Free Order on Motion to Dismiss Case - District Court of Arizona - Arizona

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

UNITED STATES OF AMERICA, ) Plaintiff, vs. LEAR JET, et al., Defendants. ) ) ) ) ) ) ) ) ) CIV 04-363 PHX JWS ORDER FROM CHAMBERS [Re: Motions at docket 65]

I. MOTIONS PRESENTED At docket 65, Alberto Abed-Schebaikan; Calezar, Ltd.; Casafin, Ltd.; and Hartslope Holdings, Ltd. ("Claimants") have filed a renewed motion to dismiss the forfeiture action by the United States of America ("USA") against three aircraft. In addition, claimants move for a more definite statement. At docket 72, the USA opposes the motions at docket 65. Oral argument has not been requested on either motion and would not assist the court. II. BACKGROUND The facts of the case are described in the court's order at docket 57 and will not be repeated here.

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As for this case's procedural history, at docket 51, claimants filed a motion to dismiss the USA's first amended complaint against defendants Lear Jet, Model 31A, Serial No. 31A-244, U.S. Registration No. N224LJ; Agusta Helicopter, Model A 109E, Serial No. 11116, Mexican Registration No. XA-TSR; and Cessna Caravan, Model 208B, Serial No. 208B-0941, Mexican Registration No. XA-TUF. Claimants argued that the USA's complaint should be dismissed for lack of in rem jurisdiction, improper venue, and failure to state a claim upon which relief can be granted. At docket 57, the court denied claimants' motion to dismiss for lack of in rem jurisdiction and improper venue. Regarding defendant Lear Jet, the court held that it had in rem jurisdiction over the airplane and that the District of Arizona was the proper venue for the USA's forfeiture action against it. As for defendants Agusta Helicopter and Cessna Caravan, which are presently in Mexico, the court ordered the USA to file documents showing that they have been seized by the Mexican government. The court granted in part and denied in part claimants' motion to dismiss for failure to state a claim. The court granted the motion with respect to Counts 3 and 5 of the USA's complaint. The court denied the motion with respect to Counts 1, 2, 4, and 6. The motion was denied with respect to Counts 4 and 6 on the condition that the USA correct the defects in those counts that the court noted in its order at docket 57. After the court issued its order, the USA filed a second amended complaint. In response to that complaint, claimants have renewed their motion to dismiss for lack of in rem jurisdiction and improper venue with respect to defendants Agusta Helicopter and

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Cessna Caravan. Also, they have renewed their motion to dismiss for failure to state a claim with respect to Counts 3 and 4 of the second amended complaint, which replaced Counts 4 and 6 of the USA's first amended complaint. III. STANDARDS OF REVIEW A. In rem Jurisdiction Before the USA may initiate a forfeiture proceeding against property, the court must have in rem jurisdiction over it.1 As plaintiff, the USA bears the burden of demonstrating that jurisdiction exists.2 To meet that burden, the USA must show that the property is within the court's actual or constructive control when the case is commenced. 3 The court has actual control over property that has been submitted to its process.4 The court has constructive control over property located in a foreign country if it has been seized under circumstances indicating that parties with an interest in it are reasonably likely to receive notice of the action against it and that any judgment against it will be enforced. 5

Republic Nat'l Bank of Miami v. United States, 506 U.S. 80, 84 (1992) (valid seizure of the res is a prerequisite to a civil forfeiture proceeding). See, e.g., Tosco Corp. v. Cmtys. for a Better Env't, 236 F.3d 495, 499 (9th Cir. 2001) (citing Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989)).
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Republic Nat'l Bank of Miami, 506 U.S. at 87.

United States v. All Funds on Deposit in Any Accounts Maintained in the Names of Meza or Castro, 856 F. Supp. 759, 762 (E.D.N.Y. 1994) (citing The Brig Ann, 13 U.S. 289, 291 (1815)), aff'd 63 F.3d 148 (2d Cir. 1995). All Funds on Deposit, 856 F. Supp. at 763 (citing Republic Nat'l Bank of Miami, 506 U.S. at 87­88).
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B. Venue On a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3), the plaintiff bears the burden of offering facts showing that venue is proper.6 The facts offered may be in or outside the pleadings.7 When the facts are disputed and the court does not conduct an evidentiary hearing to settle the dispute, it must draw all reasonable inferences from, and resolve all conflicts about, the facts in favor of the plaintiff.8 If the court holds an evidentiary hearing, it may "make findings of fact that are dispositive on the Rule 12(b)(3) motion."9 C. Failure to State a Claim Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss an opposing party's claim on the ground that it is not based on a cognizable legal theory or does not allege facts sufficient to support a cognizable legal theory.10 In reviewing a Rule 12(b)(6) motion, the court will take the complaint's factual allegations as true and

