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finding under a California statutory forfeiture law (with the same language "subject to the order of the court" language found in Ala. Code § 15-5-14) that "the Defendant currency could not be handed over to the federal government without a state court turnover order because the state court had already exerted in rem jurisdiction over the property
Summary of this case from United States v. $389,820.00 in U.S. CurrencyOpinion
No. C-03-2547-SC
September 16, 2003
JUDGMENT
In accordance with this Court's ORDER GRANTING DEFENDANT'S MOTION to DISMISS, it is hereby ORDERED, ADJUDGED, and DECREED that:
Judgement shall be entered in favor or DEFENDANT and against PLAINTIFF.
IT IS SO ORDERED.
ORDER GRANTING CLAIMANT'S MOTION TO DISMISS AND FOR RETURN OF DEFENDANT PROPERTY TO THE JURISDICTION OF THE HUMBOLDT COUNTY SUPERIOR COURT
I. INTRODUCTIONThis case involves a forfeiture proceeding initiated by the Drug Enforcement Agency ("DEA") against Defendant currency. Claimant Paul Fields ("Claimant" or "Fields") brings this motion to dismiss the federal forfeiture proceeding and for the return of Defendant currency on the ground that the Federal Courts lack jurisdiction over Defendant currency. For the reasons stated below, this Court grants Claimant's motion dismissing the instant action and orders Defendant property be returned to the jurisdiction of the Humboldt County Superior Court for a proper determination of ownership. II. BACKGROUND
On March 5, 2000, law enforcement officers from the Arcata Police Department executed a state search warrant, duly authorized by the Humboldt County Superior Court, at the residence of Paul Sanderford located in Arcata, California. See Ex. A to Hinds Decl. In the back bedroom officers found and seized a duffel bag that contained $25,000, the Defendant currency. Id., Ex. B at p. 6. Fields, a visiting friend of Sanderford, was present during the search of the residence and claimed ownership of Defendant currency. Id. No criminal charges have ever been filed against Claimant relating to this incident or to the seizure of the funds.
On March 6, 2000, Claimant was served with a Receipt for Property Subject to Forfeiture and Personal Notice re: Forfeiture ("Receipt"). See Ex.B to Fields Decl. The Receipt stated that" procedures to forfeit this property were underway in Humboldt County and if Claimant contested forfeiture he should file a verified claim with the County Clerk's office. Id. On March 23, 2000, Claimant filed a timely Claim Opposing Forfeiture with the Humboldt County Superior Court. This is Case No. CV 000212, People of the State of California v. $25,000 in U.S. Currency, which is still pending to this date. Id., Ex. C.
On March 27, 2000, the Humboldt County Task Force referred Defendant currency to the DEA for commencement of federal forfeiture proceedings.See Hankins Decl. In a letter dated April 5, 2000, — the Office of the District Attorney for the County of Humboldt advised the DEA that they were "not proceeding on any asset forfeiture matters in state court on this case" and that there was `"no jurisdictional impediment to transferring to federal jurisdiction" Defendant property. See Ex. E to Hinds Decl. Both of these actions were taken without the consent or order of the Humboldt County Superior Court and at a time when Fields' verified claim contesting the forfeiture proceeding was still pending in said court. Michael Decl.
On December 6, 2000, the DEA forfeited Defendant currency. On February 24, 2003, Claimant filed a motion in this Court to set aside the forfeiture and sought return of Defendant currency. This Court, per Judge Chesney, held that the administrative forfeiture was void on the ground that notice to the Claimant was defective, and ordered that the government "shall either return the subject funds to [Fields] or reinstitute forfeiture proceedings". See Ex. F to Hinds Decl. Thereafter, on May 20, 2003, the Government filed its complaint for forfeiture against Defendant funds. The instant motion to dismiss thus ensued.
Claimant argues the Superior Court of Humboldt County obtained original, exclusive in ram jurisdiction over Defendant currency because of the seizure warrant and his pending action opposing forfeiture. As such, federal jurisdiction would require some affirmative act of abandonment or relinquishment on the part of the state court. Because the state court never issued a turnover order formally transferring the Defendant currency to the federal government, Claimant contends that federal jurisdiction is improper here because the federal court cannot assume in rem jurisdiction over a res that was already under the in rem jurisdiction of another court. Plaintiff contends their adoption of these funds was permissible and there is no barrier to federal jurisdiction over these proceedings. For the reasons stated below, this Court grants Claimant's motion to dismiss on the ground that the federal court lacks jurisdiction over Defendant currency, and orders the currency be returned to the jurisdiction of the Humboldt County Superior Court for a proper determination of ownership.
