even if you assume that new century is not an innocent owner in this case forfeiture of new century security interest based soley on its alleged negligence in not doing enough due diligence violates the eighth amendment excessive fines cla the district court applied the wrong legal standard in evaluating this argument the district court compared the excessiveness of a forfeiture solely to call crime doesn't know what the statute say so that's the case to say that you should also compare it to well what happened is the district court entered a judgment for future which forfeited the entire property to the government which included as you had a junior you had a junior lean i mean that's like any other any other junior league holder except extinguished two centuries junior lean and that's and that's that's the real issue here and that's because you need a loan without having checked the real estate records to see that there were senior governments in this is not why you have the title insurance if that's true your honor that's why the title insurance is there but that doesn't foreclose the possibility that the fact that there is interest doesn't foreclose the possibility that new century might be an innocent owner and this case if you are from the perspective of a new century and if you examine whether this is an excessive fine to new proportionate reason should have standing as a claimant which is what it refers to hear it the reason it's not standing to do so is that if the property is worth what's left make up a figure three hundred fifty thousand dollars and the government says the government's losses are something far less than that then they've the government has as has some kind of over it year which would be disproportionate to its actual damages and that might go twenty junior lien holders including new century minimum that is the argument yes your honor in this case mr khan paid i think about four hundred thousand dollars for the property and that's the amount that the government traced from the proceeds of the fraud to the property was about four hundred thousand dollars at the time new century made  loan there's evidence on the record that the property was appraised at five hundred thousand dollars so and that was back in two thousand and three so there's a gap of at least one hundred thousand dollars there but the the judgment of the district court completely forfeited new centuries junior lean interest it's said that the property is convinced for for the completely to the u s government now even under the case that that the government cites new century would be entitled to the difference between the  governments for the proceeds of the crime which is the four hundred thousand and anything else that they get at the sale and that's the united states versus premises known as seventy seven twenty five unity avenue north case and that case specifically says if there's nothing left over after the government satisfies its lien then the generally hogged holders are out of luck but if any property or proceeds from the sale of the property remain jr lien holders claims may be satisfied from the residual property new century had it had a a mortgage a had a security interest in the property if it's an innocent owner then it's priority is senior to the government if it's not senior to the government it still has a lien on the property and it should be entitled to the difference it should be entitled to the thinking about the austin case which i think was the united states of chris's often the first supreme court case that dealt with the issue and it talks about forfeiture of an owner's property and it's justified by the negligence of the owner and therefore but you have to look you have to look at whether the negligence of the owner warrants that type of punishment but even if you look at this from the from the perspective of the current owner and the statute says claim about the with respect to the innocent owner argument the district court the night new century live trial on the merits in an opportunity to contest the forfeiture of its property interest based on constructive notice from an unseen list pendants the government admits that the that the dispositive issue with respect to the innocent owner defenses whether you apply state or federal law to determine whether a new century was a v f p and this appears to be an issue of first impression in the circuit if you take a look at the which the circuit decided there's no dispute that under the innes under cafe there you have to look at to determine first whether the the owner and in this case i'm talking about the owner of the security interest of the century whether the owner has a valid interest in the property and then second you look to determine whether that interest is for football and the nava case clearly says that clearly shows that illustrates that  claimant can have a valid interest in the property even though it's not b s p if you might recall that case involved a drug dealer named big dechen and he the issue was whether his daughter actually owned property that w gifted to her and the court said that that the daughter even though she did not purchase the property was still had a valid claim that she was still the owner of the property and could assert a she could challenge the forfeiture but at the same time she wasn't of the f t because she didn't purchase the property so that case which shows that that a claimant can have a valid interest in property under state law but still not be a b s p therefore whether someone is a b s p must be decided it or i think i understood you to say that say the house is worth five hundred thousand in your lien is worth four hundred hour or the government's interest in the the the the dirty proceeds are four hundred thousand the houses worth five hundred thousand of the houses sold the government would get one hundred thousand dollars windfall correct and rather than the government getting a windfall you should be able to participate in that and in that windfall to help repair the damage you it well that the the forfeiture judgment and heard by the district court said that the entire property is forfeited to the government and we obviously on appeal is the issue of reopening that judgment to allow us to assert the fences and one of the defenses would be the eighth amendment that we would that that it was an excessive fine to forfeit the entire property to the government given that there were generally holders and therefore we should able to the new century should be able to have a trial on the merits of that defense if we if we agreed with you on this could we say we don't need a new trial on the merits you just need to amend the judgment to say that if and when the property is sold bigger issue here is whether the lives pendants as a matter