United States of America v. 2007 BMW Convertible 650i, VIN: WBAEK13577CN80379, License Number 6CBS415

Filing 32

FINDINGS and RECOMMENDATIONS re 28 MOTION for DEFAULT JUDGMENT recommending that 1. Plaintiff's motion for default judgment be GRANTED; 2. Plaintiff is entitled to, and the Clerk be directed to enter, a judgment that: (a) The interest/s of Gua dalupe Avina, Jorge Leal, Elisa Leal, Johanna Leal, and Vanessa Leal in the Defendant property are CONDEMNED and FORFEITED to the United States of America; and (b) The right, title, and interest of all potential claimants in the Defendant property, i ncluding but not limited toGuadalupe Avina, Jorge Leal, Elisa Leal, Johanna Leal, and Vanessa Leal, are FORFEITED to the United States of America, and are VESTED in the United States; and, (c) All persons claiming any right, title, or interest in or to the Defendant property have DEFAULTED and no longer have any right, title, or interest in the Defendant property whatsoever; and, 3. The Clerk of Court ENTER final judgment of forfeiture for Plaintiff United States of America. Matter referred to J udge Wanger. Plaintiff directed to serve these findings and recommendations on all potential claimants and file a proof of service. Within thirty (30) days after being served with a copy, any party may file written objections with the court and ser ve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judges Findings and Recommendation." Replies to the objections shall be served and filed within ten (10) court days (plus three days if served by mail) after service of the objections. The 10/30/2009 hearing date is VACATED, signed by Magistrate Judge Sandra M. Snyder on 10/26/2009. (Timken, A)

1 2 3 4 5 6 7 8 9 10 11 UNITED STATES OF AMERICA, 12 13 vs. 14 2007 BMW Convertible 650i, VIN: WBAEK13577CN80379, 15 License Number 6CBS415, 16 17 18 19 20 21 22 23 24 Plaintiff is proceeding with an action for forfeiture in 25 this Court. Pending before the Court is Plaintiff's ex parte 26 motion for default judgment, filed on August 7, 2009, with a 27 supporting declaration of Elisa Rodriguez, which proceeds before 28 1 Defendant. Plaintiff, ) ) ) ) ) ) ) ) ) ) ) ) 1:09-cv-00009-OWW-SMS ORDER VACATING HEARING ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT AND DEEMING MATTER SUBMITTED FOR DECISION (DOC. 28) Vacated hearing date: October 30, 2009 Time: 9:30 a.m. FINDINGS AND RECOMMENDATIONS RE: PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT (Doc. 28) ORDER DIRECTING PLAINTIFF TO SERVE THESE FINDINGS AND RECOMMENDATIONS ON ALL POTENTIAL CLAIMANTS AND FILE A PROOF OF SERVICE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

1 a Magistrate Judge pursuant to 28 U.S.C. § 636(b) and Local Rule 2 72-302(c)(19). 3 4 I. Vacating the Hearing on the Motion Pursuant to Rule 78-230(h) of the Local Rules of Practice

5 for the United States District Court, Eastern District of 6 California, the Court finds that the Plaintiff's ex parte motion 7 for default judgment is a matter that may appropriately be 8 submitted upon the record and briefs, including the Plaintiffs' 9 motion, supporting memorandum of points and authorities, and 10 declaration of Elisa Rodriguez filed on August 7, 2009. 11 Accordingly, the hearing on the motion, presently set for

12 October 30, 2009, IS VACATED, and the motion IS DEEMED SUBMITTED 13 to the Court for decision. 14 15 II. Service of the Findings and Recommendations The remainder of this document constitutes the Court's

16 findings and recommendations with respect to Plaintiff's motion 17 for default judgment. 18 Plaintiff IS DIRECTED to serve the findings and

19 recommendations on all potential claimants to Defendant property, 20 including Jorge Leal, Elisa Leal, Johanna Leal, and Vanessa Leal, 21 and to file proof of such service no later than ten days after 22 the date of service of this order. 23 24 25 III. Motion for Default Judgment A. Legal Standards A court has the discretion to enter a default judgment

26 against one who is not an infant, incompetent, or member of the 27 armed services where the claim is for an amount that is not 28 certain on the face of the claim and where (1) the defendant has 2

