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United States v. Rand Motors

September 27, 2002

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
RAND MOTORS, DEFENDANT-APPELLANT,
AND SHERWIN YELLEN, ET AL., CLAIMANTS-APPELLANTS.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 91 C 2796--George W. Lindberg, Judge.

Before Coffey, Ripple, and Diane P. Wood, Circuit Judges.

The opinion of the court was delivered by: Diane P. Wood, Circuit Judge.

ARGUED DECEMBER 5, 2001

As an offshoot of an investigation into drug-related money laundering, the United States filed a civil forfeiture action against Rand Motors, along with its owners and operators, Sherwin and Martin Yellen. After a probable cause determination, the government seized cash and property from Rand Motors and from Sherwin Yellen (collectively Rand). More than five years later, the government entered into a settlement agreement with Rand, under which the United States agreed to dismiss the prosecution and keep $250,000 of the seized property and to return the balance to Rand. The district court entered a dismissal order pursuant to the settlement agreement, ordering that $250,000 be paid to the government from the assets seized and that the property, along with $207,173.91, be returned to Rand; it retained jurisdiction over the case to enforce the terms of the settlement agreement. Three years later, Rand returned to the district court, armed with letters from an Assistant United States Attorney (AUSA), arguing that the government had agreed to pay interest on the balance due to Rand, notwithstanding the silence of the settlement agreement on this point. The district court denied Rand's petition for interest. We agree that the government is not required to pay Rand interest, and we thus affirm the district court's judgment.

I.

On May 8, 1991, the government filed a forfeiture complaint against Rand. It alleged that Rand laundered money by purchasing automobiles with proceeds from illegal drug trafficking. The district court issued warrants of seizure and monition against Rand Motors. The following day, the United States Marshal seized real estate, bank accounts, and automobiles from Rand Motors, along with the keys to safe deposit boxes, financial records and $64,256 in cash from Sherwin Yellen's home. On January 22, 1992, the government itemized the property seized in an amended complaint and stated that it had seized a total of $507,173.91 in cash. Rand filed claims verifying an interest in the seized property, and $50,000 was released immediately to Rand's attorney for legal fees.

In September 1996, five years after the government seized the assets and on the eve of trial, the parties agreed to a settlement. The settlement agreement provided that "the sum of $250,000 shall be paid to the United States from the assets seized." The agreement did not mention interest. It said only that "the United States agrees that all property seized pursuant to warrants of seizure and monition shall be released 'where is and as is' to Rand."

The district court dismissed the complaint in accordance with the settlement agreement. Its order itemized the property that would be returned to Rand, ordered that Rand was entitled to "U.S. currency in the amount of $207,173.91" and ordered that $250,000 be paid to the government from the seized assets. The dismissal order also determined that Rand was entitled to $175,351.04 from Rand Motors's accounts receivable. In February 1997, the government released a total of $382,524.95 to Rand. The parties agree that this sum did not include interest.

Over a year later, in June 1998, Rand sent a letter to the AUSA who had represented the government in the forfeiture action. In the letter it requested interest on the released assets. The AUSA responded in a June 1998 letter. She first expressed the view that Rand was not legally entitled to interest, but she then went on to say that notwithstanding that fact, the government would pay a portion of the interest ($74,793.36). Rand's counsel met with the AUSA along with other supervisory personnel in the United States Attorney's office. After those meetings, the government decided that it would not pay any interest. On February 2, 2000, Rand responded by filing a petition for interest in the district court.

The district court denied Rand's petition, noting that the legal authority on the issue was unhelpful, but that the settlement agreement and the dismissal order controlled, and neither provided for interest. First, the district court relied on the "where is and as is" phrase in the settlement agreement, which appeared to exclude interest as a matter of plain language. The district court also found that the clause in the agreement that stated that the sum of $250,000 was to be paid to the government "from the assets seized" contained not a hint of an obligation on the government to pay interest to the claimants on the balance. Finally, the parties' failure to mention interest in the settlement agreement convinced the district court that Rand was not entitled to any interest. This appeal followed.

II.

As an initial matter, both parties argue that the other has waived its argument regarding interest. Rand argues that the government waived any objection to interest payments when its AUSA agreed to pay interest in her letter. But this is not a waiver argument. If it is anything, it is an estoppel argument. Waiver is the intentional relinquishment of a known right and it precludes appellate review. United States v. Richardson, 238 F.3d 837, 840 (7th Cir. 2001). In this case, the government never in any way waived its argument against interest in a formal proceeding, nor did it forfeit the argument by failing to raise it before the district court. United States v. Chay, 281 F.3d 682, 685 (7th Cir. 2002). But at oral argument, Rand explicitly stated it was not making an estoppel argument. (In itself, that was a wise decision, given the fact that this court has stated that equitable estoppel may only lie against the government in a small set of cases: "when the traditional elements of estoppel are shown and there is affirmative misconduct on the part of the government." Kennedy v. United States, 965 F.2d 413, 417 (7th Cir. 1992).) Rand could attempt to submit the AUSA letters in support of its petition for interest, which it did, but the government is still entitled to respond. Furthermore, as the government points out, Rand actually forfeited its own waiver argument by not presenting it to the district court first. This court has repeatedly stated that it will not review arguments never presented to the district court. Thomason v. Nachtrieb, 888 F.2d 1202, 1205 (7th Cir. 1989).

The government also argues waiver. It maintains that Rand waived any interest argument by failing to present it to the district court in a timely manner--at a minimum, by filing a motion under Rule 60(b) in the original proceeding, rather than by petitioning the district court for interest years later. (This is really a forfeiture argument; the government is not claiming that Rand affirmatively took steps to disclaim such an argument.) But the government never presented this argument to the district court. Id. Moreover, as long as Rand is not arguing that it disagrees with either the settlement agreement or the district court's initial order dismissing the forfeiture action, Rand is entitled to petition for interest. On appeal, Rand maintains that the government either did not abide by the settlement agreement or that it altered the agreement. It may ask the district court to enforce the agreement according to its terms. Therefore, the arguments based on waiver and forfeiture of both sides are without merit and we can proceed to the merits.

We review a district court's interpretation of a settlement agreement de novo, to the extent there are issues of law to be resolved by this court. Moriarty v. Svec, 164 F.3d 323, 330 (7th Cir. 1998). Rand presents several arguments in an attempt to convince this court that the parties intended that it should receive interest along with the return of seized assets. We will not consider whether in the abstract the United States has some duty to pay interest on seized funds that are later returned. Here, the parties entered into an agreement ...


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