Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_03-cv-05679/USCOURTS-caed-1_03-cv-05679-2/pdf.json

Nature of Suit Code: 625
Nature of Suit: Drug Related Seizure of Property
Cause of Action: 21:881 Forfeiture Property-Drugs

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

)

Plaintiff, )

v. )

)

$11,918.00, et al., )

)

Defendants. )

)

 )

1:03-cv-05679-AWI-SMS

FINDINGS AND RECOMMENDATIONS RE:

PLAINTIFF’S MOTION TO STRIKE

ANSWER OF CLAIMANT JOSE MARIA

ARROYO, SR. (DOC. 32)

FINDINGS AND RECOMMENDATIONS RE:

PLAINTIFF’S MOTION FOR DEFAULT

JUDGMENT AGAINST CLAIMANT JOSE

MARIA ARROYO, SR. (DOC. 32)

Plaintiff is proceeding with a civil action in this Court.

The matter has been referred to the Magistrate Judge pursuant to

28 U.S.C. § 636(b) and Local Rules 72-302(c)(3) and 72-303.

Pending before the Court are two motions filed in the same

docketed document (Doc. 32), a motion to strike the answer of

claimant Jose Maria Arroyo, Sr., and a motion for default

judgment against Claimant Jose Maria Arroyo, Sr. 

The motions, filed on July 11, 2007, included notices, a

motion, an ex parte application, supporting memoranda, a

declaration of Stephanie Hamilton Borchers with attached

stipulation, order, and judgment, a proposed order, and a

certificate of service. No Defendant or claimant has filed any

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opposition to the motion. The hearing on these motions was

vacated, and the matter has been submitted to the Court for

decision.

I. Motion to Strike Answer

A. Legal Standards

Plaintiff moves to strike the answer pursuant to Fed. R.

Civ. P. 12(f), which provides as follows:

Upon motion made by a party before responding to

a pleading or, if no responsive pleading is permitted

by these rules, upon motion made by a party within 20

days after the service of the pleading upon the party

or upon the court’s own initiative at any time, the

court may order stricken from any pleading any

insufficient defense or any redundant, immaterial,

impertinent, or scandalous matter.

A court may strike a document that does not conform to the formal

requirements of the pertinent rules of court. Transamerican Corp.

v. National Union Fire Ins. Co. of Pittsburgh, Pa., 143 F.R.D.

189, 191 (N.D. Ill. 1992).

The purpose of a Rule 12(f) motion is to avoid the costs

that arise from litigating spurious issues by dispensing with

those issues prior to trial. Sidney-Vinstein v. A.H. Robins Co.,

697 F.2d 880, 885 (9 Cir.1983). Immaterial matter is defined as th

matter that “has no essential or important relationship to the

claim for relief or the defenses being pleaded.” Fantasy, Inc.

v. Fogerty, 984 F.2d 1524, 1527 (9 Cir 1993) (quoting 5 Charles th

A. Wright & Arthur R. Miller, Federal Practice and Procedure §

1382, at 706-07 (1990)), rev'd on other grounds, 510 U.S. 517

(1994). Immaterial portions of a pleading that do not give fair

notice of a claim or defense may be stricken by the Court sua

sponte or upon motion. Simmons v. Abruzzo, 49 F.3d 83, 86-87 (2nd

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cir. 1995). Impertinent matter is defined as “statements that do

not pertain, and are not necessary, to the issues in question.” 

Fantasy, Inc. 984 F.2d at 1527. Granting a motion to strike may

be proper if it will make the trial less complicated or if

allegations being challenged are so unrelated to plaintiff's

claims as to be unworthy of any consideration as a defense and

that their presence in the pleading will be prejudicial to the

moving party. Id. Superfluous historical allegations are a proper

subject of a motion to strike. See, e.g., Healing v. Jones, 174

F.Supp. 211, 220 (D.Ariz.1959). Scandalous pleadings are those

that reflect cruelly upon the defendant’s moral character, use

repulsive language, or detract from the dignity of the Court.

Skadegaard v. Farrell, 578 F.Supp. 1209, 1221 (D.C.N.J. 1984),

overruled on other grounds by Aitchison v. Raffiani, 708 F.2d 96

(3d Cir. 1983).

In this in rem action for forfeiture, both the general

Federal Rules of Civil Procedure and the Supplemental Rules for

Certain Admiralty and Maritime Claims (Supp. R.) apply, but the

latter rules prevail if there is an inconsistency. Supp. R. A(1).

