United States v. Two Parcels of Real Property Located in Russell County , 92 F.3d 1123 ( 1996 )

United States Court of Appeals,
Eleventh Circuit.
No. 95-6267.
UNITED STATES of America, Plaintiff-Appellee,
v.
TWO PARCELS OF REAL PROPERTY LOCATED IN RUSSELL COUNTY, ALABAMA,
and One Parcel of Real Property Located in Lee County, Alabama,
with all Appurtenances and Improvements Thereon, and More
Particularly Described Hereinafter, Defendant,
Joseph Carl Brown, Naomi Matichka, James William Brown, Michael
W. Brown, Carrie Mae Brown, Claimants-Appellants,
and
One Parcel of Real Property Located at Route 1, Box 650, Salem,
Lee County, Alabama, with all Appurtenances and Improvements
Thereon, Defendant,
Carl Brown, Naomi Matichka, Claimants-Appellants,
Terry Brown, et al., Claimants,
and
Four Parcels of Real Property Located in Russell County, Alabama,
with all Appurtenances and Improvements Thereon, Defendant,
Angela Brown, et al., Claimants,
Michael Brown, Joseph Carr Brown, Carrie Mae Brown, Claimants-
Appellants,
and
One Parcel of Real Property Described as Lot 9, Rite-Way
Subdivision, Highway No. 12, Lee County, Alabama, with all
Appurtenances and Improvements Thereon, Including a Mobile Home,
Defendant,
James William Brown, Carrie Mae Brown, Claimants-Appellants.
Aug. 28, 1996.
Appeals from the United States District Court for the Middle
District of Alabama. (Nos. CV-92-D-500-E, CV-92-D-693-E, CV-92-D-
1332-E, CV-92-D-1436), Ira De Ment, Judge.
Before ANDERSON and COX, Circuit Judges, and RONEY, Senior Circuit
Judge.
PER CURIAM:
On this appeal from a summary judgment of forfeiture of
several pieces of property purchased with the proceeds of marijuana
transactions or used for the production of marijuana, the claimants
allege several errors:
1. The complaints should have been dismissed because the
conclusory allegations did not comply with the strict pleading
requirements in forfeiture cases.
2. The court failed to consider claimants' evidence which
established an issue of fact, or should have resulted in a summary
judgment for claimants.
3. The court improperly considered evidence acquired after the
filing of the complaints.
4. The court improperly considered the claimants' invocation
of the Fifth Amendment in response to discovery questions in
concluding there was probable cause for forfeiture.
Finding no merit to any of these assignments of error, we
affirm.
Law of Forfeiture
Federal statutes provide that property is forfeited to the
Government when it is used or intended to be used to facilitate
illegal drug activities, 21 U.S.C. § 881(a)(7) (Supp.1994); or
when it constitutes proceeds traceable to the exchange of money for
a controlled substance, section 881(a)(6) (1981). Once the
Government seizes property, the claimant must establish ownership
of the property in question. E.g., United States v. 1012
Germantown Road, 963 F.2d 1496, 1500 (11th Cir.1992). Then it is
the Government's burden to show probable cause for the belief that
the property to be forfeited is substantially connected to drug
dealing. 21 U.S.C. § 881(a)(3) (1988) (incorporating procedures in
19 U.S.C. § 1615 (1982) for shifting burden of proof in civil
forfeiture proceeding). 1012 Germantown Road, 963 F.2d at 1500-01;
United States v. Four Parcels of Real Property, 941 F.2d 1428, 1440
(11th Cir.1991) (en banc ). Once the Government has met its
burden, the ultimate burden falls upon the claimant to prove by a
preponderance of the evidence a defense to the forfeiture, such as
the innocent owner defense, 963 F.2d at 1501, or that the property
derived from a legitimate source. Section 881(d); 941 F.2d at
1438.
Thus, the critical issue in a forfeiture case is whether the
Government has shown probable cause which, unrebutted by the
claimants, is sufficient to permit forfeiture.
