United States v. Approximately $7,500.00 in U.S. Currency ( 2019 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, No. 2:19-cv-00738-TLN-CKD 12 Plaintiff, 13 v. FINDINGS & RECOMMENDATIONS 14 APPROXIMATELY $7,500.00 IN U.S. CURRENCY, 15 Defendant. 16 17 I. Introduction 18 This case was referred to the undersigned pursuant to Local Rule 302(c)(19) and 28 19 U.S.C. § 636(b)(1). The United States of America (“Government”) brings this in rem action 20 seeking forfeiture, under 21 U.S.C. § 881(a)(6), of the defendant $7,500 (“defendant currency”) 21 as money furnished or intended to be furnished in exchange for a controlled substance. Pending 22 before the court is the Government’s motion for entry of default judgment (ECF No. 12), which 23 was submitted without a hearing under Local Rule 540(d). No opposition has been received. 24 Upon review of the motion, supporting documents, and good cause appearing, the court now 25 issues the following findings and recommendations. 26 II. Background 27 This case is proceeding on the verified complaint for forfeiture in rem (“complaint”) filed 28 April 29, 2019. (ECF No. 1.) The complaint makes the following factual allegations: 1 On or about April 11, 2018, the U.S. Postal Inspection Service seized the defendant 2 currency. (Id. at ¶ 2.) The defendant currency is currently in the custody of the United States 3 Marshals Service. (ECF No. 6.) Also on or about April 11, 2018, law enforcement conducted a 4 postal interdiction operation during which time it identified a parcel that bore characteristics 5 consistent with illegal drug trafficking, including a handwritten shipping label. (ECF No. 1 at 6 ¶ 5.) The package was presented to a dog trained to detect the odor of narcotics. (Id. at ¶ 6.) The 7 dog positively alerted to the presence of the odor of narcotics. (Id. at ¶ 6.) The package was 8 identified as addressed to JR Miller at 3021 East Oro Dam Blvd., Oroville, California 95966 with 9 a return address to Kurtis Miller at 272 Loblolly Circle, Midway, Florida 32343. (Id. at ¶ 5.) 10 On April 11, 2018, law enforcement contacted the sender, Kurtis Miller, who confirmed 11 he sent the package and stated it contained $7,500 in cash for his son Kurtis Miller, Jr. to start a 12 landscaping business. (Id. at ¶ 7.) Kurtis Miller consented to having law enforcement open the 13 package to inspect its contents. (Id. at ¶ 7.) 14 Law enforcement opened the package and discovered an envelope containing a sealed 15 yellow-padded envelope inside of which was a plastic bag with a candy box. (Id. at ¶ 8.) In the 16 candy box was a stack of $7,500 in cash wrapped in cellophane plastic. (Id. at ¶ 8.) 17 Kurtis Miller, Jr. was contacted by law enforcement. (Id. at ¶ 9.) When asked about the 18 package, Kurtis Miller, Jr. stated he was expecting a package from his brother, not his father, and 19 did not know why a narcotics dog would alert on the package. (Id. at ¶ 9.) Kurtis Miller, Jr. did 20 not know his father’s address in Florida and did not know why his father would send cash instead 21 of a check. 22 Kurtis Miller, Sr. has a drug-related history dating back to 2005 that includes conspiracy 23 to distribute and to possess with intent to distribute cocaine base and cocaine, and possession and 24 distribution of marijuana. (Id. at ¶¶ 10–11.) 25 The Government seized the $7,500 under 21 U.S.C. § 881(a)(6) as money furnished or 26 intended to be furnished in exchange for a controlled substance. (Id. at ¶ 14.) 27 Pursuant to order of this court filed May 1, 2019, notice of this action was published on 28 the official internet government forfeiture site and ran for at least thirty 1 consecutive days, as required by Rule G(4)(a)(iv)(C) of the Supplemental Rules of Admiralty or 2 Maritime Claims and Asset Forfeiture Actions. (ECF Nos. 3 (Order for Publication) and 9 3 (Declaration of Publication).) 4 On May 1, 2019, copies of the complaint and related documents were sent by first-class 5 and certified mail to Kurtis Miller, Jr. to his last known address in Oroville, California. (ECF No. 6 12-1 at ¶ 3, Ex. A.) The certified mail envelope was returned as unclaimed on May 30, 2019. 