Amended in Senate June 2, 2015

Amended in Senate April 6, 2015

Senate Bill No. 443

Introduced by Senator Mitchell

February 25, 2015

An act to amend Sections 11470.1, 11488.4, 11489, and 11495 of, and to add Sections 11471.2 and 11488.7 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 also require that any property seized pursuant to any federal law that authorizes the sharing or transfer of forfeited property be distributed according to state law, thereby imposing a state-mandated local program. The bill would further prohibit state or local agencies from receiving specified seized property if a conviction for the underlying offenses is not obtained or if federal law prohibits distributing the proceeds or property received in accordance with state law.

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 require the court to appoint counsel for the defendant in the forfeiture proceeding if a defendant in a related criminal matter is represented by court-appointed counsel, thereby creating a state-mandated local program. 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 convicting standard to beyond a reasonable doubt.

The bill would allow recovery of attorney’s fees for defendants or claimants in a forfeiture action who substantially prevail. The bill would make specified changes to the distribution of proceeds from forfeiture actions under state law, including reducing distributions to seizing law enforcement agencies and prosecutor’s offices, and providing distributions to begin delete courts and public defenders in the jurisdiction of the proceedings. end delete begin insert courts, public defenders, and a specified nonprofit organization providing training in the use of laws permitting seizure and forfeiture of assets. end insert The bill would also require the Attorney General to include additional information on forfeiture actions in the yearly report.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

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

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 begin insert Care end insert
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 begin delete that end delete begin insert the end insert 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 which may be 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 to
a federal agency seeking the adoption by the federal agency of the
seized property. Nothing in this section shall be construed to
prohibit the federal government, or any of its agencies, from
seeking forfeiture under federal law.

(b) All property, moneys, negotiable instruments, securities, or
other things of value received by any state or local law enforcement
agency pursuant to any federal law that authorizes the sharing or
transfer of all or a portion of forfeited property or the proceeds of
the sale of forfeited property to a state or local law enforcement
agency shall be promptly transferred, sold, and deposited as set
forth in Section 11489.

(c) A state or local law enforcement agency may not receive all
or a portion of the forfeited property or proceeds from property
forfeited pursuant to federal law unless a defendant is convicted
in an underlying or related criminal action of an offense specified
in Section 11470 or any offense under federal law that includes
all of the elements of an offense specified in Section 11470. If
federal law prohibits compliance with Section 11489 or if a
conviction in the underlying or related criminal action is not
obtained, state law enforcement authorities shall not receive
forfeited property or proceeds from the sale of forfeited property
shared or transferred pursuant to federal law.

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),
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. If the defendant in the related criminal matter is
represented by court-appointed counsel, the trial court shall appoint
counsel for the defendant in the forfeiture proceeding.

(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. 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, 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 11488.7 is added to the Health and Safety
Code, to read:

11488.7.  

In any forfeiture proceeding under this chapter in
which the defendant or claimant substantially prevails, the
defendant or claimant shall be entitled to recover reasonable
attorneys’ fees and other litigation costs reasonably incurred by
the defendant or claimant. Any final award of fees and costs shall
be paid directly to the defendant’s or claimant’s attorney.

SEC. 5.  

Section 11489 of the Health and Safety Code is
amended to read:

11489.  

Notwithstanding Section 11502 and except as otherwise
provided in Section 11473, in all cases where the property is seized
pursuant to this chapter and forfeited to the state or local
governmental entity and, where necessary, sold by the Department
of General Services or local governmental entity, the money
forfeited or the proceeds of sale shall be distributed by the state
or local governmental entity as follows:

(a) To the bona fide or innocent purchaser, conditional sales
vendor, or mortgagee of the property, if any, up to the amount of
his or her interest in the property, when the court declaring the
forfeiture orders a distribution to that person.

(b) The balance, if any, to accumulate, and to be distributed and
transferred quarterly in the following manner:

(1) To the state agency or local governmental entity for all
expenditures made or incurred by it in connection with the sale of
the property, including expenditures for any necessary costs of
notice required by Section 11488.4, and for any necessary repairs,
storage, or transportation of any property seized under this chapter.

(2) The remaining funds shall be distributed as follows:

(A)  begin delete Sixty end delete begin insert Fifty-four end insert percent to the state, local, or state and local
law enforcement entities that participated in the seizure distributed
so as to reflect the proportionate contribution of each agency.

