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United States v. $20

United States District Court, D. New Mexico

October 30, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
$20, 000.00 IN UNITED STATES CURRENCY, Defendant-in-rem.

          John C. Anderson United States Attorney Stephen R. Kotz Assistant United States Attorney United States Attorney's Office Albuquerque, New Mexico Attorneys for the Plaintiff.

          Torence Haigler Montgomery, Alabama Defendant pro se.

          Toderick Smith Hope Hull, Alabama Defendant pro se.

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on the United States' Motion to Strike Claimants' Answers for Lack of Standing, filed July 5, 2018 (Doc. 12)(“Motion”). The Court held a hearing on September 20, 2018. The primary issue is whether the Court should strike Claimant Torence Haigler's Answer, filed February 15, 2018 (Doc. 3)(“Haigler Answer”), and Claimant Toderick Smith's Answer, filed February 15, 2018 (Doc. 4)(“Smith Answer”), because the Claimants lack statutory standing. The Court grants the motion on the condition that, if Haigler and Smith (“the Claimants”) do not cure the deficiencies in their pleadings within ten days of the entry of this order, the Court will strike their Answers. The Court will allow the Claimants ten days to cure deficiencies in their pleadings, because it believes that allowing the Claimants a limited period to cure the deficiencies is not inconsistent with the language of Rule G of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, will not thwart Supplemental Rule G's underlying purposes, and, given the equities, is consistent with the intent of Supplemental Rule G.

         FACTUAL BACKGROUND

         On December 15, 2017, Plaintiff United States of America filed its Verified Complaint for Forfeiture In Rem. See Doc. 1 (“Complaint”). The res, or properties, that are the subject of this action are $20, 000.00 in United States currency. See Complaint ¶ 2i, at 1. Haigler claims ownership of $7, 000.00 of the money, see Haigler Answer at 1, and Smith claims ownership of $7, 000.00 of the money, see Smith Answer at 1.

         The Complaint alleges that, on July 19, 2017, Border Patrol Agent Israel Torrones stopped a 2014 black Ford Fusion at the United States Border Patrol checkpoint located on I-10 west, mile marker 120. See Complaint ¶ 7, at 2. Smith, a United States citizen, was the driver, and Haigler and Brando Pettus, also United States citizens, were the occupants of the car. See Complaint ¶ 7, at 3. While Torrones questioned the car's occupants, another Border Patrol Agent, Jose Meza's trained drug detection canine, “Veeto, ” alerted positively on the car for the odor of an illegal controlled substance, after which Torrones sought and obtained Smith's consent for a canine inspection. See Complaint ¶ 8, at 2. Smith moved the vehicle to a secondary inspection area, and Smith, Haigler, and Pettus all exited the vehicle while Meza and Veeto conducted a canine drug inspection. See Complaint ¶ 9, at 2. Smith, Haigler, and Pettus all admitted to smoking marijuana recently, and all denied -- twice -- that they were traveling with contraband or large amounts of money. See Complaint ¶ 9, at 3. Haigler, the vehicle's owner, consented to Meza conducting a hand search of the vehicle. See Complaint ¶ 10, at 3. From the glove compartment, Meza recovered a plastic bag containing a large amount of United States currency, and each occupant again denied the presence of money in the car. See Complaint ¶ 10, at 3.

         Once Meza informed the car's occupants that he had discovered the bag of money, Smith stated, “Oh yeah, we're going to buy a car.” Complaint ¶ 11, at 3. Meza asked why the occupants had not informed him of the money previously, and Haigler said, “I don't know. We were going to buy a car.” Complaint ¶ 11, at 3. Agents then separated the car's occupants from one another, after which they provided conflicting accounts of how much money was in the bag, how much each of them had contributed, and where the money came from. See Complaint ¶ 12, at 3. In a sterile room, Veeto alerted positively to the bag of money for the odor of an illegal controlled substance. See Complaint ¶ 15, at 4.

         The United States seeks forfeiture of the $20, 000.00 of United States currency in the bag recovered from the vehicle, pursuant to 21 U.S.C. § 881(a)(6)[1], and 18 U.S.C. § 981(a)(c), which provides, “in part, for the forfeiture of any property, real or personal, which constitutes or is derived from proceeds traceable to an offense constituting a ‘specific unlawful activity' (SUA) as defined in 18 U.S.C. § 1956(c)(7), or conspiracy to commit such offense.” Complaint ¶ 20, at 5 (quoting 18 U.S.C. § 1956(c)(7)).

