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Commonwealth v. $34

Supreme Court of Pennsylvania

December 19, 2017

COMMONWEALTH OF PENNSYLVANIA
v.
$34, 440.00 U.S. CURRENCY APPEAL OF: RAFAEL FALETTE

          ARGUED: May 9, 2017

         Appeal from the Order of the Commonwealth Court at No. 1021 CD 2014 dated April 19, 2016 Affirming the Order of the Monroe County Court of Common Pleas, Civil Division, at No. 11208 Civil 2009 dated May 15, 2014, exited May 16, 2014.

          SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

          OPINION

          BAER JUSTICE.

         In this discretionary appeal, we consider the burdens of proof applicable in civil in rem forfeitures of currency under Pennsylvania's Controlled Substances Forfeiture Act ("Forfeiture Act"), 42 Pa.C.S. §§ 6801 - 6802 (repealed), which, inter alia, provides that money is forfeitable to the Commonwealth upon proof of a "substantial nexus"[1] to certain prohibited drug activities under The Controlled Substance, Drug, Device and Cosmetic Act ("Controlled Substance Act"), 35 P.S. §§ 780-101 - 780-144.[2] More specifically, we consider whether the Commonwealth can satisfy its evidentiary burden of proving a substantial nexus between the seized currency and prohibited drug activity by relying solely upon the Forfeiture Act's presumption at 42 Pa.C.S. § 6801(a)(6)(ii), which provides that money found in close proximity to controlled substances is rebuttably presumed to be the proceeds derived from the sale of a controlled substance, and, if so, the related assessment of how this presumption can be rebutted.[3]

         The Commonwealth Court in the case sub judice determined that proof of proximity under the Subsection 6801(a)(6)(ii) presumption is sufficient to establish a substantial nexus and that the innocent owner defense set forth at 42 Pa.C.S. § 6802(j) provides the sole method by which claimants can rebut the presumption.[4] Though we agree that, generally, proof of proximity under the Subsection 6801(a)(6)(ii) rebuttable presumption may be sufficient to satisfy the Commonwealth's overall evidentiary burden of proving a substantial nexus for the purpose of currency forfeitures, we hold that the Commonwealth Court erred in concluding that the innocent owner defense provides the sole basis for rebutting that presumption. Rather, for the reasons set forth below, we conclude that the presumption may be rebutted by demonstrating that the seized currency is not the proceeds of drug sales, independent of a claimant's ability to satisfy the innocent owner defense. If the Subsection 6801(a)(6)(ii) presumption has been rebutted sufficiently, the burden of proof remains with the Commonwealth such that it must put on further evidence of a nexus to drug activity beyond the mere propinquity between the money and controlled substances. Because the Commonwealth Court erred as a matter of law in holding otherwise, we vacate the Commonwealth Court's order, vacate the trial court's order, and remand to the trial court for further proceedings consistent with this opinion.

         I. Background

         The facts underlying this matter are straightforward and largely undisputed. On August 7, 2009, Juan Lugo ("Lugo"), a New Jersey resident, was driving with three passengers in his sister's vehicle on Interstate-80 in Monroe County, Pennsylvania, when he was pulled over for tailgating. Upon approaching the vehicle, Pennsylvania State Trooper Derek Felsman ("Trooper Felsman") detected an odor of marijuana and sought permission to conduct a search of the vehicle. Lugo consented to the search, and Trooper Felsman uncovered ecstasy pills in the cigarette outlet in the center console area of the vehicle and a small amount of marijuana by the rear passenger door.[5] Additionally, Trooper Felsman uncovered $34, 440.00 in cash hidden in the seatbelt attachment of the "b-pillar"[6] on the passenger side of the vehicle. The Pennsylvania State Police confiscated both the cash and the controlled substances.

