2005-11-30 CC Packet - Laserfiche WebLink

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lessor under terms and conditions reimbursing its costs and keeping the vehicle out of the repeat DUI offender's hands. F. Insurance Proceeds Related to Damage Occurring During Commission of the Designated Offense. Where a vehicle subject to forfeiture is totaled by an accident occurring during the commission of the designated offense, the insurance proceeds resulting from that accident are subject to forfeiture. Schug v. Nine Thousand Nine Hundred Sixteen Dollars and Fifty Cents, et 01" 669 N.W.2d 379 (Minn.App. 2003) review denied Dec. 16, 2003. The court reasoned that the insurance proceeds represent the value of the vehicle destroyed as a result of the on-going criminal act and that under 9169A.63, Subd. 3, the interest of the forfeiting agency relates back to the point when the commission of the designated offense commenced, prior to the accident. This holding is consistent with rationale underlying forfeiture law, to reduce the economic incentive to engage in criminal enterprise. The essence of Schug is that no person should have a reasonable expectation that the law will allow them to keep proceeds gained from illegal activity. Schug, supra at 383. The court stated: "Were we to hold that the vehicle is subject to forfeiture but the insurance proceeds are not we would create the perverse economic incentive to engage in such dangerous driving that the vehicle might be destroyed rather than forfeited." To make a claim for insurance proceeds the forfeiting agency should provide the insurance company with a Notice of Forfeiture specifying the agency's potential claim. This allows the insurance company to require its insured to file a Demand contesting the forfeiture and to hold off on the payment of insurance casualty loss benefits. It is a arguable under Schug to conclude that in an uncontested forfeiture action upon expiration of the 30-day period of contest the benefits become payable to the City. In a contested forfeiture action, the insurance company may constitute an indispensable party. Once a party to the action, the amount of the casualty loss benefits should be deposited into court and made the subject of the forfeiture action. If an insurance agent chooses to pay its insured prior to the completion of the forfeiture action it risks having to pay casualty loss benefits twice. FORFEITURE ACTIONS A. Selective v. "Scorched Earth" Forfeiture Programs There is no legal requirement that the law enforcement agency take and forfeit every qualifying vehicle. Some agencies only forfeit vehicles having a certain, unencumbered dollar value. A "scorched earth" policy simply treats each vehicle, irrespective of its value, as the instrumentality of a dangerous crime. It is more in line with the statute's remedial purpose and hence, provides better protection to the agency's 8 11