Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-05377/USCOURTS-cand-3_09-cv-05377-0/pdf.json

Parties Involved:
Approximately $28,000 In United States Currency
Defendant
United States of America
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Plaintiff,

v.

APPROXIMATELY $28,000 IN UNITED

STATES CURRENCY,

Defendant.

 

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No. 09-5377 SC

ORDER GRANTING MOTION

FOR DEFAULT JUDGMENT

I. INTRODUCTION

On February 23, 2010, Plaintiff United States of America

("Plaintiff") filed a Motion for Default Judgment in this in rem

action. Docket No. 9 ("Motion"). The Clerk entered Default on

February 19, 2010. Docket No. 8. No opposition to the Motion has

been filed. The matter is appropriate for decision without oral

argument. For the reasons stated herein, the Court GRANTS

Plaintiff's Motion.

II. BACKGROUND

On or about March 31, 2009, two Drug Enforcement

Administration ("DEA") Task Force Agents were working parcel

interdiction at the Federal Express (FedEx) facility in South San

Francisco, when they came across a damaged FedEx box. Docket No.

1 ("Compl.") ¶ 8. The parcel contained $28,000 in U.S. currency,

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United States District Court

For the Northern District of California

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comprised primarily of $20 and $10 denominations. Id. ¶ 12. The

currency was rubber-banded into bundles and vacuum heat-sealed

inside of two foodsaver plastic bags. Id. ¶ 9. The airbill on

the FedEx box listed David Kincaid ("Kincaid"), with an address in

Alexandria, Virginia, as the sender, and Jason Chin ("Chin"), with

an address in Daly City, California, as the recipient. Id. ¶ 10.

The DEA agents took custody of the parcel and transported it

to their office at the San Francisco International Airport. Id.

¶ 11. A narcotics detection dog reacted to the parcel, indicating

that an odor of narcotics was emanating from it. Id. At the time

the parcel was discovered, the recipient, Chin, was on probation

and had a felony drug conviction. Id. ¶ 13. 

When contacted by the DEA agents, Chin initially advised them

that the package contained a book. Id. He later explained that

the money was to pay for purchase of his 2001 Ford F-150 Harley

Davidson edition truck. Id. ¶ 14. Kincaid offered the same

explanation. Id. ¶ 15. The Kelley Blue Book value of the truck

is between $17,000 and $19,300. Id. ¶ 16. Although Kincaid is

from the Bay Area, he told the agents he was in Virginia on

business. Id. ¶ 15. Chin told agents he was currently

unemployed, and the California Employment Development Department

showed no employment records for Kincaid over the past two years. 

Id. ¶¶ 14, 17.

 

III. LEGAL STANDARD

"All moneys . . . furnished or intended to be furnished by

any person in exchange for a controlled substance . . . [and] all

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United States District Court

For the Northern District of California

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1 Although both 18 U.S.C. § 981(b)(2) and the Northern

District's Local Admiralty Rules refers to the Supplemental Rules

as "the Supplemental Rules for Certain Admiralty and Maritime

Claims," the 2010 edition of the Federal Rules of Civil Procedure

refers to them as the "Supplemental Rules for Admiralty or Maritime

Claims and Asset Forfeiture Actions." The Local Admiralty Rules

cite to the Supplemental Rules using the abbreviation "FRCivP Supp"

and this Court will do so as well.

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proceeds traceable to such an exchange, and all moneys . . . used

or intended to be used to facilitate any" narcotics transaction,

are subject to forfeiture to the United States. 21 U.S.C. 

§ 881(a)(6). Seizures must be made pursuant to a warrant, except

that a seizure may be made without a warrant if:

(A) a complaint for forfeiture has been filed in

the United States district court and the court

issued an arrest warrant in rem pursuant to the

Supplemental Rules for Certain Admiralty and

Maritime Claims; 

(B) there is probable cause to believe that the

property is subject to forfeiture and-- 

(i) the seizure is made pursuant to a lawful

arrest or search; or 

(ii) another exception to the Fourth Amendment

warrant requirement would apply; or 

(C) the property was lawfully seized by a State

or local law enforcement agency and transferred

to a Federal agency. 

