940 F2d 1537 United States v. Real Property Located at W 106th Street W

940 F.2d 1537

Unpublished Disposition

UNITED STATES of America, Plaintiff-Appellee,
Located at 3754 W. 106th Street, Real Property
Located at 10614 Doty Avenue, Inglewood,
California, Defendants,
Melvin Hanberg, Alice Hanberg, Claimants-Appellants.

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

No. 90-55092.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 7, 1991.
Decided Aug. 8, 1991.
As Amended on Grant of Rehearing
May 28, 1992.

Before TANG, REINHARDT, and WIGGINS, Circuit Judges.

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Melvin and Alice Hanberg appeal the district court's judgment of forfeiture of land and three houses owned by them and rented out to third parties. One of the houses was used extensively over three months by the tenants for the sale of crack cocaine. The jury found that the Hanbergs were not "innocent owners" and, therefore, could not prevent the drug-related forfeiture under 21 U.S.C. Sec. 881(a)(7). We affirm the jury's verdict as to Mr. Hanberg but reverse and remand its conclusion regarding his agency for his wife.

I. Deputy Clerk's Warrant of Seizure


The appellants argue that the district court had no jurisdiction over the property that is the subject of this litigation because it was unconstitutionally seized. They also argue that unconstitutionally seized property cannot be forfeited. The arguments are without merit. Even if the property was illegally seized, it can serve as the basis for in rem jurisdiction. United States v. One 1977 Mercedes Benz, 708 F.2d 444, 450 (9th Cir.1983), cert. denied, 464 U.S. 1071 (1984). Also, property seized in violation of constitutional rights can be forfeited if the forfeiture is supported by untainted evidence. Id. The appellants do not suggest that the forfeiture finding depended on evidence tainted by the seizure. Therefore, the forfeiture finding must stand or fall on other grounds.

II. Sufficiency of the Evidence


Next, the Hanbergs argue that the evidence was sufficient, as a matter of law, to establish that they were innocent owners entitled to retain their property under 21 U.S.C. Sec. 881(a)(7). However, the Hanbergs did not move for a directed verdict at the close of all the evidence. Therefore, the panel can review the evidence only to find plain error or "an absolute lack of evidence supporting the verdict." Benigni v. City of Hemet, 879 F.2d 473, 476 (9th Cir.1988).


To effect a forfeiture of real property under Sec. 881(a)(7), the government need only prove that the property was used or intended for use in violation of federal drug laws. United States v. One 1985 Mercedes, 917 F.2d 415, 419 (9th Cir.1990). This finding is independent of the guilt or innocence of the property owner. Id. The burden is entirely on the property owner, as an intervenor, to show that any violation occurred both without the owner's knowledge and without the owner's consent.1 See United States v. Lot 111-B, Tax Map Key 4-4-03-71(4), 902 F.2d 1443, 1445 (9th Cir.1990).


Mr. Hanberg introduced evidence of steps he took that he argues show a reasonable response to the drug activity and establish his lack of consent: After the first police raid in October, Hanberg unsuccessfully attempted to discover who was arrested; he did find that only one of the tenants to whom he had rented had any record of criminal activity, and even that consisted of only an old matter unrelated to illegal drugs; after he was warned about the drug activity by the police in November, Hanberg unsuccessfully attempted to contact his tenants; when the rent was not paid in December, he argues that he planned to bring an unlawful detainer action against the tenants, but the second police raid and subsequent abandonment of the house made that unnecessary.


At trial, Hanberg's evidence was put in the balance with the government's evidence that Hanberg had plenty of time to do more than he did to stop the illegal use of his property. The tenants in both adjoining houses spoke with Hanberg about drug activity many times during the period immediately after the activity began in August until the house was abandoned in December. These tenants were concerned for their own safety and also warned Hanberg that he could lose the house if nothing was done. At one point, Hanberg and one of the neighbors observed some drug transactions firsthand. Hanberg's response was always that he did not care how his tenants made their money as long as they paid their rent. Hanberg argues that it is the responsibility of law enforcement officers, not landlords, to deal with illegal drug activity and that he did not have the admissible evidence he would need to evict the tenants or bring an unlawful detainer action for illegal activity.

