United States of America v. Real Property Located at 1308 Selby Lane, Knoxville, Tennessee 37922

Filing 43

MEMORANDUM OPINION: Knox County's Motion to Intervene [doc. 36 ], Motion to Consolidate [doc. 37 ], and Motion for Oral Argument [doc. 42 ] are not properly before the Court and are DENIED. The Court will enter an order consistent with this opinion. Signed by District Judge R Leon Jordan on 9/19/17. (JBR)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
KNOXVILLE DIVISION

UNITED STATES OF AMERICA,
Plaintiff,
v.
REAL PROPERTY LOCATED AT
1308 SELBY LANE,
KNOXVILLE, TENNESSEE 37922
Defendant.

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No. 3:10-CV-423

MEMORANDUM OPINION
This matter is before the Court on Intervenor-Claimant Knox County, Tennessee’s
Motion to Intervene [doc. 36], the United States’ Response in Opposition [doc. 40],
Intervenor-Claimant Knox County, Tennessee’s Motion to Consolidate [doc. 37], the
United States’ Response in Opposition [doc. 41], and Intervenor-Claimant Knox County,
Tennessee’s Motion for Oral Argument [doc. 42]. For the reasons herein, the Court will
deny the motions.
I.

BACKGROUND

The United States brought this civil forfeiture action against two properties—one
located at 1308 Selby Lane, Knoxville, Tennessee 37922 and the other located at 1525
Wembley Hill Road, Knoxville, Tennessee 37922, (“Defendant Properties”)—claiming
they were subject to forfeiture under 28 U.S.C. §§ 981(a)(1)(C), 2461. [Verified Compl.,
doc. 1, ¶ 8]. Specifically, the United States alleged that Leslie Janous (“Ms. Janous’)

purchased the Defendant Properties with $647,698 in criminal proceeds, which she
unlawfully obtained through acts of wire fraud, and that the Defendant Properties were
therefore subject to forfeiture. [Id. ¶ 10].1 Three claimants came forward and asserted an
interest in the Defendant Properties—Regions Bank, The Painted Room, and Scancarbon,
Inc. [Regions Bank Verified Claim, doc. 8; The Painted Room Verified Claim, doc. 15;
Scancarbon, Inc. Verified Claim, doc. 16]. Recognizing their interests, the United States
reached an agreement with them for the final disposition of the Defendant Properties, and
the parties moved to preserve the agreement in a Consent Order [doc. 19], which provided
the United States with the right to sell the Defendant Properties and use the proceeds to
meet the claimants’ interests. [Id. ¶ 11].2 The Court approved the Consent Order, which,
by its own terms, “constitute[d] entry of a final order of forfeiture.” [Id.].
But as the United States prepared to sell the Defendant Properties, a dialogue began
between it and Knox County, Tennessee (“Knox County”)—which, though it was not a
party to the Consent Order, apparently contacted the United States Attorney’s Office and
maintained that it too had an interest in the Defendant Properties,3 namely liens for the

1

The United States indicted Ms. Janous on thirteen counts of wire fraud and brought
criminal forfeiture allegations against the Defendant Properties as well. [Indictment at 1–6, doc. 5,
United States v. Leslie Janous, No. 3:10-CR-00124 (E.D. Tenn. Oct. 5, 2010)]. She eventually
reached a plea agreement with the United States, and as part of her agreement, she forfeited her
interest in the Defendant Properties to the United States. [Am. Plea Agreement, doc. 33, ¶ 13,
United States v. Leslie Janous, No. 3:10-CR-00124 (E.D. Tenn. Feb. 24, 2011)]. The Court
sentenced her to a term of 110 months in prison. [J., doc. 57, at 2, United States v. Leslie Janous,
No. 3:10-CR-00124 (E.D. Tenn. Nov. 9, 2011)].
2
The Painted Room assigned its interest in the Defendant Properties to Scancarbon, Inc.
[Consent Order ¶ 6].
3
Well before the Court’s entry of the Consent Order, the United States had recorded a Lis
Pendens [doc. 3] in the Knox County Register of Deeds.
2

