Commonwealth v. All that Certain Lot or Parcel of Land Located at 605 University Drive

61 A.3d 1048, 2012 WL 5870666, 2012 Pa. Commw. LEXIS 321

• Court: Commonwealth Court of Pennsylvania
• Decided: November 21, 2012
• Status: Published

Opinions

OPINION ANNOUNCING THE JUDGMENT OF THE COURT

OPINION BY

President Judge PELLEGRINI.

Gregory Palazzari (Palazzari) appeals an order of the Court of Common Pleas of Centre County (trial court) which granted the Office of Attorney General’s (Commonwealth) motion for summary judgment in a proceeding under what is commonly known as the Controlled Substances Forfeiture Act (Forfeiture Act), 42 Pa.C.S. §§ 6801-6802. Because granting a motion for summary judgment in a forfeiture action is at variance with the procedures set forth in the Forfeiture Act, we reverse the trial court.

On August 21, 2009, following a joint investigation by the Commonwealth and the Centre County Drug Task Force, Pa-lazzari was arrested for cocaine trafficking and charged with multiple offenses under the Controlled Substance, Drug, Device and Cosmetic Act (Controlled Substance Act).¹ The Commonwealth then petitioned the trial court to forfeit the property located at 605 University Drive, State College, Pennsylvania (property) on which a service station known as Greg’s Sunoco is located. In its forfeiture petition, the Commonwealth alleged that Palazzari used the property for the sale and storage of cocaine and as a place to meet his cocaine supplier.

Palazzari filed an answer to the Commonwealth’s forfeiture petition in which he admitted that he was the owner of the property “on paper,” but stated that “for all intent[s] and purposes the owner of the property would be Mr. Palazzari’s mother,” Santina Palazzari. (Answer to Petition for Forfeiture and Condemnation at 1). Palazzari also denied that the property was used or intended to be used for drug trafficking. Palazzari ultimately pled guilty to multiple drug charges and was sentenced to a term of incarceration.

Following discovery, the Commonwealth filed a motion for summary judgment alleging that there was no genuine issue as to any fact material to the determination of the forfeiture proceeding. In support of its motion, the Commonwealth attached numerous documents identifying Palazzari as the owner of the property.² In his answer to the Commonwealth’s motion, Palazzari argued that he had produced documents demonstrating that his mother, Santina Palazzari, was the defacto owner and operator of Greg’s Sunoco. He also argued that forfeiture of the property was excessive considering the gravity of the underlying offenses and, therefore, was unconstitutional. After hearing oral argument, the trial court granted the Commonwealth’s motion for summary judgment and ordered the property forfeited to the Commonwealth. In its Opinion and Order, the trial court explained that Pennsylvania courts have “constantly applied the Rules of Civil Procedure to forfeiture actions,” and, citing Commonwealth v. 6969 Forest Avenue, 713 A.2d 701 (Pa.Cmwlth.1998), noted that summary judgment specifically has been “approved as a method of resolving a forfeiture matter.” (Trial Court Opinion and Order at 5-6). This appeal by Palazzari followed.³

On appeal, Palazzari, relying on this Court’s holding in Brown v. Commonwealth, 940 A.2d 610 (Pa.Cmwlth.2008), argues that the Pennsylvania Rules of Civil Procedure do not apply to proceedings under the Forfeiture Act. He contends that the Forfeiture Act mandates a statutory procedure that must be followed, which includes the right of a hearing. As a result, he argues that the trial court’s grant of summary judgment⁴ constituted an error of law.

Section 6802 of the Forfeiture Act, 42 Pa.C.S. § 6802, sets forth a complete procedure regarding forfeiture, in-eluding what is in the forfeiture petition, the prayer for relief, notice, what has to be in the notice, who has to sign the notice, substitute notice, preservation of the property, “temporary restraining order,” allowable evidence, “fixing of a hearing” and burdens of proof.⁵ Regarding notice and hearing, we explained in Brown:

The Forfeiture Act establishes a very specific procedure that must be followed in order for seized property to be forfeited to the Commonwealth. Pertinent here are two aspects of that procedure. First, the forfeiture petition must be personally served on the owner of the property. 42 Pa.C.S. § 6802(b) (“A copy of the petition ... shall be served personally or by certified mail on the owner or upon the person or persons in possession at the time of the seizure”) Second, there must be a hearing on the merits of the forfeiture if the owner asserts a claim that the property cannot be forfeited. 42 Pa.C.S. § 6802(i). (“Upon the filing of a claim for the property setting forth a right of possession, the case shall be deemed at issue and a time shall be fixed for a hearing.”)

