United States of America v. Real Property and Improvements Located at 929 Clay Street, Unit #7, San Francisco, CA
Filing
30
Order granting 28 Motion for Default Judgment. Signed by Judge James Donato on 6/5/2015. ***Civil Case Terminated. (jdlc1S, COURT STAFF) (Filed on 6/5/2015)
1
2
3
4
UNITED STATES DISTRICT COURT
5
NORTHERN DISTRICT OF CALIFORNIA
6
7
UNITED STATES OF AMERICA,
Case No. 15-cv-00010-JD
Plaintiff,
8
v.
ORDER GRANTING DEFAULT
JUDGMENT
9
11
REAL PROPERTY AND
IMPROVEMENTS LOCATED AT 929
CLAY STREET, UNIT #7, SAN
FRANCISCO, CA,
12
Defendant.
United States District Court
Northern District of California
10
Re: Dkt. No. 28
13
14
In this in rem forfeiture action, the United States of America moves for default judgment
15
against defendant real property located at 929 Clay Street, Unit #7 in San Francisco, CA pursuant
16
to 21 U.S.C. § 881(a)(7). The government’s motion follows a settlement agreement reached on
17
April 3, 2015 with claimant Dr. Richard Poon, who will receive 50% of the net proceeds of the
18
sale of the property. No one has opposed the motion. The Court finds that the motion is
19
appropriate for decision without oral argument pursuant to Civil Local Rule 7-1(b) and grants the
20
motion.
21
BACKGROUND
22
Beginning in 2006, and continuing until his arrest on September 24, 2013, Dr. Collin
23
Leong sold prescriptions for the narcotic medications oxycodone and hydrocodone to people who
24
were not his patients. Dkt. No. 1 ¶ 9. He sold these prescriptions without medical justification,
25
without examining the people who purchased them and often “under multiple names for a single
26
person.” Id. When pharmacies called his office about the prescriptions, Dr. Leong would verify
27
them. Id. Dr. Leong did all of this from his medical office at 929 Clay Street, Unit #7 in San
28
Francisco, CA, the defendant property in this case. Id. ¶ 10. Mabel Leong, Dr. Leong’s wife,
1
participated in the scheme. Id. ¶¶ 10, 11. She received the cash payments for the prescriptions
2
and helped launder the cash through various bank accounts. Id. ¶ 11.
3
On September 23, 2013, the United States filed a criminal complaint against Dr. Leong
4
charging him with possession with intent to distribute a controlled substance and conspiracy to
5
possess a controlled substance with intent to distribute. Dkt. No. 1 ¶ 9. On April 8, 2015, a
6
criminal complaint was also filed against Mabel Leong charging her with money laundering. Dkt.
7
No. 24 at 2.
8
9
This in rem forfeiture action was filed on January 2, 2015. Dkt. No. 1. In a verified
complaint, the government alleged that the defendant property is subject to forfeiture under 21
U.S.C. § 881(a)(7) as property used or intended to be used to commit or facilitate the commission
11
United States District Court
Northern District of California
10
of the distribution of oxycodone and hydrocodone. Id. ¶ 21. Two potential claimants of the
12
defendant property have been identified by the government: Dr. Richard Poon and Mabel Leong,
13
who each have a 50% undivided interest in the property. The government has entered into a
14
settlement agreement with Dr. Poon through his counsel, William Taylor. Dkt. No. 18. Dr. Poon
15
has consented to the forfeiture and sale of the property, and will receive one half of the net
16
proceeds of the sale, contingent on the Court’s entry of a final judgment of forfeiture. Id.
17
Following the settlement, on April 7, 2015, after all deadlines to file a verified claim in this
18
action had expired, the government moved for a Clerk’s entry of default, which was entered on
19
April 10, 2015. Dkt. Nos. 21, 23. The government now moves for entry of default judgment
20
pursuant to Rule 55(b) of the Federal Rules of Civil Procedure and Rule 6-1 and 6-2 of the
21
Admiralty & Maritime Local Rules. The deadline to file an opposition was May 1, 2015; no one
22
has opposed the motion.
