Opinion
Civil Action No: SA-05-CA-407-XR.
October 13, 2005
ORDER
On this date, the Court considered the United States of America's Motion to Strike Respondent's Original Answer and Enter Default Judgment of Forfeiture for failure to comply with Supplemental Rule C(6) and Title 18 U.S.C. § 983(a)(4)(A), filed August 12, 2005 (docket no. 11). After considering the motion, claimant's response, applicable statutes and rules, and relevant case law, the Court GRANTS Petitioner's Motion.
I. Factual and Procedural Background
This is a civil forfeiture action in rem brought to enforce the provisions of 18 U.S.C. § 924(d)(1) for a violation of 18 U.S.C. § 922(a)(1)(A). Title 18 U.S.C. § 922(a)(1)(A) makes it unlawful for any unlicensed person to engage in the business of dealing in firearms. Title 18 U.S.C. § 924(d)(1) subjects to forfeiture any firearm involved in or used in any willful violation of the provisions of Title 18. United States v. Ten Firearms, 444 F.Supp. 305, 308 (N.D. Tex. 1977).
Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) agents seized twenty-seven assorted firearms in December 2004 during the execution of federal search warrants on Adam Elizondo's vehicle. On February 14, 2005, Elizondo filed a claim with the ATF to contest the administrative forfeiture of the firearms. Because Elizondo contested the administrative forfeiture the ATF referred the matter to the office of the United States Attorney for the Western District of Texas for determination of judicial forfeiture.
On May 4, 2005, the United States filed its verified complaint for civil forfeiture, alleging that Elizondo repeatedly purchased and sold firearms without a license in violation of Title 18 U.S.C. § 922(a)(1)(A). The twenty-seven assorted firearms were found in the possession of Elizondo during the execution of a search warrant. The United States alleges that on four different occasions Elizondo sold firearms to undercover officers or informants while under surveillance at gun shows, without a license. According to the Complaint, Elizondo voluntarily stated, during the execution of the search warrant, that he carried large amounts of cash in order to purchase guns at one gun show that would then be sold at another gun show. Elizondo allegedly signed a written statement regarding his unlicensed dealings in firearms. The United States alleges that Elizondo's knowing and willful purchasing and selling of firearms without a license violated Title 18 U.S.C. § 922(a)(1)(A), and subjected the twenty-seven firearms to forfeiture pursuant to Title 18 U.S.C. § 924(d)(1).
This forfeiture action is governed by the Supplemental Rules for Certain Admiralty and Maritime Claims. Under Rule C(3), when the United States files a complaint demanding forfeiture in violation of a federal statute, the clerk must promptly issue a summons and a warrant for the arrest of the property and deliver it to the marshal for service. Service of the warrant on the res constitutes the execution of process. United States v. $38,570 U.S. Currency, 950 F.2d 1108, 1113 (5th Cir. 1992). On or about May 18, 2005, a warrant for arrest was served on the twenty-seven firearms. Notice of seizure was published on June 12, 2005, June 19, 2005, and June 26, 2005, in the San Antonio Express-News. Elizondo received personal service of the notice of forfeiture action on or about May 18, 2005, and his attorney received personal service on or about May 20, 2005. The notice states that "[a] claim may be filed with the clerk . . . not later than thirty (30) days after service of process or thirty (30) days after date of final publication, and an answer to the complaint shall be filed not later than twenty (20) days after the date of the filing of the claim, pursuant to Title 28 U.S.C. Rule C(6) of the Supplemental Rules for Certain Maritime Claims, Fed.R.Civ.P. and Title 18 U.S.C. §§ 983(a)(4)(A) and (B)." In addition, this Court issued an order on May 10, 2005 stating that any individual personally served with notice of the complaint of forfeiture shall file a claim within thirty (30) days after such service has been executed and shall serve an answer within twenty (20) days after the filing of the claim. The dates in this Court's order reflect the requirements of Supplemental Rule C(6), which states that a claimant "must file a verified statement" identifying his interest or right "within thirty days after the earlier of (1) the date of service of the Government's complaint or (2) completed publication of notice under Rule C(4)." "[A] person who files a statement of interest in or right against the property must serve and file an answer within 20 days after filing the statement."
