UNITED STATES OF AMERICA v. $307,970.00 in U. S. Currency

Filing 141

ORDER granting 126 Motion to Stay Proceedings and denying 130 Motion to Dismiss - The court stays this case up to and including July 1, 2016. At the conclusion of that time, the parties will confer and provide the court with a joint status rep ort for moving forward with the case by July 10, 2016. Should the government seek continued stay of this case, any motion to that effect shall be filed no later than May 20, 2016. Claimants will be afforded the opportunity to respond, but no replies shall be allowed. Signed by District Judge Louise Wood Flanagan on 1/14/2016. (Baker, C.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
EASTERN DIVISION
NO. 4:12-CV-136-FL

UNITED STATES OF AMERICA,
Plaintiff,
v.
$307,970.00, IN U.S. CURRENCY,
Defendant.

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ORDER

This matter comes before the court on claimants’ motion to dismiss the case for due process
violations, or, in the alternative, for discovery sanctions. (DE 130). Also pending before the court
is the government’s motion to stay proceedings, made pursuant to 18 U.S.C. § 981(g). (DE 126).
The issues raised have been briefed fully and are ripe for ruling. For the reasons that follow,
claimants’ motion is denied, the government’s motion is granted, and the case is stayed on the terms
outlined below.
BACKGROUND
This case has a lengthy and contentious history that is summarized more fully in the court’s
prior orders. The court herein summarizes only the facts pertinent to disposition of the instant
motion. The government seized the defendant funds from claimant Apolinar Garcia-Ancelmo
(“Garcia-Ancelmo”) on February 16, 2012, in Wayne County, North Carolina. On July 12, 2012,
the government initiated this civil asset forfeiture action in rem against the defendant funds pursuant
to 18 U.S.C. § 981 and 21 U.S.C. § 881(a)(6). The government contends the defendant funds were

used or intended to be used in facilitate a violation of Title II of the Controlled Substances Act, 21
U.S.C. § 801 et seq.
Claimants are Garcia-Ancelmo, his wife, Cirilia Garcia (“Garcia”), and their daughter Lucia
Covarrubias (“Covarrubias”). Claimants Garcia and Covarrubias filed claims of ownership with
the court on August 20, 2012. Claimant Garcia-Ancelmo filed a claim of ownership on August 29,
2012. Throughout this case, claimants have contended that the defendant funds were lawfully
obtained through their legitimate business operations.
For various reasons, discovery has not been completed. On November 29, 2012, the court
entered its first case management order (“CMO”) and discovery began. On January 28, 2013,
claimants filed a motion to dismiss pursuant to Rule G(8)(b) of the Supplemental Rules for
Admiralty or Maritime Claims and Asset Forfeiture Actions (“Supplemental Rules”) and Federal
Rule of Civil Procedure 12(b)(6). On February 11, 2013, the government served on claimants
special interrogatories, inquiring as to their “identity and relationship to the defendant property,”
pursuant to Supplemental Rule G(6). By operation of law, the government’s response time
automatically was stayed until 21 days after claimants responded to the special interrogatories,
giving the government until as late as March 28, 2013, to respond to the motion to dismiss. See
Supplemental Rule G(6)(c).
On March 5, 2013, claimants filed a motion to stay the case. Claimants sought a stay of both
discovery and their obligation to respond to the government’s special interrogatories, until resolution
of their motion to dismiss as well as the government’s also-pending motion to amend its complaint.
On May 22, 2013, the court granted in part and denied in part claimants’ motion to stay. The court
granted the motion to stay discovery generally until it resolved the parties’ motions. However, the

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court denied claimants’ motion inasmuch as they sought a stay of their response to the government’s
special interrogatories. The court directed claimants to respond to those special interrogatories
within 10 days of its order.
On June 14, 2013, after claimants responded to the government’s special interrogatories, but
before the government filed its memorandum in opposition to claimants’ motion to dismiss, the
government filed a motion to compel responses to those same special interrogatories, as well as a
motion to stay its response time to claimants’ motion to dismiss. Therein, the government argued
that claimants had provided materially incomplete responses, or otherwise had altogether failed to
respond, to a number of the interrogatories. Briefing on the government’s motion to compel ensued.
On August 13, 2013, the court entered order granting in part and denying in part the government’s
motion to compel and granting the government’s motion to stay its response time. Specifically, the
court directed claimants to answer certain interrogatories within 10 days of the order and granted
the government an additional 21 days after claimants’ response to file any responsive brief.
Rather than respond to claimants’ motion to dismiss, on September 13, 2013, the government
instead filed a motion to strike the three claims of ownership filed by claimants, as well as a motion
for default judgment, the filing of which was grounded in the theory that no claimant had come
forward to assert ownership of the defendant funds. In addition, the government filed a motion to
continue the stay of its response time to claimants’ motion to dismiss, filed some eight months
earlier. On September 17, 2013, the court noticed a hearing on the government’s various motions.
On September 23, 2013, claimants filed a motion to continue that hearing. On September 27, 2013,
the court entered a text order denying the government’s motion to strike and also denying the
government’s motion for default judgment. In addition, the court denied claimants’ motion to

