United States v. One Star Class Sloop Sailboat

United States Court of Appeals
For the First Circuit

No. 06-1089

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.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Rya W. Zobel, U.S. District Judge]

Before

Boudin, Chief Judge,
Selya, Circuit Judge,
and Saris,* District Judge.

Brenda Grantland for appellant.
Shelby D. Wright, Assistant United States Attorney, with whom
Michael J. Sullivan, United States Attorney, was on brief, for
appellee.

August 16, 2006

*
Of the District of Massachusetts, sitting by designation.
 SELYA, Circuit Judge. In this case, the government

initiated a forfeiture proceeding against a prized sailboat, once

owned by the late John F. Kennedy, and secured a default judgment

that obliterated the ownership interest of Dr. Kerry Scott Lane.

Arguing that the government gave him inadequate notice of the

forfeiture action, Lane asked the district court for relief from

the judgment. See Fed. R. Civ. P. 60(b). The court refused. Lane

now appeals.

After careful consideration, we conclude that the court

below did not adequately consider the sufficiency of the notice as

it pertained to Lane's interest in the sailboat. Consequently, we

vacate the order denying the Rule 60(b) motion and remand for

further proceedings. We take no view on the ultimate outcome of

those proceedings.

We state the facts rather tentatively. The district

court did not hold an evidentiary hearing and, therefore, we piece

together an account from the affidavit in support of the original

forfeiture complaint, the affidavits and other papers proffered in

support of Lane's Rule 60(b) motion, and the relatively few

undisputed facts.

The FLASH II is a sailing vessel once owned by the late

John F. Kennedy. Lane's ownership interest in it dates back to

1996, when Ole Anderson learned of the craft's impending sale at

auction. Desirous of restoring the sailboat for resale but lacking

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the wherewithal to make the initial purchase, Anderson convinced

Chuck Fitzgerald and another (faceless) investor to back his

bidding. The auction was held in Monticello, Florida, and Anderson

made the high bid ($18,500). Due to the Kennedy connection, the

sale created a flurry of publicity. The press coverage identified

Fitzgerald as the purchaser.

Subsequent to the auction, Fitzgerald discovered that the

FLASH II did not have any hull number. Worried that this void

would make it difficult to prove the sailboat's provenance, he

decided to abandon ship. Anderson agreed to put together a

syndicate to acquire Fitzgerald's interest and, on July 12, 1996,

Fitzgerald executed a handwritten agreement to sell his interest in

the sloop to "the consortium headed by Ole Anderson" for $22,000.2

Lane contributed $5,000 to join the consortium.

The new owners initially stored the sailboat at Lane's

Florida home. They then moved it to a shipyard in Marblehead,

Massachusetts (Marblehead Trading). Once the FLASH II had been

restored, the consortium exhibited it at various nautical museums

and shows. Anderson did the bulk of the restoration work and

managed the promotional activities; Lane, however, continued to

pour money into the project, contributing, over time, roughly

$70,000 in additional capital.

2
Although the language of the agreement suggests divestiture
of Fitzgerald's entire interest in the FLASH II, he apparently
retained a one percent interest in future profits.

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 On December 4, 1997, Anderson prepared a handwritten

agreement setting forth how profits from an anticipated sale of the

FLASH II would be divided. That document listed Lane, Fitzgerald,

Anderson, Anderson's mother, and two other investors3 as owners of

the sloop. Under its terms, Lane was to receive one-sixth of the

net profits (after payment of expenses and reimbursement of capital

advances).

Despite this spadework, the FLASH II continued to remain

property of the consortium. Anderson purportedly rejected a

prospective buyer's bid of around $800,000 for the sloop, believing

he could sell it for a figure in excess of $1,000,000.

Unbeknownst to Lane when he first invested in the FLASH

II, Anderson's entrepreneurial pursuits apparently extended beyond

marine restorations. In December of 2003, the Drug Enforcement

Administration (DEA) interviewed a cooperating witness (the CW) who

identified Anderson as a member of a large-scale marijuana-

trafficking enterprise. The CW also reported that Anderson had

talked him into investing close to $15,000 in marijuana profits

into the FLASH II restoration project. He added that "[a]nother

person, possibly a doctor or dentist, also invested roughly the

same amount" to help finance the acquisition and restoration of the

sloop. The CW did not identify this investor by name.

3
The agreement identified those investors as Homer Earnest and
Eddie Crosby. Lane argues, without contradiction, that the Eddie
Crosby named in the agreement is actually Harry Crosby.