III. Discussion A. In rem Jurisdiction
A federal forfeiture action under 21 U.S.C. § 881 is an in rem action. United States v. $57.480.05 United States Currency' and Other Coins, 722 F.2d 1457, 1458 (9th Cir. 1984). A California statutory forfeiture action against Defendant property under the Health and Safety Code likewise is in rem. People v. One 1941 Chevrolet Coupe, 37 Cal.2d 283 (1951) (per curiam). The Supreme Court has long recognized that in suits which are in-rem — where control of the res at issue is essential to the court's jurisdiction — a court, whether state or federal, cannot assume in rem jurisdiction over a res that is already under the in rem jurisdiction of another court. Penn Gen. Casualty Co. v. Pennsylvania, 294 U.S. 189, 195 (1935). The purpose behind this rule is the preservation of comity between courts. The Supreme Court has therefore ruled that "the court first assuming jurisdiction over the property may maintain and exercise that jurisdiction to the exclusion of other courts." Id. Thus, a federal court must yield to a prior state proceeding. This Court therefore considers whether the seizure of Defendant currency pursuant to a state court warrant and Fields' claim opposing forfeiture constitute a level of exclusive control over the money that would bar federal proceedings underPenn General.
B. State Proceedings
In United States v. One 1985 Cadillac Seville, 866 F.2d 1142 (9th Cir. 1989), California police, acting without a warrant, seized currency and a vehicle. The state instituted forfeiture proceedings against the currency but took no action with respect to the seized vehicle. The Ninth Circuit held that there could be no federal in rem jurisdiction over the currency because of the prior and ongoing jurisdiction of the state court. Id. at 1145-46. It was held to be immaterial that the state did not oppose federal forfeiture of the funds or that the state case was inactive and California apparently was not seeking the res. Id. at 1145." With respect to the car, the court held that because it was the subject of "neither the state forfeiture complaint nor of any state court order," the district court properly exercised jurisdiction over it. Id. at 1146. Implicit in the Ninth Circuit's holding is the conclusion that under California law, property must be the subject of some state court order before state in rem jurisdiction will attach. C. Search Warrant
Court's have taken somewhat inconsistent approaches to the question of whether property seized pursuant to the execution of a state court issued search warrant is within the in rem jurisdiction of that court. This issue was recently addressed at length by this Court in an opinion by Chief Judge Patel. See In re Seizure of Approximately 28 Grams of Marajuana, 2003 WL 22023451, N.D.Cal., Aug 25, 2003. Approximately 28 Grams of Marajuana explained that courts which have held that seizure by police itself constitutes an assertion of jurisdiction over the seized items have done so based on the state statute governing custody of property seized by police. Id. at *6. For example, in Scarabin v. PEA, 966 F.2d 989 (5th Cir. 1992), the Fifth Circuit found that under Louisiana statutory law, the state court "had exclusive control over the res by virtue of issuing the search warrant that procured the seized funds." Approximately 28 Grams, 2003 WL at *7, (citing Scarabin, 966 F.2d at 993). The court based its decision on the provision of Louisiana's rules of criminal procedure governing the disposition of property seized by police pursuant to a warrant. According to the court, this section "clearly and unequivocally . . . provides that the state court asserts control over items seized pursuant to its warrant." Id. at 993-994. The relevant provision reads as follows:
When property is seized pursuant to a search warrant, it shall be retained under the direction of the judge. If seized property is not to be used a [sic] evidence or is no longer needed as evidence, it shall be disposed of according to law, under the direction of the judge. Scarabin, 966 F.2d at 994 (quoting La.Code.Crim.Pro. art. 167).
Similarly, in United States v. One 1979 Chevrolet C-20 Van, 924 F.2d 120 (7th Cir. 1991), the Seventh Circuit held that state law vested exclusive control over seized property in the state court from the moment of seizure. The court found that federal jurisdiction was barred because Illinois law did not allow state officials to transfer the van to federal authorities without a judicial order. The relevant state statute required that "[p]roperty taken or detained under this Section shall not be subject to replevin, but is deemed to be in the custody of the Director subject only to the order and judgment of the circuit-court having jurisdiction over the forfeiture proceedings." Id. at 122 (quoting Ill. Rev Stat., ch. 56 1/2 § 712(d), (f)(3)).
28 Grams of Marajuana notes that other courts have held that seizure of property pursuant to a state warrant does not establish exclusive state jurisdiction over the seized property preventing its voluntary transfer to federal authorities. See Madewell v. Downs, 68 F.3d 1030 (8th Cir. 1995); United States v. One 1986 Chevrolet Van, 927 F.2d 39 (1st Cir. 1991). These courts have reasoned that the state statutory provision at issue did not place all seized property within the court's in rem jurisdiction or disapprove of the voluntary turnover of seized property from state officials to federal agencies. Madewell, 68 F.3d at 1042. Therefore, deciding whether the principles of Penn General apply to the seizure of property pursuant to a warrant necessitates an analysis of the relevant state statute.