23
24
DISCUSSION
Property subject to civil forfeiture may be seized and forfeited under the Federal Rules of
25
Civil Procedure Supplemental Rules for Admiralty and Maritime Claims and Asset Forfeiture
26
Actions (“FRCP Supp.”) and this district’s Admiralty & Maritime Local Rules. United States v.
27
Real Prop., 135 F.3d 1312, 1315 (9th Cir. 1998); Admir. L.R. 1-2. In deciding the motion, the
28
2
1
Court considers these procedural rules as well as the factors under Eitel v. McCool, 782 F.2d 1470,
2
1471–72 (9th Cir. 1986).
3
I.
4
PROCEDURAL RULES FOR CIVIL FORFEITURE
All real property used to commit or facilitate the commission of a crime under 21 U.S.C. §
5
841(a) (possession with intent to distribute a controlled substance) or 21 U.S.C. § 856
6
(maintaining drug-involved premises) shall be subject to forfeiture to the United States in
7
compliance with 18 U.S.C. § 981(b). 21 U.S.C. §§ 881(a)(7), (b). Under section 981, when the
8
United States seeks to seize real property, Congress has dispensed with the customary need for the
9
issuance and service of an arrest warrant in rem. 18 U.S.C. §§ 981(b)(1), (c)(3). Instead, the
government may initiate a civil forfeiture by filing a complaint for forfeiture, posting a notice of
11
United States District Court
Northern District of California
10
the complaint on the property and serving notice on the property owner, along with a copy of the
12
complaint. 18 U.S.C. § 985(c)(1). The government’s complaint must be verified, state the
13
grounds for jurisdiction and venue, describe the property being forfeited with reasonable
14
particularity, identify the statute under which the forfeiture action is brought, and include enough
15
factual detail to support a reasonable belief that the government will be able to meet is burden of
16
proof at trial. FRCP Supp. G(2).
17
Here, the United States has satisfied each of these requirements. It filed a verified
18
complaint for forfeiture on January 2, 2015 (Dkt. No. 1); posted a notice of the complaint and the
19
forfeiture action on the property on February 6, 2015 (Dkt. No. 16); and sent the notice of
20
forfeiture and complaint for forfeiture via certified and regular U.S. mail on January 7, 2015 to the
21
property’s owners, Dr. Richard Poon and Mabel Leong (Dkt. No. 5). The complaint set forth
22
sufficient facts as to the grounds for jurisdiction and venue, a description of the property being
23
forfeited (including the parcel number), and the federal statutes under which the forfeiture action
24
was brought. Dkt. No. 1. The facts alleged in the verified complaint support a reasonable belief
25
that the Government will meet its burden of proof at trial. Id.
26
Civil forfeiture actions in rem are also governed by the Northern District’s Admiralty &
27
Maritime Local Rules. See Admir. L.R. 1-2. Admiralty Local Rule 6-2 provides that default
28
judgment in an in rem action may be entered under Federal Rule of Civil Procedure 55(b) any time
3
1
after default has been entered. Default was entered in this case on April 10, 2015. Dkt. No. 23.
2
Under Admiralty Local Rule 6-2(a), default will be entered upon a showing that notice has been
3
given as required by Admiralty Local Rule 6-1 and that no one has filed a timely responsive
4
pleading under FRCP Supp. G(5). 1 Local Rule 6-1 requires the party seeking default to show
5
compliance with FRCP Supp. G(3) and G(4).
Under FRCP Supp. G(3), if the defendant is real property, the government must proceed
6
7
under 18 U.S.C. § 985. As discussed, the government has complied with the requirements of that
8
section. Under FRCP Supp. G(4), the government must provide notice by publication and notice
9
to known potential claimants. The government has satisfied both of these requirements as well. It
published a notice of the present action on an official government forfeiture website
11
United States District Court
Northern District of California
10
(www.forfeiture.gov) for 30 consecutive days beginning on February 2, 2015, within a reasonable
12
time after filing the January 6, 2015 complaint. Dkt. No. 17. The notice described the property
13
with reasonable particularity, stated the time to file a claim and to answer and named the
14
government attorney to be served with the claim and answer. Id. The government also mailed the
15
required documents to the last known addresses of each of the parties that it determined to be
16
potentially interested in this action. Notice was sent by certified and first class mail on January 7,
17
2015 to the property’s owners, Dr. Richard Poon and Mabel Leong, as well as Ms. Leong’s
18
husband Dr. Collin Leong, Ms. Leong’s attorney Garrick Lew, and Camilla Lee Leong,
19
presumably Collin and Mabel Leong’s relative. Dkt. No. 5.
