U.S. v. Tit's Cocktail Lounge, s. 88-1298

• Citation: 873 F.2d 141
• Decision Date: 14 April 1989
• Docket Number: 88-1352,Nos. 88-1298,s. 88-1298
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. TIT'S COCKTAIL LOUNGE, et al., Defendants. Appeals of Diane GRIFFIN, Betty McNulty.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 141

873 F.2d 141

UNITED STATES of America, Plaintiff-Appellee, v. TIT'S COCKTAIL LOUNGE, et al., Defendants.

Appeals of Diane GRIFFIN, Betty McNulty.

Nos. 88-1298, 88-1352.

United States Court of Appeals, Seventh Circuit.

Submitted March 16, 1989.

Decided April 14, 1989.

Thomas J. Fleischmann, Terence E. Flynn, Mark S. Dym, and Gessler, Flynn, Laswell, Fleischmann, Hughes & Socol, Ltd. Chicago, Ill., for defendants- appellants.

Anton R. Valukas, U.S. Atty., Nancy K. Needles, and Jeanne M. Witherspoon, Asst. U.S. Attys., Chicago, Ill., for plaintiff-appellee.

Before BAUER, Chief Judge, MANION and KANNE, Circuit Judges.

PER CURIAM.

The United States moved to dismiss the appeal in this 21 U.S.C. Sec. 881 in rem forfeiture action for lack of jurisdiction as to those properties already forfeited and sold pending appeal. Respondents Diane Griffin and Blacon Foods, Inc. (Blacon) allege that such dismissal would be improper given this court's in personam jurisdiction and the government's alleged failure to comply with 21 U.S.C. Sec. 853(n)'s notice and hearing requirements. For the following reasons, we grant the government's motion.

I.

The government filed this 21 U.S.C. Sec. 881 civil forfeiture proceeding against fourteen businesses and real properties (properties) allegedly used in drug trafficking. The district court had in rem jurisdiction over these properties under 28 U.S.C. Sec. 1345 and 1355. Proper notice and process was had at the start of the action pursuant to Rule C (Actions in Rem: Special Provisions) of the Supplemental Rules for Certain Admiralty and Maritime Claims (Supplemental Rules). Known interested parties were contacted and legal notice was published. Griffin, Blacon, Betty McNulty, ¹ and Midwest Real Estate Investment Company (Midwest) all asserted interests in various of the named properties. Only Midwest's claim was timely filed. Griffin, McNulty, and Blacon's claims were dismissed and default judgments entered against them. ²

The district court ultimately ordered forfeiture subject to Midwest's liens in interest. Griffin and Blacon appealed the forfeiture decree in this consolidated appeal, but neither sought to stay the decree's execution by filing a bond under Fed.R.Civ.P. 62. Of the properties in which Griffin alleged an interest (the real property known as 1454-56 West Pulaski, Chicago, Illinois and the business at that address, Tit's Cocktail Lounge) all were sold. Of the properties in which Blacon alleged an interest (the real property known as 745 South California, Chicago, Illinois, and the business at that address, Blacon II Food and Liquor Store; the real property known as 3853-55 West Ogden, Chicago, Illinois, and the business at that address, Noonies Lounge; 5401-03 West Madison, Chicago, Illinois, and the business at that address, Somon's Lounge; the real property known as 1812 South Millard, Chicago, Illinois; the real property known as 1811 South Harding, Chicago, Illinois; and the real property known as 5436-38 West Division, Chicago, Illinois), four were sold (the real property known as 745 South California, Chicago, Illinois, and the business at that address, Blacon II Food and Liquor Store; and the real property known as 5401-03 West Madison, Chicago, Illinois, and the business at that address, Somon's Lounge).

The government moved to dismiss Griffin and Blacon's appeals as to the properties already sold, alleging that this court no longer had subject matter jurisdiction over these defendant properties. Blacon alleged that the government failed to comply with the notice and hearing requirements of 21 U.S.C. Sec. 853(n) prior to selling the properties, and that this court therefore retained jurisdiction because the properties were improperly removed. Griffin alleged that she was without sufficient funds to stay the forfeiture decree's execution and that she should be permitted to file her late claim.

II.

Criminal forfeiture actions are in personam and determine the government's title in property only as against named defendants, while civil forfeiture actions are in rem and determine the government's title in property as against the whole world. D. Smith, Prosecution and Defense of Forfeiture Cases p 2.03, at 2-10 (1988). Under criminal forfeiture, property cannot be sold off after conviction until notice to other potential third party claimants is had pursuant to 21 U.S.C. Sec. 853(n). Under civil forfeiture, however, because such actions determine plaintiff's rights to property as against the whole world, notice and process pursuant to Supplemental Rule C is had when the forfeiture proceeding is initiated, allowing all interested parties an opportunity to prove standing and an opportunity to assert their rights in the named properties.

Jurisdiction in such in rem actions is based on the res being located in the district court's territorial jurisdiction, and removal of the res divests this court of appellate jurisdiction. Folkstone Maritime, Ltd. v. CSX Corp., 866 F.2d 955, 957 (7th Cir.1989); United States v. One 1979 Rolls-Royce Corniche Convertible, 770 F.2d 713, 716 (7th Cir.1985). Jurisdiction is retained, however, when property is removed or released accidentally, fraudulently, or improperly from the court's control. One 1979 Rolls-Royce Corniche Convertible, 770 F.2d at 716-17. Although execution of a forfeiture decree pending appeal may divest this court of appellate jurisdiction, such execution is not stayed absent the filing of a supersedeas bond. Fed.R.Civ.P. 62. Upon motion to the district court, this bond requirement may be waived in that court's discretion. Dillon v. City of Chicago, 866 F.2d 902, 904 (7th Cir.1988) (five factors to be considered in district court's discretion including movant's precarious financial position).

III.

Blacon's assertion that the government failed to comply with the criminal forfeiture statute's notice and hearing requirements confuses criminal and civil forfeiture. Criminal forfeiture under 21 U.S.C. Sec. 853(n) requires that third parties, such as Blacon, not named in the underlying criminal action be given notice and an opportunity to be heard...