United States of America v. $24,000.00 in United States Currency, No. 2:2009cv02319 - Document 15 (D. Nev. 2010)

Court Description: ORDER Granting 14 Motion for Default Judgment of Forfeiture. The Clerk of the Court shall certify, pursuant to 28 USC 2465(a)(2), that there was reasonable cause for the seizure or arrest of the currency. Signed by Judge Larry R. Hicks on 7/1/10. (Copies have been distributed pursuant to the NEF - ASB)
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United States of America v. $24,000.00 in United States Currency Doc. 15 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 *** ) ) ) ) ) ) ) ) ) ) ) ) ) ) 9 UNITED STATES OF AMERICA, 10 Plaintiff, 11 v. 12 TWENTY-FOUR THOUSAND DOLLARS ($24,000) IN UNITED STATES CURRENCY, 13 14 Defendant. 15 16 02:09-CV-2319-LRH-RJJ ORDER Before the court is Plaintiff United States of America’s (“Plaintiff”) Motion for Default 17 Judgment, requesting that approximately $24,000 in United States currency (“currency”) seized by 18 the Nevada Highway Patrol be forfeited to Plaintiff pursuant to 21 U.S.C. § 881(a)(6) (#141). 19 I. 20 Facts and Procedural History On December 8, 2009, Plaintiff filed a verified Complaint for Forfeiture in Rem, alleging 21 that the currency was furnished or was intended to be furnished in exchange for controlled 22 substances, in violation of Title II of the Controlled Substances Act, 21 U.S.C. § 801 et seq., and 23 therefore, is subject to forfeiture to the United States pursuant to 21 U.S.C. § 881(a)(6). (#1.) 24 On December 17, 2009, the court entered an Order for Summons and Warrant of Arrest in 25 26 1 Refers to court’s docket number. Dockets.Justia.com 1 Rem for the Property and Notice (#3). Pursuant to a notice of publication entered on February 24, 2 2010, all persons interested in the Defendant were required to file their claims with the clerk within 3 60 days of publication on the United States’s official internet forfeiture site, www.forfeiture.gov, or 4 within 35 days after actual notice of this action (#11). The government gave public notice of this 5 forfeiture action from January 23, 2010, through February 21, 2010. (Id.) No person or entity has 6 filed a claim, answer, or responsive pleading within the time permitted by 18 U.S.C. § 983(a)(4) 7 and Federal Rules of Civil Procedure G(4)(b) and (5). (Mot. Default J. ¶ 18.) 8 9 On February 2, 2010, Plaintiff filed a Request for Entry of Default (#7) which was entered by the clerk on February 4, 2010 (#8). Subsequently, on April 16, 2010, Plaintiff filed an Amended 10 Request for Entry of Default (#12) which was again entered by the clerk on April 19, 2010 (#13). 11 Thereafter, Plaintiff filed the present Motion for Default Judgment of Forfeiture (#14). 12 II. 13 Legal Standard Obtaining a default judgment is a two-step process governed by Federal Rule of Civil 14 Procedure 55. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). First, Rule 55(a) provides, 15 “When a party against whom a judgment for affirmative relief is sought has failed to plead or 16 otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the 17 party’s default.” Second, after the clerk enters default, a party must seek entry of default judgment 18 under Rule 55(b). 19 Upon entry of default, the court takes the factual allegations in the Plaintiff’s complaint as 20 true. Nonetheless, while entry of default by the clerk is a prerequisite to an entry of default 21 judgment, “a plaintiff who obtains an entry of default is not entitled to default judgment as a matter 22 of right.” Warner Bros. Entm’t Inc. v. Caridi, 346 F. Supp. 2d 1068, 1071 (C.D. Cal. 2004) 23 (citation omitted). Instead, the entry of a default judgment is in the court’s discretion. Id. 24 (citations omitted). 25 26 Generally, courts consider civil forfeiture actions as “harsh and oppressive.” States 2 1 v. $191,910.00 in U.S. Currency, 16 F.3d 1051, 1069 (9th Cir. 1994). The Ninth Circuit is 2 “particularly wary of civil forfeiture statutes” because they impose “quasi-criminal” penalties but 3 do not provide property owners with the degree of procedural protection provided to criminal 4 defendants. Id. at 1068. Accordingly, strict adherence to procedural rules is paramount in civil 5 forfeiture proceedings. United States v. Marolf, 173 F.3d 1213, 1217 (9th Cir. 1999) (denying 6 forfeiture where the government did not provide due notice to a property owner). 7 In the present matter, the clerk entered default against the Defendant. Therefore, the factual 8 allegations in Plaintiff’s complaint are assumed to be true, and the court is vested with the authority 9 to enter default judgment. Two overlapping inquiries guide the court’s decision on whether to 10 grant the motion for default judgment. First, the court considers Plaintiff’s claims in light of the 11 Eitel factors set forth by the Ninth Circuit. Eitel 782 F.2d at 1471-72. Second, the court 12 determines whether Plaintiff has satisfied the procedural requirements governing forfeiture actions. 13 A. Eitel Factors 14 The Ninth Circuit has identified the following factors as relevant to the exercise of the 15 court’s discretion in determining whether to grant default judgment: (1) the possibility of prejudice 16 to the plaintiff; (2) the merits of the plaintiff’s substantive claims; (3) the sufficiency of the 17 complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning 18 material facts; (6) whether the default was due to the excusable neglect; and (7) the strong policy 19 underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Id. The court 20 will consider these factors below. 