payment of back taxes. [See Joint Mot. Hold Proceeds in Escrow, doc. 21, at 3]. A dispute
then arose between Knox County and the United States, with the United States contending
that Knox County was only entitled to collect taxes that had accumulated prior to entry of
the Consent Order, not after it. [See United States’ Br., doc. 24, ¶¶ 10–11]. In an effort to
resolve their dispute, the United States acknowledged Knox County’s lien as valid and
purported to have waived the requirement that Knox County must file a verified claim of
interest in the Defendant Properties. [Id. ¶ 8]. Together, they moved the Court to hold the
proceeds from the Defendant Properties’ sale in escrow, until the Court could determine
the extent of Knox County’s liens. [Joint Mot. Hold Proceeds in Escrow at 3]. Although
the Court granted the parties’ motion, [Order, doc. 22], Knox County soon afterwards
moved for relief from the Consent Order altogether, seeking an order “declaring all
proceedings, orders, and judgments . . . void and of no effect.” [Mot. Relief, doc. 25, at 1].
The Court denied Knox County’s motion [Order Denying Mot. Relief, doc. 33], and Knox
County appealed its decision, [Notice of Appeal, doc. 34].
The Sixth Circuit rejected Knox County’s appeal, dismissing it for lack of subject
matter jurisdiction because Knox County had never properly become a party to the lawsuit
in the first place. [Sixth Circuit’s Order, doc. 35, at 3–4]. The Sixth Circuit noted that
because a civil forfeiture action is in rem—meaning that the property subject to forfeiture,
rather than a person, is the defendant—a third party with an interest in the property has to
intervene in the case before it can protect that interest. [Id. at 4]. The Sixth Circuit stated
that Knox County could have intervened in three ways: (1) by filing a verified claim, (2)
by filing a motion to intervene under Federal Rule of Civil Procedure 24, or (3) by
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requesting the Sixth Circuit’s permission to intervene in a post-judgment capacity for
purposes of appeal. [Id. at 4]. Because “Knox County did none of those things,” it was
unable to recognize Knox County as a party to the case. [Id. at 3–4]. Now, Knox County
reappears before this Court with a Rule 24 motion to intervene in hand, asking the Court
to acknowledge it as “a party to this civil forfeiture proceeding,” [Mot. Intervene ¶ 34], and
to set aside the forfeiture of the Defendant Properties, [Mot. Relief, doc. 36-1, at 1].
II.

LEGAL STANDARD

Intervention is “[t]he entry into a lawsuit by a third party who, despite not being
named a party to the action, has a personal stake in the outcome.” Intervention, Black’s
Law Dictionary (10th ed. 2014) (citing Fed. R. Civ. P. 24). Intervention is available to a
party in two forms under the Federal Rules of Civil Procedure: intervention as of right and
permissive intervention. Fed. R. Civ. P 24(a)–(b). Federal Rule of Civil Procedure 24(a)
permits a party to intervene in an action as of right, which means a court must allow a party
to intervene when that party:
(1) is given an unconditional right to intervene by a federal statute; or
(2) claims an interest relating to the property or transaction that is the subject
of the action, and is so situated that disposing of the action may as a
practical matter impair or impede the movant’s ability to protect its
interest, unless existing parties adequately represent that interest.
Fed. R. Civ. P. 24(a). Under this language, a would-be intervenor must satisfy four
elements before he is entitled to intervene: “(1) the motion to intervene is timely; (2) the
proposed intervenor has a substantial legal interest in the subject matter of the case; (3) the
proposed intervenor’s ability to protect their interest may be impaired in the absence of
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intervention; and (4) the parties already before the court cannot adequately protect the
proposed intervenor’s interest.” Coal. to Defend Affirmative Action v. Granholm, 501 F.3d
775, 779 (6th Cir. 2007) (citation omitted). “[A] failure to meet [any] one of the [four
factors] will require that the motion be denied.” Grubbs v. Norris, 870 F.2d 343, 345 (6th
Cir. 1989).
III. ANALYSIS
Although Knox County does not expressly say so, the type of intervention that it
pursues appears to be intervention as a matter of right under Rule 24(a), parts of whose
language it recites, if only briefly, in its motion. [See Mot. Intervene ¶¶ 35–36]. As an
initial matter, the fact that a case like this one is in post-judgment cannot in and of itself
preclude a party from achieving intervention. See Taylor v. KeyCorp, 680 F.3d 609, 616
n.7 (6th Cir. 2012) (“Entry of final judgment, alone, is not a basis upon which to deny a
motion to intervene.” (citing United Airlines, Inc. v. McDonald, 432 U.S. 385, 394–96
(1977))). Rather, the question of whether a motion to intervene is timely—the first of the
four elements for analysis under Rule 24(a)—is “a matter within the sound discretion of
the district court.” Stotts v. Memphis Fire Dep’t, 679 F.2d 579, 582 (6th Cir. 1982)
(citations omitted).
But even before the Court weighs the issue of timeliness—or any issue relating to
the four elements for analysis—it must recognize that intervention is first and foremost a
matter of standing. “For all relief sought, there must be a litigant with standing, whether
that litigant joins the lawsuit as a plaintiff, a coplaintiff, or an intervenor of right.” Town