Supp. R. G(1) provides that the rule governs a forfeiture action

in rem arising from a federal statute; to the extent that Rule G

does not address an issue, Supp. Rules C and E also apply.

Supp. Rule G took effect in December 2006 and was adopted by

order dated April 12, 2006, in which the Supreme Court of the

United States stated in pertinent part:

3. That the foregoing amendments to the Federal Rules

of Civil Procedure and the Supplemental Rules for

Admiralty or Maritime Claims and Asset Forfeiture

Actions shall take effect on December 1, 2006, and

shall govern in all proceedings thereafter commenced

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and, insofar as just and practicable, all proceedings

then pending.

(See, www.uscourts.gov/rules/Letters-Orders.pdf, Transmittal

Letters to Congress and Supreme Court Orders, Order of April 12,

2006.)

 Thus, it appears that the Court intended that the new rules

apply to presently pending cases if just and practicable.

Although it is generally presumed that a change in a substantive

statute will not apply retroactively, a procedural rule changed

after the commencement of a suit may generally be applied to the

suit without raising concerns about retroactivity because of

diminished reliance interests in matters of procedure and because

rules of procedure generally regulate secondary rather than

primary conduct. The application of a new rule of procedure

ordinarily depends upon the posture of the particular case.

Landgraf v. USI Film Products, 511 U.S. 244, 275 (1994).

Here, although the government’s giving of notice preceded

the effective date of Supplemental Rule G, it does not appear

that applying those rules, which the comment reveals incorporate

a commonsense approach to notice grounded in defined and

recognized principles of due process of law, would affect any

substantive right or obligation relating to the merits of the

case. Supp. Rule G, Adv. Comm. Note on 2006 Adoption. The

advisory committee note indicates that the rule was added to

bring together the central procedures governing civil forfeiture

actions; it also states that the rule generally applies to

actions governed by the Civil Asset Forfeiture Reform Act of 2000

(CAFRA) as well as those excluded from it; thus, the intended

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scope of application is very broad. The rule permits flexibility

as to the time of service of any warrant and supplemental

process. Id. The provisions for notice incorporate the

traditional means of publication and adopt the general principle

that notice should be effectuated by means reasonably calculated

to reach potential claimants at a cost reasonable in the

circumstances, and actual notice precludes a challenge to the

government’s failure to comply with the specific requirements of

the rule set forth in Rule G (4)(b). Id. 

Accordingly, the Court will apply Supplemental Rule G unless

injustice or impracticality would result. 

Supp. R. G requires the claimant to file a claim and answer

as follows:

(5) Responsive Pleadings.

(a) Filing a Claim.

(i) A person who asserts an interest in the defendant

property may contest the forfeiture by filing a claim

in the court where the action is pending. The claim must:

(A) identify the specific property claimed;

(B) identify the claimant and state the claimant's

interest in the property;

(C) be signed by the claimant under penalty of

perjury; and

(D) be served on the government attorney designated

under Rule G(4)(a)(ii)(C) or (b)(ii)(D).

(ii) Unless the court for good cause sets a different

time, the claim must be filed:

(A) by the time stated in a direct notice sent

under Rule G(4)(b);

(B) if notice was published but direct notice was

not sent to the claimant or the claimant's attorney,

no later than 30 days after final publication of

newspaper notice or legal notice under Rule G(4)(a)

or no later than 60 days after the first day of

publication on an official internet government

forfeiture site; or

(C) if notice was not published and direct notice

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was not sent to the claimant or the claimant's

attorney:

(1) if the property was in the government's

possession, custody, or control when the complaint

was filed, no later than 60 days after the filing,

not counting any time when the complaint was under

seal or when the action was stayed before

execution of a warrant issued under Rule G(3)(b);

or

(2) if the property was not in the government's

possession, custody, or control when the complaint

was filed, no later than 60 days after the

government complied with 18 U.S.C. § 985(c)

as to real property, or 60 days after process

was executed on the property under Rule G(3).

(iii) A claim filed by a person asserting an interest

as a bailee must identify the bailor, and if filed on

the bailor's behalf must state the authority to do so.

(b) Answer. A claimant must serve and file an answer

to the complaint or a motion under Rule 12 within

20 days after filing the claim. A claimant waives an

objection to in rem jurisdiction or to venue if the

objection is not made by motion or stated in the answer.

 With respect to motions to strike, Supp. R. G(8)(c)(i)(A)

provides:

(c) Motion To Strike a Claim or Answer.

