Court Opinion

ID: 9408894
Source: CourtListenerOpinion
Date Created: 2023-07-14 00:00:38.917287+00
Date Added: 2024-06-11T17:20:47.533362
License: Public Domain

Case: 22-50763          Document: 00516819620             Page: 1      Date Filed: 07/13/2023

               United States Court of Appeals
                    for the Fifth Circuit                                          United States Court of Appeals
                                                                                            Fifth Circuit

                                      ____________                                        FILED
                                                                                       July 13, 2023
                                        No. 22-50763                                   Lyle W. Cayce
                                      ____________                                          Clerk

   United States of America,

                                                                       Plaintiff—Appellee,

                                             versus

   David Davalos, Sr.,

                                               Defendant—Appellant.
                      ______________________________

                      Appeal from the United States District Court
                           for the Western District of Texas
                              USDC No. 2:16-CR-1115-11
                      ______________________________

   Before Haynes and Engelhardt, Circuit Judges, and deGravelles,
   District Judge. *
   Per Curiam: **
          Appearing before us again after remand, this sentencing-related case
   concerns whether the district court: (1) ordered the proper amount of money
   to be forfeited; and (2) adhered to our previous directives to conform the

          _____________________
          *
             United States District Judge for the Middle District of Louisiana, sitting by
   designation.
          **
               This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-50763        Document: 00516819620             Page: 2      Date Filed: 07/13/2023

                                        No. 22-50763

   written judgment to the oral sentence. For the reasons set forth below, we
   AFFIRM in part, REVERSE in part, and RENDER a modified judgment.
                           I. Facts and Procedural History
           Appellant David Davalos, Sr., was charged with conspiracy to possess
   with intent to distribute five or more kilograms of cocaine and with the use
   and maintenance of a premises for the purpose of distributing cocaine. The
   indictment included, inter alia, a notice of demand for forfeiture of certain
   real property, and a money judgment of $5,980,000 with a provision as to
   substitute assets.
           Davalos pleaded guilty to the charged offenses without a plea
   agreement. The following offense conduct was set forth in the PSR: 1
   Between October 2012 and August 2016, law enforcement agencies
   investigated the drug trafficking activities of the Genaro Balboa-Falcon Drug
   Trafficking Organization (“Balboa-Falcon” or “DTO”), which was based in
   Mexico. The DTO was involved in smuggling kilograms of cocaine from
   Mexico into the area of Crystal City, Texas. Cocaine distribution took place
   out of at least three “crack houses” in Crystal City. Davalos operated and
   maintained one of the “crack houses.”
           After the cocaine had been distributed and sold from the Crystal City
   locations, coconspirators would gather the drug proceeds gained from the
   sales; other coconspirators would transport the proceeds back to Mexico.
   Nearly 230 kilograms of cocaine were distributed during the duration of the
   conspiracy (i.e., approximately five kilograms of cocaine each month). Each

           _____________________
           1
            The factual basis in support of Davalos’s guilty plea was similar to the offense
   conduct detailed in the PSR.

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   “crack house” sold roughly 1.5 kilograms of cocaine. Over the course of the
   conspiracy, the total drug proceeds were equal to nearly $5,980,000.
          The district court sentenced Davalos to 235 months of imprisonment
   on each count of conviction and ordered the prison terms to be served
   concurrently. It also sentenced Davalos to five total years of supervised
   release and imposed certain conditions associated with that supervised
   release.
          In relevant part, the district court imposed a condition requiring
   Davalos to live in a residential reentry center for six months after his release
   from prison. The court stated that it imposed the condition “out of an
   abundance of caution” because it was uncertain whether Davalos would have
   a “valid place” to live after he was released. The court indicated that, if
   Davalos had a place to live, probation “would file a motion”; the court
   asserted that it then would “remit” the condition. The court instructed the
   probation officer to “put [ ] in [her] chronos” that the condition would be
   remitted if Davalos “ha[d] a valid residence to go to when he [got] out.” The
   judgment reflected the imposition of a condition requiring Davalos to live in
   a residential center for six months but did not state that the condition would
   be remitted if he had a valid residence to go to following his release from
   prison.
          The district court additionally imposed the standard condition of
   supervised release providing that, unless Davalos obtained permission from
   the court, he was prohibited from communicating or interacting with
   someone whom he knew had been convicted of a felony or was engaged in
   criminal activity. The district court orally stated that Davalos was allowed to
   associate with his son, brothers, nephew and six others who were exempted
   from the condition. The written judgment did not set forth the announced