1. Sufficiency of Complaint
A complaint for forfeiture must adhere to the pleading
requirements set forth in Rule E(2)(a) of the Supplemental Rules of
Certain Admiralty and Maritime Claims. These rules impose a more
stringent obligation on the Government than the notice pleading
requirements of the Federal Rules of Civil Procedure to set forth
grounds for forfeiture. See generally United States v. Property
Located at 4880 S.E. Dixie Highway, 838 F.2d 1558 (11th Cir.1988);
United States v. $38,000 in United States Currency, 816 F.2d 1538
(11th Cir.1987). Specifically Rule E(2)(a) requires a complaint to
"state the circumstances from which the claim arises with such
particularity that the defendant or claimant will be able, without
moving for a more definite statement, to commence an investigation
of the facts and to frame a responsive pleading." To satisfy this
specificity requirement, the complaint "must allege sufficient
facts to provide a reasonable belief that the property is subject
to forfeiture: in particular, that the Government has probable
cause to believe that a substantial connection exists between the
property to be forfeited and the exchange of a controlled
substance." $38,000, 816 F.2d at 1548.
In applying this standard, this Court has dismissed a
forfeiture complaint where it has contained "not even a whiff of
evidence" to suggest the property was in any way linked to illegal
drug activity. $38,000, 816 F.2d at 1548. The complaint in
$38,000 merely stated that the Government seized the currency, and
recited some probable cause language from section 881. Neither the
complaint nor the accompanying affidavit recited any facts to
support the Government's claim of probable cause. $38,000, 816
F.2d at 1541.
The complaints in this case allege that James Brown and his
son, Carl Brown, dealt in quantity sales of marijuana and cocaine
over a period of time and generally describe the method of
operation.1 Specific sales were not alleged, except for two sales
1
The complaints state the following facts:
3. The facts and circumstances supporting the
seizure and forfeiture of the Defendant property are
that James William Brown (James Brown) and his son,
Joseph Carl Brown (Carl Brown), deal in large quantity
sales of marijuana and cocaine (controlled substances).
On a weekly or bi-weekly basis one of the Browns would
go to Texas and purchase 50-100 pounds of marijuana
which would not generate the kind of money needed for the purchase
of the properties involved. The complaints then alleged the
general methods of large scale drug dealers in the handling of
cash, and specifically alleged the purchase with cash of each of
the properties sought to be forfeited, from whom they were bought,
and how the title was handled. They alleged the properties were
purchased with the proceeds of drug sales, and that one parcel was
used to facilitate the sale of controlled substances.
The complaints specified no date or location of any purported
or intended drug dealings, no dollar amounts, no specific types or
quantities of drugs sold, and no identified participants, other
than the two Browns. Yet, there were sufficient facts detailed in
and/or several ounces of cocaine. Occasionally, the
Browns would take a "driver" with them and allow the
driver to return alone in the car with the marijuana or
cocaine. Generally, the Browns only dealt in pound
quantities of marijuana and ounce quantities of
cocaine. The foregoing information was obtained from a
reliable confidential informant (hereinafter,
Informant).
4. In early 1991, this Informant was arrested for
selling five pounds of marijuana. The Informant had
received the marijuana from a man known as "James," who
in fact was James Brown.
5. The Informant agreed to cooperate with law
enforcement officials and telephoned James Brown. The
Informant told James Brown that he/she had the money
for the five pounds of marijuana and also wanted to
purchase an additional ten pounds of marijuana. The
Informant arranged by telephone for the purchase of the
marijuana and agreed to meet at the mobile home on the
Defendant Parcel located in Lee County, Alabama
(hereinafter, Defendant Parcel Three). The Informant
met with James Brown at Defendant Parcel Three, paid
James Brown for the original five pounds of marijuana,
and arranged for the purchase and pickup of the
additional ten pounds of marijuana. Thereafter, James
Brown was arrested while in and on Defendant Parcel
Three.
the complaint to put claimants on notice as to the Government's
basis for seizure. Indeed, as the Government notes, the claimants
filed responsive pleadings (claims, answers, and on the same day,
a motion for summary judgment), without obtaining a more definite
statement, indicating that the complaints were sufficient under
Rule E(2)(a). The motion to dismiss the complaint for failure to
allege a claim with sufficient specificity was not filed until
later.
