Opinion
EP-02-CA-163-DB
February 18, 2003
MEMORANDUM OPINION AND ORDER
On this day, the Court considered Petitioner United States of America's "Motion to Dismiss" filed in the above-captioned cause on September 13, 2002. The only claimant in the case, Jesus Quintero-Jaime, filed a Response on October 7, 2002, to which Petitioner filed a Reply on October 17, 2002. After due consideration, the Court is of the opinion that the Petitioner's Motion should be granted for the reasons that follow.
BACKGROUND
On December 13, 2001, Customs Inspector Fran Chavez seized $61,483.00 in U.S. currency from Jose Jesus Quintero ("Quintero") when he attempted to cross from the United States to Mexico through the Stanton Bridge in El Paso, Texas. On January 9, 2002, Quintero was charged with transporting or attempting to transport monetary instruments of more than $10,000 from a place in the United States to and through a place outside the United States without filing a report, in violation of 31 U.S.C. § 5332 (a)(1). On March 29, 2002, Quintero pled guilty to that offense. On April 18, 2002, Petitioner filed a Verified Complaint for Forfeiture requesting forfeiture of the $61,483 in United States currency ("the Respondent Property") seized from Quintero, pursuant to 31 U.S.C. § 5316, 5317 and 5332. The Court issued an Order for Warrant of Arrest of Respondent Property and for Notice on June 7, 2002, and on June 21, 2002, Claimant was served with a copy of the Verified Complaint for Forfeiture. Claimant filed a Notice of Claim on July 5, 2002, alleging that he is the lawful and bona fide owner of a portion ($30,000) of the $61,483. Claimant also filed an "Answer to Verified Complaint for Forfeiture" on July 11, 2002. The instant Motion to Dismiss the claim followed.
DISCUSSION
In its Motion to Dismiss, Petitioner avers that Claimant lacks Article III standing to assert his claim to $30,000 of the Respondent Property. The Court agrees.
Standing is a "threshold question for entry into a federal court." United States v. $38,570 U.S. Currency, 950 F.2d 1108, 1111 (5th Cir. 1992). "As a predicate to any action before a federal court, parties must establish that they have proper standing to raise a claim. Absent a party with sufficient interest, the constitutional limitation of federal court jurisdiction to `cases or controversies' would prevent a federal court from considering the matter." Id. (internal quotations and citations omitted). "The burden of establishing standing to contest forfeiture is on the claimant seeking to come before the court." Kadonsky v. United States, 216 F.3d 499, 508 (5th Cir. 2000). "A claimant need not prove the merit of his underlying claim. He must, however, be able to show at least a facially colorable interest in the proceedings sufficient to satisfy the case-or-controversy requirement and the prudential considerations defining and limiting the role of the court." Id. (citing United States v. $9,041,598.68, 163 F.3d 238, 245 (5th Cir. 1998)).
In support of its Motion, Petitioner contends that Claimant cannot show that he has an interest in the Respondent Property sufficient to establish standing to contest the civil forfeiture. Claimant asserts that he loaned Quintero, who is his nephew, $35,000 to purchase a house in Nebraska. The loan was allegedly made through use of a cashier's check in the amount of $35,000. Claimant asserts, and Quintero agrees, that $30,000 of the Respondent Property was part of the $35,000 loan. Claimant argues, therefore, that he has a legal interest to contest the forfeiture.
According to Quintero, however, the actual purpose of the loan was to buy farm land in Mexico.
Petitioner, for its part, does not deny that Claimant has a legal interest in Quintero's assets, only that Claimant does not have an interest in the specific property that is the subject of the forfeiture sufficient to establish standing. Petitioner argues that, under Texas law, the status of Claimant is that of an unsecured lender because no writing creating a lien on all or any portion of the Respondent Property exists. In Texas, for a lender to create a security interest in specific property, the security agreement must be in writing, signed by the debtor, the writing must contain a description of the collateral, value must have been given, and the debtor must have rights to the collateral. See TEX. Bus. COM. CODE ANN. § 9.203 (Vernon 2000); see also Borg-Warner Acceptance Corp. v. C.I.T. Corp., 679 S.W.2d 140 (Tex.App.-Amarillo 1984, writ ref'd n.r.e.). Because no such agreement exists, Petitioner contends, Claimant's status is that of a general creditor in relation to Quintero. The Court agrees. The next question is whether Claimant, as a general creditor, has standing to assert a claim to the Respondent Property, a specific asset owned by Quintero. The Court finds that he does not.
