Opinions of the United
1997 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-14-1997

United States v. Gaydos
Precedential or Non-Precedential:

Docket 95-3468




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               THE UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT



                           No. 95-3468



                    UNITED STATES OF AMERICA,

                                          Appellee

                               v.

                           OLGA GAYDOS,

                                          Appellant

         ON APPEAL FROM THE UNITED STATES DISTRICT COURT
            FOR THE WESTERN DISTRICT OF PENNSYLVANIA
                    (D.C. Criminal No. 95-53)



           Submitted under Third Circuit LAR 34.1(a)
                        January 22, 1997

BEFORE:   NYGAARD and LEWIS, Circuit Judges,
and SCHWARZER, District Judge*

* The Honorable William W. Schwarzer, Senior District Judge for
  the Northern District of California, sitting by designation.

                 (Opinion Filed March 14, 1997)


Bonnie R. Schlueter
Shaun E. Sweeney
Office of the U.S. Attorney
633 U.S. Courthouse
Pittsburgh, Pa. 15219

Counsel for the Appellee

Karen S. Gerlach
Office of the Federal Public Defender
960 Penn Avenue
415 Convention Tower
Pittsburgh, Pa. 15222
Counsel for the Appellant



                       OPINION OF THE COURT




NYGAARD, Circuit Judge:

     Olga Gaydos appeals her conviction for malicious destruction

of property by means of fire, contending that the evidence at

trial did not meet the interstate commerce nexus required under

18 U.S.C. § 844(i).   She also argues that the district court

failed to make the required findings to support her sentence and

restitution order; and, that the district court improperly

refused to reach the merits of her untimely post-trial motions

for judgment of acquittal and for a new trial.   We conclude that

the government failed to prove the jurisdictional element of 18

U.S.C. § 844(i), and will reverse her conviction on that count.

We will also vacate the restitution order and remand the matter

for the district court to make the required findings and, if

indicated, enter a new order of restitution.   In all other

respects, we will affirm.

                                I.

     Olga Gaydos owned a house located on Shadeland Avenue in

Pittsburgh, Pennsylvania that she rented to William Minor,

Jeannie McComb and their children.   In December 1992, a fire of

incendiary origin damaged its garage.   Kenneth Evans testified



                                2
that he saw David Minor (William Minor’s brother) coming out of

the garage at approximately the same time the garage was afire.

There was also testimony that Gaydos offered two other tenants

$15,000 each to burn down the house and that she had suggested

starting a fire in the garage.   Gaydos filed an insurance claim

with her homeowner’s insurance carrier for damage to the garage

and contents allegedly lost in the fire.

     In June 1993, Fidelity Savings Bank began foreclosure

proceedings on the property.   While the foreclosure proceedings

were pending, Gaydos met with Jeannie McComb to discuss a lead

contamination problem the Health Department had found at the

Shadeland Avenue house.   McComb testified that at this meeting

Gaydos told her that she (Gaydos) intended to burn down the

house.   Gaydos and McComb then supposedly struck a deal whereby

Gaydos would allow McComb, William Minor, and their children, to

move to another house where they could live rent-free if they

remained silent about the fire Gaydos was planning for the

Shadeland Avenue house.

     Soon after, Gaydos discussed the lead problem with William

Minor.   According to Minor’s testimony, Gaydos told him that she

did not want to put any money into the house to correct the lead

problem.   Gaydos also allegedly offered Minor $10,000 to burn

down the house, which he refused.    Minor, McComb and their

children, did, however, leave the house and moved into another

house owned by Gaydos.    Approximately two weeks later, the



                                 3
Shadeland Avenue house burned to the ground in a fire determined

to be of incendiary origin.   Gaydos again submitted a claim to

her homeowner’s insurance carrier.

     Gaydos was charged in a six count indictment alleging four

counts of mail fraud in violation of 18 U.S.C. §§ 1341 and 1342

(Counts 1-4), one count of use of fire to commit a felony in

violation of 18 U.S.C. §§ 844(h)(1) and (2) (Count 5), and one

count of malicious destruction of property by means of fire in

violation of 18 U.S.C. § 844(i) (Count 6).   Her codefendant,

David Minor, was charged in two of the mail fraud counts (Counts

1 and 2).   Gaydos was found guilty on all counts and David Minor

was acquitted of the two charges against him.

