United States v. Dusenbery

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 ELECTRONIC CITATION: 2000 FED App. 0017P (6th Cir.)

File Name: 00a0017p.06

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

_________________

UNITED STATES OF AMERICA, ;

Plaintiff-Appellee/ 

Cross-Appellant, 

 

Nos. 98-4014/



4036

v. >

 

Defendant-Appellant/  LARRY DEAN DUSENBERY,

Cross-Appellee. 



1

Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 91-00291—Kathleen McDonald O’Malley, District Judge.

Argued: September 14, 1999 Decided and Filed: January 13, 2000 Before: SUHRHEINRICH, COLE, and GIBSON*, Circuit Judges.

*

The Honorable Judge John R. Gibson, Circuit Judge of the United States Court of Appeals for the Eight Circuit, sitting by designation.

2 United States v. Dusenbery Nos. 98-4014/4036

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COUNSEL

ARGUED: Paul Mancino, Jr., MANCINO, MANCINO & MANCINO, Cleveland, Ohio, for Appellant. James L. Morford, OFFICE OF THE U.S. ATTORNEY, Cleveland, Ohio, for Appellee. ON BRIEF: Paul Mancino, Jr., MANCINO, MANCINO & MANCINO, Cleveland, Ohio, for Appellant. James L. Morford, OFFICE OF THE U.S. ATTORNEY, Cleveland, Ohio, for Appellee. Larry Dean Dusenbery, Terre Haute, Indiana, pro se.

SUHRHEINRICH, J., delivered the opinion of the court, in which GIBSON, J., joined. COLE, J. (p. 13), delivered a separate dissenting opinion.

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OPINION

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SUHRHEINRICH, Circuit Judge. Defendant-Appellant Larry Dean Dusenbery appeals the district court’s judgment denying his motion under Fed. R. Crim. P. 41(e) for the return of forfeited property. Plaintiff-Appellee United States crossappeals the district court’s ruling that its administrative forfeiture notices were constitutionally insufficient. For the following reasons, we AFFIRM.

I. Background

In 1986, Dusenbery was convicted and incarcerated for possession and distribution of cocaine. See United1 States v. Dusenbery, No. 86-CR-102 (N.D. Ohio 1986). While

1 In connection with this conviction, the Government obtained civil forfeiture of several items of Dusenbery’s property, including $21,940.00 in U.S. currency and a 1984 Chevrolet Monte Carlo. Dusenbery later moved unsuccessfully for the return of this property, claiming that the forfeited property was his and that the government’s forfeiture

Nos. 98-4014/4036 United States v. Dusenbery 3

incarcerated, Dusenbery continued to oversee and operate his cocaine distribution network. This resulted in his 1994 conviction for engaging in a continuing criminal enterprise (“CCE”), in violation of 21 U. S. C. § 848. This Court affirmed his conviction and sentence. See United States v. Dusenbery, No. 94-3804, 1996 WL 306517, at *1 (6th Cir. June 6, 1996). Incident to this conviction, the Government obtained administrative civil forfeiture of several items of Dusenbery’s property. These items included: (1) $18,672.74 seized on July 9, 1990, and forfeited on October 19, 1990; (2) $80,141.93, seized on July 9, 1990, and forfeited on October 19, 1990; (3) a 1990 Oldsmobile Delta 88 convertible, seized on October 10, 1991, and forfeited on April 20, 1992; (4) a 1956 Corvette convertible, seized on October 21, 1991, and forfeited on April 28, 1992; and (5) a $20,754.23 National City Bank cashier’s check, listed in the name of Dusenbery and Edward Clouse (his mother’s boyfriend), seized on August 8, 1990, and forfeited on July 29, 1992.

On July 10, 1996, Dusenbery moved, under Fed. R. Crim. P. 41(e)2, for the return of his property. Dusenbery claimed that the seizure of his property violated due process because the Government failed to notify him of its intent to forfeit his property. Significantly, Dusenbery did not claim at that time that the statute of limitations had already run when the

proceedings were improper. This court reversed, and remanded for further proceedings. See Dusenbery v. United States, 1996 WL 549818 (6th Cir. Sept. 25, 1996). On July 23, 1997, an evidentiary hearing was held regarding Dusenbery’s motion for return of property. See Dusenbery v. United States, No. 5:95-CV-1872 (N.D. Ohio July 23, 1997) (hereinafter “Dusenbery I”). These items are not at issue in this appeal.

