Amended in Assembly September 4, 2015

Amended in Assembly September 1, 2015

Amended in Assembly July 16, 2015

Amended in Senate June 2, 2015

Amended in Senate April 6, 2015

Senate Bill No. 443

Introduced by Senator Mitchell

(Principal coauthor: Senator Leno)

(Principal coauthors: Assembly Members Cristina Garcia and Hadley)

(Coauthors: Senators Anderson and Jackson)

(Coauthor: Assembly Member Jones-Sawyer)

February 25, 2015

An act to amend Sections 11470.1, 11488.4, 11488.5, and 11495 of, and to add Section begin delete 11417.2 end delete begin insert 11471.2 end insert to, the Health and Safety Code, relating to forfeiture.

LEGISLATIVE COUNSEL’S DIGEST

SB 443, as amended, Mitchell. Forfeiture: controlled substances.

Existing law subjects certain property to forfeiture, such as controlled substances and equipment used to process controlled substances. Existing law allows peace officers, under specified circumstances, to seize property that is subject to forfeiture. Existing law authorizes specified public agencies to bring an action to recover expenses of seizing, eradicating, destroying, or taking remedial action with respect to any controlled substance. In a forfeiture action with regards to cash or negotiable instruments of a value of not less than $25,000, existing law requires the state or local agency to prove by clear and convincing evidence that the property is subject to forfeiture. Existing law requires seized property or the proceeds from the sale of that property to be distributed among specified entities. Existing law requires the Attorney General to publish a yearly report on forfeiture within the state.

This bill would require a prosecuting agency to seek or obtain a criminal conviction for the unlawful manufacture or cultivation of any controlled substance or its precursors prior to an entry of judgment for recovery of expenses of seizing, eradicating, destroying, or taking remedial action with respect to any controlled substance. The bill would prohibit maintaining an action for recovery of expenses against a person who has been acquitted of the underlying criminal charges.

The bill would prohibit state or local law enforcement agencies from transferring seized property to a federal agency seeking adoption by the federal agency of the seized property. The bill would further prohibit state or local agencies from begin delete requesting or end delete receiving an equitable share from a federal agency of specified seized property if a conviction for the underlying offenses is not obtained.

The bill would require notices of a forfeiture action to contain additional details, such as the rights of an interested party at a forfeiture hearing. The bill would change the burden of proof that a state or local law enforcement agency must meet to succeed in a forfeiture action with regards to cash or negotiable instruments of a value not less than $25,000, from a clear and convincing standard to beyond a reasonable doubt. The bill would also make other specified changes to court forfeiture begin delete proceedings, including allowing parties to waive the requirement that forfeiture cases be tried in conjunction with related criminal cases when the forfeiture hearing is continued or stayed. end delete begin insert proceedings. end insert The bill would also require the Attorney General to include additional information on forfeiture actions in the yearly report.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 11470.1 of the Health and Safety Code
is amended to read:

11470.1.  

(a) The expenses of seizing, eradicating, destroying,
or taking remedial action with respect to, any controlled substance
or its precursors shall be recoverable from:

(1) Any person who manufactures or cultivates a controlled
substance or its precursors in violation of this division.

(2) Any person who aids and abets or who knowingly profits
in any manner from the manufacture or cultivation of a controlled
substance or its precursors on property owned, leased, or possessed
by the defendant, in violation of this division.

(b) The expenses of taking remedial action with respect to any
controlled substance or its precursors shall also be recoverable
from any person liable for the costs of that remedial action under
Chapter 6.8 (commencing with Section 25300) of Division 20 of
the Health and Safety Code.

(c) It shall be necessary to seek or obtain a criminal conviction
for the unlawful manufacture or cultivation of any controlled
substance or its precursors prior to the entry of judgment for the
recovery of expenses. If criminal charges are pending against the
defendant for the unlawful manufacture or cultivation of any
controlled substance or its precursors, an action brought pursuant
to this section shall, upon a defendant’s request, be continued while
the criminal charges are pending.

