United States v. Esposito

970 F.2d 1156, 1992 WL 183200
Court of Appeals for the Second Circuit·Decided August 3, 1992·No. No. 1479, Docket 91-6322·Published·Cited by 8 cases

Opinions

KEARSE, Circuit Judge:

Claimants Frank and Klare Esposito appeal from interlocutory orders of the United States District Court for the Eastern District of New York, Thomas C. Platt, Jr., Chief Judge, permitting the United States, the plaintiff in this civil forfeiture action, to sell their home immediately, prior to the resolution of the forfeiture action. On appeal, claimants contend that the record before the district court did not justify an interlocutory sale, especially at the $675,-000 price to be accepted by the government. The government moves to dismiss the appeal for lack of appellate jurisdiction. For the reasons below, we deny the motion to dismiss, and we vacate the orders of the district court and remand for further proceedings.

I. BACKGROUND

In January 1988, claimant Frank Esposi-to (“Esposito”) was arrested and charged with conspiracy to distribute cocaine, two counts of possession of cocaine with intent to distribute, and various tax offenses. In connection with those charges, the government commenced the present civil action seeking forfeiture of, inter alia, the custom-built home of Esposito and his wife, claimant Klare Esposito, located at 8 Princess Court, Holmdel, New Jersey (the “Princess property” or “property”). Alleging that the premises had been purchased with the proceeds of drug transactions and used to facilitate drug transactions, the government obtained an order permitting it to seize the property and ordering the occupants to “quit the premises immediately.” Seizure Warrant dated January 5, 1988, at 6.

The Espositos waived their right to a prompt hearing as to the existence of probable cause for the seizure and consented to [1158]*1158a stay of the forfeiture action pending resolution of the criminal charges. In the meantime, the government proposed to allow the Espositos to remain in occupancy so long as they kept up, inter alia, the mortgage and property tax payments. The Espositos chose to move out, however, leaving the property vacant. They also ceased to make mortgage and tax payments.

In October 1989, Esposito was convicted on the conspiracy charge and on several tax counts, and was acquitted on the two counts of distribution of narcotics. Notwithstanding the 1989 resolution of these charges, the government did little to prosecute the present action until 1991. In the meantime, Central Jersey Bank & Trust Co. (the “Bank”), which held a first mortgage on the property, had filed a claim in the civil forfeiture proceeding and sought to pursue a state-court action to foreclose on the property for nonpayment of the mortgage.

In February 1991, in light of the bank’s pending foreclosure action, the Espositos’ attorney Michael Rosen wrote the government stating his recollection that the property had been appraised at about $1,500,-000 and suggesting, “without prejudice and without waiver of any of the Esposito’s [sic ] rights or claims,” the possibility of an interlocutory sale of the property at “a price reasonably related to the government’s appraisal and the present fair market value.” (Rosen Letter to Assistant United States Attorney (“AUSA”) Arthur P. Hui dated February 7, 1991 (“February 1991 letter”).) Rosen apparently pursued the matter for the next few months with follow-up letters and telephone calls, without receiving any response. In May 1991, AUSA Hui attempted to negotiate an agreement among the government, the Es-positos, and the Bank for a private sale of the property. Apparently, after the initial negotiations, the Espositos did not respond. On August 28, 1991, the Bank wrote the government stating that the Bank had been deprived of its right to foreclose on the property “for more than three years as a result of the dilatory actions of the United States Attorney’s Office in proceeding with the forfeiture action,” and threatening to intervene if steps were not taken promptly to procure the release of the property or to repay the Bank in full.

On September 6, 1991, the government moved for an order authorizing it to sell the Princess property on an interlocutory basis. The Bank cross-moved for an order permitting it to conduct a foreclosure sale or, alternatively, for an order requiring the government immediately to pay the Bank the outstanding amounts due on the mortgage, plus expenses. The Espositos cross-moved for an order compelling the government to retain and properly maintain their home.

In support of its motion for an order permitting the interlocutory sale of the Princess property, the government submitted initial and reply declarations by AUSA Hui and by Deputy United States Marshal Dominic Russo, who was in charge of the government’s real property forfeiture sales in New Jersey. Hui’s declarations, referring to the Rosen February 1991 letter and follow-up letters and the May discussions, argued principally that the Es-positos had consented to an interlocutory sale of the property. Russo stated that the government had expended some $22,000 for repairs and maintenance of the property since the seizure in 1988, and that because of the “soft state of the real estate market in New Jersey,” an immediate sale would be in the best interests of all parties. (Russo declaration dated September 6, 1991, ¶ 7.) Russo, a licensed real estate agent, stated that the Princess property had been appraised at $999,070 in February 1988 and at $910,000 in May 1991 and that in his experience, the longer a property remains unoccupied, the lower its market value. He stated that in the past year he had had “numerous and frequent inquiries from private citizens and their real estate brokers interested in purchasing” the Princess property, and he believed the government could sell it within 30 days of an order permitting such a sale. (Russo reply declaration dated October 16, 1991, ¶ 8.) He concluded that, “based upon my experiences and knowledge, I believe that a pri[1159]*1159vate sale of the subject property would result in gross proceeds closely equalling or perhaps exceeding the most recent appraised value of $910,000.00.” (Id. 119.)

In opposition to the proposed sale and in support of the Espositos’ motion to require the government to retain and maintain the property, Klare Esposito submitted an affidavit stating, inter alia, that her home had been custom-built by Esposito, who did much of the construction himself, that there had been no allegation that she herself had been involved in any narcotics offenses, and that she would suffer if the government were allowed to sell her home. The Espositos also argued that the government was unlikely to succeed on the forfeiture claim because Esposito had been acquitted on the substantive narcotics counts, and that the government had not shown any facts that would justify a sale prior to adjudication of whether or not the government was entitled to forfeiture.

At a brief hearing on the motions, the government stated that it expected to be able to sell the property within 30 days for more than $800,000 and perhaps more than $900,000. The Bank argued that the court should either require the government to pay the Bank what was owed or let the Bank proceed to foreclose on the property. The Espositos argued principally that the government was unlikely to succeed on its forfeiture claim and that the Espositos wished to keep their home and to live in it at the anticipated conclusion of the litigation in their favor.

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United States v. Esposito, 970 F.2d 1156, 1992 WL 183200 (2d Cir. 1992).

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