United States v. $16, 761 In United States Currency
| Decision Date | 22 September 2021 |
| Docket Number | Civil Action 5:21-CV-00053-KDB-DCK |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | United States of America, Plaintiff, v. $16, 761 in United States Currency, Defendant. |
THIS MATTER is before the Court on Claimant Jermaine Sanders' Motion to Dismiss, Motion to Strike, and Request for Judicial Notice (Doc. Nos. 10, 11, 14). For the reasons discussed below, the Court will DENY the Motion to Dismiss, DENY the Motion to Strike, and will GRANT IN PART and DENY IN PART the Request for Judicial Notice.
On November 16, 2020, Jermaine Sanders' rental vehicle was searched after law enforcement smelled marijuana and a certified drug detection canine positively detected the odor of narcotics on the vehicle (Doc. No. 13). Law enforcement found marijuana and $16, 761 (“Currency”) in the vehicle (Doc. No. 1). Officers of the Mooresville Police Department (“MPD') arrested Sanders and charged him with state drug offenses (Doc. No. 10-11). On November 17 2020, MPD Detective Sergeant Shawn Elliott contacted Department of Homeland Security (“DHS”) Homeland Security Investigations (“HSI”) Task Force Officer (“TFO”) Ryan Powers and requested that HSI take over the investigation of the Currency (Doc. No 10-11). On November 19, 2020, Sanders filed a “Motion for Personal Property to be Released to Defendant” in his Iredell
County District Court criminal case, Iredell County No. 20 CR 055180 (the “State Court”) (Doc. No. 10-3).
On November 20, 2020, TFO Powers notified MPD that DHS would investigate the Currency and that MPD should follow standard protocol for turning-over the Currency to DHS (Doc. No 10-11). Then, on November 23, 2020, TFO Powers met with MPD Detective Shawn Elliott, who signed out the Currency, converted it to a certified check to U.S. Customs and Border Protection (“CBP”) (which handles asset forfeiture actions for HSI) and delivered the check to TFO Powers, who then delivered the check to CBP in Charlotte. Id. Following the relinquishment of the Currency to federal authorities, on November 24, 2020, the State Court ordered the return of the Currency to Sanders (Doc. No 10-4). However, in doing so, the State Court order did not hold or assert that it was exercising in rem jurisdiction over the Currency. Id.
Subsequently, Sanders' counsel emailed the State Court's November 24 order to MPD and a state ADA, asking how the funds would be returned. She was told to contact the DHS or the United States Attorney's Office because the federal government had adopted the Currency (Doc. No. 13-1, p.9). Then, Sanders filed a verified motion to show cause on December 10, 2020, asserting that the MPD was out of compliance with the November 24, 2020 order. Id. The MPD responded in opposition, and on January 26, 2020, the Court issued an “Order on Verified Motion to Show Cause” which found probable cause for contempt and ordered MPD to appear in Court and show cause why MPD should not be held in contempt (Doc. No. 13-1, p. 10). As with the November 24th order, the January 26th order did not mention in rem jurisdiction.
On February 9, 2021, following a hearing on the order to show cause, the State Court issued an order holding that the State Court “acquired in rem jurisdiction over the cash on November 19, 2020 - the date Defense Counsel filed the motion for return of property.” Id. The State Court also stated that, despite the Mooresville's (“Town”) argument that MPD had, prior to the November 24th order for return of the property, turned over the Currency to DHS, the Town and MPD still had “ability to use funds, or to liquidate assets, at their disposal so as to enable them to comply with the subject order by releasing $16, 761.00 to Mr. Sanders” and that the November 24 order “did not premise release of the amount of $16, 761.00 on the police department's ability to effect reversal of its wrongful transfer of a different $16, 761.00 to a third party.” (Doc. No. 13-1 p. 60). More proceedings ensued in state courts, culminating in the North Carolina Court of Appeals issuing a temporary stay of the Iredell County District Court's February 9, 2021 order on April 26, 2021 (Doc. No. 13-2).