         PROCEDURAL BACKGROUND

         On December 15, 2017, the United States filed its Complaint, stating:

This is a civil action to forfeit and condemn to the use and benefit of the United States of America property involved in violations of the Controlled Substances Act and 18 U.S.C. § 1952 that is subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6) and 18 U.S.C. § 981(a)(1)(C).

See Complaint ¶ 1, at 1. On January 24, 2018, the United States Attorney's Office sent, via certified and first class mail, copies of the Complaint and the Notice of Complaint for Forfeiture, filed July 5, 2018 (Doc. 12-2)(“Notice”), to Haigler, Smith, and Mr. Raymond Johnson, the attorney who represented them in the related administrative forfeiture proceeding.[2] See Motion ¶ 3, at 2; Certified Mail and Receipts re Notice of Complaint for Forfeiture at 1-10, filed July 5, 2018 (Doc. 12-1)(“Certified Mail and Receipts”). The Notice, which was mailed to Haigler, Smith, and Mr. Johnson via certified mail and first-class mail, states: “A civil complaint seeking forfeiture pursuant to 21 U.S.C. § 881(a)(6) was filed on December 15, 2017 in the United States District Court for the District of New Mexico on behalf of the United States of America, plaintiff, against the Defendant Property.” Notice at 1. The Notice further states:

All persons asserting an interest in or claim against the Defendant Property and who have received direct notice of the forfeiture action must file a verified claim with the Clerk of this Court pursuant to Rule G(5) of the Supplemental Rules for Admiralty or Maritime and Asset Forfeiture Claims, thirty-five (35) days after the notice is sent. In addition, any person having filed such a claim shall also serve and file an answer to the complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure within twenty-one (21) days after filing the claim.

Notice at 1 (emphasis in original).

         On February 16, 2018, the United States filed a Notice of Publication, representing that a Notice of Forfeiture Action -- substantially the same as the Notice -- was published on www.forfeiture.gov from January 10, 2018, through February 8, 2018. See Complaint ¶ 2, at 2; Notice of Publication, filed February 16, 2018 (Doc. 7).[3] The Certified Mail and Receipts indicate that Haigler received the Complaint and the Notice via certified mail on January 27, 2018, see Certified Mail and Receipts at 2, and that his attorney, Mr. Johnson, also received the documents via certified mail, although Mr. Johnson did not date the return receipt, see Certified Mail and Receipts at 8, 10. The certified mailing to Smith was returned as unclaimed. See Certified Mail and Receipts at 4. The United States asserts, however, that the first-class mailings were delivered to both Claimants. See Motion ¶ 6, at 3. Neither Claimant filed a verified claim with the Clerk of the United States District Court for the District of New Mexico. See Motion ¶¶ 6-7, at 3. On February 15, 2018, the Claimants filed Answers. See Haigler Answer at 1; Smith Answer at 1.

         On July 5, 2018, the United States filed the Motion. See Motion at 1. The United States moves to strike the Claimants' Answers, because the Claimants lack statutory standing. See Motion at 1. The United States argues that the Claimants filed only Answers, but not verified claims under penalty of perjury, as Supplemental Rule G(5)(a) requires, and that, accordingly, the Court should strike their Answers pursuant to Supplemental Rule G(8)(c). See Motion at 4.

         The Claimants do not file a response. See Motion at 1 (“Counsel for Plaintiff attempted to contact Claimants pro se, Torence Haigler and Toderick Smith, via letter regarding their position on this motion. Claimants have not yet responded. Accordingly, the motion is filed as opposed.”).