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dismiss without benefit of government response, as allowed by Supplemental Rule G(6)(c), and
further denied as moot the government’s motion to continue its response deadline. The court then
directed the parties to submit to it within 14 days a second discovery plan to govern the conduct of
pretrial activities.
The parties filed a joint report, pursuant to Federal Rule of Civil Procedure 26(f), on October
10, 2013. On October 15, 2013, the court entered a second CMO, which provided that discovery
was to close by April 15, 2014. However, three months into the renewed discovery period, on
January 23, 2014, the government filed its first motion to stay the case pursuant to 18 U.S.C. §
981(g). Briefing on the government’s motion lasted an extended amount of time, with both parties
seeking an extension of time in which to file their respective response and reply, and with claimants
filing a disfavored sur-reply without leave of court. Claimants’ sur-reply drew a motion to strike
from the government, which then had to be fully briefed. In all, briefing on the government’s
motion to stay was not completed until April 9, 2014. Finally, on May 23, 2014, the court granted
the government’s motion and stayed the case up to and including July 23, 2014.
The government filed a motion to continue the effect of the stay on July 23, 2014, the day
the stay expired. As a result, the case fell into limbo, a sort of quasi-stay, until briefing on the issue
was completed. On August 13, 2014, claimants filed a memorandum in opposition to the
government’s requested stay. In that same document, and in disregard of the Local Civil Rules,
claimants embedded a motion, styled as a “request,” to dismiss the case for due process violations.
On August 18, 2014, the court entered order granting the government’s motion to stay; however, the
court tailored the granted stay with an eye toward claimants’ due process concerns, limiting its reach
to only two months.

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At the expiration of the stay period, on October 17, 2014, the parties’ filed a joint motion to
extend the time to complete discovery and for modification of the second CMO. That joint filing
was withdrawn on the same day. On October 24, 2014, the court entered order directing the parties
to file a proposed schedule for proceeding with any additional discovery. On November 5, 2014,
the parties responded with a second joint motion to amend the second CMO. Therein, the parties
requested a new discovery deadline of February 28, 2015, with dispositive motions due by March
31, 2015. The court granted the parties’ joint motion on November 7, 2014, and the new case
schedule took effect.
On January 30, 2015, one month prior to the close of the discovery period, claimants filed
a motion for summary judgment, which argued that the government lacked probable cause to bring
this case, as well as that the government could not meet its trial burden. Approximately three weeks
later, on February 18, 2015, and 10 days before the close of discovery, claimants filed a motion to
stay the proceeding, with the proposed stay to last until the court ruled on their motion for summary
judgment. On February 20, 2015, the government also filed a motion to stay the case pursuant to
18 U.S.C. § 981(g). By order entered July 2, 2015, the court granted in part claimants’ motion to
stay and denied as moot the government’s requested motion. In particular, the court bifurcated the
issues raised in claimants’ motion for summary judgment and stayed the proceedings until resolution
of the probable cause issue. The court deferred ruling on the merits issue until the government had
the opportunity to complete discovery.
The court denied claimants’ motion on the probable cause issue on August 26, 2015. In its
order, the court set the final discovery deadline for October 20, 2015, with all dispositive motions
due by November 20, 2015. On October 13, 2015, claimants filed a motion for a protective order.

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Claimants represented to the court that the government sought to depose them in connection with
this case, and moved the court for an order limiting the use of their deposition testimony in unrelated
proceedings. After claimants filed their motion, the parties jointly moved to extend the discovery
deadline until 15 days after the court resolved claimants’ motion.
On October 27, 2015, the government filed the instant, third motion to stay proceedings
pursuant to 18 U.S.C. § 981(g). Thereafter, on November 10, 2015, claimants filed the instant
motion to dismiss or in the alternative for discovery sanctions. In their motion, claimants contend
that the government has violated their due process rights by unfairly preventing them from litigating
their claim on the merits. In addition, claimants contend that the government committed certain
unfair discovery practices in connection with the first issue raised by their motion for summary
judgment, and, as a result, they are entitled to either a dismissal of this matter with prejudice, or, at
the very least, to have certain items of evidence excluded from an eventual trial on the merits.
COURT’S DISCUSSION
A.

Motion to Dismiss
Approximately four years have passed since the defendant funds were seized. The central

argument before the court is whether that delay is unconstitutional. Claimants contend that the
government has violated their due process rights by “failing to bring the case to trial within a
reasonable amount of time,” thereby depriving them “of their hard and legitimately earned
property.” (Claimants’ Br., DE 130-1, 9). In support of the theory that a prolonged forfeiture
proceeding can contravene due process, claimants cite United States v. Eight Thousand Eight
Hundred and Fifty Dollars, 461 U.S. 555, 564–65 (1983) (“$8,850.00”), and United States v. Banco
Cafetero Panama, 797 F.2d 1154, 1163 (2d Cir. 1986) (“Banco Panama”). In opposition, the

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government suggests that the reasoning of $8,850.00 does not apply in this case, and that, in any
event, its conduct has caused no unconstitutional delay. The court agrees with claimants that
$8,850.00 establishes the proper analytical framework. However, the court agrees with the
government inasmuch as it contends that, upon application of that analytical framework to the facts
of this case, no due process violation has occurred. Accordingly, claimants’ motion is denied.
In $8,850.00, the Supreme Court held that failure to file a forfeiture suit within a reasonable
time after seizure violates a claimant’s due process right to be heard “at a meaningful time.” See
461 U.S. at 562–65. The Court observed that the specific due process concern spurred by inaction
in a forfeiture case “mirrors the concern of undue delay encompassed in the right to a speedy trial.”
Id. at 564. Thus, courts analyzing the impact of delay on the claimant’s due process rights in a civil
asset forfeiture case balance the same factors used when determining whether a given delay violates
a criminal defendant’s Sixth Amendment right to a speedy trial. $8,850.00, 461 U.S. at 565–66.
See generally Barker v. Wingo, 407 U.S. 514 (1972).
Although $8,850.00 addresses only the “narrow” issue of delay between seizure and filing,
the “flexible” due process principles articulated by the Court easily are expanded to cover situations
in which the government unfairly delays a case from coming to trial. 461 U.S. at 562, 565.
Requiring the government to file timely a forfeiture complaint does not guarantee that the claimant
will be heard at a meaningful time. To the contrary, if the most due process required was the filing
of a complaint, after the government fulfilled that task, its attorneys could sit idly by without ever
taking meaningful steps to move the case forward. No one would argue that the due process rights
of the accused criminal defendant are satisfied merely by initiating a criminal action. See, e.g.,
United States v. Eccleston, 615 F. App’x 767, 775 (4th Cir. 2015) (addressing both delay between

