Opinion ID: 782088
Heading Depth: 2
Heading Rank: 1

Heading: Dismissal of the Motion to Dismiss

Text: 27 Kesten first asks us to reverse the Court's order refusing to entertain its motion to dismiss the forfeiture complaint. Following the procedure authorized by Federal Rule of Civil Procedure 12, Kesten filed a 12(b)(6) motion. It did so after it had filed a verified claim but before answering the complaint or responding to the interrogatories served therewith. The District Court held that Rule 12 was inconsistent with Supplemental Rule C(6), and that Kesten was required to serve an answer and respond to the interrogatories before it filed any motions. The Court thus dismissed Kesten's motion. 6 For the reasons that follow, we will reverse the Court's order and reinstate Kesten's motion. 28 Parties to civil forfeiture proceedings are the servants of two procedural masters: the Supplemental Rules specially devised for admiralty and in rem proceedings, and the generally applicable Federal Rules of Civil Procedure (Civil Rules). The balance between the two is struck in favor of the Supplemental Rules, which always apply to civil forfeiture proceedings. See 18 U.S.C. § 983(a)(3). 7 However, the Supplemental Rules, like the former admiralty rules from which they are derived, are not comprehensive codes regulating every detail of practice, Miner v. Atlass, 363 U.S. 641, 648, 80 S.Ct. 1300, 4 L.Ed.2d 1462 (1960) (construing the former admiralty rules); rather, they are special provisions that overlay the Civil Rules, adding unique requirements necessary only in forfeiture and admiralty proceedings that have no place in general civil litigation. 8 The Civil Rules therefore also apply to in rem proceedings, but only to the extent that they are not inconsistent with the Supplemental Rules. Supp. R.A. This scheme seems simple enough. The difficulty arises in determining when precisely a Civil Rule is inconsistent with a Supplemental Rule. 29 Here, the District Court held that Civil Rule 12's procedure for motions in lieu of an answer was inconsistent with Supplemental Rule C(6)'s pleadings procedure. It reasoned that Rule C(6) requires an `answer' and only an answer, and further requires a response to interrogatories, and that it therefore could not be reconciled with Rule 12, which allows for motions in lieu of an answer. Having found that the allowance of motions in Rule 12 was inconsistent with the lack of a provision for motions in Rule C(6), the Court dismissed Kesten's motion to dismiss, and required it to serve an answer and respond to the interrogatories before filing any other motions. 9 The government asks us to affirm this order. 30 Kesten asks us to reverse and reinstate its motion. It argues that Rule C(6) is a truly supplemental rule, one that does nothing more than provide for certain unique aspects of forfeiture proceedings, namely, the filing of a claim and the timing for filing responsive pleadings in light of the claims process, but does not displace the motions scheme set forth in Rule 12. Kesten urges that the District Court's reading of Rule C(6) as completely disallowing pre-answer motions is not consistent with Supreme Court case law, the Supplemental Rules, and routine practice in the district courts. 31 We have found no reported decision that analyzes the issue as to whether Rule 12 is indeed inconsistent with Supplemental Rule C(6). One court has, in an unpublished opinion and without a great deal of discussion, adopted the view taken here by the District Court. See United States v. $38,870.00, No. 7:99-47 (M.D. Ga. filed Sept. 24, 1999) (dismissing motion to dismiss because claimant had not yet served an answer). Other federal courts have entertained motions to dismiss prior to the claimant's serving an answer, but they have done so without specifically addressing whether Rule 12 is inconsistent with Rule C(6). See, e.g., United States v. 2751 Peyton Woods Trail, 66 F.3d 1164 (11th Cir.1995) (remanding for consideration of claimant's motion to dismiss); United States v. Funds in the Amount of $29,266.00, 96 F.Supp.2d 806 (N.D.Ill.2000) (denying motion to dismiss); United States v. 657 Acres of Land, 978 F.Supp. 999 (D.Wyo.1997) (same); United States v. Funds in the Amount of $9,800, 952 F.Supp. 1254 (N.D.Ill.1996) (dismissing complaint for failure to state a claim). 