United States v. $11,500.00 in U.S. Currency

• Citation: 710 F.3d 1006
• Decision Date: 20 March 2013
• Docket Number: No. 11–35923.,11–35923.
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. $11,500.00 IN UNITED STATES CURRENCY, in rem; $2,971.00 in United States Currency, in rem, Defendants, and Charles Guerrero, Claimant–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

710 F.3d 1006

UNITED STATES of America, Plaintiff–Appellee,

v. $11,500.00 IN UNITED STATES CURRENCY, in rem; $2,971.00 in United States Currency, in rem, Defendants,andCharles Guerrero, Claimant–Appellant.

No. 11–35923.

United States Court of Appeals,Ninth Circuit.

Submitted Oct. 9, 2012.^*

Filed March 20, 2013.

Frank de la Puente, Attorney, Salem, OR, for Claimant–Appellant.

S. Amanda Marshall, United States Attorney, Kelly A. Zusman, Appellate Chief, and Robert D. Nesler, Assistant United States Attorney, for Plaintiff–Appellee.

Appeal from the United States District Court for the District of Oregon, Michael W. Mosman, District Judge, Presiding, Malcolm F. Marsh, District Judge, Presiding. D.C. No. 3:10–cv–00097–MO.

Before: BARRY G. SILVERMAN, RICHARD R. CLIFTON, and N. RANDY SMITH, Circuit Judges.

OPINION

CLIFTON, Circuit Judge:

Civil forfeiture actions brought by the government require compliance with certain rules by both the government and by any claimant. In this case, the government and the only claimant each violated one of the rules. This appeal requires us to consider the appropriate consequences.

The government sought to forfeit two bundles of currency in the amounts of $11,500 and $2,971. Only one contrary claim was filed regarding both sets of currency. The district court concluded that the claimant failed to comply with Supplemental Admiralty and Maritime Claims Rule G(5)(a)(iii), which requires that “[a] claim filed by a person asserting an interest as a bailee must identify the bailor.” Supp. Rule G(5)(a)(iii). The claim form filed here asserted a different property interest, described by the claimant as “possessory,” and it did not identify a bailor. The claimant's alleged interest in the $11,500 later came to be identified as a bailee's interest. Based on the failure to identify the bailor, the district court struck the claim to the $11,500. We agree with the district court that the requirement applied to the claimant, even though he initially asserted a different interest. We also conclude, however, that striking his claim based on that transgression was not mandatory but was instead subject to the sound exercise of discretion by the court. Under the circumstances of this case, the dismissal of the claim to the $11,500 for that failure was an abuse of discretion, primarily because the omission did not prejudice the government, did not appear to be calculated, and did not delay or extend the forfeiture proceedings.

The district court concluded that the government failed to provide notice to the claimant within 60 days after the date of the seizure of both sets of currency, as required under 18 U.S.C. § 983(a)(1)(A)(i) for a nonjudicial civil forfeiture. Neither did the government return the money to the claimant. Instead, the government commenced civil forfeiture proceedings. It could properly do so, even though it had not given timely notice, and we conclude that the government was not required in these circumstances to return the property.

We thus affirm the judgment in favor of the government regarding the portion of currency amounting to $2,971. We vacate the judgment in favor of the government as to the $11,500 portion and remand for further proceedings.

I. Background

The currency at issue was seized when claimant Charles Guerrero (“Guerrero”) went to a jail in Portland, Oregon, to post bail for his wife, Rosalie Guerrero (“Rosalie”), who had been arrested the night before for possession with intent to distribute heroin. Guerrero did not enter the jail himself but accompanied Virgil Wood and gave him $ 11,500 to post bail. At the jail, law enforcement agents asked Wood how he had obtained the currency. Wood eventually identified Guerrero as the source. Finding Guerrero outside the jail, law enforcement officers searched him and found $2,971 in his pocket, along with severalpills. Guerrero was arrested and told the officers that the $11,500 and $2,971 were his.

The circumstances surrounding the seizure of the currency led the government to believe that the money was connected to drug trafficking. The officers discovered several grams of heroin in a black bag in the trunk of Wood's car, and Guerrero later pled guilty to possession of heroin. A trained dog sniffed the currency for the odor of narcotics, and the government contends that the dog alerted positively.

The United States initiated civil forfeiture proceedings against the $11,500 and $2,971 under 21 U.S.C. § 881, on the basis that the currency was either proceeds of drug trafficking or used to facilitate drug trafficking. Guerrero filed the sole claim to the currency. In the claim he filed with the court, through counsel, he described his interest as “possessory.” In a “seized asset claim form” attached to the court filing, he provided a handwritten response to an inquiry as to his interest: “My interest is possessory, i.e., the money belongs to me.”

