United States of America v. $80,020.00 In U.S. Currency

Filing 23

MEMORANDUM AND ORDER re 21 Motion to Strike and Motion for Entry of Default. The Court DENIES WITHOUT PREJUDICE United States' motion to dismiss. Claimant Carlos Nazario-Lopez has until November 30, 2014 to file a verified claim in compliance with Rule G. No extensions will be allowed. Signed by Judge Francisco A. Besosa on 11/05/2014. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
UNITED STATES OF AMERICA,
Plaintiff,
v.

Civil No. 13-1381 (FAB)

$80,020.00 IN U.S. CURRENCY,
Defendant.
MEMORANDUM & ORDER1
BESOSA, District Judge.
Before the Court is the United States’ motion to strike
claimant Carlos Nazario-Lopez’s answer to the complaint and for
default judgment.

(Docket No. 21.)

For the reasons discussed

below, the Court DENIES the United States’ motion.
I.

BACKGROUND
A.

Procedural Background
On

May

15,

2013,

plaintiff

United

States

filed

a

complaint pursuant to Rule G(8)(c) (generally, “Rule G”) of the
Supplemental Rules for Admiralty or Maritime Claims and Asset
Forfeiture

Actions,

asserting

$80,020.00 in U.S. currency.

a

forfeiture

(Docket No. 1.)

action

against

On that same day,

plaintiff requested an arrest warrant in rem and seizure of the
currency.
1

(Docket

No.

2.)

The

Court

granted

plaintiff’s

Elizabeth Barreto, a third year law student at the University
of Puerto Rico School of Law, assisted in the preparation of
this memorandum.

Criminal No. 13-1381 (FAB)

2

request on May 17, 2013.

(Docket No. 4.)

claimant Nazario answered the complaint.

On June 10, 2013,

(Docket No. 6.)

The

United States filed a notice of publication on June 24, 2013.
(Docket No. 7.)
submitted

a

Subsequently, on August 1, 2013, the claimant

request

(Docket No. 13-1.)

for

admissions

to

the

United

States.

On September 17, 2013, having received no

timely response from the government, the claimant requested that
the Court deem the unanswered requests admitted.
13.)

(Docket No.

The United States responded, explaining that though the

responses had been prepared on time, through inadvertence they
had not been sent out on time.

(Docket No. 14.)

On September

25, 2013, however, the Court deemed the claimant’s requests 1,
2, 4, 9, and 10 admitted.

(Docket No. 20.)

On August 18, 2014,

the United States filed a motion to strike the claimant’s answer to
the complaint and for a default judgment.

(Docket No. 21.)

Claimant

Nazario did not oppose that motion.

B.

Factual Background
On

November

4,

2010,

Puerto

Rico

Police

Department

(“PRPD”) Agent Carlos Rivera-Walker pulled a 2010 Toyota Camry
over because of traffic violations.

(Docket No. 1-1 at ¶ 3.)

Claimant Nazario was the owner of, and front passenger in, the
vehicle.

Id.

Because the driver did not have the vehicle’s

registration, Agent Rivera ordered the occupants to exit the

Criminal No. 13-1381 (FAB)

3

vehicle and searched it.
Agent

Rivera

found

an

During a search of the vehicle,1

Id.

undetermined

amount

of

U.S.

currency

wrapped in vacuum-sealed plastic inside a black backpack behind
the driver’s seat.

Id.

According to the United States, a K-9

unit (commonly known as a dog) subsequently swept the car and
alerted

positive

to

the

presence

currency and the vehicle.

Id.

of

narcotics

in

both

the

As a result, Special Agent

Carpio, who had been contacted by Agent Rivera, seized the U.S.
currency and the vehicle.

Id. at ¶ 4.

determined to be $80,020.00.

The currency was later

Id.

The United States alleges that all four individuals in
the car denied ownership of the money.

Id. at ¶ 5.

