U.S. v. One Star Class Sloop Sailboat Built 1930

546 F.3d 26

UNITED STATES of America, Plaintiff, Appellee, v. ONE STAR CLASS SLOOP SAILBOAT BUILT IN 1930 WITH HULL NUMBER 721, NAMED "FLASH II", Defendant in Rem Kerry Scott Lane, Claimant, Appellant.

No. 08-1152.

United States Court of Appeals, First Circuit.

Heard September 3, 2008.

Decided October 20, 2008.

Brenda Grantland, for appellant.

Anton P. Giedt, Assistant United States Attorney, with whom Michael J. Sullivan, United States Attorney, was on brief, for appellee.

Before LYNCH, Chief Judge, SELYA, Circuit Judge, and SCHWARZER,^* District Judge.

SELYA, Circuit Judge.

The instant appeal requires us to revisit the FLASH II, a sailing vessel once owned by the late John F. Kennedy. This time around, the district court found that the government had failed to take reasonable steps to notify a part-owner of the vessel (Dr. Kerry Scott Lane) of its intent to forfeit. Since the government already had sold the vessel at auction, the court — which determined that the sales price equalled the vessel's fair market value — awarded a share of the net sales proceeds to Lane. It subsequently granted him attorneys' fees in an amount less than he had requested.

Lane appeals, challenging both the damages and fee awards. The damages issues are case-specific, but the issues as to fees are of potentially broader significance. After careful consideration of these issues against the backdrop of a tangled record, we affirm the damages award but modify the fee award.

I. BACKGROUND

We sketch the facts and procedural history in order to place the issues into a workable perspective. In doing so, we assume the reader's familiarity with our earlier opinion. See United States v. One Star Class Sloop Sailboat (Sloop I), 458 F.3d 16 (1st Cir.2006).

On February 1, 2005, the government filed a civil forfeiture complaint against the FLASH II, charging that the vessel comprised the avails of narcotics trafficking. After finding probable cause to forfeit, the district court ordered the government to notify those persons who arguably had an interest in the FLASH II about the pendency of the action. Only one individual, Harry Crosby, lodged a claim of interest. For reasons that are no longer important, the government did not provide notice to Lane.

On June 3, 2005, the clerk of the district court, acting pursuant to a government motion, entered a default against all interested parties who had received notice and had not responded thereto. See Fed. R.Civ.P. 55(a). Crosby and the government subsequently negotiated a settlement that contemplated the eventual sale of the vessel. On July 15, 2005, the district court endorsed that settlement and entered a default judgment of forfeiture.

Although Lane had learned of the seizure shortly after it transpired, he did not look into it. He became aware of the forfeiture proceeding only after the entry of default. He secured counsel; moved unsuccessfully to vacate or amend the default judgment, see Fed.R.Civ.P. 59(e), 60(b); and then appealed.

Lane asked the district court to stay the forthcoming forfeiture sale pending resolution of his appeal. The court refused to do so. The government proceeded to sell the FLASH II for $100,000 through Guernsey's (an auction house in New York). Crosby received one-third of the net proceeds and the government received the balance.

We decided Lane's original appeal in August of 2006, remanding to the district court to determine whether Lane had been afforded constitutionally adequate notice of the forfeiture proceeding. See Sloop I, 458 F.3d at 25-26. On remand, the case was reassigned to a different district judge. See D. Mass. R. 40.1(K)(2).

The new judge ruled that the government had not taken reasonable steps to discover Lane's proprietary interest in the vessel and, thus, had given inadequate notice of the forfeiture proceeding. In re One Star Class Sloop Sailboat (Sloop II), 517 F.Supp.2d 546, 549 (D.Mass.2007). Consequently, the judge vacated the default judgment. Id.

In due course, Lane and the government cross-moved for summary judgment. These motions focused chiefly upon the forfeitability of the FLASH II and its value. The parties submitted various materials related to value, including evidence of earlier bids and appraisals and an affidavit signed by Guernsey's president, Arlan Ettinger. On May 15, 2007, the district court tentatively granted the government's motion for partial summary judgment, ruling that as long as the vessel had been properly forfeited sovereign immunity barred the recovery of any sum in excess of $100,000.

On May 24, the court held a single-day bench trial, which focused principally upon the issues of (i) forfeitability and (ii) the validity and scope Lane's asserted ownership interest. At the end of the day, the court reserved decision, set a briefing schedule, and reminded the parties of the approaching deadline for the completion of discovery.

