Opinion ID: 4527258
Heading Depth: 1
Heading Rank: 2

Heading: order of forfeiture and money judgment

Text: Mr. Davalos advances two challenges to the forfeiture and money judgment entered against him. We address each in turn.
Mr. Davalos contends that the district court exceeded its subject-matter jurisdiction when it entered a preliminary order of forfeiture and order of 3 Case: 18-50784 Document: 00515388946 Page: 4 Date Filed: 04/20/2020 No. 18-50784 money judgment more than fourteen days after his sentencing and the entry of judgment. Existing caselaw dictates otherwise. The imposition of criminal forfeiture is governed by Federal Rule of Criminal Procedure 32.2. That rule provides that the court, when forfeiture is contested, must conduct a hearing after it finds the defendant guilty. Fed. R. Crim. P. 32.2(b)(1)(B). If the court “finds that property is subject to forfeiture, it must promptly enter a preliminary order of forfeiture setting forth the amount of any money judgment, directing the forfeiture of specific property, and directing the forfeiture of any substitute property if the government has met the statutory criteria.” Fed. R. Crim. P. 32.2(b)(2)(A). Unless it is “impractical” to do so, the court “must enter the preliminary order sufficiently in advance of sentencing to allow the parties to suggest revisions or modifications before the order becomes final as to the defendant under Rule 32.2.(b)(4).” Fed. R. Crim. P. 32.2(b)(2)(B). Rule 32.2(b)(4) provides that the preliminary forfeiture order becomes final either “[a]t sentencing” or “at any time before sentencing if the defendant consents.” Fed. R. Crim. P. 32.2(b)(4). The district court must “include the forfeiture when orally announcing the sentence or must otherwise ensure that the defendant knows of the forfeiture at sentencing.” Fed. R. Crim. P. 32.2(b)(4)(B). The court must also include the forfeiture order, either directly or by reference, in the judgment. Id. Here, while the written judgment entered by the district court included an order of forfeiture and a forfeiture money judgment, the government did not actually move for a preliminary order of forfeiture or for entry of money judgment until more than a month after sentencing. The preliminary order of forfeiture was not issued until 83 days after sentencing, and the order of money judgment was entered 97 days after sentencing. Mr. Davalos therefore argues that the district court lacked subject matter jurisdiction to enter either the preliminary order of forfeiture or the 4 Case: 18-50784 Document: 00515388946 Page: 5 Date Filed: 04/20/2020 No. 18-50784 order of money judgment. While subject matter jurisdiction is reviewed de novo as a question of law, Gandy Nursery, Inc. v. United States, 318 F.3d 631, 636 (5th Cir. 2003), this court’s precedent makes clear that Mr. Davalos’s argument is incorrect. The issue presented here is not jurisdictional, and plain error review applies. In United States v. Marquez, a $2 million money judgment was entered against the defendant. 685 F.3d 501, 509 (5th Cir. 2012). Although the district court included the money judgment in the defendant’s criminal judgment, it failed to enter a preliminary order of forfeiture. See id. at 507, 510. On appeal, the defendant argued that the money judgment was improperly issued because the district court failed to comply with Rule 32.2’s requirements. Id. at 509. The panel applied plain error review to the forfeiture issue because the defendant did not object to the district court’s failure to enter the preliminary order of forfeiture. See id. at 510. Applying plain error review, the panel affirmed the district court because the defendant could not show that his substantial rights were affected by the district court’s errors. Id. Although no preliminary order was entered, this court allowed the money judgment to stand. The Marquez panel deemed the rules set forth in Rule 32.2 “procedural requirements.” Id. at 509; see also id. at 510 (“Marquez has the burden of showing that these procedural defects affected his substantial rights.”). And “three-judge panels . . . abide by a prior Fifth Circuit decision until the decision is overruled, expressly or implicitly, by either the United States Supreme Court or by the Fifth Circuit sitting en banc.” Cent. Pines Land Co. v. United States, 274 F.3d 881, 893 (5th Cir. 2001) (quoting United States v. Kirk, 528 F.2d 1057 (5th Cir.1976)). We therefore apply plain error review to the issue at hand. 5 Case: 18-50784 Document: 00515388946 Page: 6 Date Filed: 04/20/2020 No. 18-50784 On plain error review, this court may not correct an error in the district court unless (1) there is error; (2) the error is plain; and (3) the error affects substantial rights. United States v. Gomez, 905 F.3d 347, 353 (5th Cir. 2018). Even when all three of those conditions are met, this court may only exercise its discretion to notice a forfeited error if the error “seriously affects the fairness, integrity, or public reputation of judicial proceedings.” Id. With respect to the first two prongs of the plain error analysis, Mr. Davalos has satisfied his burden. Rule 32.2’s mandates are clear, and the district court’s deviation from those mandates is plainly erroneous. But Mr. Davalos has not demonstrated that the district court’s failure to follow Rule 32.2 affected his substantial rights. “As a general rule, an error affects a defendant’s substantial rights only if the error was prejudicial.” United States v. Gonzalez-Rodriguez, 621 F.3d 354, 364 (5th Cir. 2010) (citing United States v. Olano, 507 U.S. 725, 734 (1993)). “Error is prejudicial if there is a reasonable probability that the result of the proceedings would have been different but for the error.” Id. (citation omitted). “The probability of a different result must be sufficient to undermine confidence in the outcome of the proceedings.” Id. (citation omitted). Mr. Davalos has not shown that there is a reasonable probability that the result of his proceedings would have been any different had the district court followed the appropriate procedures. See, e.g., Marquez, 685 F.3d at 510. As such, he is not entitled to relief on this ground.
