Court Opinion

ID: 181189
Source: CourtListenerOpinion
Date Created: 2010-12-16 00:38:27+00
Date Added: 2024-06-11T12:52:35.879394
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                           FILED
                            FOR THE NINTH CIRCUIT                            DEC 15 2010

                                                                          MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

UNITED STATES OF AMERICA,                       No. 09-56645

       Plaintiff - Appellee,                    D.C. No. 2:04-cv-02788-ABC-
                                                PLA
CHRISTOPHER KIM, AKA Kyung Joon
Kim, AKA KJ Kim, AKA Chris Kim; et
al.,                                            MEMORANDUM*

       Claimants - Appellees,

  v.

DAS CORPORATION, FKA Daebu
Machinery Co., Ltd.,

       Claimant - Appellant,

__________________________________

UNITED COMMERCIAL BANK,

       Intervenor - Plaintiff.

UNITED STATES OF AMERICA,                       No. 09-56792

              Plaintiff - Appellee,             D.C. No. 2:04-cv-02788-ABC-
                                                PLA

        * This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
OPTIONAL CAPITAL, INC., AKA
Optional Ventures,

               Claimant - Appellant,

  and

CHRISTOPHER KIM; et al.,

               Claimants,

  v.

REAL PROPERTY LOCATED AT 475
MARTIN LANE, BEVERLY HILLS,
CALIFORNIA, Real Property located at,
a/k/a Seal A,

               Defendant.

                  Appeals from the United States District Court
                       for the Central District of California
                 Audrey B. Collins, Chief District Judge, Presiding

                     Argued and Submitted November 3, 2010
                              Pasadena, California

Before: PREGERSON, RIPPLE,** and GRABER, Circuit Judges.

        DAS Corporation (“DAS”) and Optional Capital, Inc. (“Optional”) appeal

three decisions of the district court: (1) to grant the motion to dismiss submitted by

        **
        The Honorable Kenneth F. Ripple, Senior United States Circuit Judge for
the Seventh Circuit, sitting by designation.
                                          2
Christopher Kim, Bora Lee, Erica Kim, Se Young Kim, Young Ai Kim,

Alexandria Investment, LLC and First Stephora Avenue, Inc. (collectively, “Kim

Claimants”); (2) to grant summary judgment in favor of the Kim Claimants; and

(3) to deny Optional’s motion for summary judgment. The underlying facts are set

forth in our previous opinion in United States v. Real Property Located at 475

Martin Lane, 545 F.3d 1134, 1139-40 (9th Cir. 2008) (“Real Property I”). We

have jurisdiction under 28 U.S.C. § 1291. We affirm in part, reverse in part and

remand this case for further adjudication of the competing ownership claims.

                                            I

      The parties are familiar with the factual history. However, because the

complicated procedural history of this litigation appears to have caused confusion

in the past, we set out at least the basic stages of that history in order to avoid

further misapprehension in subsequent proceedings.

      This case comes before us for the second time. The first round of

proceedings began when the Government seized the Kim Claimants’ assets and

filed three civil forfeiture complaints. The Kim Claimants filed answers to the

Government’s complaints, as did DAS and Optional, which claimed competing

ownership interests in the seized assets. The district court consolidated all three

                                            3
complaints into one case. The district court dismissed one of the complaints,

which concerned the “May 2004 Properties,” as untimely filed (“September 2005

Order”). Regarding the remaining two complaints, which concerned the

“Summary Judgment Properties,” the district court granted summary judgment in

favor of the Kim Claimants (“March 2007 Order”). The Government, DAS and

Optional timely appealed both decisions.

      With respect to the September 2005 Order, we reversed the decision of the

district court in a published opinion. Real Property I, 545 F.3d at 1139. We

determined that the Government’s complaint against the May 2004 Properties was

timely. Additionally, we concluded that, even if the Government’s complaint had

been dismissed properly, the district court nevertheless retained in rem jurisdiction

and had the duty to adjudicate the underlying ownership claims. Our published

opinion remanded the case to the district court.

      With respect to the March 2007 Order, we affirmed the district court’s grant

of summary judgment in favor of the Kim Claimants in a memorandum

disposition. United States v. Real Property Located at 475 Martin Lane, 298 F.

App’x 545 (9th Cir. 2008) (“Real Property II”) (unpublished). In that decision, we

also upheld various evidentiary rulings by the district court.

      On remand, the Kim Claimants submitted two motions to the district court.

