U.S. v. Real Property Buildings

• Decision Date: 06 December 2000
• Docket Number: AND,CLAIMANT-APPELLANT,No. 00-1665,PLAINTIFF-APPELLEE,DEFENDANT-APPELLAN,00-1665
• Citation: 261 F.3d 65
• Parties: (1st Cir. 2001) UNITED STATES OF AMERICA,, v. REAL PROPERTY, BUILDINGS, APPURTENANCES AND IMPROVEMENTS LOCATED AT 221 DANA AVENUE, HYDE PARK, MASSACHUSETTS,KATHLEEN GASS,, Heard
• Court: U.S. Court of Appeals — First Circuit

Page 65

261 F.3d 65 (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 August 17, 2001

Brian M. McMahon for claimant-appellant.

Jennifer Hay Zacks, Assistant United States Attorney, with whom James B. Farmer, United States Attorney, and Suzanne E. Durrell, Nancy Rue, and Shelbey Wright, Assistant United States Attorneys, were on brief, for appellee.

Before Boudin, Chief Judge, 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 take the property by forfeiture because Kathleen Gass' late husband, William Gass, used a portion of 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 eleven days after the raid and left Kathleen Gass the house. Ten days later, he committed suicide.

The government then started forfeiture proceedings to seize the marital home. 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 under the former federal civil forfeiture statute, see 21 U.S.C.A. § 881(a)(7) (1999) (amended 2000),¹ reasoning that she did not possess an ownership interest in the property until after she had learned that the property had been used for drug dealing and that precluded assertion of the defense. The court also concluded that forfeiture of the property did not constitute an excessive fine under the Eighth Amendment to the Constitution. Mrs. Gass appealed.

In that appeal, this court issued an opinion on February 6, 2001, vacating the decision of the district court and directed dismissal of the government's forfeiture case with prejudice on the ground that claimant had satisfied the requirements of the innocent owner defense. That opinion was reported at United States v. Real Property, Buildings, Appurtenances and Improvements Located at 221 Dana Ave., 239 F.3d 78 (1st Cir. 2001), and has been withdrawn as a consequence of the panel's grant of rehearing on the government's petition. That opinion held that (i) claimant had a protectable interest as to one-third of the property under the dower provisions of Massachusetts law before she knew of her husband's criminal activities and (ii) the policies underlying the federal civil forfeiture statute did not support forfeiture of the remaining two-thirds interest in the home. In its petition for rehearing, the government argued that claimant had no cognizable property interest under Massachusetts law before she knew her husband was dealing drugs, and, even assuming she had a one-third interest in the property under state law, that was no basis for blocking the forfeiture of the remaining two-thirds interest in which she had no property right. Further briefing was ordered by the court and duly provided by the parties, and oral argument was held on August 1, 2001.

This court now holds that, under the statute's innocent owner defense, the Gass home at 221 Dana Avenue is not subject to forfeiture. The court thus again vacates the decision of the district court and directs dismissal of the government's forfeiture action with prejudice. Our decision does not reach the question of claimant's ownership interest under state law but accepts arguendo the government's argument that Mrs. Gass acquired her interest in the house after the illegal acts and holds that the federal civil forfeiture statute, as it then stood, does not apply to her as an innocent owner.

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 son, Cedric Gass, who is less than ten years old. William and Kathleen Gass were married on January 8, 1995; William did not then 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 apartment 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 from 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.² 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) (amended 2000); and (2) that forfeiture of the property would constitute an excessive fine in violation of the Eighth Amendment. See United States v. Real Property, Buildings, Appurtenances and Improvements Located at 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. The district court rejected all of claimant's arguments that, as a spouse and/or heir, she had a protectable state law ownership interest for purposes of the innocent owner defense to federal forfeiture. Id. at 186-89. 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. Id. at 191-92.

On appeal, this court originally held that claimant had a protectable interest in at least one-third of the home under the dower provisions in Massachusetts law, see 221 Dana Ave., 239 F.3d at 88,³ and that forfeiture, on these facts, would not serve any congressional purpose behind the statute, see id. at 89. Accordingly, the court vacated the district court's decision and directed dismissal of the government's forfeiture case.

The government filed a petition for rehearing, which this court granted. The government argued that claimant's dower interest did not constitute a protectable ownership interest for purposes of the innocent owner defense and, even assuming it did, there was still no basis for precluding forfeiture of the remaining two-thirds interest. The court again concludes that the district court erred in rejecting claimant's innocent owner defense. We now base our decision solely on the language of and policies behind the former federal civil forfeiture statute, and do not reach the state dower interest issue.

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 ...