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LOPES v. UNITED STATES

September 28, 1994

GERALDO WAGNER VASCONCELOS LOPES, JAIME MARTINS CALAIS, SEBASTIAO MARCENA, IDELFONSO MARQUES DO AMARAL, MARCELO ANTONIO DOS SANTOS FERRIERA, JORGE DOREA VIANA, HELCIO DE SOUZA FIGUIEREDO, LUIZ EDUARDO AMARAL, NEWTON JOSE LEITE and JUAN CARLOS MATOS, Plaintiffs,
v.
UNITED STATES OF AMERICA, DEPARTMENT OF THE TREASURY and INTERNAL REVENUE SERVICE, Defendants.



The opinion of the court was delivered by: ALLEN G. SCHWARTZ

 ALLEN G. SCHWARTZ, DISTRICT JUDGE:

 Plaintiffs bring this action against defendants United States of America, the Department of the Treasury and the Internal Revenue Service (collectively, "the Government") for the return of their 1992 Mercedes-Benz model 500 SEL automobile (the "Mercedes") (or its cash equivalent), which was seized pursuant to a warrant in connection with a civil forfeiture.

 The Government moves pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the amended complaint (the "Complaint") for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted. In the alternative, the Government moves pursuant to Rule 56 of the Federal Rules of Civil Procedure for summary judgment. For the reasons set forth below, the Government's motion to dismiss the Complaint for lack of subject matter jurisdiction is granted, except with respect to the plaintiffs' First Claim, alleging that notice of the seizure was inadequate, as to which summary judgment is granted.

 FACTS

 The Complaint alleges that jurisdiction of this Court is based upon the existence of a federal question under 28 U.S.C. § 1331, the Administrative Procedures Act (the "APA"), 5 U.S.C. § 702, the Federal Torts Claim Act (the "FTCA"), 28 U.S.C. § 1346(b) and the Fifth and Eighth Amendments to the United States Constitution.

 All of the plaintiffs (collectively, the "Plaintiffs") are citizens of Brazil and all, with the exception of Luiz Eduardo Amaral ("Amaral"), are residents of Brazil. Amaral resides in Ellenville, New York. *fn1"

 On or about January 24, 1992, Plaintiffs, pursuant to an agreement among themselves, purchased the Mercedes from Jack Perry Ford, Inc. in Goshen, New York (the "Dealership") for the price of $ 96,693.25. The agreement is entitled "Partnership Upon the Purchase of an Automobile" and is dated January 24, 1992 (the Agreement"). See Complaint at Exhibit A. The Agreement provides, among other things: "The proprietorship of this automobile will hereby be granted temporarily to Mr. Geraldo Wagner Vasconcelos Lopes or Mr. Luiz Eduardo Amaral who will be responsible for the care taken and conservancy [sic] of this automobile". Plaintiffs allege that the Mercedes was purchased as part of a business venture which contemplated that the Mercedes would be exported to Brazil and then sold.

 Plaintiffs initially sought to purchase the Mercedes with cash but the Dealership refused to accept cash. Plaintiffs do not dispute that they purchased certain bank checks in order to pay for the automobile: two bank checks drawn on Pawling Savings Bank for $ 9,900 each; two bank checks drawn on Ellenville National Bank for $ 9,000 each; and two bank checks drawn on Ellenville National Bank for $ 9,900 each. Affidavit of Special Agent Richard J. Pilek of the Criminal Investigation Division of the Internal Revenue Service (the "IRS") sworn on March 31, 1992 ("Pilek Aff.") at P 8. The balance was paid with four American Express money orders for $ 1,000 each, $ 25,300 in currency (in one hundred dollar bills) and the initial $ 9,900 deposit which was paid with sequentially numbered one hundred dollar bills. Id. at PP 7-8. *fn2" Plaintiffs allege that they had no knowledge of the filing requirements governing purchases of bank checks for cash in excess of $ 10,000.

 The Mercedes was registered in Amaral's name while the bill of sale listed all ten plaintiffs as the purchasers.

