United States v. 1948 S. Martin , 270 F.3d 1102 ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 00-2103 & 00-2351
United States of America,
Plaintiff-Appellee,
v.
1948 South Martin Luther King Drive,
Springfield, Illinois, et al.,
Defendants,
Appeals of: Bruce D. Locher
and
Marvin Logan, Prince E. Logan,
and Cleveland Logan,
Claimants-Appellants.
Appeals from the United States District Court
for the Central District of Illinois, Springfield Division.
No. 97-3022--Richard Mills, Judge.
Argued March 1, 2001--Decided November 5, 2001
Before Harlington Wood, Jr., Manion, and
Diane P. Wood, Circuit Judges.
Manion, Circuit Judge. The United States
filed a civil forfeiture action against
18 defendant real estate properties, and
an amended complaint added 13 vehicles as
defendant properties. Claimants Marvin
Logan, Cleveland Logan and Prince Ella
Logan filed claims to the properties and
answers to the amended complaint./1
After a bench trial, the district court
ordered 15 real estate properties and
three vehicles forfeited to the United
States. The claimants filed a
consolidated direct appeal of the
judgment of forfeiture, and their
attorney, Bruce Locher, appeals an order
imposing sanctions against him. We affirm
with respect to the order of forfeiture
and remand the matter for the limited
purpose of providing Locher with a
hearing on the issue of sanctions.
I.
According to the First Amended
Complaint, Melvin Logan was involved in
the distribution of marijuana, cocaine
and crack cocaine in the Springfield,
Illinois area from 1982 through 1997.
According to the complaint, Melvin used
his drug proceeds to purchase numerous
parcels of real estate and vehicles,
including the defendant properties. To
avoid detection by the authorities, he
bought the property using friends’ and
family members’ names. An investigation
by the Drug Enforcement Administration
and the Internal Revenue Service revealed
that Melvin himself did not hold title to
any real property or any vehicles except
two used cars. Besides purchasing homes
with the drug proceeds, Melvin also
remodeled them, paying for the
construction supplies with cash and
paying the workers in cash or cocaine. He
then rented the properties as Section 8
rental properties, thereby guaranteeing
himself receipt of government rents.
Melvin was indicted on July 10, 1998 on a
number of drug charges, and he eventually
pleaded guilty to conspiracy to
distribute cocaine and crack cocaine and
conspiracy to launder money by purchasing
properties with drug proceeds and placing
properties in the names of his family
members.
Prior to the conviction, on January 27,
1997, the United States government filed
a civil forfeiture complaint against 18
pieces of real estate that Melvin
allegedly purchased with his drug
proceeds or which were used to facilitate
his drug transactions. In response, the
claimants filed pro se claims to their
respective properties. They also filed
answers to the forfeiture complaint. On
May 15, 1997, the government filed an
amended complaint, adding 13 vehicles as
defendant properties. The claimants, now
represented by counsel, each filed
another claim and answer to the amended
complaint.
On March 3, 1998 the court entered a
Rule 16 scheduling order, directing the
parties to complete discovery by August
31, 1998 and to file dispositive motions
by September 14, 1998. The court also set
a trial date for December 1, 1998. On
November 3, 1998, appellant Bruce Locher
was substituted as an attorney for
Melvin. On November 17, 1998, at the
final pretrial conference, Locher made an
oral motion to reopen discovery and to
continue the entire trial. The court gave
Locher until March 19, 1999 to conduct
discovery, but only as to Melvin’s claim,
and allowed Locher to amend Melvin’s
answer to reflect any relevant factual
matters discovered during discovery. The
court also postponed the trial date until
April 6, 1999.
Locher did not file any dispositive
motions by the March 19, 1999 deadline;
instead, he waited until April 1, 1999 to
seek leave to file a motion to dismiss.
The district court denied Locher’s motion
stating "the Federal Rules of Civil
Procedure allow for modification of
schedules ’on good cause and by leave of’
the Court. Fed. R. Civ. P. 16(b). No real
excuse has been offered for the very long
delay in seeking to file the motion to
dismiss the Complaint. . . . The extended
discovery period is no excuse for the
delay since discovery is utterly
irrelevant to the simple task of reading
the complaint to determine if it was
sufficiently specific."/2 Then, on April
30, 1999, Melvin filed a motion to compel
answers to interrogatories. Even though
it was also untimely, the court granted
it in part, directing the government to
provide more specific answers to certain
interrogatories.
