CFK v. USA

Filing 25

MEMORANDUM DECISION AND ORDER - dismissing 2 Motion for Return of Property; granting 20 Motion to Dismiss for Lack of Jurisdiction. Case Closed. Signed by Judge Bruce S. Jenkins on 1/25/2018. (las)

FILED
2018 JAN 25 PM 3:12
CLERK
U.S. DISTRICT COURT

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
CFK, LLC, a Utah limited liability company,
Plaintiff,
vs.
UNITED STATES OF AMERICA,

Case No. 1:17CV00099
MEMORANDUM DECISION AND
ORDER GRANTING DEl-,ENDANT
UNITED STATES' MOTION TO
DISMISS

Judge Bruce S. Jenkins

Defendant.

Defendant United States of America has moved to dismiss CFK, LLC's Fed. R. Crim. P.
41(g) motion for return of$746,798.32 in funds seized by the government. 1 PlaintiffCFK
opposed the motion. 2 The Government argues that the Court should dismiss CFK's motion
because once the government filed a civil forfeiture complaint CFK could no longer show that it
lacked an adequate legal remedy as required to obtain equitable relief under Rule 41(g). The
Government further argues that when CFK gained an adequate legal remedy to address its claims
to the seized funds that this Court no longerliadjmisdiciion_tcLgranLCEK_e_quitahl.e_relief.~CEK~---~
argues that because the government delayed filing its civil forfeiture the court retains jurisdiction
under United States v. Floyd, 860 F.2d 999 (10th Cir. 1988). CFK further argues that even if the
court lack~ jurisdiction under Rule 41(g), it retains jurisdiction under 18 U.S.C. § 981(b)(3). 4

1

Mot. to Dismiss, ECF No. 20; Reply in Support of Mot. to Dismiss, ECF No. 23.

2

Resp. to Mot. to Dismiss, ECF No. 22.

3

Mot. to Dismiss at 2-3; Reply 1-3.

4

Resp. 6-10.
Pagelof6

For the reasons set forth herein, the court GRANTS the United States' motion for
dismissal and DENIES WITHOUT PREJUDICE Plaintiff CFK's motion for return of property.
FACTUAL BACKGROUND

The Defense Criminal Investigative Service ("DCIS") initiated an investigation into a
health care fraud involving CFK, LLC. As part of its investigation, DCIS seized $746,798.32
from a Wells Fargo Bank account in the name of CFK pursuant to a seizure warrant issued in the
Southern District of California on January 21, 2016. That same day agents executed a search
warrant in Utah at a pharmacy operated by CFK. On June 13, 2017, CFK filed a motion under
Fed. R. Crim. P. 41(g) seeking the return of the seized funds. 5 The court initially scheduled oral
argument on the merits of CFK's motion for November 29, 2017. 6 One day before the hearing
on the merits, on November 28, 2017, the government filed a civil forfeiture complaint in the
Southern District of California naming the seized funds sought for return in this case as a
7

defendant. The court rescheduled the hearing on the merits for January 18, 2018. 8 On
December 19, 2017, the United States filed its motion to dismiss for lack of jurisdiction. 9 On
10
- - January t8~ZOT8~tne court=liearanoralargument-on-tlie-motion-to-dism1ss~.-- - - - - - - - -

5

ECFNo. 2.

6

ECFNo. 15.

7

8
9

See Complaint, United States v. $746, 798.32 in U.S. Currency, No. l 7CV2393 (ECF No. 1).
ECF No. 18 (minute entry).

ECFNo. 20.

10

ECF No. 24.
Page 2 of6

ANALYSIS

A Rule 41 (g) motion seeking return of seized property is an equitable action. Whether to
exercise jurisdiction under Rule 41(g) is based on equitable principles. Frazee v. I.R.S., 947 F.2d
448, 449 (10th Cir. 1991 ). 11 Equitable relief under Rule 41 (g) is only available if a movant "can
show irreparable harm and an inadequate remedy at law." United States v. Copeman, 458 F.3d
1070, 1071 (10th Cir. 2006). Jurisdiction under Rule 41(g) "should be exercised with caution
and restraint." Floyd, 860 F.2d at 1003.
Movant CFK, LLC cannot show that it has an inadequate remedy at law and so the court
agrees with the United States that it must dismiss CFK's motion. When the government filed its
civil forfeiture complaint against the seized funds CFK seeks, CFK could no longer show that it
lacked a legal remedy. A civil forfeiture proceeding provides an adequate legal remedy. See
United States v. Akers, 215 F.3d 1089, 1106 (10th Cir. 2000) (civil forfeiture provided adequate
remedy; no need for a motion for return of property once the forfeiture proceeding was filed);
Frazee, 947 F.2d at 449-50 ("That remedy is adequate because the legality of the seizure may be
---testea::-in-a-jooiCiaI=-forfeiture.'-'- . - - - - - - - - - - - - - - - - - - - - - - - - - CFK's asser?ltm that Floyd supports its argument that the court retains jurisdiction,i_.s..

