Opinion ID: 2792928
Heading Depth: 3
Heading Rank: 2

Heading: The Civil Forfeiture Litigation

Text: On June 30, 2011, the government filed a civil complaint seeking forfeiture of the Grupo funds in the brokerage account. In November 2011, the clerk entered a default against Angela, Enrique Sr., Grupo, and all other potential claimants. After correspondence with counsel for Angela, Enrique Sr., and Grupo, the government filed a motion for entry of default judgment, which Angela, Enrique Jr. (the son of Angela and Enrique Sr.), and Grupo opposed. Following a hearing, the district court granted the government’s motion for entry of default judgment. The court then denied Appellants’ motion to set aside the default judgment under Rule 60(b)(1). Under Rule 60(b)(1), a court may set aside a default judgment for “mistake, inadvertence, surprise, or excusable neglect.” Applying our decision in United States v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010), the district court listed the three disjunctive factors used to determine if “excusable neglect” could permit setting aside the Appellants’ default: “(1) whether the party seeking to set aside the default engaged in culpable conduct that led to the default; (2) whether it had no meritorious defense; or (3) whether reopening the default judgment would prejudice the other party.”4 After concluding that Appellants had acted culpably and Enrique Jr. lacked 4 Because the government did not contest prejudice, the district court did not address this factor. UNITED STATES V. AGUILAR 7 standing to contest the forfeiture,5 the district court examined the two potential defenses that Angela and Grupo had asserted. It rejected the innocent owner defense for Angela, as she was a shareholder in Grupo, but not an owner of the funds.6 In the alternative, the district court concluded that any interest she had was “after-acquired” and thus did not fall within 18 U.S.C. § 983(d)(2). The district court also rejected the arguments of Angela and Grupo that the civil complaint failed to state a claim, as the allegations were sufficient to meet the government’s burden at this initial stage. Because the defendants could not allege a meritorious defense, the district court refused to set aside the default judgment. The court did not specifically articulate any “extreme circumstances” justifying entry of default and default judgment.