United States of America v. $23,540 in United States Currency, No. 3:2014cv02063 - Document 18 (N.D. Cal. 2014)

Court Description: ORDER GRANTING 15 UNITED STATES OF AMERICA'S MOTION FOR DEFAULT JUDGMENT. Signed by Magistrate Judge Laurel Beeler on 9/18/2014.(lblc2, COURT STAFF) (Filed on 9/18/2014)

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United States of America v. $23,540 in United States Currency Doc. 18 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 Northern District of California 10 San Francisco Division UNITED STATES OF AMERICA 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 No. C 14-02063 LB Plaintiff, ORDER GRANTING UNITED STATES OF AMERICA’S MOTION FOR DEFAULT JUDGMENT v. 13 $23,540 IN UNITED STATES CURRENCY, 14 15 Defendant. _____________________________________/ [ECF No. 15] 16 INTRODUCTION 17 This is a judicial forfeiture action brought under 21 U.S.C. § 881(a)(6) involving the seizure of 18 Defendant $23,540 in United States currency. The clerk entered default, ECF No. 14, and the 19 United States now brings a Motion for Default Judgment (“Motion”), ECF No. 15.1 A hearing on 20 the Motion was held on September 18, 2014. For the reasons stated below, and good cause 21 appearing, the motion is GRANTED.2 22 23 24 25 26 27 28 1 Citations are to the Electronic Case File (“ECF”) with pin cites to the electronicallygenerated page numbers at the top of the document. 2 The United States has consented to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 686(c). See ECF No. 9. No other party appeared. In an in rem forfeiture proceeding, a party that fails to comply with the applicable filing requirements is precluded from standing as a “party” to the action, making it unnecessary to obtain the individual’s consent to proceed before a magistrate judge. United States v. 5145 N. Golden State Blvd., 135 F.3d 1312, 1317 (9th Cir. 1998). Therefore, the undersigned magistrate judge may enter judgment in this case. C 14-02063 LB ORDER Dockets.Justia.com 1 2 3 STATEMENT I. FACTUAL ALLEGATIONS On November 20, 2013, two United States Postal Inspectors (“PIs”) Jason Chung and Aaron Doo and a DEA Task Force Agent (“TFA”) Britt Elmore at the Post Office’s Oakland Processing 5 and Distribution Center “were engaged in routine parcel interdiction activities” to identify parcels 6 that might contain “controlled substances, the proceeds from trafficking in controlled substances or 7 currency intended to purchase controlled substances.” Complaint, ECF No. 1, ¶ 8. The PIs and 8 TFA identified an Express Mail parcel number EU 924364645 US (“Parcel”), which weighed 7 9 pounds, 5 ounces; measured 12 inches by 12 inches by 11 inches; and cost $71.70 to ship. Id. The 10 TFA’s narcotics detection canine indicated the presence of controlled substances in the Parcel. Id. 11 ¶¶ 11-12. 12 For the Northern District of California UNITED STATES DISTRICT COURT 4 PI Chung further investigated the Parcel using an on-line law enforcement database called 13 Accurint and learned that the listed sender—Keith Armstrong, 912 Rockefeller Avenue, Tupelo, MS 14 38801—had an FBI NCIC criminal history report with a misdemeanor arrest for driving with a 15 suspended license in 2010. Id. ¶ 13(a). An Accurint query for the address—Lavish Clothing DYII 16 and Lavish Clothing—revealed no history. Id. ¶ 13(b). A web search showed no results for either 17 addressee in Oakland. Id. A search of the recipient’s address—2029 Damuth Street, Oakland, CA 18 94602—indicated it was likely a single family home. Id. ¶ 13(b). An Accurint query showed that an 19 individual named Mario Evans (DOB 4/9/1978) was associated with the address from August 2012 20 to November 2014. Id. ¶ 13(d). Evans’s FBI NCIC criminal history report showed more than 35 21 arrests in California between 1994 and 2013. Id. Of those, Evans had five drug related arrests and 22 dispositions between 2005 and 2012. Id. 23 After obtaining and executing a search warrant, the PI Chung opened the Parcel and found 24 $23,540 “concealed inside many layers within a duct taped metal stock pot wrapped in a bubble 25 wrapped white towel.” Id. ¶ 14. All but 10 of the 1288 bills were in denominations of $20 or less. 26 Id. The packaging and small denomination bills are both consistent with drug trafficking. Id. 27 Based on the totality of the circumstances, PI Chung seized Defendant $23,540. Id. ¶ 15. 