(d) The action may be brought by the district attorney, county
counsel, city attorney, the State Department of Health Care
Services, or Attorney General. All expenses recovered pursuant
to this section shall be remitted to the law enforcement agency
which incurred them.

(e) (1) The burden of proof as to liability shall be on the plaintiff
and shall be by a preponderance of the evidence in an action
alleging that the defendant is liable for expenses pursuant to
paragraph (1) of subdivision (a). The burden of proof as to liability
shall be on the plaintiff and shall be by clear and convincing
evidence in an action alleging that the defendant is liable for
expenses pursuant to paragraph (2) of subdivision (a). The burden
of proof as to the amount of expenses recoverable shall be on the
plaintiff and shall be by a preponderance of the evidence in any
action brought pursuant to subdivision (a).

(2) Notwithstanding paragraph (1), for any person convicted of
a criminal charge of the manufacture or cultivation of a controlled
substance or its precursors there shall be a presumption affecting
the burden of proof that the person is liable.

(f) Only expenses which meet the following requirements shall
be recoverable under this section:

(1) The expenses were incurred in seizing, eradicating, or
destroying the controlled substance or its precursors or in taking
remedial action with respect to a hazardous substance. These
expenses may not include any costs incurred in use of the herbicide
paraquat.

(2) The expenses were incurred as a proximate result of the
defendant’s manufacture or cultivation of a controlled substance
in violation of this division.

(3) The expenses were reasonably incurred.

(g) For purposes of this section, “remedial action” shall have
the meaning set forth in Section 25322.

(h) For the purpose of discharge in bankruptcy, a judgment for
recovery of expenses under this section shall be deemed to be a
debt for willful and malicious injury by the defendant to another
entity or to the property of another entity.

(i) Notwithstanding Section 526 of the Code of Civil Procedure,
the plaintiff may be granted a temporary restraining order or a
preliminary injunction, pending or during trial, to restrain the
defendant from transferring, encumbering, hypothecating, or
otherwise disposing of any assets specified by the court, if it
appears by the complaint that the plaintiff is entitled to the relief
demanded and it appears that the defendant may dispose of those
assets to thwart enforcement of the judgment.

(j) The Legislature finds and declares that civil penalties for the
recovery of expenses incurred in enforcing the provisions of this
division shall not supplant criminal prosecution for violation of
those provisions, but shall be a supplemental remedy to criminal
enforcement.

(k) Any testimony, admission, or any other statement made by
the defendant in any proceeding brought pursuant to this section,
or any evidence derived from the testimony, admission, or other
statement, shall not be admitted or otherwise used in any criminal
proceeding arising out of the same conduct.

(l) No action shall be brought or maintained pursuant to this
section against a person who has been acquitted of criminal charges
for conduct that is the basis for an action under this section.

SEC. 2.  

Section 11471.2 is added to the Health and Safety
Code, to read:

11471.2.  

(a) State or local law enforcement authorities shall
not refer or otherwise transfer property seized under state law
authorizing the seizure of property to a federal agency seeking the
adoption of the seized property by the federal agency for
proceeding with federal forfeiture. Nothing in this section shall be
construed to prohibit the federal government, or any of its agencies,
from seizing property, seeking forfeiture under federal law, or
sharing federally forfeited property with state or local law
enforcement agencies when those state or local agencies work with
federal agencies in joint investigations arising out of federal law
or federal joint task forces comprised of federal and state or local
agencies.

(b) A state or local law enforcement agency participating in a
joint investigation with a federal agency shall not begin delete request end delete begin insert receive end insert
an equitable share from the federal agency of all or a portion of
the forfeited property or proceeds from the sale of property
forfeited pursuant to federal law unless a defendant is convicted
in an underlying or related criminal action of an offense for which
property is subject to forfeiture as specified in Section 11470 or
Section 11488, or an offense under federal law that includes all of
the elements of an offense for which property is subject to forfeiture
as specified in Sections 11470 and 11488.

begin delete

(c) If a conviction in the underlying or related criminal action
is not obtained, state or local law enforcement authorities shall not
receive an equitable share from the federal agency of all or a
portion of the forfeited property or proceeds from the sale of
property forfeited pursuant to federal law.

end delete

SEC. 3.  

