United States v. $100,000.00 In U.S. Currency ( 2020 )

O 1 2 3 4 5 6 7 8 United States District Court 9 Central District of California 10 11 UNITED STATES OF AMERICA, Case No. 2:19-cv-08296-ODW (JPRx) 12 Plaintiff, 13 ORDER GRANTING v. MOTION FOR DEFAULT 14 JUDGMENT [18] 15 $100,000.00 IN U.S. CURRENCY, 16 Defendant. 17 18 I. INTRODUCTION AND BACKGROUND 19 On September 25, 2019, Plaintiff United States of America initiated this in rem 20 forfeiture action pursuant to 18 U.S.C § 981(a)(1)(C) and 21 U.S.C. § 881(a)(6). 21 (Compl. ¶ 1, ECF No. 1.) Through this action, the government seeks forfeiture of 22 $100,000.00 in currency seized by law enforcement officers during a traffic stop in 23 Chino Hills, California, on or about June 29, 2018. (Compl. ¶¶ 5, 8–24.) The 24 government alleges that the “defendant currency represents or is traceable to proceeds 25 of illegal narcotic trafficking, was intended to be used in one or more exchanges for a 26 controlled substance or listed chemical, or was used or intended to be used to facilitate 27 a controlled substance or listed chemical violation, in violation of 21 U.S.C. § 841 et 28 seq.” (Compl. ¶ 26.) The government asserts that the defendant currency is therefore 1 subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6). (Compl. ¶ 26.) The government 2 also alleges that the “defendant currency constitutes or is derived from proceeds 3 traceable to a controlled substance violation, a specified unlawful activity as defined in 4 18 U.S.C. §§ 1956(c)(7)(A) and 1961(1)(D).” (Compl. ¶ 28.) The government asserts 5 that the defendant currency is therefore also subject to forfeiture pursuant to 18 U.S.C. 6 § 981(a)(1)(C). (Compl. ¶ 28.) 7 The government identified David Zazueta Valenzuela (“Valenzuela”) as having 8 a potential interest in the defendant currency. (Compl. ¶ 7.) The government provided 9 written notice of this action to Valenzuela via certified letter at multiple last known 10 addresses and received delivery confirmation (via signed return receipts) for each letter 11 sent. (Mot. for Default J. (“Mot.”) 2–3, ECF No. 18; Decl. of Victor A. Rodgers 12 (“Rodgers Decl.”) ¶¶ 5–6, Exs. C–G, ECF Nos. 18-1, 18-2.) The government also 13 published Notice of Civil Forfeiture for thirty days pursuant to the Supplemental Rules 14 for Admiralty or Maritime Claims and Asset Forfeiture Actions. (Mot. 1; Rodgers Decl. 15 ¶ 4, Ex. B.) Process was executed on the defendant currency by the United States 16 Marshals Service in accordance with the Supplemental Rules. (Mot. 1; Rodgers Decl. 17 ¶ 3, Ex. A.) On November 5, 2019, the government and Valenzuela through counsel 18 stipulated to extend Valenzuela’s time to file a claim to contest the forfeiture and to 19 answer the complaint. (Stip. to Extend Time 2, ECF No. 10.) That time has expired 20 and Valenzuela has not filed a claim or an answer. (Rodgers Decl. ¶ 7.) Further, the 21 time for filing a claim or answer for all interested parties has expired and no potential 22 claimant has filed a claim or answer. (Mot. 3; Rodgers Decl. ¶¶ 7–9.) 23 On January 9, 2020, the Clerk entered default as to the interests of Valenzuela 24 and all other potential claimants regarding the defendant currency. (Default, ECF 25 No. 16.) On January 30, 2020, the government filed its Motion for Default Judgment 26 (“Motion”). (See Mot.) Pursuant to Local Rule 7-9, any opposition to the government’s 27 Motion was due no later than twenty-one days before the March 2, 2020 hearing date. 28 The Court received no opposition to the Motion. After carefully considering the papers 1 filed in support of the Motion, the Court deemed the matter appropriate for decision 2 without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. (ECF No. 19.) 3 II. LEGAL STANDARD 4 Federal Rule of Civil Procedure (“Rule”) 55(b) authorizes a district court to grant 5 a default judgment after the Clerk enters default under Rule 55(a). Fed. R. Civ. P. 55(b). 