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   exceptions to the standard condition or name the people with whom the court
   granted Davalos permission to associate.
              In addition to imposing sentence, the district court addressed the
   forfeiture demand. The court initially pronounced that there was “a money
   judgment in the case of the amount alleged of [$]5,980,000, but that is joint
   and several liability.” However, the government instructed the court that it
   only sought a money judgment of $1,794,000. The government referred to
   Honeycutt v. United States, 581 U.S. 443 (2017), 2 wherein the Supreme Court
   concluded that a defendant is not jointly and severally liable under 21 U.S.C.
   § 853 for any property that his coconspirator derived from the offense but
   that he did not acquire himself. The district judge, then, concluded that the
   amount of the money judgment was $5,980,000 for “everybody combined,”
   but the amount attributable to Davalos alone was $1,794,000. The judgment
   included a money judgment stating that Davalos must forfeit a sum of money
   equal to $1,794,000.
              Davalos filed an appeal in which he, inter alia, challenged the money
   judgment and alleged that it was inconsistent with Honeycutt. See United
   States v. Davalos, 810 F. App’x 268, 272-73 (5th Cir. 2020) (“Davalos I”).
   He argued that the district court failed to make any factual findings as to
   whether he actually acquired $1,794,000 or other substitute property as a
   result of the crime. Id. at 273. We agreed, see id. at 272-73, reasoning that the
   money judgment lacked sufficient factual support and ordered that it be
   vacated and remanded for the purpose of making factual findings as to the
   appropriate money judgment in accordance with Honeycutt. Id. at 270, 273,
   276.

              _____________________
              2
                  Honeycutt was decided after the filing of the indictment and before the sentencing
   hearing.

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          Moreover, we noted that both parties acknowledged on appeal that
   there were conflicts between the written judgment and the orally pronounced
   sentence as to several conditions of supervised release. Id. at 275. We
   identified two conflicts: one with condition regarding Davalos’s
   communication or interaction with persons whom he knew had been
   convicted of a felony or engaged in criminal activity, the other with the
   condition regarding the requirement that Davalos live in a residential reentry
   center for six months after his release from prison. First, we observed that
   the district court gave permission to associate with specific individuals
   exempted from the known-felon condition, yet “[t]hat amendment to the
   standard condition d[id] not appear in the written judgment.” Id. Second,
   we explained, despite the court stating that the residential-reentry condition
   would be “remitted” if he had a “valid residence to go to” after his release
   from prison, the judgment did not reflect that the condition could be
   remitted. Id. Thus, we reasoned that the case should be remanded to the
   district court to allow it to conform the judgment to the oral sentence. Id. at
   270, 274, 276. 3
          Upon remand, the district court entered an order addressing the
   issues for which the case had been remanded. Again, it ordered a money
   judgment in the amount of $1,794,000. The district court found that 1.5
   kilograms of cocaine were distributed each month through the “crack house”
   operated by Davalos; the length of time of the conspiracy was 46 months; and
   the “amount for each kilo was $26,000 per kilo.” Accordingly, the district
   court concluded that “1.5 kilos per month multiplied by 46 months and
   multiplied by $26,000 totals $1,794,000.”

          _____________________
          3
             The Supreme Court subsequently denied a writ of certiorari. Davalos v. United
   States, 1415 S. Ct. 1518 (2021).