28 An individual named Thaddeus Shaheed filed an administrative claim with the United States C 14-02063 LB ORDER 2 1 Postal Service for Defendant on February 7, 2014. Id. ¶ 16. PI Chung searched a government 2 database named CLEAR and learned that Shaheed was associated with the recipient address in 3 Oakland from February 2010 to August 2011. Id. As of December 10, 2013, the USPS for holding 4 mail for Shaheed at that address. Id. 5 II. PROCEDURAL HISTORY AND NOTICE 6 The United States filed this action on May 6, 2014. On May 9, 2014, the United States gave parties four other individuals and the recipient’s address in Oakland (“Potential Claimants”) by 9 serving a copy of the Complaint for Forfeiture, the Notice of Forfeiture Action, the Warrant of 10 Arrest of Property In Rem, and related documents, via both certified and regular U.S. mail. See 11 Certificate of Service, ECF No. 7; see also Motion for Entry of Default, ECF No. 12. The United 12 For the Northern District of California notice of this action directly to Armstrong, Lavish Clothing DYII, Evans, Shaheed, and four other 8 UNITED STATES DISTRICT COURT 7 States also published notice of this forfeiture action on an official government website 13 (www.forfeiture.gov) for at least 30 consecutive days, beginning on May 8, 2014. See Declaration 14 of Publication, ECF No. 11. 15 No one filed a verified claim to Defendant $23,540 or otherwise responded to this action. See 16 Motion, ECF No. 15 at 4; see generally Docket. The clerk entered default on August 5, 2014. See 17 ECF No. 14. On August 6, 2014, the government filed its motion for default judgment and noticed it 18 for September 18, 2014. See ECF No. 15. It served the Potential Claimants on August 6, 2014. See 19 ECF No. 16. The court held a hearing on September 18, 2014, and no one appeared to contest the 20 government’s motion. 21 22 23 ANALYSIS I. JURISDICTION The court has jurisdiction over this matter under 28 U.S.C. §§ 1345 and 1355(a), which vests 24 district courts with original jurisdiction in “any action or proceeding for the . . . enforcement of 25 any . . . forfeiture . . . incurred under any Act of Congress.” See 28 U.S.C. § 1355(a). 26 II. LEGAL STANDARD 27 A. Forfeiture 28 The United States filed this action under 21 U.S.C. § 881(a)(6), which provides, in relevant part, C 14-02063 LB ORDER 3 1 that property “subject to forfeiture” includes “[a]ll moneys . . . intended to be furnished by any 2 person in exchange for a controlled substance or listed chemical in violation of this subchapter[.]” 3 21 U.S.C. § 881(a)(6). See Complaint, ECF No. 1, at ¶ 1. Forfeiture is “harsh and oppressive” and 4 thus, is “not favored by the courts.” See United States v. $191,910.00 in U.S. Currency, 16 F.3d 5 1051, 1069 (9th Cir. 1994). The Ninth Circuit is “particularly wary of civil forfeiture statutes” 6 because they “impose ‘quasi-criminal’ penalties” but do not provide property owners with the 7 degree of procedural protections provided to criminal defendants. See id. at 1068; United States v. 8 Marlof, 173 F.3d 1213, 1217 (9th Cir. 1999) (quoting $191,000.00 in U.S. Currency, 16 F.3d at 9 1068)). Accordingly, strict adherence to procedural rules is paramount in civil forfeiture to provide due notice to property owner); $191,910.00 in U.S. Currency, 16 F.3d at 1068-69 (strictly 12 For the Northern District of California proceedings. See Marlof, 173 F.3d at 1217 (denying forfeiture where government “erred” by failing 11 UNITED STATES DISTRICT COURT 10 construing currency forfeiture provisions of 19 U.S.C. § 615 against government and holding that 13 “the burden on the government to adhere to procedural rules should be heavier than on claimants”). 14 B. Default Judgment 15 Under Federal Rule of Civil Procedure 55(b)(2), a plaintiff may apply to the district court for— 16 and the court may grant—a default judgment against a defendant who has failed to plead or 17 otherwise defend an action. Draper v. Coombs, 792 F.2d 915, 925 (9th Cir. 1986). The decision to 18 enter a judgment lies within the court’s discretion. Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 19 1172, 1175 (C.D. Cal. 2002). Still, “[a] defendant’s default does not automatically entitle the 20 plaintiff to a court-ordered judgment.” Draper 792 F.2d at 924-25. Default judgments generally are 21 disfavored because “cases should be decided on their merits whenever reasonably possible.” Eitel v. 22 McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). Where the clerk has already entered default, the court 23 must take as true the factual allegations of the complaint and other competent evidence submitted. 24 See Fair Hous. of Marin v. Coombs, 285 F.3d 899, 906 (9th Cir. 2002); TeleVideo Sys., Inc. v. 25 Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). 26 In deciding whether to enter a default judgment, the court should consider: (1) the possibility of 27 prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claims; (3) the sufficiency of the 28 complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute about the C 14-02063 LB ORDER 4 1 material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy 2 underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 3 1471-72. 4 III. WHETHER DEFAULT JUDGMENT IS APPROPRIATE 5 In the present matter, the clerk entered default on August 5, 2014. See ECF No. 14. 6 Consequently, the factual allegations of the Government’s complaint are deemed to be true and the 7 court is vested with the authority to enter default judgment. The decision whether to exercise its 8 discretion to do so is guided by two overlapping inquiries. First, the court considers the 9 Government’s claims in light of the factors set forth by the Ninth Circuit in Eitel, 782 F.2d at 147172. Second, the court determines whether the Government has met the specific procedural 11 requirements governing forfeiture actions. 12 For the Northern District of California UNITED STATES DISTRICT COURT 10 A. Eitel Factors 13 The first Eitel factor supports granting default judgment because denying the motion would 14 likely prejudice the United States by leaving it without a remedy. The second and third factors also 15 support granting default judgment, as the United States’ allegations, assumed to be true, show that 16 the defendant funds are subject to forfeiture under 18 U.S.C. § 881(a)(6), as the funds were related 17 to drug trafficking. The sum of money at stake ($23, 540), though substantial, is not so large as to 18 warrant denial of the motion. As discussed in the procedural history and below, because the 19 Potential Claimants were properly served with the Complaint, Arrest Warrant, and Notice of 20 Forfeiture Action, and notice of these proceedings, there is no indication of a possible dispute 21 concerning material facts or that the default was due to excusable neglect. Finally, although there is 22 a strong public policy favoring a decision on the merits, no party has filed a verified claim for the 23 defendant funds, and thus deciding the case on the merits is not possible. Therefore, the 24 consideration of the Eitel factors as a whole weighs in favor of granting the Motion for Default 25 Judgment. 26 B. Compliance with Forfeiture Procedures 27 The Supplemental Rules for Certain Admiralty and Maritime Claims (“Supplemental Rules”) 28 govern judicial forfeitures of property. United States v. 5145 N. Golden State Blvd., 135 F.3d 1312, C 14-02063 LB ORDER 5 1 1315 (9th Cir. 1998). Under the Admiralty and Maritime Local Rule 6-1(a) for the Northern District 2 of California, “[a] party seeking a default judgment in an action in rem must show that due notice of 3 the action and arrest of the property has been given . . . [t]hrough execution of process in accordance 4 with Fed. R. Civ. P. Supp. G(3); and . . . in accordance with Fed. R. Civ. P. Supp. G(4).” Admir. 5 L.R. 6–1(a)(1). 6 7 1. Supplemental Rule G(3) Supplemental Rule G(3) governs judicial authorization and process. Supplemental Rule G(3) 8 provides that “the clerk must issue a warrant to arrest the property if it is in the government’s 9 possession, custody, or control.” Fed. R. Civ. P. Supp. G(3)(b)(i). In this case, a Warrant of Arrest 10 Supplemental Rule G(3) also states that “[t]he warrant and any supplemental process must be 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 of Property In Rem was issued on April 24, 2013. See ECF No. 3. delivered to a person or organization authorized to execute it,” including “someone under contract 13 with the United States.” The certificate of service states that Carolyn Jusay, a paralegal in the Asset 14 Forfeiture Unit of the United States Attorney for the Northern District of California, served the 15 relevant documents in this case via United States certified mail and regular U.S. mail upon the 16 Potential Claimants’ last known addresseses. See Certificate of Service, ECF No. 7. Based on the 17 foregoing, service was in compliance with Supplemental Rule G(3). 