US v. All Right, Title & Interest In Property

• Decision Date: 12 December 1990
• Docket Number: No. 88 Civ. 7509 (IBC).,88 Civ. 7509 (IBC).
• Citation: 753 F. Supp. 121
• Parties: UNITED STATES of America, Plaintiff, v. ALL RIGHT, TITLE AND INTEREST IN PROPERTY AND PREMISES KNOWN AS 710 MAIN STREET, PEEKSKILL, NEW YORK, and Business Interests Therein Known as Bunch's Place and the Video Arcade, Defendant.
• Court: U.S. District Court — Southern District of New York

753 F. Supp. 121

UNITED STATES of America, Plaintiff, v. ALL RIGHT, TITLE AND INTEREST IN PROPERTY AND PREMISES KNOWN AS 710 MAIN STREET, PEEKSKILL, NEW YORK, and Business Interests Therein Known as Bunch's Place and the Video Arcade, Defendant.

No. 88 Civ. 7509 (IBC).

United States District Court, S.D. New York.

December 12, 1990.

Otto Obermaier, U.S. Atty., S.D.N.Y., New York City (Timothy MacFall, Sp. Asst. U.S. Atty., of counsel), for U.S.

Hersh & Kornfeld, Peekskill, N.Y. (Leon Kornfeld, of counsel), for claimant Jesse James Bunch.

MEMORANDUM AND ORDER

IRVING BEN COOPER, District Judge.

The United States of America (the "government") commenced this civil in rem forfeiture action on October 21, 1988 by filing a verified complaint against the premises and real property located at 710 Main Street, Peekskill, New York (the "property"). Jesse James Bunch filed the only claim to the property in opposition to the forfeiture action. In an opinion dated August 13, 1990, we dismissed the government's complaint and ordered the property returned to Mr. Bunch ("the August 13 Opinion"). 744 F.Supp. 510 (S.D.N.Y.1990). The government timely moved for 1) reargument of the August 13 Opinion pursuant to Rule 3(j) of the Civil Rules for the United States District Courts for the Southern and Eastern Districts of New York ("Local Rule 3(j)"); 2) a new trial pursuant to Fed. R.Civ.P. 59(b); and 3) a stay of enforcement of the judgment filed August 17, 1990 ("the August 17 Judgment"), pursuant to Fed.R.Civ.P. 62(b), pending the disposition of the other two motions, or pending appeal. Mr. Bunch opposed the motions.

On September 24, 1990 we granted the government's application for the stay of enforcement of the August 17 Judgment, and on September 25 we granted the motion for reargument; oral arguments were heard on October 18, 1990. We shall address each motion separately hereinbelow.

The facts of this case are set forth at length in the August 13 Opinion; familiarity with them is assumed.

DISCUSSION

Motion to Vacate the August 17 Judgment

The government contends that consideration of the Second Circuit opinion in United States v. 141st Street Corp. ("141st Street Corp."), 911 F.2d 870 (2d Cir.1990), rendered four days after our August 13 Opinion, would change our disposition of the instant matter. In 141st Street Corp., our Circuit Court addressed the "lack of consent" issue in its discussion of the "innocent owner" defense contained in 21 U.S.C. § 881(a)(7) (1988); in so doing, the Court applied a standard to determine lack of consent which varies from the standard we applied in the August 13 Opinion. Having found that the strict standards for a motion for reargument had been met, see Ruiz v. Comm'r of Dept. of Transp. of City of New York, 687 F.Supp. 888, 890 (S.D.N.Y.1988); B.A.M. Brokerage Corp. v. New York, 724 F.Supp. 146, 147 (S.D.N.Y. 1989); H. Sand & Co., Inc. v. Airtemp Corp., 743 F.Supp. 279 (S.D.N.Y.1990) (Cooper, J.), we granted, on September 25, 1990, the government's motion for reargument.¹

In 141st Street Corp., the claimant, the corporation's president and principal shareholder, acted as the managing agent of the defendant property, and his uncle, the superintendent, also performed functions associated with a managing agent. 911 F.2d at 873. Police had received complaints of narcotics trafficking in connection with 24 of the building's 41 apartments. Crack vials and broken pipes designed for smoking crack were observed in the hallways and common areas, and "lookouts" and "steerers" were observed in front of and in the lobby of the building. Several police officers called the claimant on at least eight different occasions, leaving messages each time. Police also left at least three messages with the claimant's uncle, and one police officer wrote a letter to the claimant wherein he expressed his desire to discuss with the claimant the narcotics activity at the building. The claimant did not respond to any of the attempts by the police to contact him. The police thereafter chose not to contact the claimant because they felt that "`the owner was possibly aware of the narcotics trafficking, if not working directly with the narcotics traffickers in the building.'" Id.