1 been served with the claim; (2) the defendant's default has been 2 entered for failure to appear; (3) if the defendant has appeared 3 in the action, the defendant has been served with written notice 4 of the application for judgment at least three days before the 5 hearing on the application; and, (4) the court has undertaken any 6 necessary and proper investigation or hearing in order to enter 7 judgment or carry it into effect. Fed. R. Civ. P. 55(b); Alan 8 Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th 9 Cir. 1988). Factors that may be considered by courts in 10 exercising discretion as to the entry of a default judgment and 11 as to setting aside a default include the nature and extent of 12 the delay, Draper v. Coombs, 792 F.2d 915, 924-925 (9th Cir. 13 1986); the possibility of prejudice to the plaintiff, Eitel v. 14 McCool, 782 F.2d 1470, 1471-72 (9th Cir.1986); the merits of 15 plaintiff's substantive claim, id.; the sufficiency of the 16 allegations in the complaint to support judgment, Alan Neuman 17 Productions, Inc., 862 F.2d at 1392; the amount in controversy, 18 Eitel v. McCool, 782 F.2d at 1471-1472; the possibility of a 19 dispute concerning material facts, id.; whether the default was 20 due to excusable neglect, id.; and, the strong policy underlying 21 the Federal Rules of Civil Procedure that favors decisions on the 22 merits, id. 23 With respect to default judgments in proceedings that are in

24 rem actions for forfeiture, both the general Federal Rules of 25 Civil Procedure and the Supplemental Rules for Certain Admiralty 26 and Maritime Claims (Supp. R.) apply, but the latter rules 27 prevail if there is an inconsistency. Supp. R. A(1). Supp. R. 28 G(1) provides that the rule governs a forfeiture action in rem 3

1 arising from a federal statute; to the extent that Rule G does 2 not address an issue, Supp. Rules C and E also apply. 3 Supplemental Rule G, which took effect on December 1, 2006, 4 incorporates a common-sense approach to notice grounded in 5 defined and recognized principles of due process of law. Supp. 6 Rule G, Adv. Comm. Note on 2006 Adoption. The Advisory Committee 7 Note indicates that the rule was added to bring together the 8 central procedures governing civil forfeiture actions; it also 9 states that the rule generally applies to actions governed by the 10 Civil Asset Forfeiture Reform Act of 2000 (CAFRA) as well as 11 those excluded from it; thus, the intended scope of application 12 is very broad. The rule permits flexibility as to the time of 13 service of any warrant and supplemental process. Id. The 14 provisions for notice incorporate the traditional means of 15 publication and adopt the general principle that notice should be 16 effectuated by means reasonably calculated to reach potential 17 claimants at a cost reasonable in the circumstances, and actual 18 notice precludes a challenge to the government's failure to 19 comply with the specific requirements of the rule set forth in 20 Rule G (4)(b). Id. 21 22 23 B. The Court's Findings 1. Notice The declaration of publication of Elisa Rodriguez (Doc. 24)

24 filed on June 3, 2009, establishes that a notice with the 25 contents required by Supp. R. G(4)(a) was published on the 26 official government internet site for thirty consecutive calendar 27 days as required by Supp. R. G(4)(a)(iv)(C). 28 With respect to the notice to persons reasonably appearing 4

1 to be potential claimants that is required by Supp. R. G(4)(B), 2 the verified complaint identifies Defendant vehicle as one that 3 was seized on or about August 13, 2008, by the FBI, at 28542 4 Pittman Hill Road in Clovis, California, and that is presently in 5 the custody of the United States Marshal. (Cmplt. ¶¶ 1-2.) 6 With respect to Jorge Leal, who resided at both 28542

7 Pittman Hill Road and 1656 Barstow Avenue in Clovis, and was the 8 primary user of Defendant vehicle (Cmplt. ¶¶ 8, 12), the 9 declaration of Elisa Rodriguez and the Marshal's return of 10 service (Doc. 28-2, ¶ 11, Ex. I) establish that Jorge Leal was 11 personally served with the pertinent documents on January 26, 12 2009. Thus, the notice to Jorge Leal complied with the 13 requirements of Supp. R. G(4)(b). 14 With respect to the other potential claimants,1 it does not

