US v. REAL PROP. KNOWN AS 429 SOUTH MAIN STREET, C2-92-1165.

• Decision Date: 27 November 1995
• Docket Number: No. C2-92-1165.,C2-92-1165.
• Parties: UNITED STATES of America, Plaintiff, v. REAL PROPERTY KNOWN AND NUMBERED AS 429 SOUTH MAIN STREET, NEW LEXINGTON, OHIO etc., Defendant.
• Court: U.S. District Court — Southern District of Ohio

906 F. Supp. 1155

UNITED STATES of America, Plaintiff, v. REAL PROPERTY KNOWN AND NUMBERED AS 429 SOUTH MAIN STREET, NEW LEXINGTON, OHIO etc., Defendant.

No. C2-92-1165.

United States District Court, S.D. Ohio, Eastern Division.

November 27, 1995.

COPYRIGHT MATERIAL OMITTED

Marcia Harris, Assistant U.S. Attorney, Columbus, Ohio, for Plaintiff.

Randy L. Happeney, Lancaster, Ohio, for Defendant.

OPINION AND ORDER

GRAHAM, District Judge.

This is a civil forfeiture action filed by the United States on December 23, 1992 pursuant to 21 U.S.C. § 881. The government sought forfeiture of the defendant real property on the basis that the property was used to commit or to facilitate the commission of a drug offense. William G. Swallow (hereinafter "claimant") filed a claim to the property as the owner of record on April 27, 1993, and on May 19, 1993, he filed an answer to the forfeiture complaint.

On September 24, 1993, the government filed a motion for summary judgment. Claimant filed a memorandum opposing the government's motion on November 8, 1993. Claimant argued that a genuine issue of fact existed in regard to whether the property was used to facilitate a drug offense, and whether seizure of the property would violate the Eighth Amendment's Excessive Fines Clause under Austin v. United States, ___ U.S. ___, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993). In an opinion and order filed on December 13, 1993, this court found that the government had produced evidence demonstrating probable cause to believe that the defendant property was used to commit or facilitate the commission of a drug offense under Title 21, Chapter 13, Subchapter 1, and that claimant had produced no evidence sufficient to create a genuine issue of fact in that regard. This court further found that claimant failed to demonstrate the existence of a triable issue as to whether the forfeiture of the property would violate the Excessive Fines Clause, and that the evidence before the court did not show such a violation. This court granted the government's motion for summary judgment.

Claimant pursued an appeal to the Sixth Circuit Court of Appeals. In a decision rendered on May 9, 1995, the court of appeals found that summary judgment was appropriate on the issue of probable cause. A majority of the panel concluded that the award of summary judgment was also proper on the excessive fine issue, and that the forfeiture of the property did not violate the Eighth Amendment. Claimant also argued on appeal that he should have received notice and a hearing in accordance with the Supreme Court's decision in United States v. James Daniel Good Real Property, ___ U.S. ___, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993), which was issued the same day as this court's order granting summary judgment. In light of the incomplete record on this issue, the court of appeals remanded the case to this court to determine whether there was a seizure of the defendant property by the government which would have mandated predeprivation notice and a hearing, and if so, to determine the appropriate remedy. The opinion of the court of appeals was issued as a mandate on August 2, 1995.

Following remand, this court requested briefs from the parties on the issues remanded by the court of appeals and held an oral hearing on September 28, 1995, at which the parties were given the opportunity to present additional evidence or arguments relating to the remand issues and to claimant's Rule 60(b) motion. These matters are now before the court for a ruling.

The first issue before the court is whether claimant should have received pre-deprivation notice and a hearing. The court of appeals directed this court to analyze this case under the factors set forth in Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Under Eldridge, determining whether a property owner is entitled to notice and a hearing before the seizure of his property by the government requires consideration of the following factors: 1) the significance of the property interest at stake; 2) the risk of erroneous deprivation through the procedures used and the probable value of additional procedural safeguards; and 3) the government's interest in pre-notice seizure, including the avoidance of burdensome additional procedures. Id. at 335, 96 S.Ct. at 903.

