United States v. $157,808.97, More or Less, in United States Currency , 309 F. App'x 851 ( 2009 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 6, 2009
No. 08-50056 Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Plaintiff-Appellee
v.
$157,808.97, MORE OR LESS, IN UNITED STATES CURRENCY,
PROCEEDS FROM THE SALE AND/OR LIQUIDATION OF REAL
PROPERTY LOCATED AT 11405 WARE SEGUIN ROAD, SCHERTZ,
BEXAR COUNTY, TEXAS
Defendant
EMERY RANDLE
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:06-cv-310
Before GARWOOD, DENNIS, and PRADO, Circuit Judges.
PER CURIAM:*
Defendant-Appellant Emery Randle (“Randle”) appeals the district court’s
civil forfeiture order finding him to be the innocent owner of only 50% of the
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 08-50056
respondent currency. Because Randle does not argue—much less prove—that
he meets the statutory requirements of innocent ownership for the remainder
of the respondent currency, we affirm the ruling of the district court.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
In December 1997, Randle and his future-wife Robin Randle (“Robin”)
purchased a piece of property on Ware Seguin Road in Bexar County, Texas (the
“Ware Seguin property”). They purchased the property together, and thus each
owned an undivided 50% interest in the community estate. Shortly after
purchasing the Ware Seguin property, Randle and Robin married and built a
home on the property. Robin began living at the Ware Seguin property upon
completion of the house; Randle, however, resided in Houston, Texas.
In May and June 2005, while the subject of a Drug Enforcement Agency
(“DEA”) investigation, Robin sold methamphetamine from the Ware Seguin
property. She was arrested on June 28, 2005, and indicted on July 5, 2005. She
later pleaded guilty to conspiracy to possess with intent to distribute 500 grams
or more of methamphetamine and admitted that she used the Ware Seguin
property to facilitate these transactions. The Government later filed a lis
pendens on the Ware Seguin property.
On July 18, 2005, Randle and Robin divorced, with the Decree of Divorce
awarding Randle the Ware Seguin property. On July 26, 2005, a warranty deed
conveying the entirety of the Ware Seguin property was executed and recorded
in Randle’s name.
B. Procedural Background
In January 2006, the Government learned that Randle was attempting to
sell the Ware Seguin property. The Government and Randle agreed that the
property could be sold—requiring the Government to remove the lis
pendens—and that the proceeds of the sale would be seized and held by the
2
No. 08-50056
United States Marshals Service pending the outcome of forfeiture proceedings.
Randle soon sold the Ware Seguin property, and the Government seized the
check for $157,808.97 (the “respondent currency”). The Government then filed
a forfeiture action against the respondent currency. Randle was the only
individual to file a claim in the forfeiture proceedings.
In its pretrial submissions, the Government asserted two theories of why
the currency was subject to forfeiture: as the proceeds from the sale of property
purchased with the proceeds of drug transactions, see 21 U.S.C. § 881(a)(6), or
as the proceeds from the sale of property used or intended to be used to facilitate
drug transactions, see id. § 881(a)(7). The Government also offered a Proposed
Conclusion of Law that stated,
Given that the United States has established that the Respondent
Real Property was used to facilitate Robin Randle’s illegal narcotics
trafficking activities, and pursuant to Title 21 U.S.C. § 881(h), the
United States’ interest in at least Robin Randle’s one half
community property interest in the Respondent Real Property
vested on or about May, 2005 . . . .
In response, Randle asserted that the Ware Seguin property was not purchased
with the proceeds of drug transactions and that, as the innocent owner of the
entirety of the Ware Seguin property, he was entitled to 100% of the proceeds
from its sale. After a trial, the jury found that (1) the Government had proved
that the Ware Seguin property was used or intended to be used to facilitate a
drug transaction, (2) Randle had proved that he was an innocent owner
regarding such use or intended use of the Ware Seguin property, and (3) the
Government had failed to prove that the Ware Seguin property was purchased
with the proceeds of a drug transaction.
