United States of America v. Approximately $14,985.00 in U.S. Currency
Filing
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FINDINGS and RECOMMENDATIONS Regarding Plaintiff's Ex Parte Application for Default Judgment 23 . Referred to Judge O'Neill; Objections to F&R due within 15 court days of service of this recommendations. signed by Magistrate Judge Sandra M. Snyder on 7/5/2011. (Herman, H)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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UNITED STATES OF AMERICA,
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CASE NO. 1:09-cv-00470-LJO-SMS
Plaintiff,
FINDINGS AND RECOMMENDATIONS
REGARDING PLAINTIFF’S EX PARTE
APPLICATION FOR DEFAULT
JUDGMENT
v.
APPROXIMATELY $14,985.00 IN U.S.
CURRENCY,
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Defendant.
(Doc. 23)
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In this civil forfeiture action, Plaintiff United States of America (“Government”) seeks (1)
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default judgment against the interests of Marcos Fernandez and Maria Teresa Garcia in
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approximately $14,985.00 and (2) entry of a final forfeiture judgment to vest in the Government
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all right, title and interest in the defendant currency. The Government’s motion has been referred
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to the Magistrate Judge pursuant to 28 U.S.C. § 636(b) and Local Rule 72-302(c)(19) and is
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considered in accordance with Local Rule A-540(d).
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This Court has reviewed the papers and has determined that this matter is suitable for
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decision without oral argument pursuant to Local Rule 78-230(h). Having considered all written
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materials submitted, the undersigned recommends that the District Court grant the Government
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default judgment, enter final forfeiture judgment to vest in the Government all right, title and
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interest in the defendant currency, and order the Government, within ten (10) days of service of
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an order adopting these findings and recommendations, to submit a proposed default and final
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forfeiture judgment consistent with these findings and recommendations.
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I.
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Factual Background1
On September 25, 2008, a California Highway Patrol (CHP) officer stopped a Honda
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Accord for a code violation at Crystal and Olive Avenue at Highway 99 in Fresno, California.
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Marcos Fernandez, the driver and sole occupant, denied the officer’s request for a consent search,
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stating that the car was not his. The officer requested the assistance of a drug-sniffing dog from
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the Fresno County Sheriff’s Department Narcotics Enforcement Team.
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A detective and “Cody” responded. After the detective explained in Spanish who he was
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and how Cody was to sniff for the odor of narcotics, Fernandez again denied a request for a
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consent search, again stating that the car did not belong to him. The detective and Cody searched
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both outside and inside the car. Cody alerted to the front center air vents and the dashboard,
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which appeared to have been tampered with. Fernandez and the car were then transported to the
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CHP central office where the search continued. There, CHP personnel located a hidden
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compartment within the dash board containing the defendant currency, approximately 216.7
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grams of methamphetamine, and 25.6 grams of cocaine.
After hearing his Miranda rights, Fernandez told officers that the cart belonged to his
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sister-in-law, Maria Garcia, who lived in Riverside County. Fernandez initially stated that he had
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flown Alaska Airlines to Riverside County from Washington State that morning. But after
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officers asked whether Alaska Airlines would have a record of his flight, Fernandez stated that he
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had flown the previous Saturday.
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When officers asked whether Fernandez had left any personal belongings in the car,
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Fernandez replied that he had left his cell phone. He denied knowledge of the cash or drugs that
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had been found in the search. He then decided to exercise his right to remain silent. Thereafter,
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Fernandez was detained in the Fresno County Jail, charged with violating California Health and
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Safety Code § 11352(a), Transportation/Sale of Narcotics/Controlled Substances.
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These facts were derived from the Government’s application and from the Court’s records.
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II.
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Procedural Background
On March 12, 2009, the Government filed its complaint for forfeiture in rem, alleging
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that the defendant currency was subject to forfeiture to the Government under 21 U.S.C. §
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881(a)(6) because it constituted moneys furnished or intended to be furnished in exchange for a
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controlled substance or listed chemical, all proceeds traceable to such an exchange, and was used
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or intended to be used to facilitate one or more violations of 21 U.S.C. § 841, et seq. On March
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19, 2009, based on the allegations of the complaint, the Clerk of the Court issued a Warrant for
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Arrest of Articles In Rem for the defendant currency. The warrant was executed on March 26,
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2009.
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On March 19, 2009, this Court authorized publication of the forfeiture action via the
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internet forfeiture website www.forfeiture.gov for at least thirty days. According to the
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Government’s Declaration of Publication, a Notice of Civil Forfeiture was published on the
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official government internet site (www.forfeiture.gov) for thirty days beginning on April 3, 2009.
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On April 2, 2009, the U.S. Marshals Service served Fernandez personally. The U.S.
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Marshals Service was unable to locate Garcia to serve her personally. Despite a diligent search,
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Garcia’s whereabouts are unknown.
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As part of the Government’s Request for Entry of Default against Fernandez, FSA
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Paralegal Autumn Magee declared under penalty of perjury that on information and belief,
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Fernandez was neither the military service nor was an infant or incapacitated person. As part of
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the Government’s Request for Entry of Default against Garcia, FSA Paralegal Elisa M.