In his subsequent deposition Guerrero acknowledged that he had sold drugs and that he had not had stable employment for years. He maintained, however, that the seized currency came from legitimate sources. He testified that the $2,971 was money he had saved from the sale of some furniture and tools. With respect to the $11,500, Guerrero testified that his wife had received the money several years earlier from an insurance settlement and had given it to him for safekeeping.

The district court granted summary judgment to the government with respect to the $11,500, holding that Guerrero failed to comply with Supplemental Admiralty and Maritime Claims Rule G(5)(a)(iii), because he failed to identify Rosalie as his bailor on the claim form. The court further held, in the alternative, that there was no genuine issue of fact as to whether the $11,500 was the proceeds of or facilitated drug trafficking. The $2,971 was forfeited after a jury found that it constituted proceeds of illegal drug activity and facilitated drug trafficking. Guerrero timely appealed.

II. Bailor Identification Requirement

When the government initiates civil forfeiture proceedings against specified property, a person may contest the forfeiture by filing a claim in district court in accordance with the Supplemental Rules for Admiralty and Maritime Claims. 18 U.S.C. § 983(a)(4)(A). The claim must “identify the claimant and state the claimant's interest in the property.” Supp. Rule G(5)(a)(i)(B). Among the other requirements, and the one at issue here, is that “[a] claim filed by a person asserting an interest as a bailee must identify the bailor.” Supp. Rule G(5)(a)(iii). Supplemental Rule G(8)(c) specifically provides that the government may move to strike a claim for failure to comply with specified portions of the Supplemental Rules, including Supplemental Rule G(5), or because the claimant lacks standing.

The district court granted the government's motion to strike Guerrero's claim to the $11,500 for failing to identify Rosalie as the bailor of the currency on his claim form. The court's order noted that Guerrero “never pled the existence of a bailment, and did not identify Rosalie Guerrero as the bailor.” The order also noted that Guerrero did not explain until his deposition that the money had been given to him by his wife, and further that Guerrero never sought to amend his claim form to identify her as the bailor.

We review a district court's interpretation of the Supplemental Admiralty and Maritime Claims Rules de novo. See United States v. 2,164 Watches, 366 F.3d 767, 770 (9th Cir.2004). Dismissal of a forfeiture claim for failure to comply with procedural requirements is reviewed for abuse of discretion. See United States v. Real Property Located at 22 Santa Barbara Drive, 264 F.3d 860, 868 (9th Cir.2001). A district court abuses its discretion if it does not apply the correct legal standard, Bateman v. U.S. Postal Service, 231 F.3d 1220, 1223 (9th Cir.2000), or if it fails to consider the factors relevant to the exercise of its discretion. See Bautista v. Los Angeles Cnty., 216 F.3d 837, 841–42 (9th Cir.2000). We conclude that the district court was correct in holding that Rule G(5)(a)(iii) applied to Guerrero, but that striking his claim was an abuse of discretion.

As described above, Guerrero's claim form stated that his interest in the currency was “possessory.” It was not until after the government moved to strike Guerrero's claim for lack of standing that Guerrero argued in response that he had an ownership interest in the currency by virtue of his marriage to Rosalie and further described his “possessory” interest as that of a “bailee for Rosalie.” That was the first time that Guerrero or anyone else described Guerrero's relationship to the currency as that of a bailee. The court declined to strike Guerrero's claim based on a lack of standing, holding that there was a genuine dispute of material fact as to whether Guerrero was a bailee of the currency. But the court went on to strike Guerrero's claim for failure to identify Rosalie as the bailor.

Guerrero contends that the rule only requires the identification of the bailor when the claimant explicitly asserts a bailee interest on his claim form. Guerrero's claim form did not describe his interest as that of a bailee. The government argues that the bailor identification requirement did apply here.

The rule in question, Supplemental Rule G(5)(a)(iii), states under a subheading entitled “Filing a Claim” that “[a] claim filed by a person asserting an interest as a bailee must identify the bailor, and if filed on the bailor's behalf must state the authority to do so.” That language does not explicitly spell out whether “asserting an interest as a bailee” refers only to the time the claim form is filed or includes a subsequent assertion of a bailee's interest.

We are persuaded that the requirement to identify the bailor applies to the assertion of a bailee's interest at any time, even if it is articulated after the claim form is filed. The...