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 The CW's investment was short-lived. He complained that,

in 2001, under a threat that Anderson would reveal his role in the

drug-trafficking operation, he ceded to Anderson his entitlement to

profits from any future sale of the FLASH II. The gist of this

tale was confirmed when, at the DEA's instigation, the CW met face

to face with Anderson in Beverly, Massachusetts, on September 27,

2004. During that audience, Anderson made it pellucid that, from

his point of view, the CW no longer had any ownership interest in

the FLASH II.

To make a tedious tale tolerably terse, the DEA

concluded, based on its investigation, that the FLASH II

constituted property derived from the proceeds of narcotics

distribution and seized the sloop from the Marblehead Trading yard.

See 21 U.S.C. § 881(a)(6) (providing for civil forfeiture of

property traceable to the avails of drug trafficking). Anderson

called Lane in October of 2004 to report the seizure. Although

Anderson offered to identify Lane as an owner, Lane beseeched him

not to do so because he (Lane) was in the midst of a credentialing

process at a new hospital and feared that publicity about his

association with a reputed drug-trafficker would jeopardize his

prospects (Lane claims that he did not realize at the time that his

own interest in the sailboat might be at risk). Lane did request,

however, that Anderson keep him apprised of any further

developments.

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 On February 1, 2005, the government filed a civil

forfeiture complaint against the FLASH II. It supported the

complaint with the affidavit of a DEA agent. That affidavit set

forth a narrative account of what the CW had told the DEA at a

series of meetings. Based on that recital, the district court

found probable cause for forfeiture and issued a preliminary order

instructing the government to arrest the vessel, publish notice of

the intended forfeiture, and notify Ole Anderson, Ralph Anderson

(of Marblehead Trading), Harry Crosby,4 and any other persons who

claimed an interest in the FLASH II of the pendency of the action.

The government published notices of intent to forfeit in

the Boston Herald on February 15, February 22, and March 1, 2005

and served the above-named individuals by certified mail. Lane was

not personally served and claims not to have seen the published

notices.

Crosby was the only person who filed an answer to the

forfeiture complaint. As to all other interested parties, the

government moved for an entry of default. See Fed. R. Civ. P.

55(a); see also Fed. R. Civ. P. Supp. R. C(6)(a)(i)(A) (requiring

interested parties to file verified claims of interest "within 30

days after the earlier of (1) the date of service of the

Government's complaint or (2) completed publication of notice under

4
Crosby, unlike Lane, had come forward, identified himself to
the government in the wake of the seizure, and eventually filed a
timely claim of ownership.

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Rule C(4)"). The clerk of court obliged on June 3, 2005.

Seventeen days later, Crosby and the government (who had negotiated

a settlement) jointly moved for the entry of a default judgment of

forfeiture. See Fed. R. Civ. P. 55(b).

Lane claims that, notwithstanding his request that he be

kept apprised, he never heard from Anderson. His efforts to

contact Anderson drew a blank. In frustration, he set up a search

alert to identify any internet postings containing the words "John

F. Kennedy/FLASH II." He asserts that he first learned of the

judicial forfeiture action in late June of 2005, when this alert

led him to an article stating that the government had forfeited the

sailboat and was planning to sell it at auction.

Lane promptly contacted Marblehead Trading and, on July

1, 2005, received for the first time a copy of the entry of

default. He immediately began hunting for counsel. On July 15,

2005 — before Lane's newly retained counsel had acclimated herself

— the district court granted the motion for entry of a default

judgment.

Lane promptly filed a motion to vacate the judgment, see

Fed. R. Civ. P. 60(b), asseverating that he was an innocent part-

owner of the FLASH II and that the government had failed to take

reasonable steps to notify him of the institution of the forfeiture

proceeding. The district court denied the motion without a

hearing, stating simply that "[b]ecause claimant admittedly knew of

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the seizure and deliberately declined to disclose his interest,

none of the grounds for vacating a judgment under Rule 60(b)

apply." Following an unsuccessful motion to alter or amend the

order, see Fed. R. Civ. P. 59(e), Lane prosecuted this appeal.

Lane's most compelling argument is that the district

court abused its discretion when it rejected his motion to vacate

without any inquiry into whether the government provided him

adequate notice of the civil forfeiture proceeding.5 The

government counters that it was unaware of Lane's identity so

notice by publication sufficed to assuage any legitimate concerns.

We explore this battleground.