2 Rule 41(e) provides in pertinent part: A person aggrieved by an unlawful search and seizure or by the deprivation of property may move the district court for the district in which the property was seized for the return of the property on the ground that such person is entitled to lawful possession of the property.

Fed. R. Crim. P. 41(e).

4 United States v. Dusenbery Nos. 98-4014/4036 Nos. 98-4014/4036 United States v. Dusenbery 13

Government sent the allegedly defective notices.3 The ___________________ Government responded that Dusenbery received notice because it sent personal notice to Dusenbery’s mother and to DISSENT the Milan Federal Correctional Institute (“Milan FCI”), where ___________________ the Government maintained Dusenbery was incarcerated. The Government also stated that notice of the proposed forfeiture was published in the Cleveland Plain Dealer. Finally, the R. GUY COLE, JR., dissenting. I disagree with the Government argued that Dusenbery was put on notice through majority opinion in this case because I find the reasoning of the evidence presented at his CCE trial. Dusenbery replied the Ninth and Tenth Circuits in United States v. Marolf, 173 that he was not at Milan FCI when the notice was sent F.3d 1213 (9th Cir. 1999) and Clymore v. United States, 164 because he had been transferred to a local jail to await trial. F.3d 569 (10th Cir. 1999) more persuasive than the Second Circuit’s decision in Boero v. Drug Enforcement Agency, 111 The district court denied the Rule 41(e) motion, concluding F.3d 301 (2nd Cir. 1997). Dusenbery had received adequate notice of each proposed forfeiture, and that the Government had properly executed the As the majority stated, in Boero, the Second Circuit held forfeiture process. On appeal, we reversed and remanded for that defective notices of appeal should be treated as voidable an evidentiary hearing. See United States v. Dusenbery, No. rather than void, thereby tolling the statute of limitations for 96-3941, 1997 WL 321148, at *2 (6th Cir. June 11, 1997). the filing of judicial forfeiture proceedings. I disagree, seeing We held that, “under all the circumstances of this case, the no reason to determine the merits of a challenged forfeiture record before this court does not establish that Dusenbery was when the original notice was constitutionally defective and provided constitutionally adequate notice of the seizures and the statute of limitations has run. Inadequate notice is void impending forfeitures at issue.” Id. at *2. We instructed the and constitutionally defective. In this instance, there is simply district court that if it found insufficient notice, “Dusenbery no reason to disregard the five-year statute of limitations set should be given an opportunity to contest the forfeitures at forth in 19 U.S.C. § 1621, short of the rare occasions when this time.” Id. at *3. the government has a valid basis for the application of laches or equitable tolling. Such would be the case when a claimant On remand, the district court determined that an evidentiary receives borderline notice and sits on a Rule 41(e) motion hearing was not necessary because “documentary evidence until the five-year statute of limitations has run, a scenario filed by the government, alone, reveal that Dusenbery never that the majority fears. received actual notice of the pending forfeitures of his property.” It proceeded to find that the notices were thus As noted in Marolf, courts should be “particularly wary of insufficient as a matter of law. It also found that “the civil forfeiture statutes, for they impose ‘quasi-criminal’ government’s motion for summary judgment assumed penalties without affording property owners all of the insufficient notice,” thereby making an evidentiary hearing procedural protections afforded criminal defendants.” 173 unnecessary. The district court rejected Dusenbery’s F.3d at 1217 (citation and quotation omitted). Further, “[d]ue argument, made for the first time on remand, that further process protections ought to be diligently enforced, and by no means relaxed, where a party seeks the traditionally disfavored remedy of forfeiture.” Clymore, 164 F.3d at 574 3 It appears that the applicable statute of limitations, which is five (citation and quotation omitted). For these reasons, I years from the discovery of the alleged offense, had already run on some respectfully dissent from the majority opinion. of the items at issue. See 19 U.S.C. § 1621.

12 United States v. Dusenbery Nos. 98-4014/4036 Nos. 98-4014/4036 United States v. Dusenbery 5

obviates any need to address the Government’s cross-appeal. forfeiture proceedings were barred by the five-year statute of Accordingly, we AFFIRM the judgment of the district court. limitations. See 19 U.S.C.A. § 1621 (West 1999). After considering the merits of the forfeiture, the district court found that the Government established probable cause that the property constituted proceeds, 4 or was purchased with proceeds from illegal drug sales. Because Dusenbery failed to rebut this showing of probable cause, the district court held that forfeiture was proper and granted summary judgment to the Government.

