No. 2--96--0239
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________
THE PEOPLE OF THE STATE OF ) Appeal from the Circuit Court
ILLINOIS, ) of Kane County.
)
Plaintiff-Appellant, ) No. 91--CF--333)
v. )
)
LUIS A. MEDINA, ) Honorable
) Barry E. Puklin,
Defendant-Appellee. ) Judge, Presiding.
_________________________________________________________________
JUSTICE THOMAS delivered the opinion of the court:
The State timely appeals from the circuit court's order
granting the post-conviction petition of defendant, Luis A. Medina,
and effectively vacating defendant's criminal conviction on the
basis of double jeopardy. He asserted in the petition that he had
previously been punished where the Department of Revenue issued a
"jeopardy" tax assessment against him and a lien on his property
pursuant to the Cannabis and Controlled Substances Tax Act (Tax
Act) (Ill. Rev. Stat. 1991, ch. 120, par. 2151 et seq.). We vacate
the judgment.
Following a bench trial, which began on January 13, 1992,
defendant was convicted of the unlawful possession of a controlled
substance (cocaine) with intent to deliver (Ill. Rev. Stat. 1991,
ch. 56½, par. 1401). He was sentenced to 20 years' imprisonment.
The charge arose from the discovery early in March 1991 of
approximately nine kilograms of cocaine in a garage on defendant's
property. The judgment was affirmed on direct appeal in People v.
Medina, 239 Ill. App. 3d 871 (1993). No further appeal in that
case was taken, and that judgment became final.
On January 17, 1995, with the aid of counsel, defendant filed
a post-conviction petition (725 ILCS 5/122--1 et seq. (West 1992)),
arguing that the drug tax, assessed on March 7, 1991, on the
cocaine taken from his possession in the criminal case, together
with the subsequent lien on his property, amounted to a final
judgment and was a punishment; therefore, defendant argued, his
subsequent criminal prosecution was a second punishment barred by
the constitutional prohibition against double jeopardy. U.S.
Const., amend. V; Ill. Const. 1970, art. I, §10. Defendant relied
principally on Department of Revenue v. Kurth Ranch, 511 U.S. 767,
128 L. Ed. 2d 767, 114 S. Ct. 1937 (1994) (finding Montana drug tax
was punitive and violated prohibition against double jeopardy; tax
proceeding to impose tax was equivalent of successive criminal
prosecution). See Wilson v. Department of Revenue, 169 Ill. 2d 306
(1996) (applying Kurth Ranch to find drug tax punitive and
unconstitutional on basis of double jeopardy where tax was imposed
under Tax Act following defendant's criminal prosecution and was
functional equivalent of successive criminal prosecution placing
defendant in jeopardy for second time for same offense).
Defendant also argued that Kurth Ranch must be retroactively
applied to him because the rule against double jeopardy was well
established but was simply applied to a new factual context. See
United States v. McCaslin, 863 F. Supp. l299, 1306 (W.D. Wash.
1994). The State argued that Kurth Ranch was a new ruling of
constitutional law and was nonretroactive under Caspari v. Bohlen,
510 U.S. 383, 127 L. Ed. 2d 236, 114 S. Ct. 948 (1994), and Teague
v. Lane, 489 U.S. 288, 103 L. Ed. 2d 334, 109 S. Ct. 1060 (1989).
Alternatively, the State argued defendant's claim was waived or res
judicata for his failing to assert it in the original criminal
proceedings.
I. FACTUAL BACKGROUND
The parties stipulated to certain limited facts concerning the
proceedings. The salient facts were that defendant was convicted
of the drug offense on January 17, 1992, and was sentenced on March
20, 1992. Pursuant to the Tax Act, on March 7, 1991, the
Department of Revenue (Department) had assessed a tax on the
cocaine of $2,415,000, a penalty of $9,660,000, and interest of
$362,234.03, all of which totalled $12,437,234.03. (The amount of
interest appears to derive from the final assessment of February 5,
1992, rather than that of March 7, 1991.) The tax was assessed on
the same cocaine involved in the offense of which defendant was
convicted. Defendant was now liable to pay the tax, and there was
a lien on all property which defendant owned or would thereafter
acquire until the tax was paid. He was subsequently tried and
convicted before the court and filed his direct appeal.