Brown, 940 A.2d at 613 (emphasis added) (footnote omitted). Not only is a hearing required, under Article I, Section 6 of the Pennsylvania Constitution,⁶ a property owner is entitled to a jury trial in a forfeiture action to decide whether the property seized is contraband. Commonwealth v. One 1984 Z-28 Camaro Coupe, 530 Pa. 523, 610 A.2d 36 (1992); Commonwealth v. $3961.00 Cash, 1 A.3d 999 (Pa.Cmwlth.2010).

Forfeiture proceedings, while nominally civil in nature, involve constitutional rights normally only involved in criminal proceedings. A forfeiture effected pursuant to the Forfeiture Act is a fine and, thus, subject to review under the Excessive Fines Clause. Commonwealth v. Real Property and Improvements Commonly Known As 5444 Spruce Street, Philadelphia, 574 Pa. 423, 832 A.2d 396 (2003).

In One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 85 S.Ct. 1246, 14 L.Ed.2d 170 (1965), the United States Supreme Court held Fourth Amendment protections applicable to forfeiture proceedings. In so doing, the Court rejected the argument that forfeiture proceedings are solely civil in nature. Relying on Boyd v. United States, 116 U.S. 616, 633-634, 6 S.Ct. 524, 29 L.Ed. 746 (1886), the Court stated, “We are also clearly of opinion that proceedings instituted for the purpose of declaring the forfeiture of a man’s property by reason of offenses committed by him, though they may be civil in form, are in their nature criminal.” One 1958 Plymouth Sedan, 380 U.S. at 697, 85 S.Ct. 1246. See also United States of America v. 1988 BMW 750IL, 716 F.Supp. 171 (E.D.Pa.), aff'd, 891 F.2d 281 (3rd Cir.1989).

In United States v. United States Coin and Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971), the United States Supreme Court held the Fifth Amendment applicable to forfeiture proceedings. The Court reiterated that forfeiture proceedings, although civil in form, are quasi-criminal in nature:

From the relevant constitutional standpoint there is no difference between a man who ‘forfeits’ $8,674 because he has used the money in illegal gambling activities and a man who pays a ‘criminal fine’ of $8,674 as a result of the same course of conduct. In both instances, money liability is predicated upon a finding of the owner’s wrongful conduct; in both cases, the Fifth Amendment applies with equal force.

Id. at 718, 91 S.Ct. 1041. See also U.S. v. One Single Family Residence Located at 6960 Miraflores Ave. 995 F.2d 1558, 1564-65 (11th Cir.1993).

Given the quasi-criminal nature of the forfeiture proceeding, Pennsylvania courts have often stated that notice and opportunity to be heard as provided for in the Forfeiture Act guard against those proceedings from “amount[ing] to little more than state-sanctioned theft.” Commonwealth v. Younge, 446 Pa.Super. 541, 667 A.2d 739, 747 (1995). See also Commonwealth v. Mosley, 549 Pa. 627, 702 A.2d 857 (1997); Commonwealth v. $1,155.00 Cash, 909 A.2d 12 (Pa.Cmwlth.2006).⁷ Because it imposes a fíne attendant to a criminal action, forfeitures are not favored under the laws of the Commonwealth and statutes authorizing forfeiture are strictly construed against the Commonwealth. Commonwealth v. Smith, 562 Pa. 609, 757 A.2d 354 (2000); Commonwealth v. 502-504 Gordon Street in Ninth Ward of City of Allentown, County of Lehigh, 147 Pa.Cmwlth. 330, 607 A.2d 839 (1992), affirmed per curiam, 535 Pa. 515, 636 A.2d 626 (1994). By requiring a hearing in 42 Pa.C.S. § 6802(i), the General Assembly intended for the Commonwealth to present evidence in open court to make out its case before property could be taken from an individual and forfeited to the state.