15 appear that notice amounting to service of process that would be 16 legally sufficient to constitute service under Fed. R. Civ. P. 4 17 was effected upon Elisa, Johanna, or Vanessa Leal. However, they 18 were given notice that either complies with Supp. R. G(4) or 19 constitutes actual notice that forecloses objection to the notice 20 given. The appropriate documentation was delivered by the Marshal 21 22 23 24 25 26 27 28
1 Elisa Leal was the wife of Jorge Leal; she stated to law enforcement o f f i c e r s that she had been on disability since January 2007, the Defendant v e h i c l e belonged to a family member named Guadalupe Avina from Los Angeles, a n d Elisa had picked up the vehicle about six months previously and had been d r i v i n g it because she had no other vehicle. (Cmplt. ¶¶ 9, 14). Johanna Leal w a s the adult daughter of Jorge Leal; she was an unemployed, full-time s t u d e n t , and she stated that her mother had brought the Defendant vehicle over t o the house on Pittman Hill Road, the formal ownership of which was in J o h a n n a ' s name; in the house was found a receipt for approximately $72,063.00 f o r the cash purchase of the Defendant vehicle by Maria Guadalupe Avina r e s i d i n g at Pittman Hill Road in Clovis, although surveillance revealed that J o r g e Leal was the primary user of the Defendant vehicle. (Cmplt. ¶¶ 12, 151 6 . ) Vanessa Leal was another adult daughter who had not worked for the past t w o years. (Cmplt. ¶ 18.)

5

1 to the door of the house at the Pittman address (the last known 2 address of Elisa, Johanna, and Vanessa Leal and of Guadalupe 3 Avina) for all four persons on January 22, 2009. (Decl. Of 4 Rodriguez, ¶¶ 7-10.) The documents were mailed to the four 5 persons at the Pittman Hill Road address on January 14, 2009. 6 (Rodriguez Decl., ¶¶ 3-6.) This notice was sent by means 7 reasonably calculated to reach to potential claimants and 8 complies with Supp. R. G(4)(b)(iii)((A), (D), and (E). 9 Further, the internal documentation of the United States

10 attorney's Office and the Marshal's Service are consistent with 11 the receipt of actual notice. The supporting declaration of Elisa 12 Rodriguez, based on personal knowledge, details the contact by 13 the Marshal's Service with Johanna and Vanessa Leal, which 14 resulted in the Leals' confirmation that all parties had received 15 copies of the relevant process. (Decl. ¶ 13.) Further, a memo to 16 file dated February 12, 2009, from Anne Gaskins, Deputy United 17 States Marshal, reflects that on February 11, 2009, Deputy 18 Gaskins called Johanna and Vanessa Leal at a specified telephone 19 number, and they both confirmed that all parties received copies 20 of the process. (Decl., Ex. K.) An additional notation reflected 21 that paralegal Autumn Magee at the Assistant United States 22 Attorney's Office in Fresno had confirmed to Gaskins in a 23 telephone conversation that Magee received a call from the Leals 24 indicating that they did receive the paperwork. (Decl., Ex. K.) 25 With respect to Johanna Leal, a confirming letter to her from 26 Autumn Magee reflects that on or about February 4, 2009, the 27 government granted Johanna Leal's request for an extension of 28 time to March 6, 2009, in which to file a claim and answer. 6

1 (Decl. Rodriguez, ¶ 12, Ex. J.) 2 The Court finds that Jorge Leal was personally served as

3 required by Local Rule A-540(a), and the other potential 4 claimants received actual notice and thus, pursuant to Supp. R. 5 G(4)(b)(v), may not oppose or seek relief from forfeiture because 6 of a failure of notice. 7 The Court concludes that Plaintiff has demonstrated that it

8 has given notice by publication and the notice required to be 9 given to potential claimants by Rule G(4). 10 11 a. Judgment Sought 12 The Court concludes that the notice given of the judgment 13 sought satisfied Fed. R. Civ. P. 55(d) and 54(c), which require 14 that a judgment by default shall not be different in kind from 15 the relief sought, or exceed in amount that prayed for, in the 16 demand for judgment. Plaintiff expressly sought in the complaint 17 the types of relief sought by the instant application for default 18 judgment, including a judgment of forfeiture of the Defendant 19 currency to the Plaintiff United States. (Cmplt. p. 7.) 20 b. Motion for Default Judgment 21 The application for default judgment before the Court was 22 filed on an ex parte basis and thus was not served on the 23 Defendant property or on any persons who might reasonably appear 24 to be potential claimants. 25 Here, although there was informal contact between the 26 government and potential claimant Johanna Leal, the contact 27 related only to an extension of time to file any claim or answer. 28 7 2. Notice of Judgment Sought and of Motion for Default Judgment