The stipulation states that defendant also "appealed" the
Department's assessment and this "appeal" was denied on January 17,
1992. The parties stipulated to the accuracy of the documents in
the record from the tax proceeding. The trial court granted
defendant's post-conviction petition on February 23, 1996, and
later released defendant pursuant to a bail bond.
The record also reveals that, at the criminal trial, the first
witness was sworn and the trial judge began to hear evidence on
January 13, 1992. The documents from the tax proceeding show that
the initial notice of a statutory "jeopardy" assessment was issued
on March 7, 1991, stating defendant's total tax liability was
$12,105,187.50, including penalties and interest. The notice was
entitled "Notice of Tax Liability For Cannabis & Controlled
Substance Tax Jeopardy Assessment." The use of the term "jeopardy"
in the context of the Tax Act shows that the tax is immediately due
and payable because, for example, the Department finds that the
taxpayer will depart the state or will conceal his property, or
there will be some other difficulty in collecting the tax. In
other words, the collection of the tax may be somehow jeopardized.
See Ill. Rev. Stat. 1991, ch. 120, pars. 11--1102, 2166. In
issuing a jeopardy notice, the Department may then also file a
jeopardy assessment lien in the county recorder's office. Ill.
Rev. Stat. 1991, ch. 120, par. 2166(b). The notice of tax
liability issued to defendant states that a jeopardy assessment
lien was filed and that defendant has 20 days to request a hearing.
See People v. Provenzano, 265 Ill. App. 3d 33, 36-37 (1994)
(describing procedure generally).
On March 7, 1991, the Department also filed a notice of intent
to seize assets and a demand for payment within 10 days. A "Notice
Of Levy Upon Bank Accounts Or Other Assets Of A Taxpayer Held By A
Financial Institution" was issued on March 25, 1991, to various
financial institutions. The notice of levy states that the assets
are to be held for 20 days and then will be levied upon for payment
of the taxes owed. "Levy" under the Tax Act means "the power of
distraint and seizure by any means." Ill. Rev. Stat. 1991, ch.
120, par. 2173. If the tax remains unpaid during the specified
time and no protest has been lodged, the Department may issue a
warrant directing any sheriff or other person to levy on the
property; enforcement of the tax levy "proceeds in the same manner
as *** against property upon judgments by a court." Ill. Rev.
Stat. 1991, ch. 120, par. 2173. The notice of levy here demanded
that the institution not disburse funds or assets from the account,
and, after the 20-day period expired, if the institution does not
receive a release, the notice becomes a demand by the Department
for any sums due to be applied to the tax liability.
The "Notice of Decision" issued on February 5, 1992, states
that a recommended decision of the Administrative Hearings Division
has been accepted by the Director of the Department and is now a
final administrative decision; it advises defendant of his right to
administrative review in the circuit court within 35 days of the
date of mailing of the notice. The final assessment recommended on
the same date is $12,437,234.03, with interest computed through
February 29, 1992. In accordance with the Tax Act provisions for
a protest hearing, a "Final Assessment" in that amount was issued
on February 25, 1992. See Ill. Rev. Stat. 1991, ch. 120, par.
2166(c) (within 20 days of notice of jeopardy assessment lien,
taxpayer may protest that he does not owe some or all of amount of
jeopardy assessment and request a hearing in accordance with
section 908 of the Illinois Income Tax Act (Ill. Rev. Stat. 1991,
ch. 120, par. 9--908); see also Cook v. Department of Revenue, 281
Ill. App. 3d 171, 178 (1996) (under retailers' occupation tax
provisions, final assessment was judgment or procedural and
substantive equivalent).