Section 11488.4 of the Health and Safety Code is
amended to read:

11488.4.  

(a) (1) Except as provided in subdivision (j), if the
Department of Justice or the local governmental entity determines
that the factual circumstances do warrant that the moneys,
negotiable instruments, securities, or other things of value seized
or subject to forfeiture come within the provisions of subdivisions
(a) to (g), inclusive, of Section 11470, and are not automatically
made forfeitable or subject to court order of forfeiture or
destruction by another provision of this chapter, the Attorney
General or district attorney shall file a petition of forfeiture with
the superior court of the county in which the defendant has been
charged with the underlying criminal offense or in which the
property subject to forfeiture has been seized or, if no seizure has
occurred, in the county in which the property subject to forfeiture
is located. If the petition alleges that real property is forfeitable,
the prosecuting attorney shall cause a lis pendens to be recorded
in the office of the county recorder of each county in which the
real property is located.

(2) A petition of forfeiture under this subdivision shall be filed
as soon as practicable, but in any case within one year of the seizure
of the property which is subject to forfeiture, or as soon as
practicable, but in any case within one year of the filing by the
Attorney General or district attorney of a lis pendens or other
process against the property, whichever is earlier.

(b) Physical seizure of assets shall not be necessary in order to
have that particular asset alleged to be forfeitable in a petition
under this section. The prosecuting attorney may seek protective
orders for any asset pursuant to Section 11492.

(c) The Attorney General or district attorney shall make service
of process regarding this petition upon every individual designated
in a receipt issued for the property seized. In addition, the Attorney
General or district attorney shall cause a notice of the seizure, if
any, and of the intended forfeiture proceeding, as well as a notice
stating that any interested party may file a verified claim with the
superior court of the county in which the property was seized or
if the property was not seized, a notice of the initiation of forfeiture
proceedings with respect to any interest in the property seized or
subject to forfeiture, to be served by personal delivery or by
registered mail upon any person who has an interest in the seized
property or property subject to forfeiture other than persons
designated in a receipt issued for the property seized. Whenever
a notice is delivered pursuant to this section, it shall be
accompanied by a claim form as described in Section 11488.5 and
directions for the filing and service of a claim.

(d) An investigation shall be made by the law enforcement
agency as to any claimant to a vehicle, boat, or airplane whose
right, title, interest, or lien is of record in the Department of Motor
Vehicles or appropriate federal agency. If the law enforcement
agency finds that any person, other than the registered owner, is
the legal owner thereof, and that ownership did not arise subsequent
to the date and time of arrest or notification of the forfeiture
proceedings or seizure of the vehicle, boat, or airplane, it shall
forthwith send a notice to the legal owner at his or her address
appearing on the records of the Department of Motor Vehicles or
appropriate federal agency.

(e) When a forfeiture action is filed, the notices shall be
published once a week for three successive weeks in a newspaper
of general circulation in the county where the seizure was made
or where the property subject to forfeiture is located.

(f) All notices shall set forth the time within which a claim of
interest in the property seized or subject to forfeiture is required
to be filed pursuant to Section 11488.5. The notices shall explain,
in plain language, what an interested party must do and the time
in which the person must act to contest the forfeiture in a hearing.
The notices shall state what rights the interested party has at a
hearing. The notices shall also state the legal consequences for
failing to respond to the forfeiture notice.

(g) Nothing contained in this chapter shall preclude a person,
other than a defendant, claiming an interest in property actually
seized from moving for a return of property if that person can show
standing by proving an interest in the property not assigned
subsequent to the seizure or filing of the forfeiture petition.

(h) (1) If there is an underlying or related criminal action, a
defendant may move for the return of the property on the grounds
that there is not probable cause to believe that the property is
forfeitable pursuant to subdivisions (a) to (g), inclusive, of Section
11470 and is not automatically made forfeitable or subject to court
order of forfeiture or destruction by another provision of this
chapter. The motion may be made prior to, during, or subsequent
to the preliminary examination. If made subsequent to the
preliminary examination, the Attorney General or district attorney
may submit the record of the preliminary hearing as evidence that
probable cause exists to believe that the underlying or related
criminal violations have occurred.