(i) Fifteen percent of the funds distributed pursuant to this
subparagraph shall be deposited in a special fund maintained by
the county, city, or city and county of any agency making the
seizure or seeking an order for forfeiture. This fund shall be used
for the sole purpose of funding programs designed to combat drug
abuse and divert gang activity, and shall wherever possible involve
educators, parents, community-based organizations and local
businesses, and uniformed law enforcement officers. Those
programs that have been evaluated as successful shall be given
priority. These funds shall not be used to supplant any state or
local funds that would, in the absence of this clause, otherwise be
made available to the programs.

It is the intent of the Legislature to cause the development and
continuation of positive intervention programs for high-risk
elementary and secondary schoolage students. Local law
enforcement should work in partnership with state and local
agencies and the private sector in administering these programs.

(ii) The actual distribution of funds set aside pursuant to clause
(i) shall be determined by a panel consisting of the sheriff of the
county, a police chief selected by the other chiefs in the county,
and the district attorney and the chief probation officer of the
county.

(B) Five percent to the prosecutorial agency that processes the
forfeiture action.

(C) Ten percent to the court in the jurisdiction where the
forfeiture proceedings are initiated.

(D) Five percent to the public defender’s office or provider of
court-appointed counsel in the jurisdiction where the forfeiture
proceedings were initiated.

(E)  begin delete Twenty end delete begin insert Twenty-four end insert percent to the General Fund.
Notwithstanding Section 13340 of the Government Code, the
moneys are hereby continuously appropriated to the General Fund.
Commencing January 1, 2016, all moneys deposited in the General
Fund pursuant to this subparagraph, in an amount not to exceed
ten million dollars ($10,000,000), shall be made available for
school safety and security, upon appropriation by the Legislature,
and shall be disbursed pursuant to Senate Bill 1255 of the 1993-94
Regular Session, as enacted.

begin insert

(F) One percent to a private nonprofit organization composed
of local prosecutors, which shall use these funds for the exclusive
purpose of providing a statewide program of education and
training for prosecutors and law enforcement officers in ethics
and the proper use of laws permitting the seizure and forfeiture
of assets under this chapter.

end insert begin insert

(G) One percent to a private nonprofit organization composed
of local criminal defense attorneys, which shall use these funds
for the exclusive purpose of providing a statewide program of
education and training in the use of laws permitting the seizure
and forfeiture of assets under this chapter.

end insert

(c) Notwithstanding Item 0820-101-469 of the Budget Act of
1985 (Chapter begin delete 111 of the end delete begin insert 111, end insert Statutes of 1985), all funds allocated
to the Department of Justice pursuant to subparagraph (A) of
paragraph (2) of subdivision (b) shall be deposited into the
Department of Justice Special Deposit Fund-State Asset Forfeiture
Account and used for the law enforcement efforts of the state or
for state or local law enforcement efforts pursuant to Section
11493.

All funds allocated to the Department of Justice by the federal
government under its Federal Asset Forfeiture program authorized
by the Comprehensive Crime Control Act of 1984 begin insert (Public Law
98-473) end insert may be deposited directly into the Narcotics Assistance
and Relinquishment by Criminal Offender Fund and used for state
and local law enforcement efforts pursuant to Section 11493.

Funds that are not deposited pursuant to the above paragraph
shall be deposited into the Department of Justice Special Deposit
Fund-Federal Asset Forfeiture Account.

(d) All funds distributed to the courts pursuant to subparagraph
(C) of paragraph (2) of subdivision (b) shall be deposited into the
Judicial Asset Forfeiture Fund, which is hereby created in the State
Treasury. The moneys in the Judicial Asset Forfeiture Fund, upon
appropriation by the Legislature, shall be expended for the purpose
of administering the courts in the jurisdiction where the forfeiture
proceeding occurred.

(e) All the funds distributed to the state or local governmental
entity pursuant to subparagraphs (A) and (B) of paragraph (2) of
subdivision (b) shall not supplant any state or local funds that
would, in the absence of this subdivision, be made available to
support the law enforcement and prosecutorial efforts of these
agencies.

The court shall order the forfeiture proceeds distributed to the
state, local, or state and local governmental entities as provided in
this section.

For the purposes of this section, “local governmental entity”
means any city, county, or city and county in this state.

SEC. 6.  

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.

SEC. 7.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.