2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-3-2002

Mantilla v. USA

Precedential or Non-Precedential: Precedential

Docket No. 99-5923

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Recommended Citation

"Mantilla v. USA" (2002). 2002 Decisions. Paper 548.

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PRECEDENTIAL 

 Filed September 3, 2002 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 99-5923 

EDUARDO MANTILLA, 

 Appellant 

v. 

UNITED STATES OF AMERICA; 

U.S. CUSTOMS SERVICE 

Appeal from the United States District Court 

for the District of New Jersey 

(D.C. Civil Action No. 99-cv-00287) 

District Judge: Honorable John C. Lifland 

Argued February 4, 2002 

Before: SLOVITER, and AMBRO, Circuit Judges 

POLLAK,* District Judge 

(Opinion filed: September 3, 2002) 

 Mark H. Lynch, Esquire 

 Keith Noreika, Esquire (Argued) 

 Covington & Burling 

 1201 Pennsylvania Avenue, N.W. 

 Washington, DC 20004 

 Attorneys for Appellant 

_________________________________________________________________ 

* Honorable Louis H. Pollak, Senior United States District Judge for the 

Eastern District of Pennsylvania, sitting by designation. 

 

 Robert J. Cleary 

 United States Attorney 

 Colette R. Buchanan (Argued) 

 Assistant U.S. Attorney 

 Office of United States Attorney 

 970 Broad Street, Room 700 

 Newark, NJ 07102 

 Attorneys for Appellee 

OPINION OF THE COURT 

AMBRO, Circuit Judge: 

Eduardo Mantilla filed this civil action seeking the return 

of funds that the United States Customs Service 

("Customs") obtained from him and his co-conspirators 

during an undercover operation. Finding that public policy 

bars the return of funds that are voluntarily exchanged 
during a narcotics transaction, the United States District 

Court for the District of New Jersey granted summary 

judgment in favor of Customs.1 

We affirm the District Court’s judgment. Mantilla lacks 

standing to seek the return of one portion of the funds. As 

to the remaining amount, we agree with the District Court 

that an extension of the in pari delicto2 concept prevents 

Mantilla from seeking its return. 

I. Background 

In early 1991, Customs began an undercover narcotics 

investigation of Mantilla, Robert Jonas, Michael Mittenberg, 

_________________________________________________________________ 

1. Although the United States and Customs are appellees, we will refer 

to both collectively as Customs. 

2. Although commonly referred to as in pari delicto, the concept’s full title 

is in pari delicto potior est conditio defendentis, meaning "in case of equal 

fault the condition of the party defending is the better one." United States 

v. Farrell, 606 F.2d 1341, 1348 & n.21 (D.C. Cir. 1979). Recognized as 

a defense in both law and equity, in pari delicto dictates that "[n]either 

party to an illegal contract will be aided by the court, whether to enforce 

it or set it aside." Id.; see infra S V (discussing Farrell). 

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and Enidio Abreu. Through negotiations with Mantilla 

and/or Jonas, undercover Customs agents, posing as drug 

smugglers, transported large quantities of cocaine and 

marijuana from Colombia to the United States in exchange 

for $9,000,000. Of this amount the agents required a 

payment of $1,000,000 "up front" prior to releasing the 

narcotics to Mantilla and his co-conspirators. 

The parties agreed to meet at a specific location in Jersey 

City, New Jersey to complete the arrangement. There, 

Mantilla and his co-conspirators would deliver a truck 

containing $1,000,000 to the agents. The agents would 

then drive away in the truck, take the fee, and return the 

truck filled with cocaine. 

The transaction occurred on May 30, 1991. Abreu drove 

the truck to the pre-arranged site. He parked the truck and 

handed the keys to Mantilla, who in turn handed them to 

an agent. The transaction continued as planned until the 

agent discovered that the truck contained only $900,000. 

Extensive, and presumably intense, negotiations ensued, 

after which Mantilla and his co-conspirators represented 

that the missing $100,000 would be available later that 

day. 

