11.14Defenses and Exceptions

The statutes governing forfeiture provide specific defenses and exceptions to forfeiture. MCL 333.7521, which sets forth property that is subject to forfeiture, includes specific exceptions under which property is not subject to forfeiture. Specifically, MCL 333.7521(1)(d)(i)-(iv) provides that certain conveyances are not subject to forfeiture, and MCL 333.7521(1)(f) provides an innocent owner defense to forfeiture of property. Similarly, MCL 333.7523(4) protects the rights of secured parties who neither had knowledge of nor consented to the act or omission giving rise to forfeiture proceedings involving real property.

This section will also discuss the applicability of traditional defenses including double jeopardy, collateral estoppel, and the constitutional prohibition against excessive fines.

A.Exceptions to Forfeiture of Conveyances

“[A] conveyance, including an aircraft, vehicle or vessel used or intended for use, to transport, or in any manner to facilitate the transportation, for the purpose of sale or receipt of property described in [MCL 333.7521(1)(a)-(b)]” is subject to forfeiture, “[e]xcept as provided in [MCL 333.7521(1)(d)(i)-(iv).]” MCL 333.7521(1)(d).

MCL 333.7521(1)(d)(i)-(iv) provides:

“(i) A conveyance used by a person as a common carrier in the transaction of business as a common carrier is not subject to forfeiture unless it appears that the owner or other person in charge of the conveyance is a consenting party or privy to a violation of [Article 7 of the PHC].

(ii) A conveyance is not subject to forfeiture by reason of any act or omission established by the owner of that conveyance to have been committed or omitted without the owner’s knowledge or consent.

(iii) A conveyance is not subject to forfeiture for a violation of [MCL 333.7403(2)(c) (possession of lysergic acid diethylamide, peyote, mescaline, dimethyltryptamine, psilocyn, psilocybin, or a controlled substance classified in schedule 5), MCL 333.7403(2)(d) (possession of marihuana), MCL 333.7404 (use of a controlled substance or controlled substance analogue), or MCL 333.7341(4) (use of or possession with intent to use an imitation controlled substance)].

(iv) A forfeiture of a conveyance encumbered by a bona fide security interest is subject to the interest of the secured party who neither had knowledge of nor consented to the act or omission.”

Accordingly, the four circumstances under which forfeiture is not permitted under MCL 333.7521(1)(d) are:

•innocent common carrier;

•innocent owner;

•Violation of MCL 333.7403(2)(c), MCL 333.7403(2)(d), MCL 333.7404, or MCL 333.7341(4); and

•innocent secured party. MCL 333.7521(1)(d)(i)-(iv).

1.Co-Owners

There is a split among panels of the Court of Appeals regarding the scope of the innocent owner defense for conveyances.¹ In People v One 1979 Honda Auto, 139 Mich App 651, 655-656 (1984), the Court of Appeals held that where property subject to forfeiture as a conveyance under MCL 333.7521(1)(d) is owned by more than one person, “the guilty knowledge of one co-owner that the conveyance or vehicle is involved in a prohibited transaction subject to forfeiture is sufficient to provide a basis for [forfeiture under MCL 333.7521(1)(d)].”

Conversely, in In re Forfeiture of $53, 178 Mich App 480, 495-496 (1989), the Court of Appeals held that where property subject to forfeiture as a conveyance under MCL 333.7521(1)(d) is owned by more than one person, “the forfeiture of the [property] is subject to the interest of a co-owner who proves that the proscribed act was done without his or her knowledge or consent, express or implied. The state may only forfeit the ownership interest of the noninnocent owner.”

See also In re Forfeiture of $1,159,420, 194 Mich App 134, 148 (1992), a case involving the innocent owner defense in the context of “any thing of value” under MCL 333.7521(1)(f) rather than a “conveyance,” under MCL 333.7521(1)(d), the Court of Appeals held that in cases of joint ownership a court may only forfeit the ownership interest of the noninnocent owner.