21 1. Prejudice 22 The first Eitel factor considers whether the plaintiff will suffer prejudice if default 23 judgment is not entered. See PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. 24 Cal. 2002). Plaintiff gave public notice of this forfeiture action on the United States’s official 25 internet forfeiture site from January 23, 2010, through February 21, 2010. No person or entity has 26 3 1 filed a claim, answer, or responsive pleading contesting the forfeiture. Due to the likelihood that 2 there will continue to be no claimants, the possibility of prejudice to Plaintiff in the absence of 3 default judgment is great. Thus, this factor weighs in favor of entering default judgment. 4 2. Merits of Plaintiff’s Substantive Claims and Sufficiency of the Complaint 5 The second and third Eitel factors favor default judgment where the complaint 6 sufficiently states a claim for relief under the “liberal pleading standards embodied in Rule 8” of 7 the Federal Rules of Civil Procedure. See FED . R. CIV . P. 8; Danning v. Lavine, 572 F.2d 1386, 8 1389 (9th Cir. 1978). Here, the Plaintiff alleges the currency was “furnished or was intended to be 9 furnished in exchange for controlled substances . . . [and was] traceable to exchanges of controlled 10 substances in violation of Title II of the Controlled Substances Act, 21 U.S.C. § 801 et seq., and is 11 subject to forfeiture to the [Plaintiff] pursuant to 21 U.S.C. § 881(a)(6).” (Compl. ¶ 28, 30.) 12 Plaintiff’s complaint states plausible claims for relief under Rule 8, and Plaintiff has 13 provided sufficient evidence supporting its claims. Because the allegations in the complaint 14 and the evidence Plaintiff has submitted indicate a strong likelihood that Plaintiff will be successful 15 on the merits, the second and third Eitel factors favor entering a default judgment. 16 3. Sum of Money at Stake 17 Under the fourth Eitel factor, the court considers “the amount of money at stake in 18 relation to the seriousness of Defendants’ conduct.” PepsiCo, 239 F. Supp. 2d at 1176. Plaintiff 19 has provided evidence that the currency, a sum of $24,000, was furnished or intended to be 20 furnished in exchange for marijuana, a serious violation of federal law. 21 4. Possible Dispute 22 The fifth Eitel factor considers the possibility of dispute as to any material facts in the 23 case. PepsiCo, Inc., 238 F. Supp. 2d at 1177. Here, given the sufficiency of the complaint (#1), 24 “no genuine dispute of material facts would prejudice granting [Plaintiff’s] motion.” See id. 25 \\\ 26 4 1 5. Excusable Neglect 2 The sixth Eitel factor considers the possibility that the default resulted from excusable 3 neglect. The evidence shows that Plaintiff gave public notice on the United States’s official 4 forfeiture site, pursuant to the Supplemental Rules C(4). See FED . R. CIV . P. C(4). Therefore, it is 5 unlikely the lack of claimants and subsequent default resulted from excusable neglect. 6 6. Decision on the Merits 7 The seventh Eitel factor considers that “[c]ases should be decided upon their merits 8 whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, the “mere existence of [Rule 9 55(b)] indicates that this ‘preference, standing alone, is not dispositive.’” PepsiCo, Inc., 238 F. 10 Supp. 2d at 1177 (citation omitted). Moreover, when there is no response to a plaintiff’s complaint, 11 a decision on the merits is impractical, if not impossible. Id. Thus, the court finds that all Eitel 12 factors favor entering default judgment. 13 B. Procedural Requirements 14 Given the court’s finding that entry of default judgment is appropriate under Eitel, the court 15 must next determine whether Plaintiff has also satisfied the procedural requirements that govern 16 civil forfeiture actions. 17 The Supplemental Rules for Certain Admiralty and Maritime Claims (“Supplemental 18 Rules”) govern judicial forfeitures of property. United States v. 5145 N. Golden State Blvd., 135 19 F.3d 1312, 1315 (9th Cir. 1998). Pursuant to the Supplemental Rules, the United States initiates 20 forfeiture proceedings by filing a complaint. FED . R. CIV . P. C(2), G(2). Under both Rules 21 C(2) and G(2), the complaint must be verified and describe the property at issue with reasonable 22 particularity. See id. Rule G(2) also requires that the complaint include sufficient factual 23 allegations to support a “reasonable belief” the United States will be able to meet its burden at trial. 24 FED R. CIV . P. G(2)(f). 25 26 Further, if the property is located in the United States, the plaintiff must publish notice of 5 1 the forfeiture action either in a newspaper of general circulation in the district, or by posting a 2 notice on a government forfeiture website for 30 consecutive days. FED . R. CIV . P. C(4), 3 G(4)(iv)(A). This notice must include the time available for filing a claim. FED R. CIV . P. 4 G(4)(b)(ii)(B). 5 Here, Plaintiff filed a verified complaint that describes the property subject to forfeiture, the 6 specific forfeiture statute at issue and facts supporting forfeiture. In addition, Plaintiff posted 7 notice on the United States’s official internet forfeiture site for 30 days, providing the time 8 available to file a claim. Therefore, Plaintiff has satisfied the procedural requirements for 9 entry of default judgment. 10 11 12 IT IS THEREFORE ORDERED that Plaintiff’s Motion for Default Judgment of Forfeiture (#14) is GRANTED. IT IS FURTHER ORDERED that the Clerk of the Court shall certify, pursuant to 13 28 U.S.C. § 2465(a)(2), that there was reasonable cause for the seizure or arrest of the 14 currency. 15 IT IS SO ORDERED. 16 DATED this 1st day of July, 2010. 17 18 19 __________________________________ LARRY R. HICKS UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 6