The "Administrative Findings and Recommendation" recite that
the matter came for hearing on January 17, 1992, pursuant to the
Department's motion for default and for a hearing on the timely
protest of the respondent (defendant) to the issuance of the notice
of tax liability, and that the respondent failed to appear either
in person or through a representative. Therefore, the default was
granted and the prove up was concluded. The findings also state
that respondent was given proper notice and, upon the admission
into evidence of the Department's prima facie case, the notice of
tax liability stood unrebutted. Accordingly, the administrative
law judge concluded that the notice should be finalized in its
entirety. There is no indication in the record before us that
defendant pursued any further appeal of the final tax assessment.
On appeal, again relying on Teague and Caspari, the State
argued that the trial court erred in applying Kurth Ranch
retroactively to defendant so as to bar his criminal conviction,
which had become final. The State again also argued defendant's
claim was waived or res judicata. Because of the fundamental nature
of the double jeopardy claim, we do not deem it waived,
particularly where, as here, defendant could not have been expected
to assert it prior to the Kurth Ranch decision. See People v.
Valentine, 122 Ill. App. 3d 782, 784 (1984) (claim treated as plain
error).
Defendant responded that the prohibition against double
jeopardy applied retroactively because it is a substantive
constitutional right, and not merely a procedural rule. See, e.g.,
Robinson v. Neil, 409 U.S. 505, 35 L. Ed. 2d 29, 93 S. Ct. 876
(1973). Therefore, the Teague nonretroactivity analysis did not
apply to his case.
This court ordered the parties to file supplemental briefs to
address precisely when jeopardy attached in each of the proceedings
because we believe Wilson, 169 Ill. 2d 306, did not conclusively
determine the moment when jeopardy attached in a tax proceeding
implicating multiple punishments. Further, we requested the
parties to harmonize or explain the significance, if any, of Penry
v. Lynaugh, 492 U.S. 302, 106 L. Ed. 2d 256, 109 S. Ct. 2934
(1989), to the possible application of the Teague and Caspari
principle of nonretroactivity of new rules of constitutional law in
the context of a collateral post-conviction proceeding.
II. WHEN JEOPARDY ATTACHED
In conclusory fashion and without explaining other supporting
legal authorities, the State interprets Wilson, 169 Ill. 2d 306, to
mean that jeopardy never attached at all in the tax proceeding
because a conviction is a prerequisite to tax liability and the
assessment before the conviction was but a nullity. Defendant
maintains that, under Kurth Ranch, it was when the tax was
initially assessed on March 7, 1991, that the first jeopardy
attached and that this occurred before his criminal trial began on
January 13, 1992, and the tax assessment was therefore the first
jeopardy to attach.
A. Jeopardy Attached First in the Criminal Proceeding
As we shall explain below, since defendant protested the tax
assessment and the protest hearing did not occur until January 17,
1992, jeopardy first attached in the criminal trial on January 13,
1992, when the first witness was sworn and the trial judge began to
hear evidence (People ex rel. Daley v. Strayhorn, 121 Ill. 2d 470,
477 (1988). By analogy to criminal proceedings, we conclude that,
in the tax proceeding, jeopardy could only have attached at the
very earliest at the beginning of the protest hearing when the tax
claim was adjudicated.
B. Defendant Did not Establish Violation Necessary for
Statutory Post-Conviction Remedy
We hold that, since defendant did not establish, either here
or below, that there was a substantial denial of his constitutional
rights in the proceeding which resulted in his criminal conviction,
he is not entitled to relief under the Post-Conviction Hearing Act
(Hearing Act) (725 ILCS 5/122--1 et seq. (1994)). In this
collateral proceeding, to be entitled to relief under the statutory
provisions, a defendant must establish a substantial deprivation of
his constitutional rights in the proceeding that produced the
judgment under attack. People v. Ruiz, 132 Ill. 2d 1, 9 (1989).
