Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-01259/USCOURTS-caed-1_06-cv-01259-3/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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1

 UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

)

Plaintiff, )

)

vs. )

)

APPROXIMATELY $70,000.00 IN )

U.S. CURRENCY, )

)

Defendant. )

 )

1:06-cv-1259-OWW-SMS

FINDINGS AND RECOMMENDATION RE:

PLAINTIFF’S MOTION FOR DEFAULT

JUDGMENT (Doc. 32)

Plaintiff is proceeding with a civil action in this Court.

Plaintiff is proceeding before a Magistrate Judge pursuant to 28

U.S.C. § 636(b) and Local Rule 72-302(c)(19). Pending before the

Court is Plaintiff’s ex parte application for default judgment,

which was filed on December 21, 2007, and consisted of an

application and memorandum.

By separate order, the Court has vacated the hearing

initially set on the motion, and the matter has been submitted

for preparation of findings and recommendations and decision by

the Court.

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I. Background

In the complaint filed on September 13, 2006, it is alleged

that this Court has jurisdiction over this action to forfeit

currency pursuant to 28 U.S.C. §§ 1345 and 1355 and 21 U.S.C. §

881. (Cmplt. at 1.) Section 881(a)(6) authorizes forfeiture of

money or things of value furnished or intended to be furnished in

exchange for a controlled substance or listed chemical, or all

proceeds traceable to such an exchange, or money used or intended

to be used to facilitate any violation concerning controlled

substances.

II. 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

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.

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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.

B. Notice

The complaint refers to four individuals in connection with

a stop, effected on January 26, 2006, of a Ford pickup in which

$70,000.00 in currency was found wrapped up in baby diapers and

concealed in the wheel well: the driver, Salvador Real-Diaz

(Diaz); Guillermo Pena Govea (Govea), the passenger; Jose E.

Marquez, the registered owner, according to Govea; and Ruben

Barajas, Govea’s boss, and the person to whom Govea stated the

money belonged. (Cmplt. at 2-4.) 

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

(4) Notice.

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(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

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.

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(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).

Supplemental Rule G took effect in December 2006; in an

order dated April 12, 2006, the Supreme Court of the United

States adopted the amendment to the Supplemental Rules and stated

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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

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.)

 The complaint in this case was filed before the effective

date of the new supplemental rules. However, 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 filing the suit and

publication 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

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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

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

because no injustice or impracticality would result. 

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

Rule A-530 also requires publication.

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

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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 proof of publication filed on October 30, 2006, shows

that the notice was published for four successive weeks in

September and October 2006 in a newspaper of general circulation

and with the contents required by Supp. R. G. 

With respect to additional notice, the complaint alleges

that Govea informed officers at the time of the traffic stop that

he owned the vehicle but did not own the currency; Govea stated

that he had received the currency from his boss, Ruben Barajas

(Barajas), with instructions to take it to Mexico and purchase

realty for Barajas. Govea admitted wrapping and concealing the

currency in the tire jack compartment because of fear of theft

upon arrival in Mexico. Govea signed a disclaimer of ownership of

the currency on January 26, 2006. The declaration of Borchers,

Ex. A to the motion to strike answer, shows that on September 18,

2006, attorney Guadalupe Gamino, attorney for Govea, acknowledged

receipt of the complaint and related documents (including the

warrant and summons for arrest and order for publication) and

accepted service on behalf of his client, Govea. (Doc. 26-3 p.

7.) This notice meets the requirements of Supp. R. G(4)(b) and,

specifically, Supp. R. G(4)(b)(iii)(B).

As to Barajas, who is alleged to have stated to law

enforcement that he was not the owner of the currency, Plaintiff

has established by the declaration of the marshal (Doc. 13) as

well as exhibit A to the declaration of Autumn Magee in support

of request to clerk for entry of default against Ruben Barajas,

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filed March 5, 2007, that Barajas was personally served with the

complaint and related documents on November 16, 2006. 

With respect to Diaz, Plaintiff has established that Diaz

was personally served with the complaint and related documents on

October 10, 2006. (Decl. of Marshal, Doc. 9.)

The personal service effected upon these two persons

provided actual notice to them and was sufficient pursuant to

Fed. R. Civ. P. 4(e)(2).

