People v. 6344 Skyway, Paradise, Cal.

Page 198

84 Cal.Rptr.2d 198

71 Cal.App.4th 1026, 99 Cal. Daily Op. Serv. 3136,

1999 Daily Journal D.A.R. 4043

The PEOPLE, Plaintiff and Respondent, v. 6344 SKYWAY, PARADISE, CALIFORNIA, Defendant Collette Hill et al., Defendants and Appellants.

No. C029097.

Court of Appeal, Third District, California.

April 29, 1999.

Michael P. LeLouis for Defendants and Appellants.

Michael L. Ramsey, District Attorney, and Howard W. Abbott, Assistant District Attorney, for Plaintiff and Respondent.

HULL, J.

In this civil forfeiture proceeding, we consider whether a person must pay storage costs accrued on property seized as proceeds of, or as items traceable to, narcotics trafficking when a jury has found that the property is not subject to forfeiture. (Health & Saf.Code, §§ 11470 et seq.) ¹

Appellants contend there is no statutory or other authority for that portion of the judgment entered in the trial court which requires them to pay storage and maintenance costs associated with property which the jury determined was not derived from drug trafficking proceeds. Appellants also contend the court erred in requiring them to pay a proportionate share of the sale and storage costs associated with property which the jury determined was traceable only in part to drug trafficking proceeds. We agree and modify the judgment.

FACTS AND PROCEDURAL HISTORY

The facts are not in dispute.

The People initiated this civil forfeiture proceeding in 1992, seeking forfeiture of certain items of real and personal property on the ground that the property represented traceable proceeds of narcotics trafficking. (Health & Saf.Code, § 11470 et seq.; further section references are to the Health & Safety Code unless otherwise designated.)

Appellants are Collette Hill, Harold Hill and Carol Hill. William Hill is Collette's husband and Harold and Carol's son. ²

The People's application for an order authorizing seizure of the property alleged that William Hill was acquainted through his work as a private investigator with a person not a party to this proceeding who was involved in the manufacture of methamphetamine, and that William Hill received from that person a " 'suitcase' or 'briefcase' " of cash "with instructions to 'launder' or 'invest' the money for the dealer."

Pursuant to that application, nearly 300 items of personal property--including aircraft, vehicles, tools, sports equipment, audio equipment, and home furnishings--were seized from claimants' homes or businesses. Bank accounts in their names were also seized. Most of the personal property seized was placed by Butte County law enforcement into storage with Roger Ernst & Associates, a licensed, bonded auctioneer.

William and Collette Hill filed a claim opposing forfeiture. (§ 11488.5.) ³ Harold and Carol Hill filed a separate but identical claim.

A lengthy jury trial ensued. (§ 11488.5, subd. (e)(2).) The jury was asked to determine which, if any, of the items seized were, in whole or in part, things of value exchanged for a controlled substance, or proceeds traceable to such an exchange within the meaning of section 11470 and thereby subject to forfeiture. The jury concluded some items were wholly traceable to drug trafficking proceeds, other items partly traceable to drug trafficking proceeds, and other items not traceable to drug trafficking proceeds at all.

By the end of trial, the seized items had been in storage for nearly four years.

In the course of preparing the form of judgment, the parties disagreed as to who should pay the costs of storage for those items seized, including 19 cars and a houseboat, which were declared not traceable to drug trafficking proceeds. One form of judgment proposed by the People would have required claimants to satisfy all storage costs attributable to seized items declared not traceable to drug trafficking before those items would be returned to claimants, on the theory that the People had probable cause to seize the property in the first place. The People also analogized the seized property to an automobile impounded because of its connection with the commission of a crime, in which circumstance the owner must pay the storage costs before the automobile may be returned to him. Claimants objected on the grounds they are innocent owners or "bona fide purchasers" of the property declared not traceable to drug trafficking proceeds and are thus excused from the payment of those costs by section 11489, subdivision (a); ⁴ that they have no contract for storage of the items; and logically that they should not be forced by the judgment to incur storage costs before their property is returned to them.