On May 26, 1999, Locher filed a motion
for leave to file a motion for production
of probation and parole records
(including pre-sentence reports) of all
identified government witnesses. The
court denied this motion because it was
an untimely discovery request and because
Melvin had failed to show good cause why
the district court should deviate from
its scheduling deadline.
In response to Locher’s most recent
untimely motion, the district court also
stated that "[f]urther piecemeal,
dilatory conduct may justify the
imposition of sanctions." Nevertheless,
on June 30, 1999, Locher orally moved
again for leave to file an amended
answer. This request was denied as
untimely. Locher then filed another
motion to reopen discovery and to exclude
certain evidence. The court denied both
motions. On July 1, 1999, Locher filed a
Motion for Judgment on the Pleadings,
raising issues identical to those raised
in his proposed motion to dismiss. The
district court denied this motion,
stating "as was the case with several
other motions, it was filed well after
the dispositive motion deadline and is
therefore late." The court also denied
the motion on its merits.
The district court rescheduled the trial
date several times before it finally
commenced on August 24, 1999. On the
first day of trial, the government moved
to amend the complaint (to correct a
technical error regarding the proper code
citation authorizing the forfeiture of
automobiles) and the court granted the
motion. Locher then sought leave to file
a motion to dismiss the newly amended
complaint, which the court granted.
Locher then re-filed his same motion to
dismiss (which had already been denied by
the court). The district court rejected
this approach stating "I will not permit
another bite at the apple where I’ve
already ruled." But, upon Locher’s
further request, the court allowed him to
file a motion to dismiss relating only to
the government’s amendment. However, on
October 15, 1999, Locher filed the motion
to dismiss the amended complaint,
essentially restating his arguments from
his prior motions to dismiss, rather than
focusing on the government’s most recent
amendment as directed by the court. The
court denied his motion, concluding that
the government’s amendment had nothing to
do with the adequacy of the portions of
the complaint Locher challenged in his
motion. The district court further stated
that "it was incredible that they would
attempt to file this latest motion to
dismiss, given the Court’s earlier denial
of similar motions based on exactly the
same paragraphs of the amended
complaint." The court then directed
Locher to show cause why he should not be
held in contempt of court under Fed. R.
Civ. P. 11 for filing frivolous and
untimely motions and raising issues which
had already been raised to and rejected
by the court. In response, Locher, while
avoiding a direct answer to the court’s
rule to show cause order, asked the court
not to impose sanctions and sought to
withdraw as Melvin’s counsel because "the
threat of those sanctions interferes with
his ability to vigorously represent his
client in this matter." On November 12,
1999, the court fined Locher $1,000 for
his conduct./3 The district court also
denied Locher’s motion to withdraw as
Melvin’s counsel.
As the forfeiture proceedings continued,
Locher appeared before another district
court judge, Judge Jeanne E. Scott, the
presiding judge over Melvin’s criminal
sentencing proceeding, and requested that
she release Melvin’s pre-sentence report
for use in the forfeiture proceeding.
Locher did not advise Judge Scott that
Judge Mills (the judge presiding over the
forfeiture action) had previously denied
his May 26, 1999 motion to obtain
probation records. Because neither the
Assistant U.S. Attorney nor Melvin
objected to Locher’s request, Judge Scott
granted Locher’s request for the PSR.
Locher’s methods were exposed on August
31, 1999 at the forfeiture trial before
Judge Mills during the claimants’ cross-
examination of IRS Agent Sue Roderick. At
that time it became apparent that the
claimants’ attorney (not Locher) was
using the PSR. When the attorney
explained to Judge Mills that Locher had
given it to him, Judge Mills then asked
Locher how he obtained the PSR and Locher
explained what he had done. Locher also
admitted that he had not told Judge Scott
that he had previously been denied
probation and parole records, but he
asserted that his prior motion did not
seek Melvin’s PSR because it was only
"directed towards Government’s witnesses.
