United States v. Real Props. Located At 7215 Longboat Drive

• Decision Date: 02 May 2014
• Docket Number: Nos. 13–2018,13–2050.,s. 13–2018
• Citation: 750 F.3d 968
• Parties: UNITED STATES of America, Plaintiff–Appellee v. REAL PROPERTIES LOCATED AT 7215 LONGBOAT DRIVE (LOT 24), 7223 Longboat Drive (Lot 25), Johnston, Polk County, Iowa; Real Properties Located at 8707 Friestad Court (Lot 4), 8711 Friestad Court (Lot 3), Johnston, Polk County, Iowa, Defendants Terri Buczkowski; Dale Buczkowski; Estate of Betty Mariani, Claimants–Appellants. United States of America, Plaintiff–Appellee v. Real Property located at 7212 Longboat Drive, Johnston, Polk County, Iowa, Defendant Terri Buczkowski; Dale Buczkowski; Estate of Betty Mariani, Claimants–Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

750 F.3d 968

UNITED STATES of America, Plaintiff–Appellee

v.REAL PROPERTIES LOCATED AT 7215 LONGBOAT DRIVE (LOT 24), 7223 Longboat Drive (Lot 25), Johnston, Polk County, Iowa; Real Properties Located at 8707 Friestad Court (Lot 4), 8711 Friestad Court (Lot 3), Johnston, Polk County, Iowa, Defendants

Terri Buczkowski; Dale Buczkowski; Estate of Betty Mariani, Claimants–Appellants.

United States of America, Plaintiff–Appellee

v.Real Property located at 7212 Longboat Drive, Johnston, Polk County, Iowa, Defendant

Terri Buczkowski; Dale Buczkowski; Estate of Betty Mariani, Claimants–Appellants.

Nos. 13–2018, 13–2050.

United States Court of Appeals, Eighth Circuit.

Submitted: Jan. 16, 2014.

Filed: May 2, 2014.

David M. Michael, argued, San Francisco, CA, for appellant.

Amy L. Jennings, AUSA, argued, Maureen McGuire, AUSA, on the brief, Des Moines, IA, for appellee.

Before WOLLMAN, BYE, and MELLOY, Circuit Judges.

MELLOY, Circuit Judge.

The United States government filed civil forfeiture actions against five properties in Johnston, Iowa, alleging the properties were used to manufacture illegal drugs or were purchased with proceeds from illegal drug sales. The claimant-appellants filed claims to the defendant properties, but the district court struck their claims as untimely and entered forfeiture judgments in the government's favor. We vacate the forfeiture judgments, reverse the district court's order striking two of the claimant-appellant's claims as untimely, and remand for a merits determination on the claims to the properties.

I. Facts, State Law Background, and Procedural History

The government filed a verified complaint in rem on October 15, 2012, alleging that certain properties in Johnston, Iowa, were subject to forfeiture. ¹ According to the government, the properties were forfeitable because they were either purchased with proceeds from a drug crime or were used to facilitate the commission of a drug crime. See21 U.S.C. § 881(a)(6)-(7). Richard Miller LLC once owned the properties, but in 2011 Iowa's Secretary of State administratively dissolved the company after it failed to deliver its biennial report (as state law requires). Under Iowa law, after an administrative dissolution, a company “continues in existence,” Iowa Code § 489.705(4), but “may carry on only activities necessary to wind up its activities and liquidate its assets[.]” Id. Part of winding up a dissolved LLC requires the defunct company—after settling its debts with creditors—to return equity interests and then distribute remaining assets among its members. Iowa Code § 489.708(1)-(2).

The LLC's Certificate of Organization identified Betty Mariani as the LLC's registered agent, manager, and sole member at the time the government initiated forfeiture proceedings. Mariani died in July 2012, so Mariani's Estate (the “Estate”), by operation of Iowa law, received all the LLC's assets, including the properties at issue in this case. SeeIowa Code §§ 489.501–04, 489.602(6)(a), 489.603, and 489.705–08. The government knew at the time it initiated forfeiture proceedings both that Mariani was the LLC's registered agent and manager and that the LLC had been administratively dissolved. Further, in its motion to strike claimant-appellants' claims, the government said that it “was aware” Mariani died in July 2012 “but was unable to find an estate opened in Illinois, where she lived.” The government has not explained what efforts, if any, it made to attempt to locate the Estate. In fact, on September 20, 2012, in LaSalle County, Illinois, an Illinois probate court determined that Terri Buczkowski, Mariani's daughter, was the Estate's sole heir.

The government did not send notice of the pending civil forfeiture proceedings to the Estate or Terri. Instead, on October 17, 2012, the government sent direct notice and a copy of the forfeiture complaint via certified and regular mail to Dale Buczkowski.² In addition, the government published notices of the pending forfeitures on an official government website beginning on October 19 and 20, 2012, and continuing until November 17, 2012.

