The panel unanimously concludes this case is suitable for decision *

without oral argument. See Fed. R. App. P. 34(a)(2).

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

$11,500.00 IN UNITED STATES

CURRENCY, in rem; $2,971.00 IN

UNITED STATES CURRENCY, in rem,

Defendants,

and

CHARLES GUERRERO,

Claimant-Appellant.

No. 11-35923

D.C. No.

3:10-cv-00097-

MO

OPINION

Appeal from the United States District Court

for the District of Oregon

Michael W. Mosman, District Judge, Presiding

Malcolm F. Marsh, District Judge, Presiding

Submitted October 9, 2012*

Portland, Oregon

Filed March 20, 2013
2 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

 This summary constitutes no part of the opinion of the court. It has

**

been prepared by court staff for the convenience of the reader.

Before: Barry G. Silverman, Richard R. Clifton, and

N. Randy Smith, Circuit Judges.

Opinion by Judge Clifton;

Partial Concurrence and Partial Dissent by 

Judge N.R. Smith

SUMMARY

**

Civil Forfeiture

The panel affirmed in part and vacated in part the district

court’s order in a civil forfeiture action under 21 U.S.C.

§ 881.

The government sought to forfeit two bundles of currency

in the amounts of $11,500 and $2,971. The district court held

with respect to the $11,500 that the claimant failed to comply

with Supplemental Admiralty and Maritime Claims Rule

G(5)(a)(iii) (requiring a claim form filed by a bailee must

identify the bailor); and with respect to both amounts, the

district court entered summary judgment in favor of the

government because they were either the proceeds of drug

trafficking or used to facilitate drug trafficking. The panel

held that the district court’s dismissal of the claim to $11,500

– based on the claimant’s failure to identify the bailor – was

an abuse of discretion, primarily because the omission did not

prejudice the government, did not appear to be calculated,

and did not delay or extend the forfeiture proceedings. The
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 3

panel further held that there was a genuine issue of material

fact whether the $11,500 was derived legitimately, and

therefore the district court erred in entering summary

judgment on this alternative basis. Finally, the panel held

that the government’s failure to provide timely notice of the

forfeiture to the claimant as to both amounts, pursuant to 18

U.S.C § 983(a)(1)(A)(i), did not require the government to

return the property where the government subsequently

commenced a forfeiture proceeding. The panel affirmed the

judgment forfeiting the $2,971, and vacated and remanded the

portion forfeiting the $11,500.

Judge N.R. Smith concurred in part, and dissented in part.

Judge N.R. Smith agreed that the government need not return

the seized funds for failure to give timely notice where it had

already commenced a forfeiture proceeding; and

Supplemental Rule G(5)(a)(iii) required the claimant to

identify the bailor. Judge N. Smith dissented because: he was

not convinced that the district court abused its discretion in

striking the claim for failure to comply with Supplemental

Rule G(5); and in any event, he would affirm the summary

judgment entered in favor of the government.

COUNSEL

Frank de la Puente, Attorney, Salem, Oregon, for ClaimantAppellant.

S. Amanda Marshall, United States Attorney, Kelly A.

Zusman, Appellate Chief, and Robert D. Nesler, Assistant

United States Attorney, for Plaintiff-Appellee.
4 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

OPINION

CLIFTON, Circuit Judge:

Civil forfeiture actions brought by the government require

compliance with certain rules by both the government and by

any claimant. In this case, the government and the only

claimant each violated one of the rules. This appeal requires

us to consider the appropriate consequences.

The government sought to forfeit two bundles of currency

in the amounts of $11,500 and $2,971. Only one contrary

claim was filed regarding both sets of currency. The district

court concluded that the claimant failed to comply with

Supplemental Admiralty and Maritime Claims Rule

G(5)(a)(iii), which requires that “[a] claim filed by a person

asserting an interest as a bailee must identify the bailor.”

Supp. Rule G(5)(a)(iii). The claim form filed here asserted a

different property interest, described by the claimant as

“possessory,” and it did not identify a bailor. The claimant’s

alleged interest in the $11,500 later came to be identified as

a bailee’s interest. Based on the failure to identify the bailor,

the district court struck the claim to the $11,500. We agree

with the district court that the requirement applied to the

claimant, even though he initially asserted a different interest.

We also conclude, however, that striking his claim based on

that transgression was not mandatory but was instead subject

to the sound exercise of discretion by the court. Under the

circumstances of this case, the dismissal of the claim to the

$11,500 for that failure was an abuse of discretion, primarily

because the omission did not prejudice the government, did

not appear to be calculated, and did not delay or extend the

forfeiture proceedings.
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 5

The district court concluded that the government failed to

provide notice to the claimant within 60 days after the date of

the seizure of both sets of currency, as required under

18 U.S.C. § 983(a)(1)(A)(i) for a nonjudicial civil forfeiture.

Neither did the government return the money to the claimant.

Instead, the government commenced civil forfeiture

proceedings. It could properly do so, even though it had not

given timely notice, and we conclude that the government

was not required in these circumstances to return the

property.