(i) At any time before trial, the government may move

to strike a claim or answer:

(A) for failing to comply with Rule G(5) or (6),

or

(B) because the claimant lacks standing.

(ii) The motion:

(A) must be decided before any motion by the

claimant to dismiss the action; and

(B) may be presented as a motion for judgment

on the pleadings or 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.

B. Analysis

1. Duty to Respond

Plaintiff has established that in initiating and carrying

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the action forward, Plaintiff gave the required notice in order

to cause the claimant’s obligation to respond to arise. 

On May 23, 2003, the complaint was filed alleging a claim

for civil forfeiture in rem of the Defendant currency, which was

seized on January 19, 2003, and adopted for forfeiture by the

Drug Enforcement Administration (DEA) after a search by the

Tulare County Sheriff’s Department of the residence of Jose Maria

Arroyo and Augustina Arroyo. The claim for forfeiture was based

on the currency’s having been furnished or intended to be

furnished in exchange for a controlled substance, or being

proceeds thereof, or being used or intended to be used to

facilitate a violation of the statutes pertaining to controlled

substances. (Cmplt. pp 2-4.) It was alleged that claimant Jose

Maria Arroyo, Sr., sold methamphetamine to a confidential

informant; over $9,000.00 of the currency was found in claimant’s

bedroom under the bed, and over $2,000 was found in his pocket.

(Id. p. 3.)

Arrest of the property occurred on June 20, 2003, and

complied with the requirements of Supp. R. G(3)(b) and (c).

(Decl. of marshal dated June 20, 2003, document following

document 3 in the docket.) 

Notice of the action, containing all the contents required

by Supp. R. G(4) [description of the property, the time to file a

claim, name of the government attorney to be served with the

claim and answer], was published on August 15, 22, and 29, 2003,

in the Visalia Times Delta, a newspaper of general circulation;

thus, the publication met the requirements of Supp. R. G(4)(a)

[once a week for three consecutive weeks].

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Further, direct notice of the action was effectively given

to the claimant as a known potential claimant when in June 2003,

the complaint, warrant and summons for arrest, notice concerning

availability of a Magistrate Judge, other notices, and letter

dated June 17, 2003, were served by certified mail on claimant’s

counsel, Antonio A. Reyes. (Decl. of Borchers, Ex. A, letter and

signed receipt bearing date of June 18, 2003.) The notice was of

a type permitted by Supp. R. G(4)(b). The warrant, summons, and

letter informed him that a verified claim had to be filed with

the Court within thirty days of receipt of the letter, and an

answer filed within twenty days of the filing of the claim. (Id.)

This notice reflected the requirements of 18 U.S.C. §

983(a)(4)(A) and (B), which require that when the government

files a judicial forfeiture complaint, a person claiming an

interest may file a claim pursuant to the Supplemental Rules not

later than 30 days after the date of service of the complaint or

after the date of final publication, and shall file an answer not

later than 20 days after the date of the filing of the claim. It

also complied with the requirements of Supp. R. G(4).

On July 10, 2003, claimants Augustina Arroyo and Jose Maria

Arroyo, Sr., filed in pro se status an out-of-order answer to the

verified complaint. (Doc. 4.) In the answer, claimants claimed

that the money was not subject to forfeiture; they contended that

their son, who made statements to law enforcement connecting

claimants to drug activity, was mentally challenged, and they

denied their involvement in drug activity; and they alleged that

the delay in bringing the forfeiture action after seizure was a

deprivation of due process of law. (Ans. at pp. 1-2.)

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 Effective December 1, 2006, Supp. R. C was amended to reflect the adoption of Supp. R. G to govern the 1

procedure in forfeiture actions. Supp.R. G(5) requires that the claim must be field within the time directed by the

notice as outlined in Rule G(4)(b). Supp. R. C had a similar provision in Rule C(6).

9

Plaintiff sent two communications advising the claimants

that a verified claim pursuant to Supp. Rule C(6) had to be 1

filed: a first-class letter dated December 22, 2003, to claimants

at the address listed on their claim, which was returned

unclaimed (Borchers Decl. ¶ 4, Ex. B); and on January 20, 2004, a

first-class letter to claimant Jose Arroyo, Sr., at North Kern

County State Prison, which requested an updated mailing address

since mail was being returned (id., ¶ 5, Ex. C). 

