Commonwealth v. $34,440.00 U.S. Currency

174 A.3d 1031

COMMONWEALTH of Pennsylvania

v.$34,440.00 U.S. CURRENCY

Appeal of: Rafael Falette

No. 102 MAP 2016

Supreme Court of Pennsylvania.

Argued: May 9, 2017

Decided: December 19, 2017

Jennifer Anne Peterson, Esq., Pennsylvania Office of Attorney General, Joshua D. Shapiro, Esq., for Commonwealth of Pennsylvania, Appellee.

Brandon Robert Reish, Esq., for Rafael Falette, Appellant.

Heather F. Gallagher, Esq., for Pennsylvania District Attorney's Association, Amicus Curiae.

Patrick Michael Hromisin, Esq., Saul Ewing LLP, for ACLU of Pennsylvania, Amicus Curiae.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE BAER

In this discretionary appeal, we consider the burdens of proof applicable in civil in rem forfeitures of currency under Pennsylvania's Controlled Substances Forfeiture Act ("Forfeiture Act"), 42 Pa.C.S. §§ 6801 — 6802 (repealed), which, inter alia , provides that money is forfeitable to the Commonwealth upon proof of a "substantial nexus"¹ to certain prohibited drug activities under The Controlled Substance, Drug, Device and Cosmetic Act ("Controlled Substance Act"), 35 P.S. §§ 780–101 — 780–144.² More specifically, we consider whether the Commonwealth can satisfy its evidentiary burden of proving a substantial nexus between the seized currency and prohibited drug activity by relying solely upon the Forfeiture Act's presumption at 42 Pa.C.S. § 6801(a)(6)(ii), which provides that money found in close proximity to controlled substances is rebuttably presumed to be the proceeds derived from the sale of a controlled substance, and, if so, the related assessment of how this presumption can be rebutted.³

The Commonwealth Court in the case sub judice determined that proof of proximity under the Subsection 6801(a)(6)(ii) presumption is sufficient to establish a substantial nexus and that the innocent owner defense set forth at 42 Pa.C.S. § 6802(j) provides the sole method by which claimants can rebut the presumption.⁴ Though we agree that, generally, proof of proximity under the Subsection 6801(a)(6)(ii) rebuttable presumption may be sufficient to satisfy the Commonwealth's overall evidentiary burden of proving a substantial nexus for the purpose of currency forfeitures, we hold that the Commonwealth Court erred in concluding that the innocent owner defense provides the sole basis for rebutting that presumption. Rather, for the reasons set forth below, we conclude that the presumption may be rebutted by demonstrating that the seized currency is not the proceeds of drug sales, independent of a claimant's ability to satisfy the innocent owner defense. If the Subsection 6801(a)(6)(ii) presumption has been rebutted sufficiently, the burden of proof remains with the Commonwealth such that it must put on further evidence of a nexus to drug activity beyond the mere propinquity between the money and controlled substances. Because the Commonwealth Court erred as a matter of law in holding otherwise, we vacate the Commonwealth Court's order, vacate the trial court's order, and remand to the trial court for further proceedings consistent with this opinion.

I. Background

The facts underlying this matter are straightforward and largely undisputed. On August 7, 2009, Juan Lugo ("Lugo"), a New Jersey resident, was driving with three passengers in his sister's vehicle on Interstate–80 in Monroe County, Pennsylvania, when he was pulled over for tailgating. Upon approaching the vehicle, Pennsylvania State Trooper Derek Felsman ("Trooper Felsman") detected an odor of marijuana and sought permission to conduct a search of the vehicle. Lugo consented to the search, and Trooper Felsman uncovered ecstasy pills in the cigarette outlet in the center console area of the vehicle and a small amount of marijuana by the rear passenger door.⁵ Additionally, Trooper Felsman uncovered $34,440.00 in cash hidden in the seatbelt attachment of the "b-pillar"⁶ on the passenger side of the vehicle. The Pennsylvania State Police confiscated both the cash and the controlled substances.

Though Lugo admitted to Trooper Felsman that the controlled substances belonged to him and were for his personal use, he denied ownership or knowledge of the currency found in the vehicle. Similarly, the other passengers in the vehicle denied having any knowledge of the recovered currency. Lugo was subsequently charged with possession of a controlled substance for personal use (ecstasy), possession of a small amount of marijuana for personal use, and possession of drug paraphernalia. Lugo ultimately entered a guilty plea to misdemeanor possession of marijuana. Importantly, Lugo was never charged with any crime related to drug distribution or in connection with the $34,440.00 in cash uncovered in the vehicle. Indeed, as will be discussed in further detail infra , the Commonwealth averred in its subsequent forfeiture petition that Lugo signed a waiver denying ownership of the currency. Commonwealth's Petition for Forfeiture and Condemnation at ¶ 7.