Agent

Carpio believed that sufficient probable cause indicated that
the money represented proceeds of drug trafficking violations
pursuant to 21 U.S.C. § 841(a)(1) and money laundering pursuant
to 18 U.S.C. §§ 1956(a)(1)(B)(i), 1957(a).
Because

the

matters

have

been

Id.
deemed

admitted,

the

United States has now admitted that claimant Nazario objected to
the

vehicle

search

and

that

the

authorization to search the vehicle.

1

government

had

no

written

(Docket No. 20, 13-1 ¶ 9-

The United States alleges that claimant Nazario consented to a
search of the vehicle (Docket No. 1-1 at ¶ 3), while Nazario
contests it.
The Court, however, deemed admitted that
“[c]laimant Carlos Nazario objected [to] the search of the
vehicle.” (Docket No. 13-1 at ¶ 9.)

Criminal No. 13-1381 (FAB)
10.)

In

addition,

the

4
United

States

has

admitted

that

no

illegal substances were found on any of the four individuals and
that no admissible evidence existed to connect the money seized
with any illegal substance transaction.

Id. at ¶ 1-2.

Both

parties agree that no criminal charges have been filed against
the

claimant

vehicle.
II.

or

against

any

of

the

other

occupants

of

the

Id. at ¶ 4.

LEGAL STANDARD
A.

Supplemental Rule G(8)
Supplemental Rule G applies to forfeiture actions in

rem

arising

from

a

federal

statute.

The

relevant

federal

statute here is Title 18, Section 981 of the United States Code,
which

permits

civil

forfeiture

of

any

property

constituting,

derived from, or traceable to any unlawful activity.
Rule G(8)(c)(i) authorizes the Court to strike a claim
or answer on motion by the government if a claimant fails to
comply with Rule G(6) or if the claimant lacks standing.

Rule

G(8)(c)(ii)(B) further provides that a motion to strike a claim
“may be presented as a motion for judgment on the pleadings or
as a motion to determine after a hearing or by summary judgment
whether

the

claimant

can

carry

the

burden

of

standing by a preponderance of the evidence.”

establishing
To

establish

standing, “the claimant must start by demonstrating an ownership
or possessory interest in the seized property.”

United States

Criminal No. 13-1381 (FAB)

5

v. $8,440,190.00 in U.S. Currency, 719 F.3d 49, 57 (1st Cir.
2013)

(citing

United

States

v.

One–Sixth

Bulger, 326 F.3d 36, 40 (1st Cir. 2013)).

Share

of

James

J.

See also Fed. R. Civ.

P. G(8)(c)(ii)(B).
B.

Rule 12(c)
“After the pleadings are closed — but early enough not

to delay trial — a party may move for judgment on the pleadings”
pursuant to Federal Rule of Civil Procedure 12(c).
“is

employed

as

a

vehicle

to

test

the

That motion

plausibility

of

a

complaint, [and] it must be evaluated as if it were a motion to
dismiss

under

Federal

Rule

of

Civil

Procedure

12(b)(6).”

Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (1st Cir. 2012).
Thus, “[a] plaintiff is not entitled to ‘proceed perforce’ by
virtue of allegations that merely parrot the elements of the
cause of action.”

Ocasio-Hernandez v. Fortuño-Burset, 640 F.3d

1, 12 (1st Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
680 (2009)).

The Court “must accept all of the non-movant’s

well-pleaded factual averments as true, and draw all reasonable
inferences
Morales

in

his

Medina,

[or

943

her]

F.2d

favor.”

129,

130

Santiago
(1st

Cir.

de

Castro

1991)

v.

(quoting

Rivera-Gomez v. de Castro, 843 F.2d 631, 635 (1st Cir. 1988)).
The motion cannot be granted “unless it appears beyond doubt
that the [claimant] can prove no set of facts in support of [his

Criminal No. 13-1381 (FAB)

6

or her] claim which would entitle [him or her] to relief [as a
matter of law].”