The briefs arrived on time. Relatedly, Lane requested reconsideration of the earlier (tentative) ruling on sovereign immunity. In the same time frame, the government proffered transcripts of the depositions of Ettinger and Robert Augustus Harper (an attorney who had represented another investor in the FLASH II).

On October 1, 2007, the district court handed down a comprehensive rescript, in which it concluded that the FLASH II was not forfeitable; that the vessel had a fair market value of $100,000 at the time of its seizure; and that Lane should receive his pro rata share of that sum. See Sloop II, 517 F.Supp.2d at 554-56. The court also pointed out that, given its finding on fair market value, the sovereign immunity issue had become moot. Id. at 556.

In a supplemental ruling, the district court found that Crosby had a valid interest at least equal to the amount ($26,101.24) that he had received under his earlier settlement and awarded Lane the balance of the $100,000 fair market value figure (i.e., $73,898.76), together with post-seizure interest. Finally, the court indicated that Lane, as a prevailing party, was entitled to reasonable attorneys' fees under the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), 28 U.S.C. § 2465(b)(1).

Lane applied for approximately $293,000 in fees.¹ The government vigorously contested the amount. The district court agreed that the request was exorbitant and awarded $51,929.13. See United States v. One Star Class Sloop Sailboat (Sloop III), No. 05-10192, 2008 WL 678519, at *2 (D.Mass. Jan.9, 2008). This timely appeal ensued.

II. ANALYSIS

Lane characterizes both the damages and fee awards as inadequate. We address them separately.

A. Damages.

As said, the lower court found that the fair market value of the FLASH II was $100,000, and awarded Lane his pro rata share of that amount. See Sloop II, 517 F.Supp.2d at 556. On appeal Lane concedes that he is entitled only to his share of fair market value and does not challenge the court's proration as such. He contends, however, that the court erred in valuing the FLASH II at $100,000. His contention rests on two pillars, one procedural and one substantive.

1. The Procedural Pillar. Lane claims that the district court determined the value of the FLASH II prematurely, that is, before affording him an opportunity to submit relevant evidence. The theoretical underpinnings of this claim are sound: under normal circumstances, a party must be afforded a fair chance to submit evidence and arguments in favor of his position before a final judgment is rendered. See EEOC v. S.S. Clerks Union, Local 1066, 48 F.3d 594, 609 (1st Cir.1995). But due process does not necessarily "require a full-scale trial, or even a hearing strictly conforming to the rules of evidence" on every issue. In re Nineteen Appeals, 982 F.2d 603, 611 (1st Cir.1992); see Aoude v. Mobil Oil Corp., 862 F.2d 890, 894 (1st Cir.1988) (holding that preliminary injunction motion may be heard "on the papers," provided that parties have had "a fair opportunity to present relevant facts and arguments to the court"). Moreover, when the parties consent to proceed in a particular manner (such as through written submissions), courts understandably are reluctant to give the loser a second bite at the apple on the ground that the agreed process was insufficient. See, e.g., Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1120 (1st Cir.1989).

The court below found the fair market value of the FLASH II without an evidentiary hearing devoted to that issue. Nevertheless, the court provided the parties with ample opportunity to present valuation evidence. The chronology follows.

The parties identified valuation as a key issue in a joint statement submitted shortly after vacation of the default judgment. See D. Mass. R. 16.3(b). In their cross-motions for summary judgment, both sides contested valuation and submitted documents to support their respective positions. For example, Lane pointed out that the FLASH II had received a high bid of $800,000 during an aborted 1998 auction and that Guernsey's had appraised the vessel at $800,000 to $1,000,000 in 2004. He also argued that the 2005 auction occurred under adverse conditions. For its part, the government proffered an affidavit from Guernsey's president, Ettinger, discussing the reasons for the munificent bid in 1998 and for Guernsey's original appraisal. Ettinger also opined that the 2005 auction had taken place under favorable conditions.

The short of it is that the district court received a substantial number of evidentiary submissions relating to the vessel's value. Lane contributed to that influx of information and consented to submitting the valuation issue on the papers. In view of these facts and because the issue was susceptible to adequate documentary proof, we discern no procedural bevue in the district court's approach.

In an effort to blunt the force of this reasoning, Lane complains that the court's ruling of May 15, 2007 — to the effect that sovereign immunity barred any recovery in...