United States v. A Quantity of Gold Jewelry

• Decision Date: 03 July 1974
• Docket Number: Civ. No. 73-2839-R.
• Citation: 379 F. Supp. 283
• Court: U.S. District Court — Central District of California
• Parties: UNITED STATES of America, Plaintiff, v. A QUANTITY OF GOLD JEWELRY, Charles Naywert, Ltd., Defendants, Charles Naywert, Ltd., Claimant.

379 F. Supp. 283

UNITED STATES of America, Plaintiff, v. A QUANTITY OF GOLD JEWELRY, Charles Naywert, Ltd., Defendants, Charles Naywert, Ltd., Claimant.

Civ. No. 73-2839-R.

United States District Court, C. D. California.

July 3, 1974.

William D. Keller, U. S. Atty., Los Angeles, Cal., for the U. S.

Boccardo, Blum, Lull, Niland, Teerlink & Bell, James F. Boccardo, Los Angeles, Cal., for defendants.

MEMORANDUM OPINION AND ORDER

REAL, District Judge.

Basing its claim for relief on an alleged denial of due process arising out of the government's seizure of its property pursuant to the provisions of the Tariff Act of 1930, § 603, 19 U.S.C. § 1603, Charles Naywert, Ltd., (hereinafter Naywert), the claimant herein, has moved the court for an order granting summary judgment on its behalf. Such a judgment would serve, if granted, to return to Naywert a quantity of gold jewelry, worth in excess of $140,000, which was confiscated by the government on January 21, 1972 and which now forms the basis for the instant forfeiture action.¹

Naywert was engaged in conducting a retail jewelry business in Palm Springs, California, at all times relevant to this lawsuit; and in connection therewith its president, Charles Naywert, visited Italy in July of 1971 and there purchased the items of jewelry currently appraised by the Bureau of Customs at $143,667.00. The jewelry was shipped to Los Angeles for delivery to Naywert between September and November of 1971; but, during the course of these shipments, several alleged discrepancies in Naywert's purchase orders were discovered by Naywert's customs house brokers in Italy who then brought this information to the attention of the United States Bureau of Customs in Los Angeles, California. Upon discovering the possibility of the use of devalued invoicing procedures in connection with its jewelry shipments, Naywert immediately proceeded to pay all additional duties due under newly-issued and corrected invoices.

The government, nonetheless, commenced an investigation of the possibility of Naywert's false invoicing in late December, 1971, and issued a report of its investigations and concomitantly seized Naywert's jewelry in late January, 1972. The government notified Naywert at that time that the jewelry was subject to forfeiture under the provisions of 19 U.S.C. §§ 1602-1604,² and further indicated in early February, 1972, that an additional penalty of $4,370.00 would be assessed on certain pieces of jewelry which had previously been sold by Naywert and which were, therefore, incapable of being the object of a government forfeiture action.

It was at this point, in mid-February, 1972, that there commenced a series of events which ultimately served to deprive Naywert of the use of and profit from its jewelry for nearly twenty-two months. This delay forms the basis for Naywert's current due process allegations.

On February 18, 1972, Naywert petitioned the Commissioner of Customs for remission or mitigation of the originally assessed liability for forfeiture. After a lengthy investigation spanning the months of April through October of 1972, the Los Angeles District Director of the Bureau of Customs informed Naywert in early December of 1972 that it was the decision of the Department of the Treasury to remit forfeiture and the claim for forfeiture value upon Naywert's payment of $40,355.00. Naywert, however, was apparently unimpressed with the Bureau's proposed resolution of the matter and consequently filed a supplemental petition with the Commissioner on February 6, 1973, requesting reconsideration of the Bureau's former decision. Nevertheless, it was not until November 1, 1973 that Naywert was notified that its supplemental petition had been denied, a mere two weeks prior to the point at which the government commenced the instant forfeiture litigation.

Yet, during the time in which his administrative petitions were under consideration, Naywert was evidently not satisfied to rely solely upon the reticular, time-consuming investigative and decision-making procedures of the Bureau of Customs. Ever aware that a prolonged delay in the resolution of the controversy might ultimately insure to the detriment of its jewelry trade, Naywert offered on August 30, 1972 to post a surety bond with the government in the amount of $133,000.00 to secure the release of its jewelry, but the Bureau declined to act on said offer. In late October, 1972, Naywert attempted to effectuate a return of its jewelry, pending a judicial determination of the validity of the government seizure, by filing suit in the Central District of California which prayed for an Order of Reclamation; but said action was dismissed by the Court on the stated grounds of lack of jurisdiction. The undaunted Naywert then endeavored to deposit the mitigated amount of $40,355.00 in a trust account in return for the release of its jewelry, pending the final disposition of the matter; but the Bureau of Customs likewise rejected this approach. Finally, Naywert commenced an action in this Court on November 17, 1973 seeking review of the government forfeiture procedures and recovery of its jewelry. It is, therefore, in connection with the relief sought therein that Naywert brings the motion presently under consideration.

