United States v. Diaz
| Docket Number | CRIMINAL 17-20631-CR-Scola |
| Decision Date | 26 October 2023 |
| Parties | United States of America, Plaintiff v. Osmany Rodriguez Diaz, Defendant. Ex Rel Property Investment 7722 LLC and Brandon Falcon, Petitioners. |
| Court | U.S. District Court — Southern District of Florida |
ORDER ON REPORT AND RECOMMENDATIONS
This matter is before the Court on the petition for third-party interest in forfeited property filed by Property Investment 7722 LLC and Brandon Falcon (collectively, the “Petitioners”) (Pet., ECF No. 419) and the United States of America's (“Government”) motion to dismiss the same (Mot., ECF No. 426). Following a referral by the Court, Magistrate Judge Jonathan Goodman issued a report and recommendations on the petition and the Government's motion to dismiss. (R&R, ECF No. 438.) The Government timely filed limited objections to the report and recommendations. (Obj., ECF No. 442.) After careful consideration of the parties' written submissions, the record, and the relevant legal authorities, the Court adopts in part and declines to adopt in part Judge Goodman's report and recommendations (R&R, ECF No. 438), thus granting in part and denying in part the Government's motion to dismiss (Mot., ECF No 426).
The Court assumes that parties' familiarity with the factual and procedural background of this case. As relevant here, on February 2, 2018, the Defendant Osmany Rodriguez Diaz pled guilty to conspiracy to commit health care fraud and wire fraud. (ECF Nos. 79, 121.) As part of his guilty plea, the Defendant agreed to the entry of a forfeiture money judgment in the amount of $1,728,508.00 and to forfeit all his property that may be subject to forfeiture pursuant to 18 U.S.C. § 982(a)(7) and the procedures of 21 U.S.C § 853. (Plea Agreement ¶ 8, ECF No. 119.)
On April 17, 2018, the Court entered a preliminary order of forfeiture, which imposed forfeiture of various bank accounts and other miscellaneous property from the Defendant and, in addition, included the forfeiture money judgment in the amount of $1,728,508.00. (ECF No. 171.) Upon the Government's motion, on August 8, 2022, the Court entered a second preliminary order of forfeiture, pursuant to the forfeiture of substitute property provision in 21 U.S.C. § 853(p), which imposed forfeiture of certain real property located at 21105 S.W. 213 Avenue Road, Miami, FL 33187 (“Real Property”). (ECF No. 416.) The order explained that the forfeiture of the substitute Real Property was being done in satisfaction of the original forfeiture money judgment, of which $1,687,988.09 remained unpaid. (Id.)
On November 2, 2022, the Petitioners filed a petition for third-party interest in forfeited property, asserting their ownership interests in the Real Property that was the subject of the Court's second preliminary order of forfeiture. (ECF No. 419.) The Petitioners asserted that they have a legal and equitable right, title, and interest in the Real Property under both 21 U.S.C. § 853(n)(6)(A) and 21 U.S.C. § 853(n)(6)(B). (Id. ¶ 2.) In addition, and in the alternative, the petitioners alleged that they have a constructive trust interest in the Real Property. (Id.) On April 24, 2023, the Government moved to dismiss the petition, arguing that the Petitioners failed to allege, and could not establish as a matter of law, a superior interest in the Real Property under either §§ 853(n)(6)(A) or § 853(n)(6)(B), that the Petitioners failed to adequately plead a constructive trust, and that Petitioner Falcon lacked standing to pursue his claim. (See Mot., ECF No. 426; Reply, ECF No. 431.)
The Court referred the petition for third-party interest and the Government's motion to dismiss the same to Judge Goodman, who issued a report and recommendations. (ECF Nos. 427, 438.) Judge Goodman recommended that the Court grant the Government's motion to dismiss as to Falcon for lack of Article III standing, with leave to file an amended petition; deny the Government's motion to dismiss for failure to allege a superior interest in the Real Property; and deny the Government's motion to dismiss for failure to adequately plead a constructive trust. Critically, Judge Goodman did not recommend that the Court grant the Petitioners' request for a modification to the second preliminary order of forfeiture. Instead, he recommended that the Court authorize an evidentiary or ancillary hearing over which he could preside to properly weigh the merits of the parties' claims to the Real Property.