Attorney Eric Hamilton contacted the government on February

24, 2004, stating he intended to take over the Arroyos’ case and

asked if he could file claims for both even though they were

late; no claims were ever filed. (Id., ¶ 6.) On March 11, 2004,

attorney Phil Burdette called the government and stated that

although he was not technically representing the Arroyos, they

would be filing a claim. 

Borchers declares that on March 15, 2004, claimant Augustina

contacted the United States and settled the forfeiture matter for

$1,500.00; on March 17, 2004, the government sent her a

stipulation for final judgment of forfeiture with a cover letter

written in both English and Spanish. (Decl. ¶ 8, Ex. D.)

On April 15, 2004, claimant Augustina filed a claim and

verification in propria persona. (Doc. 9.) Borchers declares that

no claim was ever filed or received on behalf of Jose Maria

Arroyo, Sr. Further, Borchers declares that to date she has not

received any request from any counsel requesting an extension to

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file a verified claim or notice that a verified claim had been

filed on his behalf. (Decl. ¶ 10.) Further, Elisa M. Maguire, a

paralegal assigned to the forfeiture action, declares that after

claimant Jose Maria Arroyo received through his attorney notice

of the action, he filed an answer but no claim, and his time to

file a claim has expired. (Req. for entry of default, Maguire

Decl. ¶¶ 5-6.)

Borchers states in the memorandum that on May 27, 2007, a

stipulation for final judgment of forfeiture was entered into by

the Plaintiff and claimant Augustina Arroyo (Memo., statement of

facts, p. 3, ll. 25-27.) The stipulation for final judgment is

attached to the motions in this case (Doc. 32-3), and it purports

to be between claimant Augustina, claimant Jose Maria Arroyo,

Sr., and Plaintiff; however, only claimant Augustina signed the

stipulation. It notes that the parties have agreed that $1,500.00

will be returned to claimants, and the remainder, $10,418.00,

will be forfeited to the United States. (Stip. ¶ 6.) It is

followed by a final judgment of forfeiture, in which the terms of

the stipulation are set forth, and all right, title, and interest

in the remaining currency is forfeited to the Plaintiff. 

2. Legal Effect of Failure to File a Claim

Supp. R. G(8) expressly provides for a motion to strike a

claim or answer for failing to comply with Rule G(5), or because

the claimant lacks standing. 

Granting a motion to strike an answer is appropriate for one

who does not file a claim in compliance with the pertinent rules.

United States v. $38, 570 U.S. Currency, 950 F.2d 1108, 1112-15

(5 Cir. 1992) (upholding the granting of a motion to strike th

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under former Supplemental Rules where the claimant had

constructive notice that the time for filing a claim had begun to

run, and he filed an answer and then an untimely claim); United

States v. $50,200.00 in U. S. Currency, 76 F.Supp.2d 1247 (D.Wyo.

1999) (granting a motion to strike an answer where the claimants

had failed to file a timely verified claim contrary to the

express requirements of the rules and where there were no

mitigating factors, good faith attempt to file a timely claim,

detrimental reliance on misinformation from a governmental

agency, or expenditure of considerable resources in preparing the

case for trial). In the Ninth Circuit, several policies support

the requirement of strict compliance with the Supplemental Rules

in filing a claim, including the need to inform the Court that

there is a claimant to the property who wants it back and intends

to defend it, to avoid waste or unnecessary expenditure of

judicial resources, and to further the important interest in the

finality of judgments ultimately entered. See, United States v.

Real Property, 135 F.2d 1312, 1317 (9 Cir. 1998). th

Here, the claimant was given repeated opportunities to file

a claim but did not do so. Despite repeated reminders, neither

claimant nor any counsel for claimant has undertaken any effort

to file a claim. The claimant was notified clearly of the

government’s intention to move to strike the answer; however, the

claimant did not file a claim. Because claimant was served with

notice of the action on June 17, 2003, he was required to file a

verified claim on or before July 18, 2003. There has been no

compliance with the requirements of the governing Supplemental

Rules.

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The Court finds no mitigating factors, good faith attempt to

file a timely claim, detrimental reliance on misinformation from

a governmental agency, or expenditure of considerable resources

in preparing the case for trial. The policies favoring timely

disposition of assets, judicial economy, and finality of

judgments support application of a rule of strict compliance

here. 

A claimant in a civil forfeiture case must establish both

Article III standing and statutory standing. United States v. One

1985 Cadillac Seville, 866 F.2d 1142, 1148 (9 Cir. 1989). One th

who does not file a verified claim pursuant to the Supplemental

Rules lacks standing in the forfeiture action. United States v.

