FirstBank Puerto Rico v. MDS Caribbean Seas Limited et al

Filing 19

OPINION AND ORDER granting 11 MOTION to Dismiss. Signed by Judge Salvador E Casellas on 10/23/2009.(THD)

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I N THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO F IR S T B A N K PUERTO RICO Plaintiff v. M D S CARIBBEAN SEAS LIMITED, et al D e f e n d a n ts C iv il No. 09-1834 (SEC)

OPINION and ORDER P e n d in g before this the United States of America's ("United States") Motion to Dismiss o r Stay (Docket # 11), and Plaintiff's opposition thereto (Docket # 17). After reviewing the f ilin g s , and the applicable case law, the United States' request for dismissal without prejudice s h a ll be GRANTED. F a c tu a l and Procedural Background T h e present action was brought by Plaintiff, FirstBank of Puerto Rico, the alleged holder o f a promissory note for $1,212,000.00 granted by MDS Caribbean Seas Limited ("MDS"), and its shareholders Michael Diaz ("Diaz") and Omayra Rodriguez ("Rodriguez), and guaranteed b y a preferred ship mortgage for $1,212,000.00 on the motor vessel Black Sea M.V. ("the V e s s e l" ) owned by MDS. In March 2009, the Vessel was seized by the United States during a d ru g enforcement action, which led to the criminal case U.S. v. Andujar-Aponte, Crim. No. 090 9 6 (D.P.R. 2009), against herein unnamed individuals for conspiracy to possess, distribute, and im p o rt controlled substances. A f te r the seizure of the Vessel, MDS defaulted on its obligations to Plaintiff, who now s e e k s to foreclose on the mortgage. Accordingly, Plaintiff began an administrative forfeiture p ro c e e d in g with United States Customs and Border Protection ("CBP") to reclaim the Vessel, b u t said proceeding was put on hold by CBP pending the resolution of the criminal case.

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H a v in g seen its administrative efforts stymied, Plaintiff now seeks to enforce its claim for 3 o u ts ta n d in g indebtedness against the Vessel under 46 U.S.C. Sec. 31325. Plaintiff avers that it 4 s h o u ld be adjudged holder of a first preferred ship mortgage, that this Court declare its lien to 5 b e superior to all others, and that the mortgage be foreclosed, and the Vessel sold to pay its 6 d e m a n d s and claims against MDS, Diaz, and Rodriguez. 7 The pleadings do not indicate that any of the parties in the present action are co8 d e f e n d a n ts in the criminal action. Nevertheless, the United States alleges that the Vessel is 9 s u b je c t to forfeiture upon conviction of the defendants in the criminal action pursuant to 21 10 U .S .C . Sec. 853 & 881, and 46 U.S.C. Sec. 70507. The United States also alleges that the 11 c u r r e n t maritime foreclosure suit is barred by 21 U.S.C. Sec. 853(k), and thus prays for 12 d ism is s a l under Fed. R. Civ. P. 12(b)(6). 13 Standard of Review 14 T o survive a Rule 12(b)(6) motion, Plaintiffs' "well-pleaded facts must possess enough 15 h e f t to show that [they are] entitled to relief." Clark v. Boscher, 514 F. 3d 107, 112 (1st Cir. 16 2 0 0 8 ).1 In evaluating whether Plaintiffs are entitled to relief, the court must accept as true all 17 o f their "well-pleaded facts [and indulge] all reasonable inferences therefrom" in the plaintiff's 18 f a v o r. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007). The First Circuit has held 19 th a t "dismissal for failure to state a claim is appropriate if the complaint fails to set forth factual 20 a lle g a tio n s , either direct or inferential, respecting each material element necessary to sustain 21 re c o v e ry under some actionable legal theory." Gagliardi v. Sullivan, 513 F. 3d 301, 305(1st Cir. 22 2 0 0 8 ). Courts "may augment the facts in the complaint by reference to documents annexed to 23 24 25 26 FED. R. CIV. P. 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to allow the defendant fair notice of what the claim is and the grounds upon which it rests. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007).
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th e complaint or fairly incorporated into it, and matters susceptible to judicial notice." Id. at 3 3 0 5 -3 0 6 . However, in judging the sufficiency of a complaint, courts must "differentiate between 4 w e ll-p le a d e d facts, on the one hand, and `bald assertions, unsupportable conclusions, 5 p e rip h ra s tic circumlocution, and the like,' on the other hand; the former must be credited, but 6 th e latter can safely be ignored." LaChapelle v. Berkshire Life Ins., 142 F.3d 507, 508 (quoting 7 A u ls o n v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996)); Buck v. American Airlines, Inc., 476 F. 3d 8 2 9 , 33 (1st Cir. 2007); see also Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999). Thus Plaintiffs 9 m u s t rely in more than unsupported conclusions or interpretations of law, as these will be 10 re je c te d . Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997) (citing Gooley v. Mobil Oil Corp., 11 8 5 1 F.2d 513, 515 (1st Cir. 1988)). 12 Therefore, "even under the liberal pleading standards of Federal Rule of Civil Procedure 13 8 , the Supreme Court has recently held that to survive a motion to dismiss, a complaint must 14 a lle g e `a plausible entitlement to relief.'" Rodríguez-Ortíz v. Margo Caribe, Inc., 490 F.3d 92 15 (1 st Cir. 2007) (citing Twombly, 127 S. Ct. at 1965). Although complaints do not need detailed 16 f a c tu a l allegations, the "plausibility standard is not akin to a `probability requirement,'but it 17 a s k s for more than a sheer possibility that a defendant has acted unlawfully." Twombly, 127 18 S . Ct. At 1965; see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). A plaintiff's obligation 19 to "provide the `grounds' of his `entitle[ment] to relief' requires more than labels and 20 c o n c lu s io n s , and a formulaic recitation of the elements of a cause of action will not do." 21 T w o m b ly, 127 S. Ct. At 1965. That is, "factual allegations must be enough to raise a right to 22 re lie f above the speculative level, on the assumption that all allegations in the complaint are 23 tru e ." Parker v. Hurley, 514 F. 3d 87, 95 (1st Cir. 2008). 24 25 26