The Government had indicated that they
weren’t going to call Melvin Logan as a
witness in this case."/4 Judge Mills
then opined that Locher "appears to have
at the least dissembled with Judge Scott
and tried to go in the back door and get
what he could not get in through the
front in this case. Now, dissuade me of
that conclusion, Mr. Locher." Locher
again argued that his prior motion only
involved a request for the records of
government informant witnesses, not for
Melvin’s PSR./5
Judge Mills allowed further argument
between Locher and the government and
then stated that he would "hold this
matter in abeyance." The court then
continued with the bench trial. After the
close of evidence, the parties submitted
written closing arguments. Before issuing
its ruling on the merits, on March 23,
2000, Judge Mills issued a written order
sanctioning Locher $1,000 for disobeying
an order of the court, for making
misrepresentations to the court and for
failing to inform Judge Scott that the
material he sought from her had already
been denied by him. Locher did not ask
the court to reconsider its order
imposing sanctions. A few days later, on
March 28, 2000, the district court issued
an order concluding that probable cause
only existed for 18 of the properties,
and it ordered the forfeiture of the 15
parcels of real estate and three
vehicles./6 The claimants appeal the
forfeiture order, and Locher appeals the
March 23, 2000 sanctions against him.
II.
A. Motion for Leave to File Motion to
Dismiss
First, we address whether the district
court erred in denying Melvin leave to
file a motion to dismiss the amended
complaint and for leave to file a motion
for judgment on the pleadings. As noted
above, on March 3, 1998, the court
entered a scheduling order directing the
parties to complete all discovery by
August 31, 1998, and to file all
dispositive motions by September 14,
1998. After Locher was substituted as
counsel for Melvin on November 3, 1998,
the court gave him leave to reopen
discovery and to file an amended answer
by March 19, 1999. Locher did not take
advantage of these extensions, instead
filing all of the motions which are the
subject of this appeal well after the
March 19, 1999 deadline. If a party
misses a deadline, Fed. R. Civ. P. 16(b)
provides that the "schedule shall not be
modified except upon a showing of good
cause and by leave of the district judge
. . . ." We review a trial court’s
refusal of a request for an extension for
an abuse of discretion. See Jovanovic v.
InSink-Erator Div. of Emerson Elec. Co.,
201 F.3d 894, 896-97 (7th Cir. 2000).
The district court denied Melvin’s
motion for leave, finding he did not
establish good cause justifying the
delay. On appeal, Melvin does not present
any facts supporting a finding of cause.
Rather, he argues that he did not file
the motion for the purpose of delaying
trial. This argument misses the mark. The
judge is not required to allow a party to
file any untimely motion as long as it
does not delay trial. Rather, a party
must provide the court with good cause to
excuse the tardiness, regardless of
whether or not there will be a delay.
Courts have a legitimate interest in
ensuring that parties abide by scheduling
orders to ensure prompt and orderly
litigation. See Fed. R. Civ. P. 16(f)
(allowing the imposition of sanctions
where a party’s attorney fails to obey a
scheduling order).
Locher entered this case in November
1998. Melvin offers no explanation for
why Locher waited until April 1, 1999 to
first challenge the complaint. Factual
discovery and months of legal analysis
are not typically necessary to challenge
a complaint’s sufficiency. Nor does
Melvin claim a necessity in this case.
Rather, he claims that the district court
abused its discretion because it had
extended the trial date several times and
allowed the government to amend its
complaint on the first day of trial,
implying that the district court treated
him unfairly. Aside from the fact that
the government’s amendment involved a
minor technicality, Locher’s insinuations
ignore the fact that, upon entrance to
the case, he too was given ample time to
conduct discovery and to file an amended
answer and motions. Moreover, in almost
every instance, even though the district
court denied leave, it alternatively
addressed the merits of his untimely
discovery and dispositive motions,
concluding (with respect to the motion to
dismiss) that it would be denied on the
merits. Under these circumstances, the
district court did not abuse its
discretion in denying Melvin leave to
file the challenged dispositive
motions./7
B. Forfeiture
We now consider the district court’s
decision forfeiting the remaining
claimants’ 15 real estate properties and
one vehicle. We begin by considering the
appropriate standard of review.
1. Standard of review.
The standard of review for whether
probable cause has been established in
civil forfeiture cases has not been
clearly set forth by our circuit.
Typically, though, we review questions of
law de novo and questions of fact for
clear error. See United States v. United
States Currency Deposited in Account No.
1115000763247 for Active Trade Co., 176
F.3d 941, 944 (7th Cir. 1999). See also
Ornelas v. United States, 517 U.S. 690,
699 (1996) (holding in a criminal
proceeding that determinations of
probable cause and reasonable suspicion
are subject to de novo review, although
historical facts are reviewed for clear
error). But, regardless of the applicable
standard of review, our result in this
case would be the same.