7 (Id.) The first-class mail package was not returned to the Government’s office. (Id.) On May 13, 8 2019, Kurtis Miller, Jr. contacted the Government’s office, confirmed receipt of the documents, 9 and said he does not know anything about the defendant currency. (ECF No. 12-1 at ¶ 4.) The 10 U.S. Marshals Service served real party in interest Kurtis Miller, Jr. with the verified complaint 11 and notice of complaint on May 20, 2019 by leaving it with his brother at his last known address. 12 (ECF No. 7.) 13 On May 1, 2019, copies of the complaint and related documents were sent by first-class 14 and certified mail to Kurtis Miller, Sr. to his last known addresses in Midway, Florida and 15 Tallahassee, Florida. (ECF No. 12-1 at ¶¶ 6–7, Exs. C–D.) The certified mail envelopes were 16 returned showing delivering on May 15, 2019 and May 6, 2019, respectively. (Id.) The U.S. 17 Marshals Service served real party in interest Kurtis Miller, Sr. with the verified complaint and 18 notice of complaint on May 24, 2019 by leaving it with his wife at his last known address. (ECF 19 No. 8.) 20 To date, the deadline for filing a claim passed with no claim or answer being filed by, or 21 on behalf of, Kurtis Miller, Jr. or Kurtis Miller, Sr., as required by Rule G(5) of the Supplemental 22 Rules of Admiralty or Maritime Claims and Asset Forfeiture Actions, to contest this action. (ECF 23 No. 12-1 at ¶ 9.) 24 On July 29, 2019, at the Government’s request, the Clerk of Court entered default as to 25 Kurtis Miller, Jr. and Kurtis Miller, Sr., pursuant to Fed. R. Civ. P. 55(a). (ECF No. 11.) 26 III. Legal Standard 27 “The Due Process Clause of the Fifth Amendment guarantees that ‘[n]o person 28 shall . . . be deprived of life, liberty, or property, without due process of law.’ Our precedents 1 establish the general rule that individuals must receive notice and an opportunity to be heard 2 before the Government deprives them of property.” United States v. James Daniel Good Real 3 Prop., 510 U.S. 43, 48 (1993) (citations omitted). Due process is satisfied when the Government 4 complies with the notice requirements set forth by statute and in the federal and local rules of 5 procedure. 6 Civil forfeitures of real property are governed generally by 18 U.S.C. § 985. Forfeiture 7 actions in rem arising from a federal statute are governed by the Federal Rules of Civil Procedure, 8 Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions 9 (“Supplemental Rule” or “Supp. Rule”). United States v. Real Prop., 135 F.3d 1312, 1315 (9th 10 Cir. 1998); see also Supp. Rule A(1)(B), and Supp. Rule G (setting forth specific procedural and 11 notice requirements). These rules are reflected in the Local Admiralty and In Rem Rules for the 12 U.S. District Court for the Eastern District of California (“Local Rule”), which govern all in rem 13 proceedings filed in this court. See Local Rule 500. Local Rule 540 sets forth the procedures for 14 obtaining default judgment in an action in rem. 15 IV. Analysis 16 Local Rule 540(d) provides for an ex parte hearing and entry of default judgment, without 17 further notice, at any time after the time for answer has expired, provided due notice of the action 18 has been given and no one has appeared to claim the property and give security thereof. The 19 Government has demonstrated compliance with these requirements. 20 A. Notice 21 Supplemental Rule G(4) requires the Government to provide both general notice to the 22 public and direct notice of the forfeiture action to any known person who reasonably appears to 23 be a potential claimant. Fed. R. Civ. P. Supp. G(4)(a), (b). 24 1. Published Notice 25 Rule G(4)(a)(ii) provides that “a published notice must: (A) describe the property with 26 reasonable particularity; (B) state the times under Rule G(5) to file a claim and to answer; and 27 (C) name the government attorney to be served with a claim and answer.” Here, the Government 28 published the required notice of the Government’s Complaint on the official government internet 1 site (www.forfeiture.gov) for 30 consecutive days, beginning on May 2, 2019. (ECF No. 9 2 (Declaration of Publication).) The notice describes the amount of currency ($7,500.00), and 3 location of its seizure (West Sacramento, California), and states that claims and answers under 4 Rule G(5) must be brought within 60 days from the first day the notice is published. (Id.) The 5 notice also names Kevin C. Khasigian as the government attorney to be served with the claim and 6 answer. (Id.) Thus, the government has satisfied the requirements of Rule G(4)(a)(ii). 