Thanks to a colleague for giving us the heads-up about a recently-filed cert petition involving an issue we covered in a different case recently: judicial takings. Specifically, an allegation that a federal court has taken property, and as a consequence, the United States owes just compensation. The background of the case is pretty interesting because it also raises the specter of civil forfeiture.
The petition isn't all that long, so it's a quick read, and we recommend you do so. But here's the short story. Mr. and Mrs. Stanford got divorced. Apparently, Mr. Stanford was a bad guy, or at least was accused of being a bad guy. Securities fraud. But Mrs. Stanford had no part of it, and was, everyone agreed, an "innocent spouse," having been separated from the miscreant for 15 years. The Securities and Exchange Commission, however, asked the local District Court to appoint a receiver, whose job it was to preserve the Stanford assets. The court did so, and "'assume[d] exclusive jurisdiction and [took] possession of the assets, monies, properties real and personal, tangible and intangible, of whatever kind and description, wherever located ...' of [Mr.] Stanford."
The receiver kicked Mrs. S out of her home, "which he alleged to have been acquired in part with proceeds of her husband's fraud," and sought disgorgement of past support payments. Thing is, this was Texas, a community property jurisdiction. Meaning that all assets acquired by either Mr. or Mrs. Stanford during the marriage are presumed to be property in which each spouse owns an undivided one-half interest. So seizing Mr. Stanford's stuff was also seizing Mrs. Stanford's stuff, and vice-versa. Sound familiar?
She settled the case with the receiver, and then sued for compensation in the Court of Federal Claims, which promptly dismissed, concluding as it had in the other case, that the CFC lacks jurisdiction to review a district court order (sort of a federal version of Rooker-Feldman), and that Mrs. S's settlement of the receiver's claims made her takings claim pointless. The Federal Circuit affirmed.
Here are the Questions Presented:
I. Is the prejudgment seizure and sale of private property by a receiver appointed by a Court at the request of the Securities and Exchange Commission a Taking under the Fifth Amendment that entitles Petitioner to make a claim for compensation?II. If a Taking occurs by the judicial branch of the Federal government, does the United States Court of Federal Claims have jurisdiction to award compensation?
As always, stay tuned. The Court, somewhat to our surprise, asked the feds to provide a response. We'll post that when it becomes available. Follow along on the Court's e-docket here.
Petition for Writ of Certiorari, Stanford v. United States, No. 17-809 (Dec. 1, 2017)
