United States v. One Lear Jet Aircraft, Serial No. 35a-280, Registration No. Yn-Bvo, Leybda Corp., Claimant-Appellant

836 F.2d 1571

• Court: Court of Appeals for the Eleventh Circuit
• Decided: March 9, 1988
• Docket: 85-5938
• Status: Published

Opinions

JOHNSON, Circuit Judge:

This case involves a forfeiture proceeding initiated by the government against a Lear Jet under 8 U.S.C.A. § 1324(b). The aircraft had been used to enter this country by persons who made material misrepresentations on their visa applications. Leybda Corporation intervened as a claimant to the plane, but after trial, the district court ruled that the aircraft was forfeited to the government. United States v. One Lear Jet Aircraft, 617 F.Supp. 769 (S.D.Fla.1985). Leybda did not file a stay of judgment with the district court or a supersedeas bond with the appellate court. Therefore, after the expiration of the automatic ten day stay provided by Fed.R.Civ.P. 62(a), the government removed the plane to a warehouse in Missouri. Leybda then filed a timely notice of appeal, and this Court affirmed the forfeiture judgment. United States v. One Lear Jet Aircraft, 808 F.2d 765 (11th Cir.1987). The panel held that it had jurisdiction to entertain this appeal even though the aircraft had been removed from the Court’s territorial jurisdiction. This opinion was vacated by the full Court, which ordered in banc reconsideration of the in rem jurisdictional issue. 831 F.2d 221 (11th Cir.1987). We now hold that, because removal of the res from a court’s territorial jurisdiction destroys that court’s in rem jurisdiction, Pennington v. Fourth National Bank, 243 U.S. 269, 37 S.Ct. 282, 61 L.Ed. 713 (1917), this Court does not have jurisdiction to hear Leybda’s appeal.

The general rule of in rem jurisdiction is that the court’s power derives entirely from its control over the defendant res. Id. at 272, 37 S.Ct. at 283; L.B. Harvey Marine, Inc. v. M/V River Arc, 712 F.2d 458, 459 (11th Cir.1983). Where an appellant fails to file a stay of judgment or a supersedeas bond, and the res is removed from the court’s territorial jurisdiction, the appellate court does not have in rem jurisdiction. Taylor v. Tracor Marine, Inc., 683 F.2d 1361, 1362 (11th Cir.1982), cert. denied, 460 U.S. 1012, 103 S.Ct. 1252, 75 L.Ed.2d 481 (1983); Parks v. B.F. Leaman & Sons, Inc., 279 F.2d 529, 532 (5th Cir.1960). This Circuit has recently reaffirmed this traditional rule. See Harvey Marine, 712 F.2d at 459; Taylor, 683 F.2d at 1362.

In Harvey Marine and Taylor, this Court dismissed appeals for lack of jurisdiction where the prevailing party had removed the res and where the losing claimants failed to stay the execution of the district court’s order. Recent cases in other circuits have reached the same result. See, e.g., United States v. $79,000 in U.S. Currency, 801 F.2d 738, 739 (5th Cir.1986) (“Where no supersedeas is filed or steps taken to supersede judgment and the Marshal surrenders custody, neither the district court nor the appellate court retains in rem jurisdiction”); United States v. 66 Pieces of Jade & Gold Jewelry, 760 F.2d 970, 973 (9th Cir.1985) (“Because forfeiture proceedings are in rem, the court’s subject matter jurisdiction is dependent on its continuing control over the property”); Bank of New Orleans & Trust Co. v. Marine Credit Corp., 583 F.2d 1063, 1068 (8th Cir.1978) (“Removal of the res from a court’s jurisdiction, or distribution of a substitute res deposited in the registry of the court, destroys in rem jurisdiction”). These cases demonstrate that the traditional in rem rule retains vitality.