The factors in Eldridge, considered as a whole, would weigh in favor of predeprivation notice and a hearing in this case. The defendant property was the claimant's residence, in which claimant had a substantial interest. The risk of erroneous deprivation was minimized by the fact that the in rem warrant was issued by a neutral magistrate judge following a probable cause determination based on a review of the government's evidence. Further, this is not a case which involved ownership of the property by a potentially innocent owner. However, preseizure notice and a hearing would have further served to minimize the risk of an erroneous deprivation. Finally, the government has offered no evidence which would indicate that exigent circumstances were present in this case which would militate against preseizure notice.

This does not end the inquiry, as the court of appeals also directed this court to determine if there was a "seizure" of claimant's property in this case sufficient to trigger the due process requirements of predeprivation notice and a hearing. As noted by the Supreme Court in Good, ___ U.S. at ___, 114 S.Ct. at 503, the exercise of authority short of seizure, such as filing a lis pendens or obtaining a restraining order, would not trigger the notice and hearing requirement. Thus, the Sixth Circuit indicated that the government can meet its burden of showing that the notice and hearing requirement did not apply by demonstrating that it only took measures short of a seizure against claimant's property which did not amount to a deprivation of property. United States v. Real Property Known and Numbered as 429 South Main Street, New Lexington, Ohio, 52 F.3d 1416, 1421 (6th Cir.1995).

The government argued in its trial brief that there was no seizure of claimant's property. Claimant offered no evidence or argument to dispute this position. The government indicated that a lis pendens was filed to prevent the sale of the property during the pendency of the forfeiture action. The parties have also filed a stipulation of evidence which includes a copy of the occupancy agreement which was signed by the claimant. This agreement allowed claimant and James Swallow, who was leasing claimant's two-story garage, to remain on the property. The agreement required claimant to maintain casualty and fire insurance on the property in the amount of $30,000, but a notation on the agreement states that claimant already had the property insured for that amount. The agreement also provided that the United States Marshal could demand that claimant vacate the property, but that in such event claimant had the option to remain on the property, thereby requiring the marshal to institute eviction proceedings. None of the other provisions of the agreement were such as would place any significant burden on claimant, and there is no evidence that the agreement had any impact on claimant's use and enjoyment of the property.

Unlike the situation in Good, where the government received rents due to the property owner, claimant received all rent monies due from James Swallow. The government has submitted copies of receipts indicating that claimant received these funds. The parties have also stipulated the testimony of John Snowden, a former deputy United States Marshal who served the in rem warrant and executed the occupancy agreement with claimant. Snowden stated that after serving a copy of the in rem warrant and executing the occupancy agreement, he left the property and at no time thereafter did he or anyone from the Marshal's Office exercise or attempt to exercise any control over the property, or interfere with claimant's receipt of rents. The parties further stipulated the testimony of Mark Stroh, the deputy marshal who assumed Snowden's duties, that this lack of interference continued after Snowden's departure. There is no evidence that the actions taken by the government caused claimant to sustain any damages or lost profits or otherwise interfered with claimant's use of the property. This court concludes that there was no seizure of claimant's property which would trigger the Good requirement of predeprivation notice and hearing.

Even if the evidence in this case had indicated that a seizure occurred, this court would still have to determine what the appropriate remedy would be for a Good violation. Some circuits which have addressed this issue have concluded that an illegal seizure does not require that the property be declared immune from forfeiture, and that the appropriate remedies are the exclusion of any evidence which was illegally seized from use in the forfeiture proceedings and requiring the government to pay to the claimant any damages, such as lost profits or rents, which accrued from the date of seizure to the date of the adversary hearing. See e.g., United States v. All Assets & Equipment of West Side Bldg. Corp., 58 F.3d 1181 (7th Cir.1995); United States v. Real Property Located at 20832 Big Rock Dr., 51 F.3d 1402 (9th Cir.1995). But see, United States v. One Parcel of Real Property, Located at 9638 Chicago Hgts., 27 F.3d 327 (8th Cir. 1994) (Good violation requires dismissal of the forfeiture action with leave to file a new action if the statute of limitations has not run). This court agrees with the view of the Seventh and Ninth Circuit that a violation of the predeprivation notice and hearing requirement does not mandate that the forfeiture be set aside. The court notes that even if a seizure had occurred in this case, claimant produced no evidence of any damages he sustained during the pendency of the forfeiture action.

The court concludes that no due...