Real Property, 135 F.2d 1312, 1316-1318 (9 Cir. 1998) (citing th

additional authority from the First, Fifth, Second, and Eighth

circuits). Accordingly, the answer is immaterial and impertinent,

and should be stricken.

Therefore, it will be recommended that Plaintiff’s motion to

strike the answer of claimant Jose Maria Arroyo, Sr., be granted,

and the answer of claimant Jose Maria Arroyo, Sr., be stricken.

II. Motion for Default Judgment

A. Default Judgment

A court has the discretion to enter a default judgment

against one who is not an infant, incompetent, or member of the

armed services where the claim is for an amount that is not

certain on the face of the claim and where (1) the defendant has

been served with the claim; (2) the defendant’s default has been

entered for failure to appear; (3) if the defendant has appeared

in the action, the defendant has been served with written notice

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of the application for judgment at least three days before the

hearing on the application; and, (4) the court has undertaken any

necessary and proper investigation or hearing in order to enter

judgment or carry it into effect. Fed. R. Civ. P. 55(b); Alan

Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th

Cir. 1988). Factors that may be considered by courts in

exercising discretion as to the entry of a default judgment and

as to setting aside a default include the nature and extent of

the delay, Draper v. Coombs, 792 F.2d 915, 924-925 (9 Cir. th

1986); the possibility of prejudice to the plaintiff, Eitel v.

McCool, 782 F.2d 1470, 1471-72 (9th Cir.1986); the merits of

plaintiff's substantive claim, id.; the sufficiency of the

allegations in the complaint to support judgment, Alan Neuman

Productions, Inc., 862 F.2d at 1392; the amount in controversy,

Eitel v. McCool, 782 F.2d at 1471-1472; the possibility of a

dispute concerning material facts, id.; whether the default was

due to excusable neglect, id.; and, the strong policy underlying

the Federal Rules of Civil Procedure that favors decisions on the

merits, id.

With respect to default judgments in proceedings that are in

rem actions for forfeiture, both the general Federal Rules of

Civil Procedure and the Supplemental Rules for Certain Admiralty

and Maritime Claims (Supp. R.) apply, but the latter rules

prevail if there is an inconsistency. Supp. R. A(1). Supp. R.

G(1) provides that the rule governs a forfeiture action in rem

arising from a federal statute; to the extent that Rule G does

not address an issue, Supp. Rules C and E also apply.

1. Notice

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a. Legal Standards 

The provisions of Rule G(4) with respect to notice are as follows:

(4) Notice.

(a) Notice by Publication.

(i) When Publication Is Required. A judgment of

forfeiture may be entered only if the government has

published notice of the action within a reasonable time

after filing the complaint or at a time the court orders.

But notice need not be published if:

(A) the defendant property is worth less than $1,000

and direct notice is sent under Rule G(4)(b) to every

person the government can reasonably identify as a

potential claimant; or

(B) the court finds that the cost of publication

exceeds the property's value and that other means of

notice would satisfy due process.

(ii) Content of the Notice. Unless the court orders

otherwise, the notice must:

(A) describe the property with reasonable

particularity;

(B) state the times under Rule G(5) to file a

claim and to answer; and

(C) name the government attorney to be served

with the claim and answer.

(iii) Frequency of Publication. Published notice

must appear:

(A) once a week for three consecutive weeks; or

(B) only once if, before the action was filed,

notice of nonjudicial forfeiture of the same property

was published on an official internet government

forfeiture site for at least 30 consecutive days,

or in a newspaper of general circulation for three

consecutive weeks in a district where publication is

authorized under Rule G(4)(a)(iv).

(iv) Means of Publication. The government should select

from the following options a means of publication

reasonably calculated to notify potential claimants

of the action:

(A) if the property is in the United States,

publication in a newspaper generally circulated in the

district where the action is filed, where the property

was seized, or where property that was not seized is

located;

(B) if the property is outside the United States,

publication in a newspaper generally circulated in a

district where the action is filed, in a newspaper

generally circulated in the country where the property

is located, or in legal notices published and generally

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circulated in the country where the property is located;

or

(C) instead of (A) or (B), posting a notice on an

official internet government forfeiture site for at

least 30 consecutive days.

(b) Notice to Known Potential Claimants.

(i) Direct Notice Required. The government must send

notice of the action and a copy of the complaint to any 

person who reasonably appears to be a potential claimant

on the facts known to the government before the end of

the time for filing a claim under Rule G(5)(a)(ii)(B).