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arrest and indictment and arrest and final disposition of criminal matter). Rather, just as the criminal
defendant is entitled to a final adjudication, so too is a forfeiture claimant. See, e.g., Banco Panama,
797 F.2d at 1163 (applying the Barker test to “the holding of the forfeiture trial as well as to the
filing of the action”); United States v. $59,074.00 in U.S. Currency, 959 F. Supp. 243, 250–51
(D.N.J. 1997) (holding Barker test applied where 30 months had passed since seizure and the
government continued to file deficient pleadings) ; see also United States v. Premises Located at
Route 13, Kilburn Beach, Florence, Ala., 946 F.2d 749, 754–55 (11th Cir. 1991) (holding Barker
test applied where 11 months had passed since seizure and claimants were given no adversarial
probable cause hearing).
To determine whether delay in the litigation process violates the forfeiture claimants’ due
process rights courts balance 1) the length of delay, 2) the government’s proffered justification for
the delay, 3) the timeliness of the claimant’s assertion of his or her rights, and 4) prejudice to the
claimant. See Barker, 407 U.S. at 530–32. Balancing these factors necessarily is an ad hoc process,
and no factor is determinative. See $8,850.00, 461 U.S. at 564. In fact, these four enumerated
factors are non-exclusive, and the list may be subject to addition or subtraction based on the facts
of the case. See Barker, 407 U.S. at 530. In any event, to trigger analysis of the second, third,
fourth, or any additional, identifiable factors, there must be “some delay which is presumptively
prejudicial.” Id. Thus, the first factor acts as both a threshold requirement, as well as a
consideration in the ultimate balancing analysis. See United States v. Hall, 551 F.3d 257, 271 (4th
Cir. 2009).
The first factor is the length of delay. There are two components to the first Barker factor.
Id. “First of all, a reviewing court must decide whether the length of the delay triggers a speedy trial

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inquiry.” Id. “Second, a reviewing court must weigh ‘the extent to which the delay stretches
beyond the bare minimum needed to trigger judicial examination of the claim.’” Id. (quoting
Doggett v. United States, 505 U.S. 647, 652 (1992)). Almost four years have passed since the initial
seizure, and this case has been pending for approximately three and one half years. The court
assumes this delay to be presumptively prejudicial such that it “triggers a speedy trial inquiry.” In
addition, despite the adversarial nature of this proceeding, as compared to the one-sided situation
presented in $8,850.00 and other similar cases, four years is a substantial amount of time. Thus, the
court assumes that the first of the Barker factors is satisfied and moves on to the remaining three.
The second factor is the “reason the government assigns to justify the delay.” Barker, 407
U.S. at 531. This factor is “[c]losely related” to the first, and different weights should be given to
different justifications. Id. For example, “[a] deliberate attempt to delay the trial in order to hamper
the defense should be weighted heavily against the government,” while “[a] more neutral reason
such as negligence or overcrowded courts should be weighted less heavily but nevertheless should
be considered since the ultimate responsibility for such circumstances must rest with the
government.” Id. However, “[a] valid reason, such as a missing witness, should serve to justify
appropriate delay.” Id.
The government points to claimants’ own litigation tactics as a notable source of the delay
in this case, and the court agrees. Through two motions to stay, as well as several improper filings,
claimants have extended the case schedule. For example, claimants filed a motion to stay the case
on March 8, 2013. That motion to stay subsequently was granted and delayed the case for
approximately six months, until the stay was lifted in September 2013. More recently, claimants
moved to stay the case in conjunction with their motion for summary judgment. That stay was

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granted on July 2, 2015, and had the effect of delaying the case in excess of six months, from
February 18, 2015, until August 26, 2015. Almost one of the four years this case has been pending
is attributable to claimants’ defense. Although claimants should not be penalized for mounting a
vigorous defense, nor should they gain a windfall by prolonging the case only to have it dismissed
as a result of that delay.
That is not to say, however, that the government has not engaged in its fair share of
procedural motions, which also have slowed the progress of the case. For example, the government
moved to stay the case on January 23, 2014, pursuant to 18 U.S.C. § 981(g). Although the resulting
stay was brief, only two months, once renewed, the effects of the stay were more substantial. All
told, the government successfully stayed the case for approximately 10 months, from January 23
until October 17, 2014. Nevertheless, the court does not weigh that delay harshly against the
government. The court is mindful of the tension between criminal investigation and a forfeiture
proceeding and views the delay as a necessary and permissible attempt to accommodate the criminal
matter. See $8,850.00, 461 U.S. at 567. In addition, the Civil Asset Forfeiture Reform Act grants
the government the statutory right to make a § 981(g) motion whenever it believes that “civil
discovery will adversely affect [its] ability . . . to conduct a related criminal investigation.” 18
U.S.C. § 981(g)(1).