On June 2, 2005, Elizondo filed an Original Answer to the United States' Verified Complaint for Forfeiture. In his Answer, Elizondo prayed that the United States be ordered to return the twenty-seven guns. The Answer was not verified, did not assert Elizondo's interest in the firearms, and did not provide any explanation for the failure to file a claim. At no time were any claims filed with regard to the judicial forfeiture of the twenty-seven guns.
In response to Elizondo's Answer and the failure of any interested parties to file a claim for the twenty-seven guns, the United States filed a Motion to Strike Elizondo's Answer for failure to timely file a claim under Rule C(6). Under Rule C(6), Elizondo was required to file a claim by June 17, 2005. Elizondo failed to file a timely response to the government's motion. Rather, on August 25, 2005, this Court sua sponte, allowed Elizondo an additional fourteen days to respond (docket no. 12). On August 26, 2005, Elizondo filed a motion for extension of time to file a response to the government's motion and to file a motion for leave to file an amended answer and claim (docket no. 13). The Court, by order dated September 6, 2005, denied Elizondo's motion because additional time to respond had already been provided and Elizondo provided no explanation why leave should to be given to file an amended answer and claim.
Pursuant to the Court's August 25 order, Elizondo filed a response to the government's motion on September 8, 2005. Elizondo asserted that he failed to file a verified claim because he believed his February 14, 2005 administrative forfeiture claim was sufficient. Elizondo claimed, in the alternative, that the Court in its discretion should excuse his failure to file a verified claim because he can show excusable neglect and a meritorious defense. Elizondo further claimed that because he mistakenly believed that his criminal case "had preferential jurisdiction over the subject firearms and that no further action would be taken in this civil forfeiture case until the parallel and simultaneous criminal case was resolved, only the ORIGINAL ANSWER to the COMPLAINT OF FORFEITURE was filed in this case."
II. Analysis
As a general rule, "[t]he filing of a claim is a prerequisite to the right to file an answer and defend on the merits." United States v. Fourteen (14) Handguns, 524 F.Supp. 395, 397 (S.D. Tex. 1981); see also United States v. One 1988 Dodge Pickup, 959 F.2d 37, 42 n. 6 (5th Cir. 1992) (noting that Rule C(6) requires the filing of a claim only after process in the judicial forfeiture action has been executed). A claimant who fails to file a verified claim in compliance with Rule C(6) will normally lack standing to contest a judicial forfeiture. See United States v. Aero Jet Commander Aircraft, 2005 WL 2000670, at *2 (S.D. Tex. Aug. 18, 2005) . The Fifth Circuit has "required strict compliance with the provisions of Rule C(6)." United States v. Real Property Located at 14301 Gateway Boulevard West, 123 F.3d 312, 313 (5th Cir. 1997). A district court, however, may excuse a claimant's failure to strictly comply with Rule C(6) when certain mitigating factors are present. See United States v. $80,760.00 in U.S. Currency, 781 F.Supp. 462, 469 (N.D. Tex. 1991).
Factors that militate against strictly adhering to . . . Supplemental Rule C(6) and excusing or extending the time for filing a claim, are as follows: (1) the claimant, in good faith, attempted to file a claim on time or inform the government of his interest; (2) the claimant relied to his detriment on misinformation from a government source; (3) the claimant actively pursued his interest in the seized property and expended considerable resources preparing the case for trial; (4) the claimant was acting pro se; (5) the government itself failed to follow the proper procedures; and (6) the excuse or extension would not prejudice the government.Id.; see also Aero Jet Commander Aircraft, 2005 WL 2000670, at *3 (considering similar mitigating factors).
This case does not present any mitigating factors that would warrant relieving Elizondo of the consequences of his own inaction. Although Elizondo's February 14, 2005 administrative forfeiture claim advised the government of his interest in the respondent property, he neither filed nor attempted to file a timely verified claim in this proceeding. If Elizondo needed additional time to file a claim, Rule C(6) has a built-in time extension which permitted him to petition this Court for additional time to file a verified claim. See Supp. Rule C(6)(a)(i)(B). Elizondo failed to do so. The first and only time he requested additional time to file a verified claim was on August 26, 2005, over two months after the thirty-day period for filing a claim expired. In his August 26 motion, Elizondo failed to provide a single reason why he was entitled to relief from Rule C(6). Additionally, Elizondo's Original Answer cannot be considered a verified claim because it was neither verified nor contained a statement of his interest in the respondent property. See United States v. One Dairy Farm, 918 F.2d 310, 313 (1st Cir. 1990); Fourteen (14) Handguns, 524 F.Supp. at 397.