An order granting or denying a Rule 60(b) motion

ordinarily engenders review for abuse of discretion. See, e.g.,

Karak v. Bursaw Oil Corp., 288 F.3d 15, 19 (1st Cir. 2002).

However, a motion that seeks to vacate a judgment as void under

subsection (4) of Rule 60(b) typically engenders de novo review.

See, e.g., M & K Welding, Inc. v. Leasing Partners, LLC, 386 F.3d

361, 365 (1st Cir. 2004). Lane invokes both of these standards of

review. We assume, arguendo — favorably to the government — that

an abuse of discretion standard applies.

Rule C of the Supplemental Rules for Certain Admiralty

and Maritime Claims sets forth the procedural matrix that applies

5
Although Lane has advanced other assignments of error, we
need not reach any of them.

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to judicial forfeitures initiated under 21 U.S.C. § 881. See 28

U.S.C. § 2461(b). The published notices in this case sufficed to

satisfy the government's obligations under that rule. See Fed. R.

Civ. P. Supp. R. C(4) (stating that the government must "give

public notice of the action and arrest in a newspaper designated by

court order and having general circulation in the district"). But

the imperatives of Supplemental Rule C(4) neither trump nor

displace the constitutional requirement that the government afford

an individual notice sufficient to satisfy the demands of due

process before confiscating that individual's property through the

instrumentality of a judicial forfeiture. See United States v.

James Daniel Good Real Prop., 510 U.S. 43, 62 (1993); United States

v. Approximately 2,538.85 Shares of Stock, 988 F.2d 1281, 1284 n.4

(1st Cir. 1993). Thus, if the circumstances called for something

more than notice by publication, the judgment of forfeiture,

insofar as it pertains to Lane's interest in the FLASH II, would be

suspect and he might well be entitled to relief. See United States

v. Giraldo, 45 F.3d 509, 512 (1st Cir. 1995); Echevarria-Gonzalez

v. Gonzalez-Chapel, 849 F.2d 24, 28 (1st Cir. 1988).

The question of whether the government provided an

interested party constitutionally sufficient notice before

effecting a forfeiture entails a case-specific inquiry that hinges,

in the first instance, on the information available to the putative

claimant. A putative claimant's actual knowledge of a forfeiture

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proceeding can defeat a subsequent due process challenge, even if

the government botches its obligation to furnish him with notice.

See Gonzalez-Gonzalez v. United States, 257 F.3d 31, 36 (1st Cir.

2001); Whiting v. United States, 231 F.3d 70, 74 (1st Cir. 2000).

Pressing this point, the government emphasizes Lane's concession

that he knew of the initial seizure of the sailboat long before the

institution of the forfeiture action. The district court's denial

of Lane's Rule 60(b) motion appears to have been premised on this

theory.

The difficulty, however, is that a claimant's knowledge

of a seizure, without more, is insufficient to defeat a challenge

premised on an absence of actual notice. In such situations, due

process entails "advance notice-in-fact of forfeiture proceedings,

as opposed to notice-in-fact of seizure."6 Gonzalez-Gonzalez, 257

F.3d at 38. And although Lane was aware of the seizure as early as

October of 2004, there is no evidence in the thin record presently

before us that suggests he knew of the judicial forfeiture action

until after the entry of default.

6
The fact that Lane asked Anderson not to mention his
ownership interest to the DEA does not defeat the operation of this
principle. Cf. Gonzalez-Gonazlez, 257 F.3d at 35-36 (finding that
a property owner was entitled to the government's reasonable
efforts to provide him notice of a section 881 forfeiture even
though he had fled to avoid criminal charges arising from the same
drug allegations). That fact may, however, bear on the
reasonableness of the government's actions (a subject to which we
shortly shall turn).

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 This is not to say that actual notice is required in

every case and under every set of circumstances. It is not. See

Tulsa Prof'l Collection Servs., Inc. v. Pope, 485 U.S. 478, 490

(1988); Whiting, 231 F.3d at 76. But the absence of actual notice

of the forfeiture proceeding means that an inquiring court must

look beyond Lane's knowledge of the seizure and consider whether,

given the totality of the circumstances, the published

announcements (which Lane claims not to have seen) satisfied the

government's obligation to provide Lane with some constitutionally

sufficient notice.