In Harvey Marine, this Court dismissed an appeal as moot where the ship against which an in rem action had been brought departed the Court’s jurisdiction after the district court dissolved the in rem arrest warrant. 712 F.2d at 459. Harvey Marine had filed an appeal from the district court’s order dissolving the arrest, but it failed to request a stay of that order and it did not file a supersedeas bond. Id. at 458. This Court stated that it could not “proceed to adjudication” where the res was no longer within the Court’s territorial jurisdiction. In response to Harvey Marine’s argument that it was “fundamentally unfair not to adjudicate the merits of the case,” the Court noted that there were “various methods to protect appellate jurisdiction in an in rem case,” id. at 459 (citing Bank of New Orleans, 583 F.2d at 1068-69; Parks, 279 F.2d 529), and it implied that Harvey Marine was at fault for failing to employ any of these methods.

Other courts have stated this position more forcefully, holding that the losing claimant to the res is obligated to take some action to preserve the res so that the parties’ rights to it could be adjudicated at the district and appellate courts. These courts impose a duty on the claimant to seek a stay of execution of the district court’s judgment pending appeal, to file a supersedeas bond, or to take other action to preserve the res. Bank of New Orleans, 583 F.2d at 1068. See also United States v. $57,480.05 in U.S. Currency and Other Coins, 722 F.2d 1457, 1458-59 (9th Cir.1984). Under these circumstances, a claimant who fails to act to preserve the res cannot complain when the appellate court dismisses his appeal for lack of in rem jurisdiction.

Taylor employs an analysis similar to that in Harvey Marine, and the cases reach similar results. In Taylor, crew members brought an action against their vessel to obtain their wages. The ship was seized and sold, but the proceeds were disbursed to priority lienholders. This Court noted that the crew members failed to seek a stay of the district court’s order allowing disbursement of the funds; therefore, the res was not before the Court on appeal. 683 F.2d at 1362. Consequently, in rem jurisdiction was destroyed, rendering the crew’s appeal moot. Id.

Our recent cases control the result in the case at bar. The present case involves a sequence of events which is similar to what occurred in Taylor and Harvey Marine. After trial below, the district court ordered the plane forfeited to the government. Leybda filed notice of appeal, but it failed to stay the district court’s order.¹ Therefore, the judgment became final ten days after the court issued its decree, and the government was free to remove the plane from this Court’s jurisdiction. That removal destroyed in rem jurisdiction.²

In light of the in rem jurisdictional rule, the only way in which Leybda might avoid dismissal of its appeal is to fit this appeal within the Court’s in personam jurisdiction. Precedent from the predecessor to this Court holds that when an original action was brought in rem and in personam, the court retained jurisdiction even after the res was removed from the jurisdiction. Inland Credit Corp. v. M/T Bow Egret, 552 F.2d 1148 (5th Cir.1977). Therefore, this Court must determine whether in per-sonam jurisdiction existed in this case.

One might argue that jurisdiction in this case was not limited to in rem jurisdiction. For example, 28 U.S.C.A. § 1345 provides that:

Except as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress.

In addition, 28 U.S.C.A. § 1355 provides that:

The district court shall have original jurisdiction, exclusive of the courts of the states, of any action or proceeding for the recovery or enforcement of any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress, except matters within the jurisdiction of the Court of International Trade under Section 1582 of this title.

In its forfeiture complaint, the government alleged that 28 U.S.C.A. §§ 1345 & 1355 provided the district court with jurisdiction, and the district court proceeded with the complaint on that basis. One Lear Jet, 617 F.Supp. at 771. At first glance, Section 1345 (jurisdiction where the United States is a plaintiff) may be read to provide a jurisdictional basis that is independent of the presence of the res.3

