The opinion of the court was delivered by: JOHN T. CURTIN
This is a civil in rem forfeiture action brought by the United States pursuant to 21 U.S.C. § 881, against premises and real property located at 500 Delaware Street, Tonawanda, New York. Edward Isenberg, the holder of legal title to the property at the time of commencement of the action, is contesting the forfeiture, as a person claiming an ownership interest in the property. Robert and Josephine Kudletz have filed a claim as innocent mortgage holders. The government has moved for summary judgment against Mr. Isenberg, arguing principally that he has no bona fide ownership interest in the property and therefore no standing to contest the forfeiture. Mr. Isenberg opposes the motion, insisting that he does indeed possess a bona fide ownership interest. He argues further that the government cannot establish probable cause for forfeiture, because its evidence was obtained in violation of the Fourth Amendment and is therefore inadmissible in the forfeiture proceeding. This court has jurisdiction pursuant to 28 U.S.C. §§ 1345, 1355 and 1395.
500 Delaware Street, Tonawanda, New York, is a residential property on which there is a small apartment building. Edward Isenberg and his wife, Beth, purchased the property from Robert and Josephine Kudletz on March 15, 1982. The Kudletzes retained a $ 20,000.00, 20-year mortgage on the property, with Edward and Beth Isenberg named as mortgagors.
Edward and Beth Isenberg acquired 500 Delaware Street with the intention that their eldest son, Martin, would live in one of the apartments and manage the property. They made an oral agreement with Martin under which he would receive a ten percent equity interest in the property each year he managed it. He duly took up residence, and assumed his responsibilities as manager.
Some time in 1984-85, Edward and Beth Isenberg separated. About a year later, on January 1, 1986, Edward executed a warranty deed transferring his one-half interest in 500 Delaware Street to Martin, for the sum of one dollar. The deed was recorded on January 27, 1986. Subsequently, on October 5, 1987 Beth Lawton, formerly Beth Isenberg, transferred her one-half interest in the property to Martin for one dollar, the deed being recorded on November 12, 1987. Both deeds state that "THIS CONVEYANCE is a gift of a one-half interest. . ." (emphasis added), and that the conveyance was made and accepted subject to the mortgage held by Robert and Josephine Kudletz. Item 20, Exs. 3 and 4. The mortgage was not, however, assigned to Martin, and it remained in the names of Edward and Beth Isenberg.
At deposition on July 6, 1992, Edward Isenberg was asked why he transferred his interest in 500 Delaware Street to Martin in 1986. He responded that "we were separated and he was managing it, taking care of it, and I just felt that he should have it. I felt he was doing a good job and why wait, 10 percent a year -- we were already separated and had no income from it or anything like that, so I figured, let him have it." Item 20, Ex. 2, pp. 24-25. When asked whether, to the best of his understanding, he retained any ownership interest in the property at that time, he answered "no." Id. at 26. Similarly, when asked whether Martin could sell the property if he wanted to, he answered, "yes, yes, it was his." Id. In an affidavit dated May 23, 1993, however, Mr. Isenberg claimed that "my belief at that time was that . . . the title might as well be placed in his name at that time rather than in ten years," but that "although title was then in Martin's name, the mortgage remained in my name. It was understood that Marin [sic] would continue to live in and manage the property as before. I could reclaim it if Martin did not fulfill his obligation to manage the property responsibly." Item 24, PP 7-8.
In January 1990, David Bentley, a detective with the City of Tonawanda, New York, Police Department, received information from a confidential informant that Martin Isenberg was growing marijuana at 500 Delaware Street. The informant told Bentley that Martin lived in the second floor apartment, that he had been cultivating marijuana plants in the attic of the building for about three years, that he had an elaborate set-up for growing the plants, and that he had been selling the harvested marijuana for approximately $ 150.00 per ounce.