In cases involving the absence of actual notice, the

result of the ensuing inquiry does not depend on whether the

government actually attempted individually to contact each and

every party in interest but, rather, on whether the government's

attempt to provide notice is, under all the circumstances,

reasonably designed to apprise the parties in interest of the

currency of the forfeiture action. See Mullane v. Cent. Hanover

Bank & Trust Co., 339 U.S. 306, 314 (1950); Gonzalez-Gonzalez, 257

F.3d at 36; United States v. One Urban Lot Located at 1 Street A-

1, 885 F.2d 998-99 (1st Cir. 1989). This depends, in turn, on what

information was reasonably available to the government when it

commenced the forfeiture proceeding.

While every case is different and context can be all-

important, this paradigm means, in general, that when the

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government knows or easily can ascertain the identity and

whereabouts of a potential claimant, reasonableness requires the

government, at a minimum, to take easily available steps in its

attempt to notify the claimant.7 See Tulsa Prof'l Collection

Servs., 485 U.S. at 491; Mennonite Bd. of Missions v. Adams, 462

U.S. 791, 798 n.4 (1983); Lombard v. United States, 356 F.3d 151,

155 (1st Cir. 2004). When, however, a potential claimant's name or

whereabouts are unknown and, practically speaking, unavailable,

notice by publication can serve as a satisfactory surrogate. See

Mullane, 339 U.S. at 317; Approximately 2,538.85 Shares of Stock,

988 F.2d at 1285; One Urban Lot, 885 F.2d at 998.

The hard cases are those in which an interested party's

name or whereabouts were not actually known to the government but

may or may not have been reasonably ascertainable. In those

7
The government asserts that the Supreme Court's recent
decision in Jones v. Flowers, 126 S. Ct. 1708 (2006), diluted its
obligation to take additional steps when providing notice. That
assertion overlooks the fact-specific nature of the inquiry.
Although the Court suggested that the government would not have
been expected to search telephone records or income tax rolls to
locate a missing owner, that finding was made in light of the fact
that the case involved a tax sale and state law required the
taxpayer to keep his address updated. See id. at 1719. Given that
requirement, it was reasonable for the government to assume that
the address on file was correct, even though the certified mailing
sent to that location was returned unclaimed. Moreover, the Jones
Court did not conclude that government's obligations were fulfilled
as soon as it sent the initial notice; instead, it held that the
government was required to take some reasonable follow-up measures
(e.g., posting notice on the front door or resending the notice by
regular mail) when it learned its initial attempt had failed. See
id.

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instances, an inquiring court must look to "the practicalities and

peculiarities of the case." Mullane, 339 U.S. at 314. The rule of

thumb is that the government, in endeavoring to identify and locate

potential claimants, must exercise a degree of diligence

commensurate with the particular circumstances — but it need not

undertake endless or impractical investigations in the hope of

finding a needle in a haystack. See id. at 317-18.

In this case, it is undisputed that the government knew

there was an additional investor ("possibly a doctor or dentist")

but did not know the investor's name. There is no exact formula

for determining the quantum of diligence due an unidentified yet

potentially ascertainable claimant. Rather, the court must

consider the circumstances, balance the interests of the government

and the individual, and determine whether, on the whole of the

record, the government's efforts were reasonable. See Tulsa Prof'l

Collection Servs., 485 U.S. at 484.

The case law makes it clear that the government's burden

is not a heavy one. The government is not required to engage in a

sprawling, open-ended investigation to identify and track down

unidentified, but potentially interested, parties. See, e.g.,

Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995). If,

however, the government has easy access to a lead that it knows (or

reasonably should know) is potentially fruitful, it has some duty

to elicit the available information and take reasonable action in

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response to it. See Small v. United States, 136 F.3d 1334, 1338

(D.C. Cir. 1998); cf. Gonzalez-Gonzalez, 257 F.3d at 38 (suggesting

that the government's failure to act upon available information

might result in a due process violation). The extent of the

required follow-up will, of course, vary with the nature of the

lead, the costs of pursuing the lead, and the idiosyncrasies of the

case. If a person using the lead could easily identify and locate

the potential claimant, eschewing further inquiry and relying on

secondary measures (such as notice by publication) may be

unreasonable, or out of step with due process, or both. See, e.g.,

Small, 136 F.3d at 1338 (finding that if the government possesses

a "piece of information that a reasonable person would use to

locate the claimant," it is constitutionally obliged to try "unless

it would be burdensome to do so"); cf. Plemons v. Gale, 396 F.3d

569, 577 (4th Cir. 2005) (noting that there may be situations in

which personal service is not constitutionally required because

reasonable follow-up efforts would be unlikely to yield results).

