Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_01-cv-02127/USCOURTS-caed-2_01-cv-02127-6/pdf.json

Nature of Suit Code: 625
Nature of Suit: Drug Related Seizure of Property
Cause of Action: 28:1345 Replevin &amp; Conversion

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

NO. CIV. S-01-2127 LKK/GGH

Plaintiff,

v. O R D E R

REAL PROPERTY LOCATED 18025

N. QUARTZ MOUNTAIN ROAD, AMADOR

COUNTY, FIDDLETOWN, CALIFORNIA,

APN: 015-320-019-000, INCLUDING

ALL APPURTENANCES AND IMPROVEMENTS

THERETO,

Defendant.

 /

WILLIAM LOCKYER and WILLIAM OLSON,

Claimants.

 /

Pending before the court are claimants William Lockyer and

William Olsen’s (“claimants”) motion to set aside a final judgment

of forfeiture pursuant to Fed. R. Civ. P. 60(b). The court granted

the government time to conduct depositions of claimants and the

government has now presented the court with an amended opposition

Case 2:01-cv-02127-LKK -GGH Document 88 Filed 02/01/06 Page 1 of 15
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26 1 Adopted from the parties’ papers. 

2

to claimants’ motion. For the reasons set forth below, the court

grants claimants’ motion. 

I.

BACKGROUND FACTS1

On October 2, 2001, a state search warrant was executed at

18025 N. Quartz Mountain Road, Amador County, Fiddletown,

California, by law enforcement officers from the Amador County

Sheriff’s Department. Both William Olsen and William Lockyer lived

at this address. After being told that he was not under arrest and

that a search warrant was being executed on his property, Lockyer

told the officers that he grew marijuana for medical purposes and

had certificates that permitted him to grow marijuana under

California law. Lockyer estimated that he had a little less than

300 plants on the property and had prescriptions that covered all

the plants. 

Law enforcement officers searched the 33-acre property. 

According to the government’s complaint, the officers found 573 

adult female marijuana plants. The complaint also states that

officers discovered additional evidence of growing operations and

other paraphernalia used to cultivate marijuana. A .38 caliber

firearm was also discovered in the residence. 

On November 20, 2001, the government commenced forfeiture

proceedings against the real property pursuant to 21 U.S.C. 

§ 881(a)(7), alleging that the property was used to facilitate

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2 Also forfeited was $28,467.63 from local bank accounts and

$102,000 from a Hawaii bank account, as well as a small apartment

in Hawaii that claimants had purchased for $70,000. 

3

violations of 21 U.S.C. § 841 (a). Claimants retained William

Panzer as their attorney. Claimants filed an answer contesting the

forfeiture, as did a lienholder, First Nationwide Mortgage

Corporation. 

Both parties agree that Panzer’s conduct during the original

forfeiture proceedings constituted gross negligence. Among other

things, Panzer misled his clients, failed to respond to discovery

requests, consistently missed court appearances and court imposed

deadlines and did not file oppositions to government briefs. 

After multiple warnings by the court, the magistrate judge

entered an order imposing monetary sanctions upon Panzer and

recommending that the claims of Lockyer and Olson be stricken. On

July 28, 2004, Judge David F. Levi entered an order adopting the

findings and recommendations of the magistrate judge.

On September 17, 2004, the government and First Nationwide

entered into a stipulation providing for a final judgment of

forfeiture. On September 30, 2004, a final judgment of forfeiture

was ordered by this court. The judgment forfeited all rights,

title and interest in claimants' real property to the United

States.2

Claimants obtained a new attorney, Kevin Hyatt, who, on their

behalf, filed a very brief motion for relief from the judgment.

Subsequently, the claimants obtained new counsel, William S.

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Farmer, the current counsel of record. The government and the

claimants (now represented by Mr. Farmer) stipulated that the Hyatt

motion be withdrawn and that new dates be set.

On April 8, 2005, claimants filed a motion to set aside final

judgment of forfeiture and petition to determine excessive fine.