The parties agreed to complete the transaction at a diner 

in nearby Elizabeth, New Jersey. Mittenberg and Jonas 

traveled in a van and followed the agents to the location. 

However, before the final transfer occurred, the agents 

stopped the van and arrested both passengers. Upon 
searching the vehicle the agents "found nearly all of the 

missing money in a paper bag under the rear seat" -- 

approximately $95,500. The agents subsequently arrested 

Mantilla in the diner parking lot. 

On June 19, 1992, a jury sitting in the United States 

District Court for the District of New Jersey found Mantilla 

guilty of three counts of conspiring to import, distribute, 

and/or possess with an intent to distribute, cocaine and 

marijuana in violation of 21 U.S.C. SS 846 and 963. 

Customs never instituted administrative forfeiture 

proceedings against the money obtained from the coconspirators. Instead, it deposited the funds into its 

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undercover operation account pursuant to 19 U.S.C.S 2081.3 

The five-year statute of limitations for initiating forfeiture 

proceedings lapsed after May 31, 1996. 19 U.S.C.S 1621. 

Eventually, Mantilla filed a Freedom of Information Act 

complaint, through which he received information regarding 

the status of the confiscated funds. On February 10, 1997, 

Mantilla filed his initial return of property complaint in the 

United States District Court for the Southern District of 

Florida. That Court dismissed the action for improper 

venue, and the United States Court of Appeals for the 

Eleventh Circuit affirmed on January 4, 1999. Mantilla v. 

United States, 168 F.3d 506 (11th Cir. 1999) (unpublished 

table decision). 

On February 19, 1999, Mantilla filed this action, his 

second return of property complaint, in the United States 

District Court for the District of New Jersey. Customs 

responded by filing a motion to dismiss for lack of subject 

matter jurisdiction, insufficiency of service of process, and 

failure to state a claim upon which relief can be granted. 

Because Customs attached a supporting affidavit, the 

District Court construed the pleading as a motion for 

summary judgment. See Fed. R. Civ. P. 12(b) (stating that 

if, on a Rule 12(b)(6) motion, "matters outside the pleading 

are presented to and not excluded by the court, the motion 

shall be treated as one for summary judgment and 

disposed of as provided in Rule 56"). 

In its September 29, 1999 memorandum opinion and 

order, the District Court granted summary judgment for 

Customs, finding that an extension of the in pari delicto 

concept prevented it from enforcing an illegal contract by 

returning funds that Mantilla voluntarily delivered to 

undercover Customs agents. The Court also held that 

Mantilla had no viable claim under S 704 of the 

Administrative Procedure Act ("APA") because the voluntary 

transfer, rather than seizure, of the funds did not 

constitute "agency action" necessary to trigger "the limited 

abrogation of sovereign immunity provided by the APA." To 

_________________________________________________________________ 
3. Because we affirm on alternative grounds, we do not address Customs’ 

contention that forfeiture proceedings were unnecessary because it acted 

in accordance with 19 U.S.C. S 2081. 

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the extent the complaint sought equitable relief, the District 

Court denied the claim as against public policy. Finally, the 

District Court rejected Mantilla’s Fifth Amendment unlawful 

taking and due process arguments, neither of which 

Mantilla raises on appeal. 

II. Jurisdiction 

We reject Customs’ contention that no statutory provision 

authorizes our jurisdiction over Mantilla’s claim. We have 

previously held that a claimant’s "collateral[ ] attack [of] an 

inadequately noticed administrative forfeiture" presents a 

proper federal question, thereby conferring jurisdiction 

under 28 U.S.C. S 1331. Foehl v. United States, 238 F.3d 

474, 478 (3d Cir. 2001) (citation omitted); United States v. 

McGlory, 202 F.3d 664, 670 (3d Cir. 2000) (en banc). Such 

challenges usually arise where the Government attempted, 

but failed to take all measures necessary under due 

process, to give notice of forfeiture. Foehl, 238 F.3d at 478- 

80; McGlory, 202 F.3d at 671-74. We agree with Mantilla 

that his claim is a natural extension of these decisions. 

