United States v. $133,420.00 in United States Currency

• Decision Date: 21 February 2012
• Docket Number: No. 10–16727.,10–16727.
• Citation: 12 Cal. Daily Op. Serv. 2083,2012 Daily Journal D.A.R. 2256,672 F.3d 629
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. $133,420.00 IN UNITED STATES CURRENCY, Defendant,andDamon J. Louis, Claimant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

12 Cal. Daily Op. Serv. 2083

2012 Daily Journal D.A.R. 2256

672 F.3d 629

UNITED STATES of America, Plaintiff–Appellee,

v.$133,420.00 IN UNITED STATES CURRENCY, Defendant,andDamon J. Louis, Claimant–Appellant.

No. 10–16727.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 26, 2011.Filed Feb. 21, 2012.

David M. Michael (argued) and Edward M. Burch, Law Offices of David M. Michael, San Francisco, CA, for claimant-appellant Damon J. Louis.

Reid C. Pixler, Assistant United States Attorney, Phoenix, AZ, for plaintiff-appellee United States of America.

Appeal from the United States District Court for the District of Arizona, Neil V. Wake, District Judge, Presiding. D.C. No. 3:09–cv–08096–NVW.Before: SUSAN P. GRABER and SANDRA S. IKUTA, Circuit Judges, and LEWIS A. KAPLAN,^* Senior District Judge.

OPINION

IKUTA, Circuit Judge:

This appeal arises in the context of a civil forfeiture action instituted by the government after it seized $133,420 found in Damon Louis's car. Louis asserts that the district court erred in granting summary judgment to the government after determining that Louis lacked standing. Because the district court did not err in striking Louis's interrogatory response claiming ownership of the property, and because the remaining evidence was inadequate to establish that Louis had standing, we affirm.

I

This appeal arises in the context of a civil forfeiture action. Such actions are governed by statute, the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, and the Federal Rules of Civil Procedure. We begin by briefly describing the applicable statutory and procedural provisions.

Under 21 U.S.C. § 881(a), certain property is “subject to forfeiture to the United States.” Relevant here, § 881(a)(6) provides that “moneys ... furnished or intended to be furnished by any person in exchange for a controlled substance” and “all proceeds traceable to such an exchange” are subject to forfeiture. Once such property has been seized, it is “deemed to be in the custody of the Attorney General.” 21 U.S.C. § 881(c). The Attorney General may then seek either criminal forfeiture, see 18 U.S.C. § 982, or (as in this case) civil forfeiture, see id. § 983.

The government begins a judicial civil forfeiture action by filing an in rem complaint against the property (sometimes referred to as the “defendant property”) in the appropriate district court. Id. § 983(a)(3)(A); see also 28 U.S.C. § 1395. The complaint must be verified, state the grounds for jurisdiction, describe the property and its location, identify the statute under which forfeiture is sought, and state facts sufficient to “support a reasonable belief that the government will be able to meet its burden at trial.” Supp. R. G(2)(f); see also 18 U.S.C. § 983(a)(3)(A).

Any person wishing to intervene and assert an interest in the property must file two responsive pleadings: a verified claim and an answer. 18 U.S.C. § 983(a)(4)(A), (B); Supp. R. G(5). The verified claim must (1) “identify the specific property claimed,” (2) “identify the claimant and state the claimant's interest in the property,” (3) “be signed by the claimant under penalty of perjury,” and (4) be served on the government's attorney. Supp. R. G(5)(a)(i). In the answer, the claim ant may admit or deny the allegations in the complaint and set forth defenses.

Unlike in typical civil proceedings, the government may commence limited discovery immediately after a verified claim is filed. Supplemental Rule G(6)(a) provides that “[t]he government may serve special interrogatories limited to the claimant's identity and relationship to the defendant property without the court's leave at any time after the claim is filed and before discovery is closed.” ¹ The purpose of the rule is “to permit the government to file limited interrogatories at any time after the claim is filed to gather information that bears on the claimant's standing.” Supp. R. G advisory committee's note (subdivision (6)). The claimant must respond to these special interrogatories within 21 days. Supp. R. G(6)(b). The general civil discovery rules of the Federal Rules of Civil Procedure otherwise apply. Supp. R. G(1).