of law precluded new century from being a b after all for with respect to the knowledge problems with respect to the knowledge drawing the district court held that the list pendants as a matter of law precluded new century from satisfying and if you look at the round hill case which this court decided and the paradise valley case those cases both show that i was pendants does not as a matter of law give knowledge of of the of the underlying forfeiture litigation what it does is it makes it more likely that the claimant had knowledge of the underlying forfeiture action and therefore that's a question of fact a new century to be able to have a trial on the merits of that claim which that which the judge concluded with respect to the johnson letter the court applied the wrong standard in saying that the johnson letter raised a red flag that the property was somehow related to improper behavior that's not the correct standard to correct standard is whether the improper behavior would have subjected the property to forfeiture because the court applied the wrong standard in that respect and i thought that the that the court used of the johnson letters to try to get around th timeliness problem here is trying to get around the sixty the problem trying to determine whether or not we had excusable neglect and failing to come forward in a timely fashion they talked about that as well i don't know whether it was from from a timeless perspective but the court talked about the johnson letter into aspects of the opinion and and the first was with respect to whether new century should have known that the property was subject to forfeiture because the johnson letter said that tony kohn was transferring the property to his aunt  for a lot of this property to close they did they did it on august seventh so they ran the first title check when the loan it was it was apparent the information is only good up through july twenty first that's correct so why didn't they update it they closed another week later  first american issued the title insurance did conduct a final title search and didn't find the i think the index is one of posting on a website or something with the indexing it's the physical records that the title at the recorder's office ok if they've been taken care of business they would have gone to the index then they would have seen that that there was this filing of record for the for the loan closed first american did what every title company in orange county does so they do that at their peril apparently this case is any any experimental but if they were if they were really doing it right that's why they have an index so the before it closes they can go and check and see there's a last minute filings the evidence on the record is that it's financially impractical and physically now but even if even if the first american had done the title search on the true closing that they anticipated the closing date would be august seventh if they had done it on august fourteenth they still wouldn't have discovered in the in the in their title plan they wouldn't of discovered it was fourteenth they would have picked up and had the index on on july thirtieth if they had physically gone to the recorder's office to look at the end x that's true but the evidence on the record is that it's it's virtually impossible for them in every case  involved in the fraud was a joint application it was a joint application yeah you know with respect to the due process starting out there's no dispute that the government did comply with the technical notice notice requirement by publication but so of the plaintiffs in the millennium versus central hanover bank and trust company that the supreme court decided that such notice is still deficient if it is not reasonably calculated to reach those who could be easily informed by other means now in this case the government published notice of the the forfeiture on august twenty seventh and then a few times after that and on that date new century had a recorded interest in the property and could easily have been informed by  bird back on the government to go through the title search it's the same thing that they're trying to put on us exactly right that if they're going to give notice of a forfeiture they should they should do what the supreme court says and and give notice to those at the addresses that they can reasonably find on the excusable neglect argument again the court of used its discretion because it apply the wrong standard the court did not apply all the pioneer files the pioneer factors it denied relief based so at any rate the courts apply the wrong standard in hand and in not applying all the pioneer factors and and also apply the wrong standard with respect to bad faith you mention you want to reserve a couple of minutes and you've got to around the be around the california recording law but if new century work to prove that it was an innocent owner the statute says it's interest shall not be forfeited so at that point the list pendants on the recording would be would be completely irrelevant forfeiture judgment and cannot be characterized as a bona fide purchaser new century seems that california large determines its ownership interest what is conspicuously absent however from its argument is any analysis under california law and that's because when you go to california law california law says and we'll probably cases we look to the recorder's statutes the recording system  new century acquired its property interest on august fourteenth the eighth amendment case analysis says that he century would like the court to undertake puts the eighty four you'll see that anybody describing an interest with very broadly described people who are applying it doesn't say somebody has an ownership interest maybe you want to argue that there's an article three problem here and that we have a standing question but that's not what the statutory language  believe it's a statutory standing however because they do have to establish that they have statutory standing and you have statutory standing they have to be an instant owner additionally if well then i'm ok i'm i'm looking i'm looking at has recognized congress has specifically stated that they will recognize for after acquired interests in other words interests that are wise after the criminal act giving rise to forfeiture they are going to recognize but in any event returning to the eighth amendment claim the eighth amendment even assuming that they can raise that as a challenge here it doesn't apply because the government trades one hundred percent of the purchase price property sells for less than what the property is worth i want to be certain that we're distinguishing between if the purchase if the initial purchase of the property was paid for one hundred percent a portion of