United States of America v. $169,740.00 in U.S. Currency et al

Filing 20

ORDER GRANTING PLAINTIFFS MOTION FOR DEFAULT JUDGMENT 17 by Judge Otis D. Wright, II: Plaintiff is granted forfeiture of Defendants currency in the amount of $364,548.00. A separate judgment will issue. (lc). Modified on 10/29/2015 (lc).

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United States District Court
Central District of California

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UNITED STATES OF AMERICA,
Plaintiff,

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v.

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Case No. 2:15-cv-02683-ODW(ARGx)
ORDER GRANTING PLAINTIFF’S

$169,740.00 IN U.S. CURRENCY AND

MOTION FOR DEFAULT

$194,840.00 IN U.S. CURRENCY,

JUDGMENT [17]

Defendants.

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I.

INTRODUCTION

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Plaintiff United States of America is seeking Declaratory Relief against

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Defendants Daniel Soto, Colette Park, Hong Natasha Sun, Gurdeep Singh and Julio

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Soto Perez for currency collected during the investigation of a Middle Eastern drug

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trafficking organization (“DTO”).

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GRANTS Plaintiff’s Motion for Default Judgment (ECF No. 17.) and enters a

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declaratory judgment.1

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For the reasons discussed below, the Court

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After carefully considering the papers filed in support of the Motion, the Court deems the matter
appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

II.

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FACTUAL BACKGROUND

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Since approximately April 2014, Drug Enforcement Administration (“DEA”)

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agents have been investigating a Middle Eastern DTO operating from India, Canada,

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Mexico and Southern California. (ECF No. 1, “Compl.” ¶ 8.) The Middle Eastern

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DTO receives shipments of narcotics from a DTO located in Mexico. (Id.) The

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shipments of narcotics are transported from Mexico through the United States and

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eventually into Canada. (Id.) Agents identified Singh as a narcotics proceeds courier

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for the Middle Eastern DTO, whereby he and other couriers receive instructions from

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the Middle Eastern DTO leaders to collect and deliver narcotics proceeds to the

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Mexican DTO couriers. (Id.)

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During the investigation, agents learned that Singh and others would meet at the

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Sikh Gurdwara Temple parking lot located at 7640 Lankershim Boulevard, North

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Hollywood, California (the “Temple parking lot”) to drop off and pick up narcotics

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proceeds. (Compl. ¶ 9.) Pursuant to state wiretap orders, agents intercepted several

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telephone calls between Singh and others regarding narcotics and narcotics proceeds

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transactions. (Compl. ¶ 10.) On September 19, 2014, at approximately 4:12 p.m.,

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Singh received a call from Raja, who has been identified as a member of the Middle

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Eastern DTO. (Id.) During the conversation, Raja instructed Singh to drop “1.75,”

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believed to be $175,000 in narcotics proceeds, to an individual whom Raja identified

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as Mario on September 20, 2014. (Id.) Mario is believed to be a Mexico DTO

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courier. (Id.)

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On September 20, 2014, at approximately 7:30 a.m., agents established

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surveillance at Singh’s Los Angeles, California residence. (Compl. ¶ 11.) During the

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surveillance, agents observed Singh depart from the residence in a white Toyota

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Sienna van, bearing a California license plate. (Id.) Agents followed the Toyota

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Sienna and observed Singh conduct money pick-ups in Bakersfield, California before

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returning to Singh’s residence. (Id.)

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At approximately 4:30 p.m., Singh called Raja and stated that he (Singh) was

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going to drop off the narcotics proceeds. (Compl. ¶ 12.) At approximately 5:30 p.m.,

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Singh and two unidentified females departed from Singh’s residence in the Toyota

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Sienna. (Id.) Singh drove the Toyota Sienna to the Temple parking lot and parked.

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(Id.) At approximately 6:00 p.m., Soto and Park arrived at the Temple parking lot in a

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Chevrolet Camaro. (Compl. ¶ 13.) Singh then drove the Toyota Sienna towards the

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rear of the Temple parking lot while the Camaro drove to the same location. (Id.)

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Singh provided a black plastic bag to Soto and then drove the Toyota Sienna away

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from Sikh Gurdwara Temple while Soto drove the Camaro out of the Temple parking

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lot. (Id.) At approximately 6:10 p.m., Singh called Raja and told Raja that the

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exchange had been completed. (Id.)