We thus affirm the judgment in favor of the government

regarding the portion of currency amounting to $2,971. We

vacate the judgment in favor of the government as to the

$11,500 portion and remand for further proceedings.

I. Background

The currency at issue was seized when claimant Charles

Guerrero (“Guerrero”) went to a jail in Portland, Oregon, to

post bail for his wife, Rosalie Guerrero (“Rosalie”), who had

been arrested the night before for possession with intent to

distribute heroin. Guerrero did not enter the jail himself but

accompanied Virgil Wood and gave him $11,500 to post bail.

At the jail, law enforcement agents asked Wood how he had

obtained the currency. Wood eventually identified Guerrero

as the source. Finding Guerrero outside the jail, law

enforcement officers searched him and found $2,971 in his

pocket, along with several pills. Guerrero was arrested and

told the officers that the $11,500 and $2,971 were his.

The circumstances surrounding the seizure of the

currency led the government to believe that the money was

connected to drug trafficking. The officers discovered several
6 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

grams of heroin in a black bag in the trunk of Wood’s car,

and Guerrero later pled guilty to possession of heroin. A

trained dog sniffed the currency for the odor of narcotics, and

the government contends that the dog alerted positively.

The United States initiated civil forfeiture proceedings

against the $11,500 and $2,971 under 21 U.S.C. § 881, on the

basis that the currency was either proceeds of drug trafficking

or used to facilitate drug trafficking. Guerrero filed the sole

claim to the currency. In the claim he filed with the court,

through counsel, he described hisinterest as “possessory.” In

a “seized asset claim form” attached to the court filing, he

provided a handwritten response to an inquiry as to his

interest: “My interest is possessory, i.e., the money belongs

to me.”

In his subsequent deposition Guerrero acknowledged that

he had sold drugs and that he had not had stable employment

for years. He maintained, however, that the seized currency

came from legitimate sources. He testified that the $2,971

was money he had saved from the sale of some furniture and

tools. With respect to the $11,500, Guerrero testified that his

wife had received the money several years earlier from an

insurance settlement and had given it to him for safekeeping.

The district court granted summary judgment to the

government with respect to the $11,500, holding that

Guerrero failed to comply with Supplemental Admiralty and

Maritime Claims Rule G(5)(a)(iii), because he failed to

identify Rosalie as his bailor on the claim form. The court

further held, in the alternative, that there was no genuine issue

of fact as to whether the $11,500 was the proceeds of or

facilitated drug trafficking. The $2,971 was forfeited after a
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 7

jury found that it constituted proceeds of illegal drug activity

and facilitated drug trafficking. Guerrero timely appealed.

II. Bailor Identification Requirement

When the government initiates civil forfeiture

proceedings against specified property, a person may contest

the forfeiture by filing a claim in district court in accordance

with the Supplemental Rules for Admiralty and Maritime

Claims. 18 U.S.C. § 983(a)(4)(A). The claim must “identify

the claimant and state the claimant’s interest in the property.”

Supp. Rule G(5)(a)(i)(B). Among the other requirements, and

the one at issue here, is that “[a] claim filed by a person

asserting an interest as a bailee must identify the bailor.”

Supp. Rule G(5)(a)(iii). Supplemental Rule G(8)(c)

specifically provides that the government may move to strike

a claim for failure to comply with specified portions of the

Supplemental Rules, including Supplemental Rule G(5), or

because the claimant lacks standing.

The district court granted the government’s motion to

strike Guerrero’s claim to the $11,500 for failing to identify

Rosalie as the bailor of the currency on his claim form. The

court’s order noted that Guerrero “never pled the existence of

a bailment, and did not identify Rosalie Guerrero as the

bailor.” The order also noted that Guerrero did not explain

until his deposition that the money had been given to him by

his wife, and further that Guerrero never sought to amend his

claim form to identify her as the bailor.

We review a district court’s interpretation of the

Supplemental Admiralty and Maritime Claims Rules de novo.

See United States v. 2,164 Watches, 366 F.3d 767, 770 (9th

Cir. 2004). Dismissal of a forfeiture claim for failure to
8 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

comply with procedural requirements is reviewed for abuse

of discretion. See United States v. Real Property Located at

22 Santa Barbara Drive, 264 F.3d 860, 868 (9th Cir. 2001).

A district court abuses its discretion if it does not apply the

correct legal standard, Bateman v. U.S. Postal Service,

231 F.3d 1220, 1223 (9th Cir. 2000), or if it fails to consider

the factors relevant to the exercise of its discretion. See

Bautista v. Los Angeles Cnty., 216 F.3d 837, 841–42 (9th Cir.

2000). We conclude that the district court was correct in

holding that Rule G(5)(a)(iii) applied to Guerrero, but that

striking his claim was an abuse of discretion.

As described above, Guerrero’s claim form stated that his

interest in the currency was “possessory.” It was not until

after the government moved to strike Guerrero’s claim for

lack of standing that Guerrero argued in response that he had

an ownership interest in the currency by virtue of his

marriage to Rosalie and further described his “possessory”

interest as that of a “bailee for Rosalie.” That was the first

time that Guerrero or anyone else described Guerrero’s

relationship to the currency as that of a bailee. The court

declined to strike Guerrero’s claim based on a lack of

standing, holding that there was a genuine dispute of material

fact as to whether Guerrero was a bailee of the currency. But

the court went on to strike Guerrero’s claim for failure to

identify Rosalie as the bailor.