2.Exempted Violation—Use

The complaint for forfeiture of a vehicle was frivolous where the owner of the vehicle was originally charged with possession of less than 25 grams of cocaine in violation of MCL 333.7403(1)(a)(v), but pleaded to a reduced charge of using cocaine in violation of MCL 333.7404 and was sentenced under MCL 333.7411 because MCL 333.7521(1)(d)(iii) specifically provides that a conveyance is not subject to forfeiture for a violation of MCL 333.7404. In re Forfeiture of $2,124, 342 Mich App 569, 578-579 (2022). The Court rejected the plaintiff’s argument that forfeiture was appropriate because the vehicle owner’s conduct “constituted a violation of the possession statute” despite the fact that she pleaded to a lesser charge. Id. at 579. Specifically, the Court explained that while MCL 333.7521a(1) states that property may be seized for violation of Article 7 of the PHC, that section goes on to state in relevant part that “property is not subject to forfeiture unless a criminal proceeding involving or relating to the property has been competed and the defendant pleads guilty to or is convicted of a violation of this article.” In re Forfeiture of $2,124, 342 Mich App at 579 (cleaned up).² Accordingly, the vehicle was not subject to forfeiture because “[t]he only possible guilty plea or conviction at the time that plaintiff filed the forfeiture complaint was under MCL 333.7404,” and under MCL 333.7521(1)(d)(iii), violation of MCL 333.7404 does not subject the vehicle to forfeiture. In re Forfeiture of $2,124, 342 Mich App at 579.

B.“Any Thing of Value” Innocent Property Owner Defense

The innocent owner defense to forfeiture of “a thing of value” states: “To the extent of the interest of an owner, a thing of value is not subject to forfeiture under this subdivision by reason of any act or omission that is established by the owner of the item to have been committed or omitted without the owner’s knowledge or consent.” MCL 333.7521(1)(f).³

1.Burden of Proof

“The burden is on the owner of the property to establish [the innocent owner] affirmative defense.” In re Forfeiture of a Quantity of Marijuana, 291 Mich App 243, 250 (2011). “The statute’s requirement that the claimant lack ‘knowledge or consent’ of the acts or omission forming the basis for forfeiture means the innocent owner defense is defeated if the claimant has either knowledge of ‘or’ consented to the illegal activity.” Id. at 252. As used in MCL 333.7521(1)(f), “the word ‘knowledge’ does not include the concept of constructive knowledge.” In re Forfeiture of a Quantity of Marijuana, 291 Mich App at 252. However, “[a] claimant’s consent[] . . . might be implied from the circumstances even without [actual] knowledge.” Id. at 253.

The claimants presented sufficient evidence to support the innocent owner defense where they submitted affidavits that they lacked knowledge of and did not consent to the illegal activity forming the basis for the forfeiture action. In re Forfeiture of a Quantity of Marijuana, 291 Mich App at 254. The burden then “shifted back to plaintiff to produce clear and decisive evidence to negate the defense.” Id. at 253. Where the plaintiff relied on inadmissible hearsay evidence (police reports) to show the claimants’ guilty knowledge, the trial court abused its discretion in granting summary disposition in favor of the plaintiff, because material questions of fact remained regarding the claimants’ innocent owner affirmative defense. Id. at 253-254, 256-257.

2.Co-owners

Where property subject to forfeiture as “any thing of value” under MCL 333.7521(1)(f) is owned by more than one person, “the state may forfeit only the ownership interest of the noninnocent owner.” In re Forfeiture of $1,159,420, 194 Mich App 134, 147-148 (1992).

“The trial court clearly erred in finding that claimant did not have an ownership interest in [seized vehicles]” where “title to the vehicles was in claimant’s name[; a]lthough claimant signed the title of the [vehicles] with the intent of transferring them to [her husband, he] was required [under MCL 257.233(9)] to sign the title in order to complete the transfer of title[,]” and “[t]he record [was] devoid of any evidence that [he] signed the title.” In re Forfeiture of 2000 GMC Denali and Contents, 316 Mich App 562, 586 (2016). However, the trial court correctly concluded that the claimant was not an innocent owner. Id. Specifically, the Court held that the trial court did not clearly err by finding that the “claimant had actual knowledge of [the defendant’s] criminal activity[]” where “[e]vidence was presented that the claimant admitted to officers that she knew marijuana plants were being grown in the basement of her house, and that she had seen defendant mixing cocaine and baking soda in the kitchen (to make crack cocaine).” Id. Further, the claimant “also admitted that she knew [the defendant, who is her husband] was ‘hanging out in the streets[,]’” and when the defendant called her from jail the claimant asked about the bag of pills without prompting, “indicating that she had knowledge of the pills[,]” and the defendant asked the claimant to check the kitchen cabinet for crack cocaine and the claimant said she would check it. Id. at 586-587.

