United States of America v. Approximately $11,258.00 in U.S. Currency, No. 1:2009cv00282 - Document 22 (E.D. Cal. 2009)

Court Description: FINDINGS and RECOMMENDATIONS re: Plaintiff's Motion for Default Judgment [Doc. 20] - be Granted. Referred to Judge O'Neill; Objections to F&R due within 30 days. signed by Judge Sandra M. Snyder on 10/20/2009. (Herman, H)

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United States of America v. Approximately &#036;11,258.00 in U.S. Currency Doc. 22 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, 12 Plaintiff, 13 vs. 14 Approximately $11,258.00 in U.S. Currency, 15 Defendant. 16 ) ) ) ) ) ) ) ) ) ) ) 1:09-cv-0282-LJO-SMS FINDINGS AND RECOMMENDATION RE: PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT (Doc. 20) 17 Plaintiff is proceeding with an action for forfeiture in 18 this Court. Pending before the Court is Plaintiff’s motion for 19 default judgment, filed on August 31, 2009, with a supporting 20 declaration of Autumn Magee, which proceeds before a Magistrate 21 Judge pursuant to 28 U.S.C. § 636(b) and Local Rule 7222 302(c)(19). By separate order the hearing on the motion has been 23 vacated, and the matter has been submitted to the Court for 24 decision. 25 I. Default Judgment 26 A court has the discretion to enter a default judgment 27 against one who is not an infant, incompetent, or member of the 28 1 Dockets.Justia.com 1 armed services where the claim is for an amount that is not 2 certain on the face of the claim and where (1) the defendant has 3 been served with the claim; (2) the defendant’s default has been 4 entered for failure to appear; (3) if the defendant has appeared 5 in the action, the defendant has been served with written notice 6 of the application for judgment at least three days before the 7 hearing on the application; and, (4) the court has undertaken any 8 necessary and proper investigation or hearing in order to enter 9 judgment or carry it into effect. Fed. R. Civ. P. 55(b); Alan 10 Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th 11 Cir. 1988). Factors that may be considered by courts in 12 exercising discretion as to the entry of a default judgment and 13 as to setting aside a default include the nature and extent of 14 the delay, Draper v. Coombs, 792 F.2d 915, 924-925 (9th Cir. 15 1986); the possibility of prejudice to the plaintiff, Eitel v. 16 McCool, 782 F.2d 1470, 1471-72 (9th Cir.1986); the merits of 17 plaintiff's substantive claim, id.; the sufficiency of the 18 allegations in the complaint to support judgment, Alan Neuman 19 Productions, Inc., 862 F.2d at 1392; the amount in controversy, 20 Eitel v. McCool, 782 F.2d at 1471-1472; the possibility of a 21 dispute concerning material facts, id.; whether the default was 22 due to excusable neglect, id.; and, the strong policy underlying 23 the Federal Rules of Civil Procedure that favors decisions on the 24 merits, id. 25 With respect to default judgments in proceedings that are in 26 rem actions for forfeiture, both the general Federal Rules of 27 Civil Procedure and the Supplemental Rules for Certain Admiralty 28 and Maritime Claims (Supp. R.) apply, but the latter rules 2 1 prevail if there is an inconsistency. Supp. R. A(1). Supp. R. 2 G(1) provides that the rule governs a forfeiture action in rem 3 arising from a federal statute; to the extent that Rule G does 4 not address an issue, Supp. Rules C and E also apply. 5 Supplemental Rule G, which took effect on December 1, 2006, 6 incorporates a common-sense approach to notice grounded in 7 defined and recognized principles of due process of law. Supp. 8 Rule G, Adv. Comm. Note on 2006 Adoption. The Advisory Committee 9 Note indicates that the rule was added to bring together the 10 central procedures governing civil forfeiture actions; it also 11 states that the rule generally applies to actions governed by the 12 Civil Asset Forfeiture Reform Act of 2000 (CAFRA) as well as 13 those excluded from it; thus, the intended scope of application 14 is very broad. The rule permits flexibility as to the time of 15 service of any warrant and supplemental