32 Kesten cites to the Supreme Court's decision in Degen v. United States, 517 U.S. 820, 116 S.Ct. 1777, 135 L.Ed.2d 102 (1996), as controlling authority supporting its position, but we do not read it as such. There, the Court held that a district court may not strike a claimant's filing and enter summary judgment against him in a civil forfeiture suit merely because he failed to appear in a related criminal prosecution. Id. at 826, 116 S.Ct. 1777. While the Court did comment that consideration of the claimant's motion to dismiss would impose no great burden on the government, because it was based on a failure to file within the statute of limitations, defense of which does not require a great deal of discovery, id. at 827-28, 116 S.Ct. 1777, the issue of motion practice in forfeiture cases as presented to us was not before it. We do not agree with Kesten that the one sentence in Degen regarding motions to dismiss controls the analysis here. Although we take some policy guidance from the Supreme Court's discussion regarding the importance of such motions and the ease with which the government may defend against them, as we discuss infra, we do not read anything further into the Court's dicta and certainly do not find within it any ruling on the issue of Rule 12's interaction with Supplemental Rule C(6). 33 As there is no binding precedent to guide us, we must draw upon principles of statutory construction, look to the overall scheme imposed by the Supplemental Rules, and consider the policy behind pre-answer motions. 34 We will first examine the language of the two rules at issue. Rule 12 provides the civil procedure for answers. It states in relevant part: 35 (a) When Presented. 36 (1) Unless a different time is prescribed in a statute of the United States, a defendant shall serve an answer (A) within 20 days after being served with the summons and complaint.... (4) Unless a different time is fixed by court order, the service of a motion permitted under this rule alters these periods of time as follows: (A) if the court denies the motion or postpones its disposition until the trial on the merits, the responsive pleading shall be served within 10 days after notice of the court's action.... 37 Fed.R.Civ.P. 12 (emphasis added). Motions are specifically permitted and itemized under Rule 12(b), which states: 38 Every defense, in law or fact, to a claim for relief in any pleading, ... shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: ... (6) failure to state a claim upon which relief can be granted. 39 Fed.R.Civ.P. 12(b). 40 Rule C(6) provides the Supplemental Rule for claims and answers. It states in its entirety: 41 Claim and Answer; Interrogatories. The claimant of property that is the subject of an action in rem shall file a claim within 10 days after process has been executed, or within such additional time as may be allowed by the court, and shall serve an answer within 20 days after the filing of the claim. The claim shall be verified on oath or solemn affirmation, and shall state the interest in the property by virtue of which the claimant demands its restitution and the right to defend the action. If the claim is made on behalf of the person entitled to possession by an agent, bailee, or attorney, it shall state that the agent, bailee, or attorney is duly authorized to make the claim. At the time of answering the claimant shall also serve answers to any interrogatories served with the complaint. In actions in rem interrogatories may be so served without leave of court. 10 42 Supp. R. C(6) (emphasis added). 43 Thus, standard civil proceedings contemplate a complaint followed by an answer or a motion. The Supplemental Rule provides for initial process — by complaint — then the filing of a claim, then an answer to the complaint. No mention is made of motion practice. The question we must answer is whether the pleadings scheme laid out in the Civil Rules is inconsistent with the pleadings scheme in Supplemental Rule C(6). 44 According to Webster's Dictionary, inconsistent means lacking in correct logical relation, contradictory, or not in agreement or harmony, incompatible. Webster's II New Riverside University Dictionary 620 (1988). Applying this definition, we can see that several of the Supplemental Rules and the Civil Rules are clearly incompatible and disharmonious. For example, Civil Rule 12(a)(1) is inconsistent with Supplemental Rule C(6) because the two cannot be logically read together: a requirement that an answer be filed within twenty days of service of process simply cannot be reconciled with a rule allowing an answer to be served within twenty days after filing a claim. Similarly, Supplemental Rule E(2), which requires a forfeiture complaint to state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading, is incompatible with Civil Rule 8(a), which allows for a short and plain statement of the claim. United States v. $39,000, 801 F.2d 1210, 1216 (10th Cir.1986). The two rules are contradictory: one requires detail, the other does not. As there is a conflict, the Supplemental Rule prevails. Rule E(2) is also inconsistent with Civil Rules 12(e) and (f), which require a party to make a motion for a more definitive statement before filing a motion to strike. United States v. $38,000, 816 F.2d 1538, 1547 n. 20 (11th Cir.1987). The civil and supplemental schemes cannot be fit together: one cannot be required to make a motion for a definitive statement and also not be so required. Again, in such a situation, the Supplemental Rule takes precedence. 