United States v. Kneeland

Opinion

USCA1 Opinion

March 29, 1996

                                [NOT FOR PUBLICATION]



                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT



                                 ____________________


No. 95-1923

        No. 95-2016



                              UNITED STATES OF AMERICA,

                                 Plaintiff, Appellee,



                                          v.



             ALL FUNDS, MONIES, SECURITIES, MUTUAL FUND SHARES AND STOCKS

                        HELD IN FIDELITY INVESTMENTS, ET AL.,

                                 Defendant, Appellee.

                                                
                                      __________



                               THOMAS E. KNEELAND, JR.,

                                Defendant, Appellant.

                                 ____________________



                    APPEALS FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                     [Hon. William G. Young, U.S. District Judge]
                                             ___________________

                                 ____________________



                                        Before



                                Torruella, Chief Judge,
                                           ___________

                           Stahl and Lynch, Circuit Judges.
                                            ______________

                                 ____________________



            Thomas E. Kneeland, Jr. on brief pro se.
            _______________________

            Donald K. Stern,  United States Attorney, and Patrick M. Hamilton,
            _______________                               ___________________

        Assistant United States Attorney, on brief for appellee, United States

        of America.



                                 ____________________


____________________



Per  Curiam.    These  consolidated appeals  have  their
                 ___________



            origin  in  a civil  forfeiture  action  which was  dismissed



            without prejudice,  on the government's  motion, pursuant  to



            Fed.  R.   Civ.  P.  41(a)(2).     Claimant  Thomas  Kneeland



            challenges the dismissal; the denial of various pre-dismissal



            motions, including his requests for an adversarial hearing or



            entry of judgment  in his  favor; and the  denial of  various



            post-dismissal  motions,  including  a  renewed   motion  for



            summary judgment, a motion  for return of property, a  motion



            to disqualify the district  judge, and a motion  for judgment



            on the pleadings.1  For the following reasons, we affirm.
                             1



                 Kneeland  allegedly  operated   an  advance  fee  scheme



            whereby he fraudulently promised  potential borrowers that he



            could obtain funding for their projects, accepted substantial



            up-front  fees, failed to arrange financing  or to return the



            fees, and subsequently  "laundered" the fees.  On December 2,



            1993, the  government received ex  parte warrants authorizing
                                           __  _____



            seizure of the defendant properties after persuading a United



            States  Magistrate Judge  that  there was  probable cause  to


____________________



               1The  parties  dispute  the  scope  of  our  jurisdiction.
               1

            Kneeland claims to have appealed eight separate orders by way

            of eight notices of  appeal, whereas the government correctly

            points out  that Kneeland filed  only two notices  of appeal.

            We  need not  resolve  what issues  are  properly before  us.

            Assuming without deciding that we have jurisdiction to review

            each of the challenged  orders, we would affirm.   See Norton
                                                               ___ ______

            v.  Matthews, 427  U.S. 524,  530-32 (1976)  (explaining that
                ________

            jurisdictional inquiry  may be  bypassed where merits  can be

            easily   resolved   in  favor   of   the  party   challenging

            jurisdiction).



believe  that  they were  involved in  or traceable  to money



            laundering.      Thereafter,    the   government    initiated



            administrative forfeiture  proceedings and   Kneeland filed a



            claim of ownership.  On March 30, 1994, a federal  grand jury



            returned an  indictment  charging Kneeland  with  conspiracy,



            mail  fraud,  wire  fraud,   money  laundering  and  criminal



            forfeiture.  The forfeiture count specifically identified the



            defendant properties.  On May  6, 1994, the government  filed



            the  instant civil  complaint for  forfeiture pursuant  to 18



            U.S.C.   981(a)(1)(A).  



                 For a  period  of time,  the  civil and  criminal  cases



            progressed forward in tandem.   The criminal case readied for



            trial.   In the civil case,  Kneeland filed an  answer to the



            complaint.  Back Bay,  Ltd., an alleged victim, filed  a late



            claim.  On October 20, 1994, less than three weeks before the



            criminal trial  was scheduled  to take place,  the government



            moved  to  stay  discovery  in  the  civil case  pending  the



            disposition of  the criminal matter.  Kneeland did not object



            to this request,  and it  was allowed.   The criminal  trial,



            however, was  delayed, and  eventually it was  rescheduled to



            take place on May 22, 1995.  



                 On December  27, 1994,  while  the stay  was in  effect,



            Kneeland  filed a motion for summary judgment in his favor on



            the alleged  ground that he was the only person to "perfect a



            claim" to the defendant properties.  The motion was summarily


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denied.    Thereafter, Kneeland  moved to  lift the  stay and



            renewed  his motion for summary judgment.  These motions were



            denied.  On April 24, 1995,  Kneeland again moved to lift the



            stay, this time  requesting a  hearing on the  merits of  the



            seizure.  This motion was  followed by similar motions, filed



            approximately every  two or three days,  seeking, inter alia,
                                                              _____ ____



            dismissal  of  the  complaint,  an  adversarial  hearing,  or



            summary judgment.    On June  20,  1995, the  district  court



            granted  Kneeland's motion  to lift  the stay,  but otherwise



            denied his various motions.  By that time, the criminal trial



            had been delayed once again.  