If a constitutional violation occurred outside of the criminal
proceeding whose judgment is under attack and did not lead to a
constitutionally flawed conviction and resulting judgment, we
believe the claim is outside the subject matter jurisdiction
prescribed by the Hearing Act. See People v. Ferree, 40 Ill. 2d
483 (1968) (constitutional claims which were not related to the
proceeding which resulted in defendant's conviction were not
reviewable under the Hearing Act).
C. Kurth Ranch and Its Progeny
In Kurth Ranch, 511 U.S. 767, 128 L. Ed. 2d 767, 114 S. Ct.
1937, the defendants (Kurths) pleaded guilty to drug offenses
arising from their production of marijuana and were sentenced to
prison on July 18, 1988. The Montana Department of Revenue had
assessed taxes and penalties of nearly $900,000 on the drugs and
attempted to collect the tax. The Kurths contested the assessments
in administrative proceedings which were stayed in September 1988,
pending the resolution of their petition filed in the bankruptcy
court. See In re Kurth Ranch, 145 B.R. 61 (Bankr. D. Mont. 1990).
After examining several factors which persuaded the Supreme
Court that the drug tax was punitive, the Court ultimately
concluded that the Montana tax was a punishment for double jeopardy
purposes and affirmed the judgment of the circuit court of appeals.
In re Kurth Ranch, 986 F.2d 1308 (9th Cir. 1993) (in affirming the
district court judgment, circuit court of appeals held that tax was
unconstitutional as applied to the Kurths and "tax assessment
levied by Revenue constituted an impermissible second punishment"
(emphasis added) in violation of federal double jeopardy clause).
The Supreme Court concluded:
"This drug tax is not the kind of remedial sanction that
may follow the first punishment of a criminal offense.
Instead, it is a second punishment within the contemplation of
a constitutional protection ***, and therefore must be imposed
during the first prosecution or not at all. The proceeding
Montana initiated to collect a tax on the possession of drugs
was the functional equivalent of a successive criminal
prosecution that placed the Kurths in jeopardy a second time
'for the same offense.' " (Emphasis added.) Kurth Ranch, 511
U.S. at___, 128 L. Ed. 2d at 781-82, 114 S. Ct. at 1948.
Defendant argues essentially that Kurth Ranch stands for the
proposition that the notice of tax assessment itself (not the
attempt to actually impose the tax) causes jeopardy to attach.
First, the courts in the Kurths' saga were not called upon to
decide the precise moment at which jeopardy attached in the tax
proceeding. All of the cases assumed that the criminal proceeding
antedated the imposition or enforcement of the tax and treated the
tax as a "second" impermissible punishment or jeopardy.
Notwithstanding the rather loose way in which the courts used the
term "assessment" in their decisions, our close scrutiny of the
facts in the Kurth Ranch line of cases conclusively shows that it
was not the assessment alone that triggered the jeopardy, but
rather it was the state's attempt to actually impose or collect the
tax. The adjudication of the correctness of that tax took place in
the bankruptcy court rather than in the administrative proceeding.
An examination of the precise facts of the Kurth cases shows
that (1) the drug products were seized on October 18, 1987; (2) the
initial "Jeopardy Assessment Tax" on the drugs was issued on
December 7, 1987, and notice was sent to each defendant-taxpayer;
the assessment was subsequently revised on May 7, 1988, from $491,
776.20 to $750,096.68; (3) sometime later, the sum of $30,680.01
was then levied upon and seized pursuant to other state court
proceedings; (4) the Kurths filed a timely administrative protest
of the tax which proceeding was suspended pending the criminal
action; (5) the Kurths pleaded guilty and were sentenced on July
18, 1988; (6) on September 9, 1988, the Kurths filed a bankruptcy
petition, challenging the tax; this action also stayed the
administrative proceeding; and (7) on May 8, 1990, the bankruptcy
court held that the tax assessments were arbitrary and capricious
and further held that the tax assessments, even if imposed in a
procedurally correct manner, also violated the proscription against
double jeopardy; the bankruptcy court ordered the sums collected
returned to the defendants. See In re Kurth Ranch, No. CV--90--
084--GF (D. Ct. Mont. April 23, 1991) (affirming the bankruptcy
court judgment); Kurth Ranch, 145 B.R. 61.
