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Schrob v. Catterson

argued: May 16, 1991.

IRWIN SCHROB AND BARBARA L. SCHROB, HIS WIFE; AND MATAWAN BUILDING SUPPLIES CORPORATION
v.
JAMES CATTERSON, INDIVIDUALLY AND IN HIS CAPACITY AS ASSISTANT UNITED STATES ATTORNEY FOR THE EASTERN DISTRICT OF NEW YORK; DAVID TORACINTA, INDIVIDUALLY AND IN HIS CAPACITY AS A SPECIAL AGENT OF THE DRUG ENFORCEMENT ADMINISTRATION; JOHN M. PELUSO, INDIVIDUALLY AND IN HIS CAPACITY AS A SPECIAL AGENT OF THE DRUG ENFORCEMENT ADMINISTRATION; U.S. DEPARTMENT OF JUSTICE--UNITED STATES ATTORNEY; U.S. DEPARTMENT OF JUSTICE--DRUG ENFORCEMENT ADMINISTRATION; JOHN DOES 1 THROUGH 20 AND JANE DOES 1 THROUGH 20, BOTH INDIVIDUALLY AND IN THEIR CAPACITIES AS SUPERVISORY PERSONNEL OVER THE IDENTIFIED INDIVIDUAL DEFENDANTS OR AS PERSONS, PRESENTLY UNKNOWN TO PLAINTIFFS, WHO PARTICIPATED IN THE ACTS AND/OR OMISSIONS ALLEGED IN THIS COMPLAINT; AND JOSEPH V. ZARRELLI, BOTH INDIVIDUALLY AND IN HIS CAPACITY AS AN AGENT/INFORMER OF THE UNITED STATES LAW ENFORCEMENT AGENCIES. JAMES CATTERSON, JOHN PELUSO AND DAVID TORACINTA, APPELLANTS



Appeal from the United States District Court for the District of New Jersey; D.C. Civil Action No. 90-00038.

Hutchinson, Cowen and Garth, Circuit Judges.

Author: Hutchinson

Opinion OF THE COURT

HUTCHINSON, Circuit Judge

I.

Assistant United States Attorney James Catterson (Catterson) and Drug Enforcement Agency (DEA) agents David Toracinta and John Peluso (collectively "the Agents") appeal the order of the United States District Court for the District of New Jersey denying their Rule 12(b)(6) motions to dismiss appellants' complaint against them on the grounds of absolute and qualified immunity. Irwin Schrob, his wife Barbara Schrob, and Matawan Building Supplies (Schrob)*fn1 filed a complaint containing claims arising under Bivens v. Six Unknown Named Agents of the Fed. Bureau of Narcotics, 403 U.S. 388, 29 L. Ed. 2d 619, 91 S. Ct. 1999 (1971). Therein they allege that the seizure of Matawan Building Supplies (Matawan) by Catterson and the Agents violated their constitutional rights. Matawan was seized after Catterson filed an in rem civil action seeking forfeiture of 100 percent of the shares of Matawan and certain real and personal property under the civil forfeiture provisions of the Comprehensive Drug Abuse Prevention and Control Act (Act), see 21 U.S.C.A. § 881(a)(6)-(7) (West 1981 & Supp. 1991), and seeking an ex parte application for a seizure warrant directing the United States Marshal Service to seize the property.

Because we have determined that many of the allegations in the complaint are subject to absolute immunity and should be dismissed, we will reverse the district court's order as to them. We will remand to the district court on the remaining claims and allow the proceedings to continue to the extent necessary to determine whether Catterson and the Agents are entitled to summary judgment on those claims on grounds of qualified immunity.

II.

Schrob's complaint in this action was first filed on January 4, 1990, and amended in April and August of 1990. Schrob alleged that the seizure of Matawan violated his First, Fourth and Fifth Amendment rights and violated the Act. Before filing an answer to Schrob's complaint, Catterson and the Agents moved for dismissal under Federal Rule of Civil Procedure 12(b)(6). Catterson argued that he was entitled to absolute immunity because all of the actions Schrob alleges he committed in violation of the Constitution were made in his core prosecutorial capacity. Alternately, Catterson argued that he was entitled to qualified immunity. The Agents argued that they were entitled to qualified immunity because Schrob's allegations of unconstitutional misconduct on their part were not specific enough to permit an inference that they had unreasonably violated any clearly established constitutional rights.