On January 25, 1990, Bentley appeared with his informant before Tonawanda City Court Judge Richard Kinzly, to make application for a warrant authorizing a search of part of the premises at 500 Delaware Street. Based upon Bentley's written application and the informant's testimony, Judge Kinzly found probable cause to believe that marijuana was being cultivated in felony quantities in the attic of 500 Delaware Street, and that marijuana, its derivatives, plants, and paraphernalia were present both in the upper apartment on the southeast corner of the house and in the attic. He issued a warrant setting forth his findings, and authorizing the search of "a multiple dwelling, located at 500 Delaware Street, Tonawanda, NY 14150 (Erie County) To [sic] search the apartment on the second floor, first door on left at top of steps, the apartment of Martin Isenberg and wife . . ." Item 19, Ex. A. It is notable that although the section of the warrant authorizing the search described the location of the entrance to Martin Isenberg's apartment with specificity, it made no mention of the attic. The door to the attic was on the second floor of the building, near the entrance to, but outside, the Isenberg apartment.
On January 26, 1990, Bentley and several other police officers, armed with the warrant issued by Judge Kinzly, conducted a search of Martin Isenberg's apartment. Over Martin's strenuous objections they also searched the attic, the door to which had been double-locked. They found evidence of marijuana cultivation, and seized 27 marijuana plants, with a combined weight of 5.2 pounds, as well as growing equipment, grow lights, control panels, drying trays and fertilizer. During the course of the search, Martin allegedly said to Bentley, "my wife has no part in this. I was growing the pot, and she never touched it." Item 19, P 8. He was then arrested, and charged with criminal possession of marijuana, obstructing governmental administration, and cultivating marijuana without a license.
Shortly after his arrest, on April 9, 1990, Martin Isenberg executed a warranty deed transferring title to 500 Delaware Street to his father, Edward Isenberg, for the sum of one dollar. The deed was recorded on May 31, 1990. At deposition on July 6, 1992, Edward Isenberg stated that he took the property back from Martin "knowing that the property was in jeopardy, because of the trouble [Martin] got into." Item 20, Ex. 2, p. 7. He admitted that by "in jeopardy" he meant that the property could be taken from Martin by the government. He also admitted knowing, at the time of the transfer, that the "trouble" that Martin had got into was growing marijuana. In his affidavit of May 23, 1993, Edward stated that "when Martin was arrested for allegedly growing marijuana on the premises, I took the title to the property back from him in order to protect my investment in it." Item 24, P 8.
Although Edward Isenberg regained title to 500 Delaware Street in April, 1990, Martin continued to occupy the second floor apartment and manage the property. At deposition on July 6, 1992, Edward admitted that nothing changed in his involvement with the property after the transfer of title in April 1990; that he received no income from the property; that Martin received all rent payments from the tenants, and was fully responsible for leasing the apartments when vacancies occurred; that he (Edward) did not know who the current tenants were; that Martin was responsible for making all mortgage, property tax, and insurance payments, for paying the utility bills, and for maintaining the property and making repairs. In his affidavit of May 25, 1993, however, Edward asserted that he has a bona fide ownership interest in the property since title to the property is in his name, he continues to be obligated under the mortgage, he is free to dispose of the property as he sees fit, and Martin lives at and manages the property only on his sufferance.
On July 6, 1990, Martin Isenberg was indicted by an Erie County Grand Jury on charges of criminal possession of marijuana in the second degree, in violation of New York Penal Law § 221.25, and growing marijuana plants without a license, in violation of New York Public Health Law § 3382. On July 8, 1991, following the denial of his motion to suppress the evidence obtained in the search of 500 Delaware Street, he pled guilty to both charges. On December 30, 1992, the New York State Supreme Court, Appellate Division, Fourth Department, unanimously overturned his conviction. The court found that at the time Judge Kinzly issued the warrant authorizing the search of 500 Delaware Street, there was not "substantial compliance" with New York Criminal Procedure Law § 690.40(1). People v. Isenberg, 188 A.D.2d 1042, 592 N.Y.S.2d 1006 (4th Dept. 1992).