In addition to his argument regarding Rule 32.2, Mr. Davalos asserts that the money judgment entered against him should be vacated in light of Honeycutt, a recent Supreme Court decision addressing forfeiture from an individual drug conspiracy defendant relating to the proceeds of a criminal 6 Case: 18-50784 Document: 00515388946 Page: 7 Date Filed: 04/20/2020 No. 18-50784 conspiracy. See Honeycutt v. United States, 137 S. Ct. 1626, 1630 (2017). We agree. 21 U.S.C. § 853 governs forfeiture of property constituting or derived from proceeds a defendant obtained as the result of certain drug crimes. Id. Honeycutt concerned how Section 853 operates when two or more defendants act as part of a conspiracy, id., as is the case here. The case established that, under Section 853, a defendant may not be held jointly and severally liable for property that his co-conspirator derived from the crime but that the defendant himself did not acquire. Id. at 1635. In this case, the government’s multi-party indictment was issued before publication of Honeycutt. It sought a money judgment of $5,980,000.00 against all defendants, for which they would be jointly and severally liable. At the sentencing hearing, the district court initially found “that there is a money judgment in the case of the amount alleged of [$]5,980,000, but that is joint and several liability.” The government then alerted the district court to Honeycutt, which was decided in the period between filing of the indictment and the sentencing hearing. After the government indicated that it was only seeking $1,794,000.00 because of Honeycutt, the following exchange occurred: THE COURT: The total amount of the money judgment is 5,980,000, but that is everybody combined. Not just you alone. And you said it was one what? AUSA: 1.794 million. THE COURT: Okay. Once – I don’t really know how to say this now because the case law has gotten really strange about joint and several liability. AUSA: And he would just be liable, not jointly and severally, just for him, for the 1.794. THE COURT: Okay, you’re not – this is not joint and several liability? AUSA: No, Your Honor. 7 Case: 18-50784 Document: 00515388946 Page: 8 Date Filed: 04/20/2020 No. 18-50784 THE COURT: All right. So your amount only, alone, would be 1.794 million, not the 5.98. Okay? Everybody else will be responsible for the rest of it. Okay? There was no more discussion regarding the money judgment. Mr. Davalos argues that the district court erred by entering a money judgment against him for $1.794 million without making any factual findings about whether he actually acquired that amount or other substitute property as a result of the crime. We review de novo. See United States v. Rasco, 123 F.3d 222, 226 (5th Cir. 1997). The government contends only that the district court “did hold a lengthy hearing where it was determined that the conspiracy was responsible for proceeds in the amount of $5,980,000” and that its imposition of the $1,794,000 money judgment against Mr. Davalos was “procedurally and substantively reasonable and should be affirmed.” It cites no law in support of that argument. And the Supreme Court made clear in Honeycutt that the provisions of Section 853(a) “are in accord with the limitation of forfeiture to property the defendant himself obtained.” Honeycutt, 137 S.Ct. at 1633. Because the money judgment entered against Mr. Davalos is without sufficient factual support, it should be vacated and this case remanded for the purpose of making factual findings regarding the appropriate money judgment.1 1 Given this finding, we do not address the parties’ dispute regarding whether the district court should have required the government to make a showing under Section 853(p) prior to entering the money judgment. We note, however, that even Section 853(p)—“the sole provision of § 853 that permits the [g]overnment to confiscate property untainted by the crime”—is limited to property “up to the value of the tainted property.” Honeycutt, 137 S.Ct. at 1633–34 (internal quotation marks and citation omitted). As explained above, the district court here made no factfinding regarding that value. 8 Case: 18-50784 Document: 00515388946 Page: 9 Date Filed: 04/20/2020 No. 18-50784