process. Id. The 16 provisions for notice incorporate the traditional means of 17 publication and adopt the general principle that notice should be 18 effectuated by means reasonably calculated to reach potential 19 claimants at a cost reasonable in the circumstances, and actual 20 notice precludes a challenge to the government’s failure to 21 comply with the specific requirements of the rule set forth in 22 Rule G (4)(b). Id. 23 24 25 II. Notice A. Publication Supplemental Rule G(4)(a) provides that a judgment of 26 forfeiture may be entered only if the government has published 27 notice of the action within a reasonable time after filing the 28 complaint or at a time the court orders. The rule sets forth the 3 1 required contents of the notice, frequency of publication, and 2 means of publication. 3 Here, the amended declaration of publication of Autumn Magee 4 filed on August 31, 2009 (Doc. 19) establishes that a notice with 5 the required contents was published on the official government 6 internet site for thirty consecutive calendar days. Thus, the 7 Plaintiff has demonstrated publication that is sufficient 8 pursuant to Supplemental Rule G(4)(a). 9 10 B. Notice to Known Potential Claimants Supplemental Rule G(4)(b) provides that the government must 11 send notice of the action and the complaint to any person who 12 reasonably appears to be a potential claimant; the rule specifies 13 the content, means, and time of the notice, and it expressly 14 provides that a potential claimant who had actual notice of a 15 forfeiture action may not oppose or seek relief from forfeiture 16 because of the government’s failure to send the required notice. 17 Here, the verified complaint states that Defendant currency 18 was seized on June 23, 2008, from the right front pants pocket of 19 potential claimant Peter Warda at the residence of Mr. Warda, 20 2500 Black Walnut Drive, Modesto, California. (Doc. 1, ¶¶ 5, 8.) 21 With respect to Warda, the declaration of Autumn Magee (Doc. 22 20-2, ¶ 3) demonstrates that notice was given via mailing of the 23 pertinent documents to Warda’s last-known address at 2500 Black 24 Walnut Drive, Modesto, California, on February 24, 2009. Further, 25 on March 11, 2009, the Marshal served Warda by leaving specified 26 documents with Warda’s sister, a person of suitable age and 27 discretion, at an address described by the marshal as one of his 28 last known addresses. (Magee Decl., Doc. 20-2, Ex. B; Doc. 8.) 4 1 Finally, Magee declares that on July 6, 2009, copies of the 2 pertinent documents were sent by way of United States mail, with 3 certified mail receipt, to the same secondary last-known address 4 for Peter Warda, namely, 3275 Wilkesboro Avenue, Modesto, 5 California; the certified return receipt card was signed by 6 William Warda on July 8, 2009. (Magee Decl., ¶ 6, Ex. D.) 7 This notice does not appear to comply with Local Rule A- 8 540(a), which provides: 9 10 (a) Notice Required. A party seeking a default judgment in an action in rem shall show to the satisfaction of the Court that due notice of the action and arrest of the property has been given: 11 (1) By publication, see L.R. A-530; 12 13 14 15 (2) By personal service on the person having custody of the property; (3) If the property is in the hand of a law enforcement officer, by personal service on the person having custody prior to its possession by law enforcement agency or officer; and 16 17 18 19 20 (4) By personal service or by certified mail, return receipt requested, to every other person who has not appeared in the action and is known to have an interest in the property; provided, however, that failure to give actual notice to such other person may be excused upon a satisfactory showing of diligent efforts to give such notice without success. 21 Local Rule A-540(a) by its terms requires that there be “personal 22 service” on the person having custody prior to possession by the 23 law enforcement agency or officer. Plaintiff appears to admit 24 that Peter Warda, from whom the Defendant currency was seized, is 25 the only claimant requiring notice pursuant to Local Rule A26 540(a)(2). (Motion p. 6, ll. 25-26.) Plaintiff claims that actual 27 notice has been provided to Warda; however, the documentation 28 submitted to the Court does not establish actual notice. 