United States v. One Star Class Sloop Sailboat Built in 1930

546 F.3d 26, 2008 U.S. App. LEXIS 21835, 2008 WL 4615800
CourtCourt of Appeals for the First Circuit
DecidedOctober 20, 2008
Docket08-1152
StatusPublished
Cited by63 cases

This text of 546 F.3d 26 (United States v. One Star Class Sloop Sailboat Built in 1930) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. One Star Class Sloop Sailboat Built in 1930, 546 F.3d 26, 2008 U.S. App. LEXIS 21835, 2008 WL 4615800 (1st Cir. 2008).

Opinion

SELYA, Circuit Judge.

The instant appeal requires us to revisit the FLASH II, a sailing vessel once owned by the late John F. Kennedy. This time around, the district court found that the government had failed to take reasonable steps to notify a part-owner of the vessel (Dr. Kerry Scott Lane) of its intent to forfeit. Since the government already had sold the vessel at auction, the court— which determined that the sales price eq-ualled the vessel’s fair market value— awarded a share of the net sales proceeds to Lane. It subsequently granted him attorneys’ fees in an amount less than he had requested.

Lane appeals, challenging both the damages and fee awards. The damages issues are case-specific, but the issues as to fees are of potentially broader significance. After careful consideration of these issues against the backdrop of a tangled record, we affirm the damages award but modify the fee award.

*32 I. BACKGROUND

We sketch the facts and procedural history in order to place the issues into a workable perspective. In doing so, we assume the reader’s familiarity with our earlier opinion. See United States v. One Star Class Sloop Sailboat (Sloop I), 458 F.3d 16 (1st Cir.2006).

On February 1, 2005, the government filed a civil forfeiture complaint against the FLASH II, charging that the vessel comprised the avails of narcotics trafficking. After finding probable cause to forfeit, the district court ordered the government to notify those persons who arguably had an interest in the FLASH II about the pen-dency of the action. Only one individual, Harry Crosby, lodged a claim of interest. For reasons that are no longer important, the government did not provide notice to Lane.

On June 3, 2005, the clerk of the district court, acting pursuant to a government motion, entered a default against all interested parties who had received notice and had not responded thereto. See Fed. R.Civ.P. 55(a). Crosby and the government subsequently negotiated a settlement that contemplated the eventual sale of the vessel. On July 15, 2005, the district court endorsed that settlement and entered a default judgment of forfeiture.

Although Lane had learned of the seizure shortly after it transpired, he did not look into it. He became aware of the forfeiture proceeding only after the entry of default. He secured counsel; moved unsuccessfully to vacate or amend the default judgment, see Fed.R.Civ.P. 59(e), 60(b); and then appealed.

Lane asked the district court to stay the forthcoming forfeiture sale pending resolution of his appeal. The court refused to do so. The government proceeded to sell the FLASH II for $100,000 through Guernsey’s (an auction house in New York). Crosby received one-third of the net proceeds and the government received the balance.

We decided Lane’s original appeal in August of 2006, remanding to the district court to determine whether Lane had been afforded constitutionally adequate notice of the forfeiture proceeding. See Sloop I, 458 F.3d at 25-26. On remand, the case was reassigned to a different district judge. See D. Mass. R. 40.1(E)(2).

The new judge ruled that the government had not taken reasonable steps to discover Lane’s proprietary interest in the vessel and, thus, had given inadequate notice of the forfeiture proceeding. In re One Star Class Sloop Sailboat (Sloop II), 517 F.Supp.2d 546, 549 (D.Mass.2007). Consequently, the judge vacated the default judgment. Id.

In due course, Lane and the government cross-moved for summary judgment. These motions focused chiefly upon the forfeitability of the FLASH II and its value. The parties submitted various materials related to value, including evidence of earlier bids and appraisals and an affidavit signed by Guernsey’s president, Arlan Et-tinger. On May 15, 2007, the district court tentatively granted the government’s motion for partial summary judgment, ruling that as long as the vessel had been properly forfeited sovereign immunity barred the recovery of any sum in excess of $100,000.

On May 24, the court held a single-day bench trial, which focused principally upon the issues of (i) forfeitability and (ii) the validity and scope Lane’s asserted ownership interest. At the end of the day, the court reserved decision, set a briefing schedule, and reminded the parties of the approaching deadline for the completion of discovery.

*33 The briefs arrived on time. Relatedly, Lane requested reconsideration of the earlier (tentative) ruling on sovereign immunity. In the same time frame, the government proffered transcripts of the depositions of Ettinger and Robert Augustus Harper (an attorney who had represented another investor in the FLASH II).

On October 1, 2007, the district court handed down a comprehensive rescript, in which it concluded that the FLASH II was not forfeitable; that the vessel had a fair market value of $100,000 at the time of its seizure; and that Lane should receive his pro rata share of that sum. See Sloop II, 517 F.Supp.2d at 554-56. The court also pointed out that, given its finding on fair market value, the sovereign immunity issue had become moot. Id. at 556.

In a supplemental ruling, the district court found that Crosby had a valid interest at least equal to the amount ($26,-101.24) that he had received under his earlier settlement and awarded Lane the balance of the $100,000 fair market value figure (i.e., $73,898.76), together with post-seizure interest. Finally, the court indicated that Lane, as a prevailing party, was entitled to reasonable attorneys’ fees under the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), 28 U.S.C. § 2465(b)(1).

Lane applied for approximately $293,000 in fees. 1 The government vigorously contested the amount. The district court agreed that the request was exorbitant and awarded $51,929.13. See United States v. One Star Class Sloop Sailboat (Sloop III), No. 05-10192, 2008 WL 678519, at *2 (D.Mass. Jan.9, 2008). This timely appeal ensued.

II. ANALYSIS

Lane characterizes both the damages and fee awards as inadequate. We address them separately.

A. Damages.

As said, the lower court found that the fair market value of the FLASH II was $100,000, and awarded Lane his pro rata share of that amount. See Sloop II, 517 F.Supp.2d at 556. On appeal Lane concedes that he is entitled only to his share of fair market value and does not challenge the court’s proration as such. He contends, however, that the court erred in valuing the FLASH II at $100,000. His contention rests on two pillars, one procedural and one substantive.

1. The Procedural Pillar.

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546 F.3d 26, 2008 U.S. App. LEXIS 21835, 2008 WL 4615800, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-one-star-class-sloop-sailboat-built-in-1930-ca1-2008.