Indeed, this case involves the most inadequate notice 

possible: Customs failed to initiate forfeiture proceedings 

altogether, and thus never attempted to give notice of the 

funds’ status.4 

III. Standing 

We turn next to Mantilla’s standing, an issue that we 

must address even though the District Court did not reach 

it. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31 

(1990). To prove standing, Mantilla must show that he has 

a colorable ownership or possessory interest in the funds. 

United States v. Contents of Account Nos. 3034504504 and 

144-07143, 971 F.2d 974, 985 (3d Cir. 1992). Because 

Customs obtained the two amounts--$900,000 and 

$95,500--under distinct circumstances, Mantilla must 

establish his standing as to each. See Kadonsky v. United 

States, 216 F.3d 499, 508 (5th Cir. 2000). 

_________________________________________________________________ 

4. Because we recognize Mantilla’s claim as lying in equity, we do not 

address whether S 704 of the APA authorizes his return of property 

action. 

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As to the first amount, it is undisputed that a coconspirator drove the truck containing the $900,000, 

parked the vehicle, and handed the keys to Mantilla. 

Mantilla then handed the keys to the Customs agent. Thus, 

Mantilla did possess the funds at the time of transfer. 
Customs contends that Mantilla is a "straw owner" of the 

funds, in which case mere possession--without"some 

explanation or contextual information regarding the 

claimant’s relationship to the seized property"--would be 

insufficient to establish standing. United States v. 

$515,060.42, 152 F.3d 491, 498 (6th Cir. 1998); see 

Contents of Accounts Nos. 3034504504 and 144-07143 , 971 

F.2d at 985 (expressing disapproval of "standing claims put 

forward by nominal or straw owners"). Nevertheless, we 

shall assume that Mantilla’s possessory interest is enough 

to confer standing as to the $900,000 amount. 

However, we conclude that Mantilla lacks standing to 

seek the return of the $95,500 amount. The facts show that 

Customs agents confiscated this amount from a vehicle 

that Mantilla did not own, possess, or occupy. Further, 

Mantilla offers no evidence from which a reasonable trier of 

fact could discern his colorable interest in this amount.5 

Accordingly, Mantilla has no standing to pursue its return. 

_________________________________________________________________ 

5. We pause to address one statement cited by Mantilla as proof of his 

colorable interest in the $95,500. As part of Mantilla’s Freedom of 

Information Act claim, a Customs attorney filed a declaration describing 

her investigation of the funds’ forfeiture status. The attorney 

communicated with a paralegal in the Newark, New Jersey Customs 

office, who in turn discussed Mantilla’s claim with an agent involved in 

the case. As the attorney’s declaration states:"The agent verbally 

informed the paralegal that the $1,000,000.00, technically, was never 

seized from Eduardo Mantilla nor was it forfeited to the government 

since it was turned over to United States Customs Agents by Eduardo 

Mantilla as drug exchange money." Mantilla relies on this statement as 

evidence that he "exercised possession and control over the entire 

$1,000,000." Leaving aside our concerns regarding the statement’s 

reliability--particularly where Mantilla’s Freedom of Information Act 

claim arguably misled the attorney into lumping the $900,000 and 

$95,500 into one amount--we find the statement of the Customs 

attorney, containing thirdhand information, irrelevant. By contrast, in 

our case a Customs agent with firsthand knowledge of the undercover 

operation filed an affidavit that described the material facts on which we 

rely. Further, Mantilla conceded the accuracy of this affidavit as to all 

relevant events. In the face of such evidence, no reasonable factfinder 

could find that Mantilla has standing as to the $95,500 amount. 

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IV. Procedural Issues 

With Mantilla’s cause of action now limited to the 

$900,000 sum, we address Customs’ arguments that three 

procedural hurdles--sovereign immunity, the statute of 

limitations, and laches--bar his claim. 