     Gaydos was sentenced to 51 months in prison for mail fraud

and malicious destruction of property by means of fire, and to 60

months for use of fire to commit a felony.   The district court

ordered the sentences to run consecutively for a total of 111

months, to be followed by supervised release for three years.

The court also ordered restitution in the amount of $190,139.42.

                               II.

     Gaydos challenges her conviction for malicious destruction

of property by means of fire, contending that there was

insufficient evidence for the jury to conclude that the

government had satisfied the jurisdictional element of 18 U.S.C.

§ 844(i), which requires the government to prove that the

property was used in an activity affecting interstate commerce.



                                4
She contends that a vacant and uninhabitable building, with

neither prospect nor intention of being returned to the stream of

commerce, cannot satisfy the interstate commerce nexus required

for a conviction under § 844(i).

     Gaydos also argues that the district court committed two

sentencing errors.   First, she asserts that a vacant and

uninhabitable building cannot be characterized as a “dwelling”

for purposes of Section 2K1.4(a)(1)(B) of the United States

Sentencing Guidelines.   Second, she contends that the district

court did not make the findings of fact necessary to support the

restitution order it imposed.

     Gaydos’ final argument on appeal is her claim that the

district court erred by finding that it lacked jurisdiction to

consider her untimely post-trial motions for judgment of

acquittal and for a new trial.

                                 III.

     Section 844(i) provides in pertinent part:
Whoever maliciously damages or destroys . . . by means of fire or
     an explosive, any building, vehicle, or other real property
     or personal property used in interstate or foreign commerce
     or in any activity affecting interstate or foreign commerce
     shall be imprisoned for not more than twenty years . . . .



     In Russell v. United States, 

, 

(1985), the Supreme Court held that § 844(i) could be

constitutionally applied to a rented apartment building.    The

Court first noted that the statute “express[ed] an intent by

Congress to exercise its full power under the Commerce Clause.”


                                  

, 105 S.Ct. at 2456.    The Court next determined

that the legislative history of § 844(i) suggested that Congress

intended the statute to protect “all business property, as well

as some additional property that might not fit that description,

but perhaps not every private home.”      

105 S.Ct. at

2457.   Noting that the express terms of the statute only applied

to property that was “used” in an “activity” that affects

commerce, the Court held that “[t]he rental of real estate is

unquestionably such an activity.”   

further opined

that the local rental of an apartment unit is an element of a

much broader commercial market in rental properties to which

congressional power to regulate extends.     

  Because Russell was renting his apartment building to

tenants at the time he attempted to burn it, the Court concluded

that the property was being used in an activity affecting

commerce within the meaning of § 844(i) and affirmed his

conviction.

     Gaydos concedes that Russell clearly stands for the

proposition that renting real estate is an activity which affects

interstate commerce within the meaning of § 844(i).      She argues,

however, that Russell is inapposite.   First, Gaydos asserts that

the Supreme Court’s recent decision in United States v. Lopez,

(1995), calls the constitutionality of § 844(i)

into question.   Second, she contends that even if § 844(i) is

facially constitutional, the evidence was insufficient to prove



                                6
beyond a reasonable doubt that the house on Shadeland Avenue was

being used in an activity affecting interstate commerce at the

time it was destroyed by fire.     We are only persuaded by Gaydos'

second argument.

                                  A.

        Gaydos asserts that the district court lacked subject matter

jurisdiction over her alleged offense because § 844(i) exceeds

the authority of Congress to regulate commerce under the Commerce

Clause.     In support of her argument, Gaydos relies on the Supreme

Court's recent decision in Lopez.      Lopez, she argues, stands for

the proposition that criminal statutes that regulate activities

affecting interstate commerce pass constitutional muster only

where the regulated activity "substantially affects" interstate

commerce.