The Government filed limited objections to Judge Goodman's report and recommendations. The Government concurs with allowing Falcon ten days to attempt to properly plead Article III standing. However, and perhaps unsurprisingly, the Government disagrees with Judge Goodman's recommendation that its motion to dismiss for failure to adequately allege a superior interest in the Real Property under either §§ 853(n)(6)(A) or § 853(n)(6)(B), and for failure to adequately plead a constructive trust, be denied. In particular, the Government strongly challenges Judge Goodman's conclusion that the lis pendens and renewal of lis pendens filed by the Government on the substitute Real Property were unauthorized.
For the reasons explained below, the Court adopts in part and declines to adopt in part Judge Goodman's report and recommendations. (R&R, ECF No. 438.)
“In order to challenge the findings and recommendations of the magistrate judge, a party must file written objections which shall specifically identify the portions of the proposed findings and recommendation to which objection is made and the specific basis for objection.” See Macort v. Prem, Inc., 208 Fed.Appx. 781, 783 (11th Cir. 2006) (quoting Heath v. Jones, 863 F.2d 815, 822 (11th Cir.1989)) (cleaned up). The objections must also present “supporting legal authority.” L.R. 4(b). Once a district court receives “objections meeting the specificity requirement set out above,” it must “make a de novo determination of those portions of the report to which objection is made and may accept, reject, or modify in whole or in part, the findings or recommendations made by the magistrate judge.” Macort, 208 Fed.Appx. at 783-84 (quoting Heath, 863 F.2d at 822) (cleaned up). To the extent a party fails to object to parts of the magistrate judge's report, those portions may be reviewed for clear error. Macort, 208 Fed.Appx. at 784.
The Court finds Judge Goodman's findings of fact and conclusions of law to be well-reasoned, thorough, cogent, and compelling. With respect to the Government's objections, the Court agrees with Judge Goodman that the Government's motion to dismiss for failure to adequately allege a superior interest in the Real Property under § 853(n)(6)(A) or § 853(n)(6)(B) should be denied, and, in particular, that the lis pendens and renewal of lis pendens filed by the Government on the substitute Real Property were unauthorized. However, the Court agrees with the Government that the Petitioners failed to adequately plead a constructive trust, and so will dismiss that claim, with leave to amend.
First, the Government objects that Judge Goodman erred in declining to dismiss the Petitioner's § 853(n)(6)(A) and § 853(n)(6)(B) claims on the basis that the Petitioners failed to provide sufficient facts to adequately allege either claim. The Court is not convinced.
Preliminarily, it is worth noting that the Government failed to raise this particular argument before Judge Goodman. The Government's motion to dismiss argued that the petition should be dismissed for failure to specify whether the Petitioners were proceeding under § 853(n)(6)(A) or § 853(n)(6)(B), that, in any event, the Government's interest in the Real Property was superior to the Petitioner's, and that the Petitioners were on notice of this superior interest. But the Government never specifically argued that the Petition was deficient for failure to adequately allege the Petitioner's interest in the Real Property. (See generally Mot., ECF No. 426.) The Government's failure to properly raise this argument before Judge Goodman is important because “a district court has discretion to decline to consider a party's argument when that argument was not first presented to the magistrate judge.” See Williams v. McNeil, 557 F.3d 1287, 1292 (11th Cir. 2009). Accordingly, the Court may reject the Government's argument on this ground alone.
Notwithstanding the above, the Court has considered the government's argument and rejects it on the merits. See United States v. Franklin, 694 F.3d 1, 6 (11th Cir. 2012) () § 853(n)(3), on which the Government largely relies specifies that a petition for the court to adjudicate a third-party interest in forfeited property “shall set forth the nature and extent of the petitioner's right, title, or interest in the property, the time and circumstances of the petitioner's acquisition of the right, title, or interest in the property, any additional facts supporting the petitioner's claim, and the relief sought.” 21 U.S.C. § 853(n)(3). The petition here satisfies these requirements by, for example, alleging that Petitioner Property Investment 7722 LLC has held title to the Real Property since May 25, 2017, that Petitioner Falcon became the managing member and owner of Property Investment 7722 LLC on April 5, 2022, and by attaching the deed evidencing ownership of the Real Property and corporate filings evidencing Falcon's status as Property Investment 7722 LLC's managing member and owner. (See Pet., ECF No. 419.) Whether the Petitioners can...
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