18 U.S.C. § 981(b)(2). In addition to the Supplemental Rules,1

Plaintiff must also comply with the Admiralty and Maritime Local

Rules for the Northern District of California. See Admir. L.R. 

1-2 ("These admiralty local rules apply only to civil proceedings

that are governed by the Supplemental Rules . .. [including]

statutory . . . forfeiture proceedings analogous to maritime

actions in rem.")(italics in original). Where the Government

seeks forfeiture of currency, the Court should determine whether

plaintiff has met the specific procedural requirements governing

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forfeiture actions. United States v. Approximately $72,000 in

U.S. Currency, No. 08-1305, 2009 WL 506866, at *3-4 (N.D. Cal.

Feb. 27 2009).

After entry of default, the Court may enter a default

judgment. Fed. R. Civ. P. 55(b)(2). The Court's decision whether

to enter a default judgment, while "discretionary," Aldabe v.

Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980), is guided by several

factors. If the court determines service of process was

sufficient, the court may consider:

(1) the possibility of prejudice to the

plaintiff, (2) the merits of plaintiff's

substantive claim, (3) the sufficiency of the

complaint, (4) the sum of money at stake in the

action, (5) the possibility of a dispute

concerning material facts, (6) whether the

default was due to excusable neglect, and (7)

the strong policy underlying the Federal Rules

of Civil Procedure favoring decisions on the

merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). "The

general rule of law is that upon default the factual allegations

of the complaint, except those relating to the amount of damages,

will be taken as true." Geddes v. United Fin. Group, 559 F.2d

557, 560 (9th Cir. 1977). 

IV. DISCUSSION

A. The Supplemental Rules

A forfeiture action in rem arising from a federal statute is

governed by Rule G of the Supplemental Rules. See FRCivP Supp

G(1). The plaintiff must file a verified complaint that states

the grounds for jurisdiction and venue, that describes the

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property being forfeited, that identifies the statute under which

the forfeiture action is brought, and that includes sufficient

factual detail to support a reasonable belief that the government

will be able to meet its burden of proof at trial. Id. G(2)(a)-

(f). The clerk must issue a warrant to arrest the property if it

is in the government's possession, custody, or control. Id.

G(3)(b)(i). The government must publish notice of the action

which, among other requirements, must state the time to file a

claim and answer. Id. G(4)(a)(ii)(B). One means of notice by

publication is posting a notice on an official internet government

forfeiture site for at least thirty consecutive days. Id.

G(4)(a)(iv)(C). The government must also send notice of the

action to any person who reasonably appears to be a potential

claimant. Id. G(4)(b)(i). "Notice to a person from whom 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." Id. G(4)(b)(iii)(E). 

B. The Admiralty Local Rules

A party seeking a default judgment in an action in rem must

show that due notice of the action and arrest has been given 

"[i]n actions subject to FRCivP Supp G: (i) Through execution of

process in accordance with FRCivP Supp G(3); and (ii) In

accordance with FRCivP Supp G(4)." Admir. L.R. 6-1(a)(1). 

Persons with recorded interests must be notified in accordance

with FRCivP Supp G(4). Id. 6-1(b)(1). Before the Court can enter

a default judgment, the government must show that "(1) Notice has

been given as required by Admir. L.R. 6-1(a)(1)and (b)(1); ( 2) No

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one has filed timely and responsive pleadings pursuant to

the requirements of FRCivP Supp G(5)." Id. 6-2(a).

C. Compliance with the Rules

Here, Plaintiff filed a verified Complaint for forfeiture

that states the Court has jurisdiction under 28 U.S.C. §§ 1345 and

1355(a). Compl. ¶ 1. 28 U.S.C. § 1345 vests district courts with

original jurisdiction of "all civil actions, suits or proceedings

commenced by the United States." 28 U.S.C. § 1355(a) vests

district courts with original jurisdiction in "any action or

proceeding for the . . . enforcement of any . . . forfeiture . . .

incurred under any Act of Congress." Venue in the Northern

District of California is proper because the money was seized in

San Mateo County. Compl. ¶ 3. 

