United States v. Ten Thousand Five Hundred Dollars ($10,500) in U.S. Currency
| Decision Date | 10 April 2020 |
| Docket Number | No. 1:19-cv-1181-STA-jay,1:19-cv-1181-STA-jay |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. TEN THOUSAND FIVE HUNDRED DOLLARS ($10,500) IN U.S. CURRENCY, Defendant. |
| Court | U.S. District Court — Western District of Tennessee |
This is a civil action in rem for the forfeiture of property. In March 2019, law enforcement seized $10,500 in U.S. currency from the Jackson, Tennessee residence of Thomas Kelly Ballard, III. In the Motion to Dismiss (ECF No. 11) now before the Court, Ballard seeks the dismissal of the suit based on defects he has identified in the United States' pleadings. The government has responded in opposition, and Ballard has filed a reply. For the reasons set forth below, the government's request to amend its pleading is GRANTED.
On August 27, 2019, the United States filed a Verified Complaint of Forfeiture against ten thousand five hundred dollars ($10,500) in U.S. currency. Ballard filed an Answer (ECF No. 8) to the Complaint and Verified Claim (ECF No. 9) of interest in the property. In his Motion to Dismiss, Ballard makes a number of arguments for the dismissal of the Complaint of Forfeiture, all addressed to Ballard's theory that the Complaint is not properly verified. According to Ballard, the Assistant United States Attorney signed the affidavit in support of the allegations of the Complaint but has no personal knowledge of the facts alleged. The affidavit states that the information was obtained from court records and from law enforcement personnel with knowledge of the case. Without a declaration made on personal knowledge, the Complaint fails to meet the verification requirement for forfeiture complaints. In the alternative, Ballard contends that the Assistant United States Attorney's declaration violates the attorney-witness rule and puts the AUSA in the untenable position of being the government's counsel of record and a witness in the proceeding. For these reasons Ballard argues that the Court lacks subject matter jurisdiction over the Complaint of Forfeiture and should dismiss it with prejudice.
In its response in opposition, the United States argues that the Complaint of Forfeiture meets the requirements for verification. The government answers that Ballard's attack on the AUSA's declaration is essentially a credibility issue, improper for consideration at the pleadings stage. According to the government, personal knowledge of the facts averred in a declaration is not required under 28 U.S.C. § 1746 or by any of the procedural rules for forfeiture. The government has drawn the facts of the Complaint largely from a criminal indictment against Ballard, meaning a grand jury has found that the facts concerning the currency are supported by probable cause. And the only facts alleged in the Complaint and not taken directly from the indictment are the dates on which law enforcement seized the currency from Ballard's home, facts which Ballard has admitted in his responsive pleading. As for Ballard's argument concerning the attorney-witness rule, the United States contends that the rule governs ethical conduct and professional responsibility, not the admissibility of testimony. Finally, the United States argues that if the Court finds that the Complaint is defective, the appropriate remedy would be the dismissal of the Complaint without prejudice preserving the government's right to amend. Ballard has filed a reply addressed to his initial arguments.
As a threshold matter, Ballard argues that the Court should dismiss the Verified Complaint of Forfeiture for lack of jurisdiction under Rule 12(b)(1). "Subject matter jurisdiction defines the court's authority to hear a given type of case" and represents "the extent to which a court can rule on the conduct of persons or the status of things." Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009) (). "Federal courts are courts of limited jurisdiction and the law presumes that a cause lies outside this limited jurisdiction." Boegh v. EnergySolutions, Inc., 772 F.3d 1056, 1064 (6th Cir. 2014) (quoting Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994) (internal quotation marks omitted)). Federal Rule of Civil Procedure 12(b)(1) allows a party to move to dismiss a claim for lack of subject matter jurisdiction.1 When a court lacks subject matter jurisdiction, dismissal is mandatory. Fed. R. Civ. P. 12(h)(3) ().
