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In re Dua Diamonds, Inc.

Supreme Court of Pennsylvania

August 22, 2017



          PER CURIAM.

         AND NOW, this 22nd day of August, 2017, the Emergency Application Pursuant to Pa.R.A.P. 3315 To Reinstate Trial Court Order Lifting Automatic Supersedeas is DENIED.


          WECHT JUSTICE.

         Today, this Court denies the emergency application for relief filed by DUA Diamonds, Inc., ("DUA") and Jasmeen Kaur (collectively, "Applicant"). I respectfully dissent. For the reasons set forth below, I would grant the application and reinstate the trial court's order lifting the automatic supersedeas.

         In this case, police officers executed a search warrant on Applicant's jewelry stores. The warrant specified that only the jewelry that was "identifiable" as being the subject of ongoing burglary investigations was to be seized. See Trial Ct. Op., 8/4/2017, at 2. The Commonwealth's own evidence later demonstrated that only approximately 2% of the jewelry that was seized was connected to any crime. Id. at 2 (noting that, of approximately 50, 000 items seized, "only 1, 000 pieces were 'identifiable' as part of a crime"), 16 ("48, 093 pieces [were] not identified as being part of a crime"). Nonetheless, police officers seized Applicant's entire inventory. Id. at 1-2. The origin of some of the inventory could not be ascertained, but the trial court specifically credited testimonial and documentary evidence demonstrating that "95% of the inventory confiscated by the Commonwealth [was] bought from wholesalers and, therefore, was legitimate and not proceeds of a crime." Id. at 9-10. The trial court's finding notwithstanding, the Commonwealth has retained Applicant's property, and has continued to operate a website upon which it advertised and posted photographs of all of Applicant's inventory, inviting members of the public to claim any items that belong to them.[1] Id. at 12.

         Applicant filed a petition for the return of property. The trial court granted Applicant's petition, and ordered the Commonwealth to return the pieces of jewelry that were unconnected to any crime, while allowing the Commonwealth to retain the pieces that served as evidence of a criminal enterprise. To minimize any possibility that Applicant irretrievably would dissipate jewelry later determined to be connected to the crimes under investigation, the trial court ordered Applicant to photograph every item subsequently sold, to keep receipts with those photographs, and to record the sale price, method of payment, and every buyer's name, address, and telephone number.

         The Commonwealth appealed the trial court's order granting Applicant's petition in part, thereby effecting an automatic supersedeas and staying the trial court's order pending the resolution of its appeal. See Pa.R.A.P. 1736. The trial court granted Applicant's motion to lift the stay. The Comonwealth sought emergency relief in the Superior Court. The Superior Court reinstated the supersedeas through a per curiam order, providing no explanation for its rejection of the trial court's reasoning. The Superior Court's determination on the merits is pending. Although that court has directed expedited consideration, Applicant remains unable to access the inventory that the trial court determined to be legitimate and wholly unconnected to any crime. Consequently, Applicant is unable to conduct any lawful business operations.

         In my view, the Superior Court's order reinstating the supersedeas and preventing Applicant's recovery of its lawfully-owned property reflects an "egregious error" that warrants the exercise of this Court's supervisory powers. See Pa.R.A.P. 3315, Note (providing for this Court's review of stay orders of appellate courts). The trial court aptly determined that Applicant has made a sufficient demonstration that: (1) it is likely to prevail on the merits, (2) it will suffer irreparable injury if the requested relief is not granted, (3) lifting the supersedeas will not substantially harm the Commonwealth or other interested parties, and (4) lifting the supersedeas will not adversely affect the public interest. See Pa. Pub. Util. Comm'n v. Process Gas Consumers Grp., 467 A.2d 805, 808-09 (Pa. 1983) (identifying the criteria for grant of a stay, and considering them in context of a motion to vacate an order granting a stay). I would exercise this Court's extraordinary jurisdiction, which is necessary here to "cause right and justice to be done." 42 Pa.C.S. § 726.