2. Probable cause.
The claimants argue that the district
court erred in finding that the
government had established probable cause
to seize the defendant properties. The
district court correctly set forth the
applicable legal framework for assessing
a civil forfeiture claim. Such a claim is
subject to a burden-shifting method of
proof. See 21 U.S.C. sec. 881(d)
(incorporating 19 U.S.C. sec. 1615);
United States v. Santiago, 227 F.3d 902,
906 (7th Cir. 2000). Initially, the
burden is upon the government to show
that probable cause exists to believe
that the property in question is subject
to forfeiture./8 Probable cause exists
if "the government has established that
the totality of the circumstances
demonstrates a nexus between the property
and illegal drug activity." Santiago, 227
F.3d at 906. See also Account No.
1115000763247 for Active Trade Co., 176
F.3d at 944. Probable cause is
"reasonable ground for the belief of
guilt supported by less than prima facie
proof but more than mere suspicion."
United States v. All Assets and Equip. of
West Side Bldg. Corp., 58 F.3d 1181, 1188
(7th Cir. 1995) (citation omitted).
Our review of the record and of the
district court’s careful and thorough
analysis of the voluminous evidence leads
us to conclude that there is ample
evidence establishing a nexus between
each of the defendant properties
forfeited and Melvin’s drug activity.
This evidence includes the testimony of
FBI Agent David Hood regarding his
investigation into Melvin’s drug dealing
and regarding the statements of numerous
informants he encountered during his
investigation who related that Melvin was
known for his method of laundering his
drug proceeds by placing money in the
property in the names of his friends and
family, especially in the names of his
father, Melvin, and his sister, Prince
Ella, who had legitimate jobs and would
not arouse undue suspicion. The
government also presented the testimony
of IRS Agent Sue Broderick regarding the
information she had gleaned from public
records, such as deeds, mortgages,
financial records, as well as
conversations with sellers who
corroborated the informants’ statements
that Melvin used his drug proceeds to
purchase property for his family.
The claimants’ main argument is that the
district court only made generalized
findings, rather than individual probable
cause determinations, as to each specific
piece of property. While the district
court did not specifically list each
property individually in the probable
cause portion of its forfeiture order,
referring to each piece of evidence
relevant thereto, it made very specific
findings, as outlined below, relating to
all of the defendant properties. The
district court, after painstakingly
picking through the relevant evidence,/9
concluded that the informants’ statements
(provided through the testimony of the
agents) "were consistent with one
another, they were supported by the
property records obtained by Agent Hood,
and corroborated by other statements . .
. ." Based on this information, the
district court made 18 findings of fact,
including: No. 2 "Melvin Logan had no
source of legitimate income, so he needed
a method to launder the money accumulated
by his drug selling"; No. 6 "specific
real properties were bought with the
proceeds of Melvin Logan’s drug business,
as indicated by the informants"; No. 7
"all the properties, except the property
located at 1948 Martin Luther King, were
bought during the same time period that
Melvin Logan was making a great deal of
money selling drugs, and he needed a
method to hide the illegal income"; No. 8
"a large and unusual amount of cash was
usually involved in these purchases . .
."; No. 11 "unlike the case with the real
properties, most (but not all) of the
witnesses’ statements and evidence about
the vehicles was obtained after the
forfeiture complaint was filed"; No. 12
"but Melvin Logan did negotiate the
purchase of the 1994 Cadillac"; No. 14
"the other vehicles were not connected to
drug proceeds with any additional
evidence that the government obtained
prior to the filing of the forfeiture
complaint"; and No. 15 "unlike the other
real properties involved in this case,
the property at 1948 Martin Luther King
was purchased in 1971, which is long
before the time that Melvin Logan was
dealing drugs or conspiring to deal
drugs."
More specific findings were not
necessary to support the district court’s
conclusions. In fact, its conclusion that
the government failed to establish
probable cause for eight properties
demonstrates that the court considered
the facts relating to each individual
count separately. We conclude that these
findings of fact were not clearly
erroneous. Our own review of the record
reveals that there was a nexus between
the defendant properties and Melvin
Logan’s drug dealing. Therefore, we
conclude that the trial court properly
determined the existence of probable
cause with respect to the properties in
question.
In challenging the district court’s
probable cause determination, the
claimants also challenge the court’s
reliance on the hearsay statements
admitted through the testimony of Agents
Hood and Roderick. We review a trial
court’s evidentiary rulings for an abuse
of discretion. See United States v.
$94,000.00 in U.S. Currency, 2 F.3d 778,
788 (7th Cir. 1992). Hearsay and other
circumstantial evidence are admissible in
determining probable cause, as long as
there is "strong indicia of reliability."