On September 1, 2005, the court stayed the motion for sixty days

to allow the government to conduct discovery. During this time,

the government took depositions of both claimants and William

Panzer and subsequently filed an amended opposition. 

II.

STANDARDS

A. STANDARD TO SET ASIDE JUDGMENT UNDER FED. R. CIV. P. 60 (b)

Federal Rule of Civil Procedure 60 (b) (6) provides that: “On

motion and upon such terms as are just, the court may relieve a

party . . . from a final judgment . . . for . . . . any reason

justifying relief from the operation of the judgment. . . .” An

attorney’s gross negligence may constitute “extraordinary

circumstances” under Rule 60 (b)(6). Community Dental Serv. v.

Tani, 282 F.3d 1164, 1170 (9th Cir. 2002). 

Rule 60 (b) is “remedial in nature and . . . must be liberally

applied.” Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984). 

There is a strong preference for deciding a case on the merits. Id.

The Ninth Circuit has clearly stated that: 

where there has been no merits decision, appropriate exercise

of district court discretion under Rule 60(b) requires that

the finality interest should give way fairly readily, to

further the competing interest in reaching the merits of a

dispute.

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TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir.

2001). 

There are three factors for the court to consider in

considering a motion to reopen a default judgement under Rule

60(b): (1) whether the plaintiff will be prejudiced; (2) whether

the defendant has a meritorious defense, and (3) whether culpable

conduct of the defendant led to the default judgement. Falk, 739

F.2d at 463; Accord Franchise Holding II, LLC. v. Huntington

Restaurants Group, Inc., 375 F.3d 922, 926 (9th Cir. 2004). A

district court is free to deny the motion if any of the three

factors are true. Franchise Holding II, LLC., 375 F.3d at 926. 

In the case at bar, the government concedes factors one and

three. The only factor at issue in the pending matter is whether

claimants have a meritorious defense so that vacating the judgment

would not be an empty exercise. 

B. STANDARD IN EVALUATING EXCESSIVE FINES 

The Eighth Amendment provides that "[e]xcessive bail shall not

be required, nor excessive fines imposed, nor cruel and unusual

punishments inflicted." U.S. CONST. amend. VIII. The touchstone

of the constitutional inquiry under the Excessive Fines Clause is

the principle of proportionality: the amount of the forfeiture must

bear some relationship to the gravity of the offense that it is

designed to punish. United States v. Bajakajian, 524 U.S. 321

(1998).

As articulated in Bakakajian, the overarching principle of the

proportionality inquiry is that the culpability of the offender

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should be examined specifically, rather than examining the gravity

of the crime in the abstract. Id. at 2038-39. The Court applied

several factors to determine whether the forfeiture was grossly

disproportionate: (1) whether the violation was related to any

other illegal activities; (2) consideration of the other penalties

that the Legislature has authorized, as well as the maximum

penalties that could have been imposed under the Sentencing

Guidelines; (3) the extent of the harm caused; and (4) if the

forfeiture amount is grossly disproportionate to the gravity of the

offense.

In 2000, the Civil Asset Forfeiture Reform Act (“CAFRA”)

codified the Bajakajian decision. Specifically, under 18 U.S.C.

§ 983(g), a claimant may petition the court “to determine whether

the forfeiture was constitutionally excessive.” 18 U.S.C. 

§ 983(g). The claimant has the burden of establishing that the

“forfeiture is grossly disproportional by a preponderance of the

evidence at a hearing conducted by the court without a jury.” Id.

In making its determination, the court compares the “forfeiture to

the gravity of the offense giving rise to the forfeiture.” Id. If

the court finds that there was an Eighth Amendment violation, the

remedy is to reduce or eliminate the forfeiture to avoid the

violation. See United States v. 6380 Little Canyon Road, 59 F.3d

974 (9th Cir. 1995)(the court must limit a civil forfeiture to an

appropriate portion of the asset to avoid an Eighth Amendment

violation). 

