United States v. JP Morgan Chase Bank Account ( 2016 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 14-16070
Plaintiff-Appellee,
D.C. No.
v. 2:12-cv-00155-MHB
JP MORGAN CHASE BANK
ACCOUNT NUMBER ENDING OPINION
8215 IN THE NAME OF LADISLAO
V. SAMANIEGO, VL:
$446,377.36; JP MORGAN
CHASE BANK ACCOUNT
NUMBER ENDING 7058 IN THE
NAME OF MANUEL CASTRO, VL:
$361, 070.25,
Defendants,
LADISLAO V. SAMANIEGO;
MANUEL CASTRO,
Claimants-Appellants.
Appeal from the United States District Court
for the District of Arizona
Michelle H. Burns, Magistrate Judge, Presiding
Argued and Submitted May 4, 2016
Pasadena, California
Filed September 1, 2016
2 UNITED STATES V. SAMANIEGO
Before: RAYMOND C. FISHER, MILAN D. SMITH, JR.,
and JACQUELINE H. NGUYEN, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY*
Civil Forfeiture
The panel reversed the district court’s summary judgment
in favor of the government in claimants’ challenge to the
government’s seizure of two J.P. Morgan Chase bank
accounts in a civil asset-forfeiture action, and remanded for
further proceedings.
Claimants Ladislao Samaniego and Manuel Castro
opened the two bank accounts which the government seized,
based on the government’s belief that the accounts were used
in money laundering connected to the illegal drug trade. The
district court held that claimants had not demonstrated a
property interest in the seized funds sufficient to confer
standing.
The panel held that claimants had standing to proceed
past summary judgment and challenge the government’s
forfeiture action, but did not address the merits of their claims
or preclude the district court from re-examining Article III
standing at a later date, in light of additional evidence.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. SAMANIEGO 3
The panel held that claimants set forth sufficient evidence
for a reasonable factfinder to conclude that they had Article
III standing to challenge the forfeiture. The panel held that in
light of claimants’ self-contradictory claims and shifting legal
theories, the district court did not err by holding that
claimants failed to provide indicia of their own ownership of
the funds sufficient to defeat summary judgment, but
claimants demonstrated a possessory interest in the funds
sufficient to defeat summary judgment. Specifically, the
panel held that, viewing the evidence in the light most
favorable to claimants, claimants’ explanation of their
respective possessory interests in the seized funds, coupled
with supporting evidence in the form of declarations,
deposition testimony, bank records, and other evidence,
raised a material dispute of fact for trial.
The panel also held that claimants provided sufficient
evidence of possessory interests to confer prudential standing.
COUNSEL
Taylor Clarke Young (argued) and Robert A. Mandel,
Mandel Young PLC, Phoenix, Arizona, for Claimants-
Appellants.
Monica N. Edelstein (argued), Assistant United States
Attorney; Mark S. Kokanovich, Deputy Appellate Chief;
John S. Leonardo, United States Attorney; United States
Attorney’s Office, Phoenix, Arizona; for Plaintiff-Appellee.
4 UNITED STATES V. SAMANIEGO
OPINION
M. SMITH, Circuit Judge:
Ladislao Samaniego and Manuel Castro (collectively,
Claimants) challenge the government’s seizure of two J.P.
Morgan Chase bank accounts in a civil asset-forfeiture action.
One account, totaling $446,377.36, was held in the name of
Samaniego; the other, totaling $361,070.25, in the name of
Castro. In a verified complaint seeking forfeiture, the
government contends that Claimants unlawfully used the
accounts to launder money connected with illicit drug
proceeds.
Claimants answered and filed verified claims in response
to the complaint, alleging that they held ownership and
possessory interests in the seized funds sufficient to confer
standing. The parties filed cross-motions for summary
judgment.1 The district court entered judgment in favor of the
government, holding that Claimants failed to produce
adequate evidence of their Article III and prudential standing
to contest the forfeiture. We reverse.
STANDARD OF REVIEW AND JURISDICTION
We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review summary judgment determinations de novo. Wright v.
1
The government captioned its motion as a “motion to strike”
Claimants’ answer and verified claims for lack of standing. However, it
presented the motion as the equivalent of a motion for summary judgment.
See Fed. R. Civ. P. G(8)(c)(ii)(B). On appeal, we review the district
court’s decision as a grant of “summary judgment” and refer to it as such
in our opinion.
