U.S. v. Ten Thousand Dollars ($10,000.00) in U.S. Currency

• Decision Date: 07 November 1988
• Docket Number: No. 87-5759,87-5759
• Parties: UNITED STATES of America, Plaintiff-Appellee, Najeeb Rahman, Claimant-Appellant, v. TEN THOUSAND DOLLARS ($10,000.00) IN UNITED STATES CURRENCY, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1511

860 F.2d 1511

UNITED STATES of America, Plaintiff-Appellee, Najeeb Rahman, Claimant-Appellant, v. TEN THOUSAND DOLLARS ($10,000.00) IN UNITED STATES CURRENCY,

Defendant.

No. 87-5759.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Oct. 4, 1988.

Decided Nov. 7, 1988.

Donna Eide, Asst. U.S. Atty., Los Angeles, Cal., for plaintiff/appellee.

Charles Weisselberg, Post Conviction Justice Project, Los Angeles, Cal., and Talis Haight, Law Student, for claimant/appellant.

Appeal from the United States District Court for the Central District of California.

Before PREGERSON, REINHARDT and NOONAN, Jr., Circuit Judges.

NOONAN, Circuit Judge:

Najeeb Rahman seeks relief from a default judgment of forfeiture. The district court, finding that the money in question had already been paid over to the government, held that it had no jurisdiction. We reverse and remand.

BACKGROUND

On May 2, 1984, the United States Customs Service seized $10,000 from Rahman as he was leaving the country on the ground that he had failed to report the sum as required by 31 U.S.C. Sec. 5316. Rahman filed a petition for relief from forfeiture with the Customs Service, which rejected the petition on June 18, 1985. On October 13, 1985, the government brought a civil forfeiture action against the cash citing both 31 U.S.C. Sec. 5317 and 21 U.S.C. Sec. 881 (forfeiture of drug proceeds).

Although the government maintains that it informed Rahman of this action by letters of October 31, December 2, and December 13, 1985, Rahman asserts he did not receive letter notification "until the latter part of December 1985." At this time Rahman was incarcerated at Terminal Island. The notification stated that Rahman had until January 2, 1986 to file a claim contesting the forfeiture.

According to Rahman, he retained a New York lawyer, Michael Maloney, who in turn contacted the office of Assistant United States Attorney Stephen D. Petersen on December 31, 1986. According to Rahman's affidavit, Maloney spoke to a secretary, "a Ms. Patty," and asked for a stipulation to extend the time in which to respond to the complaint, and Ms. Patty said the lawyer could have an extension up to February 1, 1986. This allegation is disputed by Petersen, who asserts that no approvals are given by his office without a written stipulation.

Again, according to Rahman's affidavit, he was unable to pay his attorney and in January sought to have one appointed by writing to the district court and sending a copy of the letter to Petersen. According to another letter of Rahman, he asked the "9th Circuit" in January to make this appointment. Rahman asserts that on February 3, 1986, he called Ms. Patty and asked for a further continuance and she told him that Petersen was going ahead on the default.

On February 12, 1986, the district court entered a default judgment forfeiting the cash. Rahman says he was sent a copy of the default judgment on March 5, 1986.

On March 23, 1986, Rahman wrote District Judge Wilson asking that he appoint counsel. On May 5 he repeated this request together with a request that Judge Wilson set aside the default judgment. The request was repeated again by Rahman on June 23, 1986. Thereafter Rahman obtained free legal advice from the Post-Conviction Justice Project at U.S.C.Law Center. He then, on October 30, 1986, filed an answer to the forfeiture complaint and Rahman's motion was heard November 24, 1986. The government showed that the judgment had been executed on June 6, 1986, and the cash released to the government. The court held that Rahman had failed to seek a stay of execution, that the property had left the control of the court, and that therefore the court's jurisdiction ended and it was without power to order the return of the funds.

with it a motion under Fed.R.Civ.P. 60(b) to set aside the default.

ANALYSIS

A forfeiture action is in rem. Jurisdiction in rem is predicated on the "fiction of convenience" that an item of property is a person against whom suits can be filed and judgments entered. Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 22-23, 80 S.Ct. 1470, 1472-1473, 4 L.Ed.2d 1540 (1960). The use of in rem forfeiture began at a time when jurisdiction was premised on territorial notions of sovereignty. Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1878). This view of jurisdiction has evolved to one based on due process concerns for "fair play and substantial justice," International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)), even when the court's jurisdiction is predicated on its control over an item of property or res. Shaffer v. Heitner, 433 U.S. 186, 207, 97 S.Ct. 2569, 2581, 53 L.Ed.2d 683 (1977) (" 'judicial jurisdiction over a thing' is a customary elliptical way of referring to jurisdiction over the interests of persons in a thing.").

The relationship of the minimum contacts rule after Shaffer to in rem proceedings has not been the subject of many cases or much scholarly commentary. See Note, Has Shaffer v. Heitner been Lost at Sea?, 46 Louisiana L. Rev. 141, 142 ("the issue has often been ignored altogether" in admiralty actions). But see Inland Credit Corp. v. M/T Bow Egret, 552 F.2d 1148, 1152 (5th Cir.1977) (traditional view of in rem jurisdiction "difficult to square with the modern view" of jurisdiction); see also United States v. An Article of Drug Consisting of 4680 Pails, 725 F.2d 976 (5th Cir.1984); Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 569 F.2d 330, 334 (5th Cir.1978). Although appellant argues that jurisdiction exists under the International Shoe standard, we decline to address that issue here because this case can be decided on the basis of traditional in rem principles.

The general rule is that, in an in rem action, removal of the res ends the jurisdiction of the court. But exceptions exist. If the property is removed by "an accidental or fraudulent or improper removal" jurisdiction is not destroyed. The Rio Grande, 90 U.S. (23 Wall.) 458, 465, 23 L.Ed. 158 (1874). The exceptions have been frequently acknowledged in principle, although never so far as we can determine actually applied. See, e.g., Farwest Steel Corp. v. Barge Sea-Span, 769 F.2d 620, 621-22 (9th Cir.1985); American Bank of Wage Claims v. Registry of the District Court of Guam, 431 F.2d 1215, 1219 (9th Cir.1970); Criscuolo v. Atlas Imperial Diesel Engine Co., 84 F.2d 273, 280 (9th Cir.1936).

The present case may be an appropriate case to apply one of the exceptions. If the district court finds as a fact that Rahman sought relief from the default judgment before June 6, 1986, when execution was complete, the court may conclude that the removal by execution was either improper or accidental. In such case, one or other of the Rio Grande exceptions applies, and the court has jurisdiction to consider Rahman's motion to grant relief from a default.

To find that Rahman timely sought appropriate relief, the district...