United States v. Real Property & Residence Located at 4816 Chaffey Lane
2012 U.S. App. LEXIS 23506
| 6th Cir. | 2012Background
- Baniel owns the yacht, Coffman owns Baniel, and Bank of America holds a secured mortgage on the vessel.
- The United States filed a civil forfeiture in rem against Coffman, Bryan Coffman, and related properties, adding the yacht in December 2008; the case was stayed due to ongoing criminal investigations.
- Coffman filed a verified claim to the yacht in September 2009; Coffman was later acquitted, while Bryan Coffman was convicted of multiple offenses related to fraud and money laundering.
- Payments on the Bank of America mortgage ceased in December 2009, with the balance estimated around $637,000; the mortgage is in default.
- In February 2011, a joint motion for an interlocutory sale was filed; the district court ultimately ordered the sale on February 17, 2012, and denied release to Baniel.
- Baniel and Coffman appealed the denial of a stay and the interlocutory sale; prior orders stayed the civil proceeding while criminal matters continued.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule G(7) and § 981(g)(6) govern the sale | Baniel argues § 981(g)(6) constrains sale to protect value/third-party rights. | Baniel and Coffman contend Rule G(7) must align with § 981(g)(6) and restrict sale accordingly. | Rule G(7) authority independent of § 981; sale permissible under both. |
| Whether the district court abused discretion ordering the sale | Baniel argues insufficient justification under Rule G(7)(b)(i). | Government asserts mortgage default satisfies Rule G(7)(b)(i) and safeguards exist. | No abuse; mortgage default and value-protection considerations justify the sale. |
| Whether § 981(g)(6) prohibits sale here | Sale may diminish value or harm lienholders, conflicting with § 981(g)(6). | Sale in commercially reasonable manner preserves value and protects interests. | § 981(g)(6) does not prohibit the sale under these facts. |
| Whether rights of lienholders or third parties are adequately protected | Sale could imperil Baniel/Coffman interests. | Mortgage default means Baniel’s rights are limited to proceeds after payoff; sale does not harm interests. | Interlocutory sale protects known interests; rights are not harmed. |
Key Cases Cited
- United States v. Parrett, 530 F.3d 422 (6th Cir. 2008) (statutory interpretation and review of discretionary sale decisions under Rule G(7))
- United States v. Approximately 81,454 Cans of Baby Formula, 560 F.3d 638 (7th Cir. 2009) (deferential review of Rule G(7) sale decisions)
- U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383 (3d Cir. 2002) (Rule Enabling Act and independent authority of Supplemental Rules)
- United States v. Certain Real Prop., Located at 317 Nick Fitchard Rd., 579 F.3d 1315 (11th Cir. 2009) (interpretation of § 981(g)(6) protection of property interests while stayed)