As to the argument that the statutorily required hearing in open court is excused because property can be forfeited on a summary judgment motion made under the Pennsylvania Rules of Civil Procedure, those Rules simply do not apply to forfeitures because the General Assembly provided the complete procedure to be followed that preempts the area. Moreover, simply by their own terms, the Rules do not apply to forfeiture proceedings. Pa. R.C.P. No. 1001 provides:

(a) As used in this chapter (entitled “Civil Actions”) ..., “action” means a civil action brought in or appealed to any court which is subject to these rules.

(b) There shall be a “civil action” in which shall be brought all claims for relief heretofore asserted in:

(1) the action of assumpsit,

(2) the action of trespass, and

(3) the action in equity.

A motion for summary judgment is contained in the “Civil Action” chapter and is only available in a “civil” action, ie., one in assumpsit, trespass or equity. Because forfeiture is begun by a petition, not a civil action, the Rules of Civil Procedure do not apply. To the extent that any previous cases have applied the Rules of Civil Procedure to forfeiture actions, those cases are overruled.⁸

Also, the “petition practice” rules contained in Pa. R.C.P. Nos. 206.1 through 206.7 do not apply. First, they are not envisioned to handle a proceeding that could result in a jury trial. Moreover, Rule 206.1(a) provides, in relevant part: (a) As used in this chapter, “petition” means

(1) an application to open a default judgment or a judgment of non pros, and

(2) any other application which is designated by local rule, numbered Local Rule 206.1(a), to be governed by Rule 206.1 et seq.

A forfeiture proceeding does not fall under subsection (1) and, even if it could, the Court of Common Pleas of Centre County has not designated any other type of proceeding to be covered by petition practice.

Because a forfeiture proceeding is a quasi-criminal punitive proceeding, the General Assembly mandated a hearing requiring the Commonwealth to present its evidence in open court, much like it has to do in a criminal proceeding where similar constitutional principles are implicated and not do it just on the papers.

Accordingly, because the Forfeiture Act mandates that a hearing be held before property is forfeited, and the Rules of Civil Procedure are inapplicable to forfeiture actions, we reverse the trial court’s order and remand this matter to the trial court to conduct a hearing as required by § 6802(f) of the Forfeiture Act.

Per Curiam ORDER

AND NOW, this 21st day of November, 2012, the order of the Court of Common Pleas of Centre County dated April 15, 2011, at No. CP-14-MD-1134-2009, is reversed. This matter is remanded to the trial court to conduct a hearing.

Jurisdiction relinquished.

1 . Act of April 14, 1972, P.L. 233, as amended, 35 P.S. §§ 780-101-780-144.

2 . These documents included: (1) a copy of a Currency Transaction Reporting Form showing the purchase of a bank check in the amount of $60,000; (2) copies of the HUD-1 form used by Palazzari to purchase the property on September 27, 2002; (3) liability insurance policies and workers' compensation insurance policies for the years 2005 and 2006 listing Palazzari as the owner of the property and the business known as Greg’s Sunoco; (4) Palazzari’s tax returns for the years 2002 to 2009 listing him as the owner of Greg's Sunoco at the address of the property; (5) a W-2 for Santina Palazzari indicating that she received $3,000 in employee compensation from Greg’s Sunoco; (6) two trial court opinions identifying Palazzari as the owner of Greg's Sunoco at the address of the property; and (7) a deed for the property listing Palazzari as the sole owner.

3 . In reviewing the grant of a motion for summary judgment, we are obliged to read the record in the light most favorable to the non-moving party and resolve all doubt against the movant. A grant of summary judgment will be reversed only where there has been an error of law or a manifest abuse of discretion. Moscatiello Construction Company v. Pittsburgh Water and Sewer Authority, 167 Pa.Cmwlth. 508, 648 A.2d 1249, 1251 n. 3 (1994).

