United States v. All That Tract & Parcel of Land

• Decision Date: 08 February 1985
• Docket Number: Civ. A. C84-456A.
• Citation: 602 F. Supp. 307
• Parties: UNITED STATES of America, Plaintiff, v. ALL THAT TRACT AND PARCEL OF LAND: 2306 NORTH EIFFEL COURT, Defendant.
• Court: U.S. District Court — Northern District of Georgia

602 F. Supp. 307

UNITED STATES of America, Plaintiff, v. ALL THAT TRACT AND PARCEL OF LAND: 2306 NORTH EIFFEL COURT, Defendant.

Civ. A. C84-456A.

United States District Court, N.D. Georgia, Atlanta Division.

February 8, 1985.

Barbara V. Tinsley, Asst. U.S. Atty., Atlanta, Ga., for plaintiff.

Ralph Spain, Travis & Davidson, Atlanta, Ga., for Rowland Lamar Allen and Beulah Allen Powell.

Thomas E. Prior, McCalla, Raymer, Padrick, Cobb & Nichols, Atlanta, Ga., for Goldome Realty Credit Corp. and Union Nat. Bank of Little Rock.

Michael J. Egan, William R. Asbell, Jr., R. Michael Robinson, Sutherland, Asbill & Brennan, Atlanta, Ga., for Rowland Allen Mid-Town Contractors & Property Pickup.

ORDER

ROBERT H. HALL, District Judge.

This is a forfeiture action pursuant to the Drug Abuse Prevention Act, 21 U.S.C. § 801 et seq., in which plaintiff ("the Government") is seeking to have the defendant property condemned and forfeited on the theory that the property was purchased with proceeds allegedly traceable to an exchange for a controlled substance in violation of the federal drug laws. See 21 U.S.C. § 881(a)(6). Jurisdiction exists pursuant to 28 U.S.C. §§ 1345 and 1355.

Presently pending is the Government's motion for default judgment.

BACKGROUND

A. Commencement of forfeiture action

The Government initiated this action on March 9, 1984, one day following the seizure of the defendant property by agents of the Drug Enforcement Administration, United States Department of Justice. The seizure was pursuant to a federal indictment returned on March 6, 1984.¹

All persons known to the Government to have a possible property interest in the defendant property were given personal service of this action on or before April 6, 1984. To notify those who had a possible property interest but were unknown to the Government, the Government posted a notice in the United States Courthouse in Atlanta, Georgia, on March 20, 1984, and published a notice in a newspaper of general circulation in DeKalb County, Georgia, on March 22, 1984. (See Tinsley Verification, motion for default judgment).

B. Noncomplying claimants

Pleadings styled "Claim and Answer" were filed March 27, 1984, by Rowland Lamar Allen and Beulah Allen Powell. The court ultimately granted the Government's motion to strike the Answers of these claimants finding that the claimants had failed to establish their right to defend this action by the timely filing of verified Claims as defined by Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims. (See Orders of October 1, 1984, November 9, 1984, and November 15, 1984).

C. Lienholder claimant

On May 29, 1984, Goldome Realty Credit Corporation ("Goldome Realty") filed a timely, verified Claim asserting a lienholder interest in the defendant property. The Claim was followed by a timely Answer (filed August 9, 1984) to the Government's forfeiture Complaint which proclaimed Goldome Realty's lack of knowledge of or consent to the act or omission leading to this forfeiture action and denied that Goldome Realty's interest in the defendant property was acquired with proceeds traceable to an illegal drug exchange.²

Goldome Realty's interest in the defendant property derives from a first lien security deed to the property acquired by Goldome Realty prior to the equitable interest in the property being purchased with proceeds allegedly traceable to an illegal drug transaction.³ The security deed secures the payment of a debt in the principal amount of $32,200.00 bearing interest at 8.5% per annum. Payment on the loan has apparently been made through March of 1984.⁴

In addition to filing a Claim to the defendant property and an Answer to the Complaint, Goldome Realty also filed a Petition for Remission with the Attorney General of the United States. See 21 U.S.C. § 881(d) (incorporating the remission provision of the customs forfeiture law, 19 U.S.C. § 1618). Goldome Realty now contends this petition was filed "out of an abundance of caution and was not intended as a waiver of its right to dispute the Government's right to forfeiture of Goldome Realty's security deed interest in the property." (Response of Goldome Realty in opposition to motion for default judgment, pp. 3-4).