5 1 However, as Plaintiff points out, Fed. R. Civ. P. 4(n) 2 provides: 3 4 5 6 (n) Asserting Jurisdiction over Property or Assets. (1) Federal Law. The court may assert jurisdiction over property if authorized by a federal statute. Notice to claimants of the property must be given as provided in the statute or by serving a summons under this rule. 7 Here, notice was given to Warda in a manner that was sufficient 8 to constitute service of summons under Rule 4, namely, by leaving 9 a copy of the summons and complaint at the individual’s dwelling 10 or usual place of abode with someone of suitable age and 11 discretion pursuant to Fed. R. Civ. P. 4(e)(2)(B). 12 The participation or interest of Adrin Faramarzpour in any 13 of the events or transactions pertinent to this action is not 14 described or set forth in either the verified complaint or the 15 motion for default judgment. However, the Marshal’s certificate 16 reflects that Faramarzpour was personally served with appropriate 17 notice documents on March 11, 2009. (Doc. 9.) It does not appear 18 that Faramarzpour qualifies as a person who requires notice 19 pursuant to Local Rule A-540. 20 The Court concludes that Plaintiff has demonstrated that it 21 has given notice by publication and the notice required to be 22 given to potential claimants by Rule G(4). 23 C. Notice of Judgment Sought and of Motion for Default Judgment 24 1. Judgment Sought 25 The Court concludes that the notice given of the judgment 26 sought satisfied Fed. R. Civ. P. 55(d) and 54(c), which require 27 that a judgment by default shall not be different in kind from 28 6 1 the relief sought, or exceed in amount that prayed for, in the 2 demand for judgment. Plaintiff expressly sought in the complaint 3 the types of relief sought by the instant application for default 4 judgment, including a judgment of forfeiture of the Defendant 5 currency to the Plaintiff United States. (Cmplt. p. 3, ll. 276 28.) 7 8 2. Motion for Default Judgment The application for default judgment before the Court was 9 filed on an ex parte basis and thus was not served on the 10 Defendant property or on any persons who might reasonably appear 11 to be potential claimants. 12 Fed. R. Civ. P. 55(b)(2) requires written notice of an 13 application for default judgment be served at least three days 14 prior to the hearing on a defaulting party, or a representative 15 thereof, who has appeared in the action. An appearance for the 16 purpose of Rule 55 need not be a formal one and may consist even 17 of informal contacts made by the defaulting party where the 18 defaulting party demonstrates a clear purpose to defend the suit. 19 In re Roxford Foods v. Ford, 12 F.3d 875, 879-81 20 (9th Cir. 1993). Here, there are no indicia of a formal appearance or of 21 informal contacts. Accordingly, no notice is necessary. 22 III. Default and Entry of Default 23 The declarations and the Court’s docket demonstrate that no 24 person or entity made a claim or answered the complaint within 25 the requisite thirty-day period for filing a claim of 18 U.S.C. § 26 983(a)(4)(A) and Supp. R. G(5), and/or within the twenty-day 27 period set forth in Supp. R. G(5) for filing an answer 28 thereafter. Therefore, the Clerk appropriately entered the 7 1 default of potential claimants Peter Warda and Adrin Faramarzpour 2 on May 11, 2009. 3 4 5 IV. Legal Sufficiency of the Complaint A. Legal Standards A default judgment generally bars the defaulting party from 6 disputing the facts alleged in the complaint, but the defaulting 7 party may argue that the facts as alleged do not state a claim. 8 Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392. 9 Thus, well pleaded factual allegations, except as to damages, are 10 taken as true; however, necessary facts not contained in the 11 pleadings, and claims which are legally insufficient, are not 12 established by default. Cripps v. Life Ins. Co. of North America, 13 980 F.2d 1261, 1267 (9th Cir. 1992); TeleVideo Systems, Inc. v. 14 Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). 