The issue as currently presented to this court by the claimant's motion may be stated quite simply: Does a governmental delay of some twenty-two months in bringing a forfeiture action under the provisions of the Tariff Act of 1930, § 610, 19 U.S.C. § 1610³ constitute a denial of due process when the government continuingly detains the items in question during this period? This court. persuaded by the reasoning in Sarkisian v. United States, 472 F.2d 468 (10th Cir. 1973), cert. den., 414 U.S. 976, 94 S.Ct. 291, 38 L.Ed.2d 219 (Oct. 23, 1973), feels compelled to answer in the affirmative.

In Sarkisian, supra, the district court had consolidated two actions relating to a quantity of jewelry which had been confiscated by the Bureau of Customs some fourteen months prior to the commencement of the first claim. This first cause of action had been brought by the alleged owner of the goods slightly in excess of one year after they had been originally seized by Customs officials due to the allegedly false invoicing of the property in question. The second action, a petition for forfeiture, was brought by the government some two months later. Citing United States v. U. S. Coin and Currency, 401 U.S. 715. 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971) for the proposition that the protections of Fifth Amendment due process attach to forfeiture proceedings, the court in Sarkisian, supra, held that a claimant may bring suit to compel the government to immediately institute forfeiture procedures or, in the alternative, to return the confiscated goods forthwith. In any event, noted the Sarkisian court, a nine month governmental delay between the conclusion of the forfeiture investigation and the commencement of a forfeiture action constituted an impermissible taking under Fifth Amendment due process, which taking ultimately mandated the immediate return of the confiscated jewelry.

In a similar manner, the court in United States of America v. One 1971 Opel G.T., 360 F.Supp. 638 (C.D.Cal. 1973) held, as did the Sarkisian court, that concepts of procedural due process do adhere to government forfeiture proceedings and that, to comport with these due process imperatives, such proceedings must afford the claimant of seized property a "prompt" day in court.⁴

"Now, if anything is clear from the statutory scheme relating to forfeiture, it is that claimants are entitled to prompt proceedings in all stages of the forfeiture machinery. The word `immediately' is used in describing the duties of the seizing officer to report his seizures to the Collector . . . § 1602. And the U.S. Attorney's duty is to `immediately' inquire into the facts and to `forthwith' institute court proceedings . . . § 1604." Id. at 641 (emphasis added).

Moreover, observed the court in One 1971 Opel, supra, the fact that a claimant may decide to avail himself of certain administrative procedures in order to avoid forfeiture, as Naywert did here, does not justify nor permit the government to delay in bringing a forfeiture action; for "there is nothing whatever to preclude a continued processing of the administrative claim in the Treasury Department after the Government's petition is filed in district court." Id. at 641.

Hence, in light of the considerations of the Sarkisian, supra, and One 1971 Opel, supra, courts, it is manifestly clear that, in order for the confiscation procedure under the Tariff Act of 1930, § 610, 19 U.S.C. § 1610, employed in the case at bar, to pass constitutional muster, the aggrieved claimant must be afforded a prompt hearing on the alleged violations of the Customs laws. See also, Truth Seeker Co., supra. All these courts have indicated that this "speedy" hearing provision is to be "read into" the Act itself, thereby making the Act at least facially constitutional.⁵ However, any undue delay in the commencement of a forfeiture hearing has been held to be a violation of Fifth Amendment due process, necessitating the return of the confiscated property by the government. Sarkisian, supra, 472 F.2d at 472; One 1971 Opel, supra, 360 F. Supp. at 642; Truth Seeker Co., supra, 147 F.2d at 56.

Turning, then, to the facts of the instant case, the court notes that the government is hardpressed to explain, much less justify, the twenty-two month delay in the bringing of this forfeiture action. The affidavit filed in opposition to the claimant's motion, which undertakes to describe the various investigative and quasi-judicial proceedings employed by the government in this case, does little to enhance the government's position since, as previously noted, the fact that the claimant may have pursued certain administrative remedies does not serve to justify a...