United States v. DKG Appaloosas, Inc., S-84-43-CA

• Decision Date: 21 February 1986
• Docket Number: No. S-84-43-CA,S-84-147-CA,S-84-44-CA,and S-84-149-CA.,S-84-45-CA,S-84-43-CA
• Citation: 630 F. Supp. 1540
• Parties: The UNITED STATES of America v. D.K.G. APPALOOSAS, INC., et al.
• Court: U.S. District Court — Eastern District of Texas

630 F. Supp. 1540

The UNITED STATES of America v. D.K.G. APPALOOSAS, INC., et al.

Nos. S-84-43-CA, S-84-44-CA, S-84-45-CA, S-84-147-CA, and S-84-149-CA.

United States District Court, E.D. of Texas, Sherman Division.

February 21, 1986.

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Bob Wortham, U.S. Atty., Wes Rivers, Asst. U.S. Atty., Beaumont, Tex., Bert Garcia, Asst. U.S. Atty., Sherman, Tex., Steve Mason, Asst. U.S. Atty., Tyler, Tex., for the U.S.

Gerald Goldstein, Goldstein, Goldstein & Hilley, San Antonio, Tex., Joseph C. Hawthorn, Beaumont, Tex., Joe Brent Johnson, Fort Worth, Tex., Charles B. Robinson, Sherman, Tex., for claimants, Bruce Emery Griffin, NABUC, Ltd., D.K.G. Appaloosas, Inc., Antonio Griffin and Joseph Edge.

John J. Cunningham, Jr., Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tampa, Fla., for claimant, Dr. Leffie Carlton, Jr.

MEMORANDUM OPINION AND ORDER

STEGER, District Judge.

The following motions are presently awaiting resolution in this consolidated action:

(1) Claimant Dr. Leffie M. Carlton, Jr.'s Motion for Summary Judgment and for Declaration that Claimant is not Responsible for Bills.

(2) Plaintiff United States of America's Motion to Alter or Amend the Judgment.

(3) Plaintiff's Motion to Set Aside Judgment and for Judgment Non Obstante Verdicto, or in the Alternative, Motion for New Trial.

(4) Claimants' Motion to Reconsider Order Staying Enforcement of Judgment.

(5) A Joint Motion to Release Household Furnishings.

The following opinion is composed of four parts. The first provides a review of the procedural events which preceded these motions. (P. 2) The second explains the Court's decision to grant Dr. Carlton's motion for summary judgment but deny the plaintiff's motions to alter, amend or set aside the judgment and the plaintiff's alternative motion for new trial. (P. 16) The third section provides the reasoning behind the Court's decision to tax a portion of the maintenance expenses incurred by the government against the prevailing claimants. (P. 60) Finally, the fourth part lifts the stay and reinforces the judgment entered on December 9, 1985. (P. 83)

I. PROCEDURAL BACKGROUND

As an experiment with a new apparatus for the seizure of proceeds from drug transactions, the attempted forfeiture of the D.K.G. Ranch has been a procedural nightmare. Dozens of motions and proceedings in two federal district courts have led to hesitancy, delay, and disorder. The lack of statutory or judicial guidance caused by the paucity of similar cases has led to many of the difficulties encountered. One thing has become clear, however: But for a pre-plea agreement finalized in September of 1983 between the United States and Bruce Emery Griffin, the D.K.G. Ranch could have been sold long ago.

That agreement has become the focal point in this case. By its terms, the government agreed not to impose any further civil sanctions on Bruce Emery Griffin for conduct known to the United States Attorney and committed in the Southern District of Florida prior to the date of the agreement. According to Griffin's interpretation, forfeiture of property he owns would be a civil sanction against him, and is proscribed by the plea agreement as long as the property was purchased with proceeds from illegal conduct occurring in the Southern District of Florida. He has admitted purchasing the property with such illegal proceeds, and has asserted his interpretation of the pre-plea agreement as his primary defense to this forfeiture proceeding.

This proceeding differs from all others. Unlike so many of the reported forfeiture cases, mostly involving boats or automobiles, this case has involved the seizure of an operational, multi-million dollar Appaloosa horse ranch and several million dollars worth of gold and jewelry found on the premises. More than the difference in the value of the seized property, what separates this case from so many others is the fact that the government has continued to operate the ranch, spending to date over two million dollars in the process.

