FILED

United States Court of Appeals

Tenth Circuit

March 19, 2015

Elisabeth A. Shumaker

Clerk of Court

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

FERNANDO PALACIOS,

Defendant - Appellant.

No. 14-5021

(D.C. No. 4:13-CR-00005-JHP-4)

(N.D. Okla.)

ORDER AND JUDGMENT*

Before GORSUCH, SEYMOUR, and BACHARACH, Circuit Judges.

Fernando Palacios pled guilty to maintaining a drug-involved premises in

violation of 21 U.S.C. § 856. He appeals his sentence of eighty-seven months,

and we affirm. 

On December 13, 2012, Tulsa Police Officers executed a search warrant at 

2711 E. King Street after an investigation led them to believe the residence was

being used as a stash house for a largescale drug-trafficking operation. During

*

This order and judgment is not binding precedent, except under the

doctrines of law of the case, res judicata, or collateral estoppel. It may be cited

for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R.

32.1.

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 1 
the search, officers found large quantities of methamphetamine and cocaine, two

loaded guns, and drug paraphernalia. Police also located several individuals

inside the residence including Ezequiel Perez Cervantes, Jose Luis Hurtado, and

Ramiro Aguayo Torres. Although Mr. Palacios rented a room from Mr. Perez at

the King Street house and lived there, he was not present during the raid and he

was not arrested.1

On January 5, 2013, Tulsa Police arrested Mr. Palacios after a traffic stop

and subsequent search of his vehicle revealed several small bags of

methamphetamine, drug paraphernalia, and a small amount of cash. On January

11, 2013, a grand jury indicted Mr. Perez, Mr. Hurtado, and Mr. Torres on

multiple counts, including conspiring to possess with intent to distribute cocaine

and methamphetamine, and several drug possession and firearms charges, among

others. Mr. Palacios was not charged at that time.2

 He was eventually charged in

a four-count third superseding indictment in September 2013 with conspiring to

possess and possession with intent to distribute cocaine and methamphetamine,

and maintaining the King Street house on or about December 31, 2012, as a drug

involved premises.

1

 On the same day, Tulsa Police executed a search warrant at a different

house that was also being used by Mr. Perez, who police identified as being the

head of the drug-trafficking operation.

2

 Mr. Perez, Mr. Hurtado, and Mr. Torres all subsequently pled guilty

pursuant to written plea agreements to various charges.

-2-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 2 
Mr. Palacios pled guilty pursuant to a written plea agreement to count four,

knowingly maintaining a drug-involved premises for the purpose of

manufacturing or distributing cocaine and methamphetamine, in exchange for the

dismissal of all other pending charges at sentencing. In the plea agreement, Mr.

Palacios admitted he lived at the King Street house on the day it was raided, he

“was aware that other persons were using the house to store and to sell drugs,”

and he “facilitated and assisted their use of the house for that purpose by

receiving money for [Mr.] Perez and turning the money over to him.” Rec., vol. I

at 73. At his plea colloquy, Mr. Palacios admitted that his actions helped Mr.

Perez and others sell drugs at the King Street house. The government and Mr.

Palacios stipulated in the plea agreement to a drug quantity amount of between

fifty and 200 grams of methamphetamine, recognizing that the district court

would not be bound by this amount.

The presentence report (PSR) set forth the total amount of drugs and money

recovered during the raid as representing a marijuana equivalency of 1,818.86

kilograms. Based on that quantity of drugs, the PSR calculated a base offense

level of 32 for Mr. Palacios. With adjustments for specific offense characteristics

including possession of a weapon, a downward adjustment for acceptance of

responsibility, and a criminal history category of I, the proposed advisory

guideline range was 135 to 168 months. Mr. Palacios filed written objections to

the PSR, which he renewed at sentencing. He did not object to the calculation of

-3-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 3 
the total drug amount. Instead, Mr. Palacios argued that he should only be held

accountable for the stipulated amount of fifty to 200 grams of methamphetamine

and not for the actions of others at the house, and that he should not receive a

two-level enhancement for possessing a firearm. The district court addressed and

overruled his objections, but it granted his motion for a four-level downward

variance. The court ultimately sentenced Mr. Palacios to eighty-seven months

imprisonment to be followed by three years of supervised release.

