# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted November 10, 2010 Decided March 25, 2011

No. 10-5061

U NITED S TATES OF A MERICA , A PPELLEE

v.

8 G ILCREASE L ANE , Q UINCY , F LORIDA 32351, ET AL ., A PPELLEES

A D S URF D AILY , I NC ., ET AL ., APPELLANTS

Appeal from the United States District Court for the District of Columbia (No. 1:08-cv-01345)

Charles A. Murray was on the briefs for appellants.

Ronald C. Machen Jr. , U.S. Attorney, and R. Craig Lawrence

, Stephanie Lauren Brooker , and Barry Wiegand

, Assistant U.S. Attorneys, were on the brief for appellee.

Before: H ENDERSON , T ATEL , and G RIFFITH , Circuit Judges

. Opinion for the Court filed by Circuit Judge G RIFFITH

.2

G RIFFITH , Circuit Judge : After appellants withdrew their claims in this civil forfeiture action, the district court entered a default judgment and final or der of forfeiture. Appellants now ask us to reverse. For the reasons set forth below, we reject their arguments and affirm the judgment of the district

court.

I

Appellant AdSurfDaily, Inc., is an internet marketing company incorporated and cont rolled by appellant Thomas Bowdoin, Jr. On August 1, 2008, federal agents seized approximately $80 million of the company’s bank account funds as part of an investigation of the company for wire fraud and money laundering. Five days later, the government filed a complaint for forfeiture in rem against the funds and two pieces of real property th at had been purchased with AdSurfDaily money, invoking 18 U.S.C. § 981(a)(1)(C), which authorizes civil forfeiture of proceeds traceable to wire fraud, and 18 U.S.C. § 981(a)(1)(A ), which permits forfeiture of property involved in a money laundering scheme. Bowdoin, AdSurfDaily, and appellant Bowdoin/Harris Enterprises, Inc., filed verifi ed claims to the properties. 1 On

1 Rule C(6) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions requires a claimant in a forfeiture proceeding to file a “verified statement of right or interest” in the property at stake within fourteen days of execution of process or within the time the court allows. This statement is known as a “verified claim” and “is essential to confer[ring] statutory standing upon a claimant in a forfeiture action.” United States v. $125,938.62 , 370 F.3d 1325, 1328 (11th Cir. 2004) (per curiam) (alteration in original) (quoting United States v. $175,918.00 in U.S. Currency , 755 F. Supp. 630, 632 (S.D.N.Y. 1991)) (internal quotation marks omitted). Appellants filed claims3

August 18, 2008, AdSurfDaily moved for dismissal of the forfeiture action and return of the seized funds. The district court held an evidentiary hearing and on November 19, 2008, denied the motion on the grounds that the government had properly filed its complaint and AdSurfDaily was not entitled to pretrial release of its assets. United States v. 8 Gilcrease Ln., Quincy, Fla. 32351 ( 8 Gilcrease Ln. I ), 587 F. Supp. 2d 133, 139-40, 146 (D.D.C. 2008). AdSurfDaily did not appeal this ruling.

On January 13, 2009, appellants through counsel moved for leave to withdraw their claims, stating that they “consent[ed] to the forfeiture of the properties.” Mot. for Leave to Withdraw Claims, Release of Claims to Seized Property, and Consent to Forfeiture 2 [hereinafter Withdrawal Mot.]. The district court gran ted their motion. But appellants soon reversed course and, beginning on February 27, 2009, filed a series of pro se motions to rescind the withdrawal of their claims. Appellants subs equently hired new counsel, withdrew their pro se motions, and on September 14, 2009, filed a Rule 60(b) motion to reinstate their claims. Bowdoin submitted an affidavit in support alleging that the prosecutor and his lawyer had “hoodwinked” him into believing that if he withdrew his claims he w ould receive a decreased prison

sentence or no se ntence at all.

The district court denied appellants’ motion on November 10, 2009, concluding that they had released their claims knowingly and voluntarily and that Bowdoin had done so on no more than a hope that his sentence would be decreased. United States v. 8 Gilcrease Ln., Quincy, Fla. 32351 ( 8 Gilcrease Ln. II ), 668 F. Supp. 2d 128, 132 (D.D.C.

to the real property and to a pproximately $66 million of the $80 million the government had seized.4

2009). The court also determined that appellants had, in fact, received sound advice from couns el to release their claims, given that the government’s case “appear[ed] to be strong.” Id. at 131.