Following Lugo's guilty plea, in a separate legal proceeding the Commonwealth filed a petition for forfeiture and condemnation of the $34,440.00 under Subsection 6801(a)(6)(i) of the Forfeiture Act, which is the subject of the instant appeal. As noted, the Commonwealth averred that Lugo admitted to ownership of the controlled substances, but denied any knowledge of the currency, and that all occupants of the vehicle signed waivers denying any knowledge or ownership of the currency. Commonwealth's Petition for Forfeiture and Condemnation at ¶ 7. Notwithstanding its acknowledgment in this regard, the Commonwealth maintained that the currency was forfeitable as proceeds traceable to an exchange of controlled substances. Id. at ¶ 8.

In response to the Commonwealth's forfeiture petition, Appellant Rafael Falette ("Falette"), who was not present in the vehicle during Lugo's August 7, 2009, arrest, filed an answer and new matter in which he claimed lawful ownership of the money.⁷ Falette maintained that he was a longtime friend of Lugo's sister, the record owner of the vehicle in which the currency was found, and that the money represented the proceeds of a recent personal injury lawsuit settlement. In support of his claim, Falette submitted copies of two settlement checks, one dated June 17, 2009, in the amount of $14,496.22 and a second dated July 16, 2009, in the amount of $23,303.33, for a total of $37,799.55. Appellant's Answer and New Matter at ¶ 13; id. at Exhibits 1 and 2. Falette claimed that after he initially deposited the settlement checks, he withdrew all of the money in cash so that he could impress his friends. Thereafter, he concealed the money in the b-pillar of the vehicle, purportedly because he did not want to utilize a bank. Then, unbeknownst to him at the time, Lugo borrowed the car, resulting in his arrest and the confiscation of the money.

Following a hearing, in which Trooper Felsman and Falette both testified, the trial court granted the Commonwealth's forfeiture petition. Initially, the trial court determined that the Commonwealth sufficiently established a nexus under the Forfeiture Act based upon, inter alia , the proximity between the minimal amount of drugs in the cigarette outlet and rear passenger door and the money in the b-pillar. Trial Court Order, 5/15/2014, at 1; see also 42 Pa.C.S. § 6801(a)(6)(ii) (providing that money found in close proximity to controlled substances is rebuttably presumed to be the proceeds derived from the sale of a controlled substance).⁸ Moreover, the trial court found that Falette's testimony as to how he acquired the money was incredible and that his purported rationale for withdrawing all of the money in cash, namely, to impress his friends, was inconsistent with his action of concealing it within the b-pillar of someone else's vehicle. Trial Court Order, 5/15/2014, at 1. Accordingly, the court determined that he failed to rebut the Commonwealth's case by demonstrating the innocent owner defense under Subsection 6802(j) of the Forfeiture Act because he did not establish that he was the owner of the currency, that he lawfully obtained the currency, and that he did not possess the currency for illegal purposes. 42 Pa.C.S. § 6802(j). Falette appealed to the Commonwealth Court, arguing, inter alia , that the trial court erred in finding that the Commonwealth sufficiently proved a nexus between the currency and illegal drug activity.

In a divided 3–2 decision, an en banc panel of the Commonwealth Court affirmed the trial court's order granting forfeiture of the $34,440.00. Commonwealth v. $34,440.00 U.S. Currency , 138 A.3d 102 (Pa. Cmwlth. 2016). The Commonwealth Court observed that, in a forfeiture proceeding involving money, the Commonwealth bears the initial burden of proving by a preponderance of the evidence that there is a substantial nexus between the money being forfeited and a violation of the Controlled Substance Act. Id. at 108. The court further determined, based upon its own precedent, that the Commonwealth may satisfy this evidentiary burden simply by proving that the currency was found in close proximity to controlled substances in accord with the Subsection 6801(a)(6)(ii) rebuttable presumption. Id. at 110–111 (citing Commonwealth v. $259.00 Cash U.S. Currency , 860 A.2d 228, 232 (Pa. Cmwlth. 2004) (en banc )). Finally, the Commonwealth Court concluded that once the Commonwealth establishes that money is forfeitable by utilizing the Subsection 6801(a)(6)(ii) presumption, the burden then shifts to the claimant to demonstrate all of the elements of the innocent owner defense under Subsection 6802(j), namely, that he owns the money, that it was lawfully acquired by him, and that it was not unlawfully used or possessed by him. Id. (citing, inter alia , 42 Pa.C.S. § 6802(j)(3) ). Thus, the court held that the innocent owner defense is the sole method of rebutting the Subsection 6801(a)(6)(ii) presumption.

Applying its construction of the law...