1 No claim or answer was filed, and there are no later indications 2 that Johanna or any other potential claimant sought or intended 3 to defend this action on the merits. Accordingly, no notice 4 pursuant to Fed. R. Civ. P. 55(b)(2) is necessary. See, In re 5 Roxford Foods v. Ford, 12 F.3d 875, 879-81 (9th Cir. 1993). 6 7 3. Default and Entry of Default The declarations and the Court's docket demonstrate that no

8 person or entity made a claim or answered the complaint within 9 the requisite thirty-day period for filing a claim of 18 U.S.C. § 10 983(a)(4)(A) and Supp. R. G(5), and/or within the twenty-day 11 period set forth in Supp. R. G(5) for filing an answer 12 thereafter. Therefore, the Clerk appropriately entered the 13 default of all five potential claimants on April 2, 2009. 14 15 16 4. Legal Sufficiency of the Complaint a. Legal Standards A default judgment generally bars the defaulting party from

17 disputing the facts alleged in the complaint, but the defaulting 18 party may argue that the facts as alleged do not state a claim. 19 Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392. 20 Thus, well pleaded factual allegations, except as to damages, are 21 taken as true; however, necessary facts not contained in the 22 pleadings, and claims which are legally insufficient, are not 23 established by default. Cripps v. Life Ins. Co. of North America, 24 980 F.2d 1261, 1267 (9th Cir. 1992); TeleVideo Systems, Inc. v. 25 Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). 26 Under the Civil Asset Forfeiture Reform Act (CAFRA), which

27 applies to this case, the government must prove by a 28 preponderance of evidence that the property is subject to 8

1 forfeiture. 18 U.S.C. § 983(c)(1). Further, if the government's 2 theory of forfeiture is that the property was used to commit or 3 facilitate the commission of a criminal offense, or was involved 4 in the commission of a criminal offense, the government shall 5 establish that there was a substantial connection between the 6 property and the offense. § 983(c)(3). 7 Supp. Rule G(2) requires that the complaint in a forfeiture

8 action in rem arising from a federal statute be verified; state 9 the grounds for subject-matter jurisdiction, in rem jurisdiction 10 over the Defendant property, and venue; describe the property 11 with reasonable particularity; identify the statute under which 12 the forfeiture action is brought; and state sufficiently detailed 13 facts to support a reasonable belief that the government will be 14 able to meet its burden of proof at trial. 15 16 17 8.) 18 The bases for jurisdiction are identified as 28 U.S.C. §§ b. The Complaint The complaint filed in this action was verified. (Cmplt p.

19 1345 and 1355 (jurisdiction of civil proceedings commenced by the 20 United States or an agency or officer thereof, and of actions to 21 recover or enforce penalties or forfeitures under acts of 22 Congress, respectively) and 21 U.S.C. § 881(a)(6) (subjecting to 23 forfeiture, among other things, all things of value furnished or 24 intended to be furnished by any person in exchange for a 25 controlled substance or listed chemical, and all proceeds 26 traceable to such an exchange). (Cmplt. ¶¶ 1, 3.) 27 The bases of venue are identified as 28 U.S.C. § 1395

28 (placing venue for a civil forfeiture proceeding where the 9

1 property is found) and 21 U.S.C. § 881(j) (placing venue in the 2 place where there is found the owner of property who is charged 3 with a violation that is the basis for forfeiture of the property 4 or where the criminal prosecution is brought). (Cmplt. ¶ 4.) 5 6 The property is described with reasonable particularity. It is stated that the Plaintiff United States proceeds

7 pursuant to 21 U.S.C. § 881(a)(6), and that the Defendant 8 properties, seized in August 2008 in Clovis, California, 9 constitute things of value furnished or intended to be furnished 10 in exchange for a controlled substance of listed chemical, 11 proceeds traceable to such an exchange, and/or things used or 12 intended to be used to facilitate one or more violations of 21 13 U.S.C. § 841 et seq. (Cmplt. ¶¶ 1-2.) 14 In the complaint there are alleged sufficiently detailed

