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Langbord v. United States Dep't of the Treasury

October 28, 2010


The opinion of the court was delivered by: Legrome D. Davis, J.


In July 2009, this Court ordered the United States to initiate forfeiture proceedings against the ten 1933 Double Eagle coins it illegally seized from Plaintiffs Roy, Joan, and David Langbord. The Government seeks to justify the forfeiture on the grounds that the coins were obtained through criminal activity, stolen from the United States Mint more than 70 years ago. It argues that the coins, though they may have left the Government's possession, were never legally owned by anyone else. The forfeiture proceeding has thus unfolded in an atypical fashion, forcing the parties to maneuver in uncommon legal territory and resulting in the motions now before the Court.


Several of this Court's previous memoranda and orders set forth the facts of this case (see, e.g., Doc. No. 108), and the Court need not repeat them in detail here. In sum, Plaintiffs transferred the Double Eagles to the United States Mint on September 22, 2004 "based on [their] understanding that the government w[ould] test the Coins for authenticity and secure the Coins while [they] discuss[ed] a possible resolution of the issues relating to the Coins." (Pls.' Mot. Summ. J., Exhibit E, Doc. No. 77-5, at 37). In May 2005, the Mint conclusively authenticated the Double Eagles, but, despite Plaintiffs' repeated requests, refused to return the coins or initiate forfeiture proceedings.

Plaintiffs sued the United States, the Department of the Treasury, the United States Mint, and several Mint officials (collectively, "the United States" or "the Government") in December 2006, claiming violations of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), Administrative Procedures Act (APA), and Fourth and Fifth Amendments. Plaintiffs also advanced common-law replevin and conversion claims. The United States denied all charges and asserted affirmative defenses, but did not submit any counterclaims. (See Doc. No. 24.) In July 2009, upon consideration of summary judgment motions from both sides, the Court dismissed Plaintiffs' CAFRA claim, held that the resolution of the common-law claims turned on genuine factual disputes, and ordered that the Government initiate forfeiture proceedings to remedy APA, Fourth Amendment, and Fifth Amendment violations. (Doc. No. 108, hereinafter often "2009 Order.")

Two months after the Court's summary judgment ruling, the United States sought leave to file a multi-count complaint. (Doc. No. 111.) The proposed complaint includes the court-ordered forfeiture count against the ten 1933 Double Eagles (Count I) and three additional claims: replevin and declaratory judgment claims against the Langbords (Counts II and III, respectively), and a declaratory judgment claim against three John Doe third-party defendants who allegedly possess other 1933 Double Eagles stolen from the Mint (Count IV). Plaintiffs protest that the addition of the proposed claims because they will allow the Government to prevail on a lesser showing-requiring only proof of proper title, rather than that the coins are the proceeds of a crime. They accordingly oppose the motion on several grounds, including that the Government cannot now bring claims that it failed to raise when it answered Plaintiffs' 2006 Complaint, that replevin actions may only lie against parties who possess the relevant property, and that John Does are improper third-party defendants as they bear no relation to the Langbords' possession of the Double Eagles.

Although the Court has not ruled upon the United States's motion for leave to file its multi-count complaint-and, as such, the Court has yet to docket the unchallenged forfeiture complaint-the parties have behaved as if forfeiture proceedings began in September 2009. Plaintiffs filed a claim of interest in the coins (Doc. No. 117) and answered the Government's proposed complaint (Doc. No. 123). Adding a twist, the United States also filed a claim of interest, alleging rightful ownership as the victim of the coins' theft. (Doc. No. 118.) Plaintiffs move to dismiss Government's claim of interest for lack of jurisdiction, arguing that neither the forfeiture statute nor the Constitution's case-and-controversy requirement permit the United States to file a claim against itself. (Doc. No. 121.) The Government contests the motion to dismiss on the grounds that only the government may seek to strike a claim of interest in a forfeiture proceeding, and that a case or controversy indeed exists. (Doc. No. 124.)

This opinion first addresses the Government's motion for leave, then turns toward Plaintiffs' requested dismissal.