UNITED STATES V. SAMANIEGO 5
Incline Vill. Gen. Improvement Dist., 665 F.3d 1128, 1133
(9th Cir. 2011). Summary judgment is appropriate when,
viewing the evidence in the light most favorable to the
nonmoving party, “there is no genuine dispute as to any
material fact.” Fed. R. Civ. P. 56(a); see also Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986). A genuine dispute of
material fact exists if “there is sufficient evidence favoring
the nonmoving party for a jury to return a verdict for that
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249–50 (1986).
Because this appeal concerns a civil forfeiture matter,
summary judgment procedures are construed “in light of the
statutory law of forfeitures, and particularly the procedural
requirements set forth therein.” United States v. Currency,
U.S. $42,500.00, 283 F.3d 977, 979 (9th Cir. 2002).
Forfeiture proceedings are governed by statute and by the
Supplemental Rules for Admiralty or Maritime Claims and
Asset Forfeiture Actions of the Federal Rules of Civil
Procedure. See 18 U.S.C. § 983(a)(4)(A). The relevant rules
provide that the government may move to strike a claim or
answer for lack of standing. Fed. R. Civ. P. G(8)(c)(i)(B).
Such a motion “may be presented as . . . a motion to
determine after a hearing or by summary judgment whether
the claimant can carry the burden of establishing standing by
a preponderance of the evidence.” Id. G(8)(c)(ii)(B).
FACTS AND PRIOR PROCEEDINGS
Ladislao Samaniego is the general manager and minority
shareholder of a Mexican currency-exchange business called
Centro Cambiario Sonorense, formerly Casa de Servicios de
California (CSC). Samaniego and his longtime acquaintance
Manuel Castro, both residents of Mexico, opened the two
6 UNITED STATES V. SAMANIEGO
bank accounts that are the subject of this action as a result of
CSC’s business relationship with a company called Fruteria
Welton.
Fruteria Welton is a Mexican grocery company with
stores along the U.S.-Mexican border. In the course of its
daily operations, Fruteria Welton acquires large amounts of
Mexican and U.S. currency. Fruteria Welton, along with a
related company Distribuidora Welton (collectively, Welton),
is owned in part by Jorge Salas Alvarez. Welton enlisted the
services of CSC to count, record, and deposit the currency
that it acquired.
Samaniego considers Salas Alvarez his compadre, a term
used to denote a close friend who holds the near-familial
status of a godfather.2 Through an agreement with Salas
Alvarez that has lasted seventeen years, CSC (and by
extension, Samaniego) was permitted to use the currency it
collected for its own purposes, as long as Welton did not
require immediate use of the funds. CSC and Samaniego were
also entitled to retain any profits arising from their temporary
use of the funds. This longstanding arrangement was oral in
nature.3 In this way, Samaniego alleges, he and CSC accrued
2
See United States v. Salcido, No. CR09-01878, 2010 WL 2044468, at
*3 n.4 (D. Ariz. Mar. 12, 2010) (“In Mexican culture the padrino of a
child and the child’s father refer to one another as compadre, a sign of
respect for each other as benefactors and protectors of the child.” (citing
Appleton’s New Cuyas English-Spanish and Spanish-English Dictionary
(1972))).
3
Claimants substantiated the existence and nature of this business
relationship through sworn declarations from Samaniego and Salas
Alvarez.
UNITED STATES V. SAMANIEGO 7
a debt of roughly one million dollars to Welton, which
required eventual repayment.
After Mexico enacted tighter restrictions on the maximum
amounts of U.S. currency that could be deposited in Mexican
banks, Samaniego endeavored to help Salas Alvarez transport
Welton’s excess U.S. currency across the border for deposit
in U.S. banks. Samaniego claims he did it as a personal favor
for Salas Alvarez, and without compensation, in order to
“avoid having [his] compadre’s daughter being robbed along
the way.” To better perform this function, Samaniego enlisted
the help of his longtime acquaintance Manuel Castro. Castro
was not formally engaged by Welton or CSC, but, from time
to time, Samaniego would pay Castro one hundred dollars for
his help in making deposits into the two seized accounts.
On May 31, 2011, Samaniego and Castro visited a Chase
branch in Arizona to open a personal bank account held in
Castro’s name. On June 7, 2011, Samaniego also opened a
personal Chase bank account under his own name in which
both he and Castro deposited excess funds from Welton.
Samaniego announced that the purpose of the bank accounts
was to “accumulate all the money that [he] owe[d] to Jorge
Salas in order to pay him.” Castro echoed that the money in
the accounts belonged to Welton, and was being set aside to
repay a debt to Welton. Collectively, these two bank accounts
are the subject of the current forfeiture action.
