Opinion
Case No. 99-6792-CIV-HURLEY
March 16, 2001
I. Background
The facts recited here are derived from the government's complaint for forfeiture in rem.
The plaintiff United States of America commenced this action with a verified complaint for forfeiture in rem of certain United States currency pursuant to 21 U.S.C. § 881(a)(6) asserting that the defendant currency represents proceeds derived from the sale of controlled substances. According to the government's complaint, the defendant currency — sealed in laundry detergent boxes — fell from a Toyota 4 Runner vehicle driven by Dieula Chavannes onto a public highway, prompting Steven Chandler, driver of the following automobile, to stop and begin picking up the scattered cash. This helpful act instigated a physical altercation between Chandler and Chavannes, who apparently objected to Chandler's assistance, leading to arrest of Chavannes for battery. Sometime during this fray and consequent arrest, Rony Michel, Chavanne's boyfriend, arrived at the scene and claimed that the money belonged to him. The Mirimar police department ultimately impounded the cash-laden laundry detergent boxes along with other items from the Chavannes vehicle and submitted them for inspection by narcotics canines at the Mirimar Police Department parking lot. Testing positive, the items were then later scanned by the United States Coast Guard with an ION scanning machine which determined the presence of cocaine residue on currency samples and other items taken from the Chavannes' vehicle.
On July 26, 1999, a warrant of arrest for the defendant currency was executed, and on June 25, 1999 the government filed its verified complaint for forfeiture in rem of the subject currency. The filing of verified claims by Rony Michel, Dieula Chavannes and Rony Shipping Inc. as alleged owners ensued. On November 22, 1999, these parties filed a stipulation of settlement and dismissal of the forfeiture proceedings, providing for retention of $123,771 by the United States of America, and return of the balance to the claimant/owners. This court approved the settlement on November 30, 1999 and consequently closed the forfeiture action.
Thereafter, on August 8, 2000, the government filed a motion to reopen the case, acknowledging that Steven Chandler had filed claim to the property but was never served with the original forfeiture complaint due to inadvertence. This motion was granted and the case reopened to receive the claim of Steven Chandler, who filed an unsworn claim to the currency on September 20, 2000 through his attorney, William Matthewman. By this claim, Chandler alleges that he found the currency on a public highway and reported it to the police, entitling him to a percentage of the seized funds as a reward for assisting the DEA under 28 U.S.C. § 524(c)(1)(B) and (C) and 31 U.S.C. § 9703, or alternatively, as a finder of "lost" or "abandoned" property under Fla. Stat. § 705.104.
On October 11, 2000, the government moved to dismiss Chandler's claim contending he lacks standing to challenge the forfeiture because he has no property fights to the currency under federal or state law, and alternatively, because he failed to file a verified claim in the proper form pursuant to Rule C(6) of the Supplemental Admiralty and Maritime Claims Rules. On October 17, 2000, Chandler filed a memorandum in opposition to the motion, concurrently with an "amended claim" sworn to and signed by Chandler, but otherwise identical in content to the original claim.
In addition to the government's motion to dismiss, also pending before the court is Chandler's motion to dismiss the government's forfeiture complaint, in which Chandler complains that the government violated his due process rights under the Fifth Amendment to the United States Constitution with its "inordinate delay" in the institution of forfeiture proceedings against him, despite its obvious knowledge of his claim which was lodged with the Department of Justice Drug Enforcement Agency ("DEA") as early as June, 1999. On the basis of this asserted constitutional violation, Chandler requests dismissal of the complaint, vacation of the prior forfeiture and settlement, and delivery of the defendant currency to him.
Because this matter is brought before the court on a motion to dismiss for failure to state a claim upon which relief may be granted, the court is confined to the allegations of the government's complaint and Chandler's claim in determining the issues presented. Having carefully reviewed these pleadings, the court concludes that Chandler has standing to bring this contest, and that his asserted ownership interest in the currency as a "finder" cannot be negated as a matter of law on the basis of the pleadings filed in this action.