The trial court rejected the parties' respective arguments. It relied instead upon section 11489, subdivision (b)(1), which provides that, where property is seized and forfeited to the state, and, where necessary, sold, the money forfeited or the proceeds of sale shall be distributed (except as provided in subdivision (a)) as follows: "To the state agency or local governmental entity for all expenditures made or incurred by it in connection with the sale of the property, including expenditures for any necessary costs of notice ... and any necessary repairs, storage, or transportation of any property seized under this chapter." (§ 11489, subd. (b)(1).) The trial court reasoned: "The governing principle of ... Section 11489 [, subdivision] (b)(1) appears to be that the recipient of the property is to pay the costs of its maintenance during the pendency of the litigation. Absent authority to the contrary, the court will apply this rule to the property to be returned as well. Therefore, it is concluded that the costs associated with maintenance of the property to be returned are to be born[e] by the real parties."

The subsequent "Judgment of Forfeiture (Following Jury Verdict)" states that, with regard to all items of defendant property not ordered "sold and/or which are required by the terms of this judgment and the jury verdict to be released and returned to specified parties, the fees and costs of the maintenance and storage of such items of defendant property shall be borne by the party or parties awarded or otherwise receiving such released property." The judgment also provides that those items found to be partly attributable to drug trafficking proceeds were to be sold, and the proceeds divided between the People and claimants according to the percentage interest specified in the verdicts. The parties sharing in the proceeds of sale were ordered to bear the fees and costs of sale, storage, and maintenance of the items "in proportion to the interest therein awarded them by the jury and [the] judgment."

DISCUSSION

Claimants contend the trial court erred in concluding that section 11489 authorizes the court "to require [them] to pay for the cost of storage with respect to property that the jury determined is not subject to forfeiture."

We review de novo issues of statutory construction (Berlin v. McMahon (1994) 26 Cal.App.4th 66, 72, 31 Cal.Rptr.2d 427), and issues relating to the application of statutes to undisputed facts (Engs Motor Truck Co. v. State Bd. of Equalization (1987) 189 Cal.App.3d 1458, 1464, 235 Cal.Rptr. 117).

"The goal of statutory interpretation is determining legislative intent. To accomplish that goal, courts must look first to the language of the statute and give effect to its plain meaning. If the words are clear, courts may not add to or change them to accomplish a purpose not apparent on the face of the statute or from its legislative history. [Citation.] Moreover, notwithstanding the strong governmental interest in stemming illegal drug transactions, forfeiture statutes are disfavored and must be construed strictly in favor of the owner of the property." (People v. Ten $500 etc. Traveler's Checks (1993) 16 Cal.App.4th 475, 479, 20 Cal.Rptr.2d 128; see also People v. $28,500 United States Currency (1996) 51 Cal.App.4th 447, 463, 59 Cal.Rptr.2d 239.)

"Forfeiture is a civil in rem action in which the property is proceeded against as a defendant on the legal fiction that the property itself is the guilty party." (People v. $28,500 United States Currency, supra, 51 Cal.App.4th at p. 462, 59 Cal.Rptr.2d 239.) "[Sections 11470-11489] set forth the provisions of state law which allow for the seizure and forfeiture of property used for, and proceeds traceable to, unlawful drug transactions." (People v. $400 (1993) 17 Cal.App.4th 1615, 1618, 22 Cal.Rptr.2d 161, and see cases cited therein.)

In deciding claimants were responsible for the costs of storage accrued on the property ordered returned to them, the trial court relied on section 11489, subdivision (b)(1).

Subdivision (a) of section 11489 requires that the proceeds of sale of forfeited property shall be distributed first to bona fide or innocent purchasers or other innocents with an interest in the property who suffer a loss by its forfeiture.

Subdivision (b)(1) of section 11489 provides that the proceeds of sale of forfeited property next shall be applied to pay for expenditures incurred in the sale of the property, including costs of notice required by section 11488.4 and necessary repairs, storage, or transportation of the property seized.

The balance of section 11489 directs distribution of the remaining proceeds according to a scheme not pertinent to this appeal.

The People do not agree with the trial court's interpretation of section 11489, but argue, nonetheless, that the judgment "cannot be said to be necessarily unfair[ because t]he party which prevailed as to any item of property received a benefit from the storage of such property...."

The trial court's application of section 11489 to property which was determined to be exempt from forfeiture was erroneous as a matter of law. By its own terms, section 11489 applies only to "cases where the property is seized pursuant to this chapter and forfeited to the state ...." (Italics added.) In light of...