The government then moved for a default judgment and final order of forfeiture on the ground that no claimants contesting forfeiture remained in the case. On November 20, 2009, the district court directed all potential claimants to show cause why the court should not grant the government’s motion. Neither appellants nor any other potential claimants responded, and the court entered a default judgment and final order of forfeiture on January 4, 2010.

Appellants then filed another Rule 60(b) motion, asking the district court to vacate the order refusing to reinstate their claims, the order to show cause , and the default judgment and final order of forfeiture. The court denied the motion on February 22, 2010, and appellants now seek relief from us. We have jurisdiction to consider their appeal under 28 U.S.C. § 1291.

II

Appellants assert that the dist rict court violated their due process rights in two ways. Firs t, the court failed to stay the forfeiture action pending the outcome in the parallel criminal proceeding. Appellants claim a stay was constitutionally required because the allegations in the criminal proceeding were filed under seal with portions redacted, making it difficult or impossible to c ontest the government’s grounds for forfeiture until the criminal proceeding was completed and the materials unsealed. 2 Second, appellants argue that by

2 According to appellants, “where the basis for a civil forfeiture rests upon sealed allegations in a parallel criminal proceeding, the5

refusing to reinstate their wit hdrawn claims, the court denied them the opportunity to challenge the forfeiture on the merits.

Neither argument has merit. Regarding the stay, appellants never asked for one, and we are aware of no authority for the proposition that a court has a duty to stay a civil forfeiture proceeding on its own initiative pending the outcome of a parallel criminal action. Appellants cite no authority for this proposition, and to our knowledge the only other circuit to consider the issue reached the opposite conclusion. See United States v. Certain Real Prop. 566 Hendrickson Blvd., Clawson, Oakland Cnty., Mich. , 986 F.2d 990, 996 (6th Cir. 1993). Additionally, we have previously stated that “[t]he Constitution . . . does not ordinarily require a stay of civil proceedings pe nding the outcome of criminal proceedings.” SEC v. Dresser Indus., Inc. , 628 F.2d 1368, 1375 (D.C. Cir. 1980) (en banc) (emphasis added).

Nor does due process require the government to provide a person the opportunity to challenge the seizure of property he has voluntarily forfeited. Or dinarily, “a citizen has a right to a hearing to contest the forf eiture of his property, a right secured by the Due Process Clause.” Degen v. United States

, 517 U.S. 820, 822 (1996). The purpose of this right “is to protect [the] use and possession of property from arbitrary encroachment—to minimize substantively unfair or mistaken deprivations of property.” Fuentes v. Shevin , 407 U.S. 67, 81 (1972). When a person has voluntarily relinquished his claim to property, however, these concerns disappear. We have

due process rights of the defendant-claimant[] are properly protected where the civil forfeiture action is stayed pending outcome of the criminal trial, af ter which[] the sealed information may be unsealed in the civil [actio n] to afford the [c]laimant[] opportunity to meaningfully defend on the merits.” Appellants’ Br. 13 (emphasis omitted).6

previously said that “[a]bs ent an underlying property or liberty interest, . . . one has no entitlement to procedural due process and hence no ‘right to be heard.’” Sargeant v. Dixon

, 130 F.3d 1067, 1070 (D.C. Cir. 1997); see also MercadoAlicea v. P.R. Tourism Co. , 396 F.3d 46, 53 (1st Cir. 2005) (“[Appellant] voluntarily gave up hi s property interest . . . and does not have a due process right to a hearing.”). By voluntarily releasing their claims to the properties, appellants relinquished their right to an a dversarial hearing to contest the grounds for forfeiture. It goes w ithout saying, of course, that had the district court granted ap pellants’ Rule 60(b) motion to reinstate their withdrawn clai ms, they would have been entitled to an adversarial heari ng before being deprived of the properties.