We review federal sentences for reasonableness, applying a deferential

abuse of discretion standard. Gall v. United States, 552 U.S. 38, 51 (2007);

United States v. Lente, 647 F.3d 1021, 1030 (10th Cir. 2011). “We review the

district court’s legal interpretation of the guidelines de novo, and review its

findings of fact for clear error, giving due deference to the district courts

application of the guidelines to the facts.” United States v. Janusz, 135 F.3d

1319, 1324 (10th Cir. 1998) (citation omitted). Our review includes “both the

reasonableness of the length of the sentence, as well as the method by which the

sentence was calculated.” United States v. Warren, 737 F.3d 1278, 1283 (10th

Cir. 2013). Procedural errors include “failing to calculate (or improperly

calculating) the Guidelines range, treating the Guidelines as mandatory, failing to

consider the § 3553(a) factors, selecting a sentence based on clearly erroneous

facts, or failing to adequately explain the chosen sentence.” Gall, 552 U.S. at 51;

Lente, 647 F.3d at 1030. Here, Mr. Palacios challenges only the “method by

-4-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 4 
which the sentence is calculated,” and thus our review is limited to the procedural

reasonableness of his sentence. Lente, 647 F.3d at 1030 (internal quotation marks

omitted). 

Mr. Palacios contends the district court erred in overruling his objections to

the PSR. The crux of his argument is that the district court violated Fed. R. Crim.

P. 32(i)(3)(B), which requires a sentencing court to rule on any disputed portions

of the PSR at sentencing, asserting that the court failed to take evidence at the

sentencing hearing and therefore “there was simply no evidence before the Court

from which it could have overruled Mr. Palacios’s objections.” Aplt. Br. at 16. 

Specifically, he argues the court erred in adopting the PSR’s drug quantity

calculation, which attributed to him the entire amount of drugs seized during the

raids. He asserts he never admitted to being part of the underlying drug

conspiracy and notes his plea agreement stipulated to a drug quantity of fifty to

200 grams of methamphetamine. He claims the district court should have only

held him accountable for the stipulated amount because it “had no other evidence

before it as to the quantities of drugs involved in Mr. Palacios’s offense

conduct.”3

 Aplt. Br. at 17. We are not persuaded.

Section 2D1.8(a) of the Guidelines is used to calculate the base offense

3

 We read Mr. Palacios’s brief as asserting that there was no evidence

before the court showing his involvement in the drug conspiracy, not that there

was no evidence showing the quantity of drugs found in the raid of the King

Street house.

-5-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 5 
level where a defendant pleads guilty to violating § 856(a)(1). U.S.S.G. §

2D1.8(a) (2013); United States v. Dickerson, 195 F.3d 1183, 1189 (10th Cir.

1999). Section 2D1.8(a)(1) states that the “offense level from § 2D1.1 applicable

to the underlying controlled substance offense” is utilized in calculating the base

offense level. Section 2D1.8(a)(2) sets forth one exception: “[i]f the defendant

had no participation in the underlying controlled substance offense other than

allowing use of the premises, the offense shall be 4 levels less than the offense

level from § 2D1.1 applicable to the underlying controlled substance offense, but

not greater than level 26.” As the commentary explains: 

Subsection (a)(2) does not apply unless the defendant had no

participation in the underlying controlled substance offense other

than allowing use of the premises. For example, subsection (a)(2)

would not apply to a defendant who possessed a dangerous weapon

in connection with the offense, a defendant who guarded the cache of

controlled substances, a defendant who arranged for the use of the

premises for the purpose of facilitating a drug transaction . . . or a

defendant who otherwise assisted in the commission of the

underlying controlled substance offense.

U.S.S.G. § 2D1.8 app. n.1 (2013) (emphasis added).

