United States v. 113 Maynard Avenue, N.W., Grand Rapids, Mich., Kent Cnty.
| Decision Date | 02 December 2011 |
| Docket Number | Case No. 1:10–cv–00062. |
| Parties | UNITED STATES of America, Plaintiff, v. REAL PROPERTY COMMONLY KNOWN AS 113 MAYNARD AVENUE, N.W., GRAND RAPIDS, MICHIGAN, KENT COUNTY, Together With All Improvements, Fixtures and Appurtenances Thereto, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
OPINION TEXT STARTS HERE
Joel S. Fauson, Matthew G. Borgula, U.S. Attorney, Grand Rapids, MI, for Plaintiff.
This matter is before the Court on Plaintiff's Motion for Summary Judgment. (Dkt. # 64–65). The parties consented to proceed before me for all further proceedings, including the trial and an order of final judgment. 28 U.S.C. § 636(c)(1). By Order of Reference, the Honorable Janet T. Neff referred this case to me. (Dkt. # 31). As articulated herein, the Court grants Plaintiff's motion.
The parties do not dispute the facts of this case. The United States seeks civil forfeiture of 113 Maynard Avenue, N.W. and Joshua Vance asserts a claim against the property. The property was purchased using the proceeds of bank fraud committed by James Jett, who is now serving 66 months in federal prison.
Jett and Vance first became friends while playing on the same hockey team in 2004. The two also became roommates, during which time Vance studied medicine at Michigan State University and Jett worked as a home builder. Beginning in 2006, the two also did business with one another. At that time, Vance moved into Jett's home on Ridgetop Drive in Byron Center, Michigan. Less than a year later, Jett sold that home to Vance. This transaction was, as the government concedes, legal.1 After the sale, Vance rented the master bedroom of the Ridgetop home back to Jett without memorializing the lease agreement. Jett never paid rent to Vance pursuant to this oral agreement.
Their business relations also included an unsecured loan made by Vance to Jett to fund the operating expenses of Studio 64, a Grand Rapids hair salon started by Jett in 2007. Vance had no idea that Studio 64 was anything other than a legitimate business. However, Vance also failed to memorialize this loan by reducing it to a written agreement.
Vance asserts and the Government does not dispute that, in sum, Jett owed Vance $18,900.00 between the unpaid rent and the unsecured loan, exclusive of any interest on the loan. Vance never sought to collect this sum or evict Jett from his Ridgetop Drive home for failure to pay rent. Indeed, the two remained roommates at the Ridgetop Drive location until Jett was arrested on charges of bank fraud in Milwaukee, Wisconsin on August 26, 2008. Jett was detained there for the remainder of 2008. Jett's tenancy with Vance ended in January 2009 after Vance physically moved Jett's belongings to 113 Maynard Avenue, N.W., a residential property that Jett bought earlier in 2008 in the name of Egress Development LLC. Neither party disputes that Jett participated in a scheme to defraud banks or that Jett purchased 113 Maynard Avenue, N.W. with the proceeds of that crime. The details of that scheme, although set forth in further detail by the Government, are not relevant given this lack of actual controversy.
Shortly after Jett was arrested, Vance learned of the arrest through newspaper accounts and mutual acquaintances. (Dkt. # 65, Exhibit 1, Vance Dep. 63, 66). Jett was detained until his release from Milwaukee County Jail on February 3, 2009 pursuant to a $50,000 appearance bond secured by his parents' home in White Cloud, Michigan. After his release, Jett returned and lived at 113 Maynard Avenue with his then-girlfriend Stacy McGleish.2
Later in 2009, Jett offered to sell Egress Development to Vance as a means to convey 113 Maynard Avenue. According to both Jett and Vance, the sale was intended to compensate Vance for the unsecured debt owed by Jett (Dkt. # 65, Exhibit 2a, Jett Dep. 76:12–16; Exhibit 1, Vance Dep. 68:17–25). Jett also sought to provide a home for his girlfriend Stacy McGleish while he was away in prison. Vance does not dispute the authenticity of the written sale agreement signed by both Jett and Vance and dated September 26, 2009. On the same day, Stacey McGleish signed a lease renting the property from Vance. Jett, Vance, and McGleish later signed a two-year lease on January 1, 2010, as required by the original lease.