A. Sovereign Immunity 

Sovereign immunity presents no barrier to Mantilla, as 

Foehl dictates that he may properly assert his equitable 

claim "via the waiver of sovereign immunity found in 

section 702 of the Administrative Procedure Act." 238 F.3d 
at 478; see also United States v. 1461 W. 42nd St., Hialeah, 

Fla., 251 F.3d 1329, 1340 (11th Cir. 2001) ("[C]laims for 

equitable relief, such as the return of property . .. , do not 

impinge upon sovereign immunity."). 

B. Statute of Limitations 

28 U.S.C. S 2401 imposes a six-year statute of limitations 

on Mantilla’s return of property claim. This six-year period 

begins "at the close of forfeiture proceedings" or "if no 

forfeiture proceedings were conducted, at the end of the 

five-year limitations period during which the government is 

permitted to bring a forfeiture action." Polanco v. DEA, 158 

F.3d 647, 654 (2d Cir. 1998); 19 U.S.C. S 1621 (establishing 

five-year statute of limitations for Customs to institute 

forfeiture proceedings). The latter circumstance arose in 

this case, and therefore Customs’ statute of limitations 

lapsed after May 30, 1996, five years following actual 

confiscation of the funds on May 30, 1991. Accordingly, 

Mantilla had until May 30, 2002 to file his claim, a time bar 

which his February 19, 1999 complaint easily satisfied.6 

_________________________________________________________________ 

6. Ironically, Mantilla’s claim is timely even if we measure the six-year 

bar from May 30, 1991, i.e., when Customs confiscated the funds. Under 

this scenario, his time to file would ordinarily lapse after May 30, 1997. 

However, the proceeding in the Southern District of Florida and the 

Eleventh Circuit Court of Appeals-- begun by Mantilla’s timely complaint 

filed on February 10, 1997--would toll the statute of limitations. Burnett 

v. New York Cent. R.R., 380 U.S. 424, 430 (1965) ("Both federal and 

state jurisdictions have recognized the unfairness of barring a plaintiff ’s 

action solely because a prior timely action is dismissed for improper 

venue after the applicable statute of limitations has run."). The statute 

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C. Laches 

Because Mantilla’s claim survives the statute of 

limitations, the equitable defense of laches is presumptively 

inapplicable. United States v. One Toshiba Color Television, 

213 F.3d 147, 158 (3d Cir. 2000) ("[I]f a suit is brought 

within the statutory period, laches would generally be 

unavailable."). Further, this case does not involve 

circumstances that support a laches defense. Pappan 

Enter., Inc. v. Hardee’s Food Sys., Inc., 143 F.3d 800, 804 

(3d Cir. 1998). The record suggests neither Mantilla’s lack 

of diligence in filing his complaint nor Customs’ prejudicial 

reliance on Mantilla’s delay. Id.; see United States v. Marolf, 

173 F.3d 1213, 1218-19 (9th Cir. 1999) (rejecting the 

Government’s laches argument where the failure to initiate 

forfeiture proceedings arose from the "government’s own 

carelessness," not the timing of the claimant’s return of 

property complaint). 

V. The Farrell Rule 

Finally reaching the primary basis for the District Court’s 

judgment, we agree that an extension of the in pari delicto 
concept prevents Mantilla from using the courts to recover 

the $900,000 amount that he voluntarily transferred to 

Customs agents. "It has long been the settled rule that 

property delivered under an illegal contract cannot be 

recovered back by any party in pari delicto." United States 

v. Farrell, 606 F.2d 1341, 1348 (D.C. Cir. 1979) (citation 

omitted). Courts have traditionally applied this rule to 

prevent the return of funds used in an attempted bribery. 

See Clark v. United States, 102 U.S. 322, 331-32 (1880). 