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          As to the conditions of supervised release, the district court found that
   an amended judgment was not required. The district court rejected this
   Court’s decision that the orally pronounced conditions conflicted with those
   in the judgment. Specifically, the district court indicated that its naming of
   the family members with whom Davalos was permitted to interact was not an
   “amendment” to the standard condition precluding him from associating
   with known felons. It explained that it was informing Davalos that he had the
   court’s “permission to interact with [those] family members, as stated in the
   condition,” and noted that it “reserve[d] the right to grant or revoke
   permission to [the] list in the future.” It then stated that, if such permission
   were granted or revoked, the court could do so via the United States
   Probation Office or through an order or oral pronouncement on the record.
          Further, the district court noted that it did not intend to issue an
   amended condition as to where Davalos could live after his release. The
   district court explained that it was merely informing Davalos “of the process
   to change [the] condition, if necessary,” such that an amendment was
   unnecessary. The court noted that, if Davalos had a place of residence upon
   his release, “probation will notify the [c]ourt and the condition will be
   amended at that time.”
          Davalos timely appealed, raising two issues. First, Davalos argues that
   the district court’s forfeiture order was erroneous and that it should
   determine an award based on the property Davalos “actually acquired.”
   Second, he argues that the district court erroneously declined to conform the
   written judgment to its oral pronouncement of sentence, contrary to our
   dictates in Davalos I.
                             II. Standards of Review:
          We review the district court’s findings of fact pertaining to a forfeiture
   order for clear error, and the question of whether those facts constitute

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                                     No. 22-50763

   legally proper forfeiture de novo. United States v. Ayika, 837 F.3d 460, 468
   (5th Cir. 2016).
          We review de novo a district court’s application of a remand order,
   including whether the district court’s actions on remand were foreclosed by
   the law-of-the-case doctrine or the mandate rule. United States v. Carales-
   Villalta, 617 F.3d 342, 343 (5th Cir. 2010).
                             III. Order of Forfeiture:
          We first consider Davalos’s forfeiture challenge. Davalos contends
   that the district court erred because it “did not determine what portion of the
   $1.794 million was ‘actually acquired’ by Davalos as directed by Honeycutt.”
   But the district court did not need to identify which portion of the $1.794
   million Davalos “actually acquired.”
          Under 21 U.S.C. § 853, a person convicted of certain drug crimes, like
   Davalos’s crimes, “shall forfeit to the United States … any property
   constituting, or derived from, any proceeds the person obtained, directly or
   indirectly, as the result of such violation.” 21 U.S.C. § 853(a)(1). “In
   Honeycutt, the Supreme Court read the phrase ‘obtained ... as the result of
   such violation’ to mean that the defendant himself must ‘get’ or ‘acquire’
   the tainted property.” United States v. Moya, 18 F.4th 480, 484 (5th Cir.
   2021) (quoting Honeycutt, 581 U.S. at 449). “This excludes ‘joint and several
   liability’ for property obtained not by the defendant but by a co-conspirator.”
   Id. (citing Honeycutt, 581 U.S. at 449-50); see also Honeycutt, 581 U.S. at 453
   (“The plain text and structure of § 853 leave no doubt that Congress did not
   incorporate [the] background principles ... [of] conspiracy liability[.]”).
          “To illustrate its holding, Honeycutt posed this hypo[:] A farmer pays
   a student $300 per month to sell the farmer’s marihuana on a college campus;
   the farmer earns $3 million and the student earns $3,600.” Moya, 18 F.4th
   at 484 (citing Honeycutt, 581 U.S. at 448). “Under § 853(a)(1), the student

