Source: http://ca10.washburnlaw.edu/cases/2001/09/00-2337.htm
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00-2337 -- U.S. v. Rodriguez-Aguirre -- 09/05/2001
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GABRIEL RODRIGUEZ-AGUIRRE, also known as Cuco Aguirre, also known as George Aguirre, also known as Gabriel Aguirre, also known as Gabriel Rodriguez, also known as Refugio Rodriguez; ELENO AGUIRRE; DOLORES CONTRERAS; TONY BENCOMO,
(D.C. No. CR-92-486-JC)
Before EBEL and HOLLOWAY, Circuit Judges, and JONES,(*) Senior Circuit Judge.
On April 20, 2000, Appellants Gabriel Rodriguez-Aguirre, Eleno Aguirre, Doloras Contreras and Tony Bancomo filed a motion for the return of property pursuant to Rule 41(e) following their convictions on multiple counts of drug, money laundering and related offenses. Appellants' convictions were entered on December 15, 1994. All but Bancomo appealed their convictions, and each Appellant's conviction was upheld on appeal in 1997. See United States v. Rodriguez-Aguirre, 108 F.3d 1228 (10th Cir. 1997); United States v. Aguirre, 108 F.3d 1284 (10th Cir. 1997); United States v. Contreras, 108 F.3d 1255 (10th Cir. 1997).(1)
Appellants' Rule 41(e) motion included a declaration from Rodriguez-Aguirre(2) which listed the 127 items(3) he believed had never been properly forfeited by the United States and which stated that each piece of property was owned by "either [him] or [his] relatives."(4) He also stated that he had personally owned, leased or possessed thirty-two of the fifty-one seized properties, and "most of the personal property" seized from them, listed in the first forfeiture action initiated by the United States. The other Appellants did not include declarations with the Rule 41(e) motion but assert on appeal that they "have always intended to submit declarations, live testimony, and other evidence of ownership when the case gets beyond the pleading stage and into the proof stage."
The United States filed a motion to dismiss Appellants' Rule 41(e) motion, arguing: "(1) the applicable statute of limitations barred the Rule 41(e) motion; (2) defendants lacked Article III standing to assert a claim to the alleged property; and (3) the equitable doctrine of laches barred the motion."(5)
In regard to the constitutional standing requirements, Appellants have alleged that they each have suffered an "injury in fact" caused by the defendants, due to either: (1) the United States' retention of seized property without commencing valid civil forfeiture proceedings against it, or (2) in the alternative, the United States' administrative forfeiture of the seized property without appropriate notice. The return of the property, or its monetary equivalent, pursuant to Rule 41(e) would redress Appellants' grievances. See Torres v. $36,256.80 U.S. Currency, 25 F.3d 1154, 1158 (2d Cir. 1994) ("[The claimant] clearly asserts a distinct and palpable injury ­ the loss of $30,000 through an allegedly unlawful forfeiture ­ that is the direct result of putatively illegal governmental action, and the injury would be redressed by a successful challenge to the forfeiture.") (quotations and citations omitted).
Similarly, Appellants have alleged sufficient facts to satisfy the prudential requirements for standing. First, each of the four Appellants is asserting his or her own legal rights, stating, "Defendants contend that there was a large amount of personal property seized from them, and which appeared on itemized returns on the search warrants, which were never named or forfeited in these three civil forfeiture actions." The next sentence reads: "A list of this property is attached as Appendix A to this motion." (Id. (emphasis added).) We assume the phrase "this property" in the second sentence refers to the "large amount of personal property seized from them," meaning these Appellants. We find these allegations of an ownership or lawful possessory interest in the seized items is sufficient to establish that Appellants are asserting their own rights, as opposed to the rights of others.(6)
Based on these allegations, we find that Appellants have asserted a colorable ownership or lawful possessory interest in at least some of the 127 items of property listed in Rodriguez-Aguirre's declaration and are thus asserting their own rights rather than the rights of third parties in filing this Rule 41(e) motion.(7)
United States v. Giovanelli, 998 F.2d 116, 119 (2d Cir. 1993) (citations omitted).(8)
For these reasons, we find that the United States has not established material prejudice due to Appellants' delay in filing their Rule 41(e) motion and that the district court erred in dismissing Appellants' complaint absent such a showing.(9) At this stage of the proceedings, the United States has not demonstrated that this is one of the rare cases where the doctrine of laches may properly be invoked notwithstanding the applicability of a specific statute of limitations. We therefore find that the doctrine of laches may be inapplicable to this case in any event.