                 The government immediately filed a motion to dismiss the



            civil case without prejudice.  On or about the same date, the



            government  moved  in  the  criminal case  for  new  warrants



            freezing  the  defendant  properties.     Kneeland  filed  an



            "omnibus" motion objecting to the dismissal and seeking entry



            of judgment  in his favor.   A week later, he  filed a motion



            for  adversarial hearing or entry  of judgment.   On July 18,



            1995, the district  court allowed the  motion to dismiss  and



            denied the "omnibus"  motion.   On July 20,  1995, the  court



            denied  the  motion  for  adversarial  hearing  or  entry  of



            judgment.  Thereafter, Kneeland filed, inter  alia, a renewed
                                                   _____  ____



            motion for summary judgment, a motion for return of defendant



            properties,  a   motion  to  vacate  the   dismissal  and  to


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disqualify the district judge under 28 U.S.C.   455(a), and a



            motion for judgmenton thepleadings.  Thesemotions weredenied.



                 A  plaintiff's motion  for  dismissal without  prejudice



            pursuant to Fed. R. Civ. P. 41(a)(2) should be allowed unless



            the court  finds that the  defendant will suffer  plain legal



            prejudice.  9 Charles  A. Wright & Arthur R.  Miller, Federal
                                                                  _______



            Practice  & Procedure    2364,  at  280 (2d  ed. 1994).   The
            _____________________



            decision whether or not  to grant such a dismissal  is within



            the  sound discretion  of the  district court  and reviewable



            only  for  abuse of  discretion.   See  Puerto  Rico Maritime
                                               ___  _____________________



            Shipping Authority v. Leith, 668 F.2d 46, 49 (1st Cir. 1981).
            __________________    _____



            We find no such abuse of discretion here.



                 As an  initial matter,  we reject  Kneeland's suggestion



            that he was robbed of an imminent victory.  See Grover v. Eli
                                                        ___ ______    ___



            Lilly & Co.,  33 F.3d  716, 718-19 (6th  Cir. 1994)  (finding
            ___________



            abuse of  discretion where  district court dismissed  case at



            the point where  the law  clearly dictated a  result for  the



            defendant).  Indeed, Kneeland's argument that he was entitled



            to judgment in  his favor  because the government  is a  mere



            "escrow agent"  for potential claimants is  utterly frivolous



            even  if  we  assume  arguendo that  Kneeland  was  the  only
                                  ________



            claimant.  The government in a civil forfeiture action  under



            the  money laundering  statutes is  not an  escrow agent  for



            others;  rather,  if successful,  it  acquires  title to  the



            forfeited property.  See 18 U.S.C.   981(a),(f).  
                                 ___


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We also reject Kneeland's  argument that he was deprived



            of  his right to  an adversarial hearing.   Certainly, before



            forfeiture,  a claimant  must be  afforded an  opportunity to



            rebut the government's showing  of probable cause, see United
                                                               ___ ______



            States  v. Real Property Known  & Numbered as  Rural Route 1,
            ______     __________________________________________________



            Box 137-B, Cutler, Ohio, 24 F.3d 845, 848-49 (6th Cir. 1994),
            _______________________



            as well  as to  present evidence  bearing on other  potential



            defenses. However, it doesn't  follow that a civil forfeiture



            action, once begun, may not be aborted.  In the instant case,



            the dismissal obviated the need for a hearing.2
                                                          2



                 Finally, we add  that the  civil case was  still in  the



            pre-discovery  stage.    Although  Kneeland  claims  to  have



            devoted  many hours to the case, the record reveals that much



            of his efforts were  spent on frivolous, repetitious motions.



            Kneeland had gained no ground in the civil case which he lost



            by the dismissal.  Indeed, Kneeland benefited from not having



            to  litigate two  actions  simultaneously, and  from  certain



            procedural advantages he had in the criminal proceeding.  See
                                                                      ___



            David B. Smith, Prosecution  & Defense of Forfeiture  Cases  
                            ___________________________________________



            1.03   (1995)  (discussing,   by  contrast,   the  tremendous



            procedural  advantages  the  government  enjoys  in  a  civil


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               2Kneeland's  suggestion  that he  was  denied  due process
               2

            because he  was not afforded a  "timely" post-seizure hearing

            also  fails.   Kneeland  did not  object to  the government's

            motion  for a  stay; and while  the stay  was in  effect, the

            government   diligently   prosecuted  the   related  criminal

            indictment. 



                                         -6-



forfeiture  action).    The  criminal case  was  procedurally



            advanced and  the  government ready  for  trial.   Under  the



            circumstances, we  think the district  court properly allowed



            the government's motion to dismiss the civil case.  



                 We  have  carefully   considered  Kneeland's   remaining



            arguments  and reject them as without  merit.  In particular,



            we find no error  in the denial of his  post-dismissal motion



            for  return of property since the assets were then being held



            in  connection  with his  criminal case.3    We also  find no
                                                    3



            error  in the denial of the motion for disqualification.  The



            district court's comments  in its order vacating the  stay do



            not  warrant an inference that it stepped outside its role to



            act as  adviser to the government, and we find no evidence of



            bias in  any of the court's rulings or in its handling of the



            case.   See Liteky  v.  United States, 114 S.  Ct. 1147, 1157
                    ___ ______      _____________



            (1994)  (observing that judicial  rulings alone  almost never



            constitute valid basis for a bias or partiality motion).



                 Affirmed.
                 _________


____________________



               3Contrary  to Kneeland's suggestion,  there is no evidence
               3

            that  the district  court  held a  "transfer hearing"  or was

            otherwise  involved  in the  decision  to  issue new  seizure

            warrants.



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