Guerrero contends that the rule only requires the

identification of the bailor when the claimant explicitly

asserts a bailee interest on his claim form. Guerrero’s claim

form did not describe his interest as that of a bailee. The

government argues that the bailor identification requirement

did apply here.
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 9

The rule in question, Supplemental Rule G(5)(a)(iii),

states under a subheading entitled “Filing a Claim” that “[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.” That language does not explicitly

spell out whether “asserting an interest as a bailee” refers

only to the time the claim form is filed or includes a

subsequent assertion of a bailee’s interest.

We are persuaded that the requirement to identify the

bailor applies to the assertion of a bailee’s interest at any

time, even if it is articulated after the claim form is filed. The

purpose of the requirement is to provide the government and

the court notice of the specific basis of the claim and the

source of the property. See United States v. Real Property,

135 F.3d 1312, 1317 (9th Cir. 1998) (noting that the purpose

behind forfeiture pleading requirements is “to inform the

court that there is a claimant to the property who wants it

back and intends to defend it”); United States v. $321,470.00,

U.S. Currency, 874 F.2d 298, 304 (5th Cir. 1989) (in

defending bailor identification as a standing requirement,

noting that “a courier carrying cash from an unknown owner

to an unknown recipient . . . the ideal mule for drug

traffickers, must be prepared to demonstrate that he has a

lawful possessory interest”). This purpose would be ill-served

if a claimant could avoid the bailor identification requirement

simply by describing his interest on the claim form in another

way and waiting until later to identify it as a bailee’s interest.

Therefore, we conclude that the bailor identification

requirement in Rule G(5)(a)(iii) applies to a claimant who

asserts an interest as a bailee of contested property, even if he

had not described himself as a bailee on his claim form. The

rule thus applied to Guerrero.
10 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

Guerrero’s claim should not have been dismissed as a

result, however. The district court here did so because it

understood that “strict compliance” with the forfeiture filing

rule was necessary, citing our court’s decision in United

States v. Real Property, 135 F.3d 1312 (9th Cir. 1998). But

the claimant’s failure in that case was not like Guerrero’s

misstep here. In Real Property, the claimant received notice

of forfeiture proceedings but failed to file a timely claim of

any kind, only challenging the forfeiture proceedings one

year after receiving notice and six months after the

government received a final judgment of forfeiture. Id. at

1313–14. In holding that failure to file a claim within the

applicable time limits precluded the claimant from later

challenging the forfeiture, we noted that allowing him to

challenge a forfeiture judgment after so much time had

elapsed would “exact a significant toll on judicial resources.”

Id. at 1317. That does not mean that any deficiency in a

claim form requires dismissal of a claim.

To the contrary, we have held that courts have “discretion

to overlook the failure to conform to the requirements of

[forfeiture claim rules].” United States v. Real Property at

2659 Roundhill Dr., Alamo, Cal., 194 F.3d 1020, 1024 (9th

Cir. 1999). Among the factors relevant to the exercise of that

discretion are whether the deficiency prejudiced the

government, see United States v. 1982 Yukon Delta

Houseboat, 774 F.2d 1432, 1436 (9th Cir. 1985), and whether

it was a strategic attempt to gain some advantage. See United

States v. Real Prop. Located at 22 Santa Barbara Dr.,

264 F.3d 860, 870 (9th Cir. 2001) (refusing to excuse

noncompliance with Rule C(6) where the reason for

claimant’s failure to timely file a claim was strategic). After

reviewing these factors, we conclude that it was an abuse of

discretion to strike Guerrero’s claim.
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 11

 The dissenting opinion suggests, at 23–25, that the government was 1

prejudiced by Guerrero’s failure to identify his bailee interest, but the

government did not itself so argue. Rather, it stood, as did the district

court, on the proposition that “strict compliance” with Rule G(5) was

required. As discussed above, we conclude that the court had discretion

to overlook Guerrero’s omission.

The failure of Guerrero’s claim form to identify a bailee’s

interest and to list Rosalie as the bailor did not prejudice the

government or delay the proceedings. The government knew

of Rosalie’s identity and took her deposition, as well as

Guerrero’s. There is no basis to conclude that the government

was unable to conduct a proper investigation. Regardless of

how Guerrero characterized his possessory interest, the

government was aware of the facts underlying Guerrero’s

possession of the currency.1

Nor was there any indication that Guerrero’s failure to

identify the bailor was a strategic attempt to gain some

advantage. There was no advantage gained. And it would not

have been clear to Guerrero that failing to identify his interest

with precise accuracy in the claim he filed would have been

fatal. Cf. United States v. $260,242.00 in U.S. Currency,

919 F.2d 686, 688 (11th Cir. 1990) (not holding claimant to

knowledge of the requirement that he name his bailor because

the Eleventh Circuit had not previously ruled on the specific

issue).

