F I L E D
United States Court of Appeals
Tenth Circuit
JUL 21 1997
PUBLISH
UNITED STATES COURT OF APPEALS PATRICK FISHER
Clerk
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
No. 96-1329
vs.
BRADLEY GROVER,
Defendant - Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 88-CR-61-D)
Richard J. Troberman, Seattle, Washington (Jeralyn E. Merritt, Denver, Colorado,
with him on the brief), for Defendant - Appellant.
Charlotte J. Mapes, Assistant United States Attorney, Denver, Colorado (Henry L.
Solano, United States Attorney, with her on the brief), for Plaintiff - Appellee.
Before EBEL, KELLY, and LUCERO, Circuit Judges.
KELLY, Circuit Judge.
Defendant Bradley Grover appeals from the denial of his Motion for Return
of Property pursuant to Fed. R. Crim. P. 41(e). We exercise jurisdiction under 28
U.S.C. § 1291 and affirm.
Background
After a federal grand jury indictment in March 1988, charging him with a
variety of drug-related crimes, Mr. Grover pled guilty to engaging in a continuing
criminal enterprise, 21 U.S.C. § 848, and signing a tax return that was false as to
a material matter, 26 U.S.C. § 7206(1). On the same day he entered into the plea
agreement, Mr. Grover and the government executed a separate document entitled
“Forfeiture Agreement.” Mr. Grover agreed to sell his residence in Aspen,
Colorado, and turn over a portion of the proceeds to the government. In return,
the government agreed not to seek forfeiture of other property, including a
residence in Honolulu, Hawaii, and a business known as Lounge Lizards, Inc.
Also that same day, Mr. Grover and the government executed an “Addendum to
the Forfeiture Agreement,” in which Mr. Grover agreed to surrender the proceeds
of his property sale to the government “for the purpose of bringing a civil
narcotics forfeiture action against those proceeds” under 21 U.S.C. § 881, and not
to contest the forfeiture.
Mr. Grover was sentenced to thirty years in prison on the continuing
criminal enterprise charge, with a concurrent five year sentence for the tax
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violation. He was allowed to market and sell the Aspen property, and to keep
nearly half of the proceeds to pay his attorneys and provide for his wife. Just
over a year after he was sentenced, Mr. Grover’s counsel sent the government a
certified check in the amount of $286,028.31 from the sale of the property. That
same day, Mr. Grover’s counsel and a government representative executed a
document entitled “Satisfaction of Forfeiture Agreement.”
The government never initiated a civil forfeiture against those proceeds,
however, and on January 16, 1996, Mr. Grover filed a Rule 41(e) Motion for
Return of Property, arguing that because the five-year statute of limitations on the
civil forfeiture had run, the government was no longer entitled to keep the money.
The district court denied the motion, holding that Rule 41(e) did not contemplate
or encompass the return of property under these facts, and that even if it did, the
equities in the case favored the government. Mr. Grover now appeals.
Discussion
Rule 41(e) provides: “A person aggrieved by an unlawful search and
seizure or by the deprivation of property may move the district court for the
district in which the property was seized for the return of the property on the
ground that such person is entitled to lawful possession of the property.” A Rule
41(e) motion is governed by equitable principles, Floyd v. United States, 860 F.2d
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999, 1002-03 (10th Cir. 1988), and we review the district court’s exercise of its
equitable jurisdiction and its denial of the motion for an abuse of discretion.
United States v. Deninno, 103 F.3d 82, 84 (10th Cir. 1996); Frazee v. I.R.S., 947
F.2d 448, 449 (10th Cir. 1991).
Mr. Grover argues that he only surrendered possession of the property, and
not ownership, and that it was the government’s obligation to complete the
transfer of ownership by instituting a civil forfeiture. Because the limitations
period has run, Mr. Grover contends that the government may no longer institute a
civil forfeiture, and therefore, legal ownership of the property was never
transferred to the government. We agree with Mr. Grover that “nothing vests in
the government until some legal step shall be taken,” United States v. A Parcel of
Land, 507 U.S. 111, 125 (1993) (quoting United States v. Grundy, 7 U.S. (3
Cranch) 337, 350-51 (1806)), and that until the government obtains a judgment of
forfeiture, someone else owns the property and may assert defenses unless
waived. A Parcel of Land, 507 U.S. at 127. We also agree with Mr. Grover that
in this case no forfeiture has yet taken place. This does not, however, translate
into success for Mr. Grover on the merits of his Rule 41(e) motion.
Rule 41(e) requires that Mr. Grover show he is “entitled to lawful
possession of the property.” Whatever the weakness of the government’s legal
entitlement to the property, that alone does not establish Mr. Grover’s entitlement
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to possession. By the terms of the Forfeiture Agreement, under which he has
already received the full benefit of his bargain, Mr. Grover relinquished any
possessory claim he had to the property. That the agreement still required the
government to act in order to secure legal title does not change this fact.
In addition, the equities in this case weigh in favor of the government’s
continued possession of the property. In the Forfeiture Agreement, Mr. Grover
agreed not to contest the forfeiture. Thus, he agreed not to contest the
government’s efforts to complete the transfer of legal title to the property, and,
necessarily, not to contest the government’s possession of the property. In return,
he bargained for and received the government’s promise not to seek forfeiture of
other pieces of property which were potentially forfeitable, as well as the right to
market the house and conduct the sale himself, and to keep a portion of the
proceeds. Now, in violation of the terms of his agreement, Mr. Grover is
contesting the government’s right to continued possession of the property.
Mr. Grover asserts the statute of limitations as a grounds for returning the
property. The statute of limitations, however, is an affirmative defense—which
by definition means the asserter of the defense is contesting the action against
him. His Rule 41(e) motion seeks equitable relief, but “he who seeks equity must
come into the court with clean hands.” Hocker v. New Hampshire Ins. Co., 922
F.2d 1476, 1486 (10th Cir. 1991) (quotation omitted). Mr. Grover is asking the
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court to ignore his own breach of the agreement, while at the same time asking
the court to treat the government’s admitted mistake as if it nullifies any
obligations he had under the agreement. To do so would unjustly enrich Mr.
Grover at the government’s expense—he would receive all the benefits of his
bargain as well as the money he agreed to transfer to the government in return for
those benefits. Equity cannot be so used.
AFFIRMED.
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