Account No. 1115000763247 for Active
Trade Co., 176 F.3d at 944. The claimants
argue that the informants were
unreliable. For example, Brian Kirkham
was a convicted felon and a cocaine
dealer. Likewise, AlJo Sanders was a
crack cocaine dealer, a pot smoker and a
paid confidential informant. The district
court stated that it "did not expect
members of the cloth to testify about the
intricacies of Melvin Logan’s drug
dealing and money laundering operation,
and the use of witnesses who are
cooperating and have criminal histories
is not unusual in this context. The
impeachment of these witnesses revealed
nothing unusual or out of context." The
court further found that Agent Hood’s and
Agent Roderick’s statements were
consistent with one another and supported
by other reliable evidence, such as the
public records and statements of sellers.
On the record before us, we cannot say
that the district court abused its
discretion in admitting the hearsay
evidence in question, nor in relying upon
it.
One final note. The claimants argue that
the district court erred in denying
Melvin’s motion for leave to file a
motion for disclosure of parole and
probation records of prosecution
witnesses. The claimants claim that they
needed this information for purposes of
impeachment and cross-examination, and
they argue that, in combination with the
hearsay evidence that the district court
considered, they were denied the
opportunity to confront and cross-examine
the most damaging witnesses against them,
the informants. The district court denied
Melvin’s motion, stating that it was a
late request for additional discovery. As
with the dispositive motions discussed
above, Melvin’s request for these records
came long after all the discovery cut-off
dates/10 had expired, and he did not
and does not set forth good cause for his
tardiness. Nor does he set forth a
compelling reason for the underlying
request. The claimants do not explain
what information these documents would
have provided that would have been useful
to them in cross-examining the witnesses.
Of course, they were entitled to impeach
the informants on cross-examination as if
they had testified themselves. See Fed.
R. Evid. 806. In fact, they did so in
many instances and, as noted, the
district court knew that many of the
informants had colorful criminal
histories and reputations for being
dishonest. The district court’s
forfeiture order reveals that it factored
this knowledge into its credibility
assessments of the agents’ testimony.
Lastly, the claimants certainly could
have called the informants, many of them
friends or acquaintances of the Logan
family, as witnesses during their own
case-in-chief. Accordingly, we conclude
that the district court did not abuse its
discretion in denying Melvin leave to
file an untimely motion for probation and
parole records.
3. Burden shifts to claimants for
rebuttal.
A finding of probable cause is not the
end of the inquiry, however, because the
burden then shifts to the claimants to
prove by a preponderance of the evidence
that the property is not subject to
forfeiture. See West Side Bldg. Corp., 58
F.3d at 1189. Without a sufficient
rebuttal, the government’s initial
showing of probable cause will suffice to
support the forfeiture order. Id. Thus,
the claimants needed to provide the court
with evidence that the properties in
question had no connection with illegal
drug activity, see Santiago, 227 F.3d at
906, and were instead purchased with
funds acquired from legitimate sources.
The claimants attempt to do this by
asserting that they lived frugally, they
grew their own food, they saved money
from employment and rental property
income, and they stashed substantial
amounts of cash in their socks, in gallon
jugs and in their homes. The claimants
did not produce any records or witnesses
to corroborate their explanation for the
source of the moneys used to purchase
property.
In this portion of the order, the
district court thoroughly addressed each
piece of property individually. In every
case, the only evidence submitted by the
claimants was their own self-serving
assertion that the property was theirs,
and not purchased with Melvin’s drug
proceeds. This is insufficient to
overcome the government’s establishment
of probable cause. See Santiago, 227 F.3d
at 907 (claimants failed to overcome
forfeiture where their evidence consisted
entirely of their own self-serving
statements and they offered no
independent verification of their
claims). Moreover, as the district
courted noted, the claimants’ stories
were often inconsistent. As in Santiago,
we "see no need to rehash this analysis,
as the [claimants] have brought nothing
to our attention that causes us to
question the district court’s
conclusions." 227 F.3d at 908.
The claimants also argue, without
specifically pointing to any particular
evidence, that the district court
incorrectly considered hearsay evidence
during this portion of the forfeiture
proceeding. However, we note that the
district court specifically stated that
it would only consider hearsay evidence
at the probable cause stage of the
proceeding, where it was appropriate. The
claimants’ conclusory arguments to the
contrary do not persuade us that the
district court erred.