The United States filed a verified complaint for the forfeiture of the Currency pursuant to of 28 U.S.C. §§ 1345 and 1355 on March 26, 2021 (Doc. No. 1). The Claimant filed a motion to dismiss and request for judicial notice on April 16, 2021 (Doc. No. 10, 11). The United States responded in opposition on April 30, 2021 (Doc. No. 13). The Claimant filed a motion to strike on May 7, 2021 (Doc. No. 14). Neither party contests the Claimant's standing to oppose the forfeiture pursuant to Rule G(5)(b) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, which allows any person who asserts an interest “in the defendant property” to file a claim.
Pursuant to Fed.R.Civ.P. 12(b)(1), a party may move to dismiss a complaint for lack of subject matter jurisdiction. On a motion to dismiss for lack of subject matter jurisdiction, the plaintiff (here, the United States) has the burden of showing the existence of jurisdiction by a preponderance of the evidence. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). A court should dismiss an action for lack of subject matter jurisdiction "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999) (quoting Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991)).
Federal Rule of Civil Procedure 12(f) provides that the The purpose of a Rule 12(f) motion to strike is to avoid the waste of time and money that arises from litigating unnecessary issues. Simaan, Inc. v. BP Products North America, Inc., 395 F.Supp.2d 271, 278 (M.D. N.C. 2005); see also Chapman v. Duke Energy Carolinas, 73 Fed. R. Serv. 3d (Callaghan) 1273 (W.D.N.C 2009) ("Although courts have broad discretion in disposing of motions to strike, such motions 'are generally viewed with disfavor because striking a portion of a pleading is a drastic remedy and because it is often sought by the movant simply as a dilatory tactic.'") (internal citations omitted).
Federal Rule of Evidence 201(b)(2) allows for the court to take judicial notice of “a fact that is not subject to reasonable dispute because it ... can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Typically, courts will take judicial notice of state court proceedings. Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989). Courts will also take judicial notice of government publications. Standing Akimbo, LLC v. United States, 955 F.3d 1146, 1152 n.2 (10th Cir. 2020).
A. Motion to Dismiss
Claimant Sanders' motion to dismiss seeks to dismiss the complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) and Rule G(5)(b) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. Claimant argues that the Iredell County District Court has exclusive in rem jurisdiction over the Currency and therefore this Court is divested of its exclusive subject jurisdiction over forfeiture actions brought by the United States.[1] Because the Court finds that the State Court was not exercising in rem jurisdiction it will deny the motion to dismiss.
The United States brings this action under 21 U.S.C. § 881(a)(6) for violations of 21 U.S.C. §§ 841 and/or 846 (Doc. No. 1). While the Currency was initially seized by state police, the United States may seize drug proceeds without a warrant for the purpose of initiating forfeiture proceedings under several different circumstances, including if "the property was lawfully seized by a State or local law enforcement agency and transferred to a Federal agency." 18 U.S.C. § 981(b)(2)(C). This transfer from a state law enforcement agency to a federal agency is often called "adoption." See United States v. One Ford Coupe Auto., 272 U.S. 321, 325, 47 S.Ct. 154, 71 L.Ed. 279, Treas. Dec. 41975 (1926); United States v. Winston-Salem/Forsyth Cnty. Bd. of Educ., 902 F.2d 267, 269 n.1 (4th Cir. 1990). Therefore, this Court has clear authority to exercise exclusive in rem jurisdiction over the Currency subsequent to DHS' adoption of the Currency from the MPD.[2]
However this exclusive jurisdiction can be divested if the State Court had obtained in rem jurisdiction prior to this Court obtaining jurisdiction. Under those circumstances, dismissal of the federal action would be required as only one court can have in rem jurisdiction over a res. Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 196 (1935); see also Mandeville v. Canterbury, 318 U.S. 47, 48-49 (1943) (“the court first acquiring jurisdiction or assuming control of” the res “is entitled to maintain and exercise its jurisdiction to the exclusion of the other.”). But, if the State Court was exercising in personam jurisdiction, and not in rem jurisdiction, then this Court may properly exercise jurisdiction in this case. City of Concord v. Robinson, 914 F.Supp.2d 696, 709 (M.D. N.C. 2012) (“the jurisdictional boundaries between federal and state courts in the forfeiture context turn on whether...
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