In addition, the claim was dismissed without giving him

an adequate opportunity to amend. In the dismissal order, the

district court accurately noted that Guerrero did not seek

leave to amend his claim. But the district court could have

offered that opportunity and did not do so. See Supp. Rule G

Advisory Committee Notes (“[T]he court should strike a
12 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

 The government has not argued on appeal that Guerrero lacked Article 2

III standing. Guerrero’s testimony described a bailee interest in the

currency, as we discussed above, and such an interest was sufficient for

Article III standing. See United States v. $191,910 in U.S. Currency,

16 F.3d 1051, 1057 (9th Cir. 1994) (“In order to contest a forfeiture, a

claimant need only have some type of property interest in the forfeited

items.”), superseded on other grounds by statute as stated in United States

v. $80,180.00, 303 F.3d 1182, 1184 (9th Cir. 2002).

claim or answer only if satisfied that an opportunity should

not be afforded to cure the defects under Rule 15.”).With

regard to pleadings, our general practice is to “freely give

leave [to amend] when justice so requires.” Fed. R. Civ. P.

15(a)(2); see also Eminence Capital, LLC v. Aspeon, Inc.,

316 F.3d 1048, 1051 (9th Cir. 2003) (stating that the policy

of freely granting leave to amend is “to be applied with

extreme liberality”).

That approach should apply here. Though Guerrero never

moved to amend his claim, the absence of a formal motion for

leave to amend does not preclude the district court from

granting it. Edwards v. Occidental Chem. Corp., 892 F.2d

1442, 1445 n.2 (9th Cir. 1990). It is not surprising Guerrero

did not request leave to amend his claim. The government did

not move to strike Guerrero’s claim based on the failure to

identify a bailor. Rather, the government premised its motion

to strike on the ground that Guerrero’s asserted ownership

and possessory interests were insufficient for Article III

standing. Even after Guerrero described himself as a bailee 2

in his brief opposing the motion, the government did not

argue to the district court that the claim should be struck for

violating the bailor identification requirement. Instead, the

government argued that, because Guerrero had not asserted

a bailee interest or identified a bailor on his claim form, the

court should not construe Guerrero’s claim as asserting a
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 13

bailee interest. Under these circumstances, we conclude that

striking the claim because Guerrero failed to identify Rosalie

as bailor in the claim he filed was an abuse of discretion.

III. Source of the $11,500

The district court also granted summary judgment for the

government on the alternative ground that there was no

genuine dispute that the $11,500 was proceeds of or

facilitated drug trafficking. Guerrero challenges that ruling.

In reviewing the summary judgment, we must view the

evidence in the light most favorable to Guerrero and

determine whether there is any genuine issue as to whether

the currency was derived from or facilitated drug trafficking.

United States v. $133,420.00 in U.S. Currency, 672 F.3d 629,

637 (9th Cir. 2012). In a civil forfeiture action, the

government bears the burden of proving by a preponderance

of the evidence that the property is subject to forfeiture.

18 U.S.C. § 983(c)(1). Summary judgment is appropriate if

there is no genuine issue as to any material fact. Fed. R. Civ.

P. 56(a).

The government did not prove a link between the

currency and a specific act of drug trafficking, but it was not

required to do so, notwithstanding Guerrero’s arguments to

the contrary. The government may meet its burden with

sufficiently strong circumstantial evidence linking the

currency to drug trafficking in general. See United States v.

Currency, U.S. $42,500.00, 283 F.3d 977, 984 (9th Cir. 2002)

(affirming government’s motion for summary judgment in

light of substantial circumstantial evidence that currency was

connected to drug trafficking, and where claimant refused to
14 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

Guerrero also challenges the refusal of the district court to consider 3

two pieces of evidence tending to support claimant’s position that the

currency was legitimately derived from Rosalie’s insurance proceeds.

Because we vacate the summary judgment on substantive grounds, we

need not discuss the evidentiary rulings at length, but the exclusion of the

evidence was not an abuse of discretion. First, the court struck a

declaration by Rosalie because she later invoked the Fifth Amendment

and refused to answer questions about the source of the currency at her

deposition. When a witness testifies and then invokes the Fifth

Amendment to avoid adversarial testing of the truth of that testimony, a

district court may strike that testimony to avoid distortion of the truth.

United States v. $133,420.00 in U.S. Currency, 672 F.3d 629, 640–42 (9th

Cir. 2012). Second, Guerrero tried to offer his own testimony as to what

Rosalie told him about the currency’s source. That was hearsay and was

appropriately excluded. Guerrero arguesthat it should have been admitted

under the residual hearsay exception, Federal Rule of Evidence 807. But

a statement qualifying under the residual exception must have “equivalent

circumstantial guarantees of trustworthiness.” Fed. R. Evid. 807(a)(1). No

such guarantees were present here.

disclose the source of the currency or provide any other

evidence that the source was legitimate).

