Alm v. Eleven Products Direct Sweepstakes Machines

150 Hawai‘i 329

501 P.3d 298

Steven S. ALM

, in his official capacity as the Prosecuting Attorney of the City and County of Honolulu, on behalf of the State of Hawai‘i, Respondent/Petitioner-Appellant,

v.ELEVEN (11) PRODUCTS DIRECT SWEEPSTAKES MACHINES (Total Estimated Value: $38,500.00), Four Hundred Fifty Seven Dollars in United States Currency ($457.00); One (1) Cam Security Digital Recording System (Estimated Value: $200.00) (Total Aggregate Value: $39,157.00), Respondent/Defendant-Appellee,andPJY Enterprises, LLC, Petitioner/Claimant-Appellee,

and

Winner'z Zone; April Whiting-Haraguchi, Tracy Yoshimura, and Wendy Wagner, Respondents/Interested Persons-Appellees.

(CAAP-15-0000848; S.P. NO. 14-1-0567)

SCWC-15-0000848²

Supreme Court of Hawai‘i.

DECEMBER 20, 2021

Keith M. Kiuchi, Honolulu, for petitioner/claimant-appellee

Kurt Y. Nakamatsu, for respondent/plaintiff-appellant

RECKTENWALD, C.J., NAKAYAMA, McKENNA, AND WILSON, JJ.³

OPINION OF THE COURT BY WILSON, J.

This case addresses whether the Honolulu Police Department's ("HPD") seizure of seventy-seven Product Direct Sweepstakes ("PDS") machines and the Office of the Prosecuting Attorney's subsequent petition for administrative forfeiture comported with Hawai‘i's civil forfeiture statute, Hawai‘I Revised Statutes ("HRS") Chapter 712A. In September 2012, HPD began seizing PDS machines from six Winner'z Zone locations because it deemed the machines to be in violation of Hawai‘i's gambling statutes.⁴ The machines remained in police custody for nearly two years. During that time, HPD did not initiate forfeiture proceedings pursuant to HRS § 712A-7(3) (1991)⁵ , did not give notice of the seizure of forfeiture to all parties known to have an interest in the property and did not provide the prosecutors a written request for forfeiture as required by HRS § 712A-7(4) (1991).⁶ Instead, in September 2014, HPD "re-seized" the machines for forfeiture and began forfeiture proceedings. Forfeiture proceedings were initiated on September 22, 2014, by the prosecutor's office.

We hold that a seizing agency's failure to commence forfeiture proceedings according to the specific timing requirements set forth in HRS §§ 712A-7 and 712A-9⁷ (1991) requires the agency to return the seized property.

I. Background

A. Factual Background

On September 26, 2012, HPD obtained a search warrant to search six Winner'z Zone business locations for property held in violation of Hawai‘i's gambling statutes, HRS §§ 712-1222 and 712-1226. The following day, on September 27, 2012, HPD began executing the search warrant at each location. HPD seized seventy-seven PDS machines, in addition to other items it deemed violated Hawai‘i's gambling statutes that was authorized by the search warrant.

The PDS machines remained in HPD custody for nearly two years before HPD began forfeiture proceedings. HPD cancelled the investigation for the initial HPD report number that documented the seizure for forfeiture "[d]ue to time constraints." After the investigation was cancelled, the machines remained in police custody. On September 12, 2014, a new HPD report number was issued by HPD stating that the PDS machines were re-seized for forfeiture.⁸

Seven days later, on September 19, 2014, HPD sent a request for forfeiture to the Office of the City and County of Honolulu Prosecuting Attorney ("prosecutor's office"). On September 22, 2014, pursuant to HRS § 712A-9, the prosecutor's office began administrative forfeiture proceedings by filing a petition for administrative forfeiture with the Department of the Attorney General. Petitioner/Appellee-Claimant, PJY Enterprises, LLC ("PJY") challenged the seizure on November 3, 2014,⁹ by filing a claim to the seized property and a request for judicial review of administrative forfeiture.¹⁰

In response to PJY's request for judicial review of the forfeiture, on December 19, 2014, the prosecutor's office began judicial forfeiture proceedings by filing a verified petition for forfeiture in the circuit court pursuant to HRS § 712A-9. In the petition for forfeiture, the prosecutor's office asserted that "the subject property was initially seized for forfeiture on or about September 27, 2012" and then "re-seized for forfeiture on or about September 12, 2014". It was also asserted that the seized property was subject to forfeiture because the property was used in the commission of a covered offense. The prosecutor's office requested that the property be distributed to the attorney general in accordance with HRS § 712A-16(2) (2003).¹¹

PJY filed a motion to dismiss the verified petition for forfeiture. The prosecutor's office opposed the motion.

