United States District Court, M.D. Tennessee, Nashville Division
A.Trauger, United States District Judge.
January 3, 2019, the government filed a Motion for Entry of a
Preliminary Order of Forfeiture of Defendant Canela's
Interest in Substitute Asset Real Property (Doc. No. 183),
which the court granted (Doc. No. 187). Thereafter, Paula
Canela, wife of defendant Juan Canela, filed a Third Party
Petition (Doc. No. 195), contesting the forfeiture of the
real estate sought by the government. The government filed a
Response in Opposition to Third Party Petition (Doc. No.
196), which the court construes as a motion to dismiss the
Third Party Petition for lack of standing. Upon being
directed to do so by the court, Paula Canela filed a Response
to the Government's Construed Motion to Dismiss (Doc. No.
202), and the government filed a Reply (Doc. No. 204).
reasons set forth herein, the court finds that no sentence of
forfeiture was issued and no judgment of forfeiture was ever
entered against defendant Juan Canela in this case, as a
result of which the United States lacks the authority to
effect the forfeiture of any real estate or other property
owned by Juan Canela. The court, therefore, will vacate the
Preliminary Order of Forfeiture of Defendant Canela's
Interest in Substitute Asset Real Property (Doc. No. 187) and
deny as moot the Third Party Petition (Doc. No. 195).
Juan Canela was indicted under 21 U.S.C. §§
841(a)(1) and 846 (Counts 1-3) in April 2002. (Doc. No.
The Indictment included a forfeiture count (Count 4),
pursuant to 21 U.S.C. § 853. In April 2003, a jury found
Canela guilty on Counts 1 through 3 of the Indictment
(Verdict Form, Doc. No. 79) and was then called upon to
consider the forfeiture issue. The jury completed a Special
Jury Verdict Form, finding that $200, 000 was “property
constituting or derived from proceeds that JUAN CANELA
received as a result” of his crime. (Doc. No. 80.)
Consistent with the jury verdict, the government filed a
Motion for Issuance of a Preliminary Order of Forfeiture,
seeking forfeiture of specific property derived from the
defendant's criminal enterprise. (Doc. No. 91.) A
Preliminary Order of Forfeiture was entered on September 10,
2003, providing that the defendant “shall forfeit to
the Government the amount of $200, 000.00 or any other
property up to that amount.” (Doc. No. 92.) Almost two
years later, on April 2005, the court entered an Amended
Preliminary Order of Forfeiture, applying $38, 000 seized by
the government to the $200, 000 judgment. (Doc. No. 155.)
Shortly thereafter, the court entered a Final Order of
Forfeiture as to the $38, 000. (Doc. No. 161.) No. final
order of forfeiture of the remaining $162, 000 was ever
the jury rendered its verdict in 2003, Canela was not
actually sentenced until October 31, 2005. The
government's Motion for Downward Departure (Doc. No. 168)
explains that Canela had begun cooperating with the
government in November 2003, at great personal risk to
himself. He ultimately provided substantial assistance and
testimony in an unrelated case that led to the conviction of
a fellow inmate for conspiracy to kill an Assistant U.S.
Attorney and three other people, using a mafia hitman.
(Id.; see also Sent'g Tr., Doc. No.
186.) At the sentencing hearing conducted on October 31,
2005, Canela was sentenced to a prison term of five years, to
be followed by four years of supervised release. (Doc. No.
186, at 23.)
the issue of forfeiture was never even mentioned-by the
government, defense counsel, or the court-a single time
during the entirety of the sentencing hearing. (See
id., passim.) Judgment was entered in November
2005. (Doc. No. 172.) Although the Judgment references the
finding of guilt on Count 4, for Criminal Forfeiture under 21
U.S.C. § 853, it contains no reference to the amount of
the forfeiture awarded. It does not incorporate by reference
or otherwise the Preliminary Order of Forfeiture of
Substitute Assets or, indeed, the Final Order of Forfeiture
of the $38, 000. Neither party appealed.
was released from prison in July 2006. In November 2008, the
court granted his motion for early termination of supervised
release. (Doc. No. 181.) As of that date, Canela was a free
man, having fully served his sentence. However, from the
government's perspective at least, regardless of whether
Canela himself was aware of it, a forfeiture money judgment
of $162, 000 still hung over his head. No. further payments
have been made toward the money judgment since that time.
to the allegations in the sworn Third Party Petition, Juan
Canela married Paula Canela on May 24, 2008. In August 2009,
more than a year after the marriage and nearly a year after
the termination of supervised release, Canela, as a
“married person, ” purchased real property
located at 1264 Roma Court in Orlando, Florida (the
“Subject Property”). Paula Canela avers in the
Third Party Petition that the home was purchased as a family
home for her and her husband and that no funds derived from
the criminal enterprise that led to Canela's 2003
conviction were used to purchase the property. (Doc. No. 195,
at 1-2.) Although the Subject Property is titled to Juan
Canela, “a married person, ” Paula Canela's
name is not specifically identified on the Special Warranty
Deed. (Doc. No. 185-1.) The government maintains that only
Canela's name was on the original mortgage. The mortgage
was re-recorded in November 2010 to show Paula A. Canela as a
co-borrower. (Doc. No. 196-1.) There is no dispute that Paula
Canela has been on the mortgage since no later than November
forward nine years. On January 29, 2019, the government filed
its Motion for Entry of a Preliminary Order of Forfeiture of
Juan Canela's interest in the Subject Property as a
substitute asset, pursuant to Rule 32.2(e) of the Federal
Rules of Criminal Procedure and 21 U.S.C. § 853(p), to
partially reduce or pay in full the remaining balance of the
forfeiture judgment. (Doc. Nos. 183, 184.) It is unclear
whether Canela received notice of that motion. He did not
file a response to it. The court granted the motion on
February 13, 2019, entering a Preliminary Order of Forfeiture
that effectively terminated Juan Canela's right, title
and interest in the Subject Property, vested such interest in
the United States, and authorized the Attorney General or his
designee to seize the Subject Property and to begin ancillary
proceedings to quiet title as to any third-party interests.
