United States v. $229,850.00 in U.S. Currency

• Decision Date: 25 September 2014
• Docket Number: No. CV 13–1316–TUC–CRP.,CV 13–1316–TUC–CRP.
• Parties: UNITED STATES of America, Plaintiff, v. $229,850.00 IN U.S. CURRENCY, Defendant. Robert and Debra Osborne, Claimants.
• Court: U.S. District Court — District of Arizona

50 F.Supp.3d 1171

UNITED STATES of America, Plaintiff

v.$229,850.00 IN U.S. CURRENCY, Defendant.

Robert and Debra Osborne, Claimants.

No. CV 13–1316–TUC–CRP.

United States District Court, D. Arizona.

Signed Sept. 25, 2014.

Cynthia L. Weisman, Stephen R. Kotz, US Attorneys Office, Albuquerque, NM, for Plaintiff.

ORDER

CHARLES R. PYLE, United States Magistrate Judge.

The Government filed this forfeiture action pursuant to 21 U.S.C. § 881(a)(6).

(Complaint (Doc. 1)). The Claimants in this case, Dr. Robert Osborne and his wife Debra Osborne seek dismissal pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim, arguing that the Complaint is untimely. (Doc. 9). The Magistrate Judge has jurisdiction over this matter pursuant to the parties' consent. See 28 U.S.C. § 636(c). The Osbornes' Motion to Dismiss came on for oral argument on July 29, 2014. (See Transcript (Doc. 26)). For the following reasons, the Court converts the Motion to Dismiss to a motion for summary judgment and denies the motion.

Background

On May 9, 2013, pursuant to the execution of a search warrant by DEA, FBI, HHS, and IRS, a total of $229,850.00 in cash was seized from the master bedroom area of the Osbornes' residence. (Complaint, ¶ 11). The government alleges that the cash represents proceeds from Dr. Osborne's practice that was operating in violation of the Controlled Substances Act, 21 U.S.C. §§ 846 and 841 and is subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6). (Id. at ¶¶ 13, 15). Neither Dr. Osborne nor his wife, who both reside at the residence, were arrested or incarcerated. (Id. at ¶ 14).

DISCUSSION

The Osbornes seek dismissal of this action on the ground that the Complaint is untimely filed by one day. The parties disagree about when the time for the government to file this action began to run: the Osbornes contend it should be when the Claim was received by the FBI mailroom in Phoenix, Arizona, on July 10, 2013, and the government contends it is when the claim was received by the appropriate official at the agency, here, the FBI Forfeiture Paralegal Specialist at the FBI field office in Phoenix, Arizona, who received the Claim on July 11, 2013.

Standard. The government has attached affidavits with internal exhibits to its Response to the Motion to Dismiss. To consider the government's attachments, the Court must treat the motion to dismiss as a motion for summary judgment under Rule 56 and provide the parties with “a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d) ; see also San Pedro Hotel Co., Inc. v. City of Los Angeles, 159 F.3d 470, 477 (9th Cir.1998) (represented party who submits matters outside the pleadings and invites consideration of same has sufficient notice that the court may use them to decide the motion thus requiring conversion to a motion for summary judgment). At oral argument, when the Court addressed the issue of conversion to a motion for summary judgment in light of the government's attachments, counsel for the Osbornes stated that: “It is undisputed that ... the agency [received the claim] ... on the 10th. My argument is that's the effective date. I am, at this point, not challenging that someone in that agency really did stamp it on the 11th; I mean that seems to be what these affidavits are saying. My position is, so what[?] It doesn't matter....” (Tr. at p. 12). Counsel went on to state that discovery about “how the FBI procedures work....” is not necessary for the legal issue presently before the Court unless the Court decides otherwise. (Id. ).

Summary judgment is appropriate when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] ... which it believes demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The nonmoving party's evidence is presumed true and all inferences are to be drawn in the light most favorable to that party. Eisenberg v. Ins. Co. of North America, 815 F.2d 1285, 1289 (9th Cir.1987).

Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment, and the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the burden of persuasion at trial would be on the nonmoving party, the movant may carry its initial burden of production under Rule 56(c) by producing, “evidence negating an essential element of the nonmoving party's claim or defense,” or by showing, after suitable discovery, that the “nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1105–1106 (9th Cir.2000).

Timeliness. The applicable forfeiture statute provides, in pertinent part that:

Any person claiming property seized in a nonjudicial civil forfeiture proceeding under a civil forfeiture statute may file a claim with the appropriate official after the seizure.