 On April 9, 1992, United Sates Magistrate Judge Mark D. Fox issued a warrant authorizing the IRS to seize the Mercedes (the "Warrant"). The warrant was based upon the affidavit of Special Agent Timothy J. Ryan of the Criminal Investigation Division of the IRS (which incorporated the Pilek Affidavit) attesting to the probable cause belief that the Mercedes was subject to seizure and civil forfeiture pursuant to 18 U.S.C. § 981(a)(1)(A) and (b). *fn3" The affidavits of Special Agents Ryan and Pilek set forth the agents' beliefs that there was probable cause that the Mercedes constituted property derived from the proceeds of structured financial transactions in violation of 31 U.S.C §§ 5313(a) and 5324. *fn4"

 On or about April 9, 1992, pursuant to the Warrant, the Mercedes was seized by the IRS from 14 Ivy Lane, Washingtonville, New York. On April 13, 1992, notice of the seizure was sent by certified mail to plaintiff Amaral. The notice advised Amaral that the Mercedes was seized under 18 U.S.C. § 981, because it was involved in, or was traceable to, a violation of 31 U.S.C. § 5324 (an illegally structured currency transaction) and 18 U.S.C. § 1956 (money laundering). *fn5" The notice further stated that the IRS was reviewing the facts to determine whether the Mercedes should be forfeited to the Government. Id.

 On May 15, 1992, the IRS sent Amaral another notice advising him that the Mercedes was in fact subject to forfeiture by the Government and that administrative proceedings had been instituted with respect to the forfeiture (the "Notice of Seizure and Forfeiture"). The Notice of Seizure and Forfeiture further apprised Amaral that a claimant could challenge the forfeiture either by way of an administrative review or a judicial determination of the forfeiture. It also expressly stated that if a judicial determination of whether the Mercedes should be forfeited was sought, a claim and cost bond was required to be filed by June 3, 1992. The text of the Notice of Seizure and Forfeiture, in pertinent part, is set forth in the margin. *fn6"

 Plaintiffs do not challenge the statements in the Government's Local Rule 3(g) Statement that the IRS sent a copy of the Notice of Seizure and Forfeiture to Richard Newberg, Esq. ("Newberg") an attorney representing Amaral. During the time Newberg was representing Amaral in connection with the seizure, Newberg also represented the nine other plaintiffs. Government's Local Rule 3(g) Statement at PP 8-9. It is also not disputed that in addition to providing written notice to Amaral and Newberg the IRS published notice of the forfeiture on May 20, May 27, and June 3, 1992 in The Times Herald Record, a Middletown, New York newspaper. The Government does not contend that written notice was sent to any of the Plaintiffs other than Amaral nor does the Government dispute statements made in Amaral's Affidavit, sworn to on October 12, 1993, ("Amaral Affidavit"), that Amaral provided Agent Ryan with the names and addresses of the nine other plaintiffs. See Amaral Affidavit at PP 10-13.

 Plaintiffs concede that Amaral received notice on April 13, 1992 of the commencement of the forfeiture proceedings. Plaintiffs, in their Complaint contend that no plaintiff, other than Amaral, "received actual or constructive notice of the commencement of a forfeiture proceeding." Complaint at P 12. Plaintiffs' Memorandum of Law in opposition to the Government's motion, in contrast, concedes that all of the plaintiffs had actual notice of the forfeiture proceedings:

 
. . . That other owners were advised by Luiz Amaral of the seizure and joined the petition for remission does not excuse the government's improper acts. The mere fortuitous circumstance that Mr. Amaral advised the other owners . . .

 Plaintiffs' Memorandum of Law at 28.

 Plaintiffs, in fact, filed a timely petition, dated June 5, 1992, for remission or mitigation of the forfeiture of the Mercedes (the "Petition"). The Petition was submitted by Newberg on behalf of all ten plaintiffs and was signed by seven of the 10 plaintiffs. *fn7" Plaintiffs did not file either a ...


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