~

i-R.eeffect. The Floyd court considered whether an administrative forfeiture provided an adequate
remedy requiring dismissal of the motion for return of property. Floyd, 860 F .2d at 1003-04. The
Floyd court held that it did not in that case because, while the government intended to proceed

11

Rule 41(g) was fonnerly number Rule 41(e), but the substance of the rule remains the same.
Case law such as United States v. Frazee that considered Rule 41(e) apply to consideration of
Rule 41(g).
Page 3 of6

with an administrative forfeiture, it had not completed the required steps to do so by the time of
the Rule 41 hearing. See id. at 1004 (the government had not published statutory notice of the
administrative forfeiture). The scenario in Floyd is not the one facing this court.
In contrast, Frazee provides a direct analogue because that case involved the same
circumstance facing this court: the filing of a civil forfeiture after the filing of a Rule 41 (g)
motion for return of property, but before a hearing on the motion's merits. Id. at 449. Frazee
also distinguished Floyd in the same manner as applicable here:
Unlike the claimant in Floyd ... the Frazees had a remedy available to challenge
the seizure at the time of the Rule 41(e) hearing. That remedy is adequate because
the legality of a seizure may be tested in a judicial forfeiture.
Id. at 450 (emphasis added). Once the government filed its civil forfeiture, CFK obtained an
adequate remedy at law and it is irrelevant that it filed its equitable motion for return of property
first. See, e.g., Matter of Search ofPremises Known as 6455 S. Yosemite, Englewood, Colo., 897
F.2d 1549, 1556 n.6 (10th Cir. 1990) (noting that even if a motion for return of property were
pending before an indictment's return, upon indictment "an adequate legal remedy is available in
---tfie-district-court.wffllJunschction_oyerJneJndtcmrentaml-e_quitablejurisdjction-is-no-kmger------necessary or proper."); Shaw v. United States, 891F.2d602, 603 (6th Cir. 1989) (even though a
claimant filed a motion for return of property before criminal charges were brought against her,
once the government instituted a civil forfeiture she could not prefer the equitable remedy over
the legal remedy provided to her through the civil proceedings); $8, 050. 00 in US. Currency v.
United States, 307 F. Supp. 2d 922, 926-27 (N.D. Ohio 2004) (comprehensive provisions
enacted by CAFRA in section 983(a) give claimant an adequate remedy at law for contesting a
civil forfeiture; thus, once the Government commences administrative forfeiture, the Rule 41 (g)
Page 4 of6

motion must be dismissed; claimant's argument that he filed his motion first is without merit); In
re The Seizure ofAll Funds ... National Electronics, Inc., No. M-18-65, 2005 WL 2174052, at *2

Finally, CFK's reliance on 18 U.S.C. § 98l(b)(3) is also misplaced. That section does
not convey this court with independent jurisdiction to hear a motion for return of property.
Section 981 (b )(3) merely provides for where claimants may properly file a motion for return of
property. It does not itself authorize the filing of such a motion. Instead, only Rule 41 (g)
authorizes the filing of motions for return of property. See Tucker v. United States, No.
14CV01795, 2014 WL 7506803, at *1 (C.D. Cal. Dec. 15, 2014) (deeming that claimants'
motion for return of property was under Rule 41(g) and not under 18 U.S.C. § 98l(b)(3) as
argued by claimants because Section 98l(b)(3) "only describes where such a motion should be
filed").
- In-sum,-GFK will have an-opportunity-to-make-any-challenges-regarding-the
government's seizure of the $746,798.32 in the civil forfeiture proceeding. The motion in this
case served its purpose by prompting the government to file its civil forfeiture complaint. See
United States v. Eight Thousand Eight Hundred & Fifty Dollars ($8,850) in U.S. Currency, 461

U.S. 555, 569 (1983) (noting that a "claimant is able to trigger rapid filing of a forfeiture action
if he desires it").

Page5of6

ORDER

IT IS HEREBY ORDERED that the United States' motion to dismiss 12 is GRANTED.
Plaintiff CFK, LLC's Rule 41(g) motion for return of property is DISMISSED WITHOUT
PREJUDICE.
Signed January~, 2018.
BY THE COURT

12E

cFNo. 20.
Page 6 of6