Opinion ID: 200426
Heading Depth: 2
Heading Rank: 2

Heading: Davis and Hussey

Text: 26 Davis and Hussey are in a more sympathetic position. Unlike John Bulger, at the time of the default judgment, they did not know that they might possess any relevant right or interest in the lottery forfeiture case. The whole theory of their current attempt to intervene is that this court should forgive their failure to establish statutory standing at that time and should turn back the clock to allow them to file claims now. It is true that this court has used its equitable powers to read the requirements for filing claims somewhat broadly in the interests of justice. See 116 Emerson St., 942 F.2d at 77-78 (Whether a belated claim will be recognized often depends on the existence of mitigating factors.); One Urban Lot, 885 F.2d at 999-1001 (applying admiralty law's traditional liberal construction of procedural practices to in rem civil forfeiture case). For the reasons that follow, the doctrine does not help Davis and Hussey, because even were we to ignore the failure to file, they do not have the requisite interest in the property to assert a claim. 27 Davis and Hussey rely on the purported lien they secured from state court. Normally, a lien against the defendant property would establish standing. See 18 U.S.C. § 981(a)(2) (1994) (amended 2000) (barring forfeiture of property to the extent of the interest of an owner or lienholder who was uninvolved in the criminal activity); In re Metmor Fin., Inc., 819 F.2d 446, 448 & n. 2 (4th Cir.1987) (There is no question that holder of mortgage is entitled to innocent owner status to extent of interest); Town of Sanford v. United States, 961 F.Supp. 16, 16-17, (D.Me.1997), aff'd 140 F.3d 20, 22 (1st Cir.1998) (lien for back taxes on forfeited property entitles town to innocent owner defense). Given the generous standards for constitutional standing, it is arguable that they had a colorable claim once the state court acted. 28 There are two problems with their purported lien, however. First, at the time the state court acted in 2001, [a]ll right, title, and interest in the property had already vested in the United States over five years earlier. 18 U.S.C. § 981(f). There was no share of the lottery proceeds left in Whitey Bulger's name. The Lottery Commission informed the district court in July 2001 that it believed the forfeiture order applied to one-sixth of the entire prize, and that the state court order was inconsistent with the federal forfeiture. State court jurisdiction over Whitey Bulger would have been inadequate to confer authority for disposing of property that he no longer owned, and the state court did not have or purport to exercise jurisdiction over the United States. Cf. Fierro v. Reno, 217 F.3d 1, 6-7 (1st Cir.2000) (refusing to recognize state court's nunc pro tunc order modifying twenty-year-old child custody order for purposes of defining immigration status of deportee). 29 Second, the state court was aware of the issue and included broad language in its order to exclude any interest that the federal government already had in the property by virtue of the civil forfeiture. The equitable lien is only enforceable to the extent permissible with the civil forfeiture currently in place. This exception swallows up whatever hold the lien would otherwise provide over the res. Davis and Hussey can hardly displace a first-in-time final judgment by virtue of an equitable lien which explicitly excludes property subject to that judgment. 30 Without the lien to provide standing connected to the res itself, Davis and Hussey must fall back on their more general claims against Whitey Bulger. They have a significant problem here as well, because they have never demonstrated that they possess any judgment against him. They rely on the fact that his default has been entered by the clerk of the state court under Mass. R. Civ. P. 55(a). As the government points out, however, under Massachusetts rules this is not the same as a judgment, which must be pursued in cases of default according to additional procedures under Mass. R. Civ. P. 55(b). See Mass. R. Civ. P. 55, reporters' notes (1973) (Rule 55 embraces two separate and distinct procedures....). It appears that Davis and Hussey remain mere plaintiffs, rather than judgment creditors. But the problem is more serious than one of timing — if they held a judgment, it would not solve the problem. 31 Even were we to assume that they held a judgment against Whitey Bulger, it would be only a general in personam judgment, not a secured interest against any particular asset that he owned. In most circumstances, such general creditors are outside the ambit of the owner or lienholder to which the statute then referred. 