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United States v. One 2003 Mercedes Benz Cl500

United States District Court, Fourth Circuit

October 3, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
ONE 2003 MERCEDES BENZ CL500, VIN WDBPJ75J353A033241, Defendant.

MEMORANDUM OPINION

PAUL W. GRIMM, District Judge.

The Motion for Reconsideration of Denial of Default Judgment, ECF No. 12, that Plaintiff, the United States of America ("the Government"), filed in this forfeiture in rem action against Defendant, One 2003 Mercedes Benz CL500, VIN WDBPJ75J353A033241 ("the Mercedes") is pending. For the reasons stated below, the Government's Motion is DENIED.

I. BACKGROUND[1]

Surveillance during an investigation by the Drug Enforcement Administration ("DEA") into John Edward Butler, Jr.'s participation in a drug trafficking organization revealed the Mercedes at issue parked in front of Mr. Butler's garage. Aff. of Task Force Officer Mark D. Howard 1-2. Pursuant to warrants, DEA members seized the title to the Mercedes from Butler's home and the Mercedes itself from in front of Mr. Butler's mother's house. Id. at 4-5. The Mercedes was seized as "proceeds traceable to the sale or exchange of controlled substances in violation of 21 U.S.C. § 841" and as a vehicle used in illegal drug activity. Compl. ¶¶ 3 & 5, ECF No. 1.

The Government initiated this action with a Verified Complaint seeking forfeiture of the Mercedes pursuant to 21 U.S.C. § 881(a)(4) and (6), Compl. ¶ 5, and thereafter moved for a default judgment. ECF No. 7. Claimant Gaunzie Hart submitted a letter, which I construed as an answer, asking that the Mercedes be returned to her. ECF No. 8. I struck her answer because it was untimely, and, as no other party had standing to contest the forfeiture, I considered whether the Government had shown that it was entitled to a default judgment of forfeiture. July 15, 2013 Mem. Op. 7, ECF No. 9.

Finding that the Government had met the criteria for publishing notice of the action, a prerequisite to entry of a judgment of forfeiture, I considered "whether the[] unchallenged factual allegations constitute a legitimate cause of action.'" July 15, 2013 Mem. Op. 6 (quoting Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 494 (D. Md. 2010)). Noting that "a default judgment is appropriate if the Government has shown the grounds of forfeiture, i.e., a substantial connection' between the Mercedes and illicit drug activity, by a preponderance of the evidence, " I concluded that "the Government has failed to establish by a preponderance of the evidence that there was a substantial connection between the Mercedes and Mr. Butler's illegal drug activity." Id. at 7-8. I explained that, although the Government had shown that "Mr. Butler, who was engaged in illegal drug activity at the time, paid Ms. Hart $4, 000 up front for the Mercedes and agreed to pay her an additional $9, 500 incrementally, " and that "the vehicle was seized in front of a location that Mr. Butler used in drug distribution, " the Government had not shown that Mr. Butler's payment to Ms. Hart was proceeds from drug transactions or that "Mr. Butler drove the Mercedes to and from the drug distribution location or that he drove it to distribute drugs, rather than to visit his mother." Id. at 8. On that basis, I denied the Government's motion "without prejudice to refiling it with further facts supporting the connection between the Mercedes and Mr. Butler's illegal drug activity." Id. Rather than addressing the shortcoming in its initial motion, the Government filed the Motion for Reconsideration that now is pending.

II. STANDARD OF REVIEW

"A motion for reconsideration is appropriate to correct manifest errors of law or fact or to present newly discovered evidence, ' or where there has been an intervening change in controlling law." Potter v. Potter, 199 F.R.D. 550, 552 n.1 (D. Md. 2001) (quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d. Cir. 1985); citing Above the Belt, Inc. v. Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va. 1983)); see also Pinney v. Nokia, Inc., 402 F.3d 430, 452-53 (4th Cir. 2005) (stating in dicta that these "rules of constraint... make sense when a district court is asked to reconsider its own order" because "[w]ere it otherwise, then there would be no conclusion to motions practice, each motion becoming nothing more than the latest installment in a potentially endless serial that would exhaust the resources of the parties and the court-not to mention its patience'") (quoting Potter, 199 F.R.D. at 553); Shields v. Shetler, 120 F.R.D. 123, 126 (D. Co. 1988) (observing that a motion for reconsideration "is not a license for a losing party's attorney to get a second bite at the apple'"). The three grounds identified in Potter, 199 F.R.D. at 552 n.1, are "analogous to three grounds that the Fourth Circuit recognized for [a district court to amend] an earlier judgment under Rule 59(e), " Beyond Sys., Inc. v. Kraft Foods, Inc., No. PJM-08-409, 2010 WL 3059344, at *2 n.1 (D. Md. Aug. 4, 2010), which provide a district court with discretion to grant a motion to amend a judgment "only in very narrow circumstances, " Hill v. Braxton, 277 F.3d 701, 708 (4th Cir. 2002).