(2) Within 15 days after a defendant’s motion is granted, the
people may file a petition for a writ of mandate or prohibition
seeking appellate review of the ruling.

(i) (1) With respect to property described in subdivisions (e)
and (g) of Section 11470 for which forfeiture is sought and as to
which forfeiture is contested, the state or local governmental entity
shall have the burden of proving beyond a reasonable doubt that
the property for which forfeiture is sought was used, or intended
to be used, to facilitate a violation of one of the offenses
enumerated in subdivision (f) or (g) of Section 11470.

(2) In the case of property described in subdivision (f) of Section
11470, for which forfeiture is sought and as to which forfeiture is
contested, the state or local governmental entity shall have the
burden of proving beyond a reasonable doubt that the property for
which forfeiture is sought meets the criteria for forfeiture described
in subdivision (f) of Section 11470.

(3) In the case of property described in paragraphs (1) and (2),
where forfeiture is contested, a judgment of forfeiture requires as
a condition precedent thereto, that a defendant be convicted in an
underlying or related criminal action of an offense specified in
subdivision (f) or (g) of Section 11470 which offense occurred
within five years of the seizure of the property subject to forfeiture
or within five years of the notification of intention to seek
forfeiture. If the defendant is found guilty of the underlying or
related criminal offense, the issue of forfeiture shall be tried before
the same jury, if the trial was by jury, or tried before the same
court, if trial was by court, unless waived by all parties. The issue
of forfeiture shall be bifurcated from the criminal trial and tried
after conviction unless waived by all the parties.

(4) If there is an underlying or related criminal action, and a
criminal conviction is required before a judgment of forfeiture
may be entered, the issue of forfeiture shall be tried in conjunction
therewith. In such a case, the issue of forfeiture shall be bifurcated
from the criminal trial and tried after conviction unless waived by
the parties. Trial shall be by jury unless waived by all parties. If
there is no underlying or related criminal action, the presiding
judge of the superior court shall assign the action brought pursuant
to this chapter for trial.

(j) The Attorney General or the district attorney of the county
in which property is subject to forfeiture under Section 11470 may,
pursuant to this subdivision, order forfeiture of personal property
not exceeding twenty-five thousand dollars ($25,000) in value.
The Attorney General or district attorney shall provide notice of
proceedings under this subdivision pursuant to subdivisions (c),
(d), (e), and (f), including:

(1) A description of the property.

(2) The appraised value of the property.

(3) The date and place of seizure or location of any property
not seized but subject to forfeiture.

(4) The violation of law alleged with respect to forfeiture of the
property.

(5) (A) The instructions for filing and serving a claim with the
Attorney General or the district attorney pursuant to Section
11488.5 and time limits for filing a claim and claim form.

(B) If no claims are timely filed, the Attorney General or the
district attorney shall prepare a written declaration of forfeiture of
the subject property to the state and dispose of the property in
accordance with Section 11489. A written declaration of forfeiture
signed by the Attorney General or district attorney under this
subdivision shall be deemed to provide good and sufficient title
to the forfeited property. The prosecuting agency ordering forfeiture
pursuant to this subdivision shall provide a copy of the declaration
of forfeiture to any person listed in the receipt given at the time of
seizure and to any person personally served notice of the forfeiture
proceedings.

(C) If a claim is timely filed, then the Attorney General or
district attorney shall file a petition of forfeiture pursuant to this
section within 30 days of the receipt of the claim. The petition of
forfeiture shall then proceed pursuant to other provisions of this
chapter, except that no additional notice need be given and no
additional claim need be filed.