Our careful review of the facts and holdings of these cases
leads to the inescapable conclusion that the Supreme Court did not
hold that the initial assessment of the taxes constituted the first
jeopardy; rather, the proceeding to impose or enforce the tax was
the equivalent of a second impermissible criminal proceeding
placing the defendants "at risk" for a prohibited (second)
punishment for the same criminal conduct. All of the cases were
resolved on the basis that the criminal jeopardy had already
attached, despite the fact that the tax assessments were clearly
issued prior to the criminal proceeding.
In Wilson, 169 Ill. 2d 306, defendant was indicted in January
1991 on three drug charges. The Department assessed the
defendant's liability as $54,385 in taxes, $217,540 in penalties,
and $2,039.46 in interest. Notice of the assessment was served on
the defendant on January 24, 1991, along with notice of the intent
to seize his assets if he failed to make payment in 10 days. The
defendant promptly filed a protest with the Department and
requested a hearing. Then, he pleaded guilty to the criminal
charges and was sentenced and fined. When the Department proceeded
to levy upon his property (Ill. Rev. Stat. 1989, ch. 120, par.
2173) without affording him a hearing, he brought an action for
declaratory and injunctive relief in the circuit court, claiming
that the Tax Act could not be enforced against him on the basis of
double jeopardy, because he had already been criminally prosecuted
and sentenced. The circuit court granted him summary judgment
based on the Supreme Court's Kurth Ranch decision, as imposition of
the tax would violate the prohibition of a successive punishment
for the same offense, and ordered the return of the defendant's
assets.
The Department appealed. Following the analysis of Kurth
Ranch, our supreme court held that the drug tax amounted to a form
of punishment for double jeopardy purposes and that the tax imposed
on the defendant following his criminal prosecution was the
functional equivalent of a successive criminal prosecution that
placed the defendant in jeopardy for a second time for the same
offense. Wilson, 169 Ill. 2d at 317.
There cannot be a second jeopardy without a former jeopardy.
People v. Kim, 284 Ill. App. 3d 637, 639 (1996). However, once the
double jeopardy rule comes into play, it is only the second
proceeding that is constitutionally endangered. Valencia Lucena v.
United States, 933 F. Supp. 129, 137 (D. P.R. 1996). Thus, it is
the second jeopardy that must yield where the first is established.
It is clear from our review of Wilson (and Kurth Ranch) that the
initial assessment of the tax was not the operative event in
triggering the second jeopardy; rather, the Department's attempt to
enforce or impose the tax was more significant. See Kim, 284 Ill.
App. 3d at 639-40) (without more, jeopardy did not attach merely
upon the issuance of a tax assessment and 10-day demand notice).
We also believe that, in protesting the tax and not obtaining an
administrative hearing, the attachment of jeopardy in the tax
proceeding was effectively delayed until at least after the
jeopardy attached in his criminal prosecution. See Ill. Rev. Stat.
1991, ch. 120, par. 2173 (protest delays levy).
There is no unanimity among courts concerning when jeopardy
attaches in a civil proceeding where the government seeks to impose
a civil sanction in addition to a criminal punishment in
contravention of the prohibition against multiple punishments. There
is an unsettled question whether, in a multiple punishments case
involving a civil proceeding, jeopardy attaches at the moment the
defendant is placed "at risk," that is, when the trial or
adjudication begins (successive prosecutions approach), or whether it
attaches when punishment is complete, that is, when the punishment is
actually imposed (for example, the actual forfeiture of assets, or
the payment of the penalty, or the entry of judgment). See, e.g.,
United States v. Idowu, 74 F.3d 387, 396 (2d Cir. 1996) (and cases
cited therein); United v. Sanchez-Escareno, 950 F.2d 193 (5th Cir.