7 2. Notice to Claimants 8 Rule G(4)(b) sets forth the requirements for notice to known potential claimants. It 9 provides that “[t]he government must send notice of the action and a copy of the complaint to any 10 person who reasonably appears to be a potential claimant on the facts known to the government 11 before the end of the time for filing a claim under Rule G(5)(a)(ii)(B).” Fed. R. Civ. P. Supp. 12 G(4)(b)(i). The notice must state “(A) the date when the notice is sent; (B) a deadline for filing a 13 claim, at least 35 days after the notice is sent; (C) that an answer or a motion under Rule 12 must 14 be filed no later than 21 days after filing the claim; and (D) the name of the government attorney 15 to be served with the claim and answer.” Fed. R. Civ. P. Supp. G(4)(b)(ii). 16 Here, the government complied with this rule by sending notice of the action and a copy 17 of the complaint to the potential claimants, Kurtis Miller, Jr. and Kurtis Miller, Sr., by first-class 18 and certified mail on May 1, 2019. (ECF No. 12-1 at ¶¶ 3, 6–7, Exs. A, C–D.) The mailed 19 notices included copies of the complaint and related documents. (Id. at Exs. A, C–D.) As to the 20 sufficiency of the notices sent by the government, they indicate that the notices were sent on May 21 1, 2019, the notices provide a 35-day deadline for filing a claim and a 21-day deadline for 22 submitting an answer or a motion under Rule 12, and the notices list McGregor W. Scott as the 23 government attorney to be served with the claim and answer. (Id.) 24 Finally, Rule G(4)(b)(iii)(A) provides that “[t]he notice must be sent by means reasonably 25 calculated to reach the potential claimant.” Here, the certificates of service provide that the 26 Government served the complaint for civil forfeiture and notice of this forfeiture action upon 27 Kurtis Miller, Jr. and Kurtis Miller, Sr. by first-class mail and certified mail. (ECF No. 12-1 at 28 Exs. A, C–D.) Both potential claimants were also served at their last known addresses via service 1 on persons of suitable age and discretion then residing at those addresses. (ECF Nos. 7–8.) 2 In sum, the government has adhered to the procedural rules governing civil forfeiture 3 actions as required by federal statute, the Supplemental Rules for Certain Admiralty and Maritime 4 Claims, and the Admiralty Local Rules. The court now turns to whether default judgment is 5 warranted. 6 B. Entry of Default Judgment is Proper 7 Pursuant to Federal Rule of Civil Procedure 55(a), the Clerk is required to enter default 8 when the fact of default is established by affidavit or otherwise. Fed. R. Civ. P. 55(a). The 9 Clerk’s entry of default against Kurtis Miller, Jr. and Kurtis Miller, Sr. effects their admission of 10 the factual allegations of the complaint, except those relating to the amount of damages. Fed. R. 11 Civ. P. 8(b)(6) (“An allegation—other than one relating to the amount of damages—is admitted if 12 a responsive pleading is required and the allegation is not denied”); Geddes v. United Fin. Group, 13 559 F.2d 557, 560 (9th Cir. 1977). 14 The court finds that the well pleaded allegations of the verified complaint state a claim for 15 which relief can be granted. Specifically, accepting as true the factual allegations of the verified 16 complaint, the Government has demonstrated that defendant currency was used or intended to be 17 used, in any manner or part, to commit, or to facilitate the commission of, a violation of 21 U.S.C. 18 §§ 841, et seq. (prohibiting the manufacturing, distributing, dispensing or possessing of a 19 controlled or counterfeit substance), an offense punishable by more than one year’s 20 imprisonment, and therefore subject to forfeiture to the United States pursuant to 21 U.S.C. 21 § 881(a)(7). 