II. Analysis

The court of appeals reviews an order granting summary judgment de novo and uses the same test as used in the district court. See Terry Barr Sales Agency, Inc. v. All-Lock Co., 96 F.3d 174, 178 (6th Cir. 1996). Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).

Section 881 of Title 21 of the United States Code, which is part of the Comprehensive Drug Abuse Prevention and Control Act, Pub. L. 91-313, Title II, § 511, 84 Stat. 1276 (1970), authorizes the United States to subject proceeds of drug transactions to civil forfeiture proceedings. See 21 U.S.C.A. § 881(a)(6) (West Supp. 1999).5 Under the

4

At the evidentiary hearing on the motion for return of property in Dusenbery I, Dusenbery testified that he had used the money he earned through selling drugs to purchase seventeen items of personal property and the Monte Carlo seized in connection with the 1986 conviction. See supra, note 1.

5

21 U.S.C. § 881(a)(6) provides that the following are subject to forfeiture:

All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance . . . , all proceeds traceable to such an exchange, and all moneys, negotiable instruments, 6 United States v. Dusenbery Nos. 98-4014/4036 Nos. 98-4014/4036 United States v. Dusenbery 11

applicable statute of limitations, the government agency has Like the Second Circuit, we think that inadequate notices five years from the discovery of the alleged offense to should be treated as voidable, not void, and that the proper institute a judicial forfeiture proceeding. 19 U.S.C.A. § 1621 remedy is simply to restore the right which a timely Rule (West 1999).6 41(e) notice would have conferred on the claimant: the right to judicially contest the forfeiture and to put the Government If the property is valued at $500,000 or less, the DEA may to its proofs under a probable cause standard. Thus, the use an administrative forfeiture process in the customs laws. Government is not required to institute “new” forfeiture See 19 U.S.C.A. § 1607(a)(West 1999); 21 U.S.C.A. proceedings, and the applicable statute of limitations, § 1621, § 881(d)(West 1999). Publication of notice begins the therefore has no bearing. administrative forfeiture. See 19 U.S.C.A. § 1607(a); 21 C.F.R. § 1316.75 (1999). The DEA is also required to send Rule 41(e) proceedings are equitable in nature if criminal notice to every party with an interest in the property. See 19 proceedings are no longer pending. See United States v. U.S.C.A. § 1607(a). A claimant who has received Duncan, 918 F.2d 647, 654 (6th Cir. 1990); Marolf, 173 F.3d constitutionally adequate notice of intent to forfeit then has at 1216. We fail to see the equity in allowing the claimant twenty days from the date of the first publication of the notice more than he would have been accorded in the first place; of seizure to judicially contest the forfeiture by filing a claim namely the fortuitous benefit of avoiding the forfeiture with the DEA and a cost bond, or a declaration of inability to process altogether. After all, this is not a situation where the file a cost bond. See 19 U.S.C.A. § 1608 (West 1999); 21 Government never bothered to send notices of forfeiture. Nor C.F.R. §§ 1316.75-.76 (1999). If no claim is filed, an can Dusenbery claim that he was completely blindsided, administrative forfeiture occurs by default. See 19 U.S.C.A. because the property in question had obviously been out of his § 1609 (West 1999); 21 C.F.R. § 1316.77 (1999). possession since the date of seizure. Finally, a contrary ruling, one similar to that of the Ninth and Tenth Circuits, A properly filed claim stops the administrative forfeiture might encourage some claimants with borderline notices and process and requires the seizing agency to refer the matter to nothing to lose (presumably because they will not be able to the United States Attorney to institute judicial forfeiture rebut the Government’s proofs) to sit on their Rule 41(e) proceedings. See 19 U.S.C.A. §§ 1608; 1610 (West 1999); 21 motions until the five-year statute of limitations has run. We C.F.R. §§ 1316.76(b); 1316.78 (1999). The DEA is then therefore reject the Ninth and Tenth Circuits’ approach, as required to show probable cause for the forfeiture. See 19 articulated in Marolf and Clymore. We affirm the district U.S.C.§ 1615; United States v. $67,220.00 in U.S. Currency, court’s adoption of Boero and its decision to rule on the 957 F.2d 280, 283 (6th Cir. 1992). Upon a showing of merits of Dusenbery’s forfeitures. probable cause, the burden of proof shifts to the claimant to III.