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of Chester v. Laroe Estates, Inc., 137 S. Ct. 1645, 1651 (2017) (emphasis added).4 Standing
to sue is a doctrine that “limits the category of litigants empowered to maintain a lawsuit
in federal court to seek redress for a legal wrong.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540,
1547 (2016) (citations omitted). The legal wrong that Knox County, as a prospective
intervenor, seeks to redress is the civil forfeiture of the Defendant Properties, and it
requests an order setting aside that forfeiture. [Mot. Intervene at 9; Mot. Relief at 1].5 In
reviewing Knox County’s right to intervene and pursue this relief, the Court has license to
raise standing sua sponte because it is a prerequisite for subject matter jurisdiction, Loren
v. Blue Cross & Blue Shield of Mich., 505 F.3d 598, 607 (6th Cir. 2007), without which
the Court cannot hear Knox County’s cause, Steel Co. v. Citizens for a Better Env’t, 523
U.S. 83, 94 (1998).
In a civil forfeiture action, a third party who wishes to claim an interest in the res
must have constitutional standing and statutory standing. United States v. $515,060.42 in
U.S. Currency, 152 F.3d 491, 497 (6th Cir. 1998). Statutory standing requires a third party

Before the Supreme Court’s recent decision in Town of Chester—in which it held that
intervenors must establish Article III standing if they request relief different from a plaintiff’s
request for relief, 137 S. Ct. at 1651, “[c]ourts remain[ed] divided . . . on the question of whether
an intervenor must establish Article III standing,” Davis v. Lifetime Capital, Inc., 560 F. App’x
477, 487–88 (6th Cir. 2014) (quotation omitted); see Providence Baptist Church v. Hillandale
Comm., Ltd., 425 F.3d 309, 315 (6th Cir. 2005).
5
Knox County asserts its right to this relief under Federal Rule of Civil Procedure 60 rather
than under 18 U.S.C. § 983(e), which enumerates two specific conditions that a party must meet
before a court may set aside a forfeiture. In light of § 983(e), the application of Rule 60 to this case
is somewhat dubious. Cf. United States v. Contents of Accounts, 629 F.3d 601, 606–09 (6th Cir.
2011) (determining that Federal Rule of Civil Procedure 65 does not apply to forfeiture actions
because its factors for injunctive relief differ from Rule G’s procedure for the release of seized
property).
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to meet Congress’ statutory requirements for claiming an interest in the res, namely those
in the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions:
In any case in which the Government files in the appropriate United States
district court a complaint for forfeiture of property, any person claiming an
interest in the seized property may file a claim asserting such person’s
interest in the property in the manner set forth in the Supplemental Rules for
Certain Admiralty and Maritime Claims[.]
18 U.S.C. § 983(a)(4)(A). Under Rule G(5) of the Supplemental Rules, a third party who
has an interest in the res must assert that interest by filing a verified claim, without which
he cannot attain statutory standing and become a litigant in the forfeiture proceeding in
rem. See United States v. Real Props. & Premises, 521 F. App’x 379, 384 (6th Cir. 2013)
(“[A] claimant must establish statutory standing by complying with Rule G(5)[.])”
(emphasis added)); United States v. Real Prop. Located at Mich. Ave., 489 F. App’x 855,
858 (6th Cir. 2012) (“[Claimants] lacked statutory standing to bring these claims, because
they did not comply with Supplemental Rule G[.]”); United States v. $22,050.00 U.S.
Currency, 595 F.3d 318, 323 n.5 (6th Cir. 2010) (“[W]e require ‘strict compliance’ with
the supplemental rules as a prerequisite for statutory standing to challenge a forfeiture
action.” (quotation omitted)); United States v. 8 Gilcrease Lane, 641 F. Supp. 2d 1, 5
(D.D.C. 2009) (“A verified claim in a forfeiture action in rem must be filed by the claimant