15 Under the Civil Asset Forfeiture Reform Act (CAFRA), which 16 applies to this case, the government must prove by a 17 preponderance of evidence that the property is subject to 18 forfeiture. 18 U.S.C. § 983(c)(1). Further, if the government’s 19 theory of forfeiture is that the property was used to commit or 20 facilitate the commission of a criminal offense, or was involved 21 in the commission of a criminal offense, the government shall 22 establish that there was a substantial connection between the 23 property and the offense. § 983(c)(3). 24 Supp. Rule G(2) requires that the complaint in a forfeiture 25 action in rem arising from a federal statute be verified; state 26 the grounds for subject-matter jurisdiction, in rem jurisdiction 27 over the Defendant property, and venue; describe the property 28 with reasonable particularity; identify the statute under which 8 1 the forfeiture action is brought; and state sufficiently detailed 2 facts to support a reasonable belief that the government will be 3 able to meet its burden of proof at trial. 4 B. The Complaint 5 The complaint filed in this action was verified. 6 The bases for jurisdiction are identified as 28 U.S.C. §§ 7 1345 and 1355 (jurisdiction of civil proceedings commenced by the 8 United States or an agency or officer thereof, and of actions to 9 recover or enforce penalties or forfeitures under acts of 10 Congress, respectively) and 21 U.S.C. § 881 (subjecting to 11 forfeiture all controlled substances manufactured, distributed, 12 dispensed, or acquired in violation of the subchapter, as well as 13 all money used or intended to facilitate any violation or 14 furnished in exchange therefor or constituting proceeds traceable 15 thereto). (Cmplt. ¶¶ 1, 3.) 16 The bases of venue are identified as 28 U.S.C. § 1395 17 (placing venue for a civil forfeiture proceeding where the 18 property is found) and 21 U.S.C. § 881(j) (placing venue in the 19 place where there is found the owner of property who is charged 20 with a violation that is the basis for forfeiture of the property 21 or where the criminal prosecution is brought). (Cmplt. ¶ 4.) 22 The property is described with reasonable particularity. 23 It is stated that the Plaintiff United States proceeds 24 pursuant to 21 U.S.C. § 881(a)(6), and that the Defendant 25 currency, seized in June 2008 in Modesto, California, constitutes 26 money or other things of value furnished or intended to be 27 furnished in exchange for a controlled substance of listed 28 chemical, proceeds traceable to such an exchange, and/or money 9 1 used or intended to be used to facilitate one or more violations 2 of 21 U.S.C. § 841 et seq. (Cmplt. ¶¶ 1-2.) 3 In the complaint there are alleged sufficiently detailed 4 facts to support a reasonable belief that the government would be 5 able to meet its burden of proof at trial. It is alleged that the 6 property was taken in to the custody of United States Marshals 7 after the Drug Enforcement Administration (DEA) adopted it for 8 forfeiture proceedings on July 18, 2008. (Cmplt. ¶ 2.) The 9 currency was seized on June 23, 2008, from the pocket of Peter 10 Warda at Warda’s residence at 2500 Black Walnut Drive in Modesto, 11 California, where officers of the Modesto Police Department 12 Narcotics Enforcement Team and Street Crimes Unit executed a 13 search and found three stolen handguns, one of which was loaded, 14 as well as over 1,000 Oxycodone pills, over 300 Hydrocodone 15 pills, and about 98 glass ampules containing liquid steroids. 16 After his arrest for possession of controlled substances for sale 17 in violation of state statutes, Warda claimed that the Defendant 18 currency was for the purchase of vehicles at auction or from the 19 sale of two cars at Blue Diamond Auto Sales, which Warda claimed 20 to own with his cousin, but whose name was not on any business 21 ownership paperwork due to an outstanding debt for past medical 22 bills, and who could not provide any receipts for the sales of 23 any cars or a W-2 showing proof of income. Warda claimed that he 24 was paid “under the table” for car sales and did not file taxes; 25 EDD records reflected no employment history for Warda since 2006. 