This circuit has not yet decided whether the timeliness of Rule 41(e) motions is governed by the statute of limitations set forth in § 2401(a). The Second, Fourth and Seventh Circuit Courts of Appeals have ruled on this issue,(10) and all three have concluded that the limitations period contained in § 2401(a) applies to Rule 41(e) motions for the return of property. See United States v. Duke, 229 F.3d 627, 629 (7th Cir. 2000); United States v. Minor, 228 F.3d 352, 359 (4th Cir. 2000); Polanco v. United States Drug Enforcement Admin., 158 F.3d 647, 653 (2d Cir. 1998). The Fourth Circuit in Minor explained its reliance on § 2401(a) as follows:
Minor, 228 F.3d at 359 (citations omitted).(11) We are persuaded by the reasoning of the Fourth Circuit in Minor, and we now join the Second, Fourth, and Seventh Circuits in holding that the bringing of Rule 41(e) motions is governed by the general statute of limitations set forth at 28 U.S.C. § 2401(a).
As the Second Circuit stated when rejecting the same argument in Polanco: "The district court assumed that the cause of action accrued when the currency was seized . . . . But the specific constitutional violation alleged ­ the permanent deprivation of [the claimant's] property without notice ­ did not occur until sometime later, when the property was forfeited." 158 F.3d at 654 (citing Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp., 522 U.S. 192, 195, 201 (1997) (stating that a cause of action accrues when the plaintiff has a "complete and present" cause of action and "can file suit and obtain relief") (citations and quotations omitted)). The Fourth Circuit has also rejected the United States' argument, stating, "We emphasize that the limitations period begins to run, not when the claimant is on reasonable notice of the government's seizure of the property, or even when reasonable inquiry would have led to notice of the government's intention to declare forfeiture, but when reasonable inquiry would have led to notice of the forfeiture declaration itself." See Minor, 228 F.3d at 359 (emphasis in original). We agree with this analysis, and thus decline the United States' invitation to set the beginning date of the limitations period at the date of seizure.
Instead, we adopt the Fourth Circuit's accrual date for Rule 41(e) motions for return of property: "The accrual date is the date on which [the claimant] was on reasonable inquiry notice about the forfeiture, i.e., the earlier of the following: when he first became aware that the government had declared the currency forfeited, or when an inquiry that he could reasonably have been expected to make would have made him aware of the forfeiture." Minor, 228 F.3d at 359. In cases where the Rule 41(e) claimant knows the property was administratively forfeited but asserts that he was not provided adequate notice of the forfeiture, a court should therefore measure the limitations period from the earliest of the following two dates: (1) the date on which the claimant discovered that the property was forfeited, or (2) the date on which the claimant could reasonably be expected to have made an inquiry that would have made him aware of the forfeiture.(12)
In the Rule 41(e) context, we hold that the date on which a claimant can reasonably be expected to inquire after property that has been seized by the United States in conjunction with criminal proceedings, but has not been the subject of criminal, civil or administrative forfeiture proceedings, is the date on which the criminal proceedings against the claimant have concluded. The government is clearly permitted to seize evidence for use in investigations and trial. See, e.g., Warden v. Hayden, 387 U.S. 294, 306 (1967); United States v. Premises Known as 608 Taylor Ave., Apt. 302, 584 F.2d 1297, 1302 (3d Cir. 1978). "Nevertheless, the government may not by exercising its power to seize, effect a [d]e facto forfeiture by retaining the property seized indefinitely." 608 Taylor Ave., 584 F.3d at 1302. Thus, the general rule is that "seized property, other than contraband, should be returned to its rightful owner once the criminal proceedings have terminated."(13) Cooper v. City of Greenwood, 904 F.2d 302, 304 (5th Cir. 1990); see, e.g., United States v. Francis, 646 F.2d 251, 262 (6th Cir. 1981); United States v. Farrell, 606 F.2d 1341, 1343 (D.C. Cir. 1979); 608 Taylor Ave., 584 F.2d at 1302; United States v. LaFatch, 565 F.2d 81, 83 (6th Cir. 1977); United States v. Brant, 684 F. Supp. 421, 423 (M.D.N.C. 1988); cf. Lowther v. United States, 480 F.2d 1031, 1033-34 (10th Cir. 1973) (finding that the government could not, without commencing forfeiture proceedings, retain and destroy evidence which was not illegal per se after the claimant was acquitted of criminal charges). Accordingly, it has been recognized that the non-contraband "property of [an] accused in a criminal case, seized by officers and used as evidence, generally will be returned to him on proper application, and property taken under a search warrant is generally returned to its rightful owner when no longer needed in aid of a criminal prosecution if its ownership is undisputed." 79 C.J.S. Searches and Seizures § 114 (1952); Farrell, 606 F.2d at 1347 (stating that seized property should be returned to its rightful owner unless it is contraband, it has been forfeited by the government, or "the property involved is subject to government retention pending termination of the trial"); cf. United States v. Wilson, 540 F.2d 1100, 1101 (D.C. Cir. 1976) (acknowledging the district court's jurisdiction and duty to ensure the return of "property seized from [a criminal defendant] in the investigation but which is not . . . stolen, contraband, or otherwise forfeitable, and which is not needed, or is no longer needed, as evidence").