     In Lopez, the Supreme Court invalidated the Gun-Free School

Zones Act of 1990, which made it a federal offense "for any

individual knowingly to possess a firearm at a place that the

individual knows, or has reasonable cause to believe, is a school

zone."     18 U.S.C. § 922(q)(2)(A) (1994); 

.     The Court first observed that § 922(q) "neither regulates

a commercial activity nor contains a requirement that the

possession be connected in any way to interstate commerce."       

   It then identified three broad categories of activity

that Congress may regulate under its commerce power: (1) the use

of the channels of interstate commerce; (2) the instrumentalities



                                  7
of interstate commerce, or persons or things in interstate

commerce, even though the threat may come only from intrastate

commerce; and, (3) those activities that substantially affect

interstate commerce.   

     Quickly disposing of the first two categories, the Lopez

Court focused on the third category.     The Court held that the

statute could not "be sustained under our cases upholding

regulations of activities that arise out of or are connected with

a commercial transaction, which viewed in the aggregate,

substantially affects interstate commerce."     

    The

statute failed this test, the Court said, because "by its terms,"

it had "nothing to do with `commerce' or any sort of economic

enterprise," 

nor was it "an essential part of a

larger regulation of economic activity, in which the regulatory

scheme could be undercut unless the intrastate activity were

regulated,"   

   Moreover, the Court noted that §

922(q) contained "no jurisdictional element which would ensure,

through case-by-case inquiry, that the [activity] in question

affects interstate commerce," 

Congress had made no

legislative findings that the activity so affected interstate

commerce,   

   Without a more definite connection to

interstate commerce, the Court concluded, upholding the statute

would improperly allow Congress to "regulate . . . all activities

that might lead to violent crime, regardless of how tenuously

they relate to interstate commerce,"     

and exceed the



                                  8
proper limits of the federal government's power.

     We conclude that Lopez does not render § 844(i)

unconstitutional.   Unlike the statute at issue in Lopez, § 844(i)

contains a jurisdictional element which ensures, on a case-by-

case basis, that the property in question must be "used in

interstate or foreign commerce or in any activity affecting

interstate or foreign commerce . . . ."   18 U.S.C. § 844(i).    The

jurisdictional element in § 844(i) makes the holding in Lopez

readily distinguishable.   See, e.g., United States v. McMasters,

, 1398 (8th Cir. 1996), cert. denied, 

(1997); United States v. DiSanto, 

, 1245 (1st Cir.

1996); United States v. Sherlin, 

, 1213-14 (7th Cir.

1995), cert. denied, 

(1996); see also United States

v. Bishop, 

, 585 (3d Cir.) (holding that the

jurisdictional element contained in the federal carjacking

statute, 18 U.S.C. § 2119, "wholly distinguishes Lopez and

renders section 2119 constitutional"), cert. denied, 

(1995).   Moreover, as expressly noted in 

n.9, the legislative history of §

844(i) reflects Congress's concern that it not exceed its

constitutional authority under the Commerce Clause, and

Congress's finding that the statute was necessary to protect

interstate commerce.

     We believe that Russell's interpretation of § 844(i), and
its holding, that the statute constitutionally regulates arson of



                                9
business property that satisfies the requisite jurisdictional

element, is still authoritative precedent.    Accordingly, we join

the other circuits that have concluded that § 844(i) remains

constitutionally viable under Lopez.    See, e.g., 

; United States v. Gomez, 

, 1094 (9th

Cir. 1996); 

; United States v. Denalli,

, 329 (11th Cir. 1996), amended in part, 

(11th Cir. 1996); 

; United States v.

Martin, 

, 1427 (7th Cir. 1995).    Because § 844(i)

remains constitutionally valid under Lopez, we conclude that the

district court had subject matter jurisdiction over Gaydos'

alleged offense.

                                B.

     Gaydos' best argument is that the evidence was insufficient

to satisfy the interstate commerce nexus necessary to support her

conviction under § 844(i) because the government could not prove

beyond a reasonable doubt that the house on Shadeland Avenue was

used, or intended to be used, in an activity affecting interstate

commerce at the time of the fire.    Gaydos did not preserve this

issue for appeal by filing a timely motion for a judgment of

acquittal, so we review the sufficiency of the evidence under a

plain error standard.   United States v. Zolicoffer, 

,
774 (3d Cir. 1989); United States v. Wright-Barker, 

,

170-71 (3d Cir. 1986); Fed. R. Crim. P. 52(b) ("Plain errors or

defects affecting substantial rights may be noticed although they



                                10
were not brought to the attention of the court.").