6 Before a court can enter a default judgment against a defendant, the plaintiff must satisfy 7 the procedural requirements set forth in Rules 54(c) and 55, as well as Local Rules 55-1 8 and 55-2. Local Rule 55-1 requires that the movant submit a declaration establishing: 9 (1) when and against which party default was entered; (2) identification of the pleading 10 to which default was entered; (3) whether the defaulting party is a minor or incompetent 11 person; (4) that the Servicemembers Civil Relief Act, 50 U.S.C. § 3931, does not apply; 12 and that (5) the defaulting party was properly served with notice, if required under 13 Rule 55(b)(2). C.D. Cal. L.R. 55-1. 14 If these procedural requirements are satisfied, a district court has discretion to 15 enter default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). “[A] 16 defendant’s default does not automatically entitle the plaintiff to a court-ordered 17 judgment.” PepsiCo, Inc., v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal 18 2002). In exercising discretion, a court considers several factors (the “Eitel Factors”): 19 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s 20 substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning 21 material facts; (6) whether the default was due to excusable neglect, and 22 (7) the strong policy underlying the [Rules] favoring decisions on the merits. 23 24 Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). The Court need not make 25 detailed findings of fact in the event of a default judgment. See Adriana Int’l Corp. v. 26 Thoeren, 913 F.2d 1406, 1414 (9th Cir. 1990). Generally, after the Clerk enters default, 27 the defendant’s liability is conclusively established, and the well-pleaded factual 28 allegations in the complaint are accepted as true, except those pertaining to damages. 1 TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (per curiam) 2 (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). 3 III. DISCUSSION 4 Having reviewed the filings in this action, the Court is satisfied that the 5 government has met all procedural requirements for obtaining a default judgment 6 against the interests of Valenzuela and all other potential claimants. Notice was 7 adequately served and published. The time for filing a claim or an answer has expired 8 and no claims or answers have been filed. The government has satisfied the procedural 9 requirements of FRCP 55 and Local Rule 55-1: (1) the Clerk entered default against the 10 interests of Valenzuela and all other potential claimants on January 9, 2020; (2) no 11 potential claimants responded to the Verified Complaint; (3) Valenzuela is not an infant 12 or incompetent person; and (4) Valenzuela is not in the military, so the Service Members 13 Civil Relief Act does not apply. (See Default; Rodgers Decl. ¶¶ 9–12.) 14 Further, the Court finds that on balance the Eitel factors weigh in favor of 15 granting the government’s Motion. The allegations establish that the defendant 16 currency represents or is traceable to proceeds of illegal narcotic trafficking or was 17 intended to be used in one or more exchanges for a controlled substance or listed 18 chemical, in violation of 21 U.S.C. § 841, et seq., rendering it subject to forfeiture 19 pursuant to 21 U.S.C. § 881(a)(6). The allegations further establish that the defendant 20 currency constitutes or is derived from proceeds traceable to a controlled substance 21 violation, rendering it subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(C). In 22 light of the well-pleaded allegations in the FAC and no claims having been filed, the 23 government’s interest in an efficient resolution of the case outweighs any potential 24 claimant’s interest in adjudication on the merits. PepsiCo, 238 F. Supp. 2d at 1177 25 (“Defendant’s failure to answer Plaintiffs’ Complaint makes a decision on the merits 26 impractical, if not impossible.”). 27 Having determined that entry of default judgment is appropriate, the Court finds 28 that forfeiture of the defendant currency to the United States for disposition according 1 || to law is proper because it does not “differ in kind from, or exceed in amount, what is 2 || demanded in the pleadings.” Fed. R. Civ. P. 54(c); (Compl. (c)). 3 IV. CONCLUSION 4 For the reasons discussed above, the Court GRANTS Plaintiff?s Motion for 5 || Default Judgment. (ECF No. 18.) A separate judgment will issue. 6 7 IT IS SO ORDERED. 8 9 May 7, 2020 ss 10 Yee “ g 4 at Vat 2 OTIS D. WRIGHT, II UNITED STATES, DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28