III. DISCUSSION

A. Requirements for Entry of Default Judgment in Forfeiture Action

The Government contends that "the statutory framework and case law demonstrate that the verified, properly published complaint is sufficient [to] warrant entry of default judgment." Gov't Mot. 1. There can be no quarrel with the notion that "the outcome of a civil forfeiture action does not turn on the liability of any particular person; it turns solely on the nexus between the property and the offense giving rise to forfeiture." Id. at 3. Indeed, the pivotal facts are those that "establish a nexus between the Property and drug activity." 998 Cotton Street, 2013 WL 1192821, at *10. Additionally, the Government correctly states that "the entry of judgment in a civil forfeiture action does not involve any finding of liability or culpability. It merely recognizes the Government's clear title to the defendant property." Gov't Mot. 4; see United States v. Ursery, 518 U.S. 267, 295-96 (1996) (Kennedy, J., concurring). As the Government notes, Gov't Mot. 4 n.3, "proceedings in rem are simply structures that allow the government to quiet title to criminally-tainted property in a single proceeding in which all interested persons are required to file claims contesting the forfeiture at one time." Ursery, 518 U.S. at 295-96. That said, Justice Kennedy recognized that "the forfeiture statutes require proof of a drug trafficking or other offense, ... to establish that the property was used in a crime."[2] Id. at 296. It is the failure, to date, of the Government to identify the facts that connect the vehicle itself, as opposed to its owner, to a drug trafficking crime that resulted in the denial of its motion. The Government is correct that Supplemental Rule G4 governs default judgments in forfeiture in rem actions and "provides that a judgment of forfeiture may be entered only if the government has published notice of the action within a reasonable time after filing the complaint or at a time the court orders.'" United States v. $85, 000.00 in U.S. Currency, No. WDQ-10-371, 2011 WL 1063295, at *1 (D. Md. Mar. 21, 2011) (quoting Fed.R.Civ.P. Supp. R. G(4)(a)(i)). Yet, Rule 55(b) of the Federal Rules of Civil Procedure also applies.[3] $85, 000.00 in U.S. Currency, 2011 WL 1063295, at *1. Pursuant to Rule 55(b), the Court cannot enter a default judgment unless it "determine[s] [that] the[] unchallenged factual allegations constitute a legitimate cause of action." Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 494 (D. Md. 2010); see $85, 000.00 in U.S. Currency, 2011 WL 1063295, at *2. This means that "[c]ivil forfeiture complaints must state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.'"[4] Id. (quoting Fed.R.Civ.P. Supp. R. G(2)(f)). The burden of proof at trial is a preponderance of the evidence, and "[w]hen the Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, ' it must establish a substantial connection between the property and the offense.'" Id. (quoting 18 U.S.C. § 983(c)(3).) Put another way, at trial, the Government must show that the property had "more than an incidental or fortuitous connection to criminal activity, " even though it "need not [have been] integral, essential, or indispensable to [criminal] activity." Id. The factfinder must draw "[r]easonable inferences... from the evidence presented to establish a nexus between the Property and drug activity." United States v. 998 Cotton Street, Forsyth County, N.C. , No. 11-CV-356, 2013 WL 1192821, at *10 (M.D. N.C. Mar. 22, 2013).

For example, in United States v. $85, 000.00 in U.S. Currency, No. WDQ-10-371, 2011 WL 1063295 (D. Md. Mar. 21, 2011), this Court explained that "a district court may enter a default judgment against a properly served defendant who fails to defend or otherwise appear" if the civil forfeiture complaint "state[s] sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial, '" and elaborated that, "[w]hen the Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, ' it must establish a substantial connection between the property and the offense.'" Id. at *2 (citations omitted). There, the Government submitted a Declaration from a DEA officer that a canine "alerted to the presence of a controlled dangerous substance on the four bags of currency, '" which were "located within the lining of [a woman's] luggage, '" and the woman abandoned the luggage. Id. (quoting Decl.). The Court concluded that "these allegations [were] sufficient to establish by a preponderance of the evidence a substantial connection between the Currency and a controlled substance offense.'" Id.

In United States v. $3, 156.00 in U.S. Currency, No. L-10-1128, 2010 WL 4719393 (D. Md. Nov. 15, 2010), Jackson, the man from whom the police seized the defendant currency, was the only person to contest the forfeiture. Id. at *1. The Government moved to strike Jackson's claim and enter an order of forfeiture. United States v. $3, 156.00 in U.S. Currency, No. L-10-1128, Gov't Mot. to Strike 5, ECF No. 5 (D. Md. July 8, 2010) (unpublished). The Court struck Jackson's claim for failure to file an answer, but it did not enter the forfeiture order because the Government had not shown "that a substantial connection exists between the property forfeited and the criminal activity defined by the statute." $3, 156.00 in U.S. Currency, No. L-10-1128, Order 4, ECF No. 6 (D. Md. Oct. 28, 2010) (unpublished). Noting that "[t]he affidavit of Special Agent Gwendolyn Price submitted with the original complaint establishes only that Jackson was found to be in possession of both marijuana and the Defendant currency, and that a search revealed prior arrests for violations of the Controlled Substances Act, " the Court directed the Government to file a motion for default judgment, accompanied by "additional evidence in the form of affidavits or declarations from which the Court could conclude that a substantial connection exists between the funds seized from Jackson and alleged drug trafficking activity." Id. at 4-5.

As in this case, the Government moved to reconsider, contending that a default judgment could be entered based solely on the Verified Complaint it had filed. $3, 156.00 in U.S. Currency, ...


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