However, a closer examination of these sections indicates that they vest the district courts with subject matter jurisdiction over forfeitures under 8 U.S.C.A. § 1324. This is irrelevant to the question of whether the panel had in rem or in personam jurisdiction to decide this appeal. In addition, the statute governing forfeitures under the customs laws suggests that these statutes do not supply an independent jurisdictional basis. In part, the customs laws state that, “the storage of property outside the judicial district or customs collection district in which it was seized shall in no way affect the jurisdiction of the court which would otherwise have jurisdiction over such property.” 19 U.S.C.A. § 1605. The legislative history of Section 1605 states that the statute was necessary to modify the traditional rule that the res “remain in the judicial district of seizure in order that the district court may have jurisdiction when condemnation proceedings are instituted.” 1954 U.S. Code Cong. & Admin. News 3900, 3906. The provisions of Title 28 discussed above were in effect when Congress adopted Section 1605. If those provisions were intended to eliminate the traditional requirement that the res be within the territorial jurisdiction of the court, Section 1605 was unnecessary. Obviously, the drafters of Section 1605 did not subscribe to this view.⁴

Although there is no statutory basis on which to assert that this Court has in personam jurisdiction, a limited exception to the in rem rule allows a court to retain jurisdiction even though the res is no longer within the court’s territorial boundaries.⁵ Specifically, where there is an “interface of in rem and in personam jurisdiction,” a court may properly exercise broad in per-sonam power over the parties to the in rem action. Inland Credit, 552 F.2d at 1152. However, precedent in this Court provides little support for the claim that Leybda’s appeal falls within this limited category of exceptions.

Factually, Inland Credit is different from the present case. In Inland Credit, a ship mortgagee brought an in rem action against the ship and an in personam action against the ship’s owner. By so doing, the plaintiff invoked both types of jurisdiction. In One Lear Jet, the government never invoked in personam jurisdiction when it brought suit; it sued the plane, not the purported owner who later intervened.⁶

Other cases which embody exceptions to the in rem jurisdictional rule are also distinguishable. In Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 569 F.2d 330 (5th Cir.1978), a Florida corporation sued for possession of artifacts from a sunken ship located partially within and partially outside the territorial waters of the United States. The United States intervened in the district court and appealed summary judgment in the corporation’s favor, arguing that the district court lacked in rem jurisdiction to determine the rights of the parties. The Court held that by intervening as a party defendant/claimant, and by stipulating to the district court’s admiralty jurisdiction, the United States had waived the requirement that the res be before the court. Id. at 335. Again, this case is different from One Lear Jet because jurisdiction in One Lear Jet was based solely on the res; the government did not consent to the court’s in personam jurisdiction.⁷ It merely brought a forfeiture action against the aircraft.

This Court’s precedents do not allow us to assert in personam jurisdiction over the government in this case. Such a holding would be an unwarranted extension of the limited exceptions which find in personam jurisdiction in certain forfeiture proceedings. Moreover, we reject the notion that the United States consented to in personam jurisdiction by invoking the district court’s in rem jurisdiction initially.⁸ To hold that the government “consented” to in personam jurisdiction would be tantamount to deciding that a court has in personam jurisdiction over any participant in an in rem proceeding. This does not comport with the traditional analysis of in rem jurisdiction.⁹

In sum, this Court lacks in rem jurisdiction to hear this appeal because the res had been removed from the jurisdiction at the time of the appeal. In addition, the Court does not have in personam jurisdiction over the parties because the action was solely in rem. Because this Court lacks jurisdiction to hear this appeal, it cannot entertain Leybda’s claims on the merits. Accordingly, the appeal is DISMISSED.

1 . Judge Vance contends that the result in this case is egregious because Leybda had no funds with which to post a bond to stay the judgment. He states that "[h]ad [Leybda] been able to post a supersedeas bond, the appeal would have gone forward without jurisdictional question." Our reading of the record does not support this assertion. Nothing in the record suggests that Leybda ever indicated to the trial court that it was not moving for a stay because it had no assets with which to post a bond. Moreover, a review of the record does not suggest that Leyb-da would have posted a bond even if it had sufficient assets.