26 (Cmplt. ¶¶ 5-8.) 27 These facts support a reasonable inference that the large 28 sum of money was subject to forfeiture as proceeds or as money 10 1 intended to be exchanged for controlled substances or to 2 facilitate other violations. Because of the amount of money and 3 the proximity of the money in relation to the quantity of 4 controlled substances and the multiple stolen handguns, a 5 substantial connection between the property and the offenses 6 (possession of the three substances for sale) was demonstrated. 7 V. Status of Potential Claimants and Discretionary Factors 8 Here, no one has claimed an interest in the Defendant 9 property or otherwise responded to the complaint despite adequate 10 notice. It does not appear that there is any risk of mistake or 11 excusable neglect on the part of anyone with a potential interest 12 in the property or of a dispute as to a material fact essential 13 to the government’s case. No just cause for delay appears. It is 14 apparent from the declarations submitted to the Court that none 15 of the potential claimants is an infant, incompetent, or member 16 of the armed services. There does not appear to be any reason why 17 the general policy in favor of a decision on the merits would 18 warrant refusing to enter the requested default judgment. 19 Accordingly, the Court finds that Plaintiff has shown its 20 entitlement to a default judgment of forfeiture. 21 VI. Form of the Judgment 22 A successful plaintiff in a forfeiture action is entitled to 23 a judgment against the property, Waterloo Distilling Corp. v. 24 U.S., 282 U.S. 577, 581 (1931), affecting the interests of all 25 persons in the property, Hanson v. Denkla, 357 U.S. 235, 246 n.12 26 (1958). 27 VII. Recommendation 28 Accordingly, it is hereby RECOMMENDED that: 11 1 1. Plaintiff’s motion for default judgment be GRANTED; 2 2. Plaintiff is entitled to, and the Clerk be directed to 3 enter, a judgment that: 4 (a) The interest/s of Peter Warda and Adrin 5 Faramarzpour in the Defendant property are CONDEMNED and 6 FORFEITED to the United States of America; and 7 (b) The right, title, and interest of all potential 8 claimants in the Defendant property, including but not limited to 9 Peter Warda and Adrin Faramarzpour, are FORFEITED to the United 10 States of America pursuant to 21 U.S.C. § 881(a)(6), and are 11 VESTED in the United States; and, 12 (c) All persons claiming any right, title, or interest 13 in or to the Defendant property have DEFAULTED and no longer have 14 any right, title, or interest in the Defendant property 15 whatsoever; and, 16 3. The Clerk of Court ENTER final judgment of forfeiture for 17 Plaintiff United States of America. 18 These findings and recommendation are submitted to the 19 United States District Judge assigned to the case, pursuant to 20 the provisions of 28 U.S.C. § 636 (b)(1)(B) and Rule 72-304 of 21 the Local Rules of Practice for the United States District Court, 22 Eastern District of California. Within thirty (30) days after 23 being served with a copy, any party may file written objections 24 with the court and serve a copy on all parties. Such a document 25 should be captioned “Objections to Magistrate Judge’s Findings 26 and Recommendation.” Replies to the objections shall be served 27 and filed within ten (10) court days (plus three days if served 28 by mail) after service of the objections. The Court will then 12 1 review the Magistrate Judge’s ruling pursuant to 28 U.S.C. § 636 2 (b)(1)(C). The parties are advised that failure to file 3 objections within the specified time may waive the right to 4 appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 5 1153 (9th Cir. 1991). 6 7 IT IS SO ORDERED. 8 Dated: icido3 9 October 20, 2009 /s/ Sandra M. Snyder UNITED STATES MAGISTRATE JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13

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