It is well settled that "unsecured creditors of persons whose property is subject to forfeiture have a `legal interest' in the debtor's property. This conclusion alone, however, does not assure unsecured creditors standing to challenge the forfeiture of a defendant's assets. It requires that the interest exist in the property subject to forfeiture." United States v. Reckmeyer, 836 F.2d 200, 206-07 (4th Cir. 1987). "Because general creditors are unable to assert interests in specific assets, they cannot assert legal rights, titles, or interests `in property which has been ordered forfeited'. . . ." United States v. BCCI Holdings (Luxembourg), SA., Bank of Credit and Commerce Int'l, S.A., 833 F. Supp. 9, 15 (D.D.C. 1993) (citing Reckmeyer, 836 F.2d at 206 n. 3). Here, Claimant's status is that of a general creditor, and as such, he cannot assert a legal right to a portion of the Respondent Property. The mere allegation that he is the owner of $30,000 of the entire amount is insufficient. See Kadonsky, 216 F.3d at 508 (holding that claimant's unsupported assertion of ownership is insufficient to establish standing to challenge the forfeiture action); see also United States v. $38,570 U.S. Currency, 950 F.2d 1108, 1112 (5th Cir. 1992) (holding that a bare assertion of ownership of the res, without more, is inadequate to prove an ownership interest sufficient to establish standing).
In his Response to the Motion, Claimant argues that he is protected by 18 U.S.C. § 981 (a)(2)'s innocent owner provision. Claimant argues that the term "owner," as used in that section, has been interpreted broadly to include any person with a recognizable legal or equitable interest in the property seized. The problem with Claimant's argument, however, is that under the current innocent owner provision, unsecured creditors are expressly excluded from the definition of"owner." 18 U.S.C.A. § 983(d) (West Supp. 2002). Section 983(d)(6) provides in relevant part:
In this subsection, the term owner —
(A) means a person with an ownership interest in the specific property sought to be forfeited, including a leasehold, lien, mortgage, recorded security interest, or valid assignment of an ownership interest; and
(B) does not include —
(i) a person with only a general unsecured interest in, or claim against, the property or estate of another;18 U.S.C.A. § 983(d) (West Supp. 2002). Thus, having determined that Claimant's status is that of a general creditor, he is barred from invoking the innocent owner provision in 18 U.S.C. § 983 (d).
Claimant makes two alternative arguments which the Court will address briefly. First, Claimant contends that his interest in the Respondent Property can be characterized as that of a beneficial owner of a constructive trust, and that as such, he has standing to contest the civil forfeiture. However, although various courts have recognized that beneficial owners of a constructive trust have standing to contest a civil forfeiture, see Torres v. $36,256.80 U.S. Currency, 25 F.3d 1154, 1160 (2nd Cir. 1994); United States v. BCCI Holdings (Luxembourg), SA., 833 F. Supp. 9, 14 (D.D.C. 1993), Claimant's argument fails because the facts do not support the imposition of a constructive trust. The required elements for imposition of a constructive trust under Texas law are: a) actual or constructive fraud; b) unjust enrichment of the wrongdoer; and c) tracing of the property over which the trust is placed to some identifiable res in which the claimant has an interest. Burkhart Brob Luft Und Raumfahrt GMBH Co. Kg v. E-Systems, Inc., 257 F.3d 461, 469 (5th Cir. 2001). Under Texas law, therefore, fraud, either actual or constructive, must be present to justify imposing a constructive trust. Exploration Co. v. Vega Oil Gas Co., 843 S.W.2d 123, 127 (Tex.App.-Houston [14th Dist.] 1992, writ denied). In the instant case, Claimant makes no allegations that his nephew Quintero committed fraud. In fact, Claimant concedes that under the terms of the agreement, Quintero would start repaying the loan once he began to make profits from growing produce. Thus, the Court finds no evidence of fraud to support the imposition of a constructive trust.
Claimant's second argument, that his interest in the Respondent Property should be characterized as a bailment, similarly fails because the facts do not support the existence of a bailment contract between Claimant and Quintero. The elements of a bailment are: a) the delivery of personal property from one person to another for a specific purpose; b) an acceptance by the transferee of such delivery; c) an agreement that the purpose will be fulfilled; and d) an understanding that the property will be returned to the transferor or dealt with as the transferor directs. Smith v. Radam, 51 S.W.3d 413, 417 (Tex.App.-Houston [1st Dist.] 2001, no writ). In reviewing the evidence presented, the Court finds that the $35,000 was not delivered and accepted for an agreed upon purpose. There is conflicting evidence regarding how the money was to be used. Quintero claims that he borrowed the $35,000 from Claimant to purchase farm land in Mexico, while Claimant states that he loaned the money to Quintero to purchase property in Nebraska. Under these facts, it appears that Claimant was merely under the impression that the money would be used to obtain property in Nebraska. There is no evidence showing that Claimant indicated to Quintero, and Quintero agreed, that the loan proceeds were specifically for the purchase of the property in Nebraska. Absent an express or implied bailment contract, the Court finds that Claimant's status is not that of a bailor and that he has no standing to contest the civil forfeiture in that capacity.
Having considered the evidence presented by both Parties, the Court is of the opinion that Claimant has failed to establish Article III standing to assert his claim to $30,000 of the $61,483 in
U.S. currency seized from Quintero. The Court is, therefore, of the opinion that Petitioner's Motion to Dismiss should be granted.
Accordingly, IT IS HEREBY ORDERED that Petitioner's "Motion to Dismiss" is GRANTED.