On August 22, 2011, the government seized the two bank
accounts opened by Claimants, based on the belief that the
accounts were used in money laundering connected to the
illegal drug trade. The government then filed a verified
complaint for forfeiture of the two accounts. Claimants
responded by filing an answer and verified claims. Following
8 UNITED STATES V. SAMANIEGO
a round of discovery and briefing, the government moved for
summary judgment.4 The district court granted the
government’s motion, holding that Claimants had not
demonstrated a property interest in the seized funds sufficient
to confer standing. Claimants filed a motion for
reconsideration. which the district court denied.5 This timely
appeal followed.
ANALYSIS
I. Claimants’ Article III Standing
To satisfy constitutional standing requirements under
Article III, a claimant contesting the government’s civil
forfeiture action must show “sufficient interest in the property
to create a case or controversy.” United States v. Real Prop.
Located at 475 Martin Lane, 545 F.3d 1134, 1140 (9th Cir.
2008) (quotation marks omitted); see Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560–61 (1992). This showing need
only constitute “a colorable interest” in the seized funds,
generally through the demonstration of an ownership or
possessory interest in the property. United States v.
$133,420.00 in U.S. Currency, 672 F.3d 629, 637 (9th Cir.
2012) (quotation marks omitted). “[A]n owner or possessor
of property that has been seized necessarily suffers an injury
that can be redressed at least in part by the return of the
4
As noted earlier, supra note 1, the government styled its motion for
summary judgment as a “motion to strike” Claimants’ answer and verified
claims for lack of standing. See Fed. R. Civ. P. (G)(8)(C)(ii)(B).
5
Because we reverse the judgment, we do not dwell on Claimants’
challenge to the denial of their motion for reconsideration.
UNITED STATES V. SAMANIEGO 9
seized property.” Id. at 638 (quoting United States v.
$515,060.42, 152 F.3d 491, 497 (6th Cir. 1998)).
The precise “manner and degree of evidence required” to
demonstrate standing will vary according to the stage of
litigation. Id. (quoting Lujan, 504 U.S. at 561). A claimant at
the summary judgment phase must offer supporting evidence.
Id. This evidence may take the form of affidavits alleging
specific facts, coupled with the claimant’s possession of the
property when it was seized. Id. at 639. Although a claimant
need not prove standing by a preponderance of the evidence
to survive summary judgment, a court must determine that “a
fair-minded jury could return a verdict for [the claimant] on
the evidence presented.” Liberty Lobby, 477 U.S. at 252. That
is, the evidence set forth must be sufficient for a reasonable
factfinder to conclude that the claimant has standing to
challenge the forfeiture. See Fed. R. Civ. P. G(8)(c)(ii)(B).
A. Ownership Interest
A claimant’s “unequivocal” assertion of ownership in the
seized property, along with physical possession of the
property at the time of seizure, can overcome the summary
judgment hurdle. $133,420 in U.S. Currency, 672 F.3d at 639.
However, Claimants’ ownership claims have been repeatedly
controverted through their own deposition testimony and
other record evidence. The district court did not err when it
found Claimants’ assertions of ownership to be no more than
back-pedaling, “late-in-the-day declarations” insufficient to
create a genuine dispute as to the ownership of the funds.
At various times, Claimants have asserted conflicting
interests in the seized funds. For example, Claimants stated
10 UNITED STATES V. SAMANIEGO
in their verified claims that the funds “belong[ed] to them.”6
During his deposition, however, Samaniego declared that “the
money that was seized doesn’t belong to us. It belongs to
Fruteria and Distribuidora Welton, and we need to pay it
back.” Castro’s deposition testimony confirmed that the funds
“belonged” to Welton. When asked why they did not open the
accounts in Welton’s name, Samaniego responded that “it
was our full intention to change the names on both accounts
. . . [b]ecause the money belonged to them.”
The record reveals other instances when Claimants
disavowed legal ownership. In their answers to the forfeiture
complaint, Claimants expressly “admit[ted] that Samaniego
and Castro transported U.S. dollars belonging to Fruteria
Welton or Distribuidora Welton into the United States.”
Moreover, in the Currency or Monetary Instrument Reports
that Samaniego filed with U.S. officials at the border, he
represented that he was transporting the currency on behalf of
Welton or, at times, CSC.
In a subsequent declaration, Samaniego reasserted his
ownership interest in the funds. He claimed that “[b]ecause
. . . the Seized Funds were sourced from Welton and would
. . . eventually be repaid to Welton, [he] at times referred to
them as Welton funds. . . . [S]uch a characterization does not
mean—and has never meant—that [he and] CSC lacked an
ownership and possessory interest in the funds.” To
6
Verification, in this context, means that Claimants have submitted
sworn pleadings in support of their claims, and specified the property
claimed and the nature of their interest in the property. See Fed. R. Civ. P.