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Rodriguez declared under penalty of perjury that on information and belief, Garcia was neither
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the military service nor was an infant or incapacitated person. Neither potential claimants
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Fernandez or Garcia, nor any other potential claimant, has filed an answer or otherwise defended
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the action. The Clerk entered default as to Fernandez on August 21, 2009, and as to Garcia on
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May 3, 2011. The Government moved for Default Judgment on May 11, 2011.
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DISCUSSION
I.
Sufficiency of the Complaint
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The Government contends that the allegations set forth in the verified complaint for
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Forfeiture In Rem and the cited facts provide ample grounds for forfeiture of the defendant
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currency. A complaint’s sufficiency is one factor in deciding whether to grant default judgment.
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Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Money or other things of value are
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subject to forfeiture if they (1) are furnished or intended to be furnished by any person in
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exchange for a controlled substance, (2) constitute proceeds traceable to such an exchange, or (3)
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are used or intended to be used to facilitate any violation of the laws governing controlled
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substances. 21 U.S.C. § 881(a)(6).
The Government’s verified complaint alleges that the defendant currency is subject to
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forfeiture since it constitutes a thing of value furnished or intended to be furnished in exchange
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for a controlled substance, in which all proceeds were traceable to such an exchange, and/or were
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used or intended to be used to facilitate the violation of one or more laws governing controlled
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substances. As set forth above and in the verified complaint, the DEA seized the defendant
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currency on September 25, 2008, incident to a search of an automobile owned by Garcia and
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driven by Fernandez.
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The complaint meets the requirements of Rule G of the Supplemental Rules for
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Admiralty or Maritime Claims and Asset Forfeiture Actions, Federal Rules of Civil Procedure, in
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that it is verified; states the grounds for subject matter jurisdiction, in rem jurisdiction, and
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venue; describes the property seized and the circumstance of its seizure; and identifies the
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relevant statutes. In the absence of assertion of interests in the defendant currency, this Court is
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not in a position to question the facts supporting its forfeiture. As alleged, the facts set forth a
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sufficient connection between the defendant currency and illegal drug activity to support a
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forfeiture.
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The government need not show a relationship between the proceeds of a drug crime and a
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specific drug transaction: Circumstantial evidence may support the forfeiture of the proceeds of a
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drug crime. See United States v. Funds in the Amount of Thirty Thousand Six Hundred Seventy
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Dollars ($30,670.00), 403 F.3d 448, 467-70 (7th Cir. 2005) (concluding that totality of
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circumstances demonstrated that airline passenger’s cash hoard was connected to drug trafficking
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and subject to forfeiture); United States v. $242,484.00, 389 F.3d 1149, 1160 (11th Cir. 2004)
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(applying totality of circumstances to determine that cash carried by airline passenger was the
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proceeds of, or traceable to, an illegal drug transaction).
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II.
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Notice Requirements
The Fifth Amendment’s Due Process Clause prohibits the Government from taking
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property without due process of law. Individuals whose property interests are at stake are
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entitled to notice and an opportunity to be heard. The requisite notice was provided to Fernandez
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and Garcia.
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A.
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Supplemental Rule G(4) provides that in lieu of newspaper publication, the Government
Notice by Publication
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may publish notice “by posting notice on an official government forfeiture site for at least 30
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consecutive days.” Local Admiralty and In Rem rules further provide that the Court shall
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designate by order the appropriate vehicle for publication. Local Rules A-530 and 83-171. On
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March 19, 2009, this Court authorized publication of the forfeiture action via the internet
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forfeiture website www.forfeiture.gov for at least thirty days. According to the Government’s
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Declaration of Publication, a Notice of Civil Forfeiture was published on the official government
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internet site (www.forfeiture.gov) for thirty days beginning on April 3, 2009. Accordingly, the
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Government satisfied the requirements for notice to Fernandez and Garcia by publication.
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B.
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When the Government knows the identity of the property owner, due process requires
Personal Notice
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“the Government to make a greater effort to give him notice than otherwise would be mandated
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by publication.” United States v. Real Property, 135 F.3d 1312, 1315 (9th Cir. 1998). In such
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cases, the Government must attempt to provide actual notice by means reasonably calculated
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under all circumstances to apprise the owner of the pendency of the forfeiture action. Dusenbery
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v. United States, 534 U.S. 161, 168 (2002) (quotations omitted). See also Mullane v. Central
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Hanover Bank & Trust Co., 339 U.S. 306, 315 (1950) (requiring such notice “as one desirous of
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actually informing the absentee might reasonably adopt to accomplish it”). “Reasonable notice,
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however, requires only that the government attempt to provide actual notice; it does not require
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that the government demonstrate that it was successful in providing actual notice.” Mesa
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Valderrama v. United States, 417 F.3d 1189, 1197 (11th Cir. 2005).
