Opinion ID: 3012971
Heading Depth: 2
Heading Rank: 2

Heading: The Barclay Funds.

Text: Approximately $150,000 of the proceeds from the Barclay sale remain in escrow. The Barclay funds are substitute assets and the government seeks their forfeiture as such under 18 U.S.C. § 982(b) and 21 U.S.C. § 853(p). Pantelidis argues that the district court erred by not releasing the Barclay funds to him because, as substitute assets, they are not subject to pre-conviction restraint.6 The government concedes, as it must, that substitute assets are not subject 6. Pantelidis claims that he needs the Barclay funds to pay his legal fees and living expenses. The government claims that Pantelidis sought the return of the Barclay funds only after pre-indictment negotiations failed. 13 to pretrial restraint.7 United States v. Field, 62 F.3d 246 (8th Cir. 1995); United States v. Floyd, 992 F.2d 498 (5th Cir. 1993); see also In re Assets of Martin, 1 F.3d 1351 (3d Cir. 1993) (pre-conviction restraint of substitute assets impermissible under RICO forfeiture provisions). However, the government argues that the Barclay funds are subject to pretrial restraint because the non-prosecution agreement that Pantelidis entered into allows the funds to remain escrowed for purposes of forfeiture. Not unexpectedly, Pantelidis claims that he never agreed to the pretrial restraint of the Barclay funds. The government’s position is straightforward. It argues that Pantelidis and the government agreed to allow the Barclay sale to proceed and each party gave consideration for their respective promises. The government agreed to “refrain from initiating criminal charges against Pantelidis or his corporate entity charging a money laundering violation from the monetary and/or financial transaction which is the sale.” App. 30a. In return, Pantelidis agreed to have the proceeds of the sale to be used to satisfy certain claims, and agreed to “[e]scrow all remaining proceeds from the sale.” App. 31a. Moreover, the government expressly reserved its right to seek forfeiture with respect to any criminal offenses which pre-dated or post-dated the sale. App. 30a. At the same time, Pantelidis and the government entered into an escrow agreement, which provided in part: Escrow Agent will release funds upon the following conditions: 1) An Agreement between Jerry Pantelidis and the United States Government; or 2) Final unappealable Judicial Order by a court of competent jurisdiction. App. 32a. In the government’s view, by entering into the nonprosecution agreement, Pantelidis consented to the restraint of the Barclay funds beyond that permitted by the law with respect to substitute assets. According to the 7. Pantelidis calls it “pre-conviction restraint” and the government calls it “pretrial restraint.” 14 government, Pantelidis received valuable consideration for that concession in the form of the government’s agreement not to initiate money laundering charges against him. The government also notes that it lived up to its part of the agreement. However, argues the government, if the Barclay funds are returned to Pantelidis, the government will not receive the benefit of the bargain struck between it and Pantelidis. Pantelidis’s argument that he did not agree to the pretrial restraint of the Barclay funds is equally straightforward. He first argues that the agreement contains a reservation of rights which provides: “Pantelidis reserves all rights with respect to the disposition of the proceeds of the Barclay sale.” App. 31 (Pantelidis’s emphasis). According to Pantelidis, one such reserved right is the right to use the Barclay funds prior to trial. He next argues that neither the non-prosecution agreement nor the escrow agreement provides that the Barclay funds must remain in escrow until the criminal prosecution is completed. He claims that the above-quoted language of the escrow agreement means that, in the absence of an agreement between the parties, either party is free to seek a court order determining the disposition of the funds. And, says Pantelidis, that’s precisely what he has done. He contends that if the government had intended for the funds to remain in escrow until the criminal prosecution was completed, then the government, as the drafter of the agreements, would have included an explicit provision to that effect. He notes that neither the agreement nor the escrow agreement contains any such provision. Therefore, he argues that he is entitled to seek recovery of the Barclay Funds. Although the agreements rise against the backdrop of a criminal prosecution, they are nevertheless, contracts. In resolving a contract dispute, “the initial determination is whether the contract is ambiguous concerning the dispute between the parties.” Sumitomo Machinery Corp. of America, Inc. v. AlliedSignal, Inc., 81 F.3d 328, 332 (3d Cir. 1996). The determination of whether a contract is ambiguous is a question of law. Taylor v. Continental Group Change In Control Severance Pay Plan, 933 F.2d 1227, 1232 (3d Cir. 1991). A contract is ambiguous “where the contract is 15 susceptible of more than one meaning,” Sumitomo Machinery, 81 F.3d at 332, or “if it is subject to reasonable alternative interpretations.” Taylor, 933 F.2d at 1232. After reading the disputed language, and considering the conflicting arguments of the parties, we frankly come to the conclusion that the government’s reading and Pantelidis’s reading of the non-prosecution agreement are both reasonable alternative interpretations. Therefore, the nonprosecution agreement is, by definition, ambiguous as to Pantelidis’s entitlement to the Barclay Funds. Consequently, a remand is warranted to enable the district court to resolve that ambiguity in the first instance. On remand, the district court can resolve the ambiguity by applying the framework we outlined in In re New Valley Corp., 89 F.3d 143, 149-150 (3d Cir. 1996).