U.S. v. $23,000 in U.S. Currency

• Decision Date: 23 January 2004
• Docket Number: No. 03-1748.,03-1748.
• Citation: 356 F.3d 157
• Parties: UNITED STATES, Appellee, v. $23,000 IN UNITED STATES CURRENCY, Defendant, René Rodríguez-Barrientos, Claimant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 157

356 F.3d 157

UNITED STATES, Appellee, v. $23,000 IN UNITED STATES CURRENCY, Defendant René Rodríguez-Barrientos, Claimant, Appellant.

No. 03-1748.

United States Court of Appeals, First Circuit.

Heard October 9, 2003.

Decided January 23, 2004.

Appeal from the United States District Court for the District of Puerto Rico, Daniel R. Dominguez, J.

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Anne W. Marsh, with whom John F. Cicilline was on brief, for appellant.

Isabel Muñoz-Acosta, Assistant United States Attorney, with whom H.S. Garcia, United States Attorney, and Miguel A. Fernández, Assistant United States Attorney, were on brief, for appellees.

Before LYNCH and LIPEZ, Circuit Judges, and OBERDORFER,^* Senior District Judge.

LIPEZ, Circuit Judge.

Claimant René Rodríguez-Barrientos ("Rodríguez") asserts ownership of $23,000 seized by the United States. The district court entered a default judgment in favor of the United States, ruling that Rodríguez's claim was procedurally deficient, and denied Rodríguez's subsequent motion to vacate and motion to reconsider. Rodríguez now appeals the denial of the motion to reconsider. After carefully considering the procedural missteps in this case, some by Rodríguez and some by the court, we affirm.

I.

On July 10, 2001, Rodríguez was scheduled to fly on a commercial airline from the John F. Kennedy International Airport ("JFK") in Queens, New York to Luis Munoz Marin International Airport ("LMMIA") in Carolina, Puerto Rico. Suspecting that Rodríguez was carrying money to pay for a shipment of cocaine that had arrived at JFK from LMMIA on June 24, 2001, agents of the U.S. Drug Enforcement Agency detained Rodríguez at JFK while his flight proceeded on to Puerto Rico carrying his checked luggage. The agents questioned Rodríguez and obtained his consent to search his luggage once it arrived at LMMIA. Upon searching his luggage, DEA agents in Puerto Rico seized $23,000 in U.S. currency pursuant to 21 U.S.C. § 881(a)(6).

Subsequently, Rodríguez attempted to retrieve the seized currency. The first step towards retrieving seized property is to file a sworn claim of ownership with the agency that made the seizure — here the DEA. 18 U.S.C. § 983(a)(2)(A) (2003). This "verified administrative claim" notifies the agency of the party's alleged interest in the property. Rodríguez properly filed a verified administrative claim with the DEA on January 18, 2002, asserting that he was the owner of the $23,000 seized at LMMIA.

Once a party has filed an administrative claim, the government has 90 days either to file a complaint for forfeiture in the district court or to release the property. 18 U.S.C. § 983(a)(3)(A)-(B) (2003). In this case, the government filed a timely complaint for forfeiture on April 17, 2002, in the Puerto Rico district court and served a copy of the complaint on Rodríguez's counsel.¹ The government also published notice of the forfeiture in the May 8, 2002, edition of "El Nuevo Dia," a newspaper of general circulation in Puerto Rico authorized for notice purposes by Local Admiralty Rule G(3) of the Puerto Rico District Court.²

Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims governs pleading in a civil forfeiture proceeding. See, e.g., United States v. One Dairy Farm, 918 F.2d 310, 311 (1st Cir. 1990). That rule, as it existed during the lower court proceedings in this case, requires that any person with a claim to the property must file a "verified statement identifying that interest or right" ("verified statement") within 20 days of actual notice or completed publication of notice, or within the time the court allows.³ The claimant must then serve an answer to the complaint within 20 days of filing the verified statement.⁴ Rodríguez requested an extension of time. On May 28, 2002, the district court granted him a 30-day extension to file his pleadings.

Rodríguez filed an answer on June 27, 2002, but he neglected to file the verified statement required by Rule C(6). On July 3, 2002, the government filed two motions: one to strike the answer because Rodríguez had never filed a verified statement, and one to enter a "Default Decree of Forfeiture." Copies of these motions were served on Rodríguez's counsel. Nevertheless, Rodríguez did not reply to either motion. On July 16, 2002, the district court granted the government's motion for a "Default Decree of Forfeiture," forfeiting the $23,000 to the government.