         The Court held a hearing on the Motion on September 20, 2018. See Draft Transcript of Motion Hearing (taken September 20, 2018)(“Tr.”).[4] The Court began by noting that the Claimants were not present in the courtroom. See Tr. at 2:5 (Court). The United States explained that, after the United States filed its Complaint, Haigler and Smith filed Answers. See Tr. at 2:11-15 (Kotz). The United States asserted that it provided notice to both Claimants by serving them with the Complaint, the Notice, and a letter that informed them that they would have to file a claim under oath as Supplemental Rule G(5)(A) requires. See Tr. at 2:16-20 (Kotz). The United States noted that the Claimants filed answers on February 15, 2018, but filed no other pleadings, prompting the United States to move to strike their Answers for failure to state a claim. See Tr. at 2:20-25 (Kotz). The United States argued that, by failing to file a verified claim, the Claimants lack statutory standing because of their failure to comply with Supplemental Rule G(5). See Tr. at 3:3-6 (Kotz). The Court asked the United States whether there are cases with the same facts where a claimant has filed an answer in court, but has not filed a claim, and whether the correct remedy would be to strike the answers in those cases. See Tr. at 3:7-13 (Court). The United States asserted that striking the answers would be the correct remedy. See Tr. at 3:11, 14-18 (Kotz).

         The Court next asked the United States what would happen if the Claimants want to file an untimely claim after the hearing, notarized and under oath. See Tr. at 3:19-22 (Court). The United States asserted that, to do so, the Claimants would need to ask for leave of the Court. See Tr. at 3:23-24 (Kotz). The Court next asked if the Claimants would have to ask for leave of the Court to file an administrative claim, and the United States asserted that the administrative claim is a separate matter, and the Claimants already have submitted claims in that matter. See Tr. at 3:25-4:5 (Court, Kotz). The United States argued that, notwithstanding the administrative proceeding, Supplemental Rule G(5) requires the Claimants to file a verified claim in the Court and then to follow that filing with an answer, and that the administrative claim cannot satisfy that requirement. See Tr. at 4:3-15 (Kotz). The Court next asked the United States what the Claimants' relationship is to the case, and the United States responded that they were in the vehicle from which the property at issue was seized. See Tr. at 4:16-22 (Court, Kotz). The Court sought clarification that the Claimants were not charged when the property was seized, and the United States confirmed that they were not. See Tr. at 4:21-23 (Court, Kotz).

         The Court stated that it appeared to the Court that the Notice was delivered by first class mail to both individuals and that there was no response, and so the Court was inclined to grant the Motion. See Tr. at 5:3-12 (Court). The Court put on the record that the Court and the United States waited past 3:30 p.m., thirty minutes after the hearing was scheduled to begin, and no one appeared on the Claimants' behalf, and no one contacted the Court's Courtroom Deputy to arrange to appear by telephone or otherwise participate in the hearing. See Tr. at 5:20-25 (Court). The United States also confirmed that the Claimants had not contacted it. See Tr. at 6:1-2 (Kotz).

         LAW REGARDING CIVIL FORFEITURE ACTIONS

         In a civil asset forfeiture case, the United States is the plaintiff, the property or asset is the defendant, and the claimant is the party seeking to intervene. See United States v. $148, 840 in U.S. Currency, 521 F.3d 1268, 1273 (10th Cir. 2008). At the pleading stage, the claimant satisfies his or her burden of establishing constitutional standing by “alleging a sufficient interest in the seized property, such as an ownership interest, some type of lawful possessory interest, or a security interest.” United States v. $148, 840 in U.S. Currency, 521 F.3d at 1273 (citing United States v. Rodriguez-Aguirre, 264 F.3d 1195, 1204 (10th Cir. 2001); United States v. $515, 060.42 in U.S. Currency, 152 F.3d 491, 498-99 (6th Cir. 1998)).

         Supplemental Rule G “governs a forfeiture action in rem arising from a federal statute.” Supp. R. G(1). To discharge its notice obligations in a civil asset forfeiture action, the United States must provide notice of the action to any potential claimants. See Supp. R. G(4). Supplemental Rule G(4)(a) relates to notice by publication. See Supp. R. G(4)(a). It states: “A judgment of forfeiture may be entered only if the government has published notice of the action within a reasonable time after filing the complaint or at a time the court orders.” Supp. R. G(4)(a)(i). The notice must, unless the court orders otherwise: (i) “describe the property with reasonable particularity”; (ii) “state the times under Rule G(5) to file a claim and to answer”; and (iii) “name the government attorney to be served with the claim and answer.” Supp. R. G(4)(a)(ii). Supplemental Rule G(4)(b) relates to notice to known potential claimants. It states: “The government must send notice of the action and a copy of the complaint to any person who reasonably appears to be a potential claimant on the facts known to the government before the end of the time for filing a claim under Rule G(5)(a)(ii)(B).” Supp. R. G(4)(b). The notice must state: (i) the date the notice is ...


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