As the court’s grant of the government’s January 23, 2014, motion

demonstrates, the delay was the result of the government satisfying those statutory criteria.
Although the court now considers the government’s delay favorably, it does not necessarily
follow that further, more extensive delays will comport with due process. Certainly some delay is
to be anticipated during the pendency of a criminal investigation or criminal prosecution; wellfounded criminal cases, and especially cases involving drug conspiracies, do not materialize over

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night. However, as the Supreme Court warned in Barker, eventually the government must bear the
burden of delay, even where that delay is unavoidable or the result of well-intentioned actions. See
407 U.S. at 531 (discussing “neutral reason[s]” for delay). The court cannot, and does not attempt
to accurately predict the tipping point. Context is key. Any given term of future delay, for instance,
necessarily must be viewed in light of the status of the criminal investigation, as well as the
pendency of any criminal prosecution.
In any case, other delays also have been attributable to either the court’s scheduling or to
both parties. Frequently the court has given the parties multiple weeks to respond to orders or pose
a new case schedule, which, it bears mentioning, have been taken advantage of fully. The discovery
period, unimpeded by motions to dismiss or motions to stay, has lasted 10 months. In the abstract,
10 months is not an altogether unreasonable time in which to complete discovery. That figure is
made all the more reasonable considering that, in this case, discovery has been taken only in fits.
In addition, the parties have at least once jointly agreed to extend the discovery schedule. Thus,
considering the reasons for and sources of delay in this case the court cannot conclude that the
length of this case is unreasonable.
The court’s analysis, which discounts heavily any delay occasioned by claimants’ actions,
finds support in a related, yet very different area of law: the Speedy Trial Act, 18 U.S.C. §§
3161–3147. Although not a perfect analogy, see § 3173 (“No provision of this chapter shall be
interpreted as a bar to any claim of denial of speedy trial as required by amendment VI of the
Constitution.”), courts have long recognized that it would be “an unusual case in which the time
limits of the Speedy Trial Act have been met but the sixth amendment right to speedy trial has been
violated.” United States v. Nance, 666 F.2d 353, 360 (9th Cir. 1982); accord United States v. Schlei,

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122 F.3d 944, 986 (11th Cir. 1997); United States v. DeJesus, 887 F.2d 114, 116 n.1 (6th Cir. 1989);
United States v. Mitchell, 723 F.2d 1040, 1049 (1st Cir. 1983). Without implying that the time limit
imposed by the Speedy Trial Act applies in civil asset forfeiture cases, the court finds it instructive
that the provisions of the statute are tolled during the period of “delay resulting from any pretrial
motion.” 18 U.S.C. § 3161(h)(1)(D). Thus, here, where at least one year of delay has occurred as
a result of claimants’ various motions to stay, the court will not hold that time against the
government.
Claimants nonetheless vigorously assert the second Barker factor weighs in their favor. In
their view, the source of the “exorbitant delay” in bringing this matter to trial is the government’s
“opportunistic gamesmanship, which is . . . easily demonstrated [where] the government has
revealed that it has repeatedly withholding [sic] relevant evidence from [c]laimants.” (Claimants’
Br., DE 130-1, 13). Aside from the alleged discovery violations, addressed below, claimants’
argument essentially boils down to this: allegations that the government has unfairly used civil
discovery to its advantage in order to gain an edge in its criminal investigation. The court disagrees
with claimants’ unsupported characterization of the government’s conduct. Because there is no
indictment in this case, the government already possesses the power to gather much of the same
information in the course of a grand jury proceeding. See, e.g., United States v. Doe, 465 U.S. 605,
610–14 (1984) (contents of documents not protected by Fifth Amendment privilege against self
incrimination, while production of documents by the accused may be testimonial and, thus, protected
by the Fifth Amendment); see also David B. Smith, Prosecution and Defense of Forfeiture Cases §
10.02[1] (noting prosecutors may rely on the grand jury as a “powerful engine” of criminal
discovery, which then may be shared with the government’s asset forfeiture attorney). Moreover,

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the government has not used civil discovery to circumvent or otherwise compromise claimants’ Fifth
Amendment rights. Those rights have been accommodated throughout this proceeding, where they
had not been deposed at the time the court extended the time to complete discovery, subsequently
were granted a protective order limiting the use of their deposition testimony consistent with the
Fifth Amendment, and were not deposed during the pendency of their motion for protective order.
Turning to the third Barker factor, assertion of the right to a speedy trial, the court finds this
factor neutral. Although claimants correctly point out that they have been involved in this case at
every stage, timely filing their claims and participating in the discovery process, their efforts to
advance a speedy resolution cannot be viewed in a vacuum. See Barker, 407 U.S. at 531–32. In
particular, the court is mindful of the claimants’ previously-mentioned efforts to stay the case.
Although they certainly were and are well-intentioned and well-founded, dismissing the case when
the delay at issue partially is attributable to claimants would be to grant them a windfall.
Finally, the fourth Barker factor, prejudice to the claimant, weighs neither for nor against
dismissing the case. The Barker court identified three considerations pertinent to a court’s analysis
of the third factor: 1) prevention of oppressive pretrial incarceration, 2) minimization of anxiety and
concern of the accused, and 3) limiting the possibility that the defense will be impaired. 407 U.S.
at 532. Of those three considerations, the third is the most important. Id. Even assuming the first
defense interest weights in claimants’ favor, the second, and the critical third defense interest do not.
On the second defense interest, anxiety and concern, claimants have failed to identify “any
restraint on liberty, disruption of employment, strain on financial resources, [or] exposure to public
obloquy that [i]s greater than that faced by anyone openly subject to criminal investigation.” Hall,
551 F.3d at 272 (internal quotations and citations omitted) (first alteration in original). Claimants