On July 22, 2002, appellant filed a motion to vacate the judgment by default. He attached a copy of his verified administrative claim and argued that, although it was originally filed with the DEA and had not previously been before the court,⁵ it was a sufficient substitute for the verified statement required by Rule C(6). He did not offer any explanation for the failure to file the verified statement required by the rules before filing his answer, and he did not ground his motion to vacate in any particular rule.

In a written order entered on January 28, 2003, the court rejected appellant's argument that filing a verified administrative claim fulfilled the pleading requirements of Rule C(6). The court cited precedent that filing a verified statement is required to establish standing in a civil forfeiture case. It also distinguished this case, in which the claimant filed an unverified answer, from the exception we adopted in United States v. One Urban Lot, where we held that a verified answer "can serve as both a [verified statement] and answer." 885 F.2d 994, 1000 (1st Cir.1989). The court did not, however, specify the rule or standard of relief that it applied to the motion to vacate the default judgment.

On February 3, appellant submitted a motion to reconsider the denial of the January 28 motion. Again he attached a copy of the verified administrative claim and again he argued that it fulfilled the verification requirement of Rule C(6). He did not invoke a particular rule when filing his motion. On February 5, the government filed an opposition to the motion.

On April 23, the court denied the motion to reconsider, which it characterized as a request for relief under Rule 60(b). After quoting Rule 60(b) in its entirety, but without citing any one of the six possible grounds for vacating a judgment under Rule 60(b), the court reiterated that the filing of a verified administrative claim and an unverified answer does not meet the requirements of Rule C(6) and is not sufficiently similar to the filing of a verified answer to invoke the exception we adopted in One Urban Lot. Rodríguez now appeals the district court's denial of the motion to reconsider.

II.

A. Default

The filing of a verified statement, as required by Rule C(6), is no mere procedural technicality. It forces claimants to assert their alleged ownership under oath, creating a deterrent against filing false claims. See, e.g., United States v. Commodity Account No. 549 54930, 219 F.3d 595, 597 (7th Cir.2000)("Verification forces the claimant to place himself at risk for perjury of false claims, and the requirement of oath or affirmation is not a mere technical requirement that we easily excuse."). For this reason, filing a verified statement is normally "a prerequisite to the right to file an answer and defend on the merits." One Dairy Farm, 918 F.2d at 311 (quoting United States v. Fourteen (14) Handguns, 524 F.Supp. 395, 397 (S.D.Tex.1981)); see also One Urban Lot, 885 F.2d at 999 ("[S]ympathy alone does not suffice to require the district judge to disregard [claimants'] complete failure to abide by the command of Supp. Rule C(6) to file a verified claim or answer."). When a claimant files only an answer without a verified statement, the district court may strike the answer. See, e.g., United States v. Beechcraft Queen Airplane, 789 F.2d 627, 630 (8th Cir.1986)(holding that "the District Court did not abuse its discretion by requiring strict compliance with Rule C(6) and striking [claimant's] answer because he did not precede it with a verified [statement].").

The failure to file a verified statement implicates Federal Rule of Civil Procedure 55, which governs the entry of a default judgment. See, e.g., One Urban Lot, 885 F.2d at 997 (applying Rule 55 to a civil forfeiture default). The rule distinguishes between the "entry of default" under Rule 55(a) and "judgment by default" under Rule 55(b). Entry of default is an interlocutory order — entered in anticipation of a final judgment — formally recognizing that a party "has failed to plead or otherwise defend as provided by [the Federal Rules of Civil Procedure]." Fed. R.Civ.P. 55(a). Because Rodríguez did not file a verified statement in accordance with Rule C(6), the court was entitled to enter a default under Rule 55(a) for failing to "otherwise defend" as required by the rules.

In contrast to the entry of default under Rule 55(a), a Rule 55(b) judgment by default is a "final disposition of the case and an appealable order" that has the same effect as a judgment rendered after a trial on the merits. 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil 3d, § 2684 (1998). Rule 55(b)(2) provides that the court may enter a judgment by default provided that "[i]f the party against whom judgment by default is sought has appeared in the action, the party ... shall be served with written notice of the application for judgment at least 3 days prior to the hearing on such application."

In this case, Rodríguez's filing of an answer constituted an appearance before the court. See 10A Wright, Miller & Kane, § 2686 (noting that an appearance merely "involves some presentation or submission to the court."). Thus, he was entitled to notice, under Rule 55(b)(2), of the application for a default judgment. The government provided notice of the motion for a default judgment by sending a copy to claimant's counsel via certified mail. Receiving no opposition...