45 In contrast to these instances of clear incompatibility, the civil scheme for motions in Rule 12(a)(4) can be read together with the supplemental pleading requirements in Rule C(6). Supplemental Rule C(6), like Civil Rule 12(a)(1), provides the timing requirements for responsive pleadings. Rule C(6), however, operates in the world of forfeiture, and therefore must include different instructions. Whereas civil complaints are served on a known defendant, forfeiture complaints are served on the res, the property. Before the action can proceed, the party claiming the res must make himself known by filing a claim. The claim adds an extra step not contemplated by the Civil Rules. The Supplemental Rules must therefore instruct parties that before they may file an answer, they must first file a claim. In terms of timing, the claim in a forfeiture proceeding is equivalent to the answer in a general civil proceeding: both begin a responsive pleading process, and both must be filed within twenty days of service of process. Parties to forfeiture proceedings, however, must then also be apprised of when the answer to the complaint is due. Rule C(6) instructs that it must be filed within ten days after the filing of the claim. 46 Neither Civil Rule 12(a)(1) nor Supplemental Rule C(6) includes any discussion of motions. They both simply provide that an answer must be served within a certain time period. Clearly, however, under the Civil Rules, Rule 12(a)(4) modifies Rule 12(a)(1) and allows a defendant to file a motion before filing an answer. We see no reason why Rule 12(a)(4) cannot similarly modify Supplemental Rule C(6). The term answer in Rule C(6) should be interpreted the same way it is in Rule 12(a)(1), whose timing provisions Rule C(6) supplants. Under the Civil Rules, 12(a)(1)'s requirement that an answer be served within twenty days of service of process is not read to trump 12(a)(4)'s provision for filing a motion in lieu of answer. Neither must Supplemental Rule C(6)'s requirement that an answer be served within ten days of the filing of a claim be so read. 47 Rule 12(a)(4) is simply not incompatible with Supplemental Rule C(6). Rather, the two fit comfortably together, the same way that Rules 12(a)(1) and 12(a)(4) do. Just as a civil defendant may respond to a complaint with a motion to dismiss, and must then file an answer within ten days after the court disposes of that motion, a forfeiture claimant may, after being served with a complaint and filing a verified claim, respond to a forfeiture complaint by filing a motion to dismiss; the claimant must then serve an answer within ten days after the court disposes of that motion. There is no either/or choice to be made. Asking whether C(6) or 12(a)(4) applies is like asking whether 12(a)(1) or 12(a)(4) applies. The simple answer is: both do. 48 The compatibility of Supplemental Rule C(6) and Rule 12(a)(4) is supported by another provision of the Supplemental Rules, case law arising out of a similar context, and policy considerations. 49 First, only by reading Supplemental Rule C(6) to permit pre-answer motions in forfeiture can we reconcile that rule with Supplemental Rule E(2), the enforcement of which appears to require such motions. As stated above, Rule E(2) imposes a particularity requirement on forfeiture pleadings. It requires the government to draft its complaint with precision so that a claimant need not move for a more definite statement before framing responsive pleadings. Supp. R. E(2). This particularity requirement arises out of the drastic nature of forfeiture actions, which allow for the seizure of property while the claim on the merits is litigated. Rule E(2) is thus an important safeguard against the government's seizing and holding property on the basis of mere conclusory allegations that the property is forfeitable. United States v. One Partially Assembled Drag Racer, 899 F.Supp. 1334, 1340 (D.N.J. 1995). Claimants can enforce Rule E(2) by filing motions to dismiss for lack of particularity prior to forming their responsive pleadings. See, e.g., United States v. Premises & Real Prop. at 4492 S. Livonia Rd., 889 F.2d 1258, 1266 (2d Cir.1989) (affirming denial of motion); United States v. Funds in the Amount of $29,266.00, 96 F.Supp.2d 806, 811 (N.D.Ill.2000) (denying motion); One Partially Assembled Drag Racer, 899 F.Supp. at 1341 (same). 