The Rule 12(b)(6) motion to dismiss was filed on October 4, 1990, and heard on October 22, 1990. In a ruling from the bench, the district court dismissed Schrob's First Amendment claim, his claim for violation of the Act, and denied the remainder of the motion. Catterson and the Agents filed their Notice of Appeal on December 21, 1990.

III.

On a motion to dismiss for failure to state a claim, all allegations in the pleadings must be accepted as true and the plaintiff, Schrob, must be given the benefit of every favorable inference that can be drawn from those allegations. See Conley v. Gibson, 355 U.S. 41, 48, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 83 n.1 (3d Cir. 1987) (citations omitted).

The complaint alleged the following facts. Matawan was incorporated in New Jersey in October of 1984 and commenced operations in February of 1985. At its outset, Matawan was owned by Frank J. Esposito (Esposito), Joseph Zarelli (Zarelli), and Schrob.*fn2 Schrob was actively involved in the day-to-day running of Matawan. Zarelli left Matawan in April 1986 and brought an action against Matawan, Schrob and Esposito. The action was later settled and Zarelli transferred all of his shares to Matawan thereby making Schrob and Esposito fifty percent shareholders in the company.

After leaving Matawan, Zarelli contacted the DEA and this contact ultimately led to the investigation and indictment of Esposito on charges of conspiracy to distribute narcotics.*fn3 Schrob was never investigated or implicated in Esposito's crimes. On January 4, 1988 Catterson filed an in rem complaint in the United States District Court for the Eastern District of New York seeking forfeiture of certain real and personal property of Matawan, Esposito, Schrob and others, under the civil forfeiture provisions of the Comprehensive Drug Abuse Prevention and Control Act, 21 U.S.C.A. § 881(a)(6)-(7). Specifically, the in rem complaint alleged that 100 percent of the shares of Matawan, as well as Esposito's one-third equitable interest in the Matawan business property were the proceeds of, and directly traceable to the sale of a controlled substance in violation of 21 U.S.C.A. § 841. The complaint sought issuance of a warrant directing the U.S. Marshal to seize the property and assets identified in the in rem complaint.

At an ex parte hearing on the seizure warrant held on January 5, 1988, Catterson made certain factual misstatements. The magistrate judge, in considering the propriety of seizing the Matawan property and shares, asked Catterson "Am I correct that two of Mr. Esposito's partners had been indicted or convicted?" and Catterson responded "That is correct." Appendix (App.) at 42, para. 21. While two of Esposito's associates had in fact been convicted in connection with cocaine sales, Esposito's two partners in Matawan, Schrob and Zarelli, were in no way implicated in Esposito's drug sales. Schrob alleges that the magistrate judge issued the seizure warrant in reliance on these misstatements. The warrant was issued that day and approximately thirty Deputy United States Marshals seized the shares, business and property of Matawan, directed customers to leave the premises and fired certain employees. Matawan's bank accounts were seized and frozen and normal business activities came to a complete halt. An article in the local newspaper detailed the seizure.

After the seizure was effected, Schrob met with Catterson and demonstrated the legitimacy of his investment in Matawan and that Esposito had only capitalized one-third of the business. Following a period of negotiations, control of Matawan was returned to Schrob. Schrob alleges that the return of control was unduly delayed because Catterson demanded numerous "unreasonable and unjustified" restrictions on operation of the business, as well as a release from personal liability for his actions related to the seizure. Although Schrob agreed to the restrictions, no such release was ever signed. Complete control of the company was returned to Schrob within one week.

IV.