The claimants also argue that the
government should have been required to
prove what portion of the down payments
and loan payments were made with money
derived from drug trafficking. We reject
this argument. Once the government has
established probable cause, it need not
present further evidence. Rather, if the
claimants fail to rebut the government’s
proof of probable cause, the original
showing will support the forfeiture
order. See West Side Bldg. Corp., 58 F.3d
at 1189. To hold otherwise would render
the entire burden-shifting analysis
meaningless. See Santiago, 227 F.3d at
907 (where claimants proceeded as if
government shouldered ultimate burden of
proof, court noted that "the opposite is
true.").
Lastly, the claimants argue that the
forfeiture is punitive in violation of
the Excessive Fines Clause of the Eighth
Amendment./11 The Supreme Court has
interpreted the Excessive Fines Clause to
apply to civil fines, including
forfeitures. See United States v.
Bajakajian, 524 U.S. 321, 331 n.6 (1998)
(noting that while traditionally civil
forfeitures were considered non-punitive,
"it does not follow, of course, that all
modern civil in rem forfeitures are non-
punitive and thus beyond the coverage of
the excessive fines clause."); Austin v.
United States, 509 U.S. 602, 621-22
(1993) (although labeled in rem, civil
forfeiture of real property used "to
facilitate" the commission of drug crimes
was punitive in part and thus subject to
review under the Excessive Fines Clause).
If a fine or forfeiture is punitive, we
must then ask whether the fine is
excessive by using a "gross
disproportionality" test. See Towers v.
City of Chicago, 173 F.3d 619, 624 (7th
Cir. 1999).
We conclude that the forfeitures in
question are not punitive and therefore
not subject to the gross
disproportionality test under the Eighth
Amendment. In Bajakajian, the Supreme
Court determined that the forfeiture
under consideration did not "bear any of
the hallmarks of traditional civil in rem
forfeitures" because the government had
not proceeded against the currency
itself, instead seeking a criminal
conviction of the respondent personally.
524 U.S. at 331-32. It concluded that
"the forfeiture serves no remedial
purpose, is designed to punish the
offender, and cannot be imposed upon
innocent owners." Id. at 332. In
contrast, the forfeitures under
consideration in the present case are
truly in rem proceedings. The claimants
themselves were not the subject of
criminal proceedings, and their conduct
is not the cause of the sought
forfeitures. And, the properties would
not have been forfeited if the claimants
had been able to establish that the
properties had no connection to Melvin’s
drug dealing. Accordingly, we determine
that the forfeitures in question are not
"fines" for purposes of the Excessive
Fines Clause of the Eighth Amendment. Cf.
Smith v. United States, 76 F.3d 879, 882
(7th Cir. 1996) (finding that "proceeds"
forfeitures do not constitute punishment
for purposes of the Fifth Amendment’s
Double Jeopardy Clause). In any event,
the claimants have not pointed to any
specific evidence establishing that
identifiable portions of the property in
question were not properly subject to
civil forfeiture.
C. Sanctions Against Attorney Locher
Finally, we review the district court’s
March 23, 2000 decision to impose
sanctions against Locher for his conduct
in Judge Scott’s courtroom regarding the
request for Melvin Logan’s PSR for an
abuse of discretion./12 See Harrison
v. Dean Witter Reynolds, Inc., 974 F.2d
873, 886 (7th Cir. 1992).
Locher argues that the sanction was an
order of criminal contempt and that he
was entitled to notice and a hearing
under Fed. R. Crim. P. 42(b)./13 Judge
Mills did not specify the legal basis for
the imposition of sanctions in this civil
forfeiture proceeding. Such specification
would surely make our own review easier,
although even if he had done so, we would
still be required to consider whether
that characterization was proper. See
Securities and Exchange Commission v.
Simpson, 885 F.2d 390, 394 (7th Cir.
1989). In any case, the parties did not
brief the issue and we need not reach it
because we conclude that, whether the
sanctions were imposed as criminal or
civil sanctions, it is certainly
preferable, if not required under certain
circumstances, for a district court judge
to direct an offending party or attorney
to show cause why he should not be
sanctioned and to provide him with notice
and a hearing. See Larsen v. City of
Beloit, 130 F.3d 1278, 1286 (7th Cir.
1997) (imposition of sanctions under
various provisions required notice and an
opportunity to be heard); Kapco Mfg. Co.,
Inc. v. C&O Enter., Inc., 886 F.2d 1485,
1494-95 (7th Cir. 1989) (holding that due
process requires notice and an
opportunity to respond, but not
necessarily a hearing)./14 Providing
such notice and a hearing prevents
misunderstandings between the offending
party and the sanctioning judge, provides
an orderly manner and calm forum in which
each party has had time to prepare
adequately, and certainly aids our review
on appeal.
