Court Opinion

ID: 2961794
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:47:58.715658+00
Date Added: 2024-06-11T11:42:19.802056
License: Public Domain

USCA1 Opinion

	

          March 5, 1993                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1698                                    UNITED STATES,                                      Appellee,                                          v.                                    RALPH MALING,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                 [Hon. Andrew A. Caffrey, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                         Higginbotham,* Senior Circuit Judge,                                        ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            Joshua L. Dratel with  whom Gerald B. Lefcourt, P.C., was on brief            ________________            ________________________        for appellant.            Frederick  E.  Dashiell, Assistant  United  States  Attorney, with            _______________________        whom  A. John Pappalardo, United  States Attorney, and  Paul V. Kelly,              __________________                                _____________        Assistant United States Attorney, were on brief for appellee.                                 ____________________                                    March 5, 1993                                 ____________________        _____________________        *Of the Third Circuit, sitting by designation.                       BREYER, Chief Judge.   Ralph Maling appeals from a                               ___________             judgment  imposing a  fine  as partial  punishment for  drug             crimes.  He argues, in essence, that the court wanted to set             the fine at a level that would credit him with  the value of             property to be forfeited.  He adds that the court failed  to             do so.   And, the  Government, he says,  is responsible  for             this failure.   We find the  district court's determinations             lawful, and we affirm its judgment.                                          I                                      Background                                      __________                       The reader  should keep in mind  the following two             sets of background events:                       Forfeitures.     In  May   1990,  Maling  and  the                       ___________             Government entered  into a  Plea Agreement, in  which Maling             (and  several co-defendants) agreed to forfeit property that             would  have a  total value  of $2.8  million.   In September             1990,  Maling  signed  a  separate  agreement  in  which  he             promised  to  forfeit  assets  (listed  in  the  agreement's             Appendix  A)  including some  condominiums  owned by  J  & R             Properties, Inc.,  a firm  of which he  and James  Taglienti             each  owned half.  On September 20, 1990, the district court             entered  an  initial "Amended  Order  of Forfeiture,"  which             listed the  condominiums (among  other properties) as  items             subject to  forfeiture (the forfeiture itself  to take place             __________             only  after the  court had  an  opportunity to  consider any             competing  claims to the property).  See 21 U.S.C.   853(a),                                                  ___             (p) (providing for assets to be made subject to forfeiture);               853(n)(7) (providing  a mechanism for forfeiture  actually             to  occur); United States v. Schwimmer,  968 F.2d 1570, 1576                         _____________    _________             n.4 (2d Cir.  1992) (interpreting the  RICO equivalent of                853(n)(7) as implying that the Government does not take good             title to forfeited property until after competing claims are             determined); Amended Order of Forfeiture,    8.  On November             13,  1990, Taglienti  filed a  petition objecting,  under 21             U.S.C.   853(n), to the forfeiture of the J & R condominiums             on the ground that he (through J & R) owned  a half interest             in  them.    The  Government  then  refused  to  accept  the             condominiums  as satisfying  (in  part) Maling's  forfeiture             obligation.   And,  on  May 26,  1992,  the  district  court             entered a "Final Order of Forfeiture," which forfeited other             property, but which specifically  said that the condominiums             were not forfeited.                  ___                       The Fine.   In September 1990,  the district court                       ________             imposed a  fine of $250,000 as  partial punishment following             Maling's guilty plea to drug charges.  Maling appealed.  See                                                                      ___             United  States  v. Maling,  942  F.2d  808 (1st  Cir.  1991)             ______________     ______                                         -3-                                          3             ("Maling I").  He argued that the Plea Agreement had assumed               ________             that the  defendants  would  pay  no  more  (in  fines  plus             forfeitures) than  $2.8 million  total.   He added  that the             fine plus  forfeitures would exceed that amount.   We agreed             that the Plea Agreement did assume a $2.8 million "ceiling,"             but we held that  the Plea Agreement bound the  parties, not             the district  court.   Nonetheless, we concluded  that there             had  been "confusion during the sentencing proceedings about             the  meaning of the Plea  Agreement."  And,  because of that             confusion,  we  would "vacate  the  sentence  insofar as  it             imposes fines . .  . and remand for resentencing  in respect             to fines."  Id. at 811.  