As indicated above, we have assumed that the and securities used or intended to be used to facilitate any Government’s notices were constitutionally inadequate. We violation of this subchapter. conclude that the merits of the forfeiture were properly 21 U.S.C.A. § 881(a)(6) (West Supp. 1999).

considered, notwithstanding the intervening expiration of the 6 “No . . . forfeiture of property accruing under the customs laws shall statute of limitations. Additionally, we adopt the district be instituted unless such suit or action is commenced within five years court’s determination of the merits of the forfeiture. This after the time when the alleged offense was discovered.” 19 U.S.C.A. § 1621 (West 1999).

10 United States v. Dusenbery Nos. 98-4014/4036 Nos. 98-4014/4036 United States v. Dusenbery 7

administrative remedy, over five years after the date of the demonstrate that the property is his and not the proceeds of initial seizure. The practical effect of the Boero court’s drug transactions. The claimant may meet his burden by reversal and remand for a determination on the merits of the showing that the property was not the proceeds of illegal drug forfeiture was to treat the ineffective notice as voidable rather activities or that the claimant is an “innocent owner” and was than void, so that the statute of limitations was tolled. unaware of the proceeds’ criminal connection. See 19 U.S.C.

§ 1615; United States v. Certain Real Property 566 Conversely, two other cases, one from the Ninth Circuit and Hendrickson Blvd., 986 F.2d 990, 995 (6th Cir. 1993). If the one from the Tenth Circuit, reject the Second Circuit’s claimant fails in his burden, the government is entitled to a approach in Boero and hold that a forfeiture without adequate judgment of forfeiture. See id. notice is void, and if the statute of limitations has run against the government, a decision on the merits of the forfeiture is On appeal Dusenbery argues that forfeiture is no longer barred. See United States v. Marolf, 173 F.3d 1213, 1217-18 available because of the applicable statute of limitations. (9th Cir. 1999); Clymore v. United States, 164 F.3d 569, 574 That is, Dusenbery argues that the Government could not (10th Cir. 1999). In Clymore, the Tenth Circuit held that reinstate forfeiture proceedings during the 1997 remand “[w]here obvious statute of limitations problems exist, we because the factual basis for Dusenbery’s CCE charges was think the offending forfeiture [i.e. inadequate notice] should more than five years old. He therefore contends that all his be vacated and the statute of limitations allowed to operate, property and funds should be returned, with interest. subject, of course, to any available government arguments against it.” Clymore, 164 F.3d at 574. Following the In deciding Dusenbery’s claim under Rule 41(e)7, we will reasoning of Clymore, the Ninth Circuit held that, absent the assume that the notices of forfeiture were insufficient and rare application of laches or equitable tolling principles, proceed to the forfeiture question: What is the proper remedy courts may not ignore the statute of limitations in forfeiture for a due process violation in an administrative forfeiture cases when an administrative forfeiture is9 invalidated on a proceeding when the statute of limitations for filing a judicial Rule 41(e) motion due to defective notice. See Marolf, 173 forfeiture action has expired? Few circuits have addressed F.3d at 1217-18. See also United States v. $57,960.00 in this issue, and those that have are divided. United States Currency, 58 F.Supp.2d 660, 1999 WL 566616 (D.S.C. July 28, 1999) (agreeing with Ninth and Tenth In Boero v. DEA, 111 F.3d 301, 305-07 (2d Cir. 1997), the Circuits). Second Circuit resolved the problem of a defective notice and an untimely claim outside the statute of limitations by directing the trial court to resolve the dispute on the merits. See id. at 305-07. There, the DEA administratively forfeited $1799.46 on January 31, 1991. The money had been seized 9 In supporting its conclusion that inadequate notices should be from Boero when he was arrested on October 25, 1990 for treated as void, the Marolf court remarked that the forfeiture statutes violations of federal narcotics laws. The DEA sent notices of “impose no duty on a defendant to prevent the government from losing its seizure to Boero’s home and to his presumed place of rights through carelessness,” United States v. Marolf, 173 F.3d 1213, 1217 (9th Cir. 1999) (internal quotation marks omitted); and that statutes of limitations historically have “represent[ed] a pervasive legislative 7 judgment that it is unjust to fail to put the adversary on notice to defend We have jurisdiction to entertain collateral due process attacks on within a specified period of time and that the right to be free of stale administrative forfeitures, including challenges to the adequacy of notice. claims in time comes to prevail over the right to prosecute them.” Id. at See United States v. Giraldo, 45 F.3d 509, 511 (1st Cir. 1995) (per 1217-18 (internal quotation marks omitted). curiam); United States v. Woodall, 12 F.3d 791, 793 (8th Cir. 1993).

