The opinion of the court was delivered by: GERARD L. GOETTEL
Claimant Joseph Munson moves this court to dismiss the in rem complaint against five parcels of real estate in which Mr. Munson owns in whole or part. The parcels include his personal residence in which he and his family live as well as four parcels containing multi-family homes and a laundromat. The Claimant also seeks to suppress certain physical evidence, the fruits of wiretaps, and post-arrest statements.
The government commenced this in rem civil forfeiture action in August 1991. Count I of the verified complaint seeks forfeiture of the properties pursuant to 21 U.S.C. § 881(a)(6) on grounds that all six properties constitute proceeds traceable to exchanges of controlled substances. Count II alleges that two of the properties, Lovers Lane and Decatur Street, were subject to forfeiture pursuant to 21 U.S.C. § 881(a)(7) because they were used to commit or facilitate commission of a violation of Title 21.
The summonses and verified complaint were served upon the defendant real properties by the Marshals Service in September 1991. Joseph and Kim Munson subsequently filed a "Verified Notice of Claim" claiming ownership of the properties. The government contests whether the claim was properly verified.
Notice of the forfeiture action was published beginning in November 1991. The only other claim filed was by Richard Robbins regarding the Decatur Street property.
The allegations in the complaint are based upon an investigation conducted by the Putnam County Sheriff's Narcotics and Westchester County Drug Enforcement Task Force. The investigation allegedly established that Joseph Munson was responsible for the distribution of large amounts of marijuana and heroin. The complaint also alleges that Mr. Munson invested profits from the sale of these drugs in real estate and businesses. The investigation relied upon information obtained from undercover purchases by confidential informants, telephone conversations intercepted by wiretaps, physical surveillance, statements by informants, and county land records.
Claimant and other defendants were later charged in 14 separate indictments in Putnam county court with conspiracy and distribution and possession of heroin and marijuana. Following the indictments, the parties agreed to stay the forfeiture proceedings pending final resolution of the criminal proceedings.
The criminal indictments were apparently dismissed due to the failure to corroborate the evidence presented to the grand jury. Two new indictments were brought against Mr. Munson charging distribution of marijuana. Those charges were dismissed by the Putnam County Supreme Court as well for similar reasons. We note that Munson has two prior convictions for sale and possession of small amounts of drugs for which he received probation. The present motions were then filed, and the court granted a request to stay discovery pending disposition of this motion.
Before the court today are motions to dismiss brought by claimant Munson and claimant Richard Robbins, Munson's brother-in-law who is half-owner of the Decatur Street property and claims to be an innocent owner of that property. Claimant Robbins joins in Munson's motions adopting his positions and also raises an innocent owner defense to the forfeiture of his half interest in the Decatur property. Claimant Munson makes three arguments: 1) the court lacks subject matter jurisdiction in that the government never obtained or executed arrest warrants for the defendant properties, a condition precedent to properly exercising in rem jurisdiction; 2) the complaint does not allege facts with particularity to support a finding of probable cause to forfeit the defendant properties; 3) the burden of proof imposed by 19 U.S.C. § 1615 is unconstitutional.
Claimants also move to suppress certain wiretap evidence arguing that it was gathered in violation of state law minimization requirements, no probable cause existed (due to unsubstantiated hearsay), and its acquisition from state officials was a violation of law. Evidence relating to state court indictments should be suppressed, claimants argue, because People provided the grand jury with duplicate tape recordings that had never been sealed by court order. The post-arrest statements require suppression, they argue, because they were obtained in violation of Munson's right to remain silent and right to an attorney.
As a preliminary matter, we note that an acquittal on criminal charges (or a dismissal) does not bar a civil forfeiture action arising out of the same facts on which the criminal action was based. U.S. v. United States Currency in Amount of $ 228,536, 895 F.2d 908, 916 (2d Cir.), cert. denied, 495 U.S. 958 (1990).
