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Lucas v. United States

United States District Court, N.D. New York

May 22, 2014

NICHOLAS M. LUCAS, as Assignee of Justin Lucas, Petitioner,
UNITED STATES OF AMERICA et al., Respondents.

Office of Wayne P. Smith, WAYNE P. SMITH, ESQ., Schenectady, NY, for the Petitioner.

HON. RICHARD J. HARTUNIAN, United States Attorney, GWENDOLYN E. CARROLL, Assistant U.S. Attorney, Syracuse, NY, for the Respondents.


GARY L. SHARPE, Chief Judge.

I. Introduction

Petitioner Nicholas M. Lucas, as assignee of Justin Lucas, commenced this action against respondents the United States of America and the Drug Enforcement Administration pursuant to 18 U.S.C. § 983(e), seeking to set aside an administrative forfeiture of bail money. ( See generally Pet., Dkt. No. 1.) Respondents moved to dismiss the petition pursuant to Fed.R.Civ.P. 12(b)(1) and (6). (Dkt. No. 5.) For the reasons that follow, the motion to dismiss is granted.

II. Background[1]

On January 13, 2011, Justin Lucas posted $50, 000 bail with the Otsego County Sheriff on behalf of his brother, Nicholas Lucas, who had been arrested and arraigned on charges involving possession of marijuana. (Pet. ¶¶ 3, 9.) Justin was given a bail receipt by the Otsego County Sheriff's Office, (Dkt. No. 1 at 8), but at some later date, was told by a member of the Sheriff's Office that the bail money had been seized by the Drug Enforcement Administration (DEA), (Pet. ¶¶ 3, 8). The DEA then commenced administrative forfeiture proceedings with respect to the seized money, which were completed on June 21, 2011. ( Id. ¶ 7; Dkt. No. 1 at 10-11, 13-14.) On July 25, 2011, Justin purported to assign his rights and interest in the bail money to Nicholas. (Pet. ¶ 10; Dkt. No. 1 at 33.) Nicholas alleges that neither he nor Justin ever received notice of the seizure or the administrative forfeiture proceedings commenced by respondents. ( Id. ¶¶ 5, 13.) Specifically, Nicholas asserts that the DEA, "probably intentionally or negligently, " repeatedly attempted to send notice of the forfeiture to incorrect addresses for both Nicholas and Justin Lucas. ( Id. ¶ 12.)

III. Standards of Review

The standards of review under Rules 12(b)(1) and 12(b)(6), which are "substantively identical, " Lerner v. Fleet Bank, N.A., 318 F.3d 113, 128 (2d Cir. 2003), are well settled and will not be repeated. For a full discussion of those standards, the parties are referred to the court's decisions in Unangst v. Evans Law Associates, P.C., 798 F.Supp.2d 409, 410 (N.D.N.Y. 2011), and Ellis v. Cohen & Slamowitz, LLP, 701 F.Supp.2d 215, 218 (N.D.N.Y. 2010), respectively.

IV. Discussion

Respondents have moved, pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, seeking dismissal of Nicholas' petition because he has not demonstrated that he meets the statutory requirements of 18 U.S.C. § 983 to bring a motion to set aside the forfeiture, and because he lacks Article III standing to maintain this action. (Dkt. No. 5, Attach. 1 at 10-17.) Nicholas argues that he does in fact have standing to bring this action, both under constitutional principles and pursuant to the applicable statutory framework.[2] (Dkt. No. 7, Attach. 1 at 7-21.) For the reasons that follow, respondents' motion to dismiss is granted.

"In every federal case, the party bringing the suit must establish standing to prosecute the action" under Article III of the Constitution. Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004), abrogated on other grounds by Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377 (2014). Article III standing requires that the following three elements be satisfactorily pled: (1) "an injury in fact" that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical"; (2) "a causal connection between the injury and the conduct complained of"; and (3) a likelihood "that the injury will be redressed by a favorable decision." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (internal quotation marks and citations omitted). Ordinarily, "a litigant must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.'" Bano v. Union Carbide Corp., 361 F.3d 696, 715 (2d Cir. 2004) (quoting Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 474 (1982)). However, "[a] plaintiff may assert the... claims of a third party if the plaintiff can demonstrate: (1) injury to the plaintiff, (2) a close relationship between the plaintiff and the third party that would cause plaintiff to be an effective advocate for the third party's rights, and (3) some hindrance to the third party's ability to protect his or her own interests.'" Camacho v. Brandon, 317 F.3d 153, 159 (2d Cir. 2003) (quoting Campbell v. Louisiana, 523 U.S. 392, 397 (1998)).

As relevant here, courts have recognized that a party seeking to challenge the government's forfeiture of money or property used in violation of federal law must first demonstrate an interest in the seized item sufficient to satisfy the court of its standing to contest the forfeiture. See DSI Assocs. LLC v. United States, 496 F.3d 175, 184 (2d Cir. 2007); United States v. One 1945 Douglas C-54 (DC-4) Aircraft, Serial No. 22186, 604 F.2d 27, 28-29 (8th Cir. 1979); United States v. Fifteen Thousand Five Hundred Dollars ($15, 500.00) United States Currency, 558 F.2d 1359, 1360 (9th Cir. 1977); United States v. Huggins, 607 F.Supp.2d 660, 664-65 (D. Del. 2009) ("To demonstrate a colorable ownership or possessory interest, and satisfy the Article III standing requirement, an individual must show that he independently exercised some dominion or control over the property."). Where, as here, the party challenging forfeiture is not the person in possession of the property at the time it was seized, but instead purports to be an assignee of that person, the requirements for establishing standing are twofold. First, the "claimant must show that the assignment was valid, i.e. that it effectively conveyed to the assignee an interest in the subject property." United States v. Dupree, 919 F.Supp.2d 254, 266 (E.D.N.Y. 2013) (internal quotation marks and citation omitted). Similarly, since it is well established that an assignee takes only the interest of its assignor, a claimant must also demonstrate that the assignor "held a valid ownership interest in the seized property at the time of the assignment." United States v. Three Hundred Sixty Four Thousand Nine Hundred Sixty Dollars ($364, 960.00) in U.S. Currency, 661 F.2d 319, 326-27 (5th Cir. 1981).

Here, as the government points out at the outset of its motion, (Dkt. No. 5, Attach. 1 at 10-12), the purported assignment of "all right, title or interest" in the $50, 000 made by Justin to Nicholas, (Dkt. No. 1 at 33), did not actually convey any interest, as "[a]ll right, title, and interest in [the] property... vest[ed] in the United States upon commission of the act giving rise to forfeiture, " 21 U.S.C. § 881(h), namely Nicholas' drug activity. Here, the funds at issue were seized on January 13, 2011, (Pet. ¶ 7), and declared administratively forfeited on May 19, 2011, (Dkt. No. 1 at 10), while the latest date Nicholas alleges with respect to the forfeiture is a "last disposition date" of June 21, 2011, (Pet. ¶ 7). Because the assignment did not occur until over a month later, on July 25, 2011, (Dkt. No. 1 at 33), the purported assignment did not actually convey any possessory or ownership interest in the money to Nicholas; the forfeiture had already been completed, and therefore Justin had no interest to assign to Nicholas, as all right, title, and interest in the money had vested in the United States. See 21 U.S.C. § 881(h). ...

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