G(5)(a)(i). This procedural requirement serves to protect against the
proliferation of false claims in asset-forfeiture proceedings. See Stefan D.
Casella, Asset Forfeiture Law in the United States § 7-13(c), at 313 (2d ed.
2013).
UNITED STATES V. SAMANIEGO 11
complicate matters, Samaniego, in his declarations, adopted
the shorthand of “CSC” to refer collectively to both himself
and CSC.
A claimant must “make clear whether he is asserting a
possessory interest, an ownership interest, or something else.”
Id. at 640 (quotation marks omitted) (holding that a
claimant’s bare allegation of “ownership and/or a possessory
interest” was lacking specificity and insufficient to survive
summary judgment); cf. Kennedy v. Allied Mut. Ins. Co.,
952 F.2d 262, 266–67 (9th Cir. 1991) (discounting a “sham”
affidavit when the district court found that it “flatly
contradicts earlier testimony in an attempt to ‘create’ an issue
of fact and avoid summary judgment”). In light of Claimants’
self-contradictory claims and jumble of shifting legal
theories—alternatively alleging ownership on the part of
Welton or CSC or Claimants—the district court did not err by
holding that Claimants failed to provide indicia of their own
ownership of the funds sufficient to defeat summary
judgment.
B. Possessory Interest
However, Claimants may still demonstrate a possessory
interest in the funds that is short of ownership. A possessory
interest involves “[t]he fact of having or holding property in
one’s power; the exercise of dominion over property.”
Possession, Black’s Law Dictionary (10th ed. 2014). Unlike
an ownership interest, a possessory interest arises even if the
claimant is merely “holding the item for a friend” who has
temporarily transferred control of the item to the claimant for
safekeeping. United States v. $191,910.00 in U.S. Currency,
16 F.3d 1051, 1058 (9th Cir. 1994), superseded by statute on
other grounds as stated in United States v. $80,180.00 in U.S.
12 UNITED STATES V. SAMANIEGO
Currency, 303 F.3d 1182, 1184 (9th Cir. 2002). If the item
were seized, the claimant would suffer injury to that
possessory interest. Id.In forfeiture proceedings, we have acknowledged that the
risk of false claims “requir[es] courts to demand more than
conclusory or hearsay allegations of some ‘interest’ in the
forfeited property.” United States v. $100,348.00 in U.S.
Currency, 354 F.3d 1110, 1118–19 (9th Cir. 2004) (quotation
marks and alteration omitted). Neither naked possession nor
bare title, standing alone, will do. Rather, a claimant must
offer some additional explanation concerning his “lawful
possessory interest in the money seized.”7 $133,420.00 in
U.S. Currency, 672 F.3d at 639 (quoting United States v.
$321,470.00, 874 F.2d 298, 303 (5th Cir. 1989)). Therefore,
at the summary judgment phase, claimants alleging a
possessory interest must set forth supporting evidence along
with some explanation of how they came into possession of
the seized property. Id.7
By “lawful possessory interest,” we do not mean that a claimant must
prove that his possession is lawful, which is an inquiry better left for the
merits stage of an asset-forfeiture action. See United States v. Hooper,
229 F.3d 818, 820 n.4 (9th Cir. 2000); United States v. Funds in the
Amount of $239,400, 795 F.3d 639, 647 (7th Cir. 2015). Instead, a
claimant must articulate an interest in the property that is recognized by
law. This comports with the principle that, for standing inquiries, the
guiding question is whether the claimant would be injured through the
seizure of the property, even assuming arguendo that the property was
wrongfully seized. See Funds in the Amount of $239,400, 795 F.3d at 645;
United States v. Cambio Exacto, S.A., 166 F.3d 522, 527 (2d Cir. 1999);
United States v. One-Sixth Share of James J. Bulger in All Present &
Future Proceeds of Mass Millions Lottery Ticket No. M246233, 326 F.3d
36, 41 (1st Cir. 2003) (“Courts should not . . . conflate the constitutional
standing inquiry with the merits determination that comes later.”).
UNITED STATES V. SAMANIEGO 13
Viewing the evidence in the light most favorable to
Claimants, we hold that Claimants’ explanation of their
respective possessory interests in the seized funds, coupled
with supporting evidence in the form of declarations,
deposition testimony, bank records, and other evidence, raises
a material dispute of fact for trial.