For these reasons, we hold that the limitations period for a Rule 41(e) motion seeking the return of property that has been seized in conjunction with a criminal investigation, but against which the government has not instituted forfeiture proceedings, begins to run at the conclusion of the government's criminal proceedings against the defendant. Prior to that point in time, the government arguably has the right to possess the property as evidence (at least, absent a successful suppression challenge) and the defendant consequently has no reasonable expectation that it will be returned. After the criminal proceedings conclude, however, the government has no right to retain the property, absent the commencement of forfeiture proceedings, and its continued retention of the property from that point forward could legitimately be viewed as a deprivation of the defendant's due process rights.(14) It is at this point, then, that a criminal defendant can reasonably be expected to make an inquiry that would place him on notice of the government's intention to retain the property, thus allowing him to discover that his property is being held by the government despite the lack of forfeiture proceedings.
Appellants are seeking the return of property that was not contraband per se, although it may well have been derivative contraband, see supra n.14, and against which it appears the United States may not have instituted valid forfeiture proceedings. Appellants thus had a reasonable expectation that, once the criminal proceedings against them concluded and the government had failed to institute forfeiture proceedings against the property, that property would be returned to them. They could have inquired as to the United States' intended disposition of the property at that point in time, and Appellants' failure to do so does not excuse them of not learning information that the exercise of due diligence would most certainly have revealed. Cf. Duke, 229 F.3d at 630 ("The discovery rule does not permit the victim of an alleged wrong to postpone the running of the statute of limitations by willfully closing his eyes, ostrich-like, to a known probability that he has been injured, even if he is not certain. A plaintiff who either knew that he was injured or should have known is deemed to have 'discovered' the injury for purposes of the statute of limitations."). We therefore find that Appellants are charged with knowledge of the United States' alleged unconstitutional retention of the property as of the date on which criminal proceedings against Appellants concluded.(15)
*. The Honorable Nathaniel R. Jones, Senior Circuit Judge, Sixth Circuit Court of Appeals, sitting by designation.
1. Two Appellants, Rodriguez-Aguirre and Aguirre, have appeals of their petitions for a writ of habeas corpus pending before the Tenth Circuit. See United States v. Rodriguez-Aguirre, No. 00-2382; United States v. Aguirre, No. 00-2384.
2. Rodriguez-Aguirre asserts that he included a declaration in support of the Rule 41(e) motion "because the prosecutors in this case have repeatedly 'warned' [his attorney] that she could be held in contempt if she filed a motion for return of property on behalf of the Aguirres, citing the February 25, 1999 order from Judge Black in the related forfeiture case [Fifty-One Items]." Judge Black entered an order in Fifty One Items after receiving filings seeking to vacate those forfeitures from two fugitives in the criminal case, because he concluded that the filing of additional pleadings in that case "gave rise to a substantial danger of fraud being perpetrated on the Court." In that order, Judge Black directed that no further pleadings would be accepted in regard to the forfeiture proceeding without prior approval by the court and without the service of an attorney licensed to practice in the State of New Mexico.
3. The list included items ranging from $3,233,000 in United States currency, portable buildings, personal clothing (e.g., 12 leather jackets seized from storage (valued at $14,000) and 30 Italian wool suits seized from storage (valued at $56,000)), custom pool equipment, bricks, exercise equipment, vehicles and mobile homes.