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Accepting his lack of evidence argument, which is doubtful given his own and the neighbors' eyewitness accounts, he could have given a 30-day termination notice to his month-to-month renters long before December without the burden and expense of initiating legal proceedings.


We hold that the jury verdict that Mr. Hanberg was not an innocent owner entitled to retain his property is not plain error or completely without evidentiary support. Whether the same is true as to Mrs. Hanberg depends upon the conclusion that her husband acted as her agent is supported by this record. To that issue we now turn.

III. Mr. Hanberg as Mrs. Hanberg's Agent


The trial judge decided as a matter of law that Mr. Hanberg acted as Mrs. Hanberg's agent. Therefore, the judge instructed the jury that the actions and knowledge of Mr. Hanberg should be imputed to Mrs. Hanberg. It was undisputed at trial that Mrs. Hanberg was not aware of the illegal drug activity until March 1988, after the government had instituted forfeiture proceedings and seized the property. The Hanbergs argue that Mr. Hanberg was an agent for Mrs. Hanberg in the day-to-day operation of their rental properties, but that she retained some duties in partnership with her husband. They argue that among the duties she retained was the duty to respond to legal violations. Therefore, they argue, her half of the community property should not be affected by any forfeiture that might result from her husband's inaction.


A spouse may act as agent for the other in transactions affecting community property. In re Nelson, 761 F.2d 1320, 1322 (9th Cir.1985). This agency may be shown by circumstantial evidence and by less evidence than other agency relationships. Davinroy v. Thompson, 169 Cal.App.2d 63, 336 P.2d 1028, 1030 (1959); cf. Hancock v. Williams, 99 Cal.App.2d 80, 221 P.2d 129 (1950). California law establishes that the existence of an agency relationship ordinarily poses a question of fact. Seneris v. Haas, 291 P.2d 915, 926 (1955); Pistone v. Superior Court, 279 Cal.Rptr. 173, 176 (1991); 2 B. Witkin, Summary of California Law, Agency Sec. 37 (9th ed. 1987). "Unless the evidence permits only one inference, the question is one for the trier of fact." Pistone v. Superior Court, 279 Cal.Rptr. at 176. Agency can be established by statements of the principal acknowledging the agency. Schlake v. McConnell, 257 P. 175, 177 (1927) (agency relation established by statement from defendant to plaintiff that third party was defendant's agent). "An agency relationship may be informally created." Housewright v. Pacific Far East Line, Inc., 40 Cal.Rptr. 208, 212 (1964). "No particular words are necessary to bring it into being." Id. All that is required is conduct by each party manifesting acceptance of a relationship whereby one of them is to perform work for the other under the other's direction. Id. Here Mrs. Hanberg testified that she did not delegate her authority to cure violations of the law. Mrs. Hanberg further testified that she brought violations to her husband's attention as soon as she knew about them, and the two of them would take care of these problems. Mrs. Hanberg testified that if she had been aware of the problems, she would have seen that something was done about them. These facts would appear to rebut the district court's agency conclusion. At the least, the agency question should have been submitted to the jury.


We reverse the trial court's decision that Mr. Hanberg's knowledge and action with regard to the illegal drug activity can be imputed to Mrs. Hanberg as a matter of law.

IV. Eighth Amendment and Civil Forfeitures


The Hanbergs argue that forfeiture of their property is out of proportion to any wrongdoing on their part and, therefore, violates the Eighth Amendment prohibition against excessive punishment. We have applied an Eighth Amendment proportionality analysis to criminal forfeitures, United States v. Busher, 817 F.2d 1409, 1413-16 (9th Cir.1987), but, noting that we found no case to the contrary, we have expressly declined to do so in the case of civil forfeitures. United States v. Tax Lot 1500, 861 F.2d 232, 233-35 (9th Cir.1988) (construing Sec. 881(a)(7)), cert. denied, 110 S.Ct. 364 (1989). We relied, in part, on the Supreme Court's continuation of the distinction between forfeiture proceedings in personam and in rem. See Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680-83 (1974) (in rem forfeiture proceedings depend on the "guilt" in the objects, irrespective of the guilt in the owners).