(ii) Content of the Notice. The notice must state:

(A) the date when the notice is sent;

(B) a deadline for filing a claim, at least 35

days after the notice is sent;

(C) that an answer or a motion under Rule 12

must be filed no later than 20 days after filing

the claim; and

(D) the name of the government attorney to be

served with the claim and answer.

(iii) Sending Notice.

(A) The notice must be sent by means reasonably

calculated to reach the potential claimant.

(B) Notice may be sent to the potential claimant

or to the attorney representing the potential claimant

with respect to the seizure of the property or

in a related investigation, administrative forfeiture

proceeding, or criminal case.

(C) Notice sent to a potential claimant who is

incarcerated must be sent to the place of incarceration.

(D) Notice to a person arrested in connection with

an offense giving rise to the forfeiture who is not

incarcerated when notice is sent may be sent to

the address that person last gave to the agency

that arrested or released the person.

(E) Notice to a person from whom the property

was seized who is not incarcerated when notice is sent

may be sent to the last address that person gave to

the agency that seized the property.

(iv) When Notice Is Sent. Notice by the following means

is sent on the date when it is placed in the mail,

delivered to a commercial carrier, or sent by

electronic mail.

(v) Actual Notice. A potential claimant who had

actual notice of a forfeiture action may not oppose

or seek relief from forfeiture because of the government's

failure to send the required notice.

Supp. R. G(4).

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The provisions of Supp. R. G(4) have been set forth. Rule C

previously required publication, as does Local Rule A-530.

Local Rule A-540(a) requires that a party seeking a default

judgment in an action in rem shall show to the satisfaction of

the Court that due notice of the action and arrest of the

property has been given by publication pursuant to Local Rule

A-530, and by personal service on the person having custody of

the property or on the person having custody prior to its

possession by a law enforcement agency or officer, and by

personal service or by certified mail, return receipt requested,

to every other person who has not appeared in the action and is

known to have an interest in the property; provided that failure

to give actual notice to such other person may be excused upon a

satisfactory showing of diligent efforts to give such notice

without success.

The Due Process Clause of the Fifth Amendment, which confers

a right to notice and an opportunity to be heard, requires that

with respect to known owners of the property whose whereabouts

are known, the government must employ such notice as is

reasonably calculated under all of the circumstances to apprise

the person of the pendency of the forfeiture. United States v.

Real Property, 135 F.3d 1312, 1315 (9 Cir. 1998); Dusenbery v. th

United States, 534 U.S. 161, 168 (2002) (holding that sending

certified mail to the custodial institution where the party was

being held as well as to the residence where the arrest occurred,

and the address in the town where his mother lived, satisfied due

process even though it did not result in actual notice to the

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person).

b. Analysis

Here, as previously noted, the pertinent returns and

documents reveal that after the complaint was filed on May 23,

2003, arrest of the property occurred on June 20, 2003, and

complied with the requirements of Supp. R. G(3)(b) and (c).

(Decl. of marshal dated June 20, 2003, document following

document 3 in the docket.) 

Notice of the action, containing all the contents required

by Supp. R. G(4) [description of the property, the time to file a

claim, name of the government attorney to be served with the

claim and answer], was published on August 15, 22, and 29, 2003,

in the Visalia Times Delta, a newspaper of general circulation;

thus, the publication met the requirements of Supp. R. G(4)(a)

[once a week for three consecutive weeks].

Further, direct notice of the action was effectively given

to the claimant as a known potential claimant when in June 2003,

the complaint, warrant and summons for arrest, notice concerning

availability of a Magistrate Judge, other notices, and letter

dated June 17, 2003, were served by certified mail on claimant’s

counsel, Antonio A. Reyes. (Decl. of Borchers, Ex. A, letter and

signed receipt bearing date of June 18, 2003.) The notice was of

a type permitted by Supp. R. G(4)(b). The warrant, summons, and

letter informed him that a verified claim had to be filed with

the Court within thirty days of receipt of the letter, and an

answer filed within twenty days of the filing of the claim. (Id.)

This notice reflected the requirements of 18 U.S.C. §

983(a)(4)(A) and (B), which require that when the government

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files a judicial forfeiture complaint, a person claiming an

interest may file a claim pursuant to the Supplemental Rules not

later than 30 days after the date of service of the complaint or

after the date of final publication, and shall file an answer not

later than 20 days after the date of the filing of the claim. It

also complied with the requirements of Supp. R. G(4).