In granting summary judgment, the district court

emphasized “the absence of some admissible evidence

supporting the contention that the source of the $11,500 was

the insurance settlement paid to Rosalie Guerrero two years

prior to the seizure.” (Emphasis in original.) This statement

immediately preceded the district court’s conclusion that

other evidence offered by Guerrero in support of the

insurance settlement as the source of funds (Rosalie’s

declaration and Guerrero’s deposition testimony regarding the

source of the money given to him by Rosalie) was not

admissible evidence and could not be considered.3

Guerrero did offer admissible evidence that supported that

proposition, however. In particular, he presented a
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 15

declaration from the attorney who represented Rosalie in her

insurance claim. The declaration stated that Rosalie received

insurance proceeds in the amount of $12,743.75 two years

before the seizure, and an additional $11,096.05 on an

undisclosed date, as compensation for injuries sustained in a

car accident. The declaration attached and authenticated two

documents supporting that contention. The district court did

not rule that the lawyer’s evidence was inadmissible. Indeed,

the court’s order even referred to the fact of the insurance

payments to Rosalie, with citation to the attorney’s

declaration, as part of the background of the case.

The district court nonetheless concluded that “Rosalie

Guerrero’s receipt of an insurance settlement more than two

years prior to the seizure in question does not give rise to a

genuine dispute of material fact as to whether the seized

currency represented a portion of that settlement or profits

therefrom.” It is clear that there was plenty of evidence to

support an ultimate factual finding that the money came from

drug sales. Viewing the evidence in the light most favorable

to Guerrero as we must, however, we do not agree that the

evidence was so conclusive as to eliminate a genuine issue as

to the source of the $11,500.

The length of time between the insurance settlement and

the seizure of the currency, more than two years, did not

preclude a finding that the currency was legitimate. Guerrero

testified that Rosalie was unemployed at the time she gave

Guerrero the money, but there was no evidence about her

employment status the rest of the time. It is not unreasonable

to think that someone receiving a lump sum of money might

set it aside for a rainy day.
16 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

The evidence of a positive dog sniff alert to the currency

did not conclusively prove that the currency came from drug

sales. Given that the Guerreros dealt drugs, a jury could

reasonably infer that any money they had, even if legitimately

derived, could have been exposed to drugs, such as the heroin

found in Wood’s vehicle at the scene of the forfeiture. And,

there was some ambiguity in the record as to whether the

drug dog properly alerted. In a document detailing the dog’s

training, the canine officer stated that his dog has been trained

to scratch or bite at the source of narcotics. In his notes on the

$11,500, however, he did not mention the dog scratching or

biting but wrote “sniffed intently—alerted.” That might mean

that the dog sniffed intently and then alerted, or it might

mean, as Guerrero argued, that the dog failed to scratch but

that the officer nonetheless interpreted its sniff as an alert.

While the jury could draw inferences in favor of the

government from Rosalie’s refusal to testify, her refusal was

not necessarily inconsistent with a legitimate source for the

currency. Given her own problems with the law, her attorney

may have advised her to play it safe and not answer any

questions that might require her to acknowledge illegal

activity. At her deposition, Rosalie’s attorney expressed

concern that if she answered even a seemingly innocuous

question, the government would accuse her of “picking and

choosing when to answer.”

Guerrero did not have a lot of admissible evidence on his

side, and a jury might well be persuaded by the government’s

evidence. On the $2,971 bundle of currency, the forfeiture

case went to trial, and the jury found in favor of the

government. But Guerrero mustered enough evidence to

permit a reasonable jury to conclude that the $11,500 was

derived legitimately, and that was enough to establish the
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 17

 The government argues that it complied with the applicable notice 4

requirements, and urges the court to affirm on this alternative ground.

Because we conclude that the government need not return the currency

even if it failed to provide timely notice, we decline to reach the issue. We

therefore assume, without deciding, that notice was not timely in the

remainder of the opinion.

existence of a genuine issue of material fact. The alternative

basis identified by the district court cannot sustain the grant

of summary judgment in favor of the government as to the

forfeitability of the $11,500.

IV. Timeliness of Notice

The district court held that the government failed to

provide Guerrero with timely notice of the forfeiture of both

the $11,500 and the $2,971. The government held on to the

money despite the failure to give notice, and it later

commenced this civil forfeiture proceeding. Guerrero argued

that 18 U.S.C. § 983(a)(1)(F) required that the money be

returned to him. The district court disagreed and held that the

statute did not require the return of the currency to Guerrero.

We agree with the district court’s interpretation.4

When the federal government seizes property under a

civil forfeiture statute, it must send notice to potential

claimants “in a manner to achieve proper notice as soon as

practicable, and in no case more than 60 days after the date of

the seizure.” 18 U.S.C. § 983(a)(1)(A)(i). If the government

does not send proper notice in the time allotted, the statute

provides that the government “shall return the property to [the

person from whom the property was seized] without prejudice

to the right of the Government to commence a forfeiture

proceeding at a later time.” 18 U.S.C. § 983(a)(1)(F). When
18 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

the government commences a civil forfeiture proceeding, it

may seize the property. See 21 U.S.C. § 881(b); 18 U.S.C.

§ 981(b)(2).

This framework arguably suggests that if the government

fails to give timely notice, it should return the property

though it could then commence forfeiture proceedings and reseize the property. But is the government required to return

the property even if it has in the meantime commenced

forfeiture proceedings?