Neither of the cases appellants cite for the proposition that they were entitled to an adversarial hearing is on point. United States v. James Daniel Good Real Property , 510 U.S. 43 (1993), held that absent “exigent circumstances,” due process requires the government to provide “notice and a meaningful opportunity to be heard before seizing real property subject to civil forfeiture.” Id. at 62. Here, although the government seized the bank account funds prior to appellants’ withdrawal of claims , there is no indication that it seized the real property at issue prior to appellants’ withdrawal. United States v. Pr operty Identified as Lot Numbered 718 , 20 F. Supp. 2d 27 (D.D.C. 1998), is similarly distinguishable. See id. at 35-38 (findi ng due process violation where government sei zed claimant’s home without an adversarial hearing). In any event, in neither James Daniel Good nor Lot Numbered 718 did the claimant relinquish claim to the property, vol untarily or otherwise.

We turn next to the district court’s denial of appellants’ first Rule 60(b) motion, whic h sought to reinstate their7

previously withdrawn claims to the properties. We review the district court’s decision for abuse of discretion. See Smalls v. United States , 471 F.3d 186, 191 (D.C. Cir. 2006). Federal Rule of Civil Procedure 60(b) provides that “[o]n motion and just terms, the court may relieve a party or its legal representative from a final j udgment, order, or proceeding for,” inter alia , “mistake, inadvertence, surprise, or excusable neglect,” Fed. R. Civ. P. 60(b)(1); “fraud . . . , misrepresentation, or misconduct by an opposing party,” id. 60(b)(3); or “any other reas on that justifies relief,” id. 60(b)(6). Appellants contend th at the district court should have reinstated their withdr awn claims to the properties because Bowdoin acted on his atto rney’s negligent advice that he could “wholly” avoid jail tim e by relinquishing his claims. Appellants’ Br. 16.

Neither side cites, and we ar e unable to fi nd, any circuit court precedent setting forth pr inciples for assessing whether a district court abused its disc retion in denying a Rule 60(b) motion to rescind a withdrawal of claims in a civil forfeiture action. Casting our net a bit wide r, we take counsel from the Supreme Court’s instru ction that Rule 60(b) is not an avenue for relieving litigants from “free, calculated, deliberate choices.” Ackermann v. United States , 340 U.S. 193, 198 (1950). This teaching has guided mu ch of our Rule 60(b) case law, see, e.g. , In re Sealed Case (Bowles) , 624 F.3d 482, 489 n.4 (D.C. Cir. 2010) (stating that appellant could not “use Rule 60(b) to avoid its strate gic choice” to file a rushed, poorly drafted request for judi cial notice before the court ruled on other pending motions); Kramer v. Gates , 481 F.3d 788, 792 (D.C. Cir. 2007) (vacating grant of Rule 60(b) motion deeming plaintiffs “emp loyees” under the Back Pay Act, because plaintiffs’ failu re to request retroactive employee status “was clearly a litigation choice”), and we have emphasized several times th at “Rule 60(b) cannot . . . be8

employed simply to rescue a li tigant from strategic choices that later turn out to be improvident.” Good Luck Nursing Home, Inc. v. Harris , 636 F.2d 572, 577 (D.C. Cir. 1980); accord Kramer , 481 F.3d at 792; Smalls

, 471 F.3d at 191; S. Pac. Commc’ns Co. v. AT&T , 740 F.2d 1011, 1019 (D.C. Cir. 1984). Applying the Supreme Court’ s instruction to the case before us, we hold that a dist rict court does not abuse its discretion in denying a Rule 60(b) motion to reinstate withdrawn claims when the w ithdrawal was the product of a free, deliberate choice. We furthe r find that appellants’ choice to withdraw their claims in th is case was free and deliberate.

To begin with, there can be no doubt that appellants meant to withdraw their clai ms. Their withdrawal motion expressly stated that they wished to “withdraw and release with prejudice” their verified claims and that they “consent[ed] to the forfeiture of the propertie s.” Withdrawal Mot. 2. Nor is there any basis to conclude that appellants were somehow tricked into releasing their claims. Despite Bowdoin’s protests to the cont rary, his own affidavit shows that he understood well that he was receiving no promise in return for relinquishing his claims. See Bowdoin Aff. ¶ 8 (“I . . . signed a document st ating that I would release my claims . . . on the understanding that by cooperating I could possibly avoid a pr ison sentence.”); id. ¶ 11 (“[My attorney] le[d] me to believe that if I cooperated there was a possibility that I would not be incar cerated or imprisoned.”); id. ¶ 12 (“I believed that my cooperation would still result in a criminal sentence that could possibly not include imprisonment or incarceration.”). That he feared a stiffer prison sentence if he did not withdraw his claims does not mean his withdrawal was not a free, deliberate choice. Cf. Brady v. United States

, 397 U.S. 742, 749-55 (1970) (holding that a guilty plea is not involuntary even though made to avoid possibility of death penalty). Of course, had Bowdoin been induced to withdraw9

his claims by a false promise of a more lenient sentence, his choice to withdraw would not ha ve been free and deliberate, but that is not this case.

