United States v. 1500 Lincoln Avenue Case Brief

Summary of United States v. 1500 Lincoln Avenue, United States Court of Appeals, Third Circuit, 1991

Statement of Case:

Action alleging of 21 USC 881 involving the US Gov’t against tenancy by the entirety property held by a felonious pharmacist and his innocent wife SEEKING civil forfeiture of the property on which the pharmacist used for the illegal distribution of prescription drugs.

Facts:

  • DEF husband (pharmacist) was involved in the illegal distribution of prescription drugs, to which he was indicted by a federal grand jury for 51 drug-related offenses, mainly selling prescription drugs w/out a prescription. He eventually pled guilty to nine counts and was sentenced to ten years’ imprisonment.
  • Some, if not all, of the offenses were committed on the property held by the DEF husband and his wife. The wife claims that she did not know about or consent to the illegal activities that were conducted on the property that she shared w/ her husband in tenancy by the entirety.

Procedure:

  • The trial court dismissed the Gov’ts complaint, holding that the Gov’t was not entitled at “this time" to forfeiture of any interest in the property. They found that a spouse’s innocent owner defense bars a civil in rem (determining the status) forfeiture. A tenant by the entireties has title to the whole property, not to a share of the property. So, b/c she had an interest in all of the property, the court concluded, no interest in the property was subject to forfeiture by the government.
  • Gov’t then moved to alter or amend the judgment and argued that the court should allow forfeiture of DEF husband’s interest and allow the innocent owner to remain on the property w/ her rights in tact.
    • Gov’t contended that it should at least be able to get the DEF husband’s interest if he outlives his wife, and that this approach would still protect the innocent wife b/c it would give her a life estate in the property and preserve her right of survivorship.
    • COURT: denied the motion, but said that the Gov’t could file a lis pendens (pending lawsuit) against the property and thereby preserve its ability to seek forfeiture of any separate interest in the property that the husband might subsequently acquire as a result of the death of his wife or the severance of the tenancy.

Issue:

Whether any interest in tenancy by the entirety property is subject to forfeiture when one of the tenants commits a drug offense on the property w/out the other tenant’s knowledge or consent?

Holding:

Partially. To serve the dual purpose of 1) the Gov’ts attempt to deter/punish drug offenders, and 2) to allow the innocent tenant to maintain full use and possession of the property during her lifetime, THIS COURT decided to force the forfeiture of the DEF husband’s interest in the tenancy by the entireties but that the DEF wife may retain full and exclusive use of the property during her life, protection against any alienation w/out her consent or any attempt to levy upon her husband’s former interest, and the right to obtain title in fee simple absolute if her husband predeceases her.

(Rules):

21 USC 881: real property that is used, or intended to be used, in any manner or part, to commit a drug crime punishable by more than 1 year prison, shall be subject to forfeiture, except that no property SHALL be forfeited when there is another tenant that did not know about or consent to the drug crime.

Reasoning:

Interpretation of 21 USC 881:

1) (All forfeited); As the government initially suggested, that forfeiture of the guilty spouse’s interest means forfeiture of the whole estate and consequently leaves nothing for the innocent spouse.

2) (None forfeited); As the trial court reasoned, that the innocent spouse’s retention of his or her interest in the tenancy means retention of the whole estate and therefore leaves nothing for the gov’t to obtain by forfeiture.

3) (Half-forfeited); As the gov’t suggested in the alternative, that one-half of the property should be forfeited.

Policy favoring Gov’t

  • Traditional sanctions of fine and imprisonment are inadequate to deter or punish drug trade.
  • Forfeiture is a reasonable mechanism through which such an attack may be made.
  • Strong gov’t interest in obtaining full recovery of all forfeitable assets.

Policy favoring DEF wife

  • Insertion of the innocent owner defense into 21 USC 881 shows that Congress did not want to extinguish the interests of innocent owners and nothing in the legislative history discloses precisely how Congress wanted to balance the interest of forfeiture and the interest of an innocent owner

This courts Analysis

  • The half-forfeited interpretation best serves the two goal that the rule sets out to protect.
  • As tenant by the entireties, DEF wife has the right to possess and use the whole property during her life and the right to obtain title in fee simple absolute if her cotenant predeceased her. Also, she had protection against a unilateral conveyance by her cotenant of his interest in the estate, as well as protection against a levy upon the property by any creditor of her cotenant.