in order for the claimant to acquire ‘statutory standing[.]’” (quotation omitted)).
A verified claim under Rule G(5) remains necessary for statutory standing when a
third party asserts an interest in the res as a would-be intervenor. See Gilcrease Lane, 641
F. Supp. 2d at 5 (“Congress has required a would-be intervener to establish, by filing a
timely verified claim to some or all of the defendant property, that the claimant has an
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interest in . . . the particular defendant property. Compliance with these requirements gives
rise to ‘statutory standing.’” (citations and footnote omitted)); see also United States v.
Vazquez-Alvarez, 760 F.3d 193, 197 (2d Cir. 2014) (“[T]he Forfeiture Rules require
claimants [to] establish standing to intervene in the in rem action . . . . by filing a claim in
the court where the action is pending.” (quoting Suppl. R. Admiralty or Mar. Cls. & Asset
Forfeiture Actions G(5)(a)(i)); United States v. $487,825.00 in U.S. Currency, 484 F.3d
662, 664 (3d Cir. 2007) (asserting that a would-be intervenor “lack[ed] statutory standing
to intervene” because he did not comply with the “most significant requirement . . . that
the claimant must timely file a verified [claim]” (citation omitted)); United States v. OneSixth Share of Lottery Ticket No. M246233, 326 F.3d 36, 40–41 (1st Cir. 2003) (observing
that “[t]he federal forfeiture statute defines rules as to who may intervene and when they
must do it” and noting that a “failure to file [a] timely claim disqualifies [a] would-be
intervenor” (citation omitted)); Stefan D. Cassella, Asset Forfeiture Law in the United
States 311 n.208 (2d ed. 2013) (“[F]iling a claim pursuant to Rule G(5) is the only way a
third party can intervene in a civil forfeiture case.”).
The district courts in this circuit have reached the same conclusion—a would-be
intervenor must file a verified claim to obtain statutory standing in a forfeiture action. See
United States v. $311,570 in U.S. Currency, No. 3:12 CV 1285, 2013 WL 6162989, at *4
(N.D. Ohio Nov. 22, 2013) (“[D]efenses to the civil forfeiture must be brought by a third
party intervenor. This third party must himself have independent standing. Such standing
involves satisfaction of both constitutional and statutory requirements.” (citations
omitted)); United States v. One Silicon Valley Bank Account, No. 1:05-cv-295, 2007 WL
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1594484, at *3 (W.D. Mich. June 1, 2007) (“[B]ecause the Proposed Intervenors did not
timely file claims . . . their motion to intervene will be denied for lack of standing.”); United
States v. $38,852.00 in U.S. Currency, 328 F. Supp. 2d 768, 769 (N.D. Ohio 2004)
(“Because the [would-be intervenor] lacks standing . . . her Motion for Intervention is
denied.”).
Knox County has not filed a verified claim—timely or otherwise.6 In fact, it asks
the Court to waive Rule G(5)’s requirement of a duly filed verified claim in the res; in
lieu of a verified claim, it requests “that the district court [interpret] its prior pleadings
together with this Motion to Intervene as a ‘claim’ inasmuch as [it] has set out all of the
necessary elements of its claim.” [Mot. Intervene ¶ 33]. Knox County’s request has
problems to spare. First, Knox County has filed no prior pleadings in this action, only
motions. Second, Rule G(5)’s requirement of a verified claim is not some mindless
technicality but a congressional requirement, see 18 U.S.C. § 983(a)(4)(A), with
important objectives, $487,825.00 in U.S. Currency, 484 F.3d at 664–65; United States
v. Thirty-Five Firearms, 123 F. App’x 204, 207 (6th Cir. 2005). Indeed, “[c]ourts have
repeatedly emphasized that forfeiture claimants must strictly adhere to the filing
requirements to perfect standing.” $487,825.00 in U.S. Currency, 484 F.3d at 665
(citations omitted); see $22,050.00 U.S. Currency, 595 F.3d at 323 n.5 (stating that courts
in the Sixth Circuit must strictly comply with Rule G).

