Diaz v. United States, No. 06-5301 (2d Cir. 2008)

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06-5301-cv Diaz v. United States 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2007 (Submitted: December 13, 2007 Decided: February 26, 2008) Docket No. 06-5301-cv - - - - - - - - - - - - - - - - - - - -X FERNANDO HERNANDEZ DIAZ, Plaintiff-Appellant, - v.UNITED STATES OF AMERICA, DEPARTMENT OF HOMELAND SECURITY, BUREAU OF IMMIGRATION & CUSTOMS ENFORCEMENT, DRUG ENFORCEMENT AGENCY, Defendants-Appellees. - - - - - - - - - - - - - - - - - - - -X Before: JACOBS, Chief Judge, POOLER and SACK, Circuit Judges. Plaintiff appeals from the judgment of the United States District Court for the Eastern District of New York (Ross, J.), which dismissed his claim for the return of cash that was seized and forfeited in connection with plaintiff s arrest for violating currency reporting laws. The district court rejected plaintiff s due process challenge, finding that plaintiff received adequate notice of the proceedings. We affirm on a different ground: the district court lacked subject matter jurisdiction because the claim is barred by sovereign immunity. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 FERNANDO HERNANDEZ-DIAZ, pro se, Coleman, Florida. KEISHA-ANN G. GRAY, Assistant United States Attorney (Steven Kim, Kathleen A. Nandan, Assistant United States Attorneys, of counsel), for Benton J. Campbell, United States Attorney for the Eastern District of New York, Brooklyn, New York, for DefendantsAppellees. DENNIS JACOBS, Chief Judge: Fernando Hernandez Diaz seeks the return of $91,743 in 17 cash that was seized from him when he was arrested for 18 failing to declare he was transporting more than $10,000 in 19 United States currency out of the country (in violation of 20 31 U.S.C. §§ 5316(a) and 5322). 21 judgment of the United States District Court for the Eastern 22 District of New York (Ross, J.), dismissing his claim on the 23 ground that the notice of forfeiture satisfied due process. 24 We affirm on a different ground: 25 jurisdiction is lacking because sovereign immunity bars a 26 federal court from ordering the United States to return 27 funds that have already been disbursed. 28 American Eng g Corp., 315 F.3d 151, 155 (2d Cir. 2003) ( Our 29 court may, of course, affirm the district court s judgment 30 on any ground appearing in the record, even if the ground is 31 different from the one relied on by the district court. ). 2 Diaz appeals from a subject matter See ACEquip Ltd. v. BACKGROUND 1 2 On October 25, 1999, while Diaz was boarding a flight 3 to his native Colombia, United States Customs agents 4 arrested him and seized $91,743 in cash from his person and 5 luggage. 6 $10,000 or more in currency outside the United States 7 without reporting the funds. 8 5322. 9 sentenced to the three months he had already served and a Diaz was charged with attempting to transport See 31 U.S.C. §§ 5316(a) and Diaz pled guilty and, on January 24, 2000, was 10 fine of $5,000 to be taken from the funds seized. 11 removed from the United States soon thereafter. 12 returned to the United States and is presently incarcerated 13 for a federal drug offense. 14 Diaz was He later In November 1999, Customs sent written notice that the 15 money was seized, that it was subject to forfeiture, and 16 that Diaz had 30 days to petition for relief. 17 was sent to Diaz s prison address and to his last known 18 residence in Bogota, Colombia. 19 through his criminal defense attorney Salvador Cheda, 20 submitted an affidavit documenting the supposedly legitimate 21 source of the cash. The notice On December 17, 1999, Diaz, 22 On March 30, 2000, Customs sent Cheda its decision 23 denying the petition because Diaz failed to show sufficient 24 proof of legitimate source of the seized funds. 3 The 1 decision advised Cheda that Diaz had another 30 days to 2 respond by submitting further documentation or else the 3 government would commence administrative forfeiture 4 proceedings. 5 Cheda a notice of Final Administrative Action that the cash 6 would be forfeited on June 25, 2000 if by then no claim was 7 filed. 8 New York Post (which erroneously gave the date of the 9 seizure as May 15, 1998 rather than October 25, 1999). When Diaz missed this deadline, Customs sent Customs also published notice of the seizure in the 10 Neither Diaz nor Cheda responded to these notices. 11 26, 2000, Customs administratively forfeited the seized 12 currency. 