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   would forfeit the $3,600 he ‘obtained as a result of’ the drug trafficking,”
   “[b]ut not the remaining $2,996,400.” Id. (citing Honeycutt, 581 U.S. at 448-
   49). “Those tainted proceeds were ‘obtained’ by the farmer, not the
   student.” Id. at 484-85 (citing Honeycutt, 581 U.S. at 449-50). “In other
   words, to make the student forfeit the entire $3 million would impose ‘[j]oint
   and several liability,’ which ‘would represent a departure from § 853(a)’s
   restriction of forfeiture to tainted property.’” Id. at 485 (citing Honeycutt, 581
   U.S. at 449).
          According to Davalos, he is the student in the Honeycutt hypo. He
   concedes that “approximately $1.794 million flowed through [his] crack
   house.” But then, says Davalos, “the $1.794 million flowed south to Balboa-
   Falcon in Mexico,” meaning that the tainted drug proceeds were obtained by
   Balboa-Falcon, not by Davalos. He argues that because some portion of that
   tainted money was acquired by Davalos’s supplier, holding Davalos liable for
   the entire $1.794 million would mean that he would have to pay that portion
   of it from his own untainted assets.
          In addition to the Honeycutt hypo, Davalos relies on Moya. There, we
   decided that the defendant was not liable for the conspiracy’s entire $4
   million, when “[t]he evidence show[ed] that Moya [i.e., the defendant]
   earned up to $1,000 per kilo to distribute [a foreign drug trafficker’s]
   narcotics” and “made roughly $150,000 from these sales, while the rest of
   the money flowed south to [the foreign drug trafficker].” Moya, 18 F.4th at
   485. We noted that the foreign drug trafficker “obtained the vast majority of
   the trafficking proceeds through Moya’s efforts,” such that the foreigner,
   “not Moya, obtained those proceeds ‘indirectly’” and “Moya obtained only
   the $150,000 he personally acquired as profit for his trafficking.” Id. at 485.
   This, we said, “[was] the Honeycutt hypo to a T.” Id. Because the forfeiture
   order “ma[de] Moya responsible for drug proceeds that [the foreign drug
   trafficker] obtained,” we vacated the order and remanded the case to the

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   district court to determine an award based on the property that Moya
   obtained as a result of the conspiracy.” Id. at 485-86.
           But Davalos’s reliance on Moya and the Honeycutt hypo is misplaced.
   The central concern in the Moya case and the Honeycutt hypo was whether
   Moya or the Honeycutt student would be liable for the total amount of money
   gained from the conspiracy: either $4 million (in Moya’s case) or $3 million
   (in the Honeycutt student’s case). In both Moya and Honeycutt, the Courts
   concluded that joint-and-several liability under § 853(a)(1) is impermissible.
   This Court never decided what portion of the total $4 million – profits or not
   – Moya needed to forfeit. Moya, 18 F.4th at 485-86.
           Further, we have already held that a forfeiture order may reach
   beyond profits. See United States v. Olguin, 643 F.3d 384, 399-400 (5th Cir.
   2011). 4 In Olguin, the defendants argued that the district court erred when it
   computed the forfeiture amount based upon the gross amount of the
   conspiracy yielded, and not the net profits. Id. at 399. The defendants,
   however, acknowledged that § 853 forfeiture orders had been traditionally
   based on gross proceeds. Id. Relying on our opinion in United States v.
   Fernandez, 559 F.3d 303 (5th Cir. 2009), we explained that we had previously
   affirmed a district court’s forfeiture order characterizing proceeds as
   receipts, not profits. Id. “When considering the sale of contraband and the
   operation of a criminal organization,” we explained that we previously held
   in the Fernandez case “that the defendant in Fernandez could not, on
   appellate review,        render     the district       court’s     proceeds-not-profits
           _____________________
           4
               This Court in Moya did not address the Olguin case. Moreover, the Supreme
   Court in Honeycutt made no specific holding about “profits,” rather that joint and several
   liability is impermissible under § 853(a)(1). Honeycutt, 581 U.S. at 448. To the extent that
   Moya and Olguin conflict, Olguin controls. See Arnold v. U.S. Dep’t of Interior, 213 F.3d
   193, 196 n.4 (5th Cir. 2000) (“[U]nder the rule of orderliness, to the extent that a more
   recent case contradicts an older case, the newer language has no effect.”).