The Government then requested that the court award it 50% of the
respondent currency. The Government asserted that—in line with the above-
quoted Proposed Conclusion of Law—it was entitled to the proceeds stemming
from the sale of Robin’s interest, which it had acquired prior to the sale under
3
No. 08-50056
civil forfeiture’s relation back doctrine. In response, Randle suggested that he
was entitled to all of the respondent currency as an innocent owner. At the
court’s request, the Government prepared two proposed judgments. The first
awarded 100% of the respondent currency to Randle as the innocent owner of the
Ware Seguin property. The second awarded 50% to Randle as an innocent owner
of half of the Ware Seguin property and 50% to the Government as owner of the
other half under the relation back doctrine. After considering the parties’
arguments as to which proposed judgment was proper, the district court
concluded that Randle had proved that he was an innocent owner of his original
interest in the Ware Seguin property, but not of any interest he acquired from
Robin in their divorce. Therefore, the district court reasoned, title over Robin’s
interest vested in the Government in May 2005, and Randle never took title to
this interest. The district court thus awarded Randle 50% of the respondent
currency and the remaining 50% to the Government.
Randle now brings this appeal, arguing that the jury found him to be the
innocent owner of the entirety of the Ware Seguin property and that, as such, he
is entitled to 100% of the respondent currency. The Government does not
contest that Randle is entitled to 50% as an innocent owner, but asserts that the
district court correctly concluded that Randle had proved his innocent-owner
defense as to only half of the Ware Seguin property. We review the district
court’s legal conclusions as to the forfeiture order de novo. United States v. 1977
Porsche Carrera 911, 946 F.2d 30, 33 (5th Cir. 1991).
II. DISCUSSION
A. Innocent Ownership Under CAFRA
The Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), Pub. L. No. 106-
185, 114 Stat. 202, governs federal civil forfeiture proceedings. Under CAFRA,
the Government bears the initial burden of proving that the property is subject
to forfeiture. 18 U.S.C. § 983(c)(1). It is undisputed that the Government met
4
No. 08-50056
this burden in the present case by proving that the Ware Seguin property was
used to facilitate a drug transaction. See 21 U.S.C. § 881(a)(7).
CAFRA contains an “innocent-owner defense,” stating that “[a]n innocent
owner’s interest in property shall not be forfeited under any civil forfeiture
statute.” 18 U.S.C. § 983(d)(1). Section 983(d) provides distinct requirements
for the innocent ownership of different types of property interests. First, one
can innocently own “pre-existing interests,” or property interests acquired prior
to the conduct giving rise to forfeiture. Section 983(d)(2) sets out the conditions
for proving innocent ownership of a pre-existing interest. Second, one can
innocently own “after-acquired interests,” or property interests acquired after
the conduct giving rise to forfeiture. Section 983(d)(3) sets out the conditions for
proving innocent ownership of such an interest. The claimant bears the burden
of proving that she is an innocent owner. Id. § 983(d)(1).
B. Randle’s Property Interests and the Innocent Ownership Thereof
In the present case, the conduct giving rise to forfeiture was Robin’s May
2005 drug transactions. Thus, the undivided 50% community property interest
that Randle acquired in the Ware Seguin property upon its purchase is a pre-
existing interest for the purposes of CAFRA.1 The 50% interest in the Ware
Seguin property that Randle acquired in his July 2005 divorce is an after-
acquired interest for the purposes of CAFRA, and § 983(d)(3) governs any claim
to innocent ownership of that interest. On appeal, Randle concedes that this is
the proper characterization of his property interests. Therefore, Randle
effectively acknowledges that it is his burden to prove that he was an innocent
owner of the after-acquired interest.
In the forfeiture proceedings, Randle argued only the elements of
§ 983(d)(2)—the section governing pre-existing interests. Randle did not present
1
The parties do not dispute that Randle proved he was an innocent owner of this pre-
existing interest.
5
No. 08-50056
a § 983(d)(3) innocent-owner defense before the district court, and he offers no
argument on appeal that he meets § 983(d)(3)’s conditions.2 As Randle has failed
to adequately argue—much less prove—that he was an innocent owner of the
after-acquired interest under § 983(d)(3), we affirm the district court’s order
giving 50% of the respondent currency to the Government.