13 agreement, Customs transferred half the currency to the 14 Queens County District Attorney s Office and half to the 15 U.S. Treasury Forfeiture Fund. 16 On June On July 27, 2000, pursuant to an asset sharing More than five years later, in December 2005, Diaz pro 17 se filed this claim, arguing that the notice of the original 18 forfeiture proceeding violated his Fifth Amendment right to 19 due process, and seeking another chance to prove the funds 20 legitimate source. 21 Fed. R. Crim. P. 41(g) for the return of property seized in 22 a criminal proceeding, and the district court treated it as 23 such. 24 Diaz styled his claim as a motion under On defendants motion for summary judgment, the 4 1 district court observed that it is an open question in this 2 Circuit whether the rule that sovereign immunity bars relief 3 under Rule 41(g) where seized property is no longer 4 available applies to the seizure and subsequent 5 unavailability of fungible currency. 6 district court s serious doubt as to its jurisdiction to 7 entertain the claim, it assume[d] arguendo that sovereign 8 immunity poses no bar and proceeded to the merits of the 9 notice argument. Notwithstanding the Seeing no issue of material fact as to 10 whether the government provided Diaz with adequate notice, 11 the district court dismissed the claim. 12 13 DISCUSSION 14 A 15 Rule 41(g) permits [a] person aggrieved . . . by the 16 deprivation of property [to] move for the property s 17 return. 18 is brought after the criminal proceeding is over is treated 19 as a civil equitable action. 20 355 F.3d 144, 149 (2d Cir. 2004); United States v. 21 Giovanelli, 998 F.2d 116, 118-119 (2d Cir. 1993). 22 what this is. 23 24 Fed. R. Crim. P. 41(g). A Rule 41(g) motion that See Adeleke v. United States, That is Commencement of a civil or administrative forfeiture proceeding ordinarily deprives the district court of subject 5 1 matter jurisdiction to review the merits of the forfeiture 2 on a Rule 41(g) motion. 3 459 F.3d 377, 382 (2d Cir. 2006); United States v. One 1987 4 Jeep Wrangler Auto. VIN # 2BCCL8132HBS12835, 972 F.2d 472, 5 479 (2d. Cir 1992). 6 is completed, and the claimant no longer has the opportunity 7 to raise objections to the seizure in that forum, civil 8 equitable jurisdiction may be invoked to determine whether 9 proper procedural safeguards were observed. See De Almeida v. United States, However, once the forfeiture proceeding See id. at 480; 10 Polanco v. U.S. Drug Enforcement Agency, 158 F.3d 647, 651 11 (2d Cir. 1998) (finding subject matter jurisdiction in 28 12 U.S.C. § 1331, the general federal question statute, over 13 claim of procedurally deficient forfeiture); United States 14 v. McGlory, 202 F.3d 664, 670 (3d Cir. 2000) (en banc) ( [A] 15 district court has jurisdiction to consider a claim that a 16 person received inadequate notice of completed 17 administrative forfeiture proceedings, notwithstanding that 18 the claim was styled as a Rule 41[(g)] motion and filed 19 after criminal proceedings had been completed. ). 20 The threshold problem with this claim is that the 21 currency taken from Diaz was forfeited and has been 22 disbursed, so that all he can seek now is to be paid the 23 cash equivalent of the seized currency--that is, money from 6 1 the fisc. That claim is frustrated by the principle of 2 sovereign immunity which, absent a waiver, shields the 3 federal government and its agencies from suit. 4 Meyer, 510 U.S. 471, 475 (1994); see United States v. 5 Mitchell, 463 U.S. 206, 212 (1983) ( It is axiomatic that 6 the United States may not be sued without its consent and 7 that the existence of consent is a prerequisite for 8 jurisdiction. ). 9 unequivocally expressed ; the government s consent to be FDIC v. Waivers of sovereign immunity must be 10 sued is strictly construed and cannot arise by implication. 11 United States v. Nordic Village, Inc., 503 U.S. 30, 33-34 12 (1992). 13 Rule 41(g) itself, which simply provides for the 14 return of seized property, does not waive the sovereign 15 immunity of the United States with respect to actions for 16 money damages relating to such property. 17 at 151 (citing sister circuits that have reached the same 18 conclusion); Bertin v. United States, 478 F.3d 489, 492 (2d 19 Cir. 2007) (citing Adeleke for same). 20 actions brought for the return of property after the 21 conclusion of criminal proceedings, such equitable 22 jurisdiction does not permit courts to order the United 23 States to pay money damages when, for whatever reason, 7 Adeleke 355 F.3d As to civil equitable 1 property is not available for Rule 41(g) return. 