Arizona Court of Appeals Division One Holds That The State Must Serve a Notice of Pending Forfeiture on an Owner or Other Person Claiming an Interest in Seized Property Before That Property May Be Forfeited.

On June 14, 2004, the State filed a notice of pending forfeiture and notice of seizure due to alleged racketeering offenses committed by Daniel Rivas.  The notice identified the property seized, including a piece of real property (the “Property”) owned in part by Juan Rivas, and required any person claiming an interest in the seized property to file a verified claim satisfying the requirements of A.R.S. § 13-4311(E) and (F) within 30 days.  The notice did not list Juan as a party and he was never served with the notice.  When Juan discovered the seizure, his counsel wrote a letter to the State explaining that the seizure was erroneous because although both Daniel and Juan were listed as owners of record of the Property, Daniel had executed a quitclaim deed in Juan’s favor in January 2003.  The letter also stated that although Juan was preparing to file a claim on the property, he hoped it would be unnecessary.

The State’s forfeiture action proceeded against Daniel, but the complaint did not include Juan, even though the complaint listed him as a co-owner of the Property.  In November 2006, the trial court entered a forfeiture judgment that included the Property.  The State then sold the Property to SNC Properties, LLC (“SNC”).  Juan learned of the sale in 2007 when he attempted to pay property taxes and filed a quiet title action against SNC.  In 2009, the State filed a new notice of pending forfeiture and notice of seizure against Juan.  In response, both Juan and SNC filed claims pursuant to A.R.S. § 13-4311.  Following Juan’s request for release of the property, the trial court struck the State’s second notice and released the Property to Juan.  The State timely appealed.

The ArizonaAppeals Court affirmed.  A.R.S. § 13-4311 requires the State to give notice to an owner or other person claiming an interest in seized property.  Moreover, under A.R.S. § 13-4305(B), courts only have jurisdiction over the property being forfeited in rem if the owner or interest-holder is properly served.  When the identity of the owner of the property is known, A.R.S. § 13-4307(1) requires service of the notice of pending forfeiture by personal service or through certified mail.  The Court ruled that because the State knew that Juan owned the Property, but failed to serve the notice of pending forfeiture on him pursuant to A.R.S. § 13-4307(1), it was barred from forfeiting the Property. 

The Court rejected the State’s argument that Juan’s actual knowledge of the forfeiture action absolved it of its statutory duty to serve him the notice, explaining that Juan did not waive statutory notice because he was not an active litigant in the forfeiture action.  The Court also rejected the State’s other waiver arguments. 

Presiding Judge Irvine authored the opinion; Judges Portley and Thompson concurred.