United States v. $200,000 in U.S. Currency, 1:14-cv-836

Decision Date28 September 2016
Docket Number1:14-cv-836
Citation210 F.Supp.3d 788
CourtU.S. District Court — Middle District of North Carolina
Parties UNITED STATES of America, Plaintiff, v. $200,000 IN U.S. CURRENCY, Defendant.

Lynne P. Klauer, Office of U. S. Attorney, Greensboro, NC, for Plaintiff.


LORETTA C. BIGGS, District Judge

The United States of America ("Plaintiff" or the "Government") initiated this in rem civil forfeiture proceeding on September 30, 2014, pursuant to 21 U.S.C. § 881(a)(6) and 18 U.S.C. § 981(a)(1)(C) for the forfeiture of $200,000 in U.S. Currency ("Defendant Currency"). (Compl. at 1, ECF No. 1.) On January 6, 2015, Damian Phillips filed a Verified Claim to Defendant Currency, (Claim, ECF No. 7), and an Answer to the Complaint (Answer, ECF No. 8). Before the Court is Plaintiff's Motion for Summary Judgment, filed on March 4, 2016, which includes a motion to strike Mr. Damian Phillips' claim and answer based on lack of standing. (ECF No. 15; ECF No. 16 at 6.) For the reasons that follow, Plaintiff's Motion for Summary Judgment is granted.


Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if it might affect the outcome of the litigation, and a dispute is "genuine" if the evidence would permit a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When the nonmoving party bears the burden of proof on an issue, the moving party is entitled to judgment as a matter of law if the nonmoving party "fail[s] to make a sufficient showing on an essential element of [his] case." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (noting that a "complete failure of proof" on an essential element of the case renders all other facts immaterial).

The party seeking summary judgment bears the initial burden of "pointing out to the district court ... that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548. To defeat summary judgment, the nonmoving party must designate "specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. 2548. The nonmoving party must support its assertions by citing to particular parts of the record, such as affidavits, depositions, answers to interrogatories, and admissions on file. Fed. R. Civ. P. 56(c)(1) ; Celotex Corp. , 477 U.S. at 324, 106 S.Ct. 2548.

When reviewing a motion for summary judgment, the court must " ‘resolve all factual disputes and competing, rational inferences in the light most favorable’ " to the nonmoving party. Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir.2003) (quoting Wightman v. Springfield Terminal Ry. Co ., 100 F.3d 228, 230 (1st Cir.1996) ). This standard applies in forfeiture cases. See United States v. Bailey , 926 F.Supp.2d 739, 753 (W.D.N.C.2013).


On April 14, 2014, the Durham Police Department advised the Durham County Sheriff's Office that they had received information that a "strong odor of marijuana" was emitting from a section of storage units located at the Brassfield Self Storage facility located at 2136 Page Road, Durham, North Carolina. (ECF No. 1-1 ¶ 5.) A Durham police officer met with members of the Sheriff's Department at the storage facility and directed them to building 200, units 11-21, the area he was told smelled like marijuana. (Id. ¶ 5.)

The Sheriff's Department requested a K-9 unit to conduct a free air sniff of the area in question. Deputy Carson responded with his K-9 "Frisco" and was directed to building 200, units 11-21. (Id. ¶ 6.) "Frisco" stopped and gave a positive indication of the scent of narcotics at unit 18. After giving this positive indication, Deputy Carson took "Frisco" to a set of interior units. "Frisco" did not alert on any of the interior units. Deputy Carson then had "Frisco" return to the line of units 11-21, building 200 and "Frisco" again alerted at unit 18. (Id. ) Deputy Carson has been a canine handler and paired with "Frisco" for over six years. Together they have over 1,000 hours of training and have been certified with the National Police Canine Association and the Durham Police Department's K-9 Certification Course in Narcotics. (Id. ¶ 7.)

Based on the information received from the Durham Police Department and the positive canine alerts, the Sheriff's Department applied for and received a state search warrant for building 200, unit 18. (Id. ¶ 8.) With the assistance of management, the officers gained entrance to the unit. Inside were the following items: "a small desk, four tires, a suitcase, a black/grey duffle bag, burgundy duffle bag, a boxing bag, and a few other miscellaneous items." (Id. ¶ 9.) The suitcase found in the unit was "strong with the odor of raw marijuana, though none was found inside." (Id. ) The black/grey duffle bag was located in the desk and contained a large sum of U.S. currency, in 12 vacuum-sealed plastic baggies. "The burgundy duffle bag contained two digital scales." (Id. ) The vacuum-sealed baggies of currency, scales, suitcase, and duffle bags were seized and transported back to the Sheriff's Department. (Id. ) At the Sheriff's Department, "Frisco" once again alerted on the seized currency which had been placed in a brown paper bag next to other, empty, paper bags. (Id. ¶ 10.) The currency was counted and totaled $200,000.00 in U.S. currency.