In Leybda's reply brief submitted to the panel of this Court, Leybda stated that it “did not need to seek a stay because the court had continuing in personam jurisdiction. Moreover, a motion for a stay would have been futile. Leybda has no assets to post a stay." Appellant’s Reply Brief at 6. In its in banc brief, Leybda reasserted the futility of seeking a stay. Appellant’s In Banc Brief at 17. The language employed in these briefs demonstrates that impecuniousness was not the reason behind Leybda’s failing to seek a stay. Instead, we find that Leybda’s initial statement that it believed that it "did not need to seek a stay” explains Leybda’s failure to take action.

In addition, the record is not clear on the issue of Leybda’s access to funds. Leybda cites a corporate officer’s affidavit as proof that the corporation's only major asset was the Lear Jet. R 7-243. However, the government alleged that Leybda was a sham corporation established as a commercial cover for the Cuban government. R 10-252 n. 1. If this latter allegation is true, Leybda may have had access to Cuban government funds. Moreover, this may explain how Leybda’s attorney will be recompensed for the more than $41,000 worth of costs and fees he had incurred on behalf of this defunct corporation. See R 10-348 & 349.

2 . Leybda asserts that the government’s removal of the aircraft was improper because it was done solely to eliminate this Court’s in rem jurisdiction. Accidental, fraudulent, or improper removal of the res does not destroy in rem jurisdiction. The Rio Grande, 90 U.S. (23 Wall) 458, 23 L.Ed. 158 (1874). However, after the expiration of the automatic ten day stay provided in Fed.R.Civ.P. 62(a) and absent a stay pending appeal, a prevailing plaintiff is free to execute a judgment in his favor even though the defendant is pursuing an appeal. See United States v. Verlinsky, 459 F.2d 1085, 1089 (5th Cir.1972).

In the present case, Leybda did not request a stay, and neither the district court nor this Court stayed the judgment sua sponte. Thus, ten days after the district court issued its decree, the government was entitled to do what it wished with the jet. See $79,000, 801 F.2d at 740 (The government’s removal of forfeited property after the expiration of the ten day stay did not fall within the Rio Grande exception where the losing claimant failed to stay the district court’s judgment). In this situation, the removal of the aircraft to Missouri was not improper.

3 . The only statutory provision which requires the res to be before the court is 28 U.S.C.A. § 1395(b), which provides:

A civil proceeding for the forfeiture of property may be prosecuted in any district where such property is found.

However, this section concerns venue, not jurisdiction. Therefore, it does not limit a court’s authority to adjudicate forfeitures under Section 1324.

4 . In the exercise of its regulatory powers, Congress could modify the requirement that the res be within the court’s territorial jurisdiction, as long as the claimants were not denied due process. In fact, one district court has stated that, in the absence of a contrary congressional intent, the territorial jurisdiction of a court in a forfeiture proceeding under 28 U.S.C.A. § 1355 is limited only by the territorial limits of the nation and the venue requirements of 28 U.S.C. A. § 1395. United States v. One 1974 Cessna Model 310R Aircraft, 432 F.Supp. 364, 368 (D.S.C.1977). There is no support for this conclusion and we decline to adopt it, especially in light of the legislative history to 19 U.S.C.A. § 1605.

5 . Judge Clark's dissent quotes from Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 80 S.Ct. 1470, 4 L.Ed.2d 1540 (1960), to support the proposition that the absence of the res should-not defeat this Court’s jurisdiction. However, as Judge Clark notes, Continental Grain involved an action which had been brought both in rem and in personam. There was an "interface” of the two types of jurisdiction; therefore, the Court could maintain in personam jurisdiction over the parties even after the res was removed from the jurisdiction. Reliance on Continental Grain is unavailing in the present case where such an interface of in rem and in personam jurisdiction does not exist. In this case, the Court cannot assert in personam jurisdiction over the government because the action was solely in rem. We recognized this in Taylor where we dismissed an in rem action on appeal but noted that, if "this case also involved claims in personam, jurisdiction might still lie.” 683 F.2d at 1362 n. 2. It follows from this comment that there is no basis for in personam jurisdiction when an action does not involve in person-am claims. This is the situation here.