Yet under revamped and broadened procedures for the forfeiture of traceable proceeds from drug trafficking, the operation of seized businesses is becoming less unique. There may be other cases, now or in the future, where the government will spend millions in upkeep while forfeiture proceedings progress through the courts. It is unlikely, however, that there will be many of these large forfeiture cases in which the claimants will stipulate that the government had probable cause to seize their property, admit that drug money was used to purchase the property, and assert only one defense: The government promised not to do this.

No such promise was mentioned when the government approached this Court on the evening of March 13, 1984, seeking authority to seize the D.K.G. Ranch. This Court was not told about the existence of the pre-plea agreement made between the government and Bruce Emery Griffin until six weeks after the seizure. By then, the United States Marshal's Service had firm control over all the assets, and a substitute custodian had been appointed who was operating the ranch. The government was committed, and it was too late to turn back without great difficulty. If this Court could have foreseen the delays that ultimately attended these proceedings, the difficulty might not have seemed so great.

By the same token, if this Court had known about the plea agreement on March 13, 1984, it is unlikely that it would have given the government authority to seize the ranch without a thorough inquiry into the provisions of the bargain. Such an inquiry may have led to a refusal to give the authority to seize, or it may have led to a limited seizure upon strict conditions. This observation is conjectural, and is made with the benefit of hindsight. The fact remains, however, that all relevant information should have been presented to the Court, and it was not.

The information that was presented to the Court clearly warranted authorization of the seizure. The government stressed the fact that the property had been purchased with the proceeds from illegal drug trafficking by a major narcotics dealer in Florida. They assured the Court that they had conclusive evidence to establish all necessary requirements for a forfeiture, and described some of that evidence. Due process did not require that pre-seizure notice or opportunity to be heard be given to the owners of the seized property. See United States v. One 1977 Mercedes Benz, 708 F.2d 444, 450 n. 5 (9th Cir.1983) (and cases cited therein). Under these circumstances, it seemed appropriate to go forward with the forfeiture proceedings.

As a result, the D.K.G. Ranch was seized on March 14, 1984. The various claims to the property were filed on March 26, 1984. The next month consisted primarily of a dispute concerning the extent of the powers to be granted to the substitute custodian appointed to operate the ranch. This dispute was resolved by an agreement memorialized in a written order dated May 10, 1984. This order amended an earlier order spelling out the powers of the custodian. The amended order gave the claimants the right to monitor the ranch operations on a weekly basis at an agreed time and through an agreed agent. This understanding was reached after a hearing conducted by this Court on April 23, 1984.

One week earlier, on April 16, 1984, Bruce Emery Griffin's attorneys in Florida had brought the seizure of the D.K.G. Ranch to the attention of the Hon. William M. Hoeveler, the federal district court judge who had accepted Griffin's plea bargain. Griffin's attorneys made clear their belief that the seizure action in Texas was in violation of that September, 1983 pre-plea agreement. Nothing substantive came of this hearing. It is mentioned because it was only after this hearing that this Court was apprised of the existence of the pre-plea agreement.

Knowledge of the pre-plea agreement came from one of the attorneys for Bruce Emery Griffin, who informed the Court in chambers just before the April 23, 1984 hearing began. The government was quick to point out that the seized land was deeded to NABUC, Ltd. a Bahamian corporation. In addition, most of the other seized assets were apparently owned by D.K.G. Appaloosas, Inc., a Texas corporation wholly owned by NABUC, Ltd. Neither of these corporations were parties to the pre-plea agreement, and as a result the government contended that the agreement did not bar forfeiture of the seized property. In addition, the government argued that the plea agreement should be set aside or interpreted so as to allow this forfeiture.

The next several months were composed of attempts by both sides to engage in discovery and by delays caused by the claimants. After abiding by a protective order requiring compliance with government regulations, the claimants were successful in obtaining the information they requested from the government. When they were summoned for depositions, however, the claimants asserted fifth amendment privileges and refused to testify. Requests for admission and document requests from the government were ignored by the claimants. Through it all, the claimants were constantly seeking additional time in which to file their answers. From April 9, 1984 until August 10, 1984, this Court honored seven requests for additional time. The final deadline for filing an answer was August 20, 1984, more than five months after the seizure.

On August 20, 1984, the claimants and the defendant property finally filed answers, together with a motion for more definite statement and, more importantly, a motion for change of venue to Florida. This latter motion represented the first time that the pre-plea agreement issue had been formally raised in written pleadings filed in this Court. Three days earlier, on August 17, 1984, Bruce Emery Griffin's...