8 United States v. Dusenbery Nos. 98-4014/4036 Nos. 98-4014/4036 United States v. Dusenbery 9

incarceration, in accordance with 19 U.S.C. § 1607. The forfeiture proceedings under the customs laws must be DEA also published notice in USA Today pursuant to 21 commenced within five years after the time when the C.F.R. § 1316.75. However, Boero never received the notices alleged offense was discovered. See 19 U.S.C. § 1621; because he had been transferred to a state prison. 21 U.S.C. § 881(d)).

On January 31, 1991, the DEA declared the property Id. at 304-05 (internal footnotes omitted). The Second Circuit administratively forfeited to the United States under 19 therefore concluded that Boero’s proper remedy was to U.S.C. § 1609. Boero filed a civil complaint against the DEA restore his right to seek a hearing in district court. See id. at on April 13, 1994, and subsequently moved for summary 307.8 See also Kadonsky v. United States, 1998 WL 119531, judgment, arguing that his property should be returned as at *2-3 (N.D. Tex. March 6, 1998) (holding that the remedy equitable relief for the failure of notice. The DEA conceded for a due process violation in a forfeiture proceeding where inadequate notice, but argued that Boero’s motion should be the statute of limitations has run is a hearing on the merits of treated as a timely but unperfected administrative claim under the forfeiture question). 19 U.S.C. §§ 1603(b) and 1608. In other words, the DEA argued that Boero was limited to his administrative claim and Although the Second Circuit in Boero did not directly could not recover the money in the district court. The district address the statute of limitations problem, it did expressly court agreed with the DEA and held that the claimant’s note that the district court had allowed Boero to pursue an remedy was via administrative claims procedures. See id. at 303-04.

8

The Second Circuit reversed, holding that: The Boero court catalogued various approaches taken by other circuits:

The First and Eighth Circuits have ruled that when notice of In Onwubiko v. United States, 969 F.2d 1392, 1398 (2d administrative forfeiture is inadequate, the district court must set Cir. 1992), we explained that an administrative forfeiture aside the forfeiture and either order return of the seized property ordinarily removes the subject matter of the action--the or direct the government to commence judicial forfeiture in property or res--from the district court, and thereby district court. See, e.g, United States v. Volanty, 79 F.3d 86,88 deprives the court of jurisdiction to review administrative (8th Cir. 1996); United States v. Giraldo, 45 F.3d 509, 512 (1st decisions once the administrative process has begun. An Cir. 1995); United States v. Woodall, 12 F.3d 791, 795 (8th Cir.

1993). The Federal Circuit has held that a district court can exception to this rule is when property is taken excuse a property owner’s failure to comply with the statutory accidentally, fraudulently, or improperly. In actions requirements when notice in an administrative forfeiture asserting such a claim, the district court has jurisdiction proceeding is inadequate. Litzenberger v. United States, 89 F.3d to correct the deficiency. Id. Boero’s complaint that his 818, 822 (Fed. Cir. 1996). The Ninth Circuit, upon ruling that property was taken improperly-- without proper notice-- a district court has jurisdiction over due process challenges to administrative proceedings under 28 U.S.C. § 1331, remanded correctly invoked district court jurisdiction. The court’s the case for an adjudication on the merits. Marshall Leasing, findings concerning impropriety of the forfeiture gave the 893 F.2d at 1103. The Fifth Circuit, in Armendariz-Mata v. court power to correct the deficiency. See id. The court, DEA, 82 F.3d 679, 683 (5th Cir.), cert. denied, -- U.S. --, 117 S. however, did not correct the deficiency, and instead Ct. 317, 136 L.Ed.2d 232 (1996), having found notice in an allowed Boero to pursue an administrative remedy, over administrative forfeiture proceeding to be insufficient, directed the district court to vacate the DEA’s administrative forfeiture five years from the date of the initial seizure, as if an without providing further instructions or comment. improper forfeiture had never occurred. (Ordinarily, Boero v. DEA, 111 F.3d 301, 307 n.6 (2d Cir. 1997). None of these cases address the effect of the running of the statute of limitations, however.