         Though Lugo admitted to Trooper Felsman that the controlled substances belonged to him and were for his personal use, he denied ownership or knowledge of the currency found in the vehicle. Similarly, the other passengers in the vehicle denied having any knowledge of the recovered currency. Lugo was subsequently charged with possession of a controlled substance for personal use (ecstasy), possession of a small amount of marijuana for personal use, and possession of drug paraphernalia. Lugo ultimately entered a guilty plea to misdemeanor possession of marijuana. Importantly, Lugo was never charged with any crime related to drug distribution or in connection with the $34, 440.00 in cash uncovered in the vehicle. Indeed, as will be discussed in further detail infra, the Commonwealth averred in its subsequent forfeiture petition that Lugo signed a waiver denying ownership of the currency. Commonwealth's Petition for Forfeiture and Condemnation at ¶ 7.

         Following Lugo's guilty plea, in a separate legal proceeding the Commonwealth filed a petition for forfeiture and condemnation of the $34, 440.00 under Subsection 6801(a)(6)(i) of the Forfeiture Act, which is the subject of the instant appeal. As noted, the Commonwealth averred that Lugo admitted to ownership of the controlled substances, but denied any knowledge of the currency, and that all occupants of the vehicle signed waivers denying any knowledge or ownership of the currency. Commonwealth's Petition for Forfeiture and Condemnation at ¶ 7. Notwithstanding its acknowledgment in this regard, the Commonwealth maintained that the currency was forfeitable as proceeds traceable to an exchange of controlled substances. Id. at ¶ 8.

         In response to the Commonwealth's forfeiture petition, Appellant Rafael Falette ("Falette"), who was not present in the vehicle during Lugo's August 7, 2009, arrest, filed an answer and new matter in which he claimed lawful ownership of the money.[7]Falette maintained that he was a longtime friend of Lugo's sister, the record owner of the vehicle in which the currency was found, and that the money represented the proceeds of a recent personal injury lawsuit settlement. In support of his claim, Falette submitted copies of two settlement checks, one dated June 17, 2009, in the amount of $14, 496.22 and a second dated July 16, 2009, in the amount of $23, 303.33, for a total of $37, 799.55. Appellant's Answer and New Matter at ¶ 13; id. at Exhibits 1 and 2. Falette claimed that after he initially deposited the settlement checks, he withdrew all of the money in cash so that he could impress his friends. Thereafter, he concealed the money in the b-pillar of the vehicle, purportedly because he did not want to utilize a bank. Then, unbeknownst to him at the time, Lugo borrowed the car, resulting in his arrest and the confiscation of the money.

         Following a hearing, in which Trooper Felsman and Falette both testified, the trial court granted the Commonwealth's forfeiture petition. Initially, the trial court determined that the Commonwealth sufficiently established a nexus under the Forfeiture Act based upon, inter alia, the proximity between the minimal amount of drugs in the cigarette outlet and rear passenger door and the money in the b-pillar. Trial Court Order, 5/15/2014, at 1; see also 42 Pa.C.S. § 6801(a)(6)(ii) (providing that money found in close proximity to controlled substances is rebuttably presumed to be the proceeds derived from the sale of a controlled substance).[8] Moreover, the trial court found that Falette's testimony as to how he acquired the money was incredible and that his purported rationale for withdrawing all of the money in cash, namely, to impress his friends, was inconsistent with his action of concealing it within the b-pillar of someone else's vehicle. Trial Court Order, 5/15/2014, at 1. Accordingly, the court determined that he failed to rebut the Commonwealth's case by demonstrating the innocent owner defense under Subsection 6802(j) of the Forfeiture Act because he did not establish that he was the owner of the currency, that he lawfully obtained the currency, and that he did not possess the currency for illegal purposes. 42 Pa.C.S. § 6802(j). Falette appealed to the Commonwealth Court, arguing, inter alia, that the trial court erred in finding that the Commonwealth sufficiently proved a nexus between the currency and illegal drug activity.