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obviously have lost substantial financial resources. However, any criminal investigation into the
source of allegedly ill-gotten funds decreases either the target’s ability to jettison those funds, or,
at a minimum, the desirability and wisdom of parting ways with those funds.
That leaves the third defense interest, the possibility of impairing the defense, as claimants’
lone basis on which to rest their argument. In their own words
[c]laimants earned the money in their legitimate business of providing migrant labor
to local farming operations. Inherently, this means witnesses will move to different
cities, states, and countries. People change their number. People’s memories fade.
Every day that goes by, and every employee or client that becomes out of touch or
otherwise unavailable, harms [c]laimants’ ability to defend this case.
(Claimants’ Br., 12–13). The court is not persuaded by claimants’ contentions. As an initial matter,
those same considerations could harm the government’s case as well, which would be a boon to
claimants. In any event, although those farmers’ memories of the particulars of claimants’ staffing
services may wane, claimants readily admit they previously have enlisted the services of an
accountant. Any information in their accountants’ possession should prove more than sufficient to
bolster claimants’ case. Moreover, claimants’ contentions are purely speculative. The court is
unpersuaded by claimants’ veritable parade of horribles where there is no concrete evidence
supporting it. Without evidence of how the delay actually has prejudiced their defense, the court
must conclude that no such prejudice exists. Hall, 551 F.3d at 273; United States v. Ninety-Three
(93) Firearms, 330 F.3d 414, 426 (6th Cir. 2003).
In sum, claimants have failed to demonstrate that this case should be dismissed on the basis
of $8,850.00 for due process violations. Even assuming that there has been a prejudicial delay, the
various reasons for that delay are substantial. A portion of the delay is attributable to the
government’s own legitimate criminal investigation, and another contributing factor is the

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sometimes slow-progress of civil litigation. The court also views claimants’ own contribution to
the delay as a significant factor warranting the denial of their motion. Moreover, the remaining
Barker factors also weigh against claimants. Although claimants have expressed an interest in a
speedy resolution, they have contributed materially in preventing any final outcome. Although it
undeniably is their right to do so, the court will not countenance claimants’ argument that they
should be allowed to both contribute to the overall delay in litigation and yet reap the benefit of that
delay. Finally, claimants have failed to provide any concrete evidence demonstrating the negative
effects of delay on their defense. Weighing all these reasons together, claimants’ motion must be,
and is, denied.
B.

Motion for Discovery Sanctions
Next, the court considers the consequences of the government’s discovery conduct.

Claimants move the court to either dismiss the case outright, or at least severely limit the universe
of evidence available to the government, as a result of alleged discovery violations. The precise
nature of claimants’ motion requires a brief historical discussion. In support of its motion to stay
the proceeding, filed January 23, 2014, the government submitted the ex parte declaration of Drug
Enforcement Agency (“DEA”) Task Force Officer Lance Anthony under seal. That declaration,
which subsequently was unsealed in conjunction with the government’s defense of claimants’
motion for summary judgment, detailed a larger investigation into claimants, specifically claimant
Garcia-Ancelmo, than claimants previously had understood. In particular, the Anthony declaration
detailed claimant Garcia-Ancelmo’s interactions with a third party, Sanchez-Correa, and discussed
recorded phone conversations between the two, wherein Garcia-Ancelmo and Sanchez-Correa
conversed about various drug transactions. Claimants find troubling that the government failed to

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produce the Anthony Declaration, which was prepared on January 23, 2014, as well as the
recordings mentioned therein, in its November 26, 2014, response to claimants’ request for
production of “[a]ll documents, reports, statements, recordings, photographs, or any other
information or evidence . . . which in any way relate to any investigation by law enforcement
officers of [c]laimants.” (See DE 116-1, 3).
The Anthony declaration was unsealed on the government’s motion on July 15, 2015, so that
it could be used in defense of claimants’ motion for summary judgment on the issue of probable
cause existing at the time the government filed suit. Since the unsealing of that declaration, on
September 3, 2015, the government provided claimants with the various recordings mentioned in
the Anthony declaration. Thereafter, on October 27, 2015, the government again served claimants
with supplemental discovery responses. At that time, the government served on claimants a redacted
copy of a DEA Task Force Officer’s report from an August 14, 2015, interview with a confidential
informant. This report was prepared on August 15, 2015, and was approved on September 1, 2015,
but was not served with the government’s September 3, 2015, supplementations.
In their motion, claimants mount an attack on three specific alleged discovery violations.
First, claimants contend that the recorded phone calls should have been turned over to them in the
government’s first, November 26, 2014, response to their request for production. Next, claimants
suggest that the Anthony declaration also should have been disclosed in the government’s November
26, 2014, discovery response. Finally, claimants argue that the DEA report, dated August 15, 2015,
should have been disclosed in the government’s discovery supplementation served September 3,
2015.

Citing these alleged discovery violations, claimants move the court to sanction the

government’s discovery tactics. Claimants suggest the appropriate sanction in this context is