     In Zolicoffer, we held that "the failure to prove one of the

essential elements of a crime is the type of fundamental error

which may be noticed by an appellate court notwithstanding the

defendant's failure to raise it in the district 

(citing Strickland v. United States, 

, 868

(10th Cir. 1965)).   We believe that affirming a conviction where

the government has failed to prove each essential element of the

crime beyond a reasonable doubt "affect[s] substantial rights,"

and seriously impugns "the fairness, integrity and public

reputation of judicial proceedings."     See United States v. Olano,

, 732, 

, 1776 (1993).    Therefore, we

will review the substance of Gaydos' claim.

     Russell established that renting real estate is an activity

that affects interstate commerce for purposes of § 

, 105 S. Ct. at 2457.     Courts interpreting Russell

have held “that rental property is per se property used in an

activity affecting interstate commerce.”    United States v.

Medeiros, 

, 16 (1st Cir. 1990) (citations omitted);

accord 

; United States v. Parsons, 

, 40 (4th Cir. 1993); United States v. Patterson, 

, 534 (5th Cir. 1986).   Gaydos' argument, however, is

different. She argues that the house on Shadeland could not have

been considered rental property because at the time it burned it

was vacant, uninhabitable, and she had no intent to rent it



                                11
again.   As such, Gaydos argues that the house was not being used

in an activity affecting interstate commerce at the time of the

fire, and therefore the interstate nexus requirement of § 844(i)

could not be satisfied.   We agree.

     The government argues that a temporary cessation of activity

at a business property does not place that property beyond the

scope of § 844(i).   Again, we agree.   This argument has been

accepted by every Court of Appeals that has addressed the issue.1

 Moreover, courts in both the Fifth and the Ninth Circuits have

held that the destruction of uncompleted commercial buildings by

means of fire falls within the coverage of § 844(i).    See

(partially completed condominium

complex found to affect interstate commerce for purposes of §

844(i) where construction involved out-of-state partners and

project was financed by out-of-state lender); United States v.

Andrini, 

, 1096 (9th Cir. 1982) (“construction of a

commercial office building using out-of-state materials is a
     1
       See 

(“property routinely used in
interstate-commerce activity does not lose its interstate use
simply because of a temporary cessation of that activity”);
United States v. Ryan, 

, 364 (8th Cir. 1994) (en banc)
(section 844(i) reaches arson for property that satisfies the
interstate commerce nexus “even when the property is temporarily
closed or vacant”), cert. denied, 

(1995); United
States v. Turner, 

, 1362 (6th Cir. 1993) (“property
routinely used in interstate commerce activity does not lose its
interstate characteristics because of a temporary cessation of
that activity”); 

(“vacancy alone does not
constitute a removal [of a house] from the rental market”);

(a “tenant’s departure . . . did not
necessarily sever the property’s ties to interstate commerce for
the purposes of § 844(i)”).



                                12
commercial activity affecting interstate commerce for the purpose

of § 844(i)”).   Collectively, this caselaw suggests that once the

business nature of the property at issue is established, courts

will presume, absent indicia of an intention to permanently

remove the property from the stream of commerce, that the

requisite nexus between the property and interstate commerce is

satisfied, notwithstanding temporary changes or modifications in

the use of the property.

     We note that in each of these cases, however, there was a

clear intention that the property at issue either remain in, or

return to, the stream of commerce.    Indeed, despite the temporary

removal of the rental or business properties from the commercial

market, the trial records in these cases demonstrate that the

particular properties were treated by their owners as if they had

never left the stream of commerce.2   Moreover, in the two cases
     2
       See, e.g., 

(owner of property
testified that vacancy was only temporary and that he intended to
rent the property in the future); 

(evidence
indicated that building housing failed health center was about to
be placed on the commercial market for sale); 

(evidence and testimony proved that owner had intended to
re-let vacant building as soon as repairs and renovations were
completed); 