We said specifically:                         ___                       Although the Agreement does not bind the                       ________________________________________                       district    court,   we    believe   the                       _________________                       appellants should now be  sentenced with                       the  district court  fully aware  of the                       Agreement's  efforts  to  impose a  $2.8                       million cap upon  the appellants'  total                       financial liability.             Id. (emphasis added).             ___                       On  remand, the  district  court received  written             submissions  from  the   parties  and  held  three   further             hearings.  The  court said  that it wished  to impose  fines             such that  the "total  financial liability" would  amount to             $2.8 million.   The court then  entered judgment imposing  a                                         -4-                                          4             fine  of  $634,000  against Maling.    He  now appeals  that             judgment.                                         -5-                                          5                                          II                                 The Size of the Gap                                 ___________________                       The  district  court  made clear  that  its  basic             objective  in assessing a fine in the amount of $634,000 was             to  fill a gap  -- the gap  between the value  of the assets             forfeited and  the  $2.8 million  Plea Agreement  "ceiling."             Maling  says the  district court  was mistaken  in believing             there was such a gap.   In particular, he says, the  gap was             filled,  without   the  fine,   by  1)  his   forfeiture  of             condominiums  owned  by J  & R  Properties, Inc.,  valued at             $300,000,  and 2)  his forfeiture  of property  in Westwood,             valued at  $335,000.  The  Government refuses to  accept the             condominiums;  it agrees that  Maling forfeited the Westwood             property after entry  of the $634,000 judgment  and that the             judgment must  be modified to  take its value  into account.             (The  district court  expressly left  the judgment  open for             sixty  days so that it  could be modified.)   The Government             disagrees, however, about the value of that property.                         The upshot is that the  Government believes Maling             must pay a fine  of $344,000, while Maling believes  he need             not  pay any  fine  at all.    The difference  reflects  the             disagreements about whether the Government must accept the J             & R condominiums (worth $300,000) and about the value of the                                         -6-                                          6             Westwood property (the difference in valuations amounting to             $45,000).                       Before turning to the  disagreements, we point out             that the district court has broad legal powers to  determine             the amount of  the fine.  See Fed.  R. Crim. P. 11(e)(1)(B);                                       ___             Maling I, 942  F.2d at  810 (court not  bound by  sentencing             ________             recommendations derived from Plea Agreement) (citing cases);             21 U.S.C.   848(a)  (authorizing a fine of up  to $2 million             for one  of the  offenses of  which  Maling was  convicted);             U.S.S.G.     5E1.2(c)(4)   (Sentencing  Guidelines  do   not             constrain fines where statute  authorizes fines in excess of             $250,000); United States v. Savoie, No. 92-1920, slip op. at                        _____________    ______             14-15  (1st Cir.  Feb. 8, 1993)  (appellate review  of fines             imposed  by  the  district  court  is  under  "an  abuse-of-             discretion  rubric"  only).    The  court  was  not  legally             compelled to limit  its fine to the size  of the gap (though             it quite reasonably chose  to do so).  Similarly,  the court             was  not legally required to measure the gap precisely or to             engage  in  professional   matters  of  appraisal  or   make             technical  property law determinations in doing so.  The law             would permit the court to assess  its fine on the basis of a             rough estimate of the gap size, or on an assumption that the             Government would  probably, but not definitely, win disputed                               ________          __________                                         -7-                                          7             matters in respect to what was, or what was not, forfeitable             under  the Plea Agreement.   For this reason,  we review the             district court's judgments about "gap size" with a degree of             deference.                       a. The  J & R  Condominiums.  Maling  must concede                          _________________________             that  there is  a $300,000  gap, for,  in fact,  he  has not             forfeited  the J & R  condominiums.  Rather,  he argues that             the Government  should have  accepted  the condominiums  for                             ______ ____             forfeiture, and the district  court should have assessed the             fine  as if the government had done  so.  His claim that the                   _____             Government  had to  accept the  condominiums stems  from the             Plea Agreement, which says that  the parties will enter into             a "separate agreement"  that "specifically describe[s]"  the             "property  and  assets" to  be  forfeited.   That  "separate             agreement"  (as we have said)  lists the J  & R condominiums             among  those  assets.     Consequently,  says  Maling,   the             Government, having signed this "separate  agreement," cannot             later reject the assets that it listed.                       