The Government has promised Goldome Realty remission equal to its "net equity" in the defendant property if this court condemns and forfeits the property to the Government, "net equity" being defined by the Government as the unpaid principal due Goldome Realty plus interest up to the date remission was granted. See 28 C.F.R. Parts 9.7(c) and 9.2(d).⁵ (The remission is to be paid from the proceeds of the sale of the defendant property if the court condemns and forfeits the property to the Government.)

D. Notice of appeal

The Government filed the pending motion for default judgment on October 31, 1984. On November 30, 1984, claimant Beulah Allen Powell, a claimant whose Answer was stricken, filed a notice of appeal mistakenly thinking that the court had granted the Government's motion for default judgment on November 15, 1984, and that default judgment had been entered by the Clerk on November 27, 1984.⁶

DISCUSSION

A. Jurisdiction as affected by the notice of appeal

The Government contends that this court lacks jurisdiction to decide the pending motion for default judgment because a notice of appeal has been filed. (See supplemental brief of plaintiff filed January 25, 1985).

The court rejects this position. The notice of appeal filed in this case does not divest this court of its jurisdiction as the appeal is taken from nonappealable orders. There has been no "final decision" nor has this court granted permission to file an interlocutory appeal, thus the notice of appeal does not transfer jurisdiction over this case to the court of appeals, 28 U.S.C. §§ 1291 and 1292(b); jurisdiction necessarily remains in this court. See United States v. Hitchmon, 602 F.2d 689 (5th Cir. 1979) (en banc) ("the notice of appeal from a nonappealable order does not render void for lack of jurisdiction acts of the trial court taken in the interval between the filing of the notice and the dismissal of the appeal...."). See also McLaughlin v. City of LaGrange, 662 F.2d 1385, 1387 (11th Cir.1981).

B. Motion for default judgment

With its motion for default judgment, the Government seeks a default judgment against the defendant property "as to all persons who could claim any ownership interest in the property." The Government asserts that it is entitled to default judgment because no party with standing to contest the Government's forfeiture has filed a timely Claim and Answer. In the interest of clarity, the court will treat this argument as it respects the "noncomplying claimants" and the "lienholder claimant" separately.

1. Lienholder Claimant

The motion for default judgment as it concerns Goldome Realty is not easily disposed of.

Goldome Realty opposes the motion for default judgment to the extent it pertains to its interest in the defendant property, arguing that it has not defaulted its interest in the property, having filed a timely Claim to the defendant property as well as an Answer asserting a nonforfeitable interest in the property. Goldome Realty does not oppose the granting of a default judgment as to the equitable interest in the defendant property which may have been purchased with proceeds traceable to an illegal drug transaction and for which no timely Claim was filed, but strenuously opposes the entry of a default judgment as to its lienholder interest in the defendant property.

The Government's response to Goldome Realty's argument is that the Claim and Answer filed by Goldome Realty are immaterial because a lienholder such as Goldome Realty has no standing to challenge a forfeiture.⁷ "A mere security holder," argues the Government, "must apply for remission of the forfeiture penalty with the Attorney General .... and the Attorney General's discretion in these matters is not subject to judicial review...." (Memorandum in support of motion for default judgment, pp. 2-3).

The Government cites General Finance Corp. of Florida South v. United States, 333 F.2d 681 (5th Cir.1964), for its position that a lienholder has no standing to contest a forfeiture and is restricted to the remission process for relief. In that case, a forfeiture action under 49 U.S.C. § 782 (authorizing seizure and forfeiture of carriers transporting contraband articles), the holder of a security interest in the seized property (a car) intervened and filed a petition for remission. Remission was denied and the court ordered the property forfeited to the United States. The former Fifth Circuit, in affirming the trial court's judgment condemning the seized property and declaring it forfeited to the United States, stated:

It is well established that only an owner is entitled to set up a lack of forfeiture and to claim a remission or mitigation of that penalty. A mere security-holder, like the present one, must apply for remission of the penalty to the Secretary of the Treasury now to the Attorney General....

Id. at 682 (emphasis added).⁸

While not recognizing a right to intervene for Goldome Realty, the Government does urge the court to recognize the interest of the lienholder as established through the remission process in the judgment of forfeiture by directing that Goldome Realty be paid its "net equity" in the defendant property (i.e., the unpaid principal due Goldome Realty plus interest up to the date remission was granted) prior to distribution of the proceeds from sale of the property to the Government.

Despite the clear language of General Finance Corp., Goldome Realty argues that a lienholder has standing to challenge a forfeiture under 21 U.S.C. § 881(a)(6). Goldome Realty's contention is that a lienholder should be considered an "owner" for the purposes of § 881(a)(6) in light of the legislative history of the statute.

Indeed, the...