The Circuit Court of the First Circuit ("circuit court") granted PJY's motion to dismiss the verified petition for forfeiture and granted in part PJY's alternative motion for summary judgment.¹² The circuit court dismissed the verified petition because the prosecutor's office failed to comply with the time limitations under HRS § 712A-17¹³ and HRS § 701-108(2).¹⁴ The circuit court also granted summary judgment in part after concluding that there was no genuine issue of material fact as to the prosecutor's office's violation of this time limitation under HRS § 701-108(2) and that PJY was entitled to a judgment as a matter of law. The State appealed.

B. ICA Decision

The ICA vacated the circuit court's decision and remanded for further proceedings. According to the ICA, the circuit court incorrectly interpreted Chapter 712A to require that both the administrative petition and the judicial petition be filed within the two-year statute of limitations delineated in HRS § 712A-17. The ICA held that although the Prosecutor failed to file the judicial petition within the two-year statute of limitations, the petition was nevertheless timely because the administrative petition was filed within the statute of limitations. Under this analysis, the ICA held that where a prosecuting attorney files a qualifying claim for forfeiture pursuant to HRS § 712A-9 and requests judicial review of an administrative petition, the prosecuting attorney may "discretionarily continue to seek forfeiture by petitioning the circuit court for forfeiture of the property[.]" HRS § 712A-10(10) provides that "no duplicate or repetitive notice shall be required. The judicial proceeding, if any, shall adjudicate all timely claims." Reading these two provisions together, the ICA held that the judicial proceeding is a continuation of a preexisting administrative proceeding pursuant to HRS § 712A-9(1) and "bringing the administrative petition within the statute of limitations period satisfies that requirement."

Having determined that the prosecuting attorney did not violate the statute of limitations, the ICA considered the timing requirements of HRS §§ 712A-7 and 712A-9. As interpreted by the ICA, these provisions require HPD to send a request for forfeiture to the prosecuting attorney within thirty days of seizure and require the prosecuting attorney to determine whether the property is likely subject to forfeiture pursuant to HRS § 712A-5 and, if so, to file the petition for forfeiture within forty-five days of the request. The ICA asserted that the first seizure by HPD occurred on September 27, 2012; accordingly the ICA concluded that HPD failed to meet these statutory deadlines mandated by HRS §§ 712A-7 and 712A-9 because HPD failed to make reasonable efforts to give notice of seizure within twenty days to all parties who were known to have an interest in the seized property.¹⁵ However, the ICA ruled that the failure of HPD to file petitions to begin forfeiture proceedings within forty-five days in accordance with HRS §§ 712A-7 and 712A-9 was not sanctionable because those provisions do not provide penalties for their violation. The ICA held that "failure to comply with the internal deadlines contained in HRS § 712A will not serve as a bar for [a] petition brought within the limitation provision continued in HRS § 712A-17."

Pursuant to HRS § 712A-17, forfeiture proceedings must be commenced within the statute of limitations to file the covered offense. In the present case, the covered offenses were misdemeanors. Therefore, prosecution must have commenced within two-years pursuant to HRS § 701-108(2)(e). The ICA thus concluded that the two-year statute of limitations contained in HRS § 712A-17 --rather than the statutory deadlines contained in HRS §§ 712A-7(3)¹⁶ and 712A-9(1)¹⁷ --establish the time by which HPD and the prosecutor's office must initiate forfeiture actions. The ICA relied on United States v. James Daniel Good Real Prop., 510 U.S. 43, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993). In Good, the United States Supreme Court found that, because the customs statute containing forfeiture timing requirements did not provide a remedy for the government's noncompliance, and because a statute of limitations already existed to prevent stale claims from being brought, the customs statute's forfeiture timing requirements were simply internal timing requirements that could not be enforced by the Court. 510 U.S. at 65, 114 S.Ct. 492. The ICA found HRS Ch. 712A to be analogous to the customs statute at issue in Good. The ICA stated that HRS Ch. 712A similarly lacks a remedy for noncompliance with the forfeiture timing requirements, and also provides a statute of limitations to prevent stale claims. The ICA characterized HRS §§ 712A-7 and 712A-9 as providing unenforceable internal timing requirements analogous to the customs statute in Good. Accordingly, the ICA concluded that the circuit court erred in its application of the time limitations of Section 712A-7 and 712A-9 to the September 27, 2012, seizure by HPD. The ICA vacated the circuit court's order granting PJY Enterprises, LLC's motion to dismiss the verified petition for forfeiture and/or in the alternative granting PJY's Enterprises, LLC's motion for summary judgment. Further, the ICA vacated the final judgment of the circuit court dated October...