The written sale agreement conveyed Egress Development, and 113 Maynard Avenue along with it, from Jett to Vance for a listed purchase price of one dollar. (Dkt. # 65, Exhibit 2a, Jett Dep., Exhibit 5). Although this price term is facially unambiguous, Vance contends that repayment of the prior debt owed by Jett to Vance and the lease agreement in favor of Stacy McGleish constitute additional valuable consideration given by Vance. The antecedent debts owed by Jett to Vance as additional consideration for 113 Maynard Avenue or Egress Development are mentioned nowhere in the purchase agreement.
Notably, the written sale agreement contains a merger clause entitled :
The Parties represent that this is the entire agreement and understanding among the Parties, and that there are no representations, warranties, terms, covenants or conditions made by any other party except as herein expressly contained. This Agreement shall not be altered, waived, modified or canceled in any respect except in writing, duly executed by all of the Parties hereto, and no oral agreement or course of conduct to the contrary, shall be deemed an alteration, amendment, modification of [sic] cancellation.
The agreement also names the State of Michigan as its choice of law for the “construction, performance, and enforcement of this Agreement.”
The Government also points out a number of facts uncontroverted by Vance, all of which suggest that Vance's ownership of 113 Maynard Avenue, N.W. is nominal. First, the taxes remain unpaid for 2008, 2009, and 2010 in an aggregate amount of $13,123.39. (Dkt. # 65, Exhibit 6: Delinquent Tax Status). Vance asserts that this nonpayment is a rational reaction to the instant forfeiture action, as paying those taxes could result in an ever greater loss to him. Additionally, Vance does not make regular visits to the property and does not take responsibility for the property's maintenance. Stacey Jett has also fallen behind on her rent, but Vance testified he does not know how far behind she was or is and stated he had no intention of evicting Ms. Jett. Vance asserts this is natural result of their friendship. Both of Vance's assertions as to his motive may be true but still do not undermine the Government's position. For the reasons stated below, the Government's motion is granted.
Summary judgment should be granted where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The United States, because it is the movant, has the initial burden of identifying the portion of the record that demonstrates a lack of any genuine issue of material fact on an essential element of the other party's claim. Celotex v. Catrett, 477 U.S. 317, 322–26, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the United States did so, Vance, the Claimant, was required to produce specific facts to demonstrate that there was a genuine issue of material fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
This case is governed by 18 U.S.C. § 983. To have standing under 18 U.S.C. § 983, Vance must be an “owner” for purposes of the statute, which requires a “valid assignment of an ownership interest” and excludes “a nominee who exercises no dominion or control over the property.” 18 U.S.C. § 983(d)(6)(A), (d)(6)(B)(iii). Assuming that Vance has standing as an owner, the statute then mandates a two-part test to resolve this matter. The first test is for the United States “to establish, by a preponderance of the evidence, that the property is subject to forfeiture.” 18 U.S.C. § 983(c)(1). Assuming the United States does this, Vance then has the burden to prove by a preponderance of the evidence that he is an innocent owner. 18 U.S.C. § 983(d)(1); United States v. Vehicle 2007 Mack 600 Dump Truck, 680 F.Supp.2d 816, 827 (E.D.Mich.2010).
Because in this case the property interest was acquired after Jett's conduct giving rise to forfeiture, Vance must establish that he is an “innocent owner” by demonstrating that at the time he acquired his interest in 113 Maynard Avenue, N.W., he was a 1) “bona fide purchaser ... for value” of the property; and 2) he “did not know and was reasonably without cause to believe that the property was subject to forfeiture.” 18 U.S.C. § 983(d)(3)(A)(i), (ii). A “bona fide purchaser for value” is someone who gives value in an arms-length transaction with the expectation that they will receive equivalent value in return. See United States v. One 1996 Vector M12, 442 F.Supp.2d 482, 486 (S.D.Ohio 2005) ().
The United States moves for summary judgment on two grounds. First, it asserts that Vance lacks standing. Second, it asserts that even if he has standing he cannot show that he is an innocent owner because the undisputed facts demonstrate that he was never a bona fide purchaser of 113 Maynard Avenue, N.W. The Court is to view the evidence in the light most favorable to the nonmoving party; however, Vance may not merely allege that he has standing and is an innocent owner. See, Sutherland v. Mich. Dep't of Treasury, 344 F.3d 603, 613 (6th Cir.2003). He must show that evidence exists to support his position.
Claimant Vance does not contest that the Government has met its initial burden of showing that...
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