United States v. $11,500.00 in United States Currency

• Decision Date: 13 July 2011
• Docket Number: Case No. 3:10–cv–97–MA.
• Parties: UNITED STATES of America, Plaintiff, v. $11,500.00 IN UNITED STATES CURRENCY, et al., Defendants.
• Court: U.S. District Court — District of Oregon

797 F.Supp.2d 1092

UNITED STATES of America, Plaintiff,

v.$11,500.00 IN UNITED STATES CURRENCY, et al., Defendants.

Case No. 3:10–cv–97–MA.

United States District Court, D. Oregon.

July 13, 2011.

Dwight C. Holton, United States Attorney, District of Oregon, Robert D. Nesler, Assistant United States Attorney, Portland, OR, for the United States of America.

F. de la Puente, Salem, OR, for Claimant Charles Guerrero.

OPINION AND ORDER

MARSH, District Judge.

The United States brings this civil forfeiture proceeding pursuant to 21 U.S.C. § 881; and 28 U.S.C. §§ 1345, 1356 & 1395. Currently before the court are the government's motion to strike the claim of Charles Guerrero and, in the alternative, for partial summary judgment concerning defendant $11,500 (# 45); Claimant Charles Guerrero's cross-motion for partial summary judgment (# 51); the government's motion to strike the declaration of Rosalie Guerrero & related portions of claimant's concise statement of facts (# 54); and the parties' cross motions for summary judgment on the issue of forfeitability (# 59 & # 66).

BACKGROUND

Claimant Charles Guerrero and Rosalie Guerrero were married in 1993. Charles Guerrero Depo. at 13. On May 30, 2005, Rosalie Guerrero was involved in an automobile accident. Declaration of Attorney Keri Trask at ¶ 1. On an undisclosed date, Progressive Insurance Company paid Rosalie Guerrero PIP benefits for lost wages caused by the accident in the amount of $11,096.05. Additionally, on February 22, 2007, Rosalie Guerrero was paid $12,743.75 in bodily injury benefits. Id. at ¶ 2.

Over two years later, on June 30, 2009, Rosalie Guerrero was arrested for possession with intent to distribute heroin. Affidavit of Special Agent Guy Gino in Support of Complaint in Rem for Forfeiture at ¶ 12. On July 1, 2009, a Deputy Multnomah County Sheriff contacted the Oregon High Intensity Drug Trafficking Area Interdiction Taskforce to report that Virgil Wood was attempting to post $11,500 in cash to bail out Rosalie Guerrero. Id. at ¶ 11. When questioned about the currency, Wood provided inconsistent answers as to its source. Id. at ¶ 13. A narcotics detection canine sniff of the currency was positive for the odor of narcotics. Id. at ¶ 14 & Declaration of Guy Gino (# 67) at ¶ 4 & Exh. 2.

Wood subsequently consented to a search of his vehicle. Gino Aff. at ¶¶ 16 & 21. As the officers and Wood walked toward Wood's vehicle, they encountered Claimant Charles Guerrero. Id. at ¶ 17. Although Wood initially indicated he did not know Guerrero, Charles Guerrero informed the officers that he had come to town with Wood and had given him the money to post bail for his wife. Id. at ¶ 18. Claimant Guerrero indicated that he did not post the bail himself because he had no valid identification aside from an Oregon Department of Corrections (ODOC) inmate release card. Id. The officers searched Guerrero and found $2,971.00 in his pant pockets and several pills (later determined to be Clonazepam and Methadone). Id. at ¶ 19 & Gino Dec. (# 67), Exh. 3 at 1. Guerrero was transported to the Portland Police Bureau's Drugs and Vice Division. Gino Aff. at ¶ 20.¹

Officers subsequently discovered 3.6 grams of Heroin in the trunk of Wood's car in a black bag, which also contained mail bearing Rosalie Guerrero's name and Tootsie Pop suckers identical to those found on Charles Guerrero. Id. at ¶ 22. Wood claimed he did not know who owned the bag. Id. Wood later told officers that he was helping Charles Guerrero bail out his wife, and that Guerrero had given him the bail money. Id. at ¶ 25. Wood stated that Guerrero was homeless and unemployed, but seemed to have money. Id. at ¶¶ 26 & 27.

When Claimant Guerrero was deposed by the government on July 21, 2010, he testified that (1) neither he nor Rosalie Guerrero were currently employed; (2) he had not “held down a steady job” in the fifteen years prior to the seizure; (3) Rosalie had been convicted of delivery of a controlled substance and theft by receiving; (4) he has sold drugs for more than 25 years; and (5) he was selling drugs during the period of February to July, 2009, and his only other source of income during that time was sporadic yard work and proceeds from the sale of some furniture and tools. Guerrero Depo. at 35, 37, 57–58, 63, 71–72 & 75; see also Gino Dec. (# 67) at ¶¶ 6 & 7 & Exhs. 4 & 5 (setting forth Rosalie and Charles Guerrero's criminal history).