When probable cause is based on evidence that the
participants are generally engaged in the drug business over a
period of time, have no other source of income, and that the
properties were bought with the income produced from that drug
business, it is not necessary to identify specific drug
transactions in the complaint. See United States v. Four Parcels,
941 F.2d 1428, 1440 (11th Cir.1991).
Contrary to appellants' motion for summary judgment or dismiss
argument, there was no error in denying the motion to dismiss the
complaint for insufficiency.
2. Whether Sufficient Evidence to Establish An Issue of Fact
Claimants next argue the district court erred in considering
evidence acquired after seizure in determining whether there was
probable cause to "forfeit the property." Examination of probable
cause in the civil forfeiture context may require a two-tiered
analysis. First, the Government must have probable cause toseize
the property. Second, the Government in court must show probable
cause for "forfeit of property." Claimants, on this issue, appear
to confuse probable cause to seize the property initially with the
ultimate determination whether forfeiture was proper.
At the summary judgment stage where the court's focus is on
the ultimate determination of whether the property is forfeit, it
is perfectly appropriate for the court to consider all the evidence
adduced by the Government. United States v. $121,100 in United
States Currency, 999 F.2d 1503 (11th Cir.1993); Four Parcels, 941
F.2d at 1440.
a. Claimant's Motion for Summary Judgment
The application of the burdens of proof in reviewing these
cross-motions is set out in United States v. Four Parcels of Real
Property, 941 F.2d 1428 (11th Cir.1991). As a preliminary matter,
whether it is the Government or the claimant who moves for summary
judgment, the court must determine whether the Government has shown
probable cause. Four Parcels, 941 F.2d at 1439. It is the
claimant's initial responsibility to point out to the court why it
believes the Government does not have probable cause for the
forfeiture. 941 F.2d at 1439 n. 25.
The verified complaint stated that on a weekly or bi-weekly
basis, either James Brown or his son, Carl Brown, would travel to
Texas to purchase 50-100 pounds of marijuana and/or several ounces
of cocaine. The complaint also detailed a drug transaction
involving James Brown conducted in a mobile home located on one of
the defendant parcels for which James Brown was later arrested. In
addition, the complaint detailed the cash purchases of the property
in question and how it was titled to various members of the Brown
family.
As a result of discovery, the Government also adduced the
following evidence: (1) four of the claimants, James William
Brown, Angela Brown, Joseph Carl Brown, and Michael W. Brown had
been convicted of drug related offenses; (2) the cost of the
purchased property amounted to more than the claimants' income as
reported on their income tax returns; (3) the claimants purchased
valuable pieces of real property totally, or predominantly, with
cash; (4) the claimants are related by blood or marriage; (5)
each of the defendant properties was used for the purposes of at
least one claimant; and (6) some of the claimants asserted their
Fifth Amendment right against self-incrimination during their
depositions.
Evidence that claimants are generally engaged in the drug
business over a period of time, have no visible source of
substantial income, use cash for large purchases, and are nominee
owners is all probative evidence of probable cause, Four Parcels,
941 F.2d at 1441-42, as is a history of drug violations, $121,100
in United States Currency, 999 F.2d at 1506-07. Finally, as we
discuss in more detail below, claimants' invocation of the Fifth
Amendment can also be considered as an element of probable cause.
We hold that the Government's showing in this case is sufficient to
establish probable cause.
Even though the Government has shown probable cause, summary
judgment for claimants would be proper if they offered
uncontroverted evidence that the funds used to purchase the
property were obtained from legitimate sources, or that they were
innocent owners unaware of the property's connection with drug
sales. U.S. v. A Single Family Residence, 803 F.2d 625, 629 (11th
Cir.1986); United States v. $4,255,000 in United States Currency,
762 F.2d 895, 906 (11th Cir.1985), cert. denied, 474 U.S. 1056, 106
S. Ct. 795, 88 L. Ed. 2d 772 (1986).
As evidence the property was bought with legitimate funds,
claimants offered the affidavit of Robert Jones, who testified that
he loaned Carl Brown in excess of $100,000 and that he frequently
loaned Carl Brown large amounts of cash. Claimants point to no
other evidence in the record to establish this defense, nor do they
offer any detailed explanation of the allocation of these funds to
purchase the various properties. That affidavit is insufficient to
prove that the property was obtained from legitimate funds.