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Agents followed the Camaro to a nearby gas station where Soto and Park

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changed seats. (Compl. ¶ 14.) When agents approached the Camaro, agents observed

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on the Camaro’s floorboard in plain view a black plastic bag containing a large

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amount of U.S. currency. (Id.) Soto told the agents the U.S. currency was not his,

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that he had more in the Los Angeles residence, and he was instructed by an

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unidentified individual to pick up the narcotics proceeds. (Compl. ¶ 15.)

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Agents executed a search warrant for the Camaro and the Los Angeles

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residence and found $194,840.00 in stacked and rubber-banded U.S. currency inside a

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black plastic bag on the Camaro’s floorboard. (Compl. ¶ 16.) When agents executed

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the search warrant at the Los Angeles residence, they found $169,740.00 in additional

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U.S. currency inside a hallway closet. (Id.)

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The Complaint was filed on April 10, 2015. (ECF No. 1.) Defendants were

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served with the Summons and Complaint on April 16, 2015. (ECF No. 17, Attach. 1

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Decl. of Katherine Schonbachler [“Schonbachler Decl.”], Exs. C-N.)

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requested entry of default on August 3, 2015. (Id. ¶ 17.) The Clerk entered the

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default of Defendants on August 4, 2015, and a copy of the Default by Clerk was

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served on Defendants by mail on August 20, 2015. (Id., Ex, O.) Defendants are

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neither minors nor incompetent persons and the Service Members Civil Relief Act

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Plaintiff

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does not apply. (Id. ¶ 21.) Plaintiff now moves for default judgment. (ECF No. 17.)
III.

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LEGAL STANDARD

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FRCP 55(b) authorizes a district court to grant default judgment after the Clerk

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enters default under Rule 55(a). Local Rule 55-1 requires that the movant submit a

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declaration establishing: (1) when and against which party default was entered; (2)

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identification of the pleading to which default was entered; (3) whether the defaulting

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party is a minor, incompetent person, or active service member; and (4) that the

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defaulting party was properly served with notice.

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A district court has discretion whether to enter default judgment. Aldabe v.

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Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Upon default, the defendant’s liability

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generally is conclusively established, and the well-pleaded factual allegations in the

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complaint are accepted as true. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–

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19 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560

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(9th Cir. 1977)).

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In exercising its discretion, a court must consider several factors (the “Eitel

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Factors”), including: (1) the possibility of prejudice to plaintiff; (2) the merits of

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plaintiff’s substantive claim; (3) the sufficiency of the complaint; (4) the sum of

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money at stake; (5) the possibility of a dispute concerning material facts; (6) whether

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the defendant’s default was due to excusable neglect; and (7) the strong policy

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underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

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Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986).

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The federal Declaratory Judgment Act provides that district courts “may declare

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the rights and other legal relations of any interested party seeking such declaration

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whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The two

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principal criteria guiding the policy in favor of rendering declaratory judgments are

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(1) when the judgment will serve a useful purpose in clarifying and settling the legal

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relations in issue, and (2) when it will terminate and afford relief from the uncertainty,

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insecurity, and controversy giving rise to the proceeding. It follows that when neither

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of these results can be accomplished, the court should decline to render the declaration

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prayed. McGraw-Edison Co. v. Preformed Line Products Co., 362 F.2d 339, 342 (9th

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Cir. 1966) (citation omitted).
IV.

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DISCUSSION

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All moneys, negotiable instruments, securities, or other things of value

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furnished or intended to be furnished by any person in exchange for a controlled

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substance shall be subject to forfeiture to the United Stated and no property right shall

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exist to them. 21 U.S.C. § 881(a)(6).

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A.

Service

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The Court finds that service of the Summons and Complaint upon Defendants

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was proper, as each Defendant was served twice by certified mail to their last known

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address. (Schonbachler Decl., Exs. C-N.) All other requirements of Local Rule 55-1

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have been met and are not in controversy.

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B.

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Eitel Factors
The Court finds that the Eitel factors weigh in favor of default judgment. The

Court will discuss each factor in turn.
1. Plaintiff Would Suffer Prejudice

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If default judgment is not entered against Defendants, Plaintiff may be left with

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no recourse against Defendants and its efforts to collect monies owed will be severely

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prejudiced. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal.