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Supplemental Rule G(4)(b) mirrors this requirement, providing for notice to be sent by
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means reasonably calculated to reach the potential claimant. Local Rule A-540 also requires that
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a party seeking default judgment in an action in rem demonstrate to the Court’s satisfaction that
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due notice of the arrest of the property has been given both by publication and by personal
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service of the person having custody of the property, or if the property is in the hands of a law
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enforcement officer, by personal service on the person who had custody of the property before its
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possession by a law enforcement agency or officer. Notice must also be provided by personal
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service or certified mail, return receipt requested, on every other person who has appeared in the
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action and is known to have an interest in the property, provided that failure to give actual notice
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to such other person may be excused upon a satisfactory showing of diligent efforts to provide
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notice without success. L.R. A-540(a). Notwithstanding the Supplemental Rules and L.R. A-
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540(a), the Government provides sufficient notice when the notice complies with the
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requirements of F.R.Civ.P. 4. See F.R.Civ.P. 4(n)(1) (providing that when a federal statute
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authorizes forfeiture, “[n]otice to claimants of the property shall then be sent in the manner
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provided by statute or by service of a summons under this rule”).
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Here, the Government personally served Fernandez with the complaint, arrest warrant,
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publication order, and other related documents on April 2, 2009. Although the Government was
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unable to personally serve Garcia, whose whereabouts are unknown, it demonstrated diligent
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efforts to personally serve her.
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C.
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Supplemental Rule G(5) requires any person who asserts an interest in or right against the
Failure to File Claim or Answer
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defendant currency to file a claim with the Court within 35 days after service of the
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Government’s complaint or 30 days after the final publication of notice. Supplemental R.
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G(4)(b) & (5). Failure to comply with the procedural requirements for opposing the forfeiture
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precludes a person from establishing standing as a party to the forfeiture action. Real Property,
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135 F.3d at 1317. The Clerk of Court properly entered default against Fernandez on August 21,
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2009, and against Garcia on May 3, 2011.
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D.
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The Government seeks judgment against the interests of Fernandez and Garcia, and final
Default Judgment
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forfeiture judgment to vest in the Government all right, title and interest in the defendant
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currency. The Supplemental Rules do not set forth a procedure to seek default judgment in rem.
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Supplemental Rule A provides, “The Federal Rules of Civil Procedure also apply to the
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foregoing proceedings except to the extent that they are inconsistent with these Supplemental
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Rules.”
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Pursuant to the Federal Rules of Civil Procedure, default entry is a prerequisite to default
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judgment. “When a party against whom a judgment for affirmative relief is sought has failed to
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plead or otherwise defend, and the failure is shown by affidavit or otherwise, the clerk must enter
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the party’s default.” F.R.Civ.P. 55(a). Generally, the default entered by the clerk establishes a
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defendant’s liability.
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Rule 55 gives the court considerable leeway as to what it may require as a
prerequisite to the entry of a default judgment. The general rule of law is that
upon default the factual allegations of the complaint, except those relating to the
amount of damages, will be taken as true.
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TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)
(internal citations and quotation marks omitted).
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As noted above, the Government properly obtained default entries against the interests of
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Fernandez and Garcia. There is no impediment to default judgment sought by the Government
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against them. The Government properly seeks judgment against the interests of the entire world,
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that is, a final forfeiture judgment to vest in the Government all right, title, and interest in the
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defendant currency. “A judgment in rem affect the interests of all persons in designated property
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. . . . [T]he plaintiff is seeking to secure a pre-existing claim in the subject property and to
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extinguish or establish the nonexistence of similar interests of particular persons.” Hanson v.
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Denckla, 357 U.S. 235, 246 n. 12 (1958). Because of Hernandez and Garcia’s defaults, the
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Government is entitled to a final forfeiture judgment.
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RECOMMENDATIONS
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In light of the reasons discussed above, this Court recommends that
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The District Court grant Plaintiff United States of America default
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judgment against the interests of Marcos Fernandez and Maria Teresa
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Garcia in the defendant currency;
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The Clerk of Court enter final forfeiture judgment to vest in Plaintiff
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United States of America all right, title and interest in the defendant
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currency; and
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3.
The District Court order Plaintiff United States of America, within ten
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(10) days of service of an order adopting these findings and
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recommendations, to submit a proposed default and final forfeiture
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judgment consistent with the findings and recommendations and the order
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adopting them.
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These findings and recommendations are submitted to District Judge Lawrence J. O’Neill
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pursuant to 28 U.S.C. § 636 (b)(1)(B) and Local Rule 72-304. Within fifteen (15) court days of
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service of this recommendation, any party may file written objections to these findings and
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recommendations with the Court and serve a copy on all parties. Such document should be
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captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The district
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judge will review these findings and recommendations pursuant to 28 U.S.C. § 636(b)(1)(C).
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The parties are advised that failure to file objections within the specific time may waive the right
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to appeal the district judge’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
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IT IS SO ORDERED.
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Dated:
icido3
July 5, 2011
/s/ Sandra M. Snyder
UNITED STATES MAGISTRATE JUDGE
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