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III.

ANALYSIS

Although the government now concedes that Panzer’s conduct

constituted “gross negligence,” the government argues that vacating

the judgment pursuant to Rule 60(b) would be an “empty exercise.”

Pl’s. Opp’n at 14. Specifically, the government asserts that

claimants’ excessive fines defense lacks merit. Claimants,

however, present evidence that their excessive fines defense does

have merit, therefore justifying relief under 60(b). For the

reasons set forth below, the court grants claimants’ motion to set

aside the forfeiture judgment. 

A. ESTABLISHING THE EXISTENCE OF A MERITORIOUS DEFENSE UNDER

RULE 60(b) 

A party seeking relief under 60(b) must convince the court

“that vacating the judgement will not be an empty exercise.” Local

59 v. Superline Transp. Co., 953 F.2d 17, 20 (1st Cir. 1992).

Should claimants present no showing of a meritorious defense, then

nothing but pointless delay can result from reopening the judgment.

See Hawaii Carpenters' Trust Funds v. Stone, 794 F.2d 508, 513 (9th

Cir. 1986). Moreover, “[a] defendant seeking to vacate a default

judgment must present specific facts that would constitute a

defense.” TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 700

(9th Cir. 2001). See also Madsen v. Bumb, 419 F.2d 4, 6 (9th Cir.

1969)(holding that district court had not erred in declining to

vacate default judgment when defendant offered "mere general denial

without facts to support it"). 

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That said, the burden on claimants is not extraordinarily 

burdensome. TCI Group Life, 244 F.3d at 700. “While a movant 

. . . need not establish that it possesses an ironclad claim or

defense which will guarantee success at trial, it must establish

a potentially meritorious claim or defense which, if proven, will

bring success.” Local 59, 953 F.2d at 21; see also Davis v.

Musler, 713 F.2d 907, 916 (2nd Cir. 1983) (“a defendant seeking to

vacate a default judgement need not conclusively establish the

validity of the defense[s] asserted.”) 

The “frequently quoted standard is that the moving party must

make allegations that, if established at trial, would constitute

a valid claim or defense.” 12 James Wm. Moore, et al., Moore’s

Federal Practice § 60.24[2]. Similarly, it is well-established

that allegations are meritorious “if they contain ‘even a hint of

a suggestion’ which, if proven at trial would constitute a [valid

claim or a] complete defense.” Id. (citing Keegel v. Key West &

Caribbean Trading Co., Inc., 627 F.2d 372 (D.C. Cir. 1980)); see

also Securities & Exchange Comm’n v. McNulty, 137 F.3d 732, 740

(2nd Cir. 1998) (the standard is not likelihood of success, rather,

claimant need only show that the defense allegations, if proven,

would constitutes a complete defense); Tri-Continental Leasing

Corp., Inc. v. Zimmerman, 485 F.Supp. 495, 497 (D.C. Cal. 1980)

(“Because the preferred disposition of any case is upon the merits,

the showing of a meritorious defense does not involve a heavy

burden of proof. Thus, a party seeking to set aside a default need

not prove his defense by a preponderance of the evidence.”)

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9

In the case at bar, the court must examine claimants’

excessive fines claim to determine if it is potentially

meritorious. 

B. EXCESSIVE FINES CLAIM

When examining proportionality, the court is not required to

consider "any rigid set of factors." United States v. Mackby, 339

F.3d 1013, 1017 (9th Cir. 2003). Nevertheless, the Ninth Circuit

often looks to "factors similar to those used by the Court in

Bajakajian." Id. In Bajakajian, the Supreme Court considered four

factors in weighing the gravity of the defendant's offense: (1) the

nature and extent of the crime, (2) whether the violation was

related to other illegal activities, (3) the other penalties that

may be imposed for the violation, and (4) the extent of the harm

caused. See Bajakajian, 524 U.S. at 337-40.