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2002). Because Plaintiff will suffer prejudice if he is without recourse, this factor

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favors entry of default judgment.

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2. Plaintiff Has Brought Meritorious Claims and the Complaint is
Sufficient

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The merits of the claim and the sufficiency of the Complaint weigh in favor of

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default judgment. The Complaint sufficiently states a plausible claim for relief by

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alleging with sufficient particularity facts of Defendants’ DTO and the amount of

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money collected by government agents. Further, the evidence submitted to the Court

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through the Declarations of Schonbachler and the supporting exhibits establish the

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merit of the claims against Defendants and the amount of damages.
3. The Amount at Stake Weighs in Favor of Default Judgment

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Under the fourth Eitel factor, the Court considers the amount of money at issue

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in relation to a defendant’s conduct. In the case at hand, the total amount comes to

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$364,580 as of April 10, 2015. (Schonbachler Decl. ¶ 2.) The currency represents or

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is traceable to proceeds of illegal narcotic trafficking or was intended to be used in

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one or more exchanges for a controlled substance or listed chemical, and is therefore

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subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6). (Compl. ¶ 19.) The sum of

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money is reasonably proportionate to the harm caused by the conduct of the defaulting

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defendants and is properly documented by Plaintiff. Gen. Emp. Trust Fund v. Victory

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Bldg. Maint., Inc., 2007 U.S. Dist. LEXIS 35600, at *12 (N.D. Cal. April 11, 2007);

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Cotton v. Zitterman Bosh & Assoc., 2012 WL 3289921, at *1 (D. Arizona Aug. 13,

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2012). As such, the Court finds that the amount at stake weighs in favor of default

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judgment.

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4. There is No Possibility of Dispute as to Material Facts
The next Eitel factor considers the possibility that material facts are disputed.

18 PepsiCo, 238 F. Supp. 2d at 1177; Eitel, 782 F.2d at 1471 – 72. Defendants have not
19 filed a responsive pleading or otherwise denied the allegations of the Complaint, so a
20 dispute concerning the material facts is not likely. Since the Clerk has already entered
21 the default of Defendants, the well-pleaded factual allegations of the Complaint are
22 deemed correct, except for those pertaining to damages.

Further, the evidence

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24 slight possibility of a dispute of material facts favors default judgment. Truong Giang
25 Corp. v. Twinstar Tea Corp., 2007 WL 1545173, at *12 (N.D. Cal. May, 29 2007).
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5. There is Little Possibility Default was Due to Excusable Neglect

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Defendants have been properly served with the Summons and Complaint and

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have failed to answer or otherwise respond. They have also been served with the

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Request for Entry of Default and the Default by Clerk. (Schonbachler Decl., Ex. O.)

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Defendants have had adequate opportunity to challenge the claims. Given the service

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of the Summons and Complaint and the notice provided to them of the entry of

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default, the possibility of excusable neglect is remote.

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6. Policy for Deciding on the Merits Weighs in Favor of Granting
Default Judgment

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In Eitel, the court maintained that “[c]ases should be decided upon their merits

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whenever reasonably possible.” 782 F.2d at 1472. However, where, as is the case

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here, the defendant fails to answer the plaintiff’s complaint, “a decision on the merits

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[is] impractical, if not impossible.” PepsiCo, 238 F. Supp. 2d at 1177 (“Under Fed. R.

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Civ. P. 55(a), termination of a case before hearing the merits is allowed whenever a

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defendant fails to defend an action.”). Furthermore, “when a defendant . . . [knows]

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that he has been sued . . . [it is] the defendant who seeks to prevent an adjudication on

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the merits.” Carol Gilbert, Inc. v. Haller, 179 Cal. App. 4th 852, 865 (Cal. Ct. App.

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2009). Accordingly, this factor does not preclude default judgment.

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V.

CONCLUSION

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For the reasons discussed above, the Court GRANTS Plaintiff’s Motion for

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Default Judgment. (ECF No. 17.) Plaintiff is granted forfeiture of Defendants’

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currency in the amount of $364,548.00. A separate judgment will issue.

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IT IS SO ORDERED.

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October 29, 2015

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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