Court Opinion

ID: 3022386
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:26:51.343862+00
Date Added: 2024-06-11T11:47:33.280251
License: Public Domain

United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 98-1793
                                   ___________

United States of America,            *
                                     *
            Appellee,                *
                                     *
      v.                             *
                                     * Appeal from the United States
$7,990.00 in U.S. Currency,          * District Court for the
                                     * District of Minnesota.
            Defendant,               *
                                     *
George James Fiorentino,             *
                                     *
            Claimant/Appellant,      *
                                     *
                                ___________

                         Submitted: December 7, 1998
                             Filed: March 15, 1999
                                  ___________

Before FAGG, BEAM, and LOKEN, Circuit Judges.
                           ___________

LOKEN, Circuit Judge.

       In October 1995, Minnesota police seized $7,990 in cash and four baggies of
suspected contraband drugs from George James Fiorentino. In January 1996,
Fiorentino pleaded guilty to illegal drug trafficking and was sentenced to 130 months
in prison. In November 1996, the government filed a civil action to forfeit the cash
pursuant to 21 U.S.C. § 881(a)(6). The district court1 granted summary judgment for
Fiorentino, concluding the government’s unreasonable delay in instituting the
forfeiture proceeding violated Fiorentino’s due process rights. Rather than appeal,
the United States paid $7,990 to Fiorentino. He now appeals the district court’s
denial of his post-judgment motions for an award of prejudgment interest. We affirm.

       Prejudgment interest may not be awarded against the United States absent an
express waiver of its sovereign immunity, a time-honored principle known as the “no-
interest rule.” Waivers of this immunity may not be implied. “For well over a
century, this Court, executive agencies, and Congress itself consistently have
recognized that federal statutes cannot be read to permit interest to run on a recovery
against the United States unless Congress affirmatively mandates that result.”
Library of Congress v. Shaw, 478 U.S. 310, 316 (1986); see Arneson v. Callahan, 128
F.3d 1243, 1245 (8th Cir. 1997), cert. denied, 118 S. Ct. 2319 (1998).

       When the government has unsuccessfully sought to forfeit previously seized
property under 21 U.S.C. § 881(a)(6), no statute expressly authorizes the payment of
prejudgment interest to the successful claimant. The statute governing the return of
the seized property makes no mention of prejudgment interest:

      Upon the entry of judgment for the claimant in any proceeding to
      condemn or forfeit property seized under any Act of Congress, such
      property shall be returned forthwith to the claimant or his agent; but if
      it appears that there was reasonable cause for the seizure, the court shall
      cause a proper certificate thereof to be entered and the claimant shall
      not, in such case, be entitled to costs, nor shall the person who made the
      seizure, nor the prosecutor, be liable to suit or judgment on account of
      such suit of prosecution.

      1
       The HONORABLE DONALD D. ALSOP, United States District Judge for the
District of Minnesota.

                                         -2-
28 U.S.C. § 2465.2 The reference to “costs” in § 2465 does not authorize the payment
of interest on the value of the property being returned. “A statute allowing costs . .
. does not provide the clear affirmative intent of Congress to waive the sovereign’s
immunity” from an award of interest. Shaw, 478 U.S. at 321; see Jarboe-Lackey
Feedlots, Inc. v. United States, 7 Cl. Ct. 329, 337 (1985).

        The drug forfeiture statutes generally incorporate the customs laws relating to
seizure and forfeiture of property. See 21 U.S.C. § 881(d); 19 U.S.C. §§ 1602-18.
The customs statutes do not authorize payment of prejudgment interest on property
wrongfully seized by the United States Customs Service. To our knowledge,
Congress has never provided for payment of interest on property wrongfully seized
by customs officials, nor have we found any case in which the United States was
ordered to pay interest on property seized by customs officials and returned to a
claimant after the government failed to prove a right to forfeiture. Thus, it seems
clear there is no statutory basis for awarding interest on the $7,990 returned to
Fiorentino, as the Second Circuit concluded in Ikelionwu v. United States, 150 F.3d
233, 238-39 (2d Cir. 1998).
        Fiorentino relies on forfeiture cases in which two other circuits declined to
apply the no-interest rule and instead ordered the government to “disgorge benefits
that it has actually and calculably received from an asset that it has been holding
improperly” by paying constructive interest to the successful claimant. United States
v. $277,000 U.S. Currency, 69 F.3d 1491, 1498 (9th Cir. 1995); accord United States
v. $515,060.42 in U.S. Currency, 152 F.3d 491, 504-06 (6th Cir. 1998). We decline
to follow those decisions. Sovereign immunity does not depend upon whether the
government benefitted from its conduct in question. Nor can the no-interest rule be

      2
       By contrast, Congress has explicitly waived its sovereign immunity from
awards of prejudgment interest in other statutes, such as 26 U.S.C. § 7426(g) (claims
for wrongfully levied property), 28 U.S.C. §2411 (overpayments of federal tax), and
28 U.S.C. § 2644 (refunds of excess customs duties).

                                         -3-
dismissed by labeling the award Fiorentino seeks constructive interest, or
compensation for his loss of use of the property -- “the force of the no-interest rule
cannot be avoided simply by devising a new name for an old institution.” Shaw, 478
U.S. at 321.

       There is a constitutional exception to the “no-interest” rule. When the
government effects a “taking” of private property, the “just compensation” required
by the Fifth Amendment includes a payment for interest. See Shaw, 478 U.S. at 317
n.5; Albrecht v. United States, 329 U.S. 599, 602 (1947). But the forfeiture of
contraband is an exercise of the government’s police power, not its eminent domain
power. A forfeiture is not subject to the Fifth Amendment’s Takings Clause when it
deprives an innocent owner of his property. See Bennis v. Michigan, 116 S. Ct. 994,
1001 (1996); Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680-90
(1974).3 Likewise, the government’s temporary possession of seized property that is
ultimately returned to a forfeiture claimant such as Fiorentino is not a “taking” for
Fifth Amendment purposes. See United States v. One 1979 Cadillac Coupe De Ville,
833 F.2d 994, 1000-01(Fed. Cir. 1987). Thus, the “no-interest” rule applies to
forfeitures.

       In conclusion, claimants’ property rights are protected in forfeiture proceedings
by the Due Process Clause. See generally United States v. James Daniel Good Real
Property, 510 U.S. 43 (1993). In this case, that protection was meaningful indeed.
Fiorentino, who had no defense to the government’s probable cause to forfeit the
seized cash, was awarded title to that property under a due process analysis that is
based upon his loss of use because the government unreasonably delayed seeking
forfeiture. See United States v. Eight Thousand Eight Hundred and Fifty Dollars, 461

      3
       The present drug forfeiture statutes protect innocent owners with an innocent
owner exception to the forfeiture of property connected with drug offenses. See 21
U.S.C. §§ 881(a)(6) and (7).

                                          -4-
U.S. 555, 564 (1983). Fiorentino has no statutory or contractual claim to an award
of interest, as the claimants had in Henkels v. Sutherland, 271 U.S. 298, 302 (1926),
and United States v. Kingsley, 851 F.2d 16, 21 (1st Cir. 1988). He simply seeks to
enlarge his due process recovery with an award of prejudgment interest that in these
circumstances would clearly be a windfall. The no-interest rule bars this claim.

      The judgment of the district court is affirmed.

      A true copy.

             Attest:

                     CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                         -5-