The district court had jurisdiction pursuant to 28 U.S.C.A. § 1331 (West Supp. 1991). We have appellate jurisdiction over the interlocutory order denying Catterson's and the Agents' claims to absolute or qualified immunity under the collateral order doctrine espoused in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 93 L. Ed. 1528, 69 S. Ct. 1221 (1949).*fn4 The Supreme Court has repeatedly held that a district court's denial of absolute immunity is an appealable interlocutory order. See, e.g., Nixon v. Fitzgerald, 457 U.S. 731, 742, 73 L. Ed. 2d 349, 102 S. Ct. 2690 (1982). The Court has also held that "a district court's denial of a claim of qualified immunity, to the extent that it turns on an issue of law, is an appealable 'final decision' within the meaning of 28 U.S.C. § 1291 notwithstanding the absence of a final judgment." Mitchell v. Forsyth, 472 U.S. 511, 530, 86 L. Ed. 2d 411, 105 S. Ct. 2806 (1985). Thus, we assert jurisdiction over the district court's denial of absolute and qualified immunity under the Cohen doctrine.*fn5

Since we are duty bound to examine our own jurisdiction, we are constrained to point out, sua sponte, that the district court never filed an official order denying the motion to dismiss. Instead, it simply said that "the transcript will be your order because it is too complicated to convert into a small order. You can take your guidance from that." App. at 31. Accordingly, the transcript itself was listed on the district court docket in lieu of a formal order.

We do not approve of this procedure, but we think that a holding that it deprives us of appellate jurisdiction would exalt form over substance. The district court should not have neglected memorializing its decision with a written order. Admittedly, an order dealing with each allegation as to the presence of absolute or qualified immunity on the face of the complaint would not be simple, but the district court's failure to issue such an order complicates our appellate review. Although the docketed transcript of the hearing at the end of which the district court denied the Rule 12(b)(6) motion of Catterson and the Agents sets out the district court's decision to deny the Rule 12(b)(6) motion to dismiss and gives us enough information to review that order, we cannot understand why the district court found it too difficult to craft an order with respect to the various claims Schrob set out in the following format: "For the reasons stated at the hearing, defendant's motion to dismiss is denied with respect to the claims alleged in para.'s X and Y," or "the motion to dismiss the claim that A and B did Z, as set out in para.'s R, S, T and U, which we summarize as follows . . . ."

On the jurisdictional problem that the district court's failure to craft such an order creates, we believe that the rationale underlying the Supreme Court's decision in Bankers Trust Co. v. Mallis, 435 U.S. 381, 55 L. Ed. 2d 357, 98 S. Ct. 1117 (1978) (per curiam) is controlling. Although the district court in Banker's Trust failed to file a judgment separate from its opinion, rather than a separate order as in this case, see id. at 382 n.6, the Court's rationale is instructive. The Supreme Court said:

Strict compliance with the separate-judgment requirement [would not] aid the court of appeals determination of whether the decision of the District Court was "final" for purposes of § 1291. Even if a separate judgment is filed, the courts of appeals must still determine whether the district court intended the judgment to represent the final decision in the case.

Id. at 385 n.6. We think it would be equally inefficient to remand this case because the district court refused to enter and docket a statement headed "order" apart from its ruling in the transcript that it did docket. Cf. Temple Univ. v. White, 941 F.2d 201, 216 (3d Cir. 1991) (rationale of Banker's Trust does not apply in absence of entry in clerk's docket). We do, however, instruct the district court to file separate, written orders in the future.

V.

Our review of the district court's denial of Catterson's and the Agents' motion to dismiss is plenary. See D.P. Enters., Inc. v. Bucks County Community College, 725 F.2d 943, 944 (3d Cir. 1984) (citations omitted). In deciding a motion to dismiss, all well-pleaded allegations of the complaint must be taken as true and interpreted in the light most favorable to the plaintiffs, and all inferences must be drawn in favor of them. Id. A complaint can only be dismissed if "it appears to a certainty that no relief could be granted under any set of facts which could be proved." Id.

VI.

Initially, we must address two immunity issues. We must first identify which allegations against Assistant United States Attorney Catterson involve core prosecutorial functions and can thereby be dismissed on grounds of absolute immunity under the Supreme Court's decisions in Imbler v. Pachtman, 424 U.S. 409, 47 L. Ed. 2d 128, 96 S. Ct. 984 (1976) and Burns v. Reed, 114 L. Ed. 2d 547, 111 S. Ct. 1934 (1991).*fn6 We will then address those allegations requiring the submission of further proofs on remand. We will remand these remaining claims to the district court, recognizing the rights of Catterson and the Agents to prove that their ...


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