Here, the parties dispute the ease with which the

government could have pinpointed Lane's identity and status as a

part-owner of the FLASH II. Lane argues that the extensive

publicity concerning the original sale of the sloop at auction and

the information related by the CW made his identity easily

ascertainable and, at a minimum, required the government to engage

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in some follow-up efforts to unmask his identity.8 The government

has a different viewpoint. While it concedes that the CW's tale

alerted it to the possibility that there was another investor

("possibly a doctor or dentist"), it contends that this designation

was too vague to allow it to take any effective action and that it

had no duty to undertake what it describes as the burdensome task

of engaging in an open-ended search for the mysterious investor.

The record, as it stands, is of little assistance. In

the district court, the government submitted no affidavits,

declarations, or other materials of evidentiary quality describing

what it knew or what (if any) efforts it undertook to identify or

locate potential owners of the FLASH II. By like token, the

district court made no inquiry into these matters and made no

findings with respect to them. The court's order denying the

motion to vacate the default judgment appears to have relied

exclusively on Lane's cognizance of the sailboat's seizure and his

decision to go to ground at that juncture. But these facts alone

will not suffice to defeat his insufficiency-of-notice challenge if

the government, knowing of the existence of an unnamed investor and

having ready access to easily explored leads to that investor's

identity, simply buried its head in the sand.

8
Lane offers a multiplicity of scenarios, but it would serve
no useful purpose to dwell on them.

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 Let us be perfectly clear. Where, as here, the

government does not know the name of a potential claimant, it need

not take heroic measures to identify him. Cf. Jones v. Flowers,

126 S. Ct. 1708, 1719 (2006) (suggesting that the government would

not need to search phone records or income tax rolls to locate

missing owner before proceeding with tax sale when state law

required the taxpayer to keep his address updated). But when the

claimant's identity may be easily ascertained through minimal

effort, the government cannot eschew these efforts. See, e.g.,

Foehl v. United States, 238 F.3d 474, 480 (3d Cir. 2001) (finding

the government's attempt to provide notice insufficient when it

failed to check with four "obvious sources" to ascertain the

claimant's address). Here, for example, the government could at

least have asked Crosby, with whom it was in contact, if he knew

the names of his fellow investors, or it could have made similar

inquires at Marblehead Trading (the locus from which the sloop was

seized).9 Perhaps the government did make such inquiries — but the

record is silent on what steps, if any, it took.

We can go no further. Given the fact-specific nature of

the question and the opacity of the record, additional proceedings

9
The record indicates that either such inquiry might have
borne fruit. Crosby, after all, presumably had a copy of the
December 1997 profit-sharing agreement that listed the owners of
the FLASH II, and Lane claims (without contradiction at this point)
that both he and his association with the sloop were well-known at
Marblehead Trading.

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in the district court are required. See Tulsa Prof'l Collection

Servs., 485 U.S. at 491. Hence, we vacate the order denying Lane's

Rule 60(b) motion and remand for further proceedings to determine

whether plainly indicated and easily accomplished efforts,

undertaken with reasonable diligence during the relevant time

frame, would have led the government directly to Lane. See id.;

Mennonite Bd. of Missions, 462 U.S. at 798 n.4.

We leave the matter of how to proceed to the district

court. It may, if it chooses, proceed exclusively by proffer,

conduct an evidentiary hearing, or handle the matter in some other

fashion. It also will have to consider the other factors that bear

on the determination of motions for relief from judgment. See,

e.g., Karak, 288 F.3d at 19. If the district court finds either

that Lane had actual notice of the forfeiture proceeding or that

his identity and whereabouts were not readily ascertainable by the

government with minimal effort, that will be the end of the matter.

If, however, the court finds that Lane had no notice in fact of the

forfeiture action, that the government's efforts to identify him

were nonexistent or otherwise insufficient under the circumstances,

and that Lane has satisfied the other prerequisites for Rule 60(b)

relief,10 Lane's motion would have to be granted and the forfeiture

10
Although notice of seizure is not tantamount to notice of
forfeiture, see text supra, the fact that Lane had notice of the
seizure and the further fact that Lane asked Anderson not to
disclose his name are not necessarily irrelevant to the final
outcome of the Rule 60(b) motion. The government remains free to

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judgment, as it pertains to his interest in the FLASH II, would

have to be set aside.

Vacated and remanded. No costs.

argue, for example, that equitable considerations — especially any
prejudice that it may have suffered through delay or concealment by
Lane — should be taken into consideration.

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