United States v.

1500 LINCOLN AVENUE 949 F.2d 73 (3rd Cir. 1991)

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Nature of the Case

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Facts

The Bernsteins owned a building in tenancy by the entirety. Mr. Bernstein ran a pharmacy in the building. He was convicted of selling controlled substances without prescriptions. Mrs. Bernstein did not know of the illegal activities. The United States Government (P) sought forfeiture of the property under 21 U.S.C. 881. The Bernsteins filed an answer to the forfeiture complaint and Mrs. Bernstein averred that she had no knowledge of any of the activity that took place at the pharmacy. The government even conceded that she had a valid innocent owner defense under 21 U.S.C. 881 (a)(7). The government then reasoned that since Mr. Bernstein’s interest was forfeitable and the title was in tenancy by the entireties, the logical conclusion was that she had no severable interest to retain as there was but one unitary estate. The government, however, maintained that the illegal use severed the entireties estate and that she was entitled to keep a half interest. Counsel for Mrs. Bernstein contended the case should be dismissed. The district court dismissed this action, holding that they could not get forfeiture because Mrs. Bernstein still held an interest in the building, and she did not know of her husband's illegal acts. The court reasoned that a spouse’s innocent owner defense bars a civil in rem forfeiture action against property held in tenancy by entireties. Since she had an interest in all the property and she had done nothing wrong she should be permitted to retain that interest. The court held that the illegal use did not sever the estate. The government then moved to alter or amend the judgment arguing that it should at least be able to obtain any separate interest, which Mr. Bernstein would be entitled to should he survive or divorce or should the entireties be severed in any other manner. This motion was denied, but the court noted that the government could file a lis pendens against the property and preserve its ability to seek forfeiture of any interest that Mr. Bernstein might come into in the future. P appealed.