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Knox County asserts that it has not filed a claim to date because the United States did
not give it proper notice of the forfeiture action. [Mot. Intervene ¶¶ 7–8, 33]. But Knox County
must first file a claim, without which it lacks standing, before the Court can even consider any
issues relating to the claim’s timeliness.
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The fact the United States purports to have “recognized the valid lien without
requiring Knox County to file a claim” is meaningless. [United States’ Br. ¶ 8]. Again,
the filing of a verified claim under Rule G(5) is an antecedent to standing, without which
the Court does not have subject matter jurisdiction over Knox County’s cause. Citizens
for a Better Env’t, 523 U.S. at 94. Neither the United States nor any other party can
unilaterally waive requirements implicating the Court’s ability to exercise its subject
matter jurisdiction. See Ammex, Inc. v. Cox, 351 F.3d 697, 702 (6th Cir. 2003) (stating
that “parties cannot waive the requirement of subject matter jurisdiction” (quotation
omitted)).
In addition, Knox County’s assertion that its “Motion to Intervene [i]s a ‘claim’
inasmuch as [it] has set out all of the necessary elements of its claim” is hardly accurate
under Rule G(5). For one thing, Rule G(5)(a)(i)(C) states that a claim must be signed “by
the claimant” and under the penalty of perjury. When counsel signs a claim on behalf of
the claimant—as is the case here, [Mot. Intervene at 10]—it is invalid and the claimant
lacks statutory standing. See United States v. One Men’s Rolex Masterpiece Watch, No.
07-2508-STA-dkv, 2008 WL 2769368, at *1 (W.D. Tenn. July 11, 2008) (determining
that a claimant was without statutory standing because the claim contained counsel’s
notarized signature, which is insufficient under Rule G(5)(a)(i)(C)); see also $22,050.00
U.S. Currency, 595 F.3d at 323 n.5 (demanding strict compliance with Rule G).
Rule G(5)(a)(i)(C)’s exacting standard is one example of how Rule G(5) differs in
important respects from Rule 24(a) when a third party’s ability to enter an in rem action
is at issue. This difference is not inconsequential because Rule 24(a)—and more broadly
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the Federal Rules of Civil Procedure as a whole—apply to forfeiture actions “except to
the extent that they are inconsistent with th[e] Supplemental Rules.” Suppl. R. Admiralty
or Mar. Cls. & Asset Forfeiture Actions A(2) (emphasis added); see Contents of Accounts,
629 F. 3d 601, 606–09 (6th Cir. 2011) (holding that Federal Rule of Civil Procedure 65
is inapplicable to forfeitures because its factors for injunctive relief differ from Rule G’s
procedure for the release of property). While both Rule 24(a) and Rule G(5) allow third
parties to assert an interest in property subject to suit, compare Rule 24(a) (permitting a
person to intervene by timely “claim[ing] an interest relating to the property”), with Rule
G(5)(a)(i) (allowing a person to “assert[] an interest in the defendant property”), this is
where their similarities end.
For instance, the issue of timeliness is also a point of divergence between the two
rules. Under Rule 24(a), courts in this circuit measure the timeliness of a third party’s
motion to intervene by considering numerous factors, which are non-dispositive and a
matter of judicial discretion:
1) the point to which the suit has progressed; 2) the purpose for which
intervention is sought; 3) the length of time preceding the application during
which the proposed intervenors knew or should have known of their interest
in the case; 4) the prejudice to the original parties due to the proposed
intervenors’ failure to promptly intervene after they knew or reasonably
should have known of their interest in the case; and 5) the existence of
unusual circumstances militating against or in favor of intervention.
Blount-Hill v. Zelman, 636 F.3d 278, 284 (6th Cir. 2011) (quotation omitted); see Stotts,
679 F.2d at 582. But under Rule G(5), a court’s determination of the timeliness of a third
party’s claim is dependent instead on whether the United States (1) directly notified
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potential claimants of the forfeiture action, (2) indirectly notified potential claimants (by
newspaper or an official governmental forfeiture site), or (3) neither directly or indirectly
notified potential claimants. Suppl. R. Admiralty or Mar. Cls. & Asset Forfeiture Actions
G(5)(a)(ii). The time frame in which a third party must file a verified claim varies under
each of these scenarios. See id.; see also 18 U.S.C. § 983(a)(4)(A).
Also, a court’s analysis of timeliness under Rule G(5) is not open-ended, unlike
under Rule 24(a), but hemmed in by strict compliance. Compare United States v. City of
Detroit, 712 F.3d 925, 937 (6th Cir. 2013) (“There is no bright-line rule to determine the
timeliness of a motion to intervene.” (quotation omitted)), with $22,050.00 U.S.
Currency, 595 F.3d at 323 n.5 (“[W]e require ‘strict compliance’ with the supplemental
rules . . . [in] a forfeiture action.” (quotation omitted)). Because of the inconsistencies
between Rule 24(a) and Rule G(5), a third party’s motion to intervene under Rule 24(a)
in a forfeiture action must conform to Rule G’s strictures. See Suppl. R. Admiralty or
Mar. Cls. & Asset Forfeiture Actions A(2) (providing that the Federal Rules of Civil
Procedure apply to forfeiture actions unless they are inconsistent with the Supplemental
Rules); see also Contents of Accounts, 629 F. 3d at 606–09. Knox County’s motion does
not comply with Rule G(5), and therefore Knox County has no standing to intervene in
this action.
IV. CONCLUSION
Knox County fails to establish statutory standing to intervene in this in rem
proceeding. As a result, Knox County’s Motion to Intervene [doc. 36], Motion to

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Consolidate [doc. 37], and Motion for Oral Argument [doc. 42] are not properly before
the Court and are DENIED. The Court will enter an order consistent with this opinion.
IT IS SO ORDERED.
ENTER:

s/ Leon Jordan
United States District Judge

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