         In a divided 3-2 decision, an en banc panel of the Commonwealth Court affirmed the trial court's order granting forfeiture of the $34, 440.00. Commonwealth v. $34, 440.00 U.S. Currency, 138 A.3d 102 (Pa. Cmwlth. 2016). The Commonwealth Court observed that, in a forfeiture proceeding involving money, the Commonwealth bears the initial burden of proving by a preponderance of the evidence that there is a substantial nexus between the money being forfeited and a violation of the Controlled Substance Act. Id. at 108. The court further determined, based upon its own precedent, that the Commonwealth may satisfy this evidentiary burden simply by proving that the currency was found in close proximity to controlled substances in accord with the Subsection 6801(a)(6)(ii) rebuttable presumption. Id. at 110-111 (citing Commonwealth v. $259.00 Cash U.S. Currency, 860 A.2d 228, 232 (Pa. Cmwlth. 2004) (en banc)). Finally, the Commonwealth Court concluded that once the Commonwealth establishes that money is forfeitable by utilizing the Subsection 6801(a)(6)(ii) presumption, the burden then shifts to the claimant to demonstrate all of the elements of the innocent owner defense under Subsection 6802(j), namely, that he owns the money, that it was lawfully acquired by him, and that it was not unlawfully used or possessed by him. Id. (citing, inter alia, 42 Pa.C.S. § 6802(j)(3)). Thus, the court held that the innocent owner defense is the sole method of rebutting the Subsection 6801(a)(6)(ii) presumption.

         Applying its construction of the law to the facts presented, the Commonwealth Court acknowledged that Lugo was charged only with possession of a small amount of marijuana for personal use and that there was no evidence, apart from its proximity to the small amount of drugs, linking the $34, 440.00 to drug sales. However, the court determined that these facts are irrelevant once the Subsection 6801(a)(6)(ii) presumption is triggered. Id. at 110. The court concluded that the Commonwealth here satisfied its burden of demonstrating that the drugs and cash were in close proximity because both were found within arm's-length of each other inside the vehicle, thus triggering the Subsection 6801(a)(6)(ii) rebuttable presumption. Id. at 108-09. The Commonwealth Court further held that Falette failed to rebut this presumption by demonstrating the innocent owner defense because the trial court disbelieved his explanation for how he got the money and why he concealed it in the b-pillar of the vehicle. Id. at 111. Concluding that it could not disturb the trial court's credibility determinations, the Commonwealth Court affirmed the trial court's order granting the Commonwealth's forfeiture petition. Id.

         Judge Levitt authored a dissenting opinion, which was joined by then-President Judge Pellegrini. The dissent would have held that the trial court misapplied the law in concluding that the innocent owner defense is the only method of rebutting the Subsection 6801(a)(6)(ii) presumption, and that it therefore erred in granting the Commonwealth's forfeiture petition. In the dissent's view, the Subsection 6801(a)(6)(ii) presumption can be rebutted by evidence that the seized currency does not represent the proceeds of a drug exchange, independent of the claimant's ability to demonstrate all of the elements of the innocent owner defense. Id. at 117. The dissent observed that this approach was utilized in Commonwealth v. Tate, 538 A.2d 903 (Pa. Super. 1988). In Tate, the Superior Court concluded that, although the rebuttable presumption applied in that money was unquestionably found in close proximity to controlled substances, the stipulated facts of record, which proved that the specific money in question was not derived from drug sales, adequately rebutted the presumption. Tate, 538 A.2d at 906.

         Because the adjudicated facts of record in this case indicated that Lugo was not the owner of the $34, 440.00, that he only possessed a small amount of marijuana for personal use, and that he was neither charged nor convicted of any drug distribution crimes, the dissent would have held that the Subsection 6801(a)(6)(ii) proximity presumption was rebutted and that the burden of proof remained with the Commonwealth to put on further evidence of a nexus between the money and illegal activity under the Controlled Substance Act in order to satisfy its burden of proving a prima facie case for forfeiture. $34, 440.00 U.S. Currency, 138 A.3d at 117-18. The dissent therefore concluded that the Commonwealth did not establish a prima facie case for forfeiture, that Falette was not required to demonstrate the innocent owner defense, and that the trial court's rejection of Falette's testimony was irrelevant. Id. at 119. Consequently, it would have reversed the trial court's order granting forfeiture of the $34, 440.00.