Although claimants Augustina Arroyo and Jose Maria Arroyo,

Sr., filed in pro se status an out-of-order answer to the

verified complaint (Doc. 4), the Court will recommend that this

answer be stricken. No claim was filed on behalf of potential

claimant Jose Maria Arroyo, Sr. (Borchers Decl., ¶ 10, Maguire

Decl., ¶¶ 5-6.) 

As detailed in the foregoing discussion concerning the

motion to strike the answer, it appears that claimant Augustina

Arroyo has entered into a settlement of this matter with the

government, and Jose Maria Arroyo, Sr., is the only person known

to be a potential claimant.

Finally, Maguire declares that to the best of her knowledge,

Jose Maria Arroyo, Sr., is not an infant, incapacitated person,

or member of the military service within the meaning of the

Soldiers and Sailors Civil Relief Act; the Court notes that since

2003, the statute has been named the “Servicemembers Civil Relief

Act.” 50 App. § 501, Pub.L. 108-189, § 1, 117 Stat. 2835.

Accordingly, the Court concludes that adequate notice of the

action was given to Jose maria Arroyo, Sr., and that he failed to

respond. 

Because the answer that was previously filed has now been

stricken, it appears to be proper to enter default. The Court

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notes that even before the answer was stricken, the clerk entered

default as to claimant Jose Maria Arroyo, Sr. (Docket entry 31,

July 10, 2007.) 

2. Legal Sufficiency of the Complaint

a. Legal Standard 

A default judgment generally bars the defaulting party from

disputing the facts alleged in the complaint, but the defaulting

party may argue that the facts as alleged do not state a claim.

Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392.

Thus, well pleaded factual allegations, except as to damages, are

taken as true; however, necessary facts not contained in the

pleadings, and claims which are legally insufficient, are not

established by default. Cripps v. Life Ins. Co. of North America,

980 F.2d 1261, 1267 (9 Cir. 1992); TeleVideo Systems, Inc. v. th

Heidenthal, 826 F.2d 915, 917 (9 Cir. 1987). th

b. Analysis

Title 21 U.S.C. § 881(a)(6) provides for the forfeiture of

money that is furnished or intended to be furnished by any person

in exchange for a controlled substance, that constitutes proceeds

traceable to such an exchange, or that is used or intended to be

used to facilitate any violation of the laws governing controlled

substances.

Title 21 U.S.C. § 881(b) provides that any such property may

be seized by the Attorney General in the manner set forth in 18

U.S.C. § 981(b). Section 981(b)(2) provides that property subject

to forfeiture shall be seized upon process issued pursuant to the

Supplemental Rules for certain Admiralty and Maritime Claims by

any district court of the United States having jurisdiction over

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the property, or by other specified means. 

Title 18 U.S.C. § 983(c) provides :

(c) Burden of proof.--In a suit or action brought

under any civil forfeiture statute for the civil

forfeiture of any property–

(1) the burden of proof is on the Government to

establish, by a preponderance of the evidence, that the

property is subject to forfeiture;

(2) the Government may use evidence gathered after

the filing of a complaint for forfeiture to establish,

by a preponderance of the evidence, that property is

subject to forfeiture; and

(3) if the Government's theory of forfeiture is

that the property was used to commit or facilitate the

commission of a criminal offense, or was involved in

the commission of a criminal offense, the Government

shall establish that there was a substantial connection

between the property and the offense.

It is recognized that the government under the Civil Asset

Forfeiture Reform Act of 2000 (CAFRA) must establish forfeiture

by a preponderance of the evidence. 18 U.S.C. § 983(c)(1); United

States v. Real Property Located at 5208 Los Franciscos Way, 385

F.3d 1187, 1193 (9 Cir. 2004). th

The complaint was brought to forfeit the currency pursuant

to 21 U.S.C. § 881. The complaint alleged a claim for civil

forfeiture in rem of the Defendant currency, which was seized on

January 19, 2003, and adopted for forfeiture by the Drug

Enforcement Administration (DEA) after a search by the Tulare

County Sheriff’s Department of the residence of Jose Maria Arroyo

and Augustina Arroyo. It was alleged that the currency had been

furnished or intended to be furnished in exchange for a

controlled substance, or was proceeds thereof, or had been used

or intended to be used to facilitate a violation of the statutes

pertaining to controlled substances. (Cmplt. pp 2-4.) It was

alleged that claimant Jose Maria Arroyo, Sr., sold

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methamphetamine to a confidential informant, and thereafter there

was found in Arroyo’s residence several plastic bags each

containing fifty smaller bindles of a pink rock-like substance

with a total weight of 94.6 grams; over $9,000.00 of the currency

was found in claimant’s bedroom under the bed, and over $2,000

was found in his pocket. All people in the house interviewed

denied knowledge of the funds except for Jose Maria Arroyo, Sr.,

who stated that it was his cash. Arroyo’s son stated that he knew

what his father was doing, it was wrong, and all the cash came

from his father’s sale of the pink rocks to people who came to

the house at all hours to buy it. (Cmplt. pp. 2-4.)