(break in rental activity of
fictional building was connected to the planned arson and
undercover government agent never indicated to defendant that the
property was to be removed from the rental market). See also
United States v. Mayberry, 

, 1119 (8th Cir. 1990)
(record reflected that temporarily closed sawmill would have been
operational had logs been available to cut); United States v.
Doby, 

, 780 (7th Cir. 1989) (per curiam) (owner of
vacant property never took it off the rental market and intended
to rent upstairs unit after the house was repaired); United
States v. Hermes, 

, 496 (8th Cir. 1988) (per curiam)
(owner of the building advertised the space for lease); United
States v. Shockley, 

, 1307 (11th Cir. 1984) (per


                                13
involving partially completed commercial buildings, the courts

relied on significant connections to out-of-state factors to

satisfy the interstate commerce nexus required under § 844(i);

factors which are not present in this case.3

     Here, we do not believe that the trial record could support

the conclusion that the house on Shadeland Avenue either remained

in, or was intended to return to, the stream of commerce.    In

reaching this conclusion, we are persuaded by a number of

factors.   First, the record clearly demonstrates that all tenants

had vacated the house.   Indeed, the property was unfit for human

habitation.   It was contaminated by lead, and Gaydos had removed

permanent fixtures such as ceiling fans and kitchen cabinets.

Second, there is no evidence that Gaydos had any intent to

improve the living conditions at the house.    She undertook no

significant abatement measures to correct the lead problem and

expressly stated that she was not going to devote any money to

fixing the house.   Finally, there was no evidence to refute

Gaydos' contention that the house had been permanently removed

from the rental market and had no prospect of generating any


curiam) (owner of closed restaurant did not remove equipment from
the building and told persons that the restaurant would re-open
after remodeling and repairs were completed).
     3
       See 

(involvement of out-of-
state partners and lender sufficient to support link between
construction of building and interstate commerce); 

(use of out-of-state materials in construction of
building is a commercial activity affecting interstate commerce
for the purpose of § 844(i)).



                                14
future rental revenue.

     We conclude that given the confluence of factors in this

case, the house on Shadeland Avenue ceased to be a rental

property before it was destroyed by fire.   Consequently, we

conclude that the evidence here was insufficient to establish

that the house was involved in an activity affecting interstate

commerce at the time of the fire.    The status of the house as a

rental property was "the interstate hook on which the government

hung its argument."   

.    By failing to

prove that the house was a rental property, the government has

not satisfied the interstate commerce element of the statute.

Hence, the requisite nexus between the property and interstate

commerce necessary to support a conviction under § 844(i) has not

been satisfied and Gaydos' conviction for malicious destruction

of property by means of fire will be reversed.

     We note that our decision here may be perceived to be in

tension with the decision reached by the court in Parsons, which

affirmed a jury's finding that a vacant house used as rental

property for two to three years before the fire and that, at the

time of the arson, was insured as rental property, qualified as

"rental property" for purposes of § 844(i).      

.
 Significantly, the court reasoned that, once the jury concluded

that Parsons had commissioned the arson, "it was certainly

rational to also conclude that Parsons never intended to move

into the house or to remove it from the rental market . . . . the



                                15
jury concluded that she planned to have the house burned and that

[Parson's notice of intent to vacate the property] was merely a

cover."    

here, unlike those in Parsons, demonstrate that

the property at issue was both vacant and uninhabitable at the

time of the fire.   Moreover, Gaydos expressed a clear intent not

to take necessary measures to make the house habitable for future

tenants.   We conclude that a reasonable juror could not have done

more than speculate that the house on Shadeland Avenue had a real

prospect of generating any future rental revenue.

     In sum, we hold that the government could not prove beyond a

reasonable doubt that the house on Shadeland Avenue was used in

an activity affecting interstate commerce.   Consequently, we will

reverse Gaydos' conviction for malicious destruction of property

by means of fire in violation of 18 U.S.C. § 844(i).4

                               IV.