D. California Penal Code § 1536
California Penal Code § 1536, which governs the care of items seized by officers pursuant to a search warrant, states in relevant part:
All property or things taken on a warrant must be retained by the officer in his custody, subject to the order of the court to which he is required to return the proceedings before him, or of any other court in which the offense in respect to which the property or things taken is triable.
California courts have held that "[l]aw enforcement officials who seize property pursuant to a warrant issued by the court do — so on behalf of the court, which has authority pursuant to Penal Code section 1536 to control the disposition of the property." People v. Superior Court (Laff), 25 Cal.4th 703, 713 (2001). "The officers have no right in the property or in its possession, and have no authority over it except as the court may order." Perkinas v. City of West Covina, 113 F.3d 1004, 1011 (9th Cir. 1997), rev'd on other-grounds, 525 U.S. 234.
California case law also clearly establishes that section 1536 confers jurisdiction on state courts to hear non-statutory motions for return of property seized under a warrant. Id. "Even in the absence of statutory authorization, the superior court possesses the inherent power to conduct proceedings and issue orders regarding property seized from a criminal suspect pursuant to a warrant issued by the court." (Laff), 25 Cal.4th at 713. Consequently, courts retain jurisdiction to dispose of seized items after the disposition of the criminal case, or in the absence of any criminal proceeding. 28 Grams of Marajuana, 2003 WL at *11. "This jurisdiction over seized property exists separate and apart from the criminal matter by virtue of the judicial control over seized items conferred by statute, in much the same manner as in rem jurisdiction." Id.
The question of whether the extent of judicial control conferred by section 1536 is by itself sufficient to hold that, under Penn General, federal courts may not take jurisdiction over seized property without a turnover order has not been directly addressed by the courts. This Court's holding in 28 Grams of Marajuana approximated that result, stating that the extent of — control conferred by section 1536 "well might be sufficient on its own to find that . . . federal courts may not take jurisdiction over property seized by California state authorities". 28 Grams of Marajuana, 2003 WL at *11. However, in that case there was also a state court order mandating the return of the Defendant property which pre-dated the transfer of the property to the federal government. Consequently, the court did not need to rest its decision entirely on the fact that the property had been obtained pursuant to a state warrant and therefore did not. A district court has concluded that California law does not confer in rem jurisdiction over items seized pursuant to a warrant. See United States v. $639,470 U.S. Currency, 919 F. Supp. 1405 (C.D. Cal. 1996). However, that court was analyzing sections of the California Health Safety Code and did not address Penal Code section 1536.
This Court follows the holding in 28 Grams of Marajuana. While the extent of control conferred by section 1536 might "well be sufficient on its own" to find that the state court exerted jurisdiction over the property seized, here there is also the pending state court action opposing forfeiture. After Claimant's property was seized, state authorities issued him a receipt which clearly stated that state "procedures to forfeit this property are underway". Ex. B to Fields Decl. In response, Claimant timely filed a claim in state court opposing forfeiture. Both of these events pre-date the Defendant currency being transferred to the" federal government. This court finds that in such circumstances, the Defendant currency could not be handed over to the federal government without a state court turnover order because the state court had already exerted in rein jurisdiction over the property. Because no such order was obtained here, we find that — the federal government improperly exerted jurisdiction in the instant case and therefore remands the Defendant property to the jurisdiction of the Humboldt County Superior Court for a proper determination of ownership.
Especially so given that the warrant in this case clearly stated that the officers were to retain any seized property in their custody "subject to order of this court". Ex. A to Fields Decl.
As a final note, this Court reiterates certain points made by the Ninth Circuit in 1985 Cadillac Seville. The rule under Penn General is intended to prevent comity between courts, and as such, it is irrelevant whether the state agency or local authority consented or even initiated the transfer of the funds to the federal agency. "We have found no authority indicating that a failure on the part of the state court to protest the federal proceeding, or by the state to prosecute, allows the district court to assume jurisdiction." 1985 Cadillac Seville, 866 F.2d at 1145. If the federal authorities wanted this money, and/or the District Attorney's office wanted them to have it, they were bound to seek a turnover order from the superior court from the county in which the money was seized.
IV. CONCLUSION
Because the Defendant property was seized pursuant to a state., warrant and the subject of a state claim opposing forfeiture, this Court finds that the state court has exerted in rem jurisdiction over the property. As such, the federal courts are barred under Penn General from exerting in rem jurisdiction over the same res. Accordingly, Claimant's motion dismissing the instant case is HEREBY GRANTED and Defendant property shall be returned to the jurisdiction of the Humboldt County Superior Court.
IT IS SO ORDERED.