C. Randle’s Other Arguments
We briefly address Randle’s other contentions on appeal. First, Randle’s
reliance on this court’s pre-CAFRA decision in United States v. Mikell, 33 F.3d
11 (5th Cir. 1994), is misplaced. The Mikell court held that ownership of
property for the purposes of an innocent owner-defense is determined by looking
to who owned the property at the time the Government filed the forfeiture
action. Id. at 13. Randle argues that, because he was the 100% owner of the
Ware Seguin property when the Government filed the instant forfeiture action,
and because the jury found that he proved his innocent ownership defense, he
is an innocent owner of 100% of the Ware Seguin property and thus entitled to
2
As the district court noted, Randle would likely be unsuccessful in arguing that he was
the innocent owner of the after-acquired property interest since he does not appear to meet all
of § 983(d)(3)’s criteria. There is, for example, some indication that Randle should have known
about the potential forfeiture. See 18 U.S.C. § 983(d)(3)(A)(ii) (requiring an owner to prove
that she “did not know and was reasonably without cause to believe that the property was
subject to forfeiture”). Also, Randle’s primary residence was in Houston, not at Ware Seguin.
See id. § 983(d)(3)(B)(i) (requiring an owner who did not take property for value to prove that
the property is her primary residence). And it is questionable whether forfeiture of the Ware
Seguin property would deprive Randle of the means to maintain reasonable shelter, as he was
attempting to sell it before the Government even filed for forfeiture. See id. § 983(d)(3)(B)(ii)
(requiring an owner who did not take property for value to prove that “depriving the claimant
of the property would deprive the claimant of the means to maintain reasonable shelter in the
community”). Finally, § 983(d)(3)(B) provides that the district court “shall limit the value of
any real property interest for which innocent ownership is recognized under this subparagraph
to the value necessary to maintain reasonable shelter in the community for such claimant and
all dependents residing with the claimant.” As the district court noted, Randle provided no
information as to how the court should limit this value.
6
No. 08-50056
all proceeds from its sale.3 Under CAFRA, however, there is more to the
question than mere ownership. All relevant property interests must be
categorized as pre-existing or after-acquired, and the innocence of ownership
must then be determined according to the statutory conditions relevant to that
interest. It is this intermediate step in the law that Randle overlooks.
Second, Randle asserts that he has somehow been deprived of property
under an erroneous application of civil forfeiture’s relation back doctrine. This
argument is without merit. Under the relation back doctrine, the Government’s
interest in property that is subject to civil forfeiture is deemed to vest “upon
commission of the act giving rise to forfeiture.” 21 U.S.C. § 881(h); see generally
United States v. 92 Buena Vista, 507 U.S. 111, 125–29 (1993) (plurality opinion).
Innocently-owned property, however, is not subject to forfeiture, and thus
innocent ownership precludes any application of the relation back doctrine.
Because Randle was not the innocent owner of the after-acquired interest in the
Ware Seguin property, the relation back doctrine operated to vest title in this
interest in the Government in May 2005. This is a straightforward application
of civil forfeiture’s relation back doctrine as it has existed for decades. Randle’s
assertion that the relation back doctrine somehow trumped his innocent
ownership defense begs the question of whether Randle was an innocent owner
of the after-acquired interest.
Finally, Randle’s argument that a ruling adverse to him would somehow
allow the Government to take property subject to forfeiture from innocent
owners misunderstands the concept of innocent ownership. Again, Randle begs
the question of whether he was an innocent owner of the entirety of the Ware
3
A review of the record suggests that Randle’s belief that he was the innocent owner
of the entirety of the Ware Seguin property might have originated in a potentially confusing
jury charge. As neither party addresses (or perhaps even realizes the existence of) any issues
regarding the jury charge, and because Randle’s failure to offer any intelligible argument as
to how he is an innocent owner of the after-acquired interest is dispositive for this appeal, we
decline to address the issue as well.
7
No. 08-50056
Seguin property.
III. CONCLUSION
As Randle has failed to meet his burden of proving that he was an
innocent owner of the after-acquired interest in the Ware Seguin property, title
in that interest passed to the Government in May 2005. The district court
correctly held that the Government is entitled to 50% of respondent currency.
We therefore AFFIRM the ruling of the district court.
AFFIRMED.
8