Review of a grant of a forfeiture petition is limited to determining whether the findings of fact made by the trial court are supported by competent evidence and whether the trial court abused its discretion or committed an error of law. Commonwealth v. Marshall, 548 Pa. 495, 499 n. 2, 698 A.2d 576, 578 n. 2 (1997).

4 . Motions for summary judgment are governed by Pa. R.C.P. No. 1035.2, which provides:

After the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law:

(1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or

(2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense in which a jury trial would require the issues to be submitted to a jury.

5 . 42 Pa.C.S. § 6802, titled “Procedure with respect to seized property subject to liens and rights of lienholders” provides:

(a)General procedure. — The proceedings for the forfeiture or condemnation of property, the sale of which is provided for in this chapter, shall be in rem, in which the Commonwealth shall be the plaintiff and the property the defendant. A petition shall be filed in the court of common pleas of the judicial district where the property is located, verified by oath or affirmation of an officer or citizen, containing the following:

(1) A description of the property seized.

(2) A statement of the time and place where seized.

(3) The owner, if known.

(4) The person or persons in possession, if known.

(5) An allegation that the property is subject to forfeiture pursuant to section 6801(a) (relating to controlled substances forfeiture) or 6801.1(a) (relating to terrorism forfeiture) and an averment of material facts upon which the forfeiture action is based.

(6)A prayer for an order of forfeiture that the property be adjudged forfeited to the Commonwealth and condemned and be ordered sold according to law, unless cause be shown to the contrary.

(b) Notice to property owners. — A copy of the petition required under subsection (a) shall be served personally or by certified mail on the owner or upon the person or persons in possession at the time of the seizure. The copy shall have endorsed a notice, as follows:

To the Claimant of within Described Property: You are required to file an answer to this petition, setting forth your title in, and right to possession of, said property within 30 days from the service hereof, and you are also notified that, if you fail to file said answer, a decree of forfeiture and condemnation will be entered against said property.

The notice shall be signed by the Attorney General, Deputy Attorney General, district attorney, deputy district attorney or assistant district attorney.

(c) Substitute notice. — If the owner of the property is unknown or there was no person in possession of the property when seized or if the owner or such person or persons in possession at the time of the seizure cannot be personally served or located within the jurisdiction of the court, notice of the petition shall be given by the Commonwealth through an advertisement in only one newspaper of general circulation published in the county where the property shall have been seized, once a week for two successive weeks. No other advertisement of any sort shall be necessary, any other law to the contrary notwithstanding. The notice shall contain a statement of the seizure of the property with a description of the property and the place and date of seizure and shall direct any claimants to the property to file a claim on or before a date given in the notice, which date shall not be less than 30 days from the date of the first publication. If no claims are filed within 30 days of publication, the property shall summarily forfeit to the Commonwealth.

(d) Property owners not in jurisdiction.— For purposes of this section, the owner or other such person cannot be found in the jurisdiction of the court if:

(1) a copy of the petition is mailed to the last known address by certified mail and is returned without delivery;

(2) personal service is attempted once, but cannot be made at the last known address; and

(3) a copy of the petition is left at the last known address.

(e) Notice automatically waived. — The notice provisions of this section are automatically waived when the owner, without good cause, fails to appear in court in response to a subpoena on the underlying criminal charges. Forty-five days after such a failure to appear, if good cause has not been demonstrated, the property shall summarily forfeit to the Commonwealth.

(f) Preservation of the property subject for forfeiture. — Upon application of the Commonwealth, the court may enter a restraining order or injunction, require the execution of a satisfactory performance bond or take any other action to preserve the availability of property described in section 6801(a) or 6801.1(a) for forfeiture under this section either:

(1) upon the filing of an information or an indictment charging an offense in this Commonwealth for which criminal forfeiture may be ordered under this chapter and alleging that the property with respect to which the order is sought would be subject to forfeiture; or

(2) prior to the filing of such an indictment or information, if, after notice to persons appearing to have an interest in the property and an opportunity for a hearing, the court determines that:

(i) there is a substantial probability that the Commonwealth will prevail on the issue of forfeiture and that failure to enter the order will result in the property being destroyed, removed from the jurisdiction of the court or otherwise made unavailable for forfeiture; and

(ii) the need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order is to be entered.