4. Appellants were not only partners in the drug cartel, but are relatives, as well. Cf. Rodriguez-Aguirre, 108 F.3d at 1230 ("Mr. Aguirre managed a family-run organization ('the Aguirre organization') specializing in the sale and distribution of large amounts of marijuana and cocaine.") Eleno Aguirre is Rodriguez-Aguirre's brother. See Aguirre, 108 F.3d at 1285. Doloras Contreras is Rodriguez-Aguirre's daughter. See Contreras, 108 F.3d at 1258. The record does not explain Bancomo's relationship to Rodriguez-Aguirre, but we know the two men are related, see Rodriguez-Aguirre, 108 F.3d at 1234, and Appellants' counsel states in her reply brief to this court that Bancomo is Rodriguez-Aguirre's nephew. At least some of Rodriguez-Aguirre's relatives who were associated with the drug cartel are not parties to the instant Rule 41(e) motion. See, e.g., Rodriguez-Aguirre, 108 F.3d at 1234 ("With the exception of defendant Sonia Gallegos, all of the [nine] defendants were relatives."). And at least some of the property seized pursuant to the 1992 search warrants appears to have belonged to identified individuals who were relatives of Rodriguez-Aguirre but who are not parties to this action. See Aguirre, 108 F.3d at 1235 (noting that the agents seized "two certificates of title for trailers owned by Raul Hernandez"). Although it is impossible to know at this point in the litigation whether Appellants will attempt to assert an interest in that property, as well, we interpret Rodriguez-Aguirre's declaration to assert an ownership or possessory interest only in the property seized from these four Appellants and not from any other relative of Rodriguez-Aguirre. See discussion infra pp. 14-15.
5. Although the motion to dismiss did not specify the Rule of Civil Procedure under which dismissal was sought, we assume it was Rule 12(b)(1) regarding the standing argument and Rule 12(b)(6) regarding the laches and statute of limitations arguments.
6. In addition, we note that some, if not all, of the property seized pursuant to the 1992 warrants was forfeited by the government in three separate civil forfeiture proceedings based upon the government's argument that Appellants (and their co-defendants) owned or possessed the property and used it in furtherance of the charged drug conspiracy. Given that fact, we think it slightly disingenuous for the United States to now argue that Appellants have not shown a colorable interest in other property seized pursuant to those same warrants.
7. We acknowledge the United States' twin concerns that some of the listed property may be inadequately described or might have belonged to a third party who is not a party to this litigation. We nevertheless find that those concerns are not dispositive of the standing inquiry. Appellants have alleged a colorable interest in at least some of the listed property and thus are asserting their own right to have that property returned. Whether some of the listed property does not, in fact, belong to Appellants is a matter better dealt with on summary judgment or at trial. Similarly, whether any of the 127 listed items were actually forfeited in one of the three civil forfeiture proceedings is not an issue this court can resolve at the motion to dismiss stage, particularly because the judgments of forfeiture and the documents underlying them are not all included in the record. In any event, Appellants have explicitly stated that if any of these items were forfeited in any of the three civil forfeiture proceedings, they "will withdraw their request for return of those items." Finally, whether some of the items are described in a manner that makes it impossible to verify either their existence or their seizure by the United States is simply not an issue to be resolved as a matter of standing.
8. See also United States v. Clymore, 245 F.3d 1195 (10th Cir. 2001) (holding that, if an adequate nexus can be established between the crime and the property being forfeited, the court may quiet title to property in favor of the government, even where the claimant has filed Rule 41(e) motion for return of property and the statute of limitations has run on the government's right to institute forfeiture proceedings on its own).
9. Because we find that the district court erred in not requiring the United States to demonstrate material prejudice, we need not address Appellants' alternative argument regarding the doctrine of laches, i.e., that the magistrate clearly erred when it found Appellants' delay in filing the Rule 41(e) motion to be "unexplained, unjustified and inexcusable."
10. The Fifth Circuit has assumed, but has not explicitly stated, that § 2401(a) applies to Rule 41(e) motions for the return of property. See Clymore v. United States, 217 F.3d 370, 373 (5th Cir. 2000) (stating "[t]he parties agree that in civil actions the statute of limitation for the return of property is supplied by 28 U.S.C. § 2401(a)").
11. The Minor court also noted: "[Section] 2401 governs actions brought under both the APA and the Tucker Act. Thus, even if it were appropriate to 'borrow' a limitations period from an analogous cause of action, a court might well look to § 2401." 228 F.3d at 359 n.6 (citations omitted).