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   characterization of the forfeiture order as plainly erroneous.” Id. at 400.
   Accordingly, the Olguin defendants’ argument failed, and we affirmed “the
   district court’s judgment that the forfeiture order apply to gross receipts, and
   not simply profits.” Id.
          We also noted that “there is a logical inconsistency in holding that a
   forfeiture order reaches only profits and not receipts in a context where
   narcotics are illicitly trafficked for profit.” Id. “Such a holding,” we
   explained, “would excuse monies spent on the cost of running the conspiracy
   and the enterprise,” like, in the Olguin defendants’ case, “the cost of renting
   a U–Haul, the monies spent on the communications apparatus erected to
   further the enterprise, and any other monies expended to fuel the
   conspiracy.” Id. But, we concluded, “the [Comprehensive Forfeiture Act,
   which includes § 853,] was intended to reach every last dollar that flowed
   through the criminal’s hands in connection with the illicit activity.” Id.
   “Were we to hold otherwise, and the [Olguin defendants’] arguments
   embraced, it would essentially mean that criminal defendants have an in-road
   by which to thwart Congressional intent in wanting to punish parties for their
   involvement in a criminal enterprise.” Id.
          So, where a forfeiture order should reach “every last dollar that
   flowed through a criminal’s hands,” id., we need not remand, as Davalos
   suggests, for the district court to “determine an award based on the property
   that Davalos actually acquired.” Davalos is one trafficker in a scheme of at
   least three trafficking houses, and it is clear, based off Davalos’s own
   admission, what precise amount of the total operation flowed through his
   hands, $1,794,000, as opposed to the total $5,980,000. By ordering Davalos
   to pay only the $1,794,000 – and not the $5,980,000 – the district court
   applied the central holding in Honeycutt: that joint and several liability is not
   permitted under § 853(a)(1). Honeycutt, 581 U.S. at 448. Because the district

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   court’s order reaches all $1.794 million that Davalos concedes “flowed
   through [his] crack house,” we find no error. 5
                        IV. Other Provisions of Sentence:
          We next address Davalos’s argument that the district court failed to
   adhere to our previous directives to conform the written judgment to the oral
   sentence. Davalos maintains that the district court disagreed with this
   Court’s explicit mandates and refused to modify the judgment as directed.
   And he is correct.
          “Under the law of the case doctrine, an issue of fact or law decided on
   appeal may not be reexamined either by the district court on remand or by
   the appellate court on a subsequent appeal.” United States v. Matthews, 312
   F.3d 652, 657 (5th Cir. 2002) (quoting Tollett v. City of Kemah, 285 F.3d 357,
   363 (5th Cir. 2002)). “Without this doctrine, cases would end only when
   obstinate litigants tire of re-asserting the same arguments over and over
   again.” Id. “Moreover, the doctrine discourages opportunistic litigants
   from appealing repeatedly in hopes of obtaining a more sympathetic panel of
   this court.” Id. (citation omitted).
          A specific application of the general doctrine of law of the case, the
   mandate rule, requires a district court to follow “the letter and spirit of the
   mandate by taking into account the appeals court’s opinion and
   circumstances it embraces.” United States v. Pineiro, 470 F.3d 200, 205 (5th
   Cir. 2006). The mandate rule, however, has three exceptions that, if present,
   would permit a district court to exceed our mandate on remand: “(1) The
   evidence at a subsequent trial is substantially different; (2) there has been an
   intervening change of law by a controlling authority; and (3) the earlier
          _____________________
          5
            The government argues that Davalos waived his forfeiture challenge. Because
   Davalos’s claim fails on the merits, we decline to address the waiver argument.