The Court holds that it has subject matter jurisdiction over the case. Under 28 U.S.C. § 1345, district courts have "original jurisdiction of all civil actions, suits or proceedings commenced by the United States." And under 28 U.S.C. § 1355, district courts have original jurisdiction over forfeiture proceedings. Both of these sections confer the Court with subjectmatter jurisdiction. The United States commenced this action and seeks the in rem forfeiture of $10,500 in currency pursuant to 21 U.S.C. § 881(a)(6). Compl. ¶ 1. That section makes "all moneys . . . furnished or intended to be furnished by any person in exchange for a controlled substance . . . in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys . . . used or intended to be used to facilitate any violation of this subchapter" subject to forfeiture. 21 U.S.C. § 881(a)(6). Because this is an action brought by the United States for the forfeiture of property, the Court is satisfied that it has subject matter jurisdiction over the action. United States v. One Parcel of Prop. Located at 2556 Yale Ave., 20 F. Supp. 2d 1212, 1215 (W.D. Tenn. 1998).
Ballard's argument about the Court's lack of jurisdiction is not so much a challenge to the Court's subject matter jurisdiction but its jurisdiction over the currency itself. "A civil forfeiture proceeding under § 881 is an action in rem." Republic Nat'l Bank of Miami v. United States, 506 U.S. 80, 84 (1992). In other words, a forfeiture action is "against the property itself, and the court's jurisdiction derives entirely from its control over the defendant res." United States v. One 1990 Cadillac, 205 F.3d 1342, 1999 WL 777689, at *1 (6th Cir. Sept. 15, 1999) (unpublished table decision) (citations omitted). Ballard's position is that the government's failure to provide proper verification for its Complaint of Forfeiture deprives the Court of jurisdiction. There is legal support for such a proposition. United States v. $84,740.00 U.S. Currency, 900 F.2d 1402, 1406 (9th Cir. 1990), overruled on other grounds by Republic Nat'l Bank of Miami, 506 U.S. at 89. However, because this aspect of the Court's jurisdiction is bound up with the verification issue, the Court will proceed to consider whether the United States has properly verified its pleading. Assuming the government has verified its Complaint of Forfeiture(or can do so by filing an amended pleading), then the Court's jurisdiction over the currency is established.
The primary issue presented in Ballard's Motion to Dismiss is whether the government has properly verified the allegations of the Complaint of Forfeiture. In civil in rem forfeiture actions, 18 U.S.C. § 983 and Rule G of the Supplemental Rules for Admiralty or Maritime Claims and Civil Forfeiture Actions (the "Supplemental Rules") supplement the general requirements of the Federal Rules of Civil Procedure and provide specific pleading rules. United States v. $31,000.00 in U.S. Currency, 872 F.3d 342, 347 (6th Cir. 2017). One of Rule G(2)'s additional requirements is that the government verify its complaint of forfeiture. Id. (citing Rule G(2)(a)).
The Verified Complaint of Forfeiture in this case incorporated by reference and relied on facts contained in a nine-page affidavit signed by the Assistant United States Attorney. The AUSA's unsworn affidavit states that "[t]he information in this affidavit comes from Court records and law enforcement personnel with firsthand knowledge of the facts contained herein." Aff. ¶ 2 (ECF No. 1-2).2 The affidavit then goes on to set out nearly verbatim the facts alleged in an eighteen-count, twelve-page indictment against Ballard accusing him of various controlled substances offense. See United States v. Thomas Kelly Ballard, III, Indictment (ECF No. 3, no. 1:19-cr-10042-STA). The only statement in the affidavit not found in the indictment concerns the recovery of the subject currency from Ballard's home in March 2019. See Aff. ¶ 27 ( ). The AUSA affirmed that based on the facts of the affidavit, he believed the property was subject to forfeiture under 21 U.S.C. § 881(a)(6) and signed the affidavit with the following declaration: "I declare under penalty of perjury that the foregoing is true and correct." Aff., ¶ 28, attestation. The Verified Complaint of Forfeiture also includes a separate unsworn declaration (ECF No. 1-1) signed by the AUSA. The declaration states that the AUSA had read the pleading and its exhibits and that the contents of both were "true to the best of my knowledge and belief." The AUSA declared "under penalty of perjury that the foregoing is true and correct."
Rule G(2) does not list any specific requirements for the government's verification, only that the complaint of forfeiture be verified. Federal law fills this gap.3 Under 28 U.S.C. § 1746, a party may provide an unsworn declaration, verification, or affidavit "[w]herever, under any law of the United States or under any rule, regulation, order, or requirement made pursuant to law, any...
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