5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1352 (3d ed. 2004) (citations omitted) ("WRIGHT & MILLER"). This court agrees with the authors of the treatise that this is the "correct" allocation of the burden of proof. Murphy v. Schneider Nat'l, Inc., 349 F.3d 1224, 1229 (9th Cir. 2003) (citing Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996)), amended on other grounds by 362 F.3d 1133, 1135 (9th Cir. 2004).
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WRIGHT & MILLER § 1352. Murphy, 349 F.3d at 1231. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990) (citation omitted).

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construe them in the light most favorable to the nonmoving party.11 The court will examine conclusory allegations to determine whether they follow from the facts alleged. 12 The court will dismiss a claim only if it is beyond doubt that the party pleading the claim will not be able to prove facts that would entitle it to relief.13 D. More Definite Statement As an alternative to a motion to dismiss for failure to state a claim, a party may move for a more definite statement under Federal Rule of Civil Procedure 12(e). A party is entitled to relief under Rule 12(e) if the complaint "is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading ...."14 To obtain relief, the party's "motion shall point out the defects complained of and the details desired."15 IV. DISCUSSION A. In rem Jurisdiction Defendants Agusta Helicopter and Cessna Caravan are in Mexico. Thus, in rem jurisdiction exists only if they are within the court's constructive control. In its order at docket 57, the court noted that it appears to have constructive control over them based

11

Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997) (citation omitted).

Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir. 1992) (quoting Brian Clewer, Inc. v. Pan Am. World Airways, Inc., 674 F. Supp. 782, 785 (C.D. Cal. 1986)).
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Vignolo, 120 F.3d at 1077 (citation omitted). FED. R. CIV. P. 12(e). Id.

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on the USA's representations that Mexican authorities are cooperating with the USA's investigation of the aircraft.16 But the court also observed that its constructive control depends on Mexican authorities' continued cooperation, and that it would no longer have constructive control if they declined to issue in rem arrest warrants against the aircraft.17 Consequently, the court ordered the USA to file "documentation demonstrating that defendants Agusta Helicopter and Cessna Caravan have been seized by the Mexican government ...."18 The documents submitted by the USA in response to the court's order do not demonstrate that the Mexican government has seized the aircraft. Instead, they show that the aircraft are free to fly around Mexico. According to one document, a letter from Deputy Attorney General of Mexico Ivann Villaverde García, at the request of the U.S. Attorney for the District of Arizona, the aircraft "have not been immobilized ...."19 Another document indicates that, rather than being seized, the aircraft have been "provisionally secured."20 According to an affidavit by Bernardo Miguel Arámburu Melendez, a Mexican attorney who advises the Supreme Court of Mexico, provisionally secured property remains in its owner's possession. 21 Melendez also declares that property is

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Doc. 57 at 11. Id. Id. at 12. Doc. 67, ex. C, letter from Ivann Villaverde García, at 2. Id., ex. C, agreement to secure airships, at 7, 44. Doc. 84, ex. 3, declaration of Bernardo Miguel Arámburu Melendez, at 1 ­ 2.

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provisionally secured before it is subject to "confiscación," the process by which the Mexican government seizes property and deprives its owner of all rights to it.22 Based on García's letter and Melendez's affidavit, it is clear that defendants Agusta Helicopter and Cessna Caravan have not been seized by the Mexican government. Two allegations that the USA makes in its second amended complaint also indicate that the aircraft have not been seized. The USA alleges that the aircraft are "being operated in Mexico"23 and "remain in the possession and control of [Servicios Integrales de Aviación, an air taxi company] ...."24 Although the USA also asserts that Mexican authorities have served arrest warrants on the aircraft,25 in its response to claimants' renewed motion to dismiss, the USA retreats from that assertion, stating that "it is the intention of the government of Mexico to serve the warrants ...."26 The Mexican government's intent to arrest and seize the aircraft does not give this court constructive control over them. Because defendants Agusta Helicopter and Cessna Caravan have not been seized by the Mexican government, the court concludes that it does not have constructive control over them and that in rem jurisdiction does not exist. B. Venue
22

Id., ex. 3, declaration of Bernardo Miguel Arámburu Melendez, at 1. Doc. 61 at 5 ­ 6, ¶¶ 20, 21. Id. at 55, ¶ 379. Id. at 5, ¶¶ 17, 18. Doc. 72 at 1 ­ 2, ¶ 2 (emphasis supplied).