18 2. Supplemental Rule G(4) 19 Supplemental Rule G(4) requires both notice by publication and notice to known potential 20 claimants. See Fed. R. Civ. P. Supp. G(4)(a)-(b). First, with respect to notice by publication, Rule 21 G(4)(a) provides that “[a] judgment of forfeiture may be entered only if the government has 22 published notice of the action within a reasonable time after filing the complaint or at a time the 23 court orders,” and requires that a published notice: “(A) describe the property with reasonable 24 particularity; (B) state the times under Rule G(5) to file a claim and to answer; and (C) name the 25 government attorney to be served with the claim and answer.” Fed. R. Civ. P. G(4)(a)(i)-(ii). Rule 26 G(4) further provides the notice may be published by “posting a notice on an official internet 27 government forfeiture site for at least 30 consecutive days.” Fed. R. Civ. P. Supp. G(4)(a)(iv). 28 To demonstrate compliance with the published notice requirement, the United States has filed a C 14-02063 LB ORDER 6 1 “Declaration of Publication” that states the United States published notice of the action on an official 2 government website (www.forfeiture.gov), where it remained for at least 30 consecutive days 3 beginning May 8, 2014. See ECF. No. 11. The published notice described the property to be seized 4 as “$23,540 U.S. Currency (14-USP-000775) which was seized from Keith Armstrong on November 5 26, 2013 at 1675 7th Street, located in Oakland, CA.” Id. The published notice also noted that 6 “[a]ny person claiming a legal interest in the Defendant Property must file a verified Claim with the 7 court within 60 days from the first date of publication (May 8, 2014),” and named Assistant United 8 States Attorney Patricia Kenney as the government attorney to be served. This notice complies with 9 the requirements of Supplemental Rule G(4)(a). 10 Next, with respect to notice to known potential claimants, Rule (G)(4)(b) requires the government to “send notice of the action and a copy of the complaint to any person who reasonably 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 appears to be a potential claimant.” Fed. R. Civ. P. Supp. G(4)(b)(i). The notice must state “(A) the 13 date when the notice is sent; (B) a deadline for filing a claim, at least 35 days after the notice is sent; 14 (C) that an answer or a motion under Rule 12 must be filed no later than 21 days after filing the 15 claim; and (D) the name of the government attorney to be served with the claim and answer.” Id. at 16 G(4)(b)(ii). 17 The Notice of Forfeiture was served on the Potential Claimants along with the Complaint and 18 Arrest Warrant. See ECF No. 5. The Notice of Forfeiture: (A) is dated May 6, 2014, and was 19 served on May 9, 2014; (B) states that the deadline for filing a claim is at least thirty-five days after 20 the notice is sent; (C) states that an answer to the complaint or a motion under Rule 12 of the Federal 21 Rules of Civil Procedure must be filed within 21 days after filing a claim; and (D) identifies 22 Assistant United States Attorney Patricia J. Kenney as the government attorney to be served. 23 Therefore, the United States has demonstrated compliance with the requirements of Supplemental 24 Rule G(4)(b). 25 26 Accordingly, notice by publication and notice to known compliance with Supplemental Rule G(4). 27 CONCLUSION 28 For the reasons stated above, the United States’ Motion for Default Judgment is GRANTED. C 14-02063 LB ORDER 7 1 This disposes of ECF No. 15. 2 IT IS SO ORDERED. 3 Dated: September 18, 2014 4 _______________________________ LAUREL BEELER United States Magistrate Judge 5 6 7 8 9 10 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C 14-02063 LB ORDER 8

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