1. Samaniego’s Possessory Interest
The district court failed to draw all reasonable inferences
in favor of Samaniego when it concluded that only CSC, and
not Samaniego, held a property interest in the funds. In this
case, it is fair to infer from the evidence that CSC and
Samaniego retained a joint interest in the funds. Under this
reading, Samaniego has presented sufficient evidence of a
possessory interest in the bank account bearing his name to
defeat summary judgment.
Here, the relevant evidence primarily took the form of
declarations from Samaniego and Salas Alvarez, a part owner
and manager of Welton. Samaniego declared that the seized
funds were the proceeds of Welton business activities.
Samaniego explained that, for nearly two decades, he and
CSC had collected Welton proceeds and arranged for their
deposit and safekeeping. Salas Alvarez corroborated this
explanation of how the seized funds came into Samaniego’s
possession. Salas Alvarez averred that “[w]hen the armored
car companies deliver these proceeds to CSC [and
Samaniego], [they] take[] title to, possession, and complete
control of the proceeds.”
Under these circumstances, a reasonable jury could find
that Samaniego has presented adequate evidence, and
explanation, of his possessory interest in the funds to confer
14 UNITED STATES V. SAMANIEGO
Article III standing. Moreover, Samaniego presented further
evidence of a “concrete and particularized” injury, see Lujan,
504 U.S. at 560, by repeatedly declaring that he was liable for
the balance on the accounts. As Salas Alvarez acknowledged,
CSC and Samaniego remained “obligated to repay to Welton
the amount of these proceeds at a later date.”
2. Castro’s Possessory Interest
Similarly, we conclude that Castro has set forth sufficient
evidence of a possessory interest in the bank account bearing
his name to survive summary judgment. Like Samaniego,
Castro was the sole individual with signatory authority over
the account in his own name. Although he agreed to manage
the funds at Samaniego’s direction, only Castro was able to
access the funds in the account. In addition, Castro was able
to identify the source and nature of the funds, explaining they
were the proceeds of Welton businesses. Castro presented
evidence that the funds came into his possession through an
arrangement with Samaniego, whereby Castro assumed
safekeeping and control of the funds on Samaniego’s behalf.
Castro has therefore offered adequate evidence and
explanation to distinguish his possessory interest from that of
a simple “unknowing custodian,” $191,910.00 in U.S.
Currency, 16 F.3d at 1058 (quotation marks omitted).
Accordingly, we conclude he has standing to challenge the
forfeiture of the bank account in his name.
II. Prudential Standing
In addition to Article III standing, a claimant must satisfy
the requirements of prudential standing. See United States v.
Lazarenko, 476 F.3d 642, 649–50 (9th Cir. 2006). Prudential
standing consists of “the general prohibition on a litigant’s
UNITED STATES V. SAMANIEGO 15
raising another person’s legal rights, the rule barring
adjudication of generalized grievances more appropriately
addressed in representative branches, and the requirement that
a plaintiff’s complaint fall within the zone of interests
protected by the law invoked.” Id. (quotation marks omitted).
The prudential-standing addendum to the Article III standing
inquiry has fallen into disfavor in recent years. See Lexmark
Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377,
1386 (2014). To the extent it continues to apply, we conclude
that the essential requirements are satisfied here.
First, Claimants do not exclusively “rais[e] another
person’s legal rights.” Lazarenko, at 476 F.3d at 649. They
are not only the titleholders of the accounts in question, but
have articulated colorable possessory interests in the seized
accounts in their own right. For similar reasons, neither do
Claimants raise “generalized grievances more appropriately
addressed in representative branches.” Id. at 650. Rather, the
locus of their injury is the seizure of the accounts. Therefore,
the seizure constitutes an injury that is redressable through
the return of the property.
Finally, Claimants’ challenges “fall[] within the class of
plaintiffs whom Congress has authorized to” assert a claim in
a civil forfeiture action. Lexmark, 134 S. Ct. at 1387. It is
precisely those claimants whose property interests are
impaired by government seizure that Congress meant to
protect through the civil asset-forfeiture laws. See 18 U.S.C.
§ 983(a)(2)(A),(C). As a result, Claimants have provided
sufficient evidence of a possessory interest to confer
prudential standing.
16 UNITED STATES V. SAMANIEGO
CONCLUSION
We hold that Samaniego and Castro have standing to
proceed past summary judgment and challenge the
government’s forfeiture action. However, we do not address
the merits of their claims or preclude the district court from
re-examining Article III standing at a later date, in light of
additional evidence. Accordingly, we REVERSE the
judgment of the district court, and REMAND for further
proceedings.