Some courts have held that it is – that when the

government has failed to provide timely notice, it must return

the seized property to the claimant even though it had already

commenced forfeiture proceedings. See De Saro v. United

States, 173 Fed. Appx. 760, 765–66 (11th Cir. 2006); United

States v. Assorted Jewelry with an Approximate Value of

$219,860.00, 386 F. Supp. 2d 9, 13 (D.P.R. 2005). But others

have held that the government need not return the seized

property. See, e.g., Return of Seized Property v. United States,

625 F. Supp. 2d 949, 954–55 (C.D. Cal. 2009) (reasoning that

the release of seized property would be “academic” because

the government’s initiation of forfeiture proceedings would

allow it to immediately re-seize the property), mandamus

denied, In re Jordan, 606 F.3d 1135, 1137 (9th Cir. 2010)

(holding that such an interpretation was not clear error);

United States v. $114,031.00 in U.S. Currency, No. 06-

21820-CIV, 2007 WL 2904154, at *3 (S.D. Fla. Oct. 4, 2007)

(noting that the plain language of section 983(a)(1)(F) allows

the government to bring a forfeiture proceeding after

returning seized property, but does not require the return of

property before bringing a later proceeding).
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 19

In our view, the better and more practical interpretation of

the statutory framework is that a failure to provide timely

notice does not require the government to return the property

if it has subsequently commenced a forfeiture proceeding.

The government can still file a forfeiture action, and once it

has done so, it is empowered to seize the property. By the

time the issue was raised before the district court, the

forfeiture proceeding was under way. Requiring the return of

the property and then permitting the government to

immediately re-seize it would impose a meaningless exercise.

V. Conclusion

The portion of the judgment forfeiting the $2,971 is

affirmed, and the portion forfeiting the $11,500 is vacated.

The case is remanded for further proceedings as to the

$11,500.

AFFIRMED in part; VACATED and REMANDED in

part.

N.R. SMITH, Circuit Judge, concurring in part, dissenting in

part:

I agree that the government need not return seized funds

for failure to give timely notice where it has already

commenced a forfeiture proceeding. I also agree that

Supplemental Rule G(5)(a)(iii) required Guerrero to “identify

the bailor,” because he asserted an interest as a bailee in the

proceedings below. This is true even though he did not

describe himself as a bailee on his initial claim form.
20 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

However, I write separately in dissent, because (1) I am

not convinced that the district court abused its discretion in

striking Guerrero’s claim for failure to comply with

Supplemental Rule G(5); and (2) in any event, I would affirm

the district court’s grant of summary judgment for the

government.

I. The district court did not abuse its discretion in

striking Guerrero’s claim.

“Civil in rem forfeitures are governed by the

Supplemental Rules for Certain Admiralty and Maritime

Claims of the Federal Rules of Civil Procedure.” United

States v. $100,348.00 in U.S. Currency, 354 F.3d 1110, 1117

(9th Cir. 2004). Supplemental Rule G(5)(a)(iii) (the rule at

issue here) provides: “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.”

Supplemental Rule G(8)(c) authorizes the government to

move to strike any claim that “fail[s] to comply with Rule

G(5) or (6) . . . .” Notwithstanding Supplemental Rule G(5)’s

mandatory language, the majority correctly determined that

the district court has discretion to excuse failure to comply.

The Advisory Committee Notes to Supplemental Rule G state

that “[a]s with other pleadings, the court should strike a claim

or answer only if satisfied that an opportunity should not be

afforded to cure the defects under [Federal Rule of Civil

Procedure 15].”

 A district court abuses its discretion only when it applies

the wrong legal standard, or if it bases its conclusion on a

factual finding that is “illogical, implausible, or without

support in inferences that may be drawn from the facts in the

record.” United States v. Hinkson, 585 F.3d 1247, 1263 (9th
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 21

 I reject any implication that the district court demanded “strict 1

compliance” with Supplemental Rule G(5) and, thereby, abused its

discretion by failing to consider whether it could properly excuse

Guerrero’s non compliance. The district court analyzed the factors

relevant under Rule 15, though it did not label them as such. The district

court observed that Guerrero never requested leave to amend his claim or

offered any explanation for his failure to comply. The district court also

noted that Guerrero failed to even raise the bailor/bailee issue until after

the close of discovery and after the government’s dispositive motions.

Thus, although the district court did not use Rule 15 terms like “prejudice”

and “delay,” it is clear that it analyzed these factors.

Cir. 2009). Here, the majority misapplies this standard. The

majority overlooks ample support for the district court’s

decision to strike Guerrero’s claim and instead concludes that

the district court should have sua sponte allowed Guerrero to

amend his claim under Federal Rule of Civil Procedure 15.

Maj. Op. at 11–12. Given the ample support for the district

court’s decision, the majority’s conclusion finds no support

in Rule 15. While Rule 15 makes clear that courts should

“freely give leave” to amend, the majority allows that phrase

to swallow the district court’s discretion.1

Nothing in our cases requires the district court to sua

sponte order leave to amend after the close of discovery and

the parties’ dispositive motions. Indeed, our court and others

have upheld a district court’s discretion to deny leave to

amend at that stage of litigation. See, e.g., Lockheed Martin

Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir.