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outright dismissal; however, claimants also contend that, should the court determine a lesser
sanction is appropriate, that the court should exclude from trial any evidence of the recorded phone
conversations, including the conversations themselves, as well as witness testimony about the
contents of those conversations, and also should exclude evidence of the August 15, 2015, DEA
report.
Before diving into the merits’ of claimants’ motion, the court pauses briefly to discuss
counsel’s filing habits. At docket entry 138, claimants filed an omnibus reply brief, containing
arguments in support of both their motion to dismiss and motion for discovery sanctions. Inasmuch
as claimants made arguments in support of their motion to dismiss, the filing is proper and in
compliance with the Local Rules. However, a not-insubstantial portion of claimants’ reply addresses
the discovery issue. Pursuant to Local Civil Rule 7.1(c), “any motion . . . that seeks to enforce, use,
regulate, extend, modify, nullify, or limit any of the procedures in any of Rules 26 through 37 of the
Federal Rules of Civil Procedure” is a “discovery motion.” Local Civ. R. 7.1(c)(1). Further,
pursuant to Local Civil Rule 7.1(f)(2) “[r]eplies are not permitted in discovery disputes.” Id.
7.1(f)(2). Thus, to the extent claimants’ motion seeks a discovery sanction it is a “discovery motion”
and the reply is improper.
The court writes separately on this issue because it is not the first time that claimants’
counsel has disregarded the Local Civil Rules. For example, on March 24, 2014, claimants filed a
sur-reply without leave of court. In addition, on August 13, 2014, claimants filed a “request” for
dismissal embedded within a memorandum in opposition to the government’s motion for continued
stay of the case. Both of these actions disregarded the Local Civil Rules. Under the Local Rules,
replies in non-discovery motions are disfavored; sur-replies without leave of court are omitted

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entirely. See Local Civ. R. 7.1(f)(1). Motions, such as claimants’ “request” for dismissal are to be
separately filed and accompanied by a memorandum in support, not embedded within responses.
See id. 7.1(d). The goals of Federal Rule of Civil Procedure 1 would be best served if both parties
ensure familiarity with the rules of practice before this court.
Turning to claimants’ motion, it must be denied. The court’s denial rests on both procedural
and substantive grounds. Local Civil Rule 7.1(c) specifically provides that “[n]o discovery motion
will be considered by the court unless the motion sets forth or has attached thereto, by item, the
specific question, interrogatory, etc., with respect to which the motion is filed.” Local Civ. R.
7.1(c)(2). Claimants failed to attach to the motion any incomplete, or allegedly evasive discovery
responses. Rather, claimants only recite generally their myriad grievances with the government’s
discovery tactics. However, the plain language of the rule requires an itemized list of challenged
discovery responses. Accordingly, the motion is not entitled to consideration and should be denied.
In any event, the court finds claimants’ motion without merit. Rule 37 of the Federal Rules
of Civil Procedure governs discovery sanctions. As relevant here, the rule provides that
[i]f a party fails to provide information or identify a witness as required by Rule
26(a) or (e), the party is not allowed to use that information or witness to supply
evidence on a motion, at a hearing, or at a trial, unless the failure was substantially
justified or is harmless.
Fed. R. Civ. P. 37(c)(1). In addition to exclusion, the court also may impose numerous other
sanctions, see id. 37(c)(1)(C), including dismissal. Id. 37(b)(2)(A)(v). The Fourth Circuit has
observed that, where the failure was not either substantially justified or harmless, Rule 37 operates
as an “automatic sanction.” S. States Rack & Fixture, Inc. v. Sherwin-Williams, Co., 318 F.3d 592,
595 n.2 (4th Cir. 2003) (quoting Fed. R. Civ. P. 37 advisory committee notes (1993)).

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Claimants’ proposed relief would punish the government’s alleged failure to supplement.
Supplementation of discovery is governed by Rule 26(e), which, in pertinent part, states
A party who has made a disclosure under Rule 26(a)–or who has responded to an
interrogatory, request for production, or request for admission–must supplement or
correct its disclosure or response . . . in a timely manner if the party learns that in
some material respect the disclosure or response is incomplete or incorrect, and if the
additional or corrective information has not otherwise been made known to the other
parties during the discovery process or in writing.
Fed. R. Civ. P. 26(e). Read together, Rules 26(e) and 37(c) provide that where a party makes a false
or misleading disclosure and fails to correct that disclosure, or where that party otherwise fails to
supplement a truthful disclosure with newly-obtained, relevant information, that party is subject to
Rule 37’s automatic sanction, unless the disclosure is substantially justified or harmless. See Fed.
R. Civ. P. 26(e) & 37(c)(1); see also, e.g., Trost v. Trek Bicycle Corp., 162 F.3d 1004, 1008 (8th Cir.
1998) (failure to timely disclose is failure to disclose). With these principles in mind, the court turns
to each objected-to discovery practice more specifically, and rejects claimants’ contentions in turn.
Claimants first contend that the court should sanction the government’s failure to disclose
the recorded phone conversations by excluding the calls, as well as any testimony about their
content. As a threshold matter, the court must consider whether the government violated Rule 26(e).
Failure to respond fully to a request for production in a timely manner is a violation of the rule. See
Wilkins v. Montgomery, 751 F.3d 214, 221 (4th Cir. 2014). The government does not suggest that
it responded appropriately to claimants’ request for production, and the court agrees. Request
number two specifically requested the production of “[a]ll documents, reports, statements,
recordings, photographs, or other information or evidence . . . which in any way relate[s] to any
investigation by law enforcement officers of [c]laimants.” (DE 116-1, 3). The phone recordings
plainly related to a law enforcement investigation into claimant Garcia-Ancelmo, yet the
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government, without objection, failed to mention any such evidence. The government’s failure to
do so is a complete abdication of its duty to respond.
In opposition, the government argues that its failure was not intentional, but, rather, was an
attempt to fashion a more convenient means of discovery. Specifically, the government contends
that, in response to claimants’ request for production, it began to collect the requested information,
so as to not respond in a piecemeal fashion. However, the government argues, before it could
respond, claimant Garcia-Ancelmo was arrested, which opened a new investigation, prompted it to
file a motion to stay, and resulted in the relevant information being turned over only on September
3, 2015. The government’s cavalier attitude toward its discovery obligations is exceptionable. It
cites no authority to suggest that the most convenient means by which a litigant may respond to a
request for production is the appropriate method of response. Nor does it attempt to explain why
its response failed to even hint at the existence of plainly responsive information. Thus, the court
has no issue concluding that the government’s failure to produce the recorded phone conversations
was a violation of its discovery responsibilities.
Having reached that conclusion, the court next must consider whether the conduct is
sanctionable, that is, whether it was prejudicial, as opposed to “substantially justified or harmless.”
Fed. R. Civ. P. 37(c). To determine whether a discovery violation is substantially justified or
harmless the court balances five factors. See Sherwin-Williams, 318 F.3d at 597. They are: 1) the
surprise to the party against whom the evidence would be offered; 2) the ability of that party to cure
the surprise; 3) the extent to which allowing the evidence would disrupt the proceedings; 4) the
importance of the evidence; and 5) the nondisclosing party’s explanation for its failure to disclose
the evidence. Id. On balance, the court holds that these factors favor denying claimants’ motion.