The Plea Agreement, however, contains an important             qualification.  It says  that "physical assets" will satisfy             the "forfeiture"  obligation only if  those physical  assets             are  "without any encumbrances."  This qualification affects             the "separate agreement" subsequently  made pursuant to  the                                         -8-                                          8             Plea Agreement.   Thus,  we read the  Government's September             1990 agreement,  accepting the forfeiture of  "[a]ny and all                                                            _____________             interest  of J & R  Properties, Inc." (our  emphasis) in the             condominiums  (not  merely  the  "interest"  of  Maling)  as             conditioned on  the  condominiums' being  unencumbered  when             forfeited.  As we  have said, after the parties  signed that             "separate agreement" and  after Maling (as J & R's President             and Treasurer) purported to convey the J & R condominiums to             the Government (but before  the forfeiture order was final),             Maling's J &  R co-owner  James Taglienti  filed a  petition             with the court, under  21 U.S.C.   853(n), objecting  to the             forfeiture  on  the  ground  that he  had  a  fifty  percent             interest  in the  condominiums.   The  Government asked  the             court  to omit  the condominiums  from its  final forfeiture             order because it considered the petition an "encumbrance."                       Maling  argues that  neither the  petition  (nor a             later-filed  state tax  lien,  which we  need not  consider)             amounts  to   an  "encumbrance."     First,  he   says  that             Taglienti's petition is without legal  merit, for Taglienti,             too,  was   involved  in  (or  knew   about)  relevant  drug             activities, which involvement would prevent him from  saving             his interests  in the condominiums from forfeiture.   See 21                                                                   ___             U.S.C.    853(c), (n)(6).  He adds that, even if Taglienti's                                         -9-                                          9             petition is otherwise  valid, the Government  received title             documents from J  & R's President and Treasurer  (Maling) in             "good faith," which fact, under Massachusetts law, means the             Government   takes  title   free  of   Taglienti's  asserted             interests.  Mass. Gen. L. ch. 155,   8; ch. 156B,   115; cf.                                                                      ___             United States v. New Silver Palace Restaurant, Inc., 1992 WL             _____________    __________________________________             404160  (E.D.N.Y.  Nov.  25,  1992)  (finding  shareholders'             rights  in respect to  corporate assets to  be an inadequate             basis for  a petition against  forfeiture under 21  U.S.C.               881).                       We  need not  consider  whether or  not Maling  is             correct about the merits  of Taglienti's claim, however, nor             need the district  court have done  so.  We read  the phrase             "without any  encumbrances" as  one who buys  property would             likely  read it,  namely  as imposing  upon the  conveyer an             obligation  to clear up any  asserted legal claims upon that             property prior to transfer, so  that the buyer will  receive             the property alone, instead  of receiving "the property plus             the obligation  to fight  a lawsuit" (regardless  of whether             the  lawsuit ultimately  turns out  to  be unfounded).   See                                                                      ___             American Law of Property   18.84 (A. James Casner ed., 1952)             ________________________             ("A pending  action assailing a vendor's  title or asserting             an interest therein or  a lien thereon of which  a purchaser                                         -10-                                          10             has notice is at least a cloud  on the title.  Since a court             will not compel a purchaser to 'buy a lawsuit,' the pendency             of  one  of the  character  indicated  is an  encumbrance.")             (citations omitted).   Such  a reading would  avoid imposing             upon the Government title-clearing obligations  that it does             not wish  to  undertake, without  (ordinarily)  harming  the             potential  transferor  (who  simply  would  retain  whatever             property interest  he previously  owned).  Maling  points to             nothing that  might suggest that this natural reading of the             agreement is incorrect.                         Such a  reading ends the argument.   To adjudicate             the  merits  of  Taglienti's  claim would  require  a  legal             proceeding (perhaps a rather  complicated one), as would any             effort to  demonstrate that  the Government (which  had long             known  that Taglienti  was Maling's  J &  R co-owner)  was a             "good  faith" transferee entitled to  clear title in all the             property, irrespective  of the merits of  Taglienti's claim.                       ____________             See Mass. Gen.  L. ch. 155,   8; ch.  156B,   115 (requiring             ___             "good faith" for transferee  of real estate from corporation             to take free of rights of owners of corporation).  Hence, we             see nothing unlawful about the district court construing the             Plea  Agreement's word  "encumbrance"  as  encompassing  the             Taglienti petition.                                         -11-                                          11                       Maling   also  claims   that  the   Government  is             "estopped"   from  refusing  to   accept  the  condominiums.             