Id. (quoting Rivera-Gomez, 843 F.2d at 635).

III. DISCUSSION
The United States contends that because claimant Nazario
failed

to

ownership

file
or

a

timely

proprietary

contest the forfeiture.
government’s

motion.

claim,

he

interest

lacks

in

the

standing
seized

and

any

currency

to

The claimant did not respond to the
The

Court

must

determine

whether

the

claimant’s failure to file a claim constitutes grounds to grant
the government’s motion and enter a default judgment against the
claimant without the benefit of claimant’s arguments.
A.

Supplemental Rule G(5)
Rule G(5)(a)(i) provides that “a person who asserts an

interest in the defendant property may contest the forfeiture by
filing a claim in the court where the action is pending.”

“A

claimant must [also] serve and file an answer to the complaint
or

a

motion

claim.”

under

Rule

Supplemental

12

Rule

within

21

G(5)(b).

days

after

filing

Accordingly,

Rule

the
G(5)

requires claimants to file both a verified claim asserting their
interest

in

the

seized

property

government’s forfeiture complaint.

and

an

answer

to

the

United States v. $285,350.00

in U.S. Currency, 547 F. App’x 886 (10th Cir. 2013); United
States v. Real Prop. & Premises, 521 F. App’x 379, 384 (6th Cir.

Criminal No. 13-1381 (FAB)

7

2013); United States v. $12,126.00 in U.S. Currency,

337 F.

App’x 818, 819 (11th Cir. 2009).
Here, the notice of the forfeiture action stated that
the

claimant

had

60

days

from

the

notice’s

publication to file a verified claim.
the

claimant

forfeiture

filed

notice

an

was

answer
even

to

(Docket No. 7.)
the

complaint

published

claimant’s answer was timely.

first

–

on

June

day

of

Because

before
10,

the

2013

–

But, claimant failed to file a

claim pursuant to Rule G(5).
B.

Standing Requirements
A

forfeiture

claimant
action

who
must

seeks
first

preponderance of the evidence.
19 F.3d at 57.

to

intervene

establish

in

an

standing

in
by

rem
a

$8,440,190.00 in U.S. Currency,

See also Supplemental Rule G(8)(c)(ii)(B).

The

claimant must demonstrate constitutional and statutory standing.
One-Sixth Share of James J. Bulger, 326 F.3d at 40.
can

establish

constitutional

standing

by

A claimant

demonstrating

ownership or possessory interest in the seized property.
41 (internal citation omitted).
coupled

with

establish

some

evidence

constitutional

$8,440,190.00

in

citation omitted).

U.S.

of

Id. at

“An allegation of ownership,
ownership,

standing
Currency,

an

to
719

is

contest
F.3d

at

sufficient
a

to

forfeiture.”
58

(internal

Criminal No. 13-1381 (FAB)

8

A claimant establishes procedural standing by adhering
to the procedural requirements outlined in Rule (G)5.

United

States v. One Dairy Farm, 918 F.2d 310, 311 (1st Cir. 1990)
(internal

citation

requirements,

the

omitted).
claim

must:

To
(1)

satisfy

Rule

identify

the

G

(5)’s

property

claimed; (2) identify the claimant; (3) state the claimant’s
interest in the property; (4) be signed by the claimant under
penalty of perjury; and (5) be timely filed.
G(5)(a).

Supplemental Rule

Accordingly, “[a] party who fails to file a [timely]

claim [pursuant to Rule G(5)] normally lacks standing to contest
a

forfeiture.”

One

citation omitted).

Dairy

Farm,

918

F.2d

at

311

(internal

In United States v. One Urban Lot, 885 F.2d

994 (1st Cir. 1989), the First Circuit Court of Appeals held,
however, that a claimant’s verified answer should be treated as
a claim if the verified answer contained all the information
required in a claim and therefore fulfilled the function of a
claim for the purpose of establishing standing.

Id. at 999.