At sentencing, the district court specifically addressed and overruled Mr.

Palacios’s objection concerning the amount of drugs used in his base offense

calculation. It held that the base offense level of 32, calculated under § 2D1.1

from the total quantity of drugs found in the raid, was appropriate because Mr.

Palacios “not only allowed the use of the premises for the underlying controlled

substance offense, but he additionally participated in the underlying offense by

-6-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 6 
possessing a dangerous weapon and by facilitating and assisting the

co-defendants’ use of the drug-involved premises by receiving money for the

drugs.” Rec., vol. II at 37. Thus, the district court viewed the “underlying

controlled substance offense” in § 2D1.8(a)(1) as including the total quantity of

drugs found in the raid of the King Street house. It adopted as its findings the

amount of drugs set forth in the PSR. 

The main problem for Mr. Palacios in his effort to limit his responsibility

for the amount of drugs found in the raid of the King Street house is the nature of

the offense to which he pled guilty. His plea agreement sets forth the elements

the United States was required to prove to convict him under 21 U.S.C. § 856:

“a. The defendant used a place 2711 E. King Street for the purpose of

manufacturing or distributing a controlled substance; and b. The defendant knew

that the place was used for such a purpose.” Rec., vol. I at 72 (emphasis added). 

Mr. Palacios specifically admitted he was guilty of the described conduct.

In United States v. Verners, 53 F.3d 291 (10th Cir. 1995), we explained the

nature of a § 856(a) crime. First, with respect to the requirement that a defendant

use or maintain the drug house, we said: “Where the defendant lives in the house,

this element is normally easily proved.” Id. at 296. Second, we addressed “the

more complex question” of the requirement that the house be maintained “for the

purpose of” manufacturing or distributing drugs. Id. We relied on the

explanation set forth in United States v. Chen, 913 F.2d 183, 189-90 (5th Cir.

-7-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 7 
1990), where the court held “that ‘purpose’ was synonymous with ‘objective,’

‘intention,’ and ‘aim.’ Furthermore, to be convicted under 856(a)(1), the

defendant must personally have the ‘specific purpose’; it is not ‘sufficient for

others to possess it.’” Verners, 53 F.3d at 296.

Thus, by pleading guilty to maintaining the King Street house as a drug

house, Mr. Palacios was admitting that it was his intention that the drugs be

manufactured or distributed there. Furthermore, he admitted facilitating such

distribution by accepting drug money for Mr. Perez on one occasion. And,

significantly, see infra, Mr. Palacios left his loaded gun at the premises, which

the police found near large quantities of drugs during the raid on the King Street

house. As we held in Dickerson with respect to a violation of § 856(a):

By its very nature, the offense of conviction involved the

participation of other persons. More specifically, in order to violate

[the statute], Dickerson had to provide the house or building and

other parties had to use the house to engage in drug trafficking

activity. For purposes of sentencing, then, Dickerson can be held

accountable for any reasonably foreseeable activities engaged in by

the parties using his house for drug trafficking activities. . . . See

U.S.S.G. § 1B1.3(a)(1)(B) (in a case involving jointly undertaken

criminal activity, relevant conduct includes “all reasonably

foreseeable acts and omissions of others in furtherance of the jointly

undertaken criminal activity”).

195 F.3d at 1188-89 (emphasis added) (some citations omitted). While Mr.

Palacios claims he never admitted to being part of a jointly undertaken criminal

activity and thus cannot be held responsible for the entire amount of drugs found

during the raid, our decision in Dickerson makes clear that when one maintains a

-8-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 8 
drug house, he becomes responsible for the reasonably foreseeable activities of

those who use the house for the distribution of drugs.

As the district court held, by knowingly facilitating use of his residence for

the manufacturing and distribution of drugs on or about December 13, 2012, Mr.

Palacios became responsible for the activities of his landlord and others using the

house for that purpose on the day of the raid. Accordingly, the court properly

overruled Mr. Palacios’ objection to the drug quantity calculation and did not err

in determining the base offense level as it did. 

Mr. Palacios also contends the district court erred in applying a two-level

enhancement for possessing a firearm. He argues that he never admitted

“possessing a firearm in relation to the offense for which he pleaded guilty,” and

that there is no evidence suggesting he “possessed a firearm during his offense of

conviction.” Aplt. Br. at 22. Although Mr. Palacios admitted to legally owning

one of the firearms recovered from the King Street house, he asserts that the gun

was not related to his offense of conviction because he was nowhere near the

house at the time of the raid, and that there is no evidence the gun was anywhere

nearby on the day he accepted drug money at the house for Mr. Perez.

Section 2D1.1(b)(1) provides that “[i]f a dangerous weapon (including a

firearm) was possessed, increase by 2 levels.” The commentary to the guideline

states that the weapon possession enhancement “reflects the increased danger of

violence when drug traffickers possess weapons,” and that the “enhancement

-9-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 9 
should be applied if the weapon was present, unless it is clearly improbable that

the weapon was connected with the offense.” U.S.S.G. § 2D1.1 app. n.11(A)

(2013). 

The district court addressed and overruled Mr. Palacios’s objection to the

firearm enhancement. It noted that “the application standard for possession under

this guideline has to do with possession by proximity,” and that “[t]o support this

proximity relationship, the government need only show that the weapon was

found in the same location where drugs or drug paraphernalia are stored.” Rec.,

vol. II at 39. The court held the two-level enhancement appropriate because the

guns were found “in close proximity to a large amount of cocaine and

methamphetamine,” in the King Street house and a preponderance of the evidence

suggested Mr. Palacios “had control and/or possession of the firearm.” Id. at 39-

40.

“[W]e have held that the government bears the initial burden of proving

possession by a preponderance of the evidence, and proof of possession may be

established by showing mere proximity to the offense.” Dickerson, 195 F.3d at

1188 (citing United States v. Vaziri, 164 F.3d 556, 568 (10th Cir. 1999); United

States v. Roberts, 980 F.2d 645, 647 (10th Cir. 1992)). “If the government meets

its initial burden, the defendant must show that it was ‘clearly improbable’ that

the weapon was connected to the offense.” United States v. Thomas, 749 F.3d

1302, 1317 (10th Cir. 2014). In Thomas, we upheld the district court’s

-10-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 10 
application of the two-level enhancement for possession of a firearm under §

2D1.1(b)(1). Id. Mr. Thomas argued that the government failed to show the gun

“was connected to the offense.” Id. We noted “[t]he government met its initial

burden” where the “gun was found in a residence with drugs, scales, plastic bags

and other drug paraphernalia.” Id. We explained that “[t]he proximity of the gun

and drug evidence sufficed for the government’s threshold burden,” and therefore

upheld the firearm enhancement “[b]ecause Mr. Thomas” did not show “a ‘clear

improbability’ that the weapon was connected to the offense.” Id. 

Nor has Mr. Palacios shown a clear improbability that the firearm he

legally possessed was connected to the offense. The gun here was located in the

King Street House near large amounts of drugs and was available for use by the

co-defendants planning to distribute drugs at the house that day. While Mr.

Palacios would like to ignore this fact, it is not improbable that the loaded gun

was available to facilitate the intended drug sale that day. It is irrelevant that Mr.

Palacios was not at the house when the gun was found in proximity to the drugs. 

See Dickerson, 195 F.3d at 1186, 1188-89 (having pled guilty to maintaining a

drug house, Dickerson was held responsible for the guns found there when he

“failed to present any evidence demonstrating the firearms were not connected

with the drug trafficking activities that occurred in his house”). The district court 

-11-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 11 
did not err in overruling Mr. Palacios’s objection and applying a two-level

enhancement under § 2D1.1(b)(1).

We affirm. 

ENTERED FOR THE COURT

Stephanie K. Seymour

Circuit Judge

-12-

Appellate Case: 14-5021 Document: 01019401505 Date Filed: 03/19/2015 Page: 12