C.Real Property Defenses

MCL 333.7523(4) authorizes the forfeiture of real property through judicial forfeiture proceedings, but provides a defense to secured creditors. MCL 333.7523(4) states:

“Title to real property forfeited under [Article 7 of the PHC] must be determined by a court of competent jurisdiction. A forfeiture of real property encumbered by a bona fide security interest is subject to the interest of the secured party who neither had knowledge of nor consented to the act or omission.”

D.Double Jeopardy

Civil forfeiture of property resulting from the same criminal transaction for which the defendant was convicted and sentenced does not ordinarily violate a defendant’s double jeopardy protection against multiple punishments because civil in rem forfeitures are not generally punishment. People v Acoff, 220 Mich App 396, 398 (1997), citing United States v Ursery, 518 US 267 (1996). However, “in rem civil forfeitures are not per se exempt from the scope of the Double Jeopardy Clause[.]” Acoff, 220 Mich App at 398. There is a rebuttable presumption that double jeopardy analysis does not apply to civil in rem forfeiture proceedings. Id. at 399. “This presumption can be rebutted only by the ‘clearest proof’ of an excessive punitive purpose or effect.” Id. (finding the defendant’s double jeopardy claims to be without merit where the defendant was convicted of possession of less than 25 grams of cocaine after the civil forfeiture of his car, $32, $17 in food stamps, and a wristwatch because there was “no evidence, let alone the ‘clearest proof,’ indicating that the instant forfeiture was so punitive in form or effect as to render it criminal[]”).

See also United States v One Assortment of 89 Firearms, 465 US 354, 361 (1984) (holding that double jeopardy does not bar a civil, remedial forfeiture proceeding initiated following an acquittal on related criminal charges).

E.Collateral Estoppel

Collateral estoppel does not bar a civil, remedial forfeiture proceeding initiated following an acquittal on related criminal charges. United States v One Assortment of 89 Firearms, 465 US 354, 361 (1984). “[A]n acquittal on criminal charges does not prove that the defendant is innocent; it merely proves the existence of a reasonable doubt as to [the defendant’s] guilt.” Id.

However, crossover estoppel was properly applied to prevent the claimants from challenging the validity of a search warrant where a federal court previously decided that the search warrant was valid. In re Forfeiture of $1,159,420, 194 Mich App 134, 145-146 (1992). “Crossover estoppel involves issue preclusion in a civil proceeding following a criminal proceeding and vice versa.” Id. at 145. Crossover estoppel barred the relitigation of the validity of the search warrant because the prior proceeding resulted in a final judgment, the same parties were involved,⁴ and the claimants had a full and fair opportunity to litigate the issue even though only one of the claimants was a party in the prior proceeding. Id. at 145-146. The Court explained that the claimant, who was a party to the prior proceedings, had a sufficient interest in the issue to protect the interests of the other claimants, and the issue was actually litigated and necessarily determined because the trial court in the federal action ruled on the merits of the challenge to the search warrant. Id. at 146 (holding that the trial court properly applied collateral estoppel in regard to the search warrant issue).

F.Excessive Fines

Both US Const, Am VIII and Const 1963, art 1, § 16 provide that excessive fines shall not be imposed. Civil forfeiture cases brought in Michigan courts are subject to the protection afforded by both excessive fines clauses. Timbs v Indiana, 586 US ___, ___ (2019) (holding the Eighth Amendment’s Excessive Fines Clause is “incorporated by the Due Process Clause of the Fourteenth Amendment”); In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App 255, 258 (2002).

“[A] punitive forfeiture is unconstitutional if ‘the amount of the forfeiture is grossly disproportional to the gravity of the defendant’s offense[.]’” In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 259, quoting United States v Bajakajian, 524 US 321, 337 (1998).