The Sheriff's Department further determined, through its investigation, that Byron T. Phillips rented storage unit 18 on November 16, 2012. A record of unit access using Phillips' gate access number, 1929, revealed that the code had been used numerous times between November 16, 2012 and April 4, 2014 at all times of day and night. (Id. ¶ 11.) A check of Byron Phillips' criminal record revealed that he has served jail sentences for drug offenses involving marijuana in 2007 and 2009. Claimant, in this case, is Damian Phillips ("Mr. Phillips" or "Claimant"), Byron Phillips' brother. He claims that he is the owner of Defendant Currency and that he had placed the seized property in the storage unit for safekeeping.


As a threshold matter, the Government seeks to have Mr. Phillips' claim stricken on the basis that he lacks standing to contest the forfeiture. A claimant seeking the return of forfeited property must have standing to challenge the forfeiture. United States v. Real Prop. Located at 5201 Woodlake Drive , 895 F.Supp. 791, 793 (M.D.N.C.1995). The burden of proof is on the claimant to establish standing by a preponderance of the evidence. United States v. $119,030.00 in U.S. Currency , 955 F.Supp.2d 569, 576 (W.D.Va.2013). Standing is derived from statute and Article III of the U.S. Constitution. Real Prop. Located at 5201 Woodlake Drive , 895 F.Supp. at 793. A claimant must establish both statutory and Article III standing to proceed with his claim. United States v. $7,000.00 in U.S. Currency , 583 F.Supp.2d 725, 729 (M.D.N.C.2008) (citing United States v. $487,825.00 in U.S. Currency , 484 F.3d 662, 664 (3d Cir.2007) ). Statutory standing is not at issue in this action, (ECF No. 16 at 7), thus the Court need only examine whether Mr. Phillips has met his burden with respect to Article III standing.

Article III standing exists if a claimant "has a legally cognizable interest in the property that will be injured if the property is forfeited to the government." $ 7,000 in U.S. Currency , 583 F.Supp.2d at 729 (quoting United States v. $38,000 in U.S. Currency , 816 F.2d 1538, 1543 n. 12 (11th Cir.1987) ). Claimant's injury must be " ‘real and immediate,’ not ‘conjectural’ or ‘hypothetical.’ " City of Los Angeles v. Lyons , 461 U.S. 95, 102, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983). "Courts generally do not deny standing to a claimant who is either the colorable owner of the [property] or who has any colorable possessory interest in it." $ 7,000 in U.S. Currency , 583 F.Supp.2d at 729 (alteration in original) (quoting United States v. Contents of Accounts Nos. 3034504 and 14407143 , 971 F.2d 974, 985 (3d Cir.1992)).1 One asserting an ownership interest must support the claim with evidence beyond a bare assertion of ownership. Id. at 729–30. There must be "other indicia of true ownership." Id. at 730 (citing United States v. One Lot or Parcel of Ground Known as 1077 Kittrell St., Norfolk, Va. , 947 F.2d 942, 1991 WL 227792, at *2 (4th Cir. Nov. 7, 1991) (unpublished table decision)); see also United States v. Morgan , 224 F.3d 339, 343 (4th Cir.2000) (same in criminal forfeiture context). "Ownership may be established by proof of actual possession, control, title, and financial stake." $ 119,030 in U.S. Currency , 955 F.Supp.2d at 576 (quoting United States v. One (1) 1983 Homemade Vessel Named Barracuda , 625 F.Supp. 893, 897 (S.D.Fla.1986) ).

Mr. Phillips does not, nor can he, claim a possessory interest in Defendant Currency. He was not present at the time Defendant Currency was seized and neither was he the owner nor the renter of the storage unit in which Defendant Currency was found. In addition, no personal items of Claimant were found with or near Defendant Currency to connect it with Mr. Phillips. Rather, Mr. Phillips argues that he is the owner of the seized property.2 Mr. Phillips' evidence in support of his claim of ownership includes his own verified claim, a declaration from his brother (the renter of the unit in which the seized property was found), and assertions concerning what he claims is the legitimate source of the currency. (Resp. at 3–4, ECF No. 19.)

The verified claim of Mr. Phillips and the declaration of his brother, without more, are insufficient to support that he has standing. Mr. Phillips' verified claim merely states that he is the owner of Defendant Currency and that the property was not used or intended to be used in exchange for controlled...

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