In the case at bar, the court makes no findings on the actual

merits of the excessive fines clause, but does conclude that

claimants present specific facts that could constitute a defense

to forfeiture under the excessive fines clause. While claimants’

excessive fines defense may or may not be “ironclad,” it

establishes “a potentially meritorious claim or defense which, if

proven, will bring success.” Local 59, 953 F.2d at 21. 

1. The nature and extent of the crime compared to the

amount of the forfeiture

Claimants set forth sufficient facts that, if true, would

support finding that this factor – the nature and extent of the

crime – weighs in favor of finding the forfeiture excessive. 

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The government maintains that claimants were directly involved

in cultivating marijuana and that the defendant real property “was

more than incidentally involved in the illegal conduct.” Pl.’s

Amended Opp’n at 12:18-19. The government argues that the most

recent depositions of claimants show that the growing activity was

“sophisticated, involved a large number of marihuana plants,

involved the use of multiple facilities on the property, [and] was

sustained over many years . . . .” Id. at 32:19-22.

Claimants, however, allege that the marijuana was grown solely

to provide comfort and relief to AIDS patients, Cls.’ Mot. to Set

Aside at 12:10, and it was never sold on “the street.” Claimants

allege that they had obtained licenses under California law to grow

a limited number of plants for medical distribution and use. Cls.’

Mot. to Set Aside at 13:22. The marijuana was never exchanged for

income or profit and money they did receive went to reimbursement

for incurred expenses of growing. Cls.’ Reply at 6:13. Claimants

also maintain that there is undisputed evidence that this amount

did not exceed $25,000.00. Id.

Claimants also dispute the way the government weighed the

marijuana plants, specifically, that the marijuana was weighed in

wet, not dry, conditions. See Cls.’ Reply at 13. Claimants

similarly maintain that only “by counting unusable plants that

would never reach maturity or harvest can the government offer

numbers in excess of what [claimants] believed were lawful under

California law.” Cls.’ Mot. to Set Aside at 13:19-21. Finally,

claimants remind the court that they were never prosecuted for a

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criminal offense. Cls.’ Mot. to Set Aside at 12:19. 

Claimants also argue that the amount of property seized is not

proportional to the alleged illegal activity that occurred on the

defendant property. Claimants assert that only a small fraction

of their land was used for cultivation, and yet all thirty three

acres were forfeited. Claimants further dispute the value of the

property. Claimants assert that the land should be valued at a

much higher sum than that estimated by the government. The value

of the land should reflect the fact that the land produced an

income of some $35,000.00 and contained very valuable orchards,

established berry bushes and other fruit trees. On a more personal

level, claimants argue that they have “lost, entirely, the place

that has been their home for many years.” Cls.’ Mot. to Set Aside

at 14:4. Claimants spent a great deal of time cultivating the land

and growing numerous fruits and vegetables, much of which they sold

for profit. Id. 

Not only was their land forfeited, but also some $132,000.00

worth of saving were forfeited, and at least $100,000.00 of this

money had nothing to do with the marijuana cultivation. See Cls.’

Reply at 12. 

These assertions contain a “hint of a suggestion” which, if

proven, would constitute a valid defense that the forfeiture of the

land and the financial assets was excessive. 12 James Wm. Moore,

et al., Moore’s Federal Practice § 60.24[2] (citing Keegel v. Key

West & Caribbean Trading Co., Inc., 627 F.2d 372 (D.C. Cir. 1980)).

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2. Whether the violation was related to other illegal

activities

Claimants maintain that the gun found by law enforcement was

unrelated to the marijuana cultivation. Claimants assert that the

government’s photograph of a gun in a drawer was “staged” and that

claimants only used the gun on a couple of occasions to shoot

gophers in the garden. Cls.’ Reply at 13:19-14:4. 

Again, if this assertion is established at a hearing,

claimants would be able to use this factor to their advantage in

arguing that the cultivation of marijuana was not connected to any

other illegal activity and therefor, the forfeiture is excessive.