As in Tax Lot 1500, the argument that the Eighth Amendment applies to civil forfeitures is rejected.

V. Forfeiture of the Entire Lot


The Hanbergs argue, first, that only the leasehold interest in the property, not the fee simple, should be forfeited. They cite a case in which the district court found this to be true in the case of innocent owners. United States v. P.O. Box 1303, 734 F.Supp. 841, 841-42 (C.D.Ill.1990). However, Mr. Hanberg forgets that he is not an innocent owner. The statute provides for the forfeiture of all the ownership interests of a non-innocent owner: "All real property, including any right, title, and interest (including any leasehold interest) ..." is forfeitable. 21 U.S.C. Sec. 881(a)(7) (emphasis added). The fee simple is subject to forfeiture under Sec. 881(a)(7).


Second, the Hanbergs argued before the district court that, barring the application of Eighth Amendment proportionality analysis, the court should exercise judicial restraint and allow only a portion of the lot to be forfeited. There are three houses on the lot seized by the government, but only one house was used for selling drugs. The other houses were occupied by unrelated tenants who complained about the drug activity. Section 881(a)(7) directs that the entire lot or tract of land that was used "in any manner or part" to violate the drug laws is to be forfeited. However, we suggested in Tax Lot 1500 that a court may, in appropriate circumstances, order that only part of the property be forfeited. 861 F.2d at 235.


The decision to exercise judicial restraint in forfeiture proceedings under Sec. 881 is committed to the discretion of the trial court. Judicial restraint is not required as a matter of law and its exercise under Sec. 881 is similar to the exercise of restraint in abstention, or in mitigation of a judgment under Fed.R.Civ.P. Rule 60(b)--both matters that are committed to the trial court's discretion. See Hillery v. Rushen, 720 F.2d 1132, 1137 n. 3 (9th Cir.1983) (abstention); Thompson v. Housing, 782 F.2d 829, 832 (9th Cir.) (relief from judgment under Rule 60(b)), cert. denied, 479 U.S. 829 (1986).


The trial judge did not abuse his discretion in choosing not to reduce the extent of property forfeited in this case under Sec. 881(a)(7). It is true that only one of the three houses on the property was used for drug trafficking. However, the judge pointed out that in Calero-Toledo, the Supreme Court upheld the forfeiture of a lessor's $20,000 yacht which was in the custody of a lessee when one marijuana cigarette was discovered on board. The judge opined that, given the steady stream of overt drug activity for over three months at the house owned by the Hanbergs, the lessor in Calero-Toledo had a more compelling case for mitigation than the Hanbergs. The judge concluded:


[T]he evidence at trial demonstrated that claimants' willful dereliction of social responsibility countenanced the operation of their property as a crack house as a means of having a steady source of revenue from drug activities.... There is no demonstration that a forfeiture of the entire tract will leave them homeless or even financially devastated. Further, the crack cocaine sales involved were not isolated or trivial nor was claimants' role in allowing their property to be used for that purpose an insignificant facilitation of the offense. Thus, claimants' motion for parcelization of defendant Real Property is denied.


We affirm the district court's order denying parcelization of the forfeited property.



We AFFIRM the forfeiture judgment as to Mr. Hanberg's interest in the property. We reverse and remand for a new trial the question of whether Mr. Hanberg was the agent of his wife, Mrs. Hanberg. The court's order denying the Hanbergs' motion for parcelization of the property is affirmed.


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3


Presumably, the lack of consent requirement enables the property owner who acquires knowledge of illegal drug activity to show that the owner took, or was taking, reasonable steps to end the illegal use