At any time before trial, the government may move to strike the claimant's claim or answer on the grounds that the claim or answer does not comply with Supplemental Rule G(5), that the claimant has not responded to special interrogatories propounded pursuant to Rule G(6)(a), or that the claimant lacks standing. Supp. R. G(8)(c).² The motion to strike may be presented as a motion for summary judgment. Supp. R. G(8)(c)(ii)(B). The court must decide the motion to strike before reaching a claimant's motion to dismiss. Supp. R. G(8)(c)(ii)(A).

If the case proceeds to trial, “the burden of proof is on the Government to establish, by a preponderance of the evidence, that the property is subject to forfeiture.” 18 U.S.C. § 983(c)(1).

II

We now turn to the facts of this case. On January 6, 2009, Arizona Department of Public Safety Officer Mace Craft stopped Louis on Interstate 40 for failure to use his turn signal. In response to questioning, Louis told Officer Craft that he was driving back to San Francisco from Albuquerque after attending a friend's wedding. He also stated that there was nothing illegal in the vehicle and twice denied that there was a large amount of currency in the vehicle.

Officer Craft led his canine, who was trained to alert to the scent of various illegal drugs, around the vehicle. The dog alerted, and Officer Craft told Louis that he had probable cause to search the vehicle. In the search that followed, Officer Craft found three cardboard boxes in Louis's trunk. Two of those boxes contained decorative rocks. The third contained a set of black throwing daggers and $133,420 in United States currency. No other contraband was found. Officer Craft seized the money, which he suspected was the proceeds of illegal drug trafficking, and transported Louis to the Flagstaff police station. At the station, Louis told the officers that he knew the currency was in the trunk of his car, but he gave no clear answer when asked whether the money was his. He refused to sign a form disclaiming ownership of the currency. The officers released Louis and returned his vehicle.

On June 5, 2009, the government began a civil forfeiture action by filing a complaint in district court that sought forfeiture of the currency seized from Louis's car as proceeds traceable to controlled substances offenses under 18 U.S.C. § 981(a)(1)(C) and 21 U.S.C. § 881(a)(6). Louis filed a verified claim on August 12, 2009, which read, in full: “The undersigned hereby claims an ownership and/or a possessory interest in, and the right to exercise dominion and control over, all or part of the defendant property.”

In response, the government served seven interrogatories, a request for production of documents, and twelve requests for admissions on Louis under Supplemental Rule G(6)(a). The discovery requests sought information and documents relating to Louis's identity, his claimed interest in the defendant property, his manner of acquiring that interest, his sources of income, and his and the currency's relationship to drug trafficking. Interrogatory No. 2 read:

State the extent and describe with particularity the nature of your interest in the defendant currency, and identify how you acquired that interest. Your answer should include, but not be limited to, the following:

(a) The date(s), time, place and manner in which the defendant currency [ ] was obtained, including the names, address and telephone numbers of the per son(s) from whom the currency was obtained.

(b) the circumstances of each transaction by which you acquired or obtained any interest in the defendant currency.

(c) the reason(s) the defendant currency was obtained, and witnesses, including the names, addresses, and telephone numbers of such witnesses, to any of the transactions by which the defendant currency was obtained.

(d) produce each and every document evidencing, recording, facilitating, or otherwise relating to any transaction identified in response to Interrogatory No. 2(a) through (c) above.

Louis responded to the discovery requests on December 9, 2009. He objected to Interrogatory No. 2, as well as every other discovery request, on three grounds: (1) the discovery request exceeded the scope of Supplemental Rule G(6)(a), (2) the discovery request sought information in violation of his Fourth Amendment right against unreasonable search and seizure, and (3) the discovery request sought information in violation of his Fifth Amendment privilege against self-incrimination. Louis did provide a limited response to Interrogatory 2: “Without waiving said objections, my interest in the defendant property is as the owner and possessor of said property, with a right to exercise dominion and control over said property.”

The government filed a motion to strike Louis's claim and answer on the theory that Louis lacked Article III standing to contest the forfeiture. After filing this motion to strike, the government made several efforts to obtain additional discovery information from Louis, including filing an emergency motion to compel discovery. Louis refused to provide any further information, even after the court granted the motion to compel. The government then filed a motion to strike Louis's December 2009 discovery responses. The district court granted that motion, holding that Louis had impermissibly used the privilege as both a shield and a sword in that he had used the interrogatory responses to claim an ownership interest in the property (which benefited his cause) but refused to respond to “follow-up questions about the details of that ownership interest, including how, why, or where he obtained the funds.”

After striking Louis's discovery response, the court determined that the only evidence remaining in the record...