A. SUBJECT MATTER JURISDICTION: VALIDITY OF IN REM SEIZURE
Claimants argue that no in rem jurisdiction exists because the government never sought or obtained a warrant for the arrest of the defendant properties and no seizures have been made. In short, no execution of process has been made on the properties themselves.
The government argues that in cases of real property, no actual seizure is required. It points to language in Republic National Bank of Miami v. United States, 121 L. Ed. 2d 474, 113 S. Ct. 554 (1992), relied upon by claimant, that says "that the court must have actual or constructive control of the res when an in rem forfeiture suit is initiated." Thus, the government contends, since invalid seizures do not immunize a property from forfeiture, see U.S. v. All Assets of Statewide Auto Parts, 971 F.2d 896, 905 (2d Cir. 1992), neither should the absence of a seizure, particularly since courts do not favor actual seizures because of their drastic nature. So long as some government action has given it constructive control over the property, the in rem proceeding is proper. The government uses as an example the Marshals posting a warrant on the property or the filing of a lien against it. Under these circumstances, the real property has, in effect, been brought under the court's jurisdiction. The government stresses that the Second Circuit has held that "the government may initiate a forfeiture proceeding of real property containing a home without a seizure by filing a complaint and protecting against the transfer of the property by filing a lis pendens." U.S. v. Premises and Real Property at 4492 South Livonia Road, 897 F.2d 659, 661 (2d Cir. 1990).
In Livonia Road, the Second Circuit held that notice and a pre-seizure adversarial hearing are required before the government may seize residential property. Id. at 660. As noted above, however, the court further held that this did not preclude the government from initiating a forfeiture proceeding by filing a complaint and protecting against the property's transfer by filing a lis pendens. See also U.S. v. $ 3,000,000 Obligation of Qatar Nat'l Bank, 810 F. Supp. 116, 118 (S.D.N.Y. 1993) ("a federal court need not actually exercise control over the res in order to adjudicate rights in it.")
Claimants note that following the Livonia Road decision, the U.S. Attorney's Office abandoned its former practice in forfeitures of applying for an "warrant of arrest in rem" or an ex parte seizure warrant from a magistrate. Now it simply files a complaint and lis pendens and then serves the summons and complaint on the subject. Claimants recognize that this course of action, under present Second Circuit law, does not run afoul of the due process clause since actual seizure has not occurred. But, they argue, it flies in the face of a hundred years of in rem jurisprudence by allowing forfeitures to proceed without first seizing the property.
We do not probe this argument since we are bound by the Second Circuit's rulings. Here, the government served a verified summons and complaint on the property and filed notices of pendency in the land records. The Second Circuit in Livonia Road explicitly approved this course of action for in rem proceedings. Absent further guidance from the appellate court, we must follow their rulings as they now stand.
We do note that the Second Circuit's approach does seem to steer a prudent course between the due process clause and current in rem jurisprudence. If residential property is seized, due process requires a pre-seizure hearing. To acquire in rem jurisdiction, courts require actual or constructive control of the property. By allowing the filing and service of a complaint combined with a lis pendens, the court recognizes that effective control over a property can be secured for purposes of forfeiture without resort to the drastic measure of actually seizing the property from a person. Less drastic alternatives to seizure have been favored by the Second Circuit. See Statewide Auto Parts, 971 F.2d at 905. Under current law, we find that we have proper in rem jurisdiction over this matter.
B. ADEQUACY OF COMPLAINT UNDER SUPPLEMENTAL ADMIRALTY RULE E(2)(a) and Fed.R.Civ.P. 12(b)(6)
To justify forfeiture of property alleged to be drug related, the government must demonstrate probable cause. United States v. One 1986 Mercedes Benz, 846 F.2d 2, 4 (2d Cir. 1988). Probable cause must be shown to have existed at the time the forfeiture was instituted. United States v. $ 134,752 United States Currency, 706 F. Supp. 1075, 1082 (S.D.N.Y. 1989).
Claimants argue that the complaint lacks sufficiently particular factual allegations to justify subjecting claimant's family to uncertainty of losing of their home. In short, the complaint fails to allege with sufficient particularity to state a cause of action.