     Gaydos also challenges the restitution order entered by the

     4
       At sentencing, Gaydos' convictions for mail fraud (Counts
1-4) and for malicious destruction of property by means of fire
(Count 6) were grouped together and assigned a base offense level
of 24 pursuant to U.S.S.G. § 2K1.4(a)(1)(B) (destruction of a
"dwelling" by fire). Gaydos argues that because the house was
vacant, uninhabitable, and without prospect of future rental, it
was not a "dwelling" within the meaning of § 2K1.4(a)(1)(B).
Instead, Gaydos asserts that her base offense level for these
Counts should have been 20 pursuant to U.S.S.G. § 2K1.4(a)(2)(B)
(destruction of a structure other than a dwelling). We need not
reach the merits of Gaydos' contention because our reversal of
her conviction on Count 6 requires the district court to readjust
its application of the grouping rules and to recalculate Gaydos'
sentence.



                                16
district court.    More specifically, Gaydos alleges that the

district court failed to make the required findings of fact that

she had the ability to pay before it entered a restitution order

against her.   We agree.

     In ordering Gaydos to pay $190,139.42 in restitution, the

district court relied on a listing of Gaydos' assets contained in

the presentence report.     At the sentencing hearing, however, both

Gaydos and her counsel raised doubts concerning her ability to

pay restitution.    The district court never made specific factual

findings with respect to these contentions.     Rather, the court

settled the issue by agreeing to a proposal by counsel for the

government that, if necessary, the amount of restitution ordered

could be remitted at a later date.

     We have held that specific findings of fact regarding a

defendant's ability to pay are required before a restitution

order may be imposed.      See, e.g., United States v. Maurello, 

, 1316-18 (3d Cir. 1996); United States v. Copple, 

, 482-83 (3d Cir. 1996); United States v. Carrara, 

, 108-09 (3d Cir. 1995); United States v. Turcks, 

, 901-02 (3d Cir. 1994), cert. denied, 

(1995).
 Deferring such findings until some time after a restitution

order has already been entered, while perhaps both practical and

intuitively correct, does not satisfy this requirement.

Accordingly, we will vacate the restitution order entered against

Gaydos and remand the matter to the district court for it to make



                                   17
specific factual findings on Gaydos' ability to pay restitution.

                                 V.

     Gaydos' final argument is that the district court erred by

refusing to reach the merits of her untimely post-trial motions

for judgments of acquittal and a new trial.    Federal Rule of

Criminal Procedure 29(c) states in pertinent part, "[I]f the jury

returns a verdict of guilty . . . a motion for judgment of

acquittal may be made . . . within 7 days after the jury is

discharged or within such further time as the court may fix

during the 7-day period."    District courts are without discretion

to consider untimely motions for judgment of acquittal under Rule

29(c).    Carlisle v. United States, 

, 1463-64

(1996).   Since no extension of time was granted, the district

court properly determined that it was without jurisdiction to

consider the merits of Gaydos' untimely motions for judgment of

acquittal.

     Similarly, Rule 33 requires that a motion for a new trial be

filed "within 7 days after verdict or finding of guilty or within

such further time as the court may fix during the 7-day period."

 We have held that the time limit for filing motions for a new

trial under Rule 33 is jurisdictional.     United States v. Coleman,

, 807 (3d Cir. 1987).     A district court is powerless

to entertain untimely motions under Rule 33 unless it grants an

appropriate extension within seven days after the verdict.      

  Since there was no extension of time, the



                                 18
district court could not consider the merits of Gaydos' untimely

motion for a new trial.5

                              VI.

     In summary, we will reverse Gaydos' conviction under 18

U.S.C. § 844(i), vacate her sentence and restitution order, and

remand the cause to the district court.




     5
       Gaydos also contends that the district court erred by
failing to hold a factual hearing so that we could rule directly
on the merits of her ineffectiveness of counsel claims. We have
emphasized our preference that claims of ineffectiveness of
counsel be raised in a collateral proceeding under 28 U.S.C. §
2255. See, e.g., United States v. Oliva, 

, 323 (3d
Cir. 1995); United States v. Rieger, 

, 235-36 (3d
Cir. 1991); United States v. Sandini, 

, 311-12.
Thus, although Gaydos' claims of ineffective counsel may be
meritorious, they must be raised through a §2255 petition.




                               19