1991) (defendants' executing promise to pay fine was not punishment
for double jeopardy purposes; court examined successive prosecutions
approach; if government attempted to collect on notes, jeopardy would
attach when trier of fact begins to hear evidence); see also
Valencia Lucena, 933 F. Supp. at 137-38; United States v. Tamez,
881 F. Supp. 460, 462-66 (E.D. Wash. 1995).
We think that a tax proceeding of this type is analogous to a
criminal prosecution. Thus, where, as here, the State issues a drug
tax assessment, we believe that no jeopardy attached merely upon the
issuance of the assessment and lien. The taxpayer stands in a
position similar to that of a criminal defendant who has been
charged. Defendant here filed a timely protest. The disputed tax
was not adjudicated until January 17, 1992, four days after his
criminal trial began on January 13, 1992. In the criminal trial,
jeopardy attached when the first witness was sworn and the trial
judge began to hear evidence. In the tax proceeding, where the tax
is directed against a person and he has protested the tax (unlike the
situation in an in rem forfeiture proceeding in which no person need
appear), we conclude that jeopardy could not have attached until the
tax hearing began and the trier of fact began to consider evidence.
We find some support for our conclusion in People v. Litchfield,
902 P.2d 921 (Colo. App. 1995). There, the defendants were arrested
when marijuana was discovered in their rental car. The state
assessed a civil (drug) tax and penalty against the defendants as a
result of the arrest, and the defendants filed a timely objection and
requested a hearing. The defendants moved to dismiss the criminal
charges on the basis of double jeopardy because of the drug tax
"punishment," but the trial court found that jeopardy had not yet
attached as there was no final administrative determination of their
obligation to pay the tax. The Colorado appellate court agreed.
Citing Sanchez-Escareno, 950 F.2d 193, the court held that, since
there was no hearing and no final determination of the tax liability,
the defendants had not yet paid any money to the state, and the state
had not taken any steps to collect the money, no jeopardy had
attached. Contra Bryant v. State, 660 N.E.2d 290 (Ind. 1995) (under
Indiana procedure, jeopardy attached at the moment defendant was
served with record of jeopardy findings and jeopardy assessment
notice and demand).
III. CONCLUSION
In sum, since defendant did not make the requisite showing of a
substantial constitutional violation in the criminal proceeding which
led to his conviction, he cannot obtain relief under the Hearing Act.
The record before us shows that the first jeopardy attached in the
criminal proceeding when the first witness was sworn and the trial
court began to hear evidence. The jeopardy in the tax proceeding
occurred thereafter and was the second jeopardy. However, if the tax
was unconstitutionally applied to defendant, it appears to have
occurred in a proceeding outside the jurisdictional reach of the
Post-Conviction Hearing Act. The defendant's remedy, if any, must
lie elsewhere. See, e.g., Provenzano, 265 Ill. App. 3d 33
(discussing limits of special statutory jurisdiction in tax case);
State v. Sproles, 672 N.E.2d 1353 (Ind. 1996) (challenge to drug tax
premised on double jeopardy claim must be made in administrative
proceeding or in tax court).
We do not decide here when jeopardy attaches in a similar tax
proceeding where the defendant has not protested the tax assessment.
We leave that determination for another day. Because defendant has
not demonstrated either here or below that his claim warrants relief
under the Hearing Act, we must vacate the judgment of the circuit
court which granted his petition. As a result of our disposition, we
do not reach the question whether the double jeopardy ruling in Kurth
Ranch must be applied retroactively.
The judgment of the circuit court of Kane County is vacated.
Judgment vacated.
GEIGER, P.J., and RATHJE, J., concur.