US v. One Parcel of Real Property
| Decision Date | 07 December 1994 |
| Docket Number | No. 91-6296-CIV.,91-6296-CIV. |
| Citation | 871 F. Supp. 437 |
| Parties | UNITED STATES of America, Plaintiff, v. ONE PARCEL OF REAL PROPERTY LOCATED AT 3100 N.E. 48TH STREET, UNIT NO. 618, FORT LAUDERDALE, BROWARD COUNTY, FLORIDA, with all appurtenances and improvements thereon, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Asst. U.S. Atty. Barbara Jean Throne, Miami, FL, for U.S.
Stanley Brian Erskine, Erskine & Fleisher, Fort Lauderdale, FL, for defendant Great Western Bank, Successor in interest to First Federal Sav. & Loan Ass'n of Lke Worth.
Bernard Berman, Fort Lauderdale, FL, for claimant Fidelity Ins. Co.
ORDER OF FORFEITURE
THIS CAUSE came before the Court, sitting as finder of fact, on November 4, 1994. Pursuant to Federal Rule of Civil Procedure 52, this Court hereby enters the following findings of fact and conclusions of law.
This Court has jurisdiction over this in rem, civil forfeiture proceeding pursuant to 28 U.S.C. §§ 1345 and 1355 and 21 U.S.C. § 881(j).
The Defendant Real Property is located at 3100 N.E. 48th Street, Unit # 618, Fort Lauderdale, Broward County, Florida. The legal description of the Defendant Real Property is as follows:
Condominium Unit No. 618 of PILOT HOUSE CONDOMINIUM, a Condominium according to the Declaration of Condominium thereof, recorded August 25, 1977 in Official Records Book 7171 at pages 298 through 353 of the Public Records of Broward County, Florida.
The Defendant Property is currently titled in the names of Ozzie and Jamie Negron. On September 5, 1989, Ozzie Negron was convicted of various drug related charges, to wit: violations of 21 U.S.C. § 846, 21 U.S.C. § 841(a)(1), 18 U.S.C. § 2, and 18 U.S.C. § 1952(a)(3).
On or about September 5, 1989, the Claimant in this case, International Fidelity Insurance Company,1 posted a corporate surety appeal bond in the amount of $100,000.00 for Ozzie Negron. In return, the Negrons paid the Claimant its standard premium of $15,000.00 and executed a contingent promissory note and mortgage on the Defendant Real Property in favor of the Claimant. The mortgage was duly recorded in Broward County, Florida on September 12, 1989. At all pertinent times the individual acting on behalf of the Claimant, pursuant to a valid power of attorney, was Steven Falowski, President of B & S Bail Bonds.
Falowski was present at an initial bond hearing when the statutory provisions violated by Ozzie Negron were read out in court. Thus, Falowski learned that Negron was charged with violating a number of federal criminal statutes for his dealings in illicit drugs. Based upon: 1) representations made by Bill Laswell, Negron's defense attorney; 2) the fact that no Nebbia2 hearing was held by the court before setting the appeal bond; 3) the fact that no forfeiture proceeding had yet been instituted by the United States; and 4) his personal experience in posting bonds, Falowski concluded that the United States would not seek forfeiture of the Defendant Real Property. At no time, however, did any agent of the United States represent to Falowski, Negron or Laswell that the United States would not institute forfeiture proceedings against the Defendant Real Property.
On or about April 3, 1991, Negron became a fugitive from justice.3 On or about April 8, 1991 — the date Negron's conviction was affirmed by the Fourth Circuit Court of Appeals — the $100,000.00 corporate surety appeal bond posted by the Claimant was forfeited and paid to the United States.
The United States filed the current action on April 30, 1991.
The Plaintiff in this action seeks forfeiture of the Defendant Real Property under 28 U.S.C. § 881(a)(7), which provides for forfeiture to the United States of:
All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of 21 U.S.C. §§ 801 et seq. punishable by more than one year's imprisonment, except that no property shall be forfeited under this paragraph, to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.
In order to prevail in a forfeiture action under 21 U.S.C. § 881(a)(7), the United States must prove probable cause to believe that the Defendant Property was used to facilitate the violation of 21 U.S.C. §§ 801 et seq.. See United States of America v. One Parcel of Real Estate at 1012 Germantown Road, 963 F.2d 1496, 1500-01 (11th Cir.1992). The burden then shifts to the Claimant to prove a defense to forfeiture by a preponderance of the evidence. Id. at 1501; United States v. $500,000.00, 730 F.2d 1437, 1439 (11th Cir.1984). On August 19, 1993, this Court granted the Plaintiff's Motion for Summary Judgment on the issue of probable cause. Therefore, the sole remaining issue for the Court to determine is whether the Claimant has carried its burden of proving that it is an innocent owner under 21 U.S.C. § 881(a)(7).