18 U.S.C. § 983(a)(2)(A) (emphasis added). “Not later than 90 days after a claim has been filed, the Government shall file a complaint for forfeiture....” 18 U.S.C. § 983(a)(3)(A). If the government does not timely file a complaint for forfeiture or return the property prior to expiration of the 90–day deadline, then the government “shall promptly release the property ... and may not take any further action to effect the civil forfeiture of such property....” 18 U.S.C. § 983(a)(3)(B).

The facts are not in dispute. On May 9, 2013, the government seized the Defendant currency. On June 18, 2013, FBI Headquarters mailed Notice Letters to each of the Osbornes informing that the forfeiture was conducted pursuant to 21 U.S.C. § 881, 19 U.S.C. § 1602 –1619, 18 U.S.C. § 983, and 28 C.F.R. Part 8. (Response (Doc. 16), Exh. 1A). The Notice Letters also informed that:

If you want to contest the seizure or forfeiture of the property in court, you must file a claim of ownership with the FBI by July 23, 2013. The claim is filed when it is received by the FBI Forfeiture Paralegal Specialist of the FBI Field Division mentioned below.^{[ 1 ]}

(Id. ) (emphasis added). Through counsel, the Osbornes submitted a Claim dated July 9, 2013. (Response, Exh. 2A). The Osbornes sent the Claim by certified mail on July 9, 2014. (Id. ) In their Answer and Motion to Dismiss, the Osbornes assert that the Claim was received by the FBI on July 10, 2013. (Answer, (Doc. 7) p. 3² (citing tracking number); Motion p. 1 (citing Answer)). The government does not dispute that the Claim arrived at the FBI mailroom on July 10, 2013. (See Response (Doc. 16), p. 1 (indicating the FBI mailroom in Phoenix, Arizona, received the Claim on July 10, 2013 according to the U.S. Postal service tracking number indicated in the Answer)). Rather, the government contends that the Claim was not received by the “appropriate official” (i.e. the FBI Forfeiture Paralegal Specialist) until July 11, 2013. Thus, the government contends it had 90 days from that date to file the Complaint.

The Claim bears a “received” date of 7/11/13 (the date appears to be hand written). (Response, Exh. 2A). The government submitted the Declaration of FSA Data Analyst Brianne Johnson who states that she: stamped and dated the Osbornes' Claim on July 11, 2013; the day she stamped the Osbornes' claim, she was undergoing training by FBI Forfeiture Paralegal Specialist Christa Roberts who trained her to immediately open and date stamp incoming claims and petitions, then give them to either Roberts or the other Forfeiture Paralegal Specialist; and standard procedure is to date stamp the claims on the day they are received from the mailroom. (Response, Exh. 2). The government also submits the declaration of Christa Roberts, FBI Forfeiture Paralegal Specialist, who confirms Johnson's statements regarding receipt of the Osbornes' Claim and dating it as received on July 11, 2013. (Response, Exh. 1). Roberts goes on to state that the FBI office has a large mailroom, staffed by two employees, that receives mail for distribution to FBI offices in cities throughout Arizona. (Id. ). She states that “[t]here is always a delay from receipt of mail in the mailroom to delivery into the forfeiture mailbox, due to required security measures and sorting procedures for incoming mail.... It is not unusual for mail to be placed in the forfeiture mailbox late in the afternoon, or the following morning. As a result, often the Forfeiture Unit has a receipt date the day after mail was received from the mailroom.” (Id. at ¶ 7). “Upon receipt from the mailroom, the Forfeiture Unit immediately opens and date stamps all incoming claims and petitions.” (Id. at ¶ 6).

On October 9, 2013 (91 days after July 10, 2013 and 90 days after July 11, 2013), the government filed the civil complaint in this action. The Osbornes assert that the complaint is untimely filed pursuant to 18 U.S.C. § 983(a)(3)(A) because this civil action was filed later than 90 days after they filed their Claim given that their Claim was received by the FBI mailroom on July 10, 2013. The government counters that § 983(a)(2)(A) requires that the claim be filed with the “appropriate official” and, therefore, the claim is not “filed” until received by that official, who in this case is the FBI Forfeiture Paralegal Specialist. The government also cites regulations indicating that with respect to a personal written notice of administrative forfeiture, such as that received by the Osbornes, “Appropriate official” means: “the office or official identified in the ... personal written notice in...