                                           4
First, the Kim Claimants filed a motion to dismiss all claims by the Government,

DAS or Optional against the Summary Judgment Properties. They maintained that

the law of the case in the memorandum disposition barred further litigation against

the Summary Judgment Properties. Second, the Kim Claimants also filed a motion

for summary judgment regarding the May 2004 Properties. They contended that

the claims against the May 2004 Properties were precluded by the memorandum

disposition. Optional also filed a motion for summary judgment. The district court

granted both of the Kim Claimants’ motions and denied Optional’s motion. DAS

and Optional now appeal the decisions of the district court.

                                          II

      We conclude that the district court erred in granting the Kim Claimants’

motion to dismiss and motion for summary judgment; we conclude that the district

court correctly denied Optional’s motion for summary judgment.

      As a preliminary matter, DAS and Optional do have prudential standing to

seek a constructive trust remedy. The Kim Claimants have waived any objection

to this issue because they have failed to appeal the district court’s determination

that DAS and Optional have prudential standing. Even on the merits, DAS and

Optional have prudential standing because their alleged injury is not a “mere

                                          5
generalized grievance,” and they assert their own rights, not the rights of a third

party. See Alaska Right to Life Political Action Comm. v. Feldman, 504 F.3d 840,

848-49 (9th Cir. 2007). DAS’s and Optional’s claims clearly fall within “the zone

of interests to be protected or regulated” because Congress explicitly has provided

for suits by competing owners in a civil forfeiture action. 18 U.S.C. § 983(a)(4);

Clarke v. Sec. Indus. Ass’n, 479 U.S. 388, 399 (1987); Feldman, 504 F.3d at 848-

49 (internal quotation marks omitted).

      The district court erred in granting the Kim Claimants’ motion to dismiss.

When our earlier memorandum disposition is read in light of this case’s earlier

history, it is clear that our memorandum disposition did not adjudicate DAS’s and

Optional’s claims against the Summary Judgment Properties. Consequently, the

law of the case doctrine does not bar DAS’s and Optional’s claims against the

Summary Judgment Properties.

      Our memorandum disposition affirmed, in its entirety, the district court’s

March 2007 Order. The March 2007 Order, in turn, granted summary judgment in

favor of the Kim Claimants. Notably, however, the Kim Claimants’ motion for

summary judgment had focused on the Government’s case alone. Indeed, in its

reply motion, the Kim Claimants specifically stated:

           The Kim claimants’ motion was directed at the government’s
      complaint, and not at the claims of DAS or the other claimant

                                          6
      Optional Capital, Inc. DAS does not have the burden of proving that
      the seized property is subject to forfeiture, only the government does.
      Thus, DAS’ opposition should not be considered by the Court . . . .
      Nevertheless, even if DAS’ arguments and evidence are considered,
      they still are insufficient to help prove the government’s case for
      forfeiture.

ER 264 n.1 (emphasis in original) (citation omitted). The Kim Claimants, thus,

were clear that the focus of the summary judgment motion was against the

Government’s case and not the assertions of the other claimants. The language in

the Kim Claimants’ motion for summary judgment is consistent with such a

reading.1

      DAS and Optional did file oppositions to the Kim Claimants’ summary

judgment motion, and DAS and Optional appealed the March 2007 Order. Yet,

DAS’s and Optional’s oppositions to summary judgment focused on bolstering the

Government’s case and did not discuss their competing ownership claims.

Specifically, under the Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), the

issues upon which the Government had the burden of proof were distinctively

different from those upon which DAS and Optional had the burden. Under

      1
          The Kim Claimant’s motion for summary judgment opens: “The
government cannot prove either the existence of a fraud scheme . . . or that the
defendant assets are traceable to any such fraud scheme.” ER 329 (emphasis
added). The motion closed by requesting “that the Court grant summary judgment
in their favor and against the plaintiff government.” ER 360. Furthermore, the
subheadings in the motion mention only the Government, not DAS or Optional.

                                         7
CAFRA, the Government has the burden to show why the property is subject to

forfeiture. 18 U.S.C. § 983(c). DAS and Optional, by contrast, each had the

burden of proving an innocent owner defense. An innocent owner defense requires

proof, by a preponderance of the evidence, that a party “(i) did not know of the

conduct giving rise to forfeiture; or (ii) upon learning of the conduct giving rise to

the forfeiture, did all that reasonably could be expected under the circumstances to

terminate such use of the property.” 18 U.S.C. § 983(d)(2)(A). DAS’s and

Optional’s oppositions to the summary judgment motion did not address these

innocent owner requirements. The March 2007 Order also did not address

substantively these innocent owner claims. Instead, the March 2007 Order focused

on the Government’s burden of showing why the property was subject to

forfeiture.

       The district court’s rulings after the March 2007 Order also suggest that only

the Government’s case, not DAS’s and Optional’s claims, was adjudicated.