Estoppel, however, requires a statement or promise or action             that leads to reasonable reliance to one's detriment.   See,                                                                     ___             e.g., Restatement  (Second) of Contracts    90(1) (1981) ("A             ____  __________________________________             promise  which  the  promisor  should  reasonably expect  to             induce action or forbearance on the part of the promisee . .             .  and  which  does  induce such  action  or  forbearance is                ______________________________________________________             binding if injustice can  be avoided only by enforcement  of             the promise.") (emphasis added).  We cannot find a statement             or action by the Government, in respect to the condominiums,             that led Maling reasonably  to rely to his detriment  on the             Government's keeping the  condominiums despite a  pre-final-             order   "encumbrance"  which,  under   the  plea  agreement,             entitled it  to reject them.   The  Government, we  concede,             knew (as, of course, did Maling) that Taglienti was a  J & R             ____             co-owner  long  before  the  condominiums  appeared  on  the             "separate agreement" forfeiture list.  But, Maling points to             no statement  or action  that suggests that  the Government,             rather than Maling, was  responsible for preventing any such                                      ___________             legal  "cloud"  upon  the  property  from  arising,  or  for             removing  it  once  it arose.    We  also  concede that  the             Government,  for   a   time,  accepted   condominium   rents                                         -12-                                          12             (presumably  because  it anticipated  that  forfeiture would             transfer  the property  to the  Government  with retroactive             effect, 21 U.S.C.   853(c)).   But, we do not see how Maling             is  any the  worse  for its  having  done so  (assuming,  of             course,  that the Government pays  over to him  the rents it             received).    That  is  to  say,  we  do  not  see  how  the             Government's   returning   the    property   makes    Maling                            _________             significantly  worse  off  than  had  the  Government  never             included the  property on  the "separate agreement"  list in             ________             the first place.   The district court could  reasonably have             found  no "reliance to  his detriment" on  Maling's part and             therefore no "estoppel."                       Maling's  strongest argument is  that he wanted to                                                                ______             clear Taglienti's "encumbrance;" indeed, he asked the  court             to permit him  to prove that Taglienti  was not the kind  of             "good  faith"   or  innocent  owner  who   could  object  to             forfeiture of  his own  (i.e., Taglienti's) interest  in the             property.    See  21 U.S.C.     853(n)(6).    But, once  the                          ___             Government  told  the  court  that  it   did  not  want  the             condominiums,  the court simply  denied Maling's  request as             "moot."  Maling,  in essence, asks, "How  can the Government             turn  down the  property  as encumbered  without letting  me             remove the encumbrance?"                                           -13-                                          13                       The short, conclusive answer to this question lies             in  the Plea Agreement itself.   It says  the Government can             turn  down  encumbered  property.    It  does  not  say  the             Government  must   give  Maling   a  chance  to   remove  an             encumbrance.  And, we  will not read  such a right into  the             Agreement, at least, in  respect to this kind of  removal of                                                      ____             an  encumbrance.    Maling  does  not  offer  to  show  that             Taglienti  does not own the  property.  Rather,  he wants to                                 ___             intervene  in the  special  statutory  "third  party  versus             Government" proceedings  to show  that the  Government could                                                                    _____             defeat  Taglienti's interest, if it decided to try to do so.             21  U.S.C.   853(c), (n)(6).  But, the statute creates those             special  proceedings,  placing  a  special  burden on  third             parties to prove that  they have "clean hands," in  order to             benefit the Government.  See S. Rep. No. 225, 98th Cong., 2d                     ______________   ___             Sess. 82, 191-92, 208,  reprinted in 1984 U.S.C.C.A.N. 3182,                                     ____________             3265,   3374-75,  3391  (expressing   purposes  of  removing             obstacles  in the  way of  federal law  enforcement agencies             seeking   forfeiture,   of  ensuring   expedition,   and  of             protecting third parties); United  States v. Regan, 858 F.2d                                        ______________    _____             115, 121 (2d  Cir. 1988) ("orders directed  at third parties             are strong medicine  and should not  be used where  measures             that are adequate  and less burdensome on  the third parties                                         -14-                                          14             are available.").  They are not  designed to help defendants             who  would   like  to  see  some   other  person's  property                                                _____             forfeited, thereby perhaps obtaining credit.  Thus, we think             the court  acted lawfully  in denying Maling's  petition for             such a proceeding.                       