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Even if in rem jurisdiction did exist, it would still be appropriate to dismiss defendants Agusta Helicopter and Cessna Caravan because the District of Arizona is not the proper venue for a forfeiture action against them. A forfeiture action against property located in a foreign country may be brought in the venue provided under 28 U.S.C. § 1355(b)(1)(A) or § 1395(c).27 § 1355(b)(1)(A) provides that a forfeiture action may brought in the district in which "any of the acts or omissions giving rise to the forfeiture occurred ...." § 1395(c) provides that a forfeiture action against "property seized outside any judicial district may be prosecuted in any district into which the property is brought." The District of Arizona is not the proper venue under either § 1355(b)(1)(A) or § 1395(c). It is not the proper venue under § 1355(b)(1)(A) because it is not where any events leading to the forfeiture action against the aircraft occurred. The second amended complaint refers to acts in Arizona regarding defendant Lear Jet, but it does not refer to any acts that occurred in Arizona with respect to defendants Agusta Helicopter and Cessna Caravan. This district is not the proper venue under § 1395(c) because defendants Agusta Helicopter and Cessna Caravan have not been brought into it. The USA argues that venue is proper under 18 U.S.C. § 981(h), but the court has already rejected that argument in its order at docket 57. 28 C. Count 3

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28 U.S.C. § 1355(b)(2). Doc. 57 at 6.

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Count 3 of the USA's second amended complaint, like Count 1 of the USA's first amended complaint, alleges that claimants violated 18 U.S.C. § 1956. 29 In their first motion to dismiss, claimants argued that Count 1 did not allege that they knew that the funds used to purchase the defendant aircraft were proceeds of unlawful activity, and that, therefore, the count failed to state a claim under § 1956. 30 The court concluded that Count 1 did allege claimants' knowledge and denied their motion to dismiss that count. In claimants' renewed motion to dismiss, they argue that Count 3 also fails to allege their knowledge and, therefore, fails to state a claim under § 1956. Because Count 3 makes the same allegations as Count 1 made, and the court has already held that those allegations state a claim under § 1956, claimants' motion to dismiss Count 3 will be denied. D. Count 4 Count 4 of the USA's second amended complaint alleges that defendant Lear Jet is the "proceeds of fraudulent statements made in a loan or credit application in violation of 18 U.S.C. § 1014" and therefore is subject to forfeiture under 18 U.S.C. § 981(a)(1)(C).31 18 U.S.C. § 1014 prohibits people from: knowingly mak[ing] any false statement or report ... for the purpose of influencing in any way the action of [many types of financial institutions] upon any application ....

Compare Doc. 3 at 49 ­ 50, ¶ 338, first amended complaint with Doc. 61 at 57, ¶ 390, second amended complaint.
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Doc. 57 at 12 (emphasis in original). Doc. 61 at 57, ¶ 391.

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According to Count 4, claimants made a false statement to Bombardier Capital. 32 However, there are no allegations in the second amended complaint about whether Bombardier Capital is one of the financial institutions listed in § 1014. The complaint does allege that Bombardier Capital is "the financial services arm of Bombardier Aerospace, Inc.,"33 but it is impossible to tell from this allegation whether Bombardier Capital is an entity covered by § 1014. Because Count 4 does not allege the elements of a violation of § 1014, it fails to state a claim under § 981(a)(1)(C). V. CONCLUSION For the reasons set out above, the motion to dismiss defendants Agusta Helicopter and Cessna Caravan is GRANTED. The motion to dismiss Count 3 of the USA's second amended complaint is DENIED. The motion to dismiss Count 4 of the USA's second amended complaint is GRANTED. The motion for a more definite statement is DENIED as moot. DATED at Anchorage, Alaska, this 26th day of July 2005.

/s/ JOHN W. SEDWICK UNITED STATES DISTRICT JUDGE

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Id. Id. at 28, ¶ 178.

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