22 It remains within the sound discretion of the district court to grant a default judgment 23 pursuant to Federal Rule of Civil Procedure 55(b). Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th 24 Cir. 1980). In making this determination, the court must consider the following factors set forth 25 in Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986): 26 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, 27 (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts, (6) whether the default was 28 due to excusable neglect, and (7) the strong policy underlying the 1 Federal Rules of Civil Procedure favoring decisions on the merits. 2 The Government seeks a final judgment of forfeiture against Kurtis Miller, Jr. and Kurtis Miller, 3 Sr. as potential claimants of the defendant currency, and against all other potential interests. This 4 is consistent with the nature of forfeiture in rem proceedings. See Hanson v. Denckla, 357 U.S. 5 235, 246 n.12 (1958) (explaining that “[a] judgment in rem affects the interests of all persons in 6 designated property”). Application of the Eitel factors supports entry of default judgment. 7 First, the Government would be prejudiced by the denial of its motion, spending 8 additional time and effort litigating an action in which the claimants have abandoned their claims 9 to the defendant currency. Further, given that no party has attempted to oppose the complaint or 10 otherwise make a claim against the defendant currency, if the Government’s motion is not 11 granted, it will have no other opportunity to establish its right to the currency. 12 Second, the Government’s claim appears to have merit. See United States v. Currency, 13 U.S. $42,500.00, 283 F.3d 977, 982–83 (9th Cir. 2002) (holding that an alert provided by a 14 narcotics-detection canine is “an important factor in determining probable cause” and provides 15 evidence of a link between seized money and controlled substances, and that wrapping a package 16 in cellophane is commonly used to “stave off detection by trained drug dogs”). 17 Third, as set forth above, the Government has adhered to the procedural requirements of a 18 forfeiture action in rem, including the filing of a sufficiently verified complaint. Fourth, the 19 defendant currency that was seized and subject to forfeiture is not of such substantial value as to 20 warrant denial of the Government’s motion. Fifth, the potential claimants were properly served 21 with notice of this action and instructions on how and when to enter a claim. No claim or answer 22 has been filed. On the record before this court, there is no evidence of a genuine dispute 23 concerning the material facts. Sixth, there is no evidence that Kurtis Miller, Jr.’s or Kurtis Miller, 24 Sr.’s abandonment was due to excusable neglect. Seventh and finally, although merits-based 25 decisions are always preferred, Eitel, 782 F.2d at 1472, it is not practical here where the potential 26 claimants have abandoned their claims. 27 Accordingly, there is no impediment to default judgment sought by the Government and 28 the court will recommend that the motion be granted. 1} V. Conclusion 2 In accordance with the foregoing findings, IT IS HEREBY RECOMMENDED that the 3 | Government’s motion for default judgment (ECF No. 12) be GRANTED, thus extinguishing any 4 | right, title, or interest in defendant currency of potential claimants, including Kurtis Miller, Jr. and 5 | Kurtis Miller, Sr. 6 These findings and recommendations are submitted to the United States District Judge 7 | assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen days 8 || after being served with these findings and recommendations, the parties may file written 9 | objections with the court and serve a copy on all parties. Such a document should be captioned 10 | “Objections to Magistrate Judge’s Findings and Recommendations.” The parties are advised that 11 | failure to file objections within the specified time may waive the right to appeal the District 12 | Court’s order. Martinez v. Y1st, 951 F.2d 1153 (9th Cir. 1991). 13 || Dated: November 20, 2019 CA rd i / { a4 CAROLYN K DELANEY 15 UNITED STATES MAGISTRATE JUDGE 16 17 18 | 15 USA738.default.f&r 19 20 21 22 23 24 25 26 27 28