Valerio v. Lacey Police Dept.

• Court: Washington Court of Appeals
• Writing for the Court: HUNT, J.
• Citation: Valerio v. Lacey Police Dept., 39 P.3d 332, 110 Wash.App. 163 (Wash. App. 2002)
• Decision Date: 01 February 2002
• Docket Number: No. 25955-9-II.
• Parties: Mark A. VALERIO, Appellant, v. LACEY POLICE DEPARTMENT and City of Lacey, Respondents.

39 P.3d 332

110 Wash.App. 163

Mark A. VALERIO, Appellant, v. LACEY POLICE DEPARTMENT and City of Lacey, Respondents.

No. 25955-9-II.

Court of Appeals of Washington, Division 2.

February 1, 2002.

Rodney Gene Franzen, Olympia, for Appellant.

William Dale Kamerrer, Olympia, Joseph M. Svoboda, Asst City Attorney, Lacey, for Respondents.

HUNT, J.

Mark A. Valerio appeals the RCW 69.50.505 forfeiture of $58,300 cash that was found in the trunk of his girlfriend's car and turned over to the City of Lacey Police Department. Valerio argues that (1) the forfeiture hearing was untimely; (2) the City failed to prove that he used or intended to use the money for an illegal drug business; and (3) RCW 69.50.505 is unconstitutionally overbroad as applied here. Finding no probable cause for forfeiture of the seized money, we reverse.

FACTS

I. SEIZURE OF UNEXPLAINED CASH

On November 12, 1998, Valerio asked his friend Johnny Morton to "hold onto" a safe containing a large amount of money in plastic bags. Morton declined. That evening, Valerio drove home in his girlfriend's [Victoria Messman] car, where police arrested him for a domestic violence assault against Messman earlier that day.

The next morning, Messman's brother, Roy Benson, helped her move from the residence that she had been sharing with Valerio. Benson found a locked safe in the back of her vehicle. Benson and his mother, Annieta Winston, opened the safe, discovered $58,300 cash, and took the safe and the money to the City of Lacey Police Department. Winston reported that she believed the money belonged to Valerio.

Detective Joe Upton questioned Valerio about the money. Valerio said that he was not the last person to have driven the vehicle, he knew nothing about the safe, and he did not want to incriminate himself. Upton noticed that some of the money had a musty odor.

The City police asked Nisqually Police Department Officer Carl Mealing and drug-detecting dog Zandy for assistance. Zandy has been trained to detect the odor of cocaine, heroin, marijuana, methamphetamines, and hashish; Zandy can also detect controlled substances odor that may have transferred from another item stored in the same evidence locker.¹ Zandy indicates a positive find of a controlled substance by placing her nose on the area where the item is located and sitting down.

Two times in two separate offices, City police hid the plastic-bagged money that Winston had turned in; both times, Zandy indicated a positive find. When the State Crime Laboratory tested the money for controlled substance residue, the result was inconclusive.

City police searched Valerio's home but recovered no evidence of controlled substances, drug paraphernalia, or any other evidence of drug dealing. Valerio had no criminal history involving drugs. Messman said that she had never known Valerio to use, to manufacture, to possess, or to deliver illegal drugs or drug paraphernalia. But she told Officer Chris Ward that Valerio had mentioned starting a drug-related business, that there would be a lot of money, and that it would never be at their residence or around the children.

II. FORFEITURE

Neither the State nor the City of Lacey charged Valerio with a crime related to the money from the safe. The City, however, initiated a hearing under RCW 69.50.505 to forfeit the money as proceeds of, or intended for use in, illegal drug transactions. Although neither Morton nor Valerio had yet claimed ownership of the money, the City sent them forfeiture notices on November 19, 1998. Only Valerio responded, on December 28, 1999.

A. REMOVAL TO SUPERIOR COURT

On January 27, 1999, Valerio filed a Complaint and Petition for Removal of Forfeiture Action in Thurston County Superior Court. The court set a status conference² for April 2, 1999, which it continued to April 16, 1999. The forfeiture hearing began on May 7, 1999. Finding that the forfeiture hearing was timely held, the trial court denied Valerio's motions to dismiss.

B. PROBABLE CAUSE HEARING

Valerio testified that he had accumulated the $58,300 over several years. Messman testified that she had given Valerio approximately $5,880. In June 1998, Valerio and Messman had cosigned a note for approximately $6,080, using Messman's 1991 Honda Accord as collateral (Resp't Exhibit No. 7); they had used $1,590 of the loan proceeds to pay off a preexisting loan from O'Bee Credit Union. (Resp't Exhibit No. 19.) For the years 1995 through 1998, Valerio did not report to the IRS an annual income of more than $5,890. (Resp't Exhibit No. 14-16.) Nor did he keep records of his past gambling winnings or losses.³ (Resp't Exhibits No. 12, 14-17, and 18.)