         This Court subsequently granted Falette's petition for allowance of appeal, limited to the following two questions, as phrased by Falette:

1. If the rebuttable presumption under Section 6801 is established, can a finding that there is a "substantial nexus" be defeated by evidence of record before the burden is shifted back to the claimant to establish that he or she is the innocent owner?
2. Where the rebuttable presumption establishes that currency is presumed to be proceeds of selling controlled substances, but the Commonwealth's evidence is inconsistent with selling of controlled substances, can the presumption be defeated by the Commonwealth's own evidence?

Commonwealth v. $34, 440.00 U.S. Currency, 158 A.3d 1245 (Pa. 2016).[9]

         II. Analysis

         It is unnecessary to explain in detail the parties' arguments to this Court, as both largely present the same substantive arguments discussed in our summary of the Commonwealth Court opinions. Stated succinctly, Falette, the appellant herein, adopts the posture of the dissent below and contends that the Commonwealth could not rely solely upon the Subsection 6801(a)(6)(ii) presumption to establish a nexus between the money and drug sales because the presumption that the money was derived from drug sales was conclusively rebutted by evidence that Lugo possessed only a small amount of drugs for personal use and did not own the money uncovered from the vehicle.[10]Conversely, the Commonwealth argues that the majority below correctly determined that, once the Subsection 6801(a)(6)(ii) presumption is triggered, the Commonwealth has satisfied its burden of proving a substantial nexus and that the innocent owner defense is the sole method of rebutting that presumption.[11]

         In order to answer the questions presented in this appeal, we must interpret Pennsylvania's Forfeiture Act set forth at 42 Pa.C.S. §§ 6801-6802. Issues of statutory interpretation present this Court with questions of law; accordingly, our standard of review is de novo, and our scope of review is plenary. Pennsylvania Pub. Util. Comm'n v. Andrew Seder/The Times Leader, 139 A.3d 165, 172 (Pa. 2016). This Court's interpretation of the Forfeiture Act, and indeed of all statutes, is guided by the Statutory Construction Act, 1 Pa.C.S. §§ 1501-1991.

         Pursuant to the Statutory Construction Act, the object of all statutory construction is to ascertain and effectuate the General Assembly's intention. 1 Pa.C.S. § 1921(a). When the words of a statute are clear and free from ambiguity, the letter of the statute is not to be disregarded under the pretext of pursuing its spirit. 1 Pa.C.S. § 1921(b). Moreover, technical words and phrases that have acquired a peculiar and appropriate meaning shall be construed according to such peculiar and appropriate meaning. 1 Pa.C.S. § 1903(a). However, when the words of a statute are not explicit, the General Assembly's intent may be ascertained by considering matters other than the statutory language, such as the occasion and necessity for the statute, the circumstances of the statute's enactment, the object the statute seeks to attain, and the consequences of a particular interpretation. 1 Pa.C.S. § 1921(c). When ascertaining the intention of the General Assembly in the enactment of a statute, we presume that the General Assembly did not intend a result that is absurd, impossible of execution, or unreasonable. 1 Pa.C.S. § 1922(1). Finally, we observe that the law generally disfavors forfeitures, requiring forfeiture statutes to be strictly construed. Commonwealth v. 1997 Chevrolet and Contents Seized from Young, 160 A.3d 153, 193 (Pa. 2017).

         Turning to the text of the Forfeiture Act at issue here, the relevant statutory provisions provide as follows:

§ 6801. Controlled substances forfeiture.
(a) Forfeitures generally.--The following shall be subject to forfeiture to the Commonwealth and no property right shall exist in them:
* * *
(6)(i) All of the Following:
(A)Money, negotiable instruments, securities or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of The Controlled Substance, Drug, Device and Cosmetic Act, and all proceeds traceable to such an exchange.
(B)Money, negotiable instruments, securities or other things of value used or intended to be used to facilitate any violation of The Controlled Substance, Drug, Device and Cosmetic Act.
* * *
(ii) No property shall be forfeited under this paragraph, to the extent of the interest of an owner, by reason of any act or omission established by the owner to have been committed or omitted without the ...

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