1999) (“A need to reopen discovery and therefore delay the

proceedings supports a district court’s finding of prejudice

from a delayed motion to amend the complaint.”); Solomon

v. N. Am. Life & Cas. Ins. Co., 151 F.3d 1132, 1139 (9th Cir.

1998) (affirming denial of leave to amend where motion was

filed on the “eve of the discovery deadline”); Campbell v.
22 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

Emory Clinic, 166 F.3d 1157, 1162 (11th Cir. 1999)

(“Prejudice and undue delay are inherent in an amendment

asserted after the close of discovery and after dispositive

motions have been filed, briefed, and decided.”). Similarly,

the addition of a new legal theory weighs against leave to

amend under Rule 15. See Jackson v. Bank of Haw., 902 F.2d

1385, 1388 (9th Cir. 1990) (“‘Putting the defendants through

the time and expense of continued litigation on a new theory,

with the possibility of additional discovery, would be

manifestly unfair and unduly prejudicial.’” (quoting Priddy

v. Edelman, 883 F.2d 438, 447 (6th Cir. 1989)). In this case,

because Guerrero asserted the bailor/bailee claim only after

the close of discovery and the government’s dispositive

motion, the district court properly determined that these

factors weigh against leave to amend.

The majority also fails to scrutinize Guerrero’s delay in

seeking amendment (i.e., his failure to ever request

amendment from the district court). A party’s undue delay

and failure to explain the reason for the delay weigh against

leave to amend under Rule 15. See Swanson v. U.S. Forest

Serv., 87 F.3d 339, 345 (9th Cir. 1996); Texaco, Inc. v.

Ponsoldt, 939 F.3d 794, 799 (9th Cir. 1991). Here, the

majority correctly points out that our cases do not preclude

amendment, even though Guerrero never requested it. Maj.

Op. at 12. Yet, the majority fails to cite any case that even

suggests that a district court might abuse its discretion if it

fails to order leave to amend sua sponte. Given that a number

of Rule 15 factors weighed against leave to amend, the

district court’s dismissal of Guerrero’s claim did not rise to

the level of an abuse of discretion.

The majority’s analysis focuses exclusively on two

factors: prejudice and the likelihood of gamesmanship.
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 23

While these factors may guide our review under Rule 15, the

majority fails to look at these factors through the deferential

lens that our precedent requires. This deference to the district

court requires that we affirm if these factors could plausibly

weigh against leave to amend. See Hinkson, 585 F.3d at

1263. The record makes clear that the district court could

plausibly find against Guerrero on these factors.

The majority concludes that the government suffered no

prejudice from Guerrero’s failure to identify his bailee

interest, because the government knew that the funds

belonged to Rosalie Guerrero. Maj. Op. at 11. Yet, the

majority acknowledges that revealing the identity of the

property’s owner is not the only purpose of Supplemental

Rule G(5). Rather, the purpose of the “identify the bailor”

requirement “is to provide the government and the court

notice of the specific basis of the claim and the source of the

property.” Maj. Op. at 9 (emphasis added). Similarly,

Guerrero argues that we should hold his claim only to a

notice pleading standard under Rule 8 of the Federal Rules of

Civil Procedure. I agree with Guerrero and the majority that

notice of the basis of a claim is an essential purpose of

Supplemental Rule G(5). Accordingly, the issue is not

whether the claim failed to give the government notice of

Rosalie Guerrero’s identity, but whether it failed to give the

government notice of the specific basis of Guerrero’s claim.

Guerrero’s claim alleged a vague “possessory interest”

and ownership of the $11,500. The claim failed to allege a

bailor/bailee interest as a specific basis for relief. Thus,
24 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

 Guerrero argues that a bailor/bailee relationship is simply a type of 2

“possessory interest.” I agree, and the vague assertion of a “possessory

interest” might have been enough to alert the government that Guerrero

would claim a bailor interest but for the “identify the bailor” requirement.

Guerrero’s failure to identify Rosalie Guerrero as the bailor entitled the

government to rely on Guerrero’s non-assertion of a bailor/bailee interest.

Guerrero failed to give the government even Rule 8–level

notice of his intent to later assert a bailor interest.2

Based on Guerrero’s claim as pleaded, the government

moved to strike the claim—pointing to Guerrero’s lack of

ownership and lack of possession (because he had given the

funds to Wood). The majority points out that the government

did not move to strike Guerrero’s claim on the basis of his

failure to identify the bailor. However, as the government

asserts, it had no notice of this basis for the claim. Guerrero

raised the bailor/bailee issue only in response to the

government’s motion to strike. Prior to that time, Guerrero

had only argued that he had an ownership/possessory interest

in the funds. Therefore, the government was surprised by

Guerrero’s sudden assertion of a bailee interest. Were it

otherwise, the government would have needed to argue

against Guerrero’s assertion of a bailee interest in its prior

briefing.