This action is being brought under 18 U.S.C. § 881(a)(6),

which provides for forfeiture of money furnished or intended to be

furnished in exchange for a controlled substance, or traceable to

such an exchange, or used to facilitate a narcotics transaction. 

Id. ¶ 1. The Complaint contains sufficient factual detail to

support a determination that the $28,000 was traceable to, or used

to facilitate, a narcotics transaction because: (1) a narcotics

detection dog reacted to the parcel, id. ¶ 11; (2) the parcel's

packaging indicated that efforts were made to conceal its

contents, id. ¶ 9; (3) the parcel's intended recipient, Chin, was

on probation and had a felony drug conviction, id. ¶ 13; (4)

Chin's explanation that the money was for the sale of a truck was

not plausible, id. ¶¶ 14, 16; and (5) there were no employment

records for the parcel's sender in the preceding two years, id. 

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¶ 17. Also, the money was packaged in small denominations, id ¶

12, which is consistent with criminal activity. See United States

v. Approximately $17,872 In U.S. Currency, No. 08-3346, 2009 WL

2990496, at *3 (N.D. Cal. Sept. 11, 2009) (use of small

denominations contributes to finding of probable cause that money

connected to illegal activity). Based on these factual

allegations in the Complaint, there is probable cause to believe

that the money is subject to forfeiture. See 18 U.S.C. §

981(b)(2)(B).

The Court issued an arrest warrant on November 19, 2009. See

Docket No. 13 ("Warrant of Arrest"). Notice of the forfeiture was

posted on an official government internet website,

www.forfeiture.gov, for at least thirty consecutive days,

beginning November 18, 2009. See Docket No. 5 ("Decl. of

Publication"). The United States gave notice to all known parties

who might have an interest in the money, including Chin, Kincaid,

and legal counsel, Nina Wilder. See Docket Nos. 4 ("Certificate

of Service"), 7 ("Am. Req. to Clerk to Enter Default"). Despite

providing proper notice, no one has appeared to file a claim or

answer, and the time for a responsive filing has expired. Mot. at

3. Also, no one has filed an opposition to this motion for

default judgment. Id.

D. Compliance with the Eitel Factors

Accepting the allegations in the Complaint as true, the Court

finds that the Eitel factors favor default judgment. If the Court

were to refuse to grant default judgment, Plaintiff would be

prejudiced -- the Government would have to expend further time and

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effort in an action that has no opposing party. Plaintiff's claim

that the money is traceable to, or was used to facilitate, a

narcotics transaction, has merit. Plaintiff provided adequate

notice to interested parties, as required by the supplemental and

local rules. The sum of money at stake, $28,000, though not

insubstantial, is not large enough to warrant denial of the

motion. See United States v. Approximately $72,000 in U.S.

Currency, 2009 WL 506866, at *4 (finding $72,000 not large enough

to warrant denial of motion for default judgment). No claim or

answer has been filed, and there is no evidence to suggest

excusable neglect on the part of any potential claimant. Although

it is preferable to decide a case on the merits, when there is no

opposing party, a decision on the merits is "impractical, if not

impossible." United States v. Approximately $17,872 In U.S.

Currency, 2009 WL 2990496, at *4 (quoting PepsiCo, Inc. v. Cal.

Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002)). 

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V. CONCLUSION

For the reasons stated above, the Court GRANTS Plaintiff's

Motion for Default Judgment. Defendant Approximately $28,000 in

United States Currency is forfeited to the United States pursuant

to 21 U.S.C. § 881(a)(6). All right, title, and interest in said

currency is vested in the United States of America. 

IT IS SO ORDERED.

Dated: April 5, 2010 

UNITED STATES DISTRICT JUDGE

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