United States v. Int'l Human Rights Commission ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 9 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 19-56018
Plaintiff-Appellee, D.C. No.
2:18-cv-00670-SJO-GJS
v.
MEMORANDUM*
INTERNATIONAL HUMAN RIGHTS
COMMISSION; ROBERT SHUMAKE;
DANIEL FLINT,
Claimants-Appellants,
v.
148,145.00 IN U.S. CURRENCY,
Defendant.
Appeal from the United States District Court
for the Central District of California
S. James Otero, District Judge, Presiding
Submitted October 7, 2020**
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: M. SMITH and OWENS, Circuit Judges, and CARDONE,*** District
Judge.
This case arises from the appeal of default judgments entered against the
International Human Rights Commission (IHRC), Daniel Flint (Flint), and Robert
Shumake (Shumake) in a judicial forfeiture proceeding relating to money seized
from Flint at Los Angeles International Airport (LAX). Because the parties are
familiar with the facts, we do not recount them here, except as necessary to provide
context to our ruling. We have jurisdiction under 28 U.S.C. § 1291. We AFFIRM in
part, and REVERSE in part.
With respect to IHRC and Flint, the district court found they received direct
notice of the judicial forfeiture proceedings but failed to file claims in the
proceedings. By failing to file a claim, the district court correctly held they lacked
standing to challenge the forfeiture and properly entered default judgments against
them. See United States v. Real Prop., 135 F.3d 1312, 1317–18 (9th Cir. 1998).
In addition, because the district court held IHRC and Flint lacked good cause
to set aside the entry of defaults against them under Federal Rule of Civil Procedure
55(c), they also fail to demonstrate excusable neglect to set aside the default
judgments under Federal Rule of Civil Procedure 60(b)(1). Both analyses consider
***
The Honorable Kathleen Cardone, United States District Judge for the
Western District of Texas, sitting by designation.
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the same factors. See Brandt v. Am. Bankers Ins. Co. of Fla., 653 F.3d 1108, 1111
(9th Cir. 2011) (citing Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984)); see also
United States v. Aguilar, 782 F.3d 1101, 1109 (9th Cir. 2015).
With respect to Shumake, however, the district court abused its discretion in
granting the motion to strike his verified judicial claim because the district court
improperly weighed competing evidence at the pleading stage of the proceedings.
We addressed this issue in United States v. $999,830.00 in U.S. Currency, 704
F.3d 1042 (9th Cir. 2012) (per curiam). In that case, we reversed the district court’s
order striking a claim and subsequent default judgment against the would-be
claimant. Id. We concluded a claimant’s “unequivocal assertion of ownership
establishes Article III standing at this stage of proceedings” and held the district
court erred by considering the claimant’s alleged prior inconsistent statements to
negate his assertion of ownership at the pleading stage. See id. at 1043.
The Government argues on appeal that Shumake had actual notice of the
judicial forfeiture proceedings under Supplemental Admiralty and Maritime Claims
Rule G(4)(b)(v) such that his claim was untimely. In the Government’s first motion
for default judgment, the district court found Shumake did not receive direct notice
of the judicial forfeiture proceedings and denied default as to Shumake on that basis.
The Government contends the district court erred because it did not consider
knowledge Shumake allegedly had before the Government filed its complaint. But
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whether Shumake filed a claim in the prior administrative proceeding, or whether
his attorneys had discussions with the Government before it filed its complaint that
initiated the judicial forfeiture proceeding, does not establish Shumake’s actual
knowledge of this judicial forfeiture proceeding under Supplemental Rule
G(4)(b)(v). As currently developed, the record does not indicate Shumake had actual
knowledge under Supplemental Rule G(4)(b)(v). Therefore, the district court did not
abuse its discretion in denying the Government’s first motion for default as to
Shumake.
Accordingly, we AFFIRM the default judgments as to IHRC and Flint.
Because the district court abused its discretion by granting the Government’s motion
to strike Shumake’s claim, we REVERSE that order and the subsequent default
judgment entered against Shumake, and REMAND the case for further proceedings
with respect to Shumake’s claim. Each party shall bear its own costs on appeal.
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