2 355 F.3d at 151. 3 property that is in the hands of the government. 4 478 F.3d at 492 (footnote omitted). 5 Adeleke, A district court can order the return of Bertin, This Circuit has not decided whether a court, under 6 Rule 41(g), can order repayment of money seized--which is 7 notionally fungible--once the bills and coins that were 8 seized have been deposited into a government account.1 9 Adeleke held that sovereign immunity barred monetary 10 damages for personal property destroyed while in the 11 government s possession. 12 originally sought return of $1,000 in cash, this aspect of 13 the claim was rendered moot when the government voluntarily 14 paid it back. Although the Adeleke claimant Adeleke, 355 F.3d at 148. 1 Similarly, in A non-precedential order in a Rule 41(g) context touched on the question. See Elfand v. United States, 161 F. App x 150 (2d Cir. 2006) (unpublished). Elfand sought return of (inter alia) a car and $28,000 cash seized by the DEA in San Diego. The claim for the car, which had been sold, was dismissed on the ground that sovereign immunity bars recovery of money damages in lieu of the return of property. Id. at 151. Avoiding any characterization of the claim for cash as one for damages, the order observed that Elfand was asking for the specific remedy of the very thing to which he was entitled, id. at 152 (quoting Bowen v. Massachusetts, 487 U.S. 879, 895 (1988) (other internal quotation marks omitted)), a remedy which might not be defeated by sovereign immunity. But the issue was left open (hence the summary disposition), because the Court transferred venue over Elfand s claim to the Southern District of California. 8 1 Bertin, the claimant sought the return only of personal 2 property; because the government had already returned the 3 cash seized upon his arrest, the Court did not need to 4 consider whether a court, under Rule 41(g), can order the 5 return of fungible cash. 6 Bertin, 478 F.3d at 492 n.2. As our opinion in Adeleke pointed out, a useful analog 7 can be found in Nordic Village, in which a debtor in 8 bankruptcy sought to have the Internal Revenue Service 9 return an unauthorized tax payment, analogizing its claim to 10 a demand that the government return tangible property seized 11 from a debtor before it filed for bankruptcy protection. 12 See Adeleke, 355 F.3d at 150 (citing Nordic Village, 503 13 U.S. at 39). 14 court s in rem jurisdiction did not imply a waiver of 15 sovereign immunity permitting monetary recovery: 16 for payment of funds from the Treasury is quite different 17 from a suit for the return of tangible property . . . . 18 Nordic Village, 503 U.S. at 39. 19 Adeleke concluded that [t]he Sovereign s consent to be sued 20 for the latter form of relief does not imply its consent to 21 be sued for the former. 22 23 The Supreme Court held that the bankruptcy A suit Quoting that observation, Adeleke, 355 F.3d at 150. We read this precedent to say that seized currency should be treated like any other seized property: 9 if the 1 property is no longer available, sovereign immunity bars the 2 claimant from seeking compensation. 3 furnish a counter-argument; rather it confirms that money 4 seized from Diaz, now that it is disbursed, can no longer be 5 identified or located in the coffers of the government. 6 True, the fungibility of money argues the ease and precision 7 with which compensation can be achieved; but that says 8 nothing about whether sovereign immunity has been waived to 9 allow payment from the Treasury to compensate for any Fungibility does not 10 wrongful seizure of this one form of property. 11 join in the conclusion of the three sister circuits that 12 have issued precedential decisions on the question. 13 Bailey v. United States, 508 F.3d 736, 740 (5th Cir. 2007) 14 (instructing district court that if the government no longer 15 possesses the seized cash, [claimant s] motion must be 16 denied because the government cannot return property it does 17 not possess, and the doctrine of sovereign immunity bars the 18 award of monetary damages under Rule 41(g). ); Clymore v. 19 United States, 415 F.3d 1113, 1120 (10th Cir. 2005) 20 (remanding for determination of whether the government still 21 possessed claimant s personal property and cash, and holding 22 as to either item that sovereign immunity bars monetary 23 relief in a Rule 41[(g)] proceeding when the government no 10 We therefore See 1 longer possesses the