Is this result unfair to Maling?  One  can imagine             circumstances  that could  make it  seem so.    Suppose, for             example,   that  the  Government,  knowing  full  well  that             Taglienti would  likely create an encumbrance  (i.e., file a             petition objecting  to the  forfeiture) led Maling  down the             garden  path.   On the  other hand,  one can  easily imagine             circumstances  that  indicate the  contrary.    Suppose, for             example,  that the Government  assumed that  Taglienti would             not  object  (or  that  Maling could  persuade  him  not  to             object); or, suppose that the Government did not think about             the  matter and Maling simply  saw a fleeting opportunity to             satisfy a portion of his debt with  someone else's property.             Regardless, this kind of  ultimate fairness or unfairness to             Maling would arise out  of facts and circumstances  of which             we  know  little.    And,  it is  beside  the  point.    The             Government and  Maling signed  an Agreement the  language of             which placed the  risk of this,  and any other,  encumbrance             upon Maling.   In all likelihood the  Government wanted this                                         -15-                                          15             language so that it would not have to become involved in the             kind of  property law disagreements that  Maling now raises.             The district court  so interpreted the Agreement.   It based             its  fine  upon  that  interpretation.    In  our  view, the             district court's view is  reasonable; and the resulting fine             is therefore lawful.                       b. The Westwood Property.  Maling argues about the                          ______________________             value of his forfeited Westwood property, property which was             not included in the September 1990 "separate agreement" list             and which he offered to forfeit for the first  time in about             September 1991.   An  appraisal made about  seventeen months             earlier (before  the plea agreement) valued  the property at             $335,000.  By late 1991, when Maling offered the property to             the Government,  its value  had declined  to $245,000.   The             Government told  the court  that, for purposes  of assessing             the  "gap-filling" fine,  it would  assume the  property was             worth  $290,000, thereby "splitting  the difference" between             the two evaluations.                       Maling argues that he  should be credited with the             higher  valuation.   But,  we can  find  no promise  by  the             Government that it would do so.  And, in the absence of such             a  promise, we  are aware of  no law that  would prevent the             Government from advising the  court that the property should                                         -16-                                          16             be assessed at $290,000 for "gap-filling"  purposes.  In the             absence of  some specific  agreement about valuation  dates,             "splitting the difference" does not seem unreasonable to us;             and we do  not know why  the district  court could not  have             reached a similar conclusion.                                         -17-                                          17                                         III                                 Recommending a Fine                                 ___________________                       The Plea  Agreement, while leaving the  court free             to impose a fine,  nonetheless prohibits the Government from             recommending  a fine.   See  Maling I,  942 F.2d  at 810-11.             ____________            ___  ________             Maling says  that  the Government  violated this  obligation             when counsel told the district court, for example:                        If the Court is entertaining the thought                       of a fine,  my suggestion  in [sic]  how                       that should  be fashioned . .  . is that                       the Court  should  issue an  order of  a                       criminal fine in the amount of $634,000.             Taken  out of context, this statement, and a few others like             it, might suggest a not-very-subtle attempt to avoid the "no             recommendation"  obligation.  Cf.  United States  v. Canada,                                           ___  _____________     ______             960 F.2d  263, 269  (1st Cir. 1992)  (we will not  allow the             Government to pay "lip service" to a plea agreement and then             do  "end-runs" around it).   But, in context, the statements             are perfectly proper.                       The context  reveals that  the district  court had             already  decided to impose a  fine despite the  absence of a             fine recommendation.  The context makes clear that the court             wanted, or could  benefit from, discussion, recommendations,             and argument from all counsel, about the amount of fine that                               ___             would  keep the  total  monetary liability  within the  $2.8                                         -18-                                          18             million "ceiling."  Government counsel, stating specifically             that  the "U.S. Government is not recommending to this Court             that they [sic]  impose a fine," went  on to respond  to the             court's request to  help it determine  the proper amount  of             the fine that the court independently had decided to impose.             We see no violation of the Plea Agreement.                       The judgment of the district court is                       Affirmed.                       _________                                         -19-                                          19