp.R. E(4)(f).

I. Res Judicata and the Law of the Case Doctrine

The government seeks to bar Degen from defending against the forfeiture. It argues (1) that Karyn Degen pursued her own claims to the property to final judgment, (2) that Karyn...