II. Discussion A. Supplemental Rule C(6) — Statutory Standing
As a threshold matter, it is apparent that claimant Chandler did not comply with Supplemental Rule C(6) by timely filing a verified claim in the principal forfeiture case once the government effected service of process upon him. The filing of a verified claim pursuant to Rule C(6) is necessary to confer statutory standing upon a claimant in a forfeiture action. See US v. $175,918.00 in United States Currency, 755 F. Supp. 630, 632-33 (S.D.N.Y. 1991) ("This rule is designed to provide the government with timely notice of a claimant's interest in contesting the forfeiture and, by requiring a sworn claim, to deter the filing of false claims"). Where a party disregards the requirements of Supp. Rule C(6), dismissal of the claim by the district court is normally the result. See United States v. One Dairy Farm, 918 F.2d 310, 311-13 (1st Cir. 1990); Sanchez v. United States, 781 F. Supp. 835, 837 (D. Puerto Rico 1991), aff'd, 976 F.2d 724 (1st Cir. 1992).
Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims provides in relevant part:
The claimant of property that is subject of an action in rem shall file a claim within 10 days after process has been executed, or within such additional time as may be allowed by the court, and shall serve an answer within 20 days after the filing of the claim. The claim shall be verified on oath or solemn affirmation, and shall state the interest in the property by virtue of which the claimant demands its restitution and the right to defend the action.
However, in this case, Chandler promptly corrected this deficiency by filing an amended claim, albeit out of time, once the government objected to the form of his original unsworn claim filed through his attorney. Following the "time honored admiralty principle that pleadings and procedural practices should be applied liberally" in the civil forfeiture context, see United States of America v. One Parcel of Real Property with Buildings, Appurtenances and Improvements Known as 116 Emerson St, Located in the City of Providence, Rhode Island, 942 F.2d 74, 77-78 (1st Cir. 1991), the court will exercise its discretion and allow Chandler additional time for the filing of his verified claim because there is no indication that the government was prejudiced by the late filed verified claim.
B. Article III standing
In addition to statutory standing under Supp. Rule 6(b), a claimant in a civil forfeiture proceeding must also demonstrate a sufficient interest in the controversy to satisfy the case or controversy requirements of Article III standing. See United States v. $267,961.07, 916 F.2d 1104, 1107 (6th Cir. 1990). This requires illustration of a colorable ownership interest, possessory interest as bailee, or security interest in at least a portion of the defendant property. See United States v. $515,060.42, 152 F.3d 491 (6th Cir. 1998); United States v. $38,000 in U.S. Currency, 816 F.2d 1538 (11th Cir. 1987) (bailee claimant has standing because he has possessory interest in bailed currency). Unexplained "naked possession" of cash does not rise to the level of a possessory interest required to establish Article III standing to attack a forfeiture proceeding. See US v. $321,470 in U.S. Currency, 874 F.2d 298 (5th Cir. 1989). See also Mercado v. US Customs Service, 873 F.2d 641, 644 (2d Cir. 1989) ("Possession . . . means more than mere custody."); rather, there must be some indication that the claimant be in fact a possessor, and not a simple, perhaps unknowing custodian, with some indicia of reliability or substance to reduce the likelihood of a false or frivolous claim. Id. at 645.
Here, the basis for Chandler's ownership interest in the currency is that he found it on a public highway, and that this act of discovered treasure is sufficient to create a property interest in the currency under Florida law. The court finds that these allegations are sufficient to allege a "facially colorable interest" in the proceedings sufficient to satisfy the case or controversy requirement of Article III, see Sanchez v. United States of America, supra (finders of $43 million dollars in barrels buried on land whose owner had been indicted on drug trafficking charges claiming interest as "finders" under Puerto Rico "hidden treasure" statute alleged sufficient interest in seized property to have Article III standing), and hence rejects the government's standing challenge to Chandler's claim. Turning to the merits, the court further concludes that Chandler's claimed ownership interest in the property cannot be negated as a matter of law on the basis of the allegations of the pleadings in this case.