property. ); Okoro v. Callaghan, 324 2 F.3d 488, 491 (7th Cir. 2003) (affirming on other grounds, 3 but stating that [a] suit for restitution is subject to the 4 defense of sovereign immunity when relief would require 5 disbursement of money from the treasury, even if the 6 government is merely an escrow agent holding funds owned by 7 the plaintiff. (citations omitted)); but see Perez-Colon v. 8 Camacho, 206 F. App x 1, 4 (1st Cir. 2006) (per curiam) 9 (non-precedential) (describing claim as one for return of 10 the very currency seized and not damages in substitution 11 for a loss, and ruling that recovery was not barred despite 12 the fact that the government obviously cannot restore to 13 [appellant] the specific currency that was seized (internal 14 quotation marks and citation omitted)). 15 Once seized currency has been disbursed and is no 16 longer available, a claim for its return is analogous to any 17 Rule 41(g) claim for the return of tangible property that is 18 no longer at hand: such claims are jurisdictionally barred 19 by the principle of sovereign immunity. 20 currency has been disbursed to the United States Treasury 21 and the Queens County District Attorney s Office; it is 22 therefore unavailable for return. 23 express waiver of sovereign immunity, we lack jurisdiction 24 to order the United States to pay the monetary equivalent. 11 Here, the seized In the absence of an B 1 2 Although Diaz styled his claim as a Rule 41(g) motion, 3 we liberally construe his pro se submissions to to raise 4 the strongest arguments that they suggest, Burgos v. 5 Hopkins, 14 F.3d 787, 790 (2d Cir. 1994), and therefore 6 consider whether they state a claim under the Federal Tort 7 Claims Act ( FTCA ), 28 U.S.C. §§ 1346(b), 2671-2680. 8 FTCA waives sovereign immunity, inter alia, for claims 9 against the United States, for money damages . . . for . . . The 10 loss of property . . . caused by the negligent or wrongful 11 act or omission of any employee of the Government while 12 acting within the scope of his office or employment. 13 § 1346(b)(1); see Adeleke, 355 F.3d at 153. 14 however, is made subject to the detention exception, 15 § 2680(c) of the FTCA, which bars claims arising in respect 16 of . . . the detention of any goods, merchandise, or other 17 property by any officer of customs or excise or any other 18 law enforcement officer. 19 478 F.3d at 492. 20 Id. This waiver, 28 U.S.C. § 2680(c); see Bertin, The Civil Asset Forfeiture Reform Act of 2000, Publ L. 21 No. 106-185, 114 Stat. 202 ( CAFRA ), amended § 2680(c) to 22 create an exception to the exception, that is, to permit 23 claims against the United States for injury or loss of goods 24 or property in law enforcement custody if the claimant can 12 1 satisfy four conditions: (1) the property was seized for the purpose of forfeiture under any provision of Federal law providing for the forfeiture of property other than as a sentence imposed upon conviction of a criminal offense; 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 § 2680(c)(1)-(4); see Ali v. Fed. Bureau of Prisons, 128 S. 23 Ct. 831, 837 (2008). 24 for a narrow category of forfeiture-related damages claims 25 was a safeguard created by CAFRA in response to the overly 26 enthusiastic pursuit of civil and criminal forfeiture. 27 United States v. Khan, 497 F.3d 204, 208 (2d Cir. 2007). 28 (2) the interest of the claimant was not forfeited; (3) the interest of the claimant was not remitted or mitigated (if the property was subject to forfeiture); and (4) the claimant was not convicted of a crime for which the interest of the claimant in the property was subject to forfeiture under a Federal criminal forfeiture law. This re-waiver of sovereign immunity See We need not consider each of § 2680(c) s requirements 29 in detail as it is immediately clear that Diaz cannot 30 satisfy the last one because he was convicted of the crime 31 for which his property was subject to forfeiture. 32 § 2680(c)(4). 33 currency reporting statute, for which the cash he was 34 carrying was subject to forfeiture. 28 U.S.C. Diaz pled guilty to violating the federal 13 See 31 U.S.C. § 1 5317(c). Accordingly, Diaz cannot benefit from § 2680(c) s 2 re-waiver of sovereign immunity, and there is no federal 3 jurisdiction under the FTCA to hear Diaz s claim for return 4 of the money. See Adeleke, 355 F.3d at 154. 5 CONCLUSION 6 7 8 For the foregoing reasons, the judgment of the district court is affirmed. 14

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