With regard to the seized currency, Claimant Guerrero testified that he had $12,000 hidden under the carpet in the room where he was staying, and that he possessed an additional $3,000.00. Guerrero Depo. at 23. Claimant testified that the $2,971.00, seized from his pockets, was money he had been saving from the sale of some furniture and tools. Id. at 37 & 75. With regard to the $11,500 seized from Virgil Wood, claimant testified that (1) weeks prior to her arrest, Rosalie Guerrero gave him the $12,000; (2) the currency previously had been in the trunk of her car and consisted of $100 dollar bills; (3) Rosalie told him that the source of the funds was an insurance settlement; (4) he did not know how the money got into $100 dollar increments; (5) Rosalie gave him the currency for “safekeeping”; and (6) he gave the currency to Virgil Wood to bail Rosalie out of jail. Id. at 24, 28–30, 34, 43–44 & 86–88. Rosalie Guerrero also was deposed by counsel for the government. However, she invoked her Fifth Amendment right not to answer any questions.

On February 2, 2010, this court issued a warrant for the arrest and seizure of the $11,500.00 and $2,971.00. On February 23, 2010, Charles Guerrero, with the assistance of counsel, filed the sole claim as to the defendant currency.

DISCUSSION

I. Standing to Challenge Forfeiture of $11,500.

Pursuant to Rule G(5)(a)(i), of the Supplemental Rules for Certain Admiralty or Maritime Claims and Asset Forfeiture Actions, any person claiming an interest in property, including a bailee, may contest its forfeiture by filing a claim in the court where the forfeiture action is pending. The government, in turn, may move to strike the claim for lack of standing at any time before trial. Rule G(8)(c)(i)(B). The motion “may be presented as a motion for judgment on the pleadings or as a motion to determine after a hearing or by summary judgment whether the claimant can carry the burden of establishing standing by a preponderance of the evidence.” Rule G(8)(c)(ii)(B).

A forfeiture claimant must have both statutory and Article III standing. See United States v. One 1985 Cadillac Seville, 866 F.2d 1142, 1148 (9th Cir.1989). In the instant proceeding, the government moves to strike Claimant Guerrero's claim to the $11,500, and for partial summary judgment, on the basis that he lacks both Article III and statutory standing. Claimant has filed a cross-motion for partial summary judgment, contending that there is no genuine issue of fact as to his ownership or possessory interest in both currencies.

A. Article III Standing.

Article III standing is a threshold matter in every federal case. United States v. Real Property Located at 5208 Los Franciscos Way, Los Angeles, Cal., 385 F.3d 1187, 1191 (9th Cir.2004). A claimant who asserts a possessory interest in forfeited property, and provides some explanation for his possession, has Article III standing to contest its forfeiture. Id.; United States v. $100,348.00 in U.S. Currency, 354 F.3d 1110, 1119 (9th Cir.2004); United States v. $191, 910.00 in U.S. Currency, 16 F.3d 1051, 1058 (9th Cir.1994); United States v. $122,043.00 in U.S. Currency, 792 F.2d 1470, 1473 (9th Cir.1986). The asserted interest need not be an ownership interest, but rather can be any type of interest, including a possessory interest. $191,910.00 in U.S. Currency, 16 F.3d at 1057. This court looks to state law to determine the existence and extent of a claimant's property interest. Real Property Located at 5208 Los Franciscos Way, 385 F.3d at 1191; $100,348.00 in U.S. Currency, 354 F.3d at 1119.

I agree with the government that Claimant Guerrero does not have an ownership interest in the $11,500 simply by virtue of the fact that Rosalie Guerrero allegedly received the insurance settlement while married to claimant. Under Oregon law, spouses may hold property individually during the course of a marriage. See Kowaleski v. Kowaleski, 227 Or. 45, 58–59, 361 P.2d 64 (1961); O.R.S. 108.060. The fact that Oregon law also provides that, upon dissolution of the marriage, such property is a marital asset subject to a rebuttable presumption that both spouses contributed equally to its acquisition, and treats the assets as “a species of co-ownership” ( see O.R.S. 107.105(1)(f)), does not create an ownership interest by operation of law during the course of the marriage. See United States v. Real Property Located at 148 Maunalanikai Place in Honolulu, Hawaii, 2008 WL 3166799, *7 (D.Haw.2008) (collecting cases which hold that a right to equitable distribution of marital property in a divorce does not confer an ownership interest independent of the divorce proceeding). Accordingly, assuming that the source of the seized $11,500 was an insurance settlement paid to Rosalie Guerrero, claimant lacks an ownership interest in the funds under Oregon law. ² Hence, I turn to his contention that he held the funds as a bailee for Rosalie Guerrero.

Under Oregon law, a bailment is the delivery of personal property by one person to another, to be held according to the purpose or object of the delivery, and to be returned when that purpose is accomplished. Gage v. All Nations Ins. Co., 314 Or. 700, 705–6, 842 P.2d 784 (1992); Dundas v. Lincoln County, 48 Or.App. 1025, 1031–32, 618 P.2d 978 (1980). In order for a bailment to exist, the bailee must have both possession and physical control of the property. Dundas, 48 Or.App. at 1032, 618 P.2d 978. Possession is defined to include the intent to exercise control over the goods. Jackson v. Miller, 41 Or.App....