The superior court ruled that there was probable cause for the City to have seized the money because: (1) the bills appeared to be new and uncirculated; (2) Valerio did not immediately claim ownership; (3) other innocent explanations for the money were not credible; (4) Messman said that Valerio had mentioned the possibility of large amounts of money, possibly from a drug-related business; and (5) a drug-sniffing dog alerted to the money. Clerk's Papers at 9. The trial court later noted that at this point, "[T]he burden shifted to Mr. Valerio to present evidence to satisfy a burden by the preponderance of evidence that he had acquired the property in some manner other than in violation of RCW 69.50.505." Oral Opinion RP at 9.

C. FORFEITURE FINDING: SEIZED MONEY WAS DRUG-DEALING PROCEEDS OR FUTURE CAPITAL

Following the forfeiture hearing, the trial court found that the money had been "accumulated and held in violation of RCW 69.50.505" and ordered its forfeiture. Oral Opinion RP at 4. The trial court also found that Valerio had not met his burden of proving by a preponderance of the evidence that the funds had come from a lawful source.

Before rendering its oral opinion, the court noted that the money had a "musty odor" and only one of the bills had been issued before 1996.

The court then recited the following evidence to support its ruling: (1) Initially no one claimed the money, and Valerio had said he knew nothing about it. (2) Valerio's testimony on direct examination that he had virtually no expenses (to offset money earned or gifted) was not reasonable, especially in light of expenses, such as child-care, that he acknowledged on cross-examination. (3) Although Valerio said that he distrusted banks, he had used banks since he was a teenager. (4) Valerio was experienced in the use of credit cards to pay off debts. (5) Valerio could not have accumulated this large amount of money in the manner he described. (6) Valerio did not have significant gambling winnings. (7) Valerio had earned approximately $121 per week from 1995 to 1998, and these amounts did not explain accumulation of the large sum of money. (8) "The investigation conducted by police officers at the time that the money was discovered tended to exclude other explanations." Oral Opinion RP at 6.

The trial court also listed two other significant items of evidence. First were Valerio's hearsay statements to Messman, his live-in companion and mother of his child,

that Mr. Valerio would be coming into large amounts of money; that the reason for that money had something to do with the drug trade, and that he would not involve his family—Ms. Messman, his child, and the other members of his family—in the business or these transactions in any way, and that no people associated with those transactions would come around the house.

Oral Opinion RP at 7. Second was the dog's "olfactory conclusion":

[T]he dog gave an immediate reaction at the time of entering the threshold of the office. In other words, he didn't wait until he was in close proximity of the drugs. Rather ... coming to the entrance to the chief's office [the dog] began a series of reactions indicating his olfactory conclusion that there were drugs somewhere in his presence, and as he proceeded around the office until he came to the place where the drugs were hidden, that reaction increased in intensity until he gave his sit-down reaction to the close proximity of drugs, and which he did exactly where they were found.

Both the handler and the police officer who witnessed this, Detective Ward, described the reaction of the dog as strong and immediate.

Oral Opinion RP at 8-9 (emphasis added). The court also entered written Findings of Fact, Conclusions of Law, a Judgment, and an Order of Forfeiture, consistent with its oral decision.

The trial court further clarified its opinion by noting that the money was "used or intended to be used to facilitate any [controlled substances] violation...." Oral Opinion RP at 17. The court candidly went on to explain its reasoning:

And I will tell you that in my analysis, if you wish it for the record, the phrase "used or intended to be used," was a phrase that caused me some concern. Clearly the evidence of the dog and the evidence of drug residue on the money suggested that it had been used. The statements by Mr. Valerio to Ms. Messman were of intention to enter that business. Whether this money was the result of a drug transaction in which Mr. Valerio participated or whether he was accumulating it to enter other drug transactions is difficult for me to say, based upon this evidence. But where the statute is so broadly stated that it says, "used or intended to be used," I concluded that the evidence satisfied that standard.

Oral Opinion RP at 18-19 (emphasis added).

When defense counsel asked if the court was finding that all $58,000 of the money was subject to forfeiture under this finding, the court replied:

My reading of this statute is that where the claimant makes no attempt to segregate the funds, that a single fund of money gathered as it was here, where even some part of it had been used or intended to be used in violation of the statute, then the entire fund is subject to seizure and forfeiture and the burden remains upon the claimant to establish what parts,...