Furthermore, this court, in the published opinion reversing the September 2005

Order, held that, even when the Government’s civil forfeiture case is dismissed, the

district court retains jurisdiction to decide ownership claims.

       The language in our memorandum disposition also focused on the

Government and its case. We referred to “the government’s civil forfeiture

                                           8
complaint” in the first sentence, observing that “[t]o establish a wire fraud

violation, the government must demonstrate three elements.” Real Property II, 258

F. App’x at 548-49. We held that “here the government failed to present

admissible evidence sufficient to demonstrate a triable issue of fact.” Id. at 549.

Our reference to arguments made by DAS and Optional was not in regard to

whether DAS and Optional have legitimate claims against the Kim Claimants’

properties. Although the memorandum disposition does note, in footnote one, that

it addresses DAS’s and Optional’s appeal of the March 2007 Order, DAS and

Optional appealed a decision that addressed only the Government’s case, not their

own ownership claims. Our memorandum disposition did not contain a remand;

however, the district court was free to consider any matter not decided by the

mandate. See Cassett v. Stewart, 406 F.3d 614, 621 (9th Cir. 2005); United States

v. Cote, 51 F.3d 178, 181-82 (9th Cir. 1995).

      In sum, the procedural history surrounding the district court’s March 2007

Order and the language of our memorandum disposition establish that those

proceedings addressed only the insufficiency of the Government’s evidence against

the Summary Judgment Properties. DAS’s and Optional’s competing ownership

claims were not adjudicated by these decisions; accordingly, in the subsequent

proceedings in the district court, the court improperly dismissed DAS’s and

                                          9
Optional’s claims against the Summary Judgment Properties based on the law of

the case doctrine. We therefore remand the matter to the district court to permit an

adjudication of the competing ownership claims on the Summary Judgment

Properties.2

      The parties’ additional contentions need not detain us long.

      The district court also erred in granting the Kim Claimants’ motion for

summary judgment regarding the May 2004 Properties. The district court correctly

noted that DAS and Optional raise the same claims and defenses against the May

2004 Properties as they do against the Summary Judgment Properties. These

claims were not addressed in our prior decisions. Accordingly, we reverse the

district court’s grant of summary judgment and remand this case for the district

court to adjudicate DAS’s and Optional’s claims against the May 2004 Properties.

      The district court correctly denied Optional’s motion for summary judgment.

Whether the issue of Kim’s fiduciary duty was waived or not, genuine issues of

material fact exist.

      Optional also submits a motion for reassignment to a different district judge.

      2
        In undertaking the task of adjudicating these claims, the district court is
bound by our affirmance of its earlier evidentiary rulings. DAS and Optional were
both parties to the memorandum disposition proceeding and had a full and fair
opportunity to litigate the evidentiary issues. In fact, DAS and Optional filed
oppositions, arguing that the evidence was admissible.

                                         10
We deny this motion. Optional has not provided sufficient proof of personal bias

or unusual circumstance to warrant reassignment. See Living Designs, Inc. v. E.I.

Dupont de Nemours & Co., 431 F.3d 353, 372-73 (9th Cir. 2005); Am. Ad Mgmt.,

Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051, 1061 (9th Cir. 1999).

      We REVERSE the district court’s grant of the Kim Claimants’ motion to

dismiss and motion for summary judgment, and we REMAND the case for the

district court to adjudicate DAS’s and Optional’s claims against the Summary

Judgment and May 2004 Properties. We AFFIRM the district court’s denial of

Optional’s summary judgment motion. We DENY Optional’s motion for

reassignment.

      The Claimants-Appellants may recover the costs of this appeal.

                                         11
                                                                                FILED
United States v. DAS Corporation, No. 09-56645                                   DEC 15 2010

                                                                             MOLLY C. DWYER, CLERK
PREGERSON, Circuit Judge, specially concurring:                               U.S. COURT OF APPEALS

      This is my take on a case that has a complicated history. The U.S.

Government seized the Kim Claimants’ assets, and DAS and Optional filed

separate answers to the Government’s civil forfeiture complaints. Our previous

memorandum disposition dismissed the Government’s claims against the Kim

Claimants’ assets, but did not resolve DAS and Optional’s competing claims to the

“Summary Judgment Properties.” See United States v. Real Property Located at

475 Martin Lane, 298 F. App’x 545 (9th Cir. 2008). As we stated in United States

v. Real Property Located at 475 Martin Lane, 545 F.3d 1134, 1145 (9th Cir. 2008),

the district court retains jurisdiction over the res and has the duty to resolve the

parties’ competing claims to the res, even when the district court dismisses the

Government’s Complaint. Therefore, we remand to the district court to resolve

DAS and Optional’s competing claims to the “Summary Judgment Properties”

because the district court has not yet resolved this issue.