Additionally, police discovered an alarm system, wired from a box on the roof to several apartments in the building, which was designed to alert drug dealers to police presence at or near the building, and narcotics purchases were made by undercover police in 17 of the building's 41 apartments. Id.

When the police raided the building a first time, executing search warrants for eight apartments, they arrested twenty-six people and recovered narcotics, money and weapons. Two weeks later, the police executed search warrants for nine additional apartments, wherein they arrested another twelve people and recovered more contraband. At the same time, law enforcement officers executed a seizure warrant for the entire building. Id.

The evidence adduced at trial in 141st Street Corp. established that the claimant took no affirmative steps to curb the drug activity until after the police first raided the property; moreover, the only action he took after the first raid was to instruct his uncle not to accept rent from those tenants who had been arrested. Id. at 879. "The jury concluded either that Realty Corp. knew of the narcotics activity before the first raid and took no steps to stop it, or that Realty Corp.'s response after learning of the raid was inadequate." Id. at 879-80.

In contrast to the claimant in 141st Street Corp., Mr. Bunch introduced evidence at trial demonstrating that he took steps to terminate the problem with drugs at the property. We found that although he knew of the drug activity, he made a number of attempts to keep it from the property. Based on the credible evidence admitted at trial, we concluded that Mr. Bunch, in an attempt to rid the property of illegal drug activity:

fired two bartenders after they were arrested on separate occasions on drug-related charges;

locked the restrooms and restricted access thereto to patrons who requested the key from the bartender;

ultimately closed the restrooms entirely and only reopened them upon orders from the Department of Health;

initiated a policy of allowing one person in the restroom at a time, for one minute per person, when the restrooms were reopened;

closed off the rear portion of the restaurant area to limit access to the unsupervised areas of the bar;

placed an electromagnetic lock on the front door of the bar to limit access to the bar (although he also testified that he stopped using it because it was a nuisance);

installed signs to warn patrons that they were subject to photograph and search (Mr. Bunch testified that he installed the signs as a scare tactic); restricted the bar's daily operating hours;

personally supervised the area around the property from a position near a second-story window;

wrote a letter (which received no reply) to the Commissioner of the Peekskill Police Department, asking for cooperation in ridding the property of drugs;

closed the third floor residential apartments at a loss of rental income to himself;

asked persons who were not patrons to leave the bar; and

made anonymous phone calls to the police to inform them of illegal activity at and around the property.

744 F.Supp. at 513-18.

We note that Mr. Bunch undertook the above measures on his own initiative. He did not have a complete high school education (Claim of Jesse James Bunch In Opposition to the Forfeiture Action, Nov. 1, 1988, Ex. 1), a law enforcement background, or even the advice of law enforcement agencies to guide him in determining appropriate actions to take.

Standard Applied

The Second Circuit, in affirming the jury's conclusion in 141st Street Corp. that the claimant consented to the illegal narcotics activity at the property, defined "lack of consent" as doing "all that reasonably could be expected to prevent the illegal activity once the claimant learns of it." 911 F.2d at 879. Conversely, the court defined "consent" as the claimant's failure to do all that he reasonably could be expected to do. Id.

In the August 13 Opinion we applied a different standard. We concluded that Mr. Bunch merely needed to show that he took some action toward ridding the property of the illicit drug activity. 744 F.Supp. at 524. We found that the facts compelled our finding, based on a fair preponderance of the credible evidence, that he did take affirmative steps to stop the proscribed use of his property. We therefore concluded that he did not consent to the illegal drug activity that was occurring at the bar and arcade. Id. at 524-25.

The government now contends that pursuant to the new standard set in 141st Street Corp., Mr. Bunch did not do all that could have reasonably been expected to show lack of consent, and it sets forth several examples in support of its position. First, the government argues that with regard to the bar, Mr. Bunch could have hired a second employee, such as a "bouncer" or doorman, to screen patrons to insure that suspected drug dealers were prohibited entry, or to monitor the bar to make sure that no drugs were being used in areas that the bartender could not effectively monitor. (R.Tr. 4)² Next, the government contends that Mr. Bunch's refusal to use the electromagnetic "buzzer" lock (Ex. 29; Tr. 252-3, 269, 275-6)³, installed to screen patrons, was unreasonable. (R.Tr. 5). The government further maintains that Mr. Bunch could reasonably have been expected to make his own presence known in the bar by personally supervising there instead of monitoring the street scene in front of the property from his position near the second-story window. (R.Tr. 4).

With respect to the arcade, the government argues that Mr. Bunch could have employed a number of reasonable measures to assist the police in curbing illegal drug activity, including asking his tenant to...