The following factors should be considered in determining whether a fine authorized by statute is excessive:

•the object designed to be accomplished;

•the importance and magnitude of the public interest sought to be protected;

•the circumstances and nature of the act for which the fine is imposed;

•the preventive effect upon the commission of the particular kind of crime; and

•the ability of the accused to pay the fine. In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 258-259, citing People v Antolovich, 207 Mich App 714, 717 (1994).

In In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 259-260, the Court applied the factors to conclude that the forfeiture of the claimant’s home did not violate the bar against excessive fines. The Court explained:

“[T]he forfeiture of a home associated with drug trafficking serves as a strong deterrence measure. ‘Moreover, public sentiment places great importance on confronting illegal drug trafficking . . . .’ Antolovich, [207 Mich App] at 718. In addition, the nature of [the claimant’s] illegal activity in the home in this case was severe, given the quantity of marijuana found. A witness testified that the street value of the drugs seized ranged from $30,000 to $65,000, depending on how the drugs were sold, and the records found in [the claimant’s] bedroom demonstrated that he was owed an additional $20,000 from drug customers. The home was valued between $100,000 and $200,000, and [the claimant’s] attorney valued the home at the low end of this scale. Given the amount of drugs involved, the value of the drugs and the home, and the societal harm imposed by [the claimant’s] actions, we conclude that the forfeiture of the home did not constitute an unconstitutionally excessive fine.” In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 259-260.

In the context of the forfeiture of cash, the Court held that “a legitimate forfeiture of drug proceeds will by definition be proportional to the amount of drugs sold and the harm inflicted by the drug sale. Accordingly, forfeitures of drug proceeds do not implicate the excessive fines provision of [Const 1963, art 1, § 16].” In re Forfeiture of $25,505, 220 Mich App at 584.

G.Homestead Exemption

The homestead exemption[, Const 1963, art 10, § 3,] does not apply to forfeiture proceedings. In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 262.

Const 1963, art 10, § 3 provides:

“A homestead in the amount of not less than $3,500 and personal property of every resident of this state in the amount of not less than $750, as defined by law, shall be exempt from forced sale on execution or other process of any court. Such exemptions shall not extend to any lien thereon excluded from exemption by law.” (Emphasis added.)

The homestead exemption is defined in MCL 600.6023. In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 261. MCL 600.6023(1)(g) provides:

“(1) The following property of a judgment debtor and the judgment debtor’s dependents is exempt from levy and sale under an execution:

* * *

(g) A homestead of not more than 40 acres of land and the dwelling house and appurtenances on that homestead that is not included in a recorded plat, city, or village, or, at the option of the owner, a quantity of land that consists of not more than 1 lot that is within a recorded town plat, city, or village, and the dwelling house and appurtenances on that land, owned and occupied by any resident of this state, not exceeding in value $3,500.00. This exemption applies to any house that is owned, occupied, and claimed as a homestead by a person but that is on land not owned by the person. However, this exemption does not apply to a mortgage on the homestead that is lawfully obtained. A mortgage is not valid for purposes of this subdivision without the signature of a married judgment debtor's spouse unless either of the following occurs . . . .”

The homestead exemption is inapplicable to forfeiture proceedings because MCL 333.7521 does not provide for a homestead exemption and the constitutional exemption provides that the exemption shall be defined “by law . . . .” In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 260-261. MCL 600.6023(1)(g), the statute providing “by law” for the constitutional homestead exemption, clearly deals with debtors, and a claimant cannot be considered a debtor in a forfeiture proceeding. In re Forfeiture of 5118 Indian Garden Rd, 253 Mich App at 261. Further, a forfeiture of property cannot be considered a “forced sale on execution or other process of any court” because the forfeiture did not occur so that the proceeds could be used to satisfy a debt or money judgment. Id. The Court explained that “the homestead exemption was designed to provide a secure place for a householder to ‘live beyond the reach of those financial misfortunes which even the most prudent and sagacious cannot avoid.’ Here, [the claimant] is losing his home not because of financial misfortunes but because he used the house to further his criminal enterprise. We conclude that the homestead exemption should not apply in such a circumstance.” Id. at 262, quoting Kleinert v Lefkowitz, 271 Mich 79, 87 (1935) (additional quotation marks and citation omitted).