18 U.S.C. § 981(a)(2) (1994) (amended 2000). [T]he federal courts have consistently held that unsecured creditors do not have standing to challenge the civil forfeiture of their debtors' property. United States v. $20,193.39, 16 F.3d 344, 346 (9th Cir.1994) (collecting cases); see Smith, supra, ¶ 9.04, at 70.6-70.7 (A mere equitable interest in the property was historically not deemed sufficient to confer standing.). 32 Whether this rule about general creditors may ever be relaxed in unusual circumstances is an issue we need not decide. In the related context of criminal forfeiture, some circuits have said never. For example, a line of cases holds: 33 [A] general creditor can never have an interest in specific forfeited property, no matter what the relative size of his claim vis-a-vis the value of the defendant's post-forfeiture estate. Were it otherwise, the court litigating the forfeiture issue would be converted into a bankruptcy court and would not be able to grant forfeiture to the government until it determined that no general creditor would be unable to satisfy its claim against the defendant. 34 United States v. BCCI Holdings (Lux.), S.A., 46 F.3d 1185, 1191-92 (D.C.Cir.1995); accord United States v. Watkins, 320 F.3d 1279, 1283 (11th Cir.2003); United States v. Ribadeneira, 105 F.3d 833, 836-37 (2d Cir.1997); United States v. Campos, 859 F.2d 1233, 1237-38 (6th Cir.1988). Other courts say hardly ever. See United States v. Reckmeyer, 836 F.2d 200, 206-08 (4th Cir.1987) (general creditors may have claim where criminal forfeiture reaches all discovered and undiscovered assets of debtor). Here, the competing general creditors are more than a mere abstraction: in light of the other murder allegations, there are at least seventeen other families of victims with potential wrongful death claims against Whitey Bulger. 35 Davis and Hussey offer two rebuttals to these arguments against their standing. They first argue, without authoritative support, that future lottery payments could not be part of the res subject to forfeiture, because there is no right to seize cash which does not yet exist and in rem jurisdiction is limited to the seizure of a physical object. As a result, they say, payments other than the one made in 1995 were never seized, and are therefore subject to their lien. 36 This argument is meritless. The complaint, the warrant, and the order all define the res as the one-sixth share of James J. Bulger in all present and future proceeds (emphasis added) from the winning ticket. That res was forfeited in its entirety to the United States at the time of the judgment in January 1996. There is no meaningful difference between this case and the forfeiture of a share of stock, which includes the right to receive future dividends. See, e.g., United States v. 2,538.85 Shares of Stock, 988 F.2d 1281, 1283-84 (1st Cir.1993) (discussing procedures for seizing intangible property in civil forfeiture cases). The contention that a res must be tangible is belied by long-running debate concerning jurisdiction over an intangible res. See generally 4A C.A. Wright & A.R. Miller, Federal Practice and Procedure § 1071 (3d ed.2002). 37 Davis and Hussey also argue that forfeiture of the right to lottery payments is impermissible under Massachusetts law making them unassignable, or at least that the question is open to doubt so they should be permitted to litigate it. In federal civil forfeiture proceedings, the definition of ownership interests is governed by state law. See $81,000, 189 F.3d at 33. However, the state law that Davis and Hussey cite hurts them instead of helping them. It provides, No right of any person to a prize shall be assignable except that ... any person pursuant to an appropriate judicial order may be paid the prize to which the winner is entitled.... Mass. Gen. Laws ch. 10 § 28 (2002). An appropriate judicial order issued by a federal court has forfeited a one-sixth share of the prize to the United States, consistent with state law. 38 The anguish of a parent whose child has been murdered is unending. Taking the property of the murderer is incomplete recompense, at best, but may provide some sense of justice. Congress has provided for justice a different way: it has provided that the government, which stands for all the citizens, may take the criminal's property by forfeiture, and it has limited those who may assert competing claims. Courts must adjudicate the laws which Congress enacts. If Davis and Hussey wish to pursue the matter, they should turn to the executive branch, to which the property was properly forfeit. See 18 U.S.C. § 981(d) (The Attorney General shall have sole responsibility for disposing of petitions for remission or mitigation with respect to property involved in a judicial forfeiture proceeding.).