Farrell extended the ambit of the policy to prevent the 

return of funds that were voluntarily exchanged as part of 

_________________________________________________________________ 

of limitations would begin accruing again on January 4, 1999 when the 

Eleventh Circuit affirmed the dismissal of the complaint for improper 

venue. Presumably, Mantilla would have had almost four months--i.e., 

the time period between his February 10, 1997 filing and the initial time 

bar of May 30, 1997--to refile his claim in the District of New Jersey. 

Accordingly, Mantilla’s second complaint, filed February 19, 1999, would 

be timely under this alternative reading of the statute of limitations. 

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a narcotics transaction. There, a claimant sought the 

return of $5,000 paid to an undercover DEA agent as part 

of what the claimant believed was an illegal contract to 

purchase heroin. Unlike the current version of 21 U.S.C. 

S 881(a)(6), the statute at that time did not provide for the 

forfeiture of money furnished in exchange for a controlled 

substance. Nevertheless, the D.C. Circuit held that 

 it is contrary to public policy to permit the courts to be 

 used by the wrongdoer Farrell to obtain the property he 

 voluntarily surrendered as part of his attempt to violate 

 the law. If as the cases hold it is sound public policy to 

 deny the use of the courts to persons [i]n pari delicto 

 who seek the return of illegally paid money, [a] fortiori 

 it is sound public policy to deny the aid of the courts 

 to a single violator of the law who seeks the return of 

 money paid to a government agent in an attempt to 

 contract for the purchase of contraband drugs. 

Farrell, 606 F.2d at 1350. 

The Eighth Circuit subsequently applied the Farrell rule 

to prevent the return of $25,000 which a claimant 

transferred to undercover agents in an attempt to purchase 

hashish. United States v. Smith, 659 F.2d 97, 100 (8th Cir. 

1981); see also Acheampong v. United States, C.A. Nos. 99 

Civ. 2169, 99 Civ. 3491, 2000 WL 1262908, at *5 (S.D.N.Y. 

Sept. 5, 2000) (citing Farrell with approval); United States v. 

Kim, 738 F. Supp. 1002, 1004-05 (E.D. Va. 1990) (same). 

We find Farrell’s reasoning persuasive and apply it here 

to bar the return of the $900,000.7 Unlike the version 

enacted when the D.C. Circuit decided Farrell , S 881(a) now 

authorizes the forfeiture of "[a]ll moneys, negotiable 

instruments, securities, or other things of value furnished 

or intended to be furnished by any person in exchange for 
a controlled substance." S 881(a)(6). However, we reject 

Mantilla’s contention that this statutory revision 

established S 881(a)(6) as the only means by which the 

_________________________________________________________________ 

7. The Farrell rule is inapplicable to the $95,500 because that money 

was not voluntarily transferred to the Customs agents. Nevertheless, as 

discussed above, Mantilla’s lack of standing bars his claim as to that 

amount. 

 9 

 

Government may retain funds intended for the purchase of 

narcotics. Cf. United States v. Clymore, 245 F.3d 1195, 

1200 (10th Cir. 2001) (stating that, in addition toS 881(a)’s 

procedures, the Government may quiet title in seized 

contraband through a criminal proceeding, a Fed. R. Civ. P. 

41(e) equitable proceeding, or a "civil motion brought by 

one who alleges a lawful right to possession"). Further, 

S 881(a)(6)’s legislative history does not evidence 

congressional intent to limit the application of common law 

principles in the context of forfeiture proceedings. See 

Psychotropic Substance Act of 1978, Pub. L. No. 95-633, 

1978 U.S.C.C.A.N. (92 Stat. 3777) 9496, 9522-23 

(discussing S 881(a)’s amendment). 

Accordingly, we hold that the Farrell rule--with its 

foundation lying in the long-recognized concept of in pari 

delicto--remains viable and thus prevents the return of the 

$900,000 sum that Mantilla voluntarily exchanged in an 

undercover narcotics transaction. 

* * * * * 

For the foregoing reasons, we affirm the District Court’s 

grant of summary judgment. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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