On November 29, 2012, attorney David M. Michael called Maureen McGuire, Assistant United States Attorney for the Southern District of Iowa, to discuss the forfeiture proceedings. Mr. Michael followed up their conversation by sending an email to Ms. McGuire that read as follows:

Thanks for the opportunity to discuss the Longboat Drive case with me today. As I indicated, I may be representing the estate of Betty Mariani as a claimant in the case and I appreciate the update on the proceedings. I will advise you as soon as I have been formally retained.

(Emphasis added). After this correspondence, the government did not send direct notice to the Estate, to Terri, or even to Mr. Michael for that matter.

Terri, the Estate, and Dale filed verified claims to the properties on January 10, 2013. On January 14, the government moved to strike their claims as untimely. The government argued that because Dale received direct notice, he had 35 days from October 17 (or November 21 at the latest) to file a claim. ³ As for the Estate and Terri (herein, “Claimants”), the government conceded in its motion-to-strike brief that it did not send them direct notice. Notwithstanding, the government argued that, pursuant to the publication notice provisions, see Fed.R.Civ.P., Supp. R. G(5)(a)(ii)(B), Claimants must have filed their claims by December 18 or 19 at the latest (that is, 60 days from the first day of publication on a government forfeiture website, which was October 19 for four of the properties and October 20 for 7212 Longboat Drive).

After Claimants filed their brief opposing the government's motion to strike, the government used its reply brief to offer a new argument: even in the absence of direct notice, Claimants' claims were still untimely because they received “actual notice” of the forfeiture proceedings.⁴ To support its “actual notice” argument, the government attached a copy of Mr. Michael's email to Ms. McGuire.

The district court accepted the government's position that Claimants received “actual notice,” so the court found their claims were untimely despite never having received direct notice of the forfeiture actions. The district court reasoned as follows:

This Court finds it is unnecessary to delve into the reasonableness of the government's actions in notifying the claimants of the forfeiture because this Court finds that the Estate possessed actual notice of the pending forfeiture on or before November 29, 2012—the date attorney David Michael contacted the government regarding the pending forfeiture.... Although in his correspondence, Michael states he “may be representing the estate of Betty Mariani as a claimant in the case,” the Estate must have had knowledge of the pending forfeiture in order to seek out his representation. Whether or not Michael was retained to represent the Estate at that time is unimportant, as the only inquiry provided for in the Rules is whether the “potential claimant ... had actual notice of the forfeiture action.” See Rule G(4)(b)(v). The court acknowledges that the government could, and maybe even should, have directly noticed Terri as the sole heir to the Estate, provided for in Rule G(4). However, pragmatically, the notice the government afforded to Dale served its purpose: the record owner received notice of the pending forfeiture proceedings. The Court finds any failure by the government to directly notify the Estate immaterial because the Estate nonetheless acquired actual notice of the forfeiture.

Terri and the Estate, therefore, had actual notice of the forfeiture action well in advance of the December 18, 2012, deadline to file a claim set by the publication of notice. Claimants failed to file their claims until January 10, 2013. The claims of Terri and the Estate are untimely, and the Court grants the government's motion to strike these claims.

The district court also rejected Claimants' request to file untimely claims. But see United States v. $125,938.62, 370 F.3d 1325, 1328–29 (11th Cir.2004) (recognizing that a district court has discretion to extend the time for filing verified claims to potentially forfeitable property); United States v. Borromeo, 945 F.2d 750, 753–54 (4th Cir.1991) (same). Claimants appeal.

II. Discussion

A. Standard of Review

The parties dispute what standard we apply to review the district court's decision to strike Claimants' claims. The government argues, with some support, that we review a district court's grant of a motion to strike only for abuse of discretion. See, e.g., United States v. Three Parcels of Real Prop., 43 F.3d 388, 391 (8th Cir.1994) (“We review the district court's grant of the government's motion to strike the claims for abuse of discretion.”). On the other hand, Claimants argue that this case requires de novo review because the district court interpreted the notice provisions in the Federal Rules of Civil Procedure, Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, Rule G(4). We review such interpretations by the district court de novo. See, e.g., United States v. Fast, 709 F.3d 712, 720 (8th Cir.2013) (noting that a district court's statutory interpretation is reviewed de novo on appeal); United States v. $11,500 in U.S. Currency, 710 F.3d 1006, 1010 (9th Cir.2013) (“We review a district court's interpretation of the Supplemental Admiralty and Maritime Claims Rules de novo.”). We agree with Claimants on this issue.

The district court “acknowledge[d] that the government could, and maybe even should, have directly noticed Terri as the sole heir to the Estate, provided for in Rule G(4).” But the court ultimately concluded that sending direct notice to Claimants was unnecessary because Claimants received “actual notice,” as evidenced by the email sent from attorney Mr. Michael to AUSA Ms. McGuire. Thus, the district court necessarily had to construe...