However, an order entered pursuant to this paragraph shall be effective for not more than 90 days unless extended by the court for good cause shown or unless an indictment or information described in paragraph (1) has been filed.

(g) Temporary restraining order. — A temporary restraining order under subsection (f) may be entered upon application of the Commonwealth without notice or opportunity for a hearing when an information or indictment has not yet been filed with respect to the property, if the Commonwealth demonstrates that there is probable cause to believe that the property with respect to which the order is sought would be subject to forfeiture under this chapter and that provision of notice will jeopardize the availability of the property for forfeiture. Such a temporary order shall expire not more than ten days after the date on which it is entered, unless extended for good cause shown or unless the party against whom it is entered consents to an extension for a longer period. A hearing requested concerning an order entered under this subsection shall be held at the earliest possible time and prior to the expiration of the temporary order.

(h) Hearing regarding property; rules of evidence. — The court may receive and consider, at a hearing held pursuant to subsection (f) or (g), evidence and information that would be inadmissible under the rules of evidence.

(i) Hearing time set. — Upon the filing of a claim for the property setting forth a right of possession, the case shall be deemed at issue and a time shall be fixed for the hearing.

(j) Owner’s burden of proof. — At the time of the hearing, if the Commonwealth produces evidence that the property in question was unlawfully used, possessed or otherwise subject to forfeiture under section 6801(a) or 6801.1(a), the burden shall be upon the claimant to show;

(1) That the claimant is the owner of the property or the holder of a chattel mortgage or contract of conditional sale thereon.

(2) That the claimant lawfully acquired the property.

(3) That it was not unlawfully used or possessed by him. In the event that it shall appear that the property was unlawfully used or possessed by a person other than the claimant, then the claimant shall show that the unlawful use or possession was without his knowledge or consent. Such absence of knowledge or consent must be reasonable under the circumstances presented.

(k) Court-ordered release of property. — If a person claiming the ownership of or right of possession to or claiming to be the holder of a chattel mortgage or contract of conditional sale upon the property, the disposition of which is provided for in this section, prior to the sale presents a petition to the court alleging over the property lawful ownership, right of possession, a lien or reservation of title and if, upon public hearing, due notice of which having been given to the Attorney General or the district attorney, the claimant shall prove by competent evidence to the satisfaction of the court that the property was lawfully acquired, possessed and used by him or, it appearing that the property was unlawfully used by a person other than the claimant, that the unlawful use was without the claimant's knowledge or consent, then the court may order the property returned or delivered to the claimant. Such absence of knowledge or consent must be reasonable under the circumstances presented. Otherwise, it shall be retained for official use or sold in accordance with section 6801(e) or 6801.1(f).

(Emphasis added).

6 . Article I, § 6 of the Pennsylvania Constitution provides that "Trial by jury shall be as heretofore, and the right thereof remain inviolate. The General Assembly may provide, however, by law, that a verdict may be ren- . dered by not less than five-sixths of the jury in any civil case. Furthermore, in criminal cases, the Commonwealth shall have the same right to trial by jury as does the accused.”

7 . 42 Pa.C.S. § 6801(f) provides:

Cash or proceeds of forfeited property transferred to the custody of the district attorney ... shall be placed in the operating fund of the county in which the district attorney is elected. The appropriate county authority shall immediately release from the operating fund, without restriction, a like amount for the use of the district attorney enforcing the provisions of the [Controlled Substance Act]. The entity having budgetary control shall not anticipate future forfeitures or proceeds therefrom in adoption and approval of the budget for the district attorney.

8 . Commonwealth v. 6969 Forest Avenue did not hold that summary judgment is an appropriate method of resolving a forfeiture matter. That case merely held that a trial court lacked equitable powers under the Forfeiture Act to stay the sale of forfeited property for five years.