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As to the first factor, the court finds that claimants were surprised by the evidence.
According to the Anthony declaration, the recorded phone calls paint a picture of claimant GarciaAncelmo as a sophisticated drug lord, a description that goes far beyond that which is conveyed in
the government’s originally produced documents. As to the second factor, the court finds that
claimants were able to cure any surprise. The phone calls were disclosed on September 3, 2015,
while discovery was ongoing. The parties have mutually agreed to extend discovery even farther
into the future. In the period since claimants have received the recordings there has been ample time
to consider their contents and plan further discovery. As to the third factor, the court finds that use
of this discovery would not disrupt the proceeding. Although claimants currently have pending a
motion for summary judgment, the time for filing such motions is far from over. There is no
impediment precluding claimants from withdrawing their currently pending motion and refiling one
that accounts for the newly received information. As to the fourth factor, the court finds that the
evidence is important, where, in the government’s view, it tends to connect claimant GarciaAncelmo to the drug trade. As to the fifth factor, although the government’s explanation is
unavailing, the court finds the government acted in conformity with its explanation and, thus, that
it was an unjustifiable lapse in judgment.
Nevertheless, claimants argue that the second factor, the ability to cure the harm, weights
heavily in their favor. Specifically, claimants contend that the government “opposes reopening
discovery,” and support that contention by pointing toward the government’s recently-filed motion
to stay the case, discussed below. (Claimants’ Br., 20). That false equivalency does not sway the
court’s conclusion. Section 981(g) gives the government the right to move for a stay where it feels
that further discovery will hamper its criminal investigation. 18 U.S.C. § 981(g). It does not follow

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that the government wishes to avoid all further discovery. Moreover, although claimants argue that
the government’s late disclosures will force them to alter their theory of the case, this is a normal
side effect of discovery and will burden claimants no more than any other litigant in any other case.
On balance, these factors do not favor imposition of any sanction for the government’s failure to
appropriately respond to claimants’ request for production. Where the failure to disclose occurred
at an early stage, claimants have suffered no prejudice. Accordingly, claimants’ motion is denied
as to the first proposed ground for sanctions.
Claimants next suggest that the government should be sanctioned for failing to disclose the
Anthony declaration, which was in existence at the time the government responded to claimants’
request for production, but was omitted from the universe of documents produced. Unlike the
preceding analysis, the court cannot conclude that the government failed to properly disclose the
declaration. Rule 26(e) speaks only of “documents.” However, although a declaration is tangible,
it is not a “document” within the spirit of the rule. See Intel Corp. v. VIA Techs., Inc., 204 F.R.D.
450, 451 (N.D. Cal. 2001). Rather, a declaration properly is characterized as testimony not subject
to production under the rules. Id.; see also Fed. R. Evid. 602 & 603 (before testifying witness must
indicate personal knowledge of matter testified to and take an oath, or make an affirmation, to testify
truthfully). Moreover, it is not clear that Anthony’s testimony was not “otherwise made known” to
claimants during the discovery process, where Anthony was identified as someone in possession of
knowledge about the case in response to all interrogatories posed by claimants. (See 116-1, 51, 58)
(identifying Anthony as a person who provided law enforcement with information about claimant
Garcia-Ancelmo). In any event, even if the declaration was subject to discovery the court finds that

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the government’s failure to disclose was not prejudicial. In so holding, the court rests on its prior
analysis.
Claimants also lodge a larger objection to the government’s discovery violation related to
the Anthony declaration and associated phone recordings. Specifically, they contend that the
government already has gained an unfair advantage, where it relied on the Anthony declaration in
response to claimants’ motion for summary judgment mounting an attack on the government’s
probable cause to file suit. In defense of claimants’ motion, the government relied on the Anthony
declaration, which it moved to have unsealed. It is undisputed that prior to the government’s
response in opposition to claimants’ motion the government had not disclosed the Anthony
declaration, or its contents, to claimants. As was previously explained, “the government’s conduct
in post-filing discovery is immaterial to the probable cause determination.” United States v.
$307,970.00 in U.S. Currency, __ F. Supp. 3d __, 2015 WL 5057311, at *5 (E.D.N.C. 2015). Thus,
to the extent claimants rest the instant motion to exclude on discovery violations affecting claimants’
earlier, procedural motion for summary judgment, their argument is without merit. See id. at *5 n.6
(noting claimants properly could challenge the government’s failure to disclose as it related to the
merits of the case).
Claimants finally move to exclude the August 15, 2015, DEA report, provided to them on
October 27, 2015, on the basis that it was not timely disclosed. Rule 37(c) only operates to exclude
evidence not disclosed in accordance with Rule 26(e). Further, Rule 26(e) requires supplemental
disclosures be made “in a timely manner.” The report at issue was not disclosed along with the
phone recordings on September 3, 2015, despite the fact that it was approved by the author’s
supervisor on September 1, 2015. However, as the government’s counsel explains, the document