As to the innocent owner defense, the claimants attempt to
cast the burden on the Government, stating the Government has
failed to offer evidence that claimants were not innocent owners.
It is claimants' burden, not the Government's, to prove innocent
ownership. Claimants identify nothing in the record to support
such a defense. The district correctly denied their motion for
summary judgment.
b. Government's Motion for Summary Judgment
Once the Government has met its initial responsibility to
establish probable cause and the absence of a genuine issue of
material fact, the claimants must produce "significant, credible
evidence" that the claimant is entitled to the property. Four
Parcels, 941 F.2d at 1439. The claimants filed no response to the
Government's motion, and the bare bones affidavit concerning the
loan of cash from a friend is insufficient to create an issue of
fact on that defense.
In their appellate brief, claimants contend the district
court erred by holding all the property forfeit rather than making
decisions about individual pieces of property. By example, the
claimants contend Naomi Matichka's property should not be forfeited
when she stated in her deposition that she purchased part of the
defendant property for $75,000 with $100,000 she alone had saved
from her $6.00 per hour job at the mill. The mere allegation of a
highly unlikely legitimate source of income without some support to
give the allegation credibility cannot constitute an issue of
material fact defeating summary judgment for forfeiture. Claimant
produces nothing to establish her total income versus expenditures
to explain how she could have established such a large amount of
cash.
As for claimants' complaint that the district court
considered all income of the claimants against the total purchases,
such a particularized accounting is not necessary for the
Government to establish probable cause, and the claimants offered
no evidence that would enable the court to make an accurate
analysis. In any event, considering the income of all the
claimants rather than just the income of only Carl Brown and James
Brown as the true purchasers inured to the benefit of the
claimants.
3. Consideration of the Claimants' Invocation of the Fifth
Amendment
In deposition, three of the seven claimants refused to answer
questions, asserting their Fifth Amendment privilege. The district
court inferred that the answers to the questions would not have
been favorable to the claimants asserting the privilege.
The claimants had a right to assert the Fifth Amendment
privilege in this civil forfeiture proceeding. United States v.
United States Coin and Currency, 401 U.S. 715, 91 S. Ct. 1041, 28
L. Ed. 2d 434 (1971); Boyd v. United States, 116 U.S. 616, 6 S. Ct.
524, 29 L. Ed. 746 (1886). This Court has held, however, that the
trier of fact may take an adverse inference against the parties to
a civil action refusing to testify on Fifth Amendment grounds.
United States v. A Single Family Residence, 803 F.2d 625, 629 n. 4
(11th Cir.1986). There is an exception to this rule when a
claimant in the civil case is also a defendant in the criminal case
and is forced to choose between waiving the privilege and losing
the case on summary judgment. United States v. Premises Located at
Route 13, 946 F.2d 749 (11th Cir.1991). The testifying claimants
here were not defendants in a criminal case.
The claimants argue that because of a recent trend in
forfeiture cases, we should hold that the so-called civil
forfeiture is no longer civil and that the criminal rules should
apply. See Austin v. United States, 509 U.S. 602, 113 S. Ct. 2801,
125 L. Ed. 2d 488 (1993) (Excessive Fines Clause limits scope of
civil forfeiture judgments); United States v. 2751 Peyton Woods
Trail, S.W., 66 F.3d 1164 (11th Cir.1995) (notice and hearing in
accordance with Due Process Clause required prior to seizure).
This argument is foreclosed by the Supreme Court's recent
pronouncement in United States v. Ursery, --- U.S. ----, 116 S. Ct.
2135, 135 L. Ed. 2d 549 (1996), that civil in rem forfeitures do not
constitute "punishment" for double jeopardy purposes.
Contrary to the claimants' argument, their invocation of the
Fifth Amendment was not the "linchpin" of the summary judgment
case, and the district court would have been justified in making
its decision without regard to the assertion of the Fifth Amendment
privilege.
AFFIRMED.