The record supports the conclusion that the timing of

Guerrero’s assertion of a bailor/bailee interest prejudiced the

government. As discussed above, Guerrero did not assert a

bailor/bailee interest until after the close of discovery. Prior

to that time, the government’s forfeiture case was geared

toward Guerrero’s claim that he owned the funds. While the

majority notes that the government asked Guerrero about his

“safekeeping” of the funds in his deposition, Maj. Op. at 6,
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 25

that question would not have alerted the government that

Guerrero would later rely on a bailor/bailee theory. Instead,

the government surely expected, after Guerrero’s deposition,

that it had won its case. After all, Guerrero had premised his

claim on his ownership of the funds and then admitted that he

did not own them. The government would not have known

that it needed to disprove Guerrero’s unpleaded bailee

interest.

On appeal, it remains unclear to what extent Guerrero

even asserts a bailee interest in the $11,500. In his Reply

Brief, Guerrero argued that the district court erred, because

Guerrero’s assertion of an unadorned “possessory interest”

was sufficient to comply with Supplemental Rule G.

Guerrero claims he did not need to identify Rosalie Guerrero

as the bailor because “[t]here was no bailee-bailor

relationship between [Guerrero] and Rosalie.” Thus, both in

the district court below and on appeal, Guerrero seems to

move fluidly between theories, claiming and disclaiming

them as convenient. This is the exact sort of moving target

that Rule G(5) aims to avoid. The majority’s holding only

serves to compound the government’s prejudice.

With respect to the gamesmanship factor, the majority

concludes that there is no indication that the decision to wait

to raise the bailee issue was strategic. Maj. Op. at 11.

However, this statement overlooks the fact that Guerrero had

to have known the facts underlying his alleged bailor/bailee

interest long before he raised the issue. Then, he raised the

issue after discovery ended and in response to a dispositive

government motion. While I stop short of accusing Guerrero

or his attorney of outright gamesmanship, these actions at

least infer such design. Such inference in the record should

force us to affirm the district court.
26 UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY

II. The district court did not err when it granted the

government’s motion for summary judgment.

The district court alternatively granted the government

summary judgment. The district court is correct that there is

no genuine issue of material fact as to whether the $11,500

constitutes drug proceeds. The majority relies on one piece

of evidence to support its conclusion to the contrary: an

affidavit of Rosalie Guerrero’s personal injury attorney.

However, because the attorney has no personal knowledge of

what Rosalie Guerrero did with the insurance proceeds she

received, the affidavit establishes only that Rosalie Guerrero

received a certain amount of money at a certain time. See

Fed. R. Civ. P. 56(c)(4); see also Block v. City of L.A.,

253 F.3d 410, 419 (9th Cir. 2001) (rejecting reliance on an

affidavit to defeat summary judgment where the affidavit was

“based on inadmissible hearsay,” not personal knowledge).

It is well settled that a non-moving party must present

“more than a ‘mere . . . scintilla of evidence’ to defeat a

motion for summary judgment.” Int’l Church of Foursquare

Gospel v. City of San Leandro, 673 F.3d 1059, 1068 (9th Cir.

2011) (alteration in original) (quoting Anderson v. Liberty

Lobby, 477 U.S. 242, 252 (1986)). The scintilla of evidence

upon which the majority and Guerrero rely—the fact that

Rosalie Guerrero received insurance proceeds—does not

preclude summary judgment. Without a competent witness

to testify at trial that Rosalie Guerrero saved the funds,

Guerrero’s attorney would not even be able to argue that the

$11,500 traces back to the insurance proceeds.

No witness would be able to testify in support of this

argument. As the majority acknowledges, Rosalie Guerrero

would be unable to testify at trial, because she previously
UNITED STATES V. $ 11,500.00 IN U.S. CURRENCY 27

invoked the Fifth Amendment. See Nationwide Life Ins. Co.

v. Richards, 541 F.3d 903, 910 (9th Cir. 2008) (“Trial courts

generally will not permit a party to invoke the privilege

against self-incrimination with respect to deposition questions

and then later testify about the same subject matter at trial.”).

As noted above, Rosalie Guerrero’s attorney will not be able

to testify at trial that the $11,500 was insurance proceeds, due

to her lack of personal knowledge. Similarly, Guerrero

himself will be unable to testify of the funds’ origin.

Guerrero does not claim to have personal knowledge of the

source of the funds. To the extent he seeks to testify, based

on information Rosalie Guerrero told him, it is hearsay. As

the majority notes, the district court did not abuse its

discretion in refusing to consider these hearsay statements on

summary judgment.

Contrary to the majority’s view, the district court’s

conclusion did not require it to weigh the evidence before it.

Rather, the government is entitled to summary judgment,

because Rosalie Guerrero’s attorney’s affidavit, without

more, does not raise a genuine issue of material fact and

would not allow a jury to reasonably find in Guerrero’s favor.

See United States v. $133,420.00 in U.S. Currency, 672 F.3d

629, 638 (9th Cir. 2012) (“‘The mere existence of a scintilla

of evidence in support of the plaintiff’s position will be

insufficient; there must be evidence on which the jury could

reasonably find for the plaintiff.’” (quoting Anderson,

477 U.S. at 252)).