Despite the apparent inequity of allowing the United States to obtain both the proceeds of the $100,000.00 bond posted by the Claimant and its underlying security, case law from this and other circuits convinces this Court that the Claimant has not established itself to be an innocent owner. Therefore, the Court concludes that the Defendant Real Property must be forfeited to the United States. The Court reaches this conclusion, however, with some hesitation.
In order to prevail in this case, the Plaintiff need not prove that the Claimant lacked actual knowledge of the illegal acts that are the basis of this forfeiture action. Instead, the Claimant must prove by a preponderance of the evidence that it lacked actual knowledge. United States v. $4,255,000.00 in U.S. Currency, 762 F.2d 895, 906-07 (11th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986); United States v. 1977 Porsche Carrera 911, 748 F.Supp. 1180, 1184 (W.D.Tex.1990), aff'd, 946 F.2d 30 (5th Cir.1991).
At trial, the Claimant provided credible evidence to support the conclusion that it was not actually aware that the Defendant Property was used to commit or facilitate the commission of a violation of 21 U.S.C. § 801 et seq. The Court accepts the Claimant's assertion, but concludes that the Claimant was aware of a high probability that the Property was so used. Thus, the Court must determine whether the knowledge provision of § 881(a)(7) should be read literally or as including some element of reasonableness.
The Plaintiff asserts that lack of knowledge is not a defense when the Claimant was "willfully blind" to the illegal use of the property. United States v. $705,270.00 in United States Currency, 820 F.Supp. 1398 (S.D.Fla.1993). Under the willful blindness test, a claimant must take "basic investigatory steps" to determine whether a property is connected with its transferee's illegal conduct, and thus potentially subject to forfeiture. 1977 Porsche Carrera, 748 F.Supp. at 1186. It is not clear, however, whether the willful blindness test should be applied under 21 U.S.C. § 881(a)(7). Unlike the forfeiture provision at 21 U.S.C. § 881(4)(c), subsection (a)(7) does not include "willful blindness" as a factor for the Court's consideration. There is, however, some indication in the legislative history that the willful blindness standard was intended to be applied to subsection (a)(7). See 1977 Porsche Carrera, at 1186.
Of the Eleventh Circuit cases cited by the Plaintiff supporting the use of the willful blindness test, most are instructive only by way of analogy. In both United States v. Alvarez, 837 F.2d 1024 (11th Cir.1988) and United States v. Rivera, 944 F.2d 1563 (11th Cir.1991), the courts discuss the willful ignorance standard as applied to the element of knowledge when interpreting criminal statutes. The same is true of United States v. Restrepo-Granda, 575 F.2d 524 (5th Cir. 1978), cert. denied, 439 U.S. 935, 99 S.Ct. 331, 58 L.Ed.2d 332 (1978). The language that the Plaintiff cites from United States v. Real Property on Lake Forrest Circle is dictum, as the opinion in that case was based upon the invalidity of the mortgage at issue and the claimants' lack of standing to raise their client's Sixth Amendment rights. 870 F.2d 586, 593 (11th Cir.1989).
The Plaintiff also relies upon United States v. One Parcel of Real Estate Located at 6640 S.W. 48th Court, 831 F.Supp. 1578 (S.D.Fla. 1993). The court in that case, however, considered a different issue from the one this Court must resolve. Judge Highsmith was not interpreting the knowledge requirement under § 881(a)(7). Instead, he was attempting to determine whether: 1) a claimant's lack of knowledge should be determined at the time of the illegal act giving rise to the forfeiture claim or at the time of conveyance of the property; and 2) whether the "consent or knowledge" provision of § 881(a)(7) should be read in the conjunctive or disjunctive. 831 F.Supp. at 1582. Judge Highsmith noted Justice Scalia's suggestion "that the post-illegal act transferees with post illegal act knowledge of the earlier illegal act should prevail when presenting an innocent owner defense." One Parcel of Real Estate Located at 6640 S.W. 48th Court, at 1584, citing United States v. Buena Vista Ave., ___ U.S. ___, ___, 113 S.Ct. 1126, 1143, 122 L.Ed.2d 469 (1993) (plurality opinion), (Scalia, J., concurring). Disagreeing with Justice Scalia, Judge Highsmith held that the claimant's knowledge must be measured at the time of the conveyance of the property. One Parcel of Real Estate Located at 6640 S.W. 48th Court, at 1584. Judge Highsmith, however, did not determine whether the willful blindness test should apply under § 881(a)(7).
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