(Doc. Nos. 187, 183-1.) Pursuant to 21 U.S.C. § 853(n),
the government was required to publish notice of the Order
and notice of its intent to dispose of the Subject Property.
Said notice was required to direct any person with a legal
interest in the property to file a petition setting forth the
nature and extent of the legal interest, any additional facts
supporting the petitioner's claim to the forfeited
property, and the relief sought. Id. §
response to that notice, Ms. Canela filed her timely
Petition. In support of her claim to the Subject Property,
Ms. Canela states that she is the lawfully married spouse of
Juan Canela; that she did not know at the time of the
marriage or at the time the home was purchased that it might
be subject to forfeiture; that the Special Warranty Deed
conveying the property to Juan Canela clearly indicates that
he was a “married person” at the time of the
conveyance; and that, as the legal spouse of Juan Canela,
under Florida law she has “a valid, good faith, and
legally cognizable interest in the [Subject Property] even
though [her] name does not appear on the deed.” (Doc.
No. 195 ¶ 15.)
construed motion to dismiss the Third Party Petition, the
government argues that Ms. Canela has no “legal
interest” in the Subject Property under Florida law,
because a “marital asset” does not vest legal
interest in real property in a non-titled spouse until and
unless a judgment from a divorce court vests title in the
non-titled spouse. As a result, the government claims, Ms.
Canela “has no standing in this lawsuit.” (Doc.
No. 196, at 2 (citing United States v. Kermali, 60
F.Supp.3d 1280 (M.D. Fla. 2014)).). It also argues that
Florida Homestead law is preempted by federal forfeiture law.
(Id. (citing United States v. Fleet, 498
F.3d 1225 (11th Cir. 2007)).)
Canela's Response to the Construed Motion to Dismiss
argues that the original 2005 forfeiture is “fatally
flawed because forfeiture was not mentioned orally at
sentencing and is not included in the judgment.” (Doc.
No. 202, at 12.) Paula Canela contends that, because the
original forfeiture order is invalid, a forfeiture order
against purported substitute property based on that original
order is also void. (Id.) She further asserts that
Kermali is not binding on this court and was
incorrectly decided and that she has both legal standing and
a claim of legal interest in the family home.
court directed the government to file a Reply, which it has
now done. The government argues that the 2003 money judgment
was incorporated by reference in the criminal Judgment; the
2005 Order permitted a forfeiture of assets that reduced the
2003 money judgment; Paula Canela lacks standing to challenge
the forfeiture judgment entered against Juan Canela; and Juan
Canela waived his ability to attack the forfeiture by failing
to appeal or otherwise challenge it.
21 U.S.C. § 853, “[a]ny person convicted of a
violation of this subchapter or subchapter II of this chapter
punishable by imprisonment for more than one year shall
forfeit to the United States . . . (1) any property
constituting, or derived from, any proceeds the person
obtained, directly or indirectly, as the result of such
violation” and “(2) any of the person's
property used, or intended to be used, in any manner or part,
to commit, or to facilitate the commission of, such
violation.” 21 U.S.C. § 853(a). Although the
statute by its terms pertains only to property used in or
derived from the criminal enterprise and does not
specifically list personal money judgments as a form of
forfeiture, the Sixth Circuit nonetheless has held that they
are permissible: “nothing suggests that money judgments
are forbidden.” United States v. Hampton, 732
F.3d 687, 691-92 (6th Cir. 2013) (collecting cases).
is clear that “[c]riminal forfeiture is part of a
defendant's sentence.” Id. at 690. At the
time Canela was sentenced, Rule 32.2 stated, “At
sentencing-or at any time before sentencing if the defendant
consents-the order of forfeiture becomes final as to the
defendant and must be made a part of the sentence and be
included in the judgment.” Fed. R. Crim. P.
32.2(b)(3) (2005) (emphasis added). Rule 35 provided then that a
court could, “[w]ithin 7 days after sentencing, . . .
correct a sentence that resulted from arithmetical,
technical, or other clear error.” Fed. R. Crim. P.
35(a) (2005). “Sentencing” was defined by
this rule as “the oral announcement of the
sentence.” Fed. R. Crim. P. 35(c) (2005). On the other
hand, Rule 36 provided that a court could “correct a
clerical error in a judgment” “at any time”
after giving such notice as it felt appropriate. Fed. R.
Crim. P. 36 (2005). “Rule 36 is normally used to
correct a written judgment of sentence to conform to the oral
sentence pronounced by the judge.” United States v.
Bennett, 423 F.3d 271, 278 (3d Cir. 2005) (citing 26
James Wm. Moore et al., Moore's Federal Practice
¶ 636.03[c] (3d ed.).
question presented in this case is this: What happens when,
as here, forfeiture was not mentioned in the defendant's
oral pronouncement of sentence or incorporated into the final
Judgment, but the government nonetheless seeks, almost
fourteen years after entry of Judgment, the forfeiture of the
(former) defendant's interest in substitute assets? No.
case of which this court is aware has addressed precisely the
factual scenario presented here, but some relevant cases
offer insight into how to proceed.
The Caselaw: ...