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was not provided to him until September 15, 2015, obviously too late to be included in the
September 3, 2015, supplementation. In this case, the court finds no violation of Rule 26(e).
Although the government’s attorney did not immediately provide claimants’ counsel with the
challenged report, the rule demands only “timely,” not immediate, compliance. The report was
provided on October 27, 2015, within a reasonable amount of time after the government received
it and within the allowable time period for discovery.1
In sum, claimants’ motion for discovery sanctions must be denied. Although the government
has violated its discovery obligations with respect to the recorded phone calls, it did so at an early
stage in this case so as to cause claimants’ no harm. Moreover, as to the other grounds asserted in
claimants’ motion, the government has not violated its discovery obligations. Because the court
concludes that the government’s conduct is not sanctionable, the court need not address the
appropriate sanction.
C.

Motion to Stay
Section 981(g)(1) provides that “[u]pon motion of the United States, the court shall stay the

civil forfeiture proceeding if the court determines that civil discovery will adversely affect the ability
of the Government to conduct a related criminal investigation or the prosecution of a related criminal
case.” 18 U.S.C. § 981(g)(1). Thus, the government must show first that the underlying criminal
investigation is “related” to the instant proceeding and then that further civil discovery “will”
adversely affect the ongoing investigation in that related case. United States v. Sum of $70,990,605,

1

In so holding, the court observes that the government served the DEA report on October 27, 2015, seven days
after discovery was to end. However, the parties jointly filed a motion to extend the discovery deadline on October 13,
2015. Although those circumstances present a close call, where the court did not grant the motion until October 21,
2015, after discovery was to close, the court ultimately does not hold the October 27, 2015, supplementation against the
government. The report was served within the agreed-upon, amended discovery period.

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4 F. Supp. 3d 209, 212 (D.D.C. 2014). An investigation is “related” where there is “overlap”
between “the parties, witnesses, facts, and circumstances involved in the two proceedings.” United
States v. One 2008 Audi R8 Coupe Quattro, 866 F. Supp. 2d 1180, 1184 (C.D. Cal. 2011); see also
§ 981(g)(4). There is no requirement that there be “identity with respect to any one or more factors,”
§ 981(g)(4), however where the criminal investigation and forfeiture action “have common facts,
similar alleged violations and some common parties, the actions are clearly related.” United States
v. All Funds on Deposit in Suntrust Account No. XXXXXXXXX8359 in the Name of Gold & Silver
Reserve, Inc., 456 F. Supp. 2d 64, 65 (D.D.C. 2006).
On the record before it, the court determines that the government has met its burden. There
currently are pending two criminal investigations that are “related” to the instant forfeiture action.
First, and most obviously, there is a pending drug investigation that targets the three claimants and
has substantial, if not perfect, factual overlap. In addition, there also is a pending investigation into
the claimants for harboring illegal immigrants. See generally United States v. $59,807.00 in U.S.
Currency, No. 5:15-CV-179-FL (E.D.N.C. Apr. 27, 2015). That case also is “related” to this
forfeiture action where it involves identical parties, as well as similar facts and witnesses.
Resolution of the harboring investigation may affect this litigation.
In addition, the government has shown that further discovery “will” harm at least one of its
investigations. In particular, the government already has responded to a discovery request with
incomplete information, where it omitted the name of a confidential informant in a supplemental
response. (See DE 128-1, 5–9). Section 981(g) is intended to prevent discovery of this type of
incomplete information. Such limited discovery hampers both parties’ efforts; it impairs claimants’

25

ability to mount a forceful and complete defense and further may compromise the government’s
pending criminal investigation. Accordingly, the court grants the motion and will stay the case.
The only issue remaining is how long this case must remain stayed. The government
requests a stay “until [the harboring] investigation . . . is completed or, in the event one or more of
the claimants or another target of the investigation is indicted, to the conclusion of the criminal
proceeding(s).” (DE 126). Claimants oppose any further stay of this action.
The stay, as requested, is too indefinite. See, e.g., Landis v. N. Am. Co., 299 U.S. 248, 257
(1936) (“The stay is immoderate and hence unlawful unless so framed in its inception that its force
will be spent within reasonable limits, so far at least as they are susceptible to prevision and
description.”). This is not a case where the requested stay is to remain in effect until the end of an
already-commenced criminal prosecution. See generally, e.g., United States v. Assorted FirearmsMotorcycles & Other Personal Property, 677 F. Supp. 2d 1214 (C.D. Cal. 2009). Rather, here, the
status of the criminal investigation is fluid, and no charging decision have been made. Under such
circumstances, an indefinite stay might adversely affect claimants’ due process rights. Thus, the
court stays this case up to and including July 1, 2016. At the conclusion of that time, the
parties will confer and provide the court with a joint status report for moving forward with
the case by July 10, 2016. Should the government seek continued stay of this case, any motion
to that effect shall be filed no later than May 20, 2016. Claimants will be afforded the
opportunity to respond, but no replies shall be allowed. However, at four and one half years, the
court notes that further stay of this case may be disfavored without substantial justification,
particularly as to the reason why such extended time period is necessary.

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CONCLUSION
Based on the foregoing, claimants’ motion to dismiss, or in the alternative for discovery
sanctions, (DE 130) is DENIED. The government’s motion to stay (DE 126) is GRANTED on the
terms outline above.
SO ORDERED, this the 14th day of January, 2016.

_____________________________
LOUISE W. FLANAGAN
United States District Judge

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