With respect to Jose Marquez, the amended declaration of

Autumn Magee filed in support of request to clerk for entry of

default against Jose Marquez, and exhibit A thereto, reflect that

on or about September 14, 2006, the government sent copies of the

complaint and related documents to Marquez by certified mail; the

return receipt was signed and returned but not dated; the date of

the receipt by the government was on or about September 22, 2006.

The certification of the marshal (Doc. 8) reflects that the wife

of Marquez was served with the pertinent documents at the

residence alleged to have been Marquez’s address on September 26,

2006. Thus, Marquez received actual notice of the action.

In summary, all four persons named in the complaint received

notice that complies with the requirements of Supp. R. G(4).

C. Sufficiency of the Complaint

A default 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,

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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. Heidenthal, 826 th

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

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

money or things of value furnished or intended to be furnished in

exchange for a controlled substance or listed chemical, or all

proceeds traceable to such an exchange, or money used or intended

to be used to facilitate any violation concerning 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) provides for seizure of the

property pursuant to a warrant. Here, a warrant issued on

September 27, 2006 (Doc. 6).

Further, the complaint alleges expressly that the Defendant

currency constituted money or other things of value furnished or

intended to be furnished in exchange for a controlled substance

or listed chemical, all proceeds traceable to such an exchange,

and all moneys, negotiable instruments, and securities used or

intended to be used to facilitate one or more violations of 21

U.S.C. § 841 et seq. (statutes defining offenses concerning

controlled substances). (Cmplt. ¶ 4.) 

Accordingly, with respect to the Defendant currency, the

operative complaint reflects probable cause for the seizures, and

it is legally sufficient to state claims for forfeiture of

Defendant currency.

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D. Propriety of Default Judgment

The declarations submitted by Autumn Magee (Docs. 17-2, 18-

2, 19-2, and 20) establish that Marquez, Diaz, and Barrajas did

not file a claim or answer. Defaults were subsequently entered as

to those potential claimants. As to Govea, the Court struck

Govea’s answer on September 19, 2007. Thereafter, default was

entered against Govea on September 20, 2007. 

The declarations of Magee as well as the declaration of

Elisa M. Maguire in support of request to clerk for entry of

default against Guillermo Govea (Doc. 27) all establish that none

of the persons with an interest in the defendant properties or

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

armed services. 

With respect to notice of the motion for default judgment,

only Govea appeared in the action. The docket reflects that

Govea’s attorney, Guadalupe Gamino, was served with the motion

electronically on September 21, 2007. Thus, Govea has received

notice of this motion.

No one other than the claimants or potential claimants

discussed above has claimed an interest in the property or

otherwise responded to the complaint despite adequate notice. It

is alleged that Diaz and Govea signed disclaimers of interest. 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 none

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

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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. 

Accordingly, the Court finds that Plaintiff has shown its

entitlement to a default judgment of forfeiture with respect to

Defendant currency.

III. Form of the Judgment

With respect to the form of the judgment, Plaintiff has

established that it is entitled to a judgment not only against

claimants or potential claimants, but also against the property,

Waterloo Distilling Corp. v. U.S., 282 U.S. 577, 581 (1931),

affecting the interests of all persons in the property, Hanson v.

Denkla, 357 U.S. 235, 246 n.12 (1958).

RECOMMENDATION

Accordingly, it is hereby RECOMMENDED that:

1. Plaintiff’s motion for default judgment be GRANTED;

2. Plaintiff is entitled to, and the Clerk be directed to 

enter, a judgment that:

(a) The interest/s of Guillermo Govea, Salvador RealDiaz, Jose Marquez, and Ruben Barajas in Defendant approximately

$70,000.00 in U.S. currency are CONDEMNED and FORFEITED to the

United States of America; and 

(b) The right, title, and interest of all potential

claimants in the Defendant approximately $70,000.00 in U.S.

currency, including but not limited to Guillermo Govea, Salvador

Real-Diaz, Jose Marquez, and Ruben Barajas, are FORFEITED to the

United States of America pursuant to 21 U.S.C. § 881(a)(6), and

are VESTED in the United States; and

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(c) All persons claiming any right, title, or interest

in or to the Defendant currency, have DEFAULTED and no longer

have any right, title, or interest in the Defendant currency

whatsoever; and,

3. The Clerk of 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).

IT IS SO ORDERED.

Dated: October 11, 2007 /s/ Sandra M. Snyder 

icido3 UNITED STATES MAGISTRATE JUDGE

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