While it appears that Locher was given
some opportunity to be heard,/15 he
was not given notice that he was in
jeopardy of being sanctioned or adequate
time to prepare a response. Rather, after
briefly questioning Locher, Judge Mills
took the matter "under abeyance" and
without further notice or argument issued
a written order of sanction seven months
later. In addition to these
circumstances, our own review is hampered
by the fact that we do not have Locher’s
motion for parole and probation records
in the record before us. Were we to
conduct a review of Judge Mill’s
sanctions order, it would be difficult,
if not impossible, for us to assess
whether Locher had indeed initially
requested Melvin’s PSR and been denied
that request. Under these particular
circumstances, we conclude that the
imposition of sanctions constituted an
abuse of discretion and we remand the
matter for the limited purpose of
providing Locher with a hearing on this
matter.
Next, Locher requests that Judge Mills
be disqualified from conducting the
hearing on remand. First, he relies upon
Fed. R. Crim. P. 42(b) which provides
that a judge is disqualified from
presiding at the hearing where "the
contempt charged involves disrespect to
or criticism of a judge." Such conduct is
not at issue here, however; Locher’s
alleged conduct does not involve
disrespect to or criticism of Judge Mills
either in his personal or judicial
capacity. Rather, Locher’s conduct
involves his actions regarding the
interpretation of Judge Mills’ order
denying him access to certain probation
and parole records as well as his
representations to both Judge Mills and
Judge Scott. Accordingly, Fed. R. Crim.
P. 42(b) does not prevent Judge Mills
from presiding over the hearing on
remand. Second, Locher makes a broad
claim that Judge Mills should be
disqualified because he was hostile
towards Locher and is therefore incapable
of fairly adjudicating this matter.
Locher argues that this hostility is
evidenced by an earlier Rule 11 sanction
imposed by the court on November 12,
1999./16 However, the imposition of
one sanction (the appropriateness of
which is not challenged on appeal) does
not render a judge incapable of
exercising impartiality over that party
throughout the duration of the
proceeding. Our own review of the record
evidences no bias on the part of Judge
Mills, and on remand, we have no doubt
that the court will make its
determination on the basis of the
evidence in the record before it./17
III.
For the reasons stated herein, we find
that the government established probable
cause regarding the forfeiture of
defendant properties and that the
claimants did not meet their burden of
overcoming that presumption.
Additionally, we remand the case for the
limited purpose of providing Locher with
a hearing on the issue of sanctions.
FOOTNOTES
/1 The initial claimants were
relatives of Melvin Logan (a noted drug
dealer in Springfield, Illinois): his
father, Marvin Logan, his sister, Prince
Ella Logan, his brothers, Cleveland and
J.B. Logan, his stepdaughters, Shawnika
Champion and LaDonna Robinson Champion,
and Rhonda Davis, a friend of Cleveland
Logan. Only Melvin, Prince Ella and
Cleveland have participated in this
appeal, and therefore we restrict our
review to their claims. Because the
remaining claimants share the same
surname, we refer to them by their first
names.
/2 The district court also noted
that even if it granted Locher leave to
file a motion to dismiss, it would deny
that motion because the complaint
sufficiently stated a cause of action.
/3 Locher filed a motion to
reconsider the imposition of Rule 11
sanctions, which the district court
denied.
/4 We note that although the
government did not actually call Melvin
Logan to testify, Melvin was listed as
one of the government witnesses.
/5 Locher’s motion, referred to in
the index as "R156," was not included in
the record before us.
/6 Melvin asserted a claim to real
properties listed in Counts 1, 7, 9, 10,
11, 12, 14, 15, 16 and 17 and to the
vehicles listed in counts 20, 23, 28 and
30. Prince Ella asserted a claim to the
real properties listed in Counts 2, 3, 4,
9, 10, 11, 15, 16 and 17, and the vehicle
listed in Count 22. Cleveland claimed an
interest in the real properties listed in
Counts 5, 6, 8, 13 and 18 and the
vehicles listed in Counts 19, 21 and 25.
Counts 5, 13, 25, 26 and 31 were
dismissed before trial. After trial, the
district court determined that probable
cause had not been shown for Counts 1,
19, 20, 21, 22, 23, 29 and 30, and
dismissed them. Therefore, we only review
the remaining Counts 2-4, 6-12, 14-18 and
28.