Under FRCP Supp. G(5)(a)(i), any person who has an interest in the property may contest
20
21
the forfeiture by filing a claim identifying his or her interest in the property. Potential claimants
22
who were sent direct notice needed to file a claim no later than thirty-five days after the notice was
23
sent, which made February 11, 2015 the deadline in this case. FRCP Supp. G(5)(a)(ii)(A).
24
Potential claimants who were not sent direct notice were required to file a claim by April 3, 2015,
25
sixty days after the notice was first published on an official government website. FRCP Supp.
26
G(5)(a)(ii)(B). After a claim is made, the claimant must file an answer no later than twenty-one
27
1
28
Because this action arises under a federal statute, and is therefore subject to FRCP Supp. G,
Admiralty & Maritime Local Rule 6-2(a), and not Rule 6-2(b), applies in this case.
4
1
days after filing the claim. FRCP Supp. G(5)(b). Although Dr. Poon missed the deadline to file a
2
claim, the government agreed to treat the settlement agreement as his timely verified claim and
3
answer. Dr. Poon does not contest the forfeiture and will receive 50% of the net proceeds from the
4
property’s sale. As of the date of this order, no other claims or answers have been filed.
5
Accordingly, the requirements of FRCP G(5), and all other procedural requirements, have been
6
met.
7
II.
8
9
THE EITEL FACTORS
Federal Rule of Civil Procedure 55(b)(2) permits a court, following an entry of default, to
enter default judgment against a defendant. “The district court’s decision whether to enter a
default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).
11
United States District Court
Northern District of California
10
Our court of appeals requires a district court to consider several factors in exercising its discretion
12
to award default judgment including:
13
14
15
16
(1) the possibility of prejudice to the plaintiff, (2) the merits of
plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4)
the sum of money at stake in the action; (5) the possibility of a
dispute concerning material facts; (6) whether the default was due to
excusable neglect, and (7) the strong policy underlying the Federal
Rules of Civil Procedure favoring decisions on the merits.
Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). After entry of default, well-pled
17
allegations in the complaint regarding liability are taken as true, except as to the amount of
18
damages. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002).
19
Overall, the factual allegations in the government’s verified complaint and the discharge of
20
all the applicable procedural requirements show that the Eitel factors weigh in favor of default
21
judgment. A denial of default judgment would prejudice the government in that it would be
22
required to expend further time and effort in an action where no claimants (other than Dr. Poon)
23
have appeared. Without a default judgment, the government may be without recourse altogether.
24
The government’s claims have substantive merit, and all procedural requirements and safeguards
25
have been met. While the property represents a significant asset, its forfeiture is warranted
26
pursuant to federal statute, and there has been no dispute raised as to any material fact. One of the
27
two known potential claimants has already settled with the government, and there is no evidence
28
5
1
that excusable neglect is the reason no other claim or answer has been filed. While it is preferable
2
to decide a case on the merits, when there is no opposing party a decision on the merits is an
3
impractical task.
CONCLUSION
4
5
The motion for default judgment is granted. The property at 929 Clay Street, Unit #7, San
6
Francisco, CA is condemned and forfeited to the United States pursuant to 21 U.S.C. § 881(a)(7).
7
All right, title and interest in the property is vested in the United States of America. Judgment
8
shall be entered accordingly, and the case closed.
9
10
IT IS SO ORDERED.
Dated: June 5, 2015
United States District Court
Northern District of California
11
________________________
JAMES DONATO
United States District Judge
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?