15 facts to support a reasonable belief that the government would be 16 able to meet its burden of proof at trial. The complaint detailed 17 two controlled buys of large quantities of methamphetamine from 18 Jorge Leal at his residence in December 2007 involving $11,000.00 19 and $16,000.00 worth of crystal methamphetamine; follow-up 20 investigation and surveillance; and a search of the two 21 residences of the Leals, which revealed over seventeen grams of 22 methamphetamine and a loaded firearm at the Barstow residence, 23 and materials concerning manufacture of methamphetamine at the 24 Pittman Hill Road residence. (Cmplt. ¶¶ 5-13.) EDD records 25 revealed that Jorge Leal had not worked for two years, Elisa had 26 been receiving disability compensation for the past year, and 27 neither Johanna nor Vanessa had worked for two years; tax 28 documents, public records, and evidence et the homes revealed 10

1 that the Leal family would not be able to afford luxury vehicles 2 without drug proceeds as income. (Cmplt. ¶ 18.) 3 These facts support a reasonable inference that the

4 expensive vehicle was subject to forfeiture as proceeds/property 5 traceable to proceeds or as property intended to be used to 6 facilitate other violations. The totality of the circumstances 7 reflects that a substantial connection between the property and 8 the related drug offenses (violations of 21 U.S.C. §§ 841()(1) 9 and 841(b)(1)(A)) was demonstrated. 10 11 Here, no one has claimed an interest in the Defendant 12 property or otherwise responded to the complaint despite adequate 13 notice. It does not appear that there is any risk of mistake or 14 excusable neglect on the part of anyone with a potential interest 15 in the property or of a dispute as to a material fact essential 16 to the government's case. No just cause for delay appears. It is 17 apparent from the declarations submitted to the Court that none 18 of the potential claimants is an infant, incompetent, or member 19 of the armed services. There does not appear to be any reason why 20 the general policy in favor of a decision on the merits would 21 warrant refusing to enter the requested default judgment. 22 Accordingly, the Court finds that Plaintiff has shown its 23 entitlement to a default judgment of forfeiture. 24 6. Form of the Judgment 25 A successful plaintiff in a forfeiture action is entitled to 26 a judgment against the property, Waterloo Distilling Corp. v. 27 U.S., 282 U.S. 577, 581 (1931), affecting the interests of all 28 11 5. Status of Potential Claimants and Discretionary Factors

1 persons in the property, Hanson v. Denkla, 357 U.S. 235, 246 n.12 2 (1958). 3 4 5 6 IV. Recommendation Accordingly, it is hereby RECOMMENDED that: 1. Plaintiff's motion for default judgment be GRANTED; 2. Plaintiff is entitled to, and the Clerk be directed to

7 enter, a judgment that: 8 (a) The interest/s of Guadalupe Avina, Jorge Leal,

9 Elisa Leal, Johanna Leal, and Vanessa Leal in the Defendant 10 property are CONDEMNED and FORFEITED to the United States of 11 America; and 12 (b) The right, title, and interest of all potential

13 claimants in the Defendant property, including but not limited to 14 Guadalupe Avina, Jorge Leal, Elisa Leal, Johanna Leal, and 15 Vanessa Leal, are FORFEITED to the United States of America 16 pursuant to 21 U.S.C. § 881(a)(6), and are VESTED in the United 17 States; and, 18 (c) All persons claiming any right, title, or interest

19 in or to the Defendant property have DEFAULTED and no longer have 20 any right, title, or interest in the Defendant property 21 whatsoever; and, 22 3. The Clerk of Court ENTER final judgment of forfeiture for

23 Plaintiff United States of America. 24 These findings and recommendation are submitted to the

25 United States District Judge assigned to the case, pursuant to 26 the provisions of 28 U.S.C. § 636 (b)(1)(B) and Rule 72-304 of 27 the Local Rules of Practice for the United States District Court, 28 Eastern District of California. Within thirty (30) days after 12

1 being served with a copy, any party may file written objections 2 with the court and serve a copy on all parties. Such a document 3 should be captioned "Objections to Magistrate Judge's Findings 4 and Recommendation." Replies to the objections shall be served 5 and filed within ten (10) court days (plus three days if served 6 by mail) after service of the objections. The Court will then 7 review the Magistrate Judge's ruling pursuant to 28 U.S.C. § 636 8 (b)(1)(C). The parties are advised that failure to file 9 objections within the specified time may waive the right to 10 appeal the District Court's order. Martinez v. Ylst, 951 F.2d 11 1153 (9th Cir. 1991). 12 13 IT IS SO ORDERED. 14 Dated: icido3 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 October 26, 2009 /s/ Sandra M. Snyder UNITED STATES MAGISTRATE JUDGE