         Applicant notes that, having already prevailed on the merits before the trial court with regard to the thousands of items that the trial court determined to have been obtained legitimately, it has made a sufficient showing that it was "entitled to lawful possession thereof, " so as to establish grounds for the return of its property under Pa.R.Crim.P. 588.[2] Applicant observes that, once it preliminarily established its entitlement to the lawfully-owned property, the burden fell upon the Commonwealth to demonstrate that the property was derivative contraband, necessitating proof of a specific nexus between the property and the crimes alleged. See Emergency Application at 19-20 (citing, inter alia, Barron v. Commonwealth, 74 A.3d 250, 255 (Pa. Super. 2013), and Petition of Koenig, 663 A.2d 725, 726 (Pa. Super. 1995)).

         Applicant notes that the Commonwealth had months to acquire evidence sufficient to satisfy its burden, and that the trial court granted the Commonwealth numerous extensions of time to produce such evidence. Despite the time afforded to the Commonwealth, and despite the Commonwealth's invitation to the public to claim Applicant's inventory as stolen property, "the Commonwealth did not provide any direct or circumstantial evidence that the property which [Applicant] wanted returned was, in fact, derivative contraband." Trial Ct. Op. at 12 (emphasis in original). Applicant highlights the Commonwealth's concession that some percentage of the property seized was not evidence of a crime, and that the Commonwealth, therefore, had no entitlement to it. See Emergency Application at 12-13 (quoting Notes of Testimony, 5/26/2017, at 161) (statement of the Commonwealth that "we have never [-] not once [-] walked into this courtroom and said every single item in there [i]s stolen. God knows that some of this is not stolen . . . .").

         Importantly, the trial court only ordered the return of the inventory for which no nexus of a crime had been established, allowing the Commonwealth to retain the pieces of jewelry that would serve as actual evidence of a crime. There is no legal theory that would allow the Commonwealth to retain indefinitely property that is lawfully owned and unconnected to any crime. The delineation between the property that was possessed unlawfully and the property that was obtained legitimately was based upon the trial court's factual findings and credibility determinations, which are owed substantial deference on appeal. For these reasons alone, Applicant has demonstrated a substantial likelihood of success on the merits.[3]

         Applicant has established that it will suffer irreparable injury if it cannot reacquire its lawfully-owned inventory. The trial court noted that, subsequent to the seizure of Applicant's inventory, Citizens Bank has sought to collect a $100, 000.00 loan that was secured by the inventory. Trial Ct. Op. at 14.[4] Applicant cannot repay the loan due to the seizure, and has borrowed money from more than nine friends and relatives in an attempt to prevent Citizens Bank from seeking to acquire from the Commonwealth the jewelry serving as collateral and then proceeding to liquidate it for less than its fair market value. Id. at 15. Apart from Applicant's difficulties with the loan, Applicant is without inventory and cannot conduct business operations. The trial court credited evidence showing that the owners of DUA were three months behind in paying their home mortgage, and that foreclosure proceedings were imminent. Id. The trial court credited evidence that Applicant has lost existing customers and prospective new customers because its stores are closed and empty, causing Applicant's business "immeasurable harm." Id. The trial court credited evidence that Applicant is many months behind on paying its rent for the commercial leases for all of its storefronts, and that "eviction will be certain." Id. The trial court credited evidence that the owners of DUA have three children and now cannot afford to purchase groceries for their family. Id. at 16.

         The trial court noted that Applicant likely would not be able to recoup any economic losses from the Commonwealth because, if Applicant later seeks to bring an action for damages, "it would likely be blocked by immunity provisions applicable to governmental entities." Id. at 17. This appears to be correct. But let us assume for the sake of argument that Applicant later could somehow recover damages from the Commonwealth. The harm to Applicant still could not be undone. By that time, it likely would be out of business permanently. Its owners may have faced foreclosure and lost their family home. Financial and reputational ruin of this sort is not easily remedied by a potential award of damages that might or might not arrive years in the future. And that is assuming, merely arguendo, Applicant's best-case scenario of being able to pursue such a claim at some later date, as opposed to the more likely eventuality that the Commonwealth's immunity would operate to ...

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