(k) If in any underlying or related criminal action or proceeding,
in which a petition for forfeiture has been filed pursuant to this
section, and a criminal conviction is required before a judgment
of forfeiture may be entered, the defendant willfully fails to appear
as required, there shall be no requirement of a criminal conviction
as a prerequisite to the forfeiture. In these cases, forfeiture shall
be ordered as against the defendant and judgment entered upon
default, upon application of the state or local governmental entity.
In its application for default, the state or local governmental entity
shall be required to give notice to the defendant’s attorney of
record, if any, in the underlying or related criminal action, and to
make a showing of due diligence to locate the defendant. In moving
for a default judgment pursuant to this subdivision, the state or
local governmental entity shall be required to establish a prima
facie case in support of its petition for forfeiture.

SEC. 4.  

Section 11488.5 of the Health and Safety Code is
amended to read:

11488.5.  

(a) (1) Any person claiming an interest in the
property seized pursuant to Section 11488 may, unless for good
cause shown the court extends the time for filing, at any time within
30 days from the date of the last publication of the notice of seizure,
if that person was not personally served or served by mail, or within
30 days after receipt of actual notice, file with the superior court
of the county in which the defendant has been charged with the
underlying or related criminal offense or in which the property
was seized or, if there was no seizure, in which the property is
located, a claim, verified in accordance with Section 446 of the
Code of Civil Procedure, stating his or her interest in the property.
An endorsed copy of the claim shall be served by the claimant on
the Attorney General or district attorney, as appropriate, within
30 days of the filing of the claim. The Judicial Council shall
develop and approve official forms for the verified claim that is
to be filed pursuant to this section. The official forms shall be
drafted in nontechnical language, in English and in Spanish, and
shall be made available through the office of the clerk of the
appropriate court.

(2) Any person who claims that the property was assigned to
him or to her prior to the seizure or notification of pending
forfeiture of the property under this chapter, whichever occurs last,
shall file a claim with the court and prosecuting agency pursuant
to Section 11488.5 declaring an interest in that property and that
interest shall be adjudicated at the forfeiture hearing. The property
shall remain under control of the law enforcement or prosecutorial
agency until the adjudication of the forfeiture hearing. Seized
property shall be protected and its value shall be preserved pending
the outcome of the forfeiture proceedings.

(3) The clerk of the court shall not charge or collect a fee for
the filing of a claim in any case in which the value of the
respondent property as specified in the notice is five thousand
dollars ($5,000) or less. If the value of the property, as specified
in the notice, is more than five thousand dollars ($5,000), the clerk
of the court shall charge the filing fee specified in Section 70611
of the Government Code.

(4) The claim of a law enforcement agency to property seized
pursuant to Section 11488 or subject to forfeiture shall have priority
over a claim to the seized or forfeitable property made by the
Franchise Tax Board in a notice to withhold issued pursuant to
Section 18817 or 26132 of the Revenue and Taxation Code.

(b) (1) If at the end of the time set forth in subdivision (a) there
is no claim on file, the court, upon motion, shall declare the
property seized or subject to forfeiture pursuant to subdivisions
(a) to (g), inclusive, of Section 11470 forfeited to the state. In
moving for a default judgment pursuant to this subdivision, the
state or local governmental entity shall be required to establish a
prima facie case in support of its petition for forfeiture.

(2) The court shall order the money forfeited or the proceeds
of the sale of property to be distributed as set forth in Section
11489.

(c) (1) If a verified claim is filed, the forfeiture proceeding shall
be set for hearing on a day not less than 30 days therefrom, and
the proceeding shall have priority over other civil cases. Notice of
the hearing shall be given in the same manner as provided in
Section 11488.4. Such a verified claim or a claim filed pursuant
to subdivision (j) of Section 11488.4 shall not be admissible in the
proceedings regarding the underlying or related criminal offense
set forth in subdivision (a) of Section 11488.

(2) The hearing shall be by jury, unless waived by consent of
all parties.

(3) The provisions of the Code of Civil Procedure shall apply
to proceedings under this chapter unless otherwise inconsistent
with the provisions or procedures set forth in this chapter. However,
in proceedings under this chapter, there shall be no joinder of
actions, coordination of actions, except for forfeiture proceedings,
or cross-complaints, and the issues shall be limited strictly to the
questions related to this chapter.