12. We acknowledge the potential inconsistency of applying the limitations period set forth in § 2401 to cases involving administrative forfeitures effected after constitutionally inadequate notice, given that we have declared such forfeitures "void" due to the constitutional inadequacies. See Clymore v. United States, 164 F.3d 569, 574 (10th Cir. 1999). Although we have never addressed this question in the Rule 41(e) context, "void" judgments are generally open to challenge at any time. See VTA, Inc. v. Airco, Inc., 597 F.2d 220, 224-25 (10th Cir. 1979) (stating that Federal Rule of Civil Procedure 60(b)(4) motions to vacate void judgments may be brought at any time); United States v. One Color Toshiba Television, 213 F.3d 147, 157 (3d Cir. 2000) ("[N]early overwhelming authority exists for the proposition that there are no time limits with regards to a challenge to a void judgment because of its status as a nullity . . . .") (finding that there is no time limit for filing a Rule 60(b) motion to vacate a void judicial forfeiture judgment). Of course, where there has been an administrative forfeiture, there has been no "judgment" that could be open to challenge in the federal courts pursuant to Rule 60(b)(4). See 19 U.S.C. § 1609 (stating that the appropriate customs officer "shall declare" property forfeited if the administrative forfeiture process goes unchallenged for the required length of time); 21 C.F.R. § 1316.77 (same process applies to DEA officers). Further, we agree with our sister circuits that a reasonable statute of limitations must apply to Rule 41(e) motions. See Polanco, 158 F.3d at 653; Minor, 228 F.3d at 359; Duke, 229 F.3d at 629. Because it would be incongruous to apply a limitations period to some Rule 41(e) motions, e.g., where the government retained the claimant's property without ever commencing forfeiture proceedings against it, but not to other Rule 41(e) motions, e.g., where the government did commence administrative forfeiture proceedings but did not provide adequate notice to claimants, we find the § 2401(a) limitations period applicable to all Rule 41(e) motions, despite the "void" status of the latter type of forfeitures.
13. There are two types of contraband, contraband per se and derivative contraband. Cooper, 904 F.2d at 305. As the Fifth Circuit has explained:
By contrast, derivative contraband includes items which are not inherently unlawful but which may become unlawful because of the use to which they are put ­ for example, an automobile used in a bank robbery. . . . Because a property interest in derivative contraband is not extinguished automatically if the item is put to unlawful use, the forfeiture of such an item is permitted only as authorized by statute, Farrell [606 F.2d at 1343], and such forfeitures are subject to scrutiny for compliance with the safeguards of procedural due process. See, e.g., United States v. $8,850 in U.S. Currency, 461 U.S. 555 (1983); United States v. $23,407.69 in U.S. Currency, 715 F.2d 162 (5th Cir. 1983); Vance v. United States, 676 F.2d 183 (5th Cir. 1982).
14. This holding is not precluded by our recent statement in United States v. Clymore, 245 F.3d 1195 (10th Cir. 2001), that the government holds "unperfected right to title" in derivative contraband "[a]t the time the government takes possession" of the property. Id. at 1200. The mere fact that the government may lawfully possess seized property prior to the commencement of forfeiture proceedings, and that the title to such property may vest in the United States after forfeiture proceedings have concluded, does not mean a criminal defendant should not reasonably be expected to inquire after the seized property once his criminal proceedings have concluded. As the Clymore panel noted, "'when the criminal proceedings have terminated . . . the person from whom the property was seized is presumed to have a right to its return, and the government must demonstrate that it has a legitimate reason to retain the property.'" Id. at 1201 (quoting United States v. Chambers, 192 F.3d 374, 377 (3d. Cir. 1999) (citations and quotations omitted)).
15. We decline to determine here whether the conclusion of criminal proceedings occurs after the trial and sentencing, or whether it occurs only after the appeals process has run its course. We do not decide that issue, first, because the parties have not briefed that issue, and, second, because that determination is not necessary to the resolution of this case. Appellants were convicted on December 15, 1994, and direct appeals of the convictions of Rodriguez-Aguirre, Aguirre and Conteras were resolved in 1997. The Rule 41(e) motion was brought on April 20, 2000. It therefore appears that Appellants' motion was brought within the six-year statute of limitations provided by 28 U.S.C. § 2401(a) regardless of which date is used as the starting point for the limitations period governing Appellants' cause of action.
URL: http://ca10.washburnlaw.edu/cases/2001/09/00-2337.htm.