3. The other penalties that may be imposed for the

violation

The court also considers the potential maximum penalties under

federal criminal statues. Bajakajian, 524 U.S. at 338. Here, the

parties dispute how the sentencing guidelines should be computed

and applied. 

The government maintains that for each count of manufacturing

100 or more marijuana plants, there is a mandatory minimum fiveyear term of imprisonment and a maximum fine of $2 million for each

offender. Pl.’s Amended Opp’n at 19. The government also asserts

that under the Sentencing Guidelines, the recommended base offense

level would be 22 for claimant Lockyer and 24 for claimant Olsen.

Pl.’s Amended Opp’n at 25:6. This level would be enhanced because

of the loaded handgun found on the property. 

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Claimants, however, argue that this case clearly justifies a

downward departure based on “safe harbor” as the gun found on the

property had no connection whatsoever with the cultivation of

marijuana. Similarly, claimants’ cooperation with the government,

as well as claimant Lockyer’s health conditions, would qualify for

a downward departures. Claimants suggest that upon “a full

hearing, these facts would be made clear to the Court.” Cls.’

Reply at 11:28-12:1.

The court does not rule on the validity of these claims, but

recognizes that these claims have potential merit, which is all

that is required under the Rule 60(b) “meritorious defense”

analysis. 

4. The extent of the harm caused to the community

The government maintains that claimants “purported medical

marijuana justification for violating a federal state does not

alleviate the harm.” Pl.’s Opp’n at 31. Moreover, claimants admit

that some of the marijuana contained mold and, according to the

government, mold “residue in marihuana smoke could be deadly to the

intended receipt of their marihuana, an AIDS patient.” Id. at

32:4. 

Claimants vigorously dispute the extent of the harm caused.

Claimants maintain that the evidence shows that they went to “great

lengths to eliminate and destroy marijuana that was unsuitable for

medical patients. In fact, some 80-90% of plants grown were

discarded for this reason.” Cls.’ Reply at 9:27-10:1. Claimants

also assert that claimant Lockyer testified in his deposition as

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to the “efforts and concerns they had about making sure that none

of the marijuana they had grown reached the wrong people, that is,

anyone other than a patient with a doctor’s prescription.” Id. at

10:9-11. 

Finally, claimants allege that the “community where the effect

of the drug production is to be measured is a community contained

solely within California, and this community has explicitly

recognized and decreed the positive benefit and value of medical

marijuana grown and distributed to patients holding a doctors’

prescription.” Id. at 10:14-17.

Again, the court is convinced that claimants assert

sufficiently specific allegations that, if proven, would constitute

a claim of excessive fines. 

C. CONCLUSION

This case has never been decided on the merits. Claimants now

seek their day in court. Under Rule 60(b) jurisprudence, there is

a preference for disposing of a case on its merits and for this

reason, the showing of a meritorious defense does not require a

heavy burden of proof. See Tri-Continential, 485 F.Supp. at 497.

Here, claimants allegations are specific and, if proven,

constitute a potentially meritorious claim that the forfeiture of

their land and their financial assets violated the excessive fines

clause of the Eighth Amendment. 

Accordingly, the court hereby ORDERS that:

1. The final judgment of forfeiture is hereby SET ASIDE

pursuant to Rule 60(b).

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2. The Clerk is directed to REOPEN the case. 

3. The court hereby SETS the following scheduling deadlines:

Designation of experts: March 2, 2006

Discovery cut-off: April 30, 2006

Pretrial: June 26, 2006 at 2:00 p.m.

Court trial: September 19, 2006 at 10:30 a.m.

4. At the request of the parties, a Settlement Conference is

now SET before the Honorable Peter A. Nowinski on March 27, 2006

at 9:00 a.m. Counsel are directed to submit settlement conference

statements to the settlement judge not later than seven (7) days

prior to the conference. At counsel's option, such statements may

be submitted in confidence pursuant to Local Rule 16-270(d). 

IT IS SO ORDERED. 

DATED: February 1, 2006.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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