6 . Judge Vance accuses the majority of misreading Inland Credit because the Inland Credit Court stated that it was "undeniable that [the plaintiff] Inland was subject to this court's in personam jurisdiction." However, Judge Vance fails to indicate that the Fifth Circuit had provided two reasons for finding in personam jurisdiction in Inland Credit. In two sentences just prior to the statement quoted by Judge Vance, the Court emphasized that (1) Inland had filed the suit both in rem and in personam, and (2) that Inland had appealed to the Fifth Circuit in an attempt to recapture a part of another party’s in personam recovery. 552 F.2d at 1152. From this, the Court concluded that it had in person-am jurisdiction over Inland. Id. However, this does not mean that an appellate court has in personam jurisdiction over a plaintiff who merely brings an in rem action in the district court.

7 .In criticizing the majority’s discussion of Treasure Salvors, Judge Vance ignores the fact that the parties in Treasure Salvors consented to the district court's exercise of in rem jurisdiction, but the losing party subsequently challenged that court's jurisdiction on appeal. The case at bar is different because the government is challenging this Court’s jurisdiction, to which it never consented. Subsequent cases have deemed this consent issue to be significant. See Harvey Marine, 712 F.2d at 459; Treasure Salvors v. Unidentified Wrecked and Abandoned Sailing Vessel, 640 F.2d 560, 566 (5th Cir. Mar.1981) ("Treasure Salvors III").

8 . Adam v. Saenger, 303 U.S. 59, 58 S.Ct. 454, 82 L.Ed. 649 (1938), provides no support for the proposition that the government consented to the personal jurisdiction of the court simply by bringing this action. Adam held that the Fourteenth Amendment allows states to authorize the service of process of a defendant’s counterclaim (referred to as a cross-complaint in Adam ) upon a plaintiffs counsel of record as a condition of allowing the plaintiff access to a state court. Id. at 67-68, 58 S.Ct. at 458. It does not state that itt personam jurisdiction exists simply because a plaintiff brings a claim in rem. At best, Adam supports a holding that the government would be subject to an in personam counterclaim brought by Leybda against the government. In the present case, no such counterclaim was filed. In November 1983, Leybda filed a pleading in response to the government’s amended complaint. This pleading was styled "Amended Answer, Affirmative Defenses and Cross-Claim,” and it included a third party cross-claim against Management Jets International. Leybda’s third party action was severed from this in rem action and transferred to district court in Nebraska. R3-137. The claim was subsequently dismissed. Appellant’s In Banc Brief at 3. This cross-claim was a different lawsuit from the government’s in rem complaint; therefore, it cannot provide in personam jurisdiction over the government in the case at bar.

9 . A recent Fifth Circuit opinion held that a "substitute basis of in personam jurisdiction” existed in a forfeiture action brought by the government against a drug. United States v. An Article of Drug Consisting of 4,680 Pails, More or Less, Each Pail Containing 60 Packets, 725 F.2d 976, 982 (5th Cir.1984). In that case, the manufacturer intervened and judgment was entered in its favor. Subsequently, the drug was released to the manufacturer who removed it from the district. After the government’s motion for a new trial was granted, the manufacturer moved to dismiss for lack of in rem jurisdiction. However, the court held that it had a "substitute basis" of jurisdiction because the manufacturer had voluntarily appeared before the court to oppose the new trial motion but had not contested the in rem jurisdiction of the court at that time. Id. at 984.

As far as An Article of Drug is indistinguishable from the present case, we decline to follow it because precedent in this Circuit does not support this holding. We refuse to supply a "substitute basis” of jurisdiction in order to expand this Court's jurisdiction, especially where Leybda could have preserved the Court’s in rem jurisdiction simply by filing a supersedeas bond.