C. Merits of the Chandler's asserted ownership interest
Chandler primarily relies upon his status as alleged "finder" of "lost" or "abandoned" property under Florida law as a premise for invocation of an ownership interest in the defendant currency. Section 705.101 et seq., Florida Statutes prescribes procedures for reporting and settling title to "lost" or "abandoned" property. Under this statute, "lost property" is defined as "all tangible personal property which does not have an identifiable owner and which has been mislaid on public property, upon a public conveyance, on premises used at the time for business purposes, or in parks, places of amusement, public recreation areas, or other places open to the public in a substantially operable, functioning condition or which has an apparent intrinsic value to the rightful owner." "Abandoned property", in turn, is defined as "all tangible personal property that does not have an identifiable owner and that has been disposed on public property in a wrecked, inoperative, or partially dismantled condition or has no apparent intrinsic value to the rightful owner."
Under Section 705.04(1). title to "lost" or "abandoned" property reported to a law enforcement officer under the prescripts of this statute vests in the "finder" after expiration of a ninety day custodial period by the law enforcement officer prescribed by the statute, provided that the requisite statutory notice to potential claimants is duly made, unless the "rightful owner" or lienholder claims the property within that time. Thus, in order for the currency in this case to be considered as either lost or abandoned property within the meaning of this statute, claimant must show that the property "does not have an identifiable owner."
In addressing a comparable claim of "finders" of "hidden treasure" in a civil forfeiture proceedings over cash currency derived from drug proceeds, the district court of Puerto Rico concluded in Sanchez v. United States, supra, that the finders of $43 million buried in barrels on land belonging to a drug trafficker did not possess any ownership interest in the currency under application of the" relation back" provision of section 21 U.S.C. § 881(h) — which provides that after forfeiture, title to the property in question "relates back" and vests in the government from the time the illegal transactions occurred on the theory that the proceeds are "tainted" from the outset by the illegal activity. Applying this statutory "relation back" concept in Sanchez, where the court had previously made a formal adjudication of forfeiture based upon the "tainted" character of the defendant currency, the court held that the finders had no lawful stake or interest in the property on the theory that title over the drug currency proceeds vested in the government at the time of the illegal drug transactions, which was well prior to its discovery by the "finders."
In this case, however, there has never been an adjudication of forfeiture determining the defendant currency to constitute the proceeds of a controlled substance transaction because the underlying forfeiture action culminated in a settlement based upon stipulation between the government and the prior claimants. Therefore, application of the "relation back" concept under the theory of Sanchez is not appropriate in this case.
III. Conclusion
In sum, the Court finds that despite Chandler's initial failure to file a timely verified claim, consistent with the requirements of Supp. Rule 6(c), his subsequent verified filing satisfies the statutory standing requirements of Rule 6(C), and that his claimed status as a finder of the currency on a public highway is sufficient to satisfy Article III standing requirements. However, on this record, where there has never been an adjudication of forfeiture, the court is unable to determine the validity of his claimed interest as a matter of law.
Accordingly, it is ORDERED and ADJUDGED:
1. The government's motion to dismiss the claim of Chandler [DE # 19] is DENIED.
2. Claimant Chandler's motion to dismiss the government's complaint, vacate settlement and deliver the defendant currency [DE # 18] is DENIED.
3. In accordance with the Magistrate Act, 28 U.S.C. § 631-39, and Federal Rule of Civil Procedure 72, the above-styled case is REFERRED to United States Magistrate Judge Frank J. Lynch for a report and recommendation determining the claimed ownership interest of Chandler over the defendant currency. Magistrate Judge Lynch is respectfully requested to hold an evidentiary hearing on this matter at his earliest convenience, and counsel are requested to send a copy of all pleadings and papers directly to Magistrate Judge Lynch when such are filed with the Clerk of Court.