50 Kesten persuasively argues that if Rule C(6) were to bar the filing of motions prior to answers, as the government suggests, claimants would have no mechanism for holding forfeiture complaints to the particularity required in Rule E(2). If a complaint were vague, claimants would nonetheless be obliged to first file a general answer and respond to what may be very extensive interrogatories before moving for relief from the insufficient complaint. This cannot be. The government's response, that claimants could wait until they file an answer and respond to the interrogatories before attacking the validity of the complaint, see United States v. Currency $267,961.07, 916 F.2d 1104, 1106 (6th Cir.1990) (stating that claimant first filed a claim and answer and then filed a motion to dismiss the complaint for lack of particularity), is not responsive. The very purpose of Rule E(2) is to protect claimants from having their property held and from being exposed to invasive discovery on the basis of vague, conclusory complaints. Under the government's reading, this goal would be undermined by Rule C(6). That claimants can wait to file a motion to dismiss, and in the meantime suffer the seizure of their property on the basis of what may be an insufficient complaint, does not mean that they must. We will not read Rule C(6) to frustrate so directly a claimant's ability to enforce the particularity requirement in Rule E(2). 51 Next, the Court of Appeals for the First Circuit's analysis in United States v. One 1987 BMW 325, 985 F.2d 655 (1st Cir. 1993), supports our view that when a Supplemental Rule is silent on a particular procedure, we should not take that silence as an indication that the procedure has no place in forfeiture, but rather should fill the gap with the relevant Civil Rule. There, the court reversed the district court's order striking a claim as a sanction for the claimant's failure to answer the interrogatories served with the complaint. Id. at 656. In determining what procedure applied to remedy a forfeiture claimant's failure to respond to the interrogatories, the court first examined the Supplemental Rules. When it did, it found those rules completely bereft of guidance concerning what measures may be appropriate when parties fail to serve answers to interrogatories in a full and timely fashion. Id. at 659. The court then looked to Rule 37 to fill the gap. Id. In so doing, the court rejected the government's curious interpretation of Supplemental Rule C(6) as allowing dismissal in the first instance if interrogatories are served thereunder and then ignored. Id. at 659-60. Because Rule C(6) was silent on the topic of discovery sanctions, the BMW court [d]iscern[ed] no hint of inconsistency between Rule C(6) and Rule 37, and held that the use of discovery sanctions in forfeiture actions was properly governed by its Rule 37 jurisprudence. Id. at 660. Thus, silence in the Supplemental Rules was taken not as an indication that discovery sanctions had no place in forfeiture, but rather as a sign that the Civil Rules were meant to step in and provide the proper procedure. 11 52 Finally, our interpretation of Supplemental Rule C(6) is buttressed by policy considerations. Civil Rule 12(b) motions are intended to streamline[] litigation by dispensing with needless discovery and factfinding. Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). Forfeiture proceedings are no different in this regard. Defenses such as a failure to adhere to the statute of limitations can be litigated without a great deal of discovery. If a complaint should be dismissed, the government should not be able to prolong dismissal simply because the claimant has not responded to interrogatories that the claimant should never have been required to answer in the first place. Motions under Rule 12(b) provide litigants with a fundamental procedural safeguard and prevent burdensome discovery in meritless cases. In the words of the Supreme Court. If [defenses requiring little discovery] have merit, the government should not prevail; if they are groundless, the government's interests will not be compromised by their consideration. Degen, 517 U.S. at 827-28, 116 S.Ct. 1777. 53 We have been presented with no evidence that Supplemental Rule C(6) was intended to pull the rug out from under forfeiture claimants by abolishing the time-honored protections provided in Rule 12(b). The advisory committee notes explain that the procedure for serving interrogatories with the complaint is justified by the special needs of expedition that often arise in admiralty. Supp. R. C advisory committee's note. Contrary to the government's urging, the procedure for interrogatories does not appear to have been provided to inform the government as to the claimant's statutory standing in forfeiture cases. In fact, the notes later acknowledge that the needs of expedition do not commonly arise in forfeiture proceedings. Id. The advisory committee made no other comment regarding the reason for allowing the government to serve interrogatories with the complaint, nor did it indicate that the special needs of expedition are so great that they completely override the procedural safeguards of Rule 12(b). We will therefore not read into Rule C(6) any