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   decision is clearly erroneous and would work a manifest injustice.”
   Matthews, 312 F.3d at 657 (citation omitted). We have adopted “a restrictive
   rule for interpreting the scope of the mandate in the criminal resentencing
   context.” Id. at 658.
          We expressly determined in Davalos’s initial appeal that the written
   judgment conflicted with the oral pronouncement of sentence as to the two
   particular conditions of supervised release. Davalos I, 810 F. App’x at 275-
   76. We identified the conditions and detailed the conflicts. See id. at 275. In
   particular, we explained that, while the district court orally modified the
   standard condition barring Davalos from associating with known felons and
   named specific persons with whom Davalos could associate, the written
   judgment did not include that information. Id. Likewise, we detailed that,
   while the district court orally pronounced that the condition requiring
   Davalos to live in a residential reentry center for six months would be
   remitted if he had a valid residence to go to after he was released from prison,
   the judgment omitted that contingency. Id. We held that the judgment
   broadened the restrictions of requirements of supervised release from the
   oral sentence, concluded that the proper remedy was to remand the case to
   the district court to amend the judgment to the oral sentence, and ordered
   that the case be remanded for the district court to conform the judgment to
   its oral sentence as to the two conditions. Id. at 270, 274, 276. We did not
   leave the district court the option to ignore our order.
          The district court did not adhere to our directives. Rather, it rejected
   our decision that there was a conflict between the judgment and the oral
   sentence, determining that there only was an “ambiguity.” It clarified that
   the statements      excluded from the written judgment              were not
   “amendments.” Rather, it explained that it merely: (1) granted Davalos
   permission to interact with certain family members with respect to the
   associating-with-known-felons condition; and (2) informed him of the

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   process to change the residential-reentry condition in the future. The district
   court, therefore, declined to conform the judgment to the orally pronounced
   sentence and instead chose to clarify its intentions as to the conditions of
   supervised release.
          By ignoring our holding that there was a conflict and refusing to
   modify the judgment in accordance with our order, the district court violated
   the mandate rule. See Pineiro, 470 F.3d at 205; Matthews, 312 F.3d at 658.
   See United States v. Bagley, 639 F. App’x 231, 232-33 (5th Cir. 2016). But no
   exception to the mandate rule applies in this instance. See Matthews, 312 F.3d
   at 657 (discussing exceptions).
          Appellate courts may “affirm, modify, vacate, set aside or reverse any
   judgment . . . and may remand the cause and direct the entry of such
   appropriate judgment.” 28 U.S.C. § 2106. We have construed § 2106 to
   confer discretion on this Court to reform the judgment or to remand for the
   district court to do so. United States v. Hermoso, 484 F. App’x 970, 972-73
   (5th Cir. 2012); see, e.g., United States v. Wheeler, 322 F.3d 823, 828 (5th Cir.
   2003) (remanding to correct judgment in light of conflict); United States v.
   Rodriguez-Barajas, 483 F. App’x 934, 935-36 (5th Cir. 2012) (affirming
   without remand after modifying the written judgment to excise a special
   condition of supervised release not orally pronounced). Seeing that the
   district court did not follow our dictates on remand, we conclude that it is
   proper to reform the judgment at this juncture.
          The two contested conditions of supervised release are modified as
   follows:
          (1) The defendant shall reside in a residential reentry center for a term
   of Six (6) months. The defendant shall follow the rules and regulations of the
   center. Should the defendant have a valid place of residence at the time of
   his release, probation shall notify the Court which shall amend that portion

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   of this order to delete the requirement to reside in a residential reentry.
   Further, once employed the defendant shall pay 25% of his/her weekly gross
   as long as it does not exceed the contract rate.
          (2) The defendant shall not communicate or interact with someone
   the defendant knows is engaged in criminal activity. If the defendant knows
   someone has been convicted of a felony, the defendant shall not knowingly
   communicate or interact with that person without first getting the permission
   of the Court.       Notwithstanding this condition, the Court permits
   communication with the following family members: David Davalos, Jr.,
   Jacinto Davalos, Bruce Davalos, Maricela Davalos, Ronald Davalos, and
   William Davalos. The court retains the right to revoke its permission at any
   given time as to any of these individuals.
                                         V.
          The district court did not err in calculating the proper forfeiture
   amount. It did err, however, in failing to follow the mandate of this Court to
   conform the written judgment to the oral pronouncement of sentence.
   Accordingly, we AFFIRM in part, REVERSE in part, and RENDER a
   modified judgment in accordance with this opinion.

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