Government’s proposal of a lesser degree of forfeiture

  • Contingent Survivorship Proposal

· Gov’t contended that it should at least be able to get the DEF husband’s interest if he outlives his wife, and that this approach would still protect the innocent wife b/c it would ive her a life estate in the property and preserve her right of survivorship.

· Would create substantial procedural difficulties b/c it requires the gov’t to postpone prosecution of civil forfeiture proceedings until the guilty spouse acquires a separate interest in the property, an event that may not occur until many years after the criminal conduct.

· IT would be burdensome on the Gov’t b/c they would have to refile its forfeiture complaint and prove the underlying criminal conduct long after it occurred.

· COURT: the issues should be adjudicated while they are fresh. Postponing them serves no purpose.

Forfeiture of only the husband’s interest proposal

  • Permits the immediate forfeiture of the interest of the guilty spouse and thus serves the goal of forfeiting property used in illegal drug activities.
  • Fully protects all of the property rights that the innocent owner enjoyed under the tenancy by the entireties (LOOK IN HOLDING)
  • Court says this is the only approach that serve the dual purposes of 21 USC 881.
    • The approach advanced the by DEF’s completely frustrates the strong interest in forfeiture of property used in committing drug offenses.
    • The approach advance by the trial court likewise frustrates the gov’ts strong interest b/c it permits a guilty spouse to retain the property that he used to commit the crime.

Disposition:

Reversed and remanded. The trial court must determine whether DEF husband’s interest is subject to forfeiture irrespective of DEF wife’s innocent owner defense.

  • If the court decides that it is, the court should enter an order forfeiting that interest but preserving DEF wife’s right to full and exclusive use and possession of the property during her life, her protection against conveyance of or execution by third parties upon her husband’s former interest, and her survivorship right.

NOTES AND QUESTIONS

  • Like the tenancy by the entirety (Gov’t and Wife), but the Gov’t does not pay taxes or other costs of ownership.
  • A federal tax lien does not attach to a tenancy by the entirety if only one spouse owes tax and state law prevents creditors from proceeding against a tenancy by the entirety.
    • The federal gov’t is treated like an ordinary creditor.

POSSIBLE POSITIONS THE COURT COULD HAVE TAKEN:

1) Government gets the whole interest

Good:

· Serves the gov’ts interest of punishing/deterring those who take part in the drug trade.

Bad:

· The tenancy by the entirety’s integrity is disrupted.

· The innocent party’s interest is jeopardized.

2) Government gets no interest. It is all wife’s.

Good:

· The innocent party’s interest is preserved and all of her rights are retained.

Bad:

· Doesn’t serve the gov’ts interest of punishing/deterring those who take part in the drug trade.

3) The tenancy by the entirety property is converted into a tenancy in common.

Good:

· The Gov’t proves its point (partially) by forcing a downgrade of the tenancy by the entirety.

Bad:

· Creditors can attach to the property; the integrity of the tenancy is disrupted.

· Innocent party is punished for doing nothing.

· No survivorship rights b/w the tenants.

4) Gov’t can file a lis pendens (ligation pending) against the property and seek forfeiture later if DEF husband acquires a separation interest as a result of the death of his wife or severance of tenancy.

Good:

· Gov’t would at least get some retribution for the DEF husband’s crime

Bad:

· Would create substantial procedural difficulties b/c it requires the gov’t to postpone prosecution of civil forfeiture proceedings until the guilty spouse acquires a separate interest in the property, an event that may not occur until many years after the criminal conduct.

· IT would be burdensome on the Gov’t b/c they would have to refile its forfeiture complaint and prove the underlying criminal conduct long after it occurred.

5) Court should order forfeiture of Mr. Bernstein’s interest right away but preserve Mrs. Bernstein’s right to full and exclusive use and possession of the property during her life and her survivorship right.

Good:

· Permits the immediate forfeiture of the interest of the guilty spouse and thus serves the goal of forfeiting property used in illegal drug activities.

· Fully protects all of the property rights that the innocent owner enjoyed under the tenancy by the entireties (LOOK IN HOLDING)

Bad:

· What if the wife wants to sell the property? Will the gov’t consent?

· How can the unilateral survivorship clause remain with the husband’s death as the condition precedent, when the husband no longer has any interest?

· The Gov’t does not have to pay taxes or any “housekeeping" $, so supporting the property alone may become burdensome for the wife when she has been used to relying on the husband’s support.



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