intention to do so. 54 The government vigorously argues that our interpretation of Supplemental Rule C(6)'s interaction with Rule 12 contradicts the policy underlying the Supplemental Rules. It urges that we cannot assume that the Supplemental Rules incorporate the motions scheme in Rule 12, as the procedural rules in forfeiture and admiralty practice serve different purposes from the procedural rules in normal civil practice. It argues that forfeiture proceedings carry a substantial danger of false claims, a danger not inherent in civil proceedings where the defendant is a known entity, and that full compliance with each of the steps in Rule C(6)'s pleadings scheme is required to ensure a claimant's bona fides. The government raises the specter of wasteful litigation against wily false claimants whose claims may at first seem genuine, but whose illegitimacy would presumably be revealed in the answers and responses to interrogatories. The government urges that [i]t is simply wrong to require [it] to try its case ... before the claimant answers the complaint and responds to the first set of interrogatories, and asserts that it has every right to insist on the answers to certain questions before engaging in litigation ... over the funds. It then concludes that because the answer and responses to interrogatories are essential to the goal of smoking out false claims, they are a requirement of Rule C(6) that cannot be overridden by the provision for motions in Rule 12. 55 This argument appears to be one of efficiency, that is that by permitting extensive inquiry into the nature of the claimant's interest in the property, the court will be able to avoid being burdened by proceedings by a claimant who might not have a real interest. But we conclude that any concern as to a waste of judicial resources is laid to rest not only by the requirement that the claimant file a verified claim to the funds, but also by the very tactic the government decries, namely, the early motion to dismiss. If the claimant would have succeeded on the motion to dismiss, it would be a waste of resources to require the claimant to answer extensive interrogatories before making the motion to dismiss. And, in the present case, the government linked Kesten to the seized money in its complaint — having stated Pires is the principal in Kesten Development Corp. which maintained the Venus account at MTB Bank — and cannot seriously contend that Kesten is feigning its interest in the seized property. 12 56 By resorting to policy arguments regarding the different motivations behind the Supplemental and Civil Rules, moreover, the government's argument misses the mark; it fails to grasp the way that the Civil Rules apply in forfeiture. As the Supreme Court explained in Miner, the Supplemental Rules are not comprehensive. See Miner, 363 U.S. at 648, 80 S.Ct. 1300. The Civil Rules provide the basic procedures for forfeiture; the Supplemental Rules are simply an overlay — they are, as their title indicates, supplemental. In finding that Rule 12(a)(4) modifies Rule C(6) the same way it modifies Rule 12(a)(1), we are not distorting the statutory scheme; rather, we are carrying it out. We are applying the Supplemental Rules and the Civil Rules in the manner dictated by Supplemental Rule A. The government's position that Rule C(6) encompasses the entire field of forfeiture pleadings and disallows pre-answer motions by failing to mention them cannot be logically reconciled with Rule A's instruction that we look to the Civil Rules when the Supplemental Rules are silent on a particular procedural provision. Policy arguments cannot alter or undermine this clear statutory directive. 57 The government is right that it should not be forced to try its case before an answer is filed and it receives meaningful discovery. But it simply does not follow that Kesten should be required to serve an answer and respond to the interrogatories before it files a motion to dismiss. We are not compelling the government to litigate the ultimate issue of forfeiture any sooner than we normally ask plaintiffs to prove their cases. We are merely requiring it to defend against a motion to dismiss the complaint that raises preliminary issues before it imposes upon Kesten a great deal of burdensome discovery, just as we require plaintiffs in normal civil cases to defend the adequacy of their complaints before the defendant must file an answer. 58 Because we find no inconsistency between Rule C(6)'s timing requirements and Rule 12's authorization of pre-answer motions, we will reverse the District Court's order dismissing Kesten's motion to dismiss for lack of standing and compelling Kesten to respond to the interrogatories. Accordingly, we will vacate the orders entered thereafter and the final judgment of forfeiture, so that Kesten's claim to the funds and its motion to dismiss are reinstated.