/7 On appeal, the claimants also
continue to attack the merits of the
complaint, arguing that it does not
describe with reasonable particularity
the properties in question. Even though
it dismissed claimants’ motion as
untimely, as just noted, the district
court reached the merits of the
claimants’ motion to dismiss and
concluded that the complaint sufficiently
stated a claim. A complaint for
forfeiture under 21 U.S.C. sec. 881 is
subject to the particularity requirements
set forth in Supplemental Rule E(2), see
21 U.S.C. sec. 881(b), which provides
that the government must "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." We agree with the district
court that this complaint was specific
enough to do so.
/8 If there is probable cause to
believe that the defendant properties
constitute proceeds traceable to the
exchange of controlled substances of
Title II of the Controlled Substances
Act, 21 U.S.C. sec. 801 et seq., they are
subject to forfeiture pursuant to 21
U.S.C. sec. 881(a)(6). Likewise, if there
is probable cause that properties were
used or intended to be used to commit or
to facilitate a crime in violation of
Title II, they are subject to forfeiture
pursuant to 21 U.S.C. sec.sec. 881(a)(4)
(vehicles) and (a)(7) (real property).
/9 In its analysis, the district
court concluded that 21 U.S.C. sec.
881(d) only allowed the government to
present evidence obtained prior to the
date that it filed its forfeiture
complaint (rather than allowing after-
acquired evidence to show probable
cause). Our circuit has not yet ruled on
this issue, see United States v.
$87,118.00 in U.S. Currency, 95 F.3d 511,
515-16 (7th Cir. 1996). However, because
the district court’s methodology was not
appealed, we need not reach the question.
/10 As noted above, discovery was
originally scheduled to end on September
14, 1998, but when Locher entered the
case in November 1998, the court extended
it to March 19, 1999. Melvin’s first
motion to obtain this information,
however, was not filed until May 28,
1999.
/11 The Eighth Amendment states,
"Excessive bail shall not be required,
nor excessive fines imposed, nor cruel
and unusual punishments inflicted." U.S.
Const. Amend. VIII.
/12 Locher does not appeal the Rule
11 sanctions imposed on him on November
12, 1999.
/13 Fed. R. Crim. P. 42(b) requires
the offending party to be given notice, a
reasonable time for preparation of a
defense, and a hearing. We note that Fed.
R. Crim. P. 42(a) provides for summary
disposition where the judge "certifies
that the judge saw or heard the conduct
constituting the contempt and that it was
committed in the actual presence of the
court." The conduct for which Locher was
sanctioned did not occur in Judge Mills’
presence and therefore this summary
procedure was not applicable.
/14 See also Fed. R. Civ. P. 37
(offending party should be given an
"opportunity to be heard" before
imposition of discovery sanctions); Fed.
R. Civ. P. 11(c) (court may impose
sanctions on its own initiative after
directing lawyer to show cause why it has
not committed violation); Fed. R. Crim.
P. 42(b) (requiring notice, reasonable
time for preparation of defense and a
hearing).
/15 As related above, after stating
that Locher "appears to have at the least
dissembled with Judge Scott and tried to
go in the back door and get what he could
not get in through the front in this
case," Judge Mills gave Locher a chance
to respond, saying, "Now, dissuade me of
that conclusion, Mr. Locher." Locher then
admitted what he had done, as well as
admitting that he had not informed Judge
Scott that he had already been denied
access to the PSR.
/16 The court imposed this sanction,
after issuing a rule to show cause and
reviewing Locher’s response, based on
Locher’s repeated filing of a motion to
dismiss that the court found to be
"frivolous," "blatantly untimely" and
filed in an effort to "harass the
Government’s attorney or to delay the
proceedings."
/17 Locher’s argument that Judge
Mills’ sanction against him indicates
that Melvin did not receive a fair and
neutral tribunal in violation of his due
process rights is meritless. Without
further argument, Locher merely cites to
Walberg v. Israel, 766 F.2d 1071, 1075
(7th Cir. 1985) ("the judge who is so
hostile to a lawyer as to doom the client
to defeat, deprives the client of the
right to an impartial tribunal."). This
argument was not raised below, nor was it
developed on appeal and therefore has
been waived. This court is not in the
business of formulating arguments for
parties. See United States v. McClellan,
165 F.3d 535, 550 (7th Cir. 1999).