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3 T h e United States alleges that Plaintiff's suit with respect to its alleged interest in the 4 V e s s e l is barred by 21 U.S.C. § 853(k). See Docket # 11 at 3. The Government's specific 5 a rg u m e n t is that 21 U.S.C. § 853(k), incorporated by 18 U.S.C. § 982(b)(1), specifically bars 6 th i r d party claimants on property subject to criminal forfeiture from commencing any action 7 a g a in st the United States with respect to said property, ". . . except by filing a claim in the 8 a n c i l l a ry forfeiture proceeding, to be held after the defendants have been convicted and a 9 f o rf e itu re order has been entered . . ." Id. The text of the relevant section states: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Except as provided in subsection (n) of this section [i.e., the ancillary n o tic e and earing provision], no party claiming an interest in property subject to forfeiture under this section may ­ (1) intervene in a trial or appeal of a c rim in a l case involving the forfeiture of such property under this section; or (2 ) commence an action at law or equity against the United States concerning th e validity of his alleged interest in the property subsequent to the filing of an in d ic tm e n t or information alleging that the property is subject to forfeiture u n d e r this section. 2 1 U.S.C. § 853(k) A c c o rd in g ly, the guidelines for third party interventions are set forth in 28 U.S.C. § 8 5 3 (n ) of the Comprehensive Drug Abuse Prevention and Control Act. This section explains th a t claims by third party interests in forfeited property begin "[f]ollowing the entry of an order o f forfeiture [under § 853] . . .," when the United States must publish notice of its intention to d isp o se of the property, and, "to the extent practicable, provide direct written notice to any p e rs o n known to have alleged an interest in the property. . ." 28 U.S.C. § 853(n)(1). At this p o in t, a third party may "petition the court for a hearing to adjudicate the validity of his alleged in te re s t in the property," (28 U.S.C. § 853(n)(2)), where it must prove either at the time of the a c ts 1) a superior interest to the defendant, or 2) a bona fide purchase without cause to believe th a t the property was subject to forfeiture. See 21 U.S.C. § 853(n)(6)(B) & (A).

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W h ile this Court has not identified a First Circuit decision reciting a rule that would 3 d isp o se of the present action, many other circuits have held that third parties may not intervene 4 d u rin g criminal forfeiture proceedings to assert their interests in the property being forfeited. 5 D S I Associates LLC v. U.S., 496 F.3d 175, 183 (2nd Cir. 2007); see also U.S. v. McHan, 345 6 F .3 d 262, 269 (4th Cir. 2003), U.S. v. Gilbert, 244 F.3d 888, 910 (11th Cir. 2001). These 7 d e c is i o n s have interpreted that § 853 bars actions at law or equity alleging an interest in the 8 p ro p e rty subsequent to an indictment of the property. Id. (citing De Almeida v. United States, 9 4 5 9 F.3d 377, 381 (2d Cir.2006)). The Supreme Court has also described § 853(n) as the 10 " m e a n s by which third-party rights must be vindicated." Libretti v. United States, 516 U.S. 29, 11 4 4 , 116 S.Ct. 356, 133 L.Ed.2d 271 (1995) 12 A c c o rd in g ly, the exclusive steps for obtaining relief from a preliminary forfeiture are 13 th o s e outlined in § 853(n) and § 1963 (I). U.S. v. Soreide, 461 F.3d 1351, 1354 (11th Cir. 2006). 14 M o re o v e r, § 853(n) is the only avenue for a third party to make a claim after the preliminary 15 f o rf e itu re order has been entered. Id. 16 W ith regards to claims regarding the Due Process Clause of the Fifth Amendment, 17 P la in tif f cannot allege sufficient injury-in-fact. Its claim is for a maritime mortgage guaranteed 18 b y the Vessel, which will not disappear during the pendency of the criminal action. The Due 19 P r o c e s s Clause is not a concern in this action, because Plaintiff may eventually intervene as 20 d ire c te d under § 853(n). There is little doubt that Plaintiff has a claim arising from 28 U.S.C. 21 § 853(n)(2), and will be able to assert its right to the Vessel in due time. Furthermore, under 22 2 1 U.S.C. 853(i)(1), "[a] third party that possesses an interest in forfeited property yet does not 23 m e e t the standing requirements of 853(n) may petition the Attorney General for redress. . ." 24 DSI Associates, 496 F.3d at 187. Nothing impedes Plaintiff from contacting the Attorney 25 G e n e ra l in order to coordinate the proper preservation and maintenance of the Vessel should this 26

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b e a significant concern. The pleadings do not suggests these efforts would necessarily be futile. 3 A c c o rd in g ly, this Court concludes that Plaintiff has not stated any grounds for concern 4 re g a rd in g its rights under the Due Process Clause. 5 Conclusion 6 B a s e d on the foregoing, this Court GRANTS Defendants' request for dismissal. The 7 insta n t case is hereby DISMISSED without prejudice. Judgement shall be entered accordingly. 8 I T IS SO ORDERED. 9 In San Juan, Puerto Rico, this 23rd day of October, 2009. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 S / Salvador E. Casellas S A L V A D O R E. CASELLAS U n ite d States District Judge