(d) (1) At the hearing, the state or local governmental entity
shall have the burden of establishing, pursuant to subdivision (i)
of Section 11488.4, that the owner of any interest in the seized
property consented to the use of the property with knowledge that
it would be or was used for a purpose for which forfeiture is
permitted, in accordance with the burden of proof set forth in
subdivision (i) of Section 11488.4.

(2) No interest in the seized property shall be affected by a
forfeiture decree under this section unless the state or local
governmental entity has proven that the owner of that interest
consented to the use of the property with knowledge that it would
be or was used for the purpose charged. Forfeiture shall be ordered
when, at the hearing, the state or local governmental entity has
shown that the assets in question are subject to forfeiture pursuant
to Section 11470, in accordance with the burden of proof set forth
in subdivision (i) of Section 11488.4.

(e) The forfeiture hearing shall be continued upon motion of
the prosecution or the defendant until after a verdict of guilty on
any criminal charges specified in this chapter and pending against
the defendant have been decided. begin delete In cases in which the forfeiture
hearing, or any related civil discovery, is continued or stayed, the
requirement that the forfeiture case be tried in conjunction with
the related criminal case or to the same jury as in the related
criminal case may be waived by the parties. end delete The forfeiture hearing
shall be conducted in accordance with Sections 190 to 222.5,
inclusive, Sections 224 to 234, inclusive, Section 237, and Sections
607 to 630, inclusive, of the Code of Civil Procedure if a trial by
jury, and by Sections 631 to 636, inclusive, of the Code of Civil
Procedure if by the court. Unless the court or jury finds that the
seized property was used for a purpose for which forfeiture is
permitted, the court shall order the seized property released to the
person it determines is entitled thereto.

If the court or jury finds that the seized property was used for a
purpose for which forfeiture is permitted, but does not find that a
person claiming an interest therein, to which the court has
determined he or she is entitled, had actual knowledge that the
seized property would be or was used for a purpose for which
forfeiture is permitted and consented to that use, the court shall
order the seized property released to the claimant.

(f) All seized property which was the subject of a contested
forfeiture hearing and which was not released by the court to a
claimant shall be declared by the court to be forfeited to the state,
provided the burden of proof required pursuant to subdivision (i)
of Section 11488.4 has been met. The court shall order the forfeited
property to be distributed as set forth in Section 11489.

(g) All seized property which was the subject of the forfeiture
hearing and which was not forfeited shall remain subject to any
order to withhold issued with respect to the property by the
Franchise Tax Board.

SEC. 5.  

Section 11495 of the Health and Safety Code is
amended to read:

11495.  

(a) The funds received by the law enforcement agencies
under Section 11489 shall be deposited into an account maintained
by the Controller, county auditor, or city treasurer. These funds
shall be distributed to the law enforcement agencies at their request.
The Controller, auditor, or treasurer shall maintain a record of
these disbursements which records shall be open to public
inspection, subject to the privileges contained in Sections 1040,
1041, and 1042 of the Evidence Code.

(b) Upon request of the governing body of the jurisdiction in
which the distributions are made, the Controller, auditor, or
treasurer shall conduct an audit of these funds and their use. In the
case of the state, the governing body shall be the Legislature.

(c) Each year, the Attorney General shall publish a report which
sets forth the following information for the state, each county, each
city, and each city and county:

(1) The number of forfeiture actions initiated and administered
by state or local agencies under California law, the number of cases
adopted by the federal government, and the number of cases
initiated by a joint federal-state action that were prosecuted under
federal law.

(2) The number of cases and the administrative number or court
docket number of each case for which forfeiture was ordered or
declared.

(3) The number of suspects charged with a controlled substance
violation.

(4) The number of alleged criminal offenses that were under
federal or state law.

(5) The disposition of cases, including no charge, dropped
charges, acquittal, plea agreement, jury conviction, or other.

(6) The value of the assets forfeited.

(7) The recipients of the forfeited assets, the amounts received,
and the date of the disbursement.

(d) The Attorney General shall develop administrative guidelines
for the collection and publication of the information required in
subdivision (c).

(e) The Attorney General’s report shall cover the calendar year
and shall be made no later than March 1 of each year beginning
with the year after the enactment of this law.