A. Counts II and III

1. Procedural Rules Governing Amendment

As an initial matter, Plaintiffs urge the Court to deny the Government leave to file a multi-count complaint because the complaint lists the Plaintiff Langbords as third-party defendants. Plaintiffs call this a "thinly-veiled attempt" to excuse the Government's failure to file compulsory counterclaims when it answered the 2006 complaint. (Pls.' Resp. in Opp'n to Defs.' Mot. for Leave, Doc. No. 113, at 13.) While it is true that the Langbords' names appear on the complaint's first page as third-party defendants, and not counterclaim defendants (see Doc. No. 111-1, Ex. A, at 1), the substance of the Government's motion for leave persuades the Court that it does, in fact, seek to bring counterclaims against the Langbords. The United States acknowledges that both the replevin and declaratory judgment claims it now wishes to pursue could "have [been] asserted as counterclaims in this action originally." (Defs.' Mot. for Leave, Doc. No. 111, at 10.) It avers that the counterclaims should be admitted anyway in an exercise of the Court's discretion. A close inspection of the Government's motion for leave further clarifies the Government's intention: though it includes third-party-practice language when it discusses the John Does, none of that language appears in its claims against the Langbords. (Id., passim.) Accordingly, the Court will treat the proposed addition of Counts II and III as a request to add counterclaims and inquire whether the rules governing counterclaim amendments allow their inclusion.

The procedural rules that allow for the amendment of counterclaims have changed since the parties briefed the issue. When the United States sought leave to file its multi-count complaint in September 2009, Rule 13(f) governed a party's ability to add a counterclaim. The rule permitted amendment when the initial omission resulted from "oversight, inadvertence, or excusable neglect, or if justice so requires." On December 1, 2009, a congressional amendment abrogated Rule 13(f), and now Rule 15(a)(2)'s more general standard-that a court should "freely give leave when justice so requires"-applies to counterclaim revisions like all other pre-trial amendments. 6 Wright & Miller, Federal Practice & Procedure § 1430, 252 (2010).

Amendments to the Federal Rules of Civil Procedure apply retroactively unless "(A) the Supreme Court specifies otherwise; or (B) the court determines that applying them in a particular action would be infeasible or work an injustice." Fed. R. Civ. P. 86(a)(2). The Supreme Court has not spoken about the retroactivity of Rule 13(f)'s abrogation. Thus, the Court examines feasibility and justice factors to determine which rule governs.

Both Rule 13(f) and 15(a) allow amendment when justice requires, and it is this element that undergirds the United States's leave request. (See Defs.' Reply to Pls.' Response in Opposition, Doc. No. 116, at 5--6.) Given the amended rule's singular focus on whether justice requires granting leave, the Government's reliance on the justice exception counsels in favor of applying the amended rule here. Moreover, the abandonment of Rule 13(f) was intended to clarify, rather than change, the standard by which a court determines whether to grant leave. Describing the abandoned rule as "largely redundant and potentially misleading," the Advisory Committee explained:

When the court's leave is required, the reasons described in Rule 13(f) for permitting amendment of a pleading to add an omitted counterclaim sound different from the general amendment standard in Rule 15(a)(2), but seem to be administered-as they should be-according to the same standard directing that leave should be freely given when justice so requires.

Advisory Committee Note to 2010 Federal Civil Rules Handbook. Before Rule 13(f)'s abrogation, courts in this district consistently interpreted the Rules 13(f) and 15(a) together, finding their standards essentially indistinguishable. See, e.g., Fort Wash. Res., Inc. v. Tannen, 153 F.R.D. 565, 566 (E.D. Pa. 1994); Fidelity Fed. Sav. & Loan Ass'n v. Felicetti, 149 F.R.D. 83, 85 (E.D. Pa. 1993). Accordingly, because applying the new rule requires little, if any, adjustment, neither justice nor feasibility concerns exist, and the Court will apply Rule 15(a) retroactively to assess the Government's motion for leave.

The Supreme Court has interpreted Rule 15(a) to require that, where the "the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits." ...

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