The claimant was tied to the funds by allegations that he

sold methampetamine in an undercover buy before the money was

seized, the other drugs packaged for sale that were found in

areas in his control, the large amounts of cash involved, and the

hidden condition of the cash. These facts provide a substantial

connection between the money and illegal drug activity. The facts

alleged in the complaint permit a conclusion by a preponderance

of the evidence that the money constituted proceeds or moneys

used to facilitate drug sales. See, United States v. Funds in

Amount of Thirty Thousand Six Hundred Seventy Dollars in United

States Funds, 403 F.3d 448 (7 Cir. 2005) (permitting an th

evaluation of all evidence, including statements, inconsistent

statements, suspicious activity, travel arrangements, hiding of

currency, large amount of currency, and inconsistency with

financial information given by the suspect in connection with tax

reporting in determining whether a substantial connection between

the property and drug-related activity had been established).

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Accordingly, the complaint for forfeiture is legally

sufficient.

3. Discretionary Factors

Here, only the other claimant, who has previously entered

into a settlement with the Plaintiff, has claimed an interest in

the property or otherwise responded to the complaint despite

adequate notice. It does not appear that there is any risk of

mistake or excusable neglect on the part of anyone with a

potential interest in the property or of a dispute as to a

material fact essential to the government’s case. No just cause

for delay appears. It is apparent from the declarations submitted

to the Court that there is no basis for a finding that the

potential claimant is an infant, incompetent, or member of the

armed services. There does not appear to be any reason why the

general policy in favor of a decision on the merits would warrant

refusing to enter the requested default judgment.

Plaintiff has established that the only other claimant or

potential claimant to the Defendant property has entered into a

stipulation for final judgment. 

Accordingly, the Court finds that Plaintiff has shown its

entitlement to a default judgment of forfeiture.

III. Recommendation

Accordingly, it IS RECOMMENDED that

1) Plaintiff’s motion to strike the answer of claimant Jose

Maria Arroyo, Sr., BE GRANTED, and

2) The Clerk BE DIRECTED to strike the answer of claimant

Jose Maria Arroyo, Sr., filed on November 20, 2006; and

3. Plaintiff’s motion for default judgment against claimant

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Jose Maria Arroyo, Sr., BE GRANTED; and

4. Plaintiff IS ENTITLED TO, and the Clerk BE DIRECTED TO

ENTER, a judgment that condemns and forfeits the interests of all

claimants and potential claimants, including claimant Jose Maria

Arroyo, Sr., in the Defendant currency to the United States of

America pursuant to 21 U.S.C. § 881(a)(4), and which recognizes

that all persons claiming any right, title, or interest in or to

the Defendant property have DEFAULTED and no longer have any

right, title, or interest in the Defendant property whatsoever;

and

5. The Clerk of the Court ENTER final judgment of forfeiture

for Plaintiff United States of America. 

These findings and recommendation are submitted to the

United States District Judge assigned to the case, pursuant to

the provisions of 28 U.S.C. § 636 (b)(1)(B) and Rule 72-304 of

the Local Rules of Practice for the United States District Court,

Eastern District of California. Within thirty (30) days after

being served with a copy, any party may file written objections

with the court and serve a copy on all parties. Such a document

should be captioned “Objections to Magistrate Judge’s Findings

and Recommendation.” Replies to the objections shall be served

and filed within ten (10) court days (plus three days if served

by mail) after service of the objections. The Court will then

review the Magistrate Judge’s ruling pursuant to 28 U.S.C. § 636

(b)(1)(C). The parties are advised that failure to file

objections within the specified time may waive the right to

appeal the District Court’s order. Martinez v. Ylst, 951 F.2d

1153 (9th Cir. 1991).

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IT IS SO ORDERED.

Dated: August 22, 2007 /s/ Sandra M. Snyder 

icido3 UNITED STATES MAGISTRATE JUDGE

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