United States v. Commty Hsing Fund

304 F. App'x 334
Court of Appeals for the Fifth Circuit·Decided December 31, 2008·No. 06-11293·Unpublished·Cited by 5 cases

Opinions

PER CURIAM: *

Community Housing Fund (“CHF”) appeals from the district court’s dismissal of its third-party petition which claimed an interest in property subject to a Preliminary Order of Forfeiture. The district court found the petition to be untimely. We AFFIRM.

I. BACKGROUND

CHF is a nonprofit corporation that Barbara Hildenbrand established in 1992. Hildenbrand serves as CHF’s registered agent for service of process and as its president. CHF participated in the Department of Housing and Urban Development’s (“HUD”) Single Family Affordable Housing Program. As part of this program, CHF purchased HUD-owned properties at a discounted rate, renovated them, and sold them to low-income buyers. Ranscott Construction, Inc., which is run by Gerald Stone, performed the majority of the renovations. While participating in HUD’s program, Hildenbrand and Stone were charged with wrongful receipt or use of HUD funds. Both pled guilty in 2005. As part of his plea agreement, Stone agreed to the forfeiture of a yacht and a condominium in Florida. Hildenbrand entered no such agreement.

On May 22, 2006, the district court entered a Preliminary Order of Forfeiture. It was served on all counsel of record in Stone and Hildenbrand’s criminal case, both by mail and through the court’s electronic filing system. Hildenbrand’s counsel received that order. The government also published the final notice of forfeiture in a Florida newspaper on July 10, 2006. On August 8, 2006, CHF filed a petition for a hearing to adjudicate its interest in the yacht and the condominium Stone had agreed to forfeit. The district court dismissed the petition as untimely.

On appeal, CHF disputes that it received direct written notice of the forfeiture. Instead, CHF argues that its petition was timely when measured from the date of the newspaper publication.

II. DISCUSSION

A, Receipt and Sufficiency of the Direct Written Notice

When a third party petitions a court asserting its interest in property to be [336] forfeited to the government, the court must conduct an ancillary proceeding. Fed.R.Crim.P. 32.2(c). Although these proceedings arise in a criminal context, they closely resemble civil proceedings. United States v. Corpus, 491 F.3d 205, 208 (5th Cir.2007). Under Rule 32.2(c)(1), there are two points in time at which a petition can be dismissed. Prior to a hearing or to discovery, the court may, upon a motion from a party, “dismiss the petition for lack of standing, for failure to state a claim, or for any other lawful reason.” Fed.R.Crim.P. 32.2(c)(1)(A). Motions to dismiss under this provision resemble Federal Rule of Civil Procedure 12(b) motions and are reviewed as such. Pacheco v. Serendensky, 393 F.3d 348, 352 (2d Cir. 2004). After discovery but before a hearing, a party may move for summary judgment. Fed.R.Crim.P. 32.2(c)(1)(B). A court’s decision under this provision is reviewed using the same standard as under Federal Rule of Civil Procedure 56. Corpus, 491 F.3d at 208-09.

Though the district court did not refer to a specific part of Rule 32.2(c)(1) that was being applied, evidence outside the pleadings was necessary for the resolution. Thus, this was a summary judgment. We review a grant of summary judgment de novo. McIntosh v. Partridge, 540 F.3d 315, 319 (5th Cir.2008). Summary judgment is appropriate when no disputed issue of material fact exists, and the movant is entitled to judgment as a matter of law. Id. at 320.

After an order of forfeiture is entered, the government is required to publish notice of the order and may also, to the extent practicable, provide direct written notice to anyone known to have a potential interest in the property. 21 U.S.C. § 853(n)(1). Any third party asserting an interest in the property being forfeited may petition the court for a hearing within 30 days either of receiving actual notice or of the date of final publication of the notice, whichever occurs earlier. Id. § 853(n)(2). CHF argues that it never received direct written notice because it was not served with the order. Therefore, CHF argues that its petition was timely because it was filed within 30 days of the final publication notice. The government argues that CHF received direct written notice when Hildenbrand was served with the order through her lawyers.

There is no argument that written notice was ever sent to Hildenbrand’s personal or CHF’s corporate address. The direct written notice that went out was addressed to and received by Hildenbrand’s attorneys in her criminal case. The issue is whether that receipt was sufficient to put CHF on notice. CHF argues that direct written notice needed to be given to CHF or directed to Hildenbrand in her official capacity as registered agent. However, CHF points us neither to language in the statute nor other authority that “direct written notice” is only satisfied in that way in circumstances such as this. We will delve into the specifies of those circumstances below.

In summary, Hildenbrand through her attorneys received this notice; nothing holds such notice to be inadequate. Thus, whether this procedure was good enough is an issue of constitutional due process. The notice must have been “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). This focus on reasonableness is not done blindly but instead views all the circumstances. The relevant ones here include that CHF is a small, nonprofit organization. The government introduced [337] certain corporate records from the Texas Secretary of State’s Office. They reveal that when the Articles of Incorporation were filed in 1992, Hildenbrand was one of the three incorporators, was the original registered agent, and was the only signatory to the Articles. When the amendments to the Articles were filed later that first year, Hildenbrand signed as president and also did so in filings in 1996 and 1999. When amendments to the Articles were filed by Hildenbrand as president in 2003, the document stated that there were no “members” of the corporation. A Texas non-profit corporation need not have members. Tex.Rev.Civ. Stat. Ann. art. 1396-2.08(A). Their absence suggests all the more, though, that Hildenbrand was the corporation.

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United States v. Commty Hsing Fund, 304 F. App'x 334 (5th Cir. 2008).

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