The United States argues that the claimant failed to
establish standing to contest the forfeiture because he failed
to file a claim.
the claimant

Here, unlike the claimant in One Dairy Farm,

filed

a timely answer.

Additionally, like the

claimant in One Urban Lot, though the claimant failed to file a
claim, he filed an answer and requests for admissions.

A review

Criminal No. 13-1381 (FAB)

9

of both documents shows that claimant Nazario identified (1) the
property claimed (Docket No. 6 ¶ 2), (2) his ownership of the
property, id. at ¶ 3, and (3) his interest in the property, id.
at ¶ 4.

Therefore, the claimant’s pleadings minimally satisfy

the standing elements.
The claimant’s pleadings, however, are defective for
other reasons.

For example, claimant’s answer is not signed

under penalty of perjury, as required by Rule G(5)(a).
the

claimant

meets

the

standing

requirements

to

Because

contest

the

forfeiture, the Court proceeds to discuss the application of
Federal Rule of Civil Procedure 15 (“Rule 15”) to determine if
the defects in the claimant’s “claim” may be cured.
C.

Leave to Amend Pursuant to Rule 15
“[T]he court should strike a claim or answer only if

satisfied that an opportunity should not be afforded to cure the
defects under [Federal Rule of Civil Procedure 15].”
Committee

Notes

$11,500.00
2013).

in

to

U.S.

Supplemental
Currency,

710

Rule

G;

United

F.3d

1006,

1012

Advisory
States
(9th

v.
Cir.

Rule 15 provides that “a court should freely give leave

[to amend] when justice so requires.”
Because

federal

court

Fed. R. Civ. P. 15(a)(2).

practice

generally

permits

amendments to cure deficiencies at any time in furtherance of
justice, this Court will

allow

claimant

Nazario

defects in his pleadings and file a verified claim.

to

cure the
See, e.g.,

Criminal No. 13-1381 (FAB)

10

United States v. $11,500.00 in U.S. Currency, 710 F.3d 1006,
1012-13 (9th Cir. 2013) (holding that striking the claim was an
abuse of discretion
granted

leave

to

and that

amend

to

the

cure

district court should have
defects);

United

States

v.

$125,938.62, 370 F.3d 1325, 1330 (11th Cir. 2004) (permitting
the claimant to cure the technical defect); Eminence Capital,
LLC

v.

Aspeon,

Inc.,

316

F.3d

1048,

1051

(9th

Cir.

2003)

(stating that the policy of freely granting leave to amend is
“to be applied with extreme liberality”).
Though claimant Nazario failed to file a claim, he filed
a timely answer2 and requests for admissions that collectively
contained the necessary information to demonstrate his standing.
(Docket Nos. 6 & 13-1.)

In addition, after the United States

failed to respond to the claimant’s requests for admissions, he
diligently
admitted.

requested

that

(Docket No. 13.)

the

unanswered

requests

be

deemed

The claimant exercised a good faith

attempt to respond to the government’s complaint, evidenced by
the timing and language of the pleadings.
of

justice,

the

Court

applies

Rule

15

Thus, in the interest
to

provide

claimant

Nazario an opportunity to cure the defects in his pleadings.
Claimant Nazario shall cure the technical defects and file a

2

Indeed, claimant filed an answer to the complaint even before
the United States published notice of its complaint.
(Docket
No. 6.)

Criminal No. 13-1381 (FAB)

11

verified claim pursuant to Rule G(5) no later than November 30,
2014.

Failure to comply with the requirements of Rule G(5)

within the time allotted will result in an entry of default
judgment in favor of the United States.
IV.

CONCLUSION
For the reasons described above, the Court DENIES WITHOUT

PREJUDICE

plaintiff’s

motion

to

dismiss.

(Docket

No.

21.)

Claimant Nazario has until November 30, 2014 to file a verified
claim in compliance with Rule G.

No extensions will be allowed.

IT IS SO ORDERED.
San Juan, Puerto Rico, November 6, 2014.

s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE