Mesle v. Signed Pers. Check No. 730 Of Yubran S. Mesle
| Decision Date | 04 August 2010 |
| Docket Number | No. 09-55353.,09-55353. |
| Citation | 615 F.3d 1085 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, Yubran S. Mesle, Claimant-Appellant, v. SIGNED PERSONAL CHECK NO. 730 OF YUBRAN S. MESLE, Drawn from Bank of America Account No. 0967267676 in the amount of $240,000.00 in U.S. Currency; Signed Personal Check No. 1004 of Yubran S. Mesle, Drawn from Wells Fargo Bank Account No. 3572585739 in the Amount of $5,000.00 in U.S. Currency; Signed Personal Check No. 1040 of Yubran S. Mesle, Drawn, from Bank of America Account No. 2454767190, No Amount Stated; $197,031.14 in U.S. Currency, Seized from Bank of America Account No. 0967267676, 2008; $1,598.21 in U.S. Currency, Seized from Wells Fargo Bank Account No. 3572585739, Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
COPYRIGHT MATERIAL OMITTED.
COPYRIGHT MATERIAL OMITTED.
Karen P. Hewitt, United States Attorney; Bruce R. Castetter, Assistant United States Attorney, Chief, Appellate Section, Criminal Division; Bruce C. Smith, Assistant United States Attorney, San Diego, CA, for the plaintiff-appellee.
Richard M. Barnett, San Diego, CA, for the claimant-appellant.
Appeal from the United States District Court for the Southern District of California, William Q. Hayes, District Judge, Presiding. D.C. No. 3:08-cv-00394-WQH-CAB.
Before: D.W. NELSON and STEPHEN REINHARDT, Circuit Judges, and ROBERT H. WHALEY, Senior District Judge. *
Yubran Mesle appeals the district court's denial of his motion to set aside an entry of default in a forfeiture proceeding against checks drawn on Mesle's accounts and funds in those accounts. “[J]udgment by default is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits.” Falk v. Allen, 739 F.2d 461, 463 (9th Cir.1984). Our rules for determining when a default should be set aside are solicitous towards movants, especially those whose actions leading to the default were taken without the benefit of legal representation. See id.; TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 695-98 (9th Cir.2001). The district court failed to show such solicitude, holding the movant to a standard inappropriate for determining whether an unrepresented lay party's conduct demonstrated culpability; and made merits decisions as to the movant's defenses that were premature at this stage of the proceedings, and, moreover, were incorrect. We reverse.
On November 8, 2007, Yubran Mesle's brother, Ata Dighlawi, entered the United States carrying three personal checks drawn on Mesle's accounts that totaled $245,000. Each was signed by Mesle, but the payee line for each was blank. Dighlawi failed to declare the checks, and customs officials seized them pursuant to 31 U.S.C. §§ 5316(a)(1)(B) and 5324(c)(1).
A week later, Mesle received a letter from Customs informing him that it had seized the checks and that they were subject to forfeiture under 31 U.S.C. § 5317.
The letter described a set of legal options available to Mesle, including, among others, filing a petition for administrative relief with U.S. Customs and filing a claim that would give rise to a forfeiture proceeding in federal district court. Nowhere did the letter explain that these options were exclusive of one another, or what would happen if Mesle exercised more than one option.
Included with the letter were several forms, including a “Petition for Remission or Mitigation of Forfeiture,” used to initiate an administrative proceeding with Customs; a “Seized Asset Claim Form,” used to initiate an action in federal district court; and an “Election of Proceedings Form.” The Election of Proceedings Form listed three options for Mesle-1) requesting that Customs delay forfeiture proceedings and consider an administrative petition, 2) abandoning the property, and 3) requesting that Customs send his case for court action-and stated that Mesle was to choose only one of these options.
Mesle filled out this paperwork without the help of a lawyer, and apparently without understanding that the instructions to choose one option on the Election of Proceedings form meant that he had to choose either a court action or an administrative petition process. He mailed to Customs both the Petition for Remission and the Seized Asset Claim form; in his declaration he stated that he did so because he hoped for the aid in recovering his property of both the courts and the administrative apparatus at Customs. Mesle also mailed Customs the Election of Proceeding form, having checked the box for a court proceeding. He asserts that he did so only out of confusion, and without realizing that this would nullify his administrative petition.
In February 2008, a United States Magistrate Judge issued two warrants ordering the seizure of $240,000 and $5,000, respectively, from the bank accounts on which the seized checks were drawn. Federal agents then seized $197,031.14 from one of Mesle's accounts and $1,598.21 from another.
On March 3, 2008, the United States filed a complaint for forfeiture pursuant to 31 U.S.C. § 5317(c) against the three checks and the seized funds, and on March 6, 2008, it sent Mesle and other potential claimants a notice of judicial forfeiture proceedings and a copy of the complaint. The notice stated that in order to contest the forfeiture, a claimant had to file a verified claim in district court within 35 days, and an answer to the complaint within 20 days of filing the verified claim.
Mesle received the notice of forfeiture proceedings a few days later, but, again acting without the aid of a lawyer, took no action in response to it. Mesle asserts that he did nothing because he thought that his prior action in sending in the Petition for Remission and the Seized Asset Claim form was sufficient at least until the resolution of the administrative process that he erroneously thought he had initiated and that a Customs official had told him could take up to a year.
In June 2008, with none of the potential claimants in the forfeiture proceeding having filed a claim or an answer, the government filed a request for Clerk's entry of default as to all potential claimants, which was granted. A month later, on July 18, 2008, the government filed a motion for default judgment. When Mesle received notice of that motion, he realized that action was required and hired a lawyer. On August 7, 2008, Mesle filed a claim in district court demanding the return of the checks and currency, and on August 19, 2008, he filed a response in opposition to the United States' motion and requested that the district court set aside the entry of default for good cause underFederal Rule of Civil Procedure 55(c). After briefing, the district court denied Mesle's motion to set aside the default and granted the government judgment by default.
This court reviews the district court's denial of a Rule 55(c) motion for abuse of discretion. Franchise Holding II v. Huntington Rests. Group, Inc., 375 F.3d 922, 925 (9th Cir.2004). There is a two step test for abuse of discretion. “[T]he first step of our abuse of discretion test is to determine de novo whether the trial court identified the correct legal rule to apply to the relief requested.” United States v. Hinkson, 585 F.3d 1247, 1261 (9th Cir.2009) (en banc). “[T]he second step ... is to determine whether the trial court's application of the correct legal standard was (1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support in inferences that may be drawn from the facts in the record.’ ” Id. “Due to the policy of favoring judgments on the merits, a glaring abuse of discretion is not required for reversal of a court's refusal to relieve a party of the harsh sanction of default.” United States v. $22,050.00 U.S. Currency, 595 F.3d 318, 324 (6th Cir.2010) (internal quotation marks and citation omitted).
The primary question before us is whether the district court identified the correct legal standards to apply. We hold that it did not. The technical details of its errors are explained below, but the basic deficiencies are simply stated: the district court ignored our oft stated commitment to deciding cases on the merits whenever possible, and held Mesle, a layman working without the aid of an attorney, to the same standards to which we hold sophisticated parties acting with the benefit of legal representation.
The Federal Rules provide that a “court may set aside an entry of default for good cause....” Fed. R. Civ. Pro. 55(c). To determine “good cause”, a court must “consider[ ] three factors: (1) whether [the party seeking to set aside the default] engaged in culpable conduct that led to the default; (2) whether [it] had [no] meritorious defense; or (3) whether reopening the default judgment would prejudice” the other party. See Franchise Holding II, 375 F.3d at 925-26. This standard, which is the same as is used to determine whether a default judgment should be set aside under Rule 60(b), is disjunctive, such that a finding that any one of these factors is true is sufficient reason for the district court to refuse to set aside the default. See id. Crucially, however, “judgment by default is a drastic step appropriate only in...
To continue reading
Request your trial
-
Golden Eye Media USA, Inc. v. Trolley Bags UK Ltd.
..."a case should, whenever possible, be decided on the merits"); see also United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (referring the "policy of favoring judgment on the merits"). The Court will consider relevant prior art in determining ......
-
Golden Eye Media USA, Inc. v. Trolley Bags UK Ltd.
...1984) (providing that "a case should, whenever possible, be decided on the merits"); see also United States v. Signed Pers. Check No. 730 of Yubran S. Mesle , 615 F.3d 1085, 1091 (9th Cir. 2010) (referring the "policy of favoring judgment on the merits"). The Court will consider relevant pr......
- Winters v. Jordan
-
Upper Deck Co. v. Doe
...govern the inquiry into "good cause" under Federal Rule of Civil Procedure ("Rule") 55(c). United States v. Signed Personal Check No. 730 of Yubran S. Mesle , 615 F.3d 1085, 1091 (9th Cir. 2010). "Those factors, which courts consistently refer to as the Falk factors, are: (1) whether the pl......