Moreover, far from being negl igent, appellants’ attorney had sound reasons for recommendi ng that they c ooperate with prosecutors by relinquishing thei r claims. “Such an approach from counsel could be seen as the norm when the Government’s evidence is strong,” 8 Gilcrease Ln. II , 668 F. Supp. 2d at 131, and indeed, the dist rict court itself remarked below that based on the affidav its received and the testimony at the evidentiary hearing, the government’s evidence “appear[ed] to be strong,” id. Further, the witnesses AdSurfDaily offered at the eviden tiary hearing to prove that it operated a legitimate business contradicted each other, see 8 Gilcrease Ln. I , 587 F. Supp. 2d at 144, and at least one actually undermined the company’s position, see id. at 143. We thus need not consider whet her a party that withdraws its claims based on negligent advi ce from counsel has made a free, deliberate choice to wit hdraw. Under the circumstances of this case, the district cour t did not abuse it s discretion in denying appellants’ Rule 60(b ) motion to reinstate their withdrawn claims.

After the district court ente red a default judgment and final order of forfeiture, appe llants filed another Rule 60(b) motion, this time asking the court to vacate the denial of their reinstatement motion, the order to show cause why a default judgment should not be entered, and the default judgment and final order of forfeiture. Appe llants claim they never received notice of the show cause orde r, making their failure to respond “excusable neglect,” see Fed. R. Civ. P. 60(b)(1), and rendering the subsequent defau lt judgment invalid because their default was not “willful,” see Jackson v. Beech , 636 F.2d 831, 832 (D.C. Cir. 1980) (“A motion for relief from a default10

judgment should be granted when . . . the defendants have not willfully defaulted . . . .”).

But as appellants concede, see Reply Br. 2, they were no longer parties to the forfeiture proceeding when the show cause order issued. Although noti ce generally must be “given to parties known to the governme nt as potential claimants” before the court may enter default judgment in a forfeiture action, United States v. $4,224,958.57 , 392 F.3d 1002, 1005 (9th Cir. 2004), a pa rty who has lost a Rule 60(b) motion to reinstate voluntarily withdrawn claims is not a “potential claimant” entitled to notice of a proposed default judgment. Obvious fairness concerns motivate the notice requirement for known potential claimants. See, e.g.

, Auster Oil & Gas, Inc. v. Stream , 891 F.2d 570, 581 (5th Cir. 1990) (Garwood, J., specially concurring) (“Fo r one to be bound by a judgment in a suit to which it was not a party and of which it had no notice is, to say the least, unusual, if not unconstitutional.”). But these concerns do not apply where a party has previously received notice, filed claims, voluntarily withdrawn those claims, and tried but failed to convince a court to reinstate the withdrawn claims. Thus, whether appellants in this case received notice of the district court’s show cause order is irrelevant given that they we re no longer parties to the proceeding and no longer had any claim to the properties. The district court did not abus e its discretion in denying appellants’ second Rule 60(b) motion.

Finally, appellants challenge th e district court’s entry of default judgment and final order of forfeiture as untimely. Federal Rule of Appellate Procedure 4 gives a party sixty days to appeal a judgment or or der when the United States is a party to the suit. Fed. R. A pp. P. 4(a)(1)(B). The district court, however, entered default judgment and final order of forfeiture only fifty-five days after denying appellants’11

motion to reinstate their wit hdrawn claims. Appellants claim that the district court’s entry of default judgment prevented them from filing an interlocutor y appeal of the order denying their reinstatement motion. This argument is moot. We are now hearing the very appeal that appellants claim the district court’s entry of defau lt judgment foreclosed.

III

For the foregoing reasons, the judgment of the district court is

Affirmed.