the property was purchased with ill gotten gains then yes then there would be something left left over because then with there would be a portion of the property that the government perhaps would not be forfeiting i'm assuming for the sake of the argument that that would be the case in other words that we would have co mingling feel gotten gains and legitimate funds both are used to purchase the property then there might be something left for junior lien holders however that is not the case here and keep in mind as well that this isn't in ram action so we're looking at the guilt if you would of the property the property was purchased one hundred percent with ill gotten gains so there is nothing left with which to pay the junior lien holders because out of the appreciation that just don't take that into account the government's entitle to that appreciation not only would that be property traceable to the proceeds but therefore any appreciation of that in the value of the property properly belongs to the government yes yes driver and if you it makes sense because otherwise let's say we didn't have a cash out equity loan in this instance then what we have and we have the wrongdoer here saying well i'm going title to all the appreciation in the property no they would say you are not because just because you happen to invest and gotten gains wisely doesn't mean you're entitled to keep those proceeds forfeited because it was purchased with the proceeds of a new look hans toni khan's father aircraft parts fraud scheme and then he goes on to state forfeiture of property bought with proceeds from criminal activities not a violation of th one of the other issues that i just wanted to clarify is that in the novel opinion the court did look to state law in that case montana state law just to determine the claimants ownership interest in the property the reason that the court never reached the bona fide purchaser issue was because they were looking at me the other provision of the innocent owner defense the one that applies to interests that are that someone preexisting interest the property could be gifted to you could inherit the property but here we're talking about after acquired interest and then you must be a bona fide purchaser for value that is why the n court did not discussion the f p because the daughter had a preexisting interest and the property that was subject to forfeiture and additionally i would also point out that that was a criminal for the church case so therefore only the defendant's interest in the property was subject to forfeiture as opposed to an in rem action which again looks to the property itself as the the guilty or innocent being the relevant issue indexes but then they run the risk of missing they know that there is at least here there was and in excess apparently of the two we lag time between the time that the and that the lose pendens was recorded in index in the time that it posted at their title plant they are well aware of that and it's a risk that they take and evidentally it is more cost effective for them to occasionally have to pay out than it would be to have the manpower to go down and look through the indexes however it is a cost that title companies can absorb and spread through the premiums that they charge their insurance and it i just lost my train of thought i'd take it is there another question to ask you are you going to tell me again why they would be entitled to some hearing where they can attempt to show that the forfeiture was disproportionate from the standpoint of the of the cons not from standpoint of their own wrongdoing as they don't really have any wrongdoing but from from the standpoint of the gravity of the crime in relation to the what's being seized well first again i would state that they need to have a legally co ownership interest in the property and in order to do that they would have to be an innocent owner stabs at their innocent owner and i don't think that they can do that but putting that issue aside  that fact was already established in the motion for summary judgment and other works what the fact that the that was not disproportionate that one hundred percent of the proceeds  there's a it once you decide that these are proceeds there's no more proportionality this we're saying instrumentality of a crime you know it's a car used in a crime that's a different story precisely and if you're talking about proceeds there's nothing there's nothing proportional about it's like to say if you can't keep the money you steal from the bank exactly your honor that is exactly correct and in fact that would be how you would distinguish full facilitation cases such as the austin case because then that would be a property residence the claimant legitimately purchased a residence the loan proceeds were one hundred percent repaid therefore you were looking at legitimately earned proceeds and all of those circumstances and eighth on the proceeds argument if you take a look at the thurmond case that case specifically held that even though the time that there was two hundred thousand dollars worth of fraudulent proceeds that the claimant obtained the court remanded it's rated terminations to whether forfeiture of the entire amount of the proceeds was was violated the eighth amendment and that's the same thing here is that you've got you may have proceeds but that doesn't mean that it's automatically that their record invision that in thurman that the wrong we have to measure it as of the time that the government forfeits this at the time the government forfeits this and that would be then there would be appreciation on the property i guess i'm not i i'm not sure property to appreciate is i'm sorry it's their property that's appreciating think your claim is that the property was purchased for what four hundred thousand dollars correct in one year about two thousand and the government doesn't forfeit it until two thousand and four correct two thousand and three two thousand and three is the forfeiture and that might have been statute says grossly disproportionate so that ordinary ordinary prescience in the property to still be grossly disproportionate the cases also say that that you have to look to the culpability of the claimant and in this case new century is the claimant and they don't have the culpability and so to forfeit their security interest as the as even a junior league holder would would be considered in making that determination on all of the factors in this case the the this record only essentially applied one factor and that was he looked at the crime and that was it but you need to look at the whole multitude of factors that just really quickly with respect you're really out of time ok thank you and thank you ms well thank you as well the case just argued that is submitted for stand