There is no suggestion that the government encouraged or participated in Elizondo's failure to timely file a verified claim. The pleadings do not reflect that Elizondo has actively pursued his interest in the seized property or expended considerable resources preparing the case for trial. Elizondo's response indicates he believed, albeit mistakenly, that while his criminal action was pending, the filing of an Original Answer was the only action he needed to take in this case . Resp., at ¶ 9. Elizondo is not acting in a pro se capacity. There is no evidence that the government failed to follow proper procedures. The government's notice of Elizondo's interest in the respondent property minimizes any potential prejudice.
Elizondo's argument that he believed his administrative forfeiture claim satisfied the requirements of Rule C(6) is disingenuous. Any confusion over the need to file a verified claim was dispelled by the Court's May 10 order (and notice of civil forfeiture), which outlined the procedures for contesting this judicial forfeiture:
Summary administrative forfeitures and judicial forfeitures are distinct proceedings. See $80,760.00 in U.S. Currency, 781 F.Supp. at 465 ("The purpose of summary forfeiture is simply to save the government the expense of prosecuting a judicial forfeiture."). The procedural deadlines of the Supplemental Rules for Certain Admiralty and Maritime Claims do not apply to administrative forfeitures. Id. at 466. It is only after the United States Attorney initiates a judicial forfeiture action that the strict deadlines of Rule C(6) are applicable. Id.
ANY INDIVIDUAL OR PARTY WHO IS PERSONALLY SERVED with Notice of Complaint of Forfeiture and Arrest of Properties in this cause shall file a claim within thirty (30) days after such service has been executed, and shall serve an answer within twenty (20) days after the filing of the claim, as provided by Title 28, U.S.C., Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims, Fed.R.Civ.P., and Title 18 U.S.C. §§ 983(a)(4)(A). Elizondo is seemingly asking the Court to turn a blind-eye to his complete disregard of the May 10 order. The Court will not do so. See $80,760.00 in U.S. Currency, 781 F.Supp. at 469-70 ("[A] willful failure to follow procedures or complete disregard for procedural requirements compels a denial of standing.").
Elizondo, in the alternative, argues that the Court should ignore his failure to timely file a verified claim because such failure was caused by excusable neglect and he possesses a meritorious defense to the government's claims. Resp., at ¶ 6 (citing United States v. One 1978 Piper Navajo PA-31 Aircraft, 748 F.2d 316, 318 (5th Cir. 1984)). Elizondo's reliance on the excusable neglect and meritorious defense rationale of One 1978 Piper Navajo PA-31 Aircraft is misplaced. The doctrine of excusable neglect and meritorious defense applies in Federal Rule of Civil Procedure 60(b) motions to set aside default judgments. Id. at 318. Because Elizondo is not challenging a default judgment, Rule 60(b) and One 1978 Piper Navajo PA-31 Aircraft are inapplicable. Furthermore, the excuses Elizondo proffers, i.e. preferential jurisdiction of the parallel pending criminal case and reliance on his administrative forfeiture claim, are highly suspect in light of this Court's May 10 order.
This case is analogous to Fourteen Handguns and United States v. Beechcraft Queen Airplane where the respective courts struck a claimant's answer because of the failure to file a verified claim. 524 F.Supp. at 397; 789 F.2d 627, 630 (8th Cir. 1986). Elizondo's failure to present any evidence demonstrating a good faith attempt to file a claim on time, detrimental reliance on government misinformation, or expense of considerable resources preparing this case for trial, weighs heavily in the Court's decision to not exercise its discretion and provide additional time to file a verified claim. One Dairy Farm, 918 F.2d at 313 (collecting cases where mitigating circumstances entitled a claimant to relief); Beechcraft Queen Aircraft, 789 F.2d at 630 (claimant not entitled to relief from Rule C(6) where there was no evidence of mitigating circumstances). Accordingly, the Court grants the United States' motion to strike and STRIKES the Original Answer of Adam Elizondo (docket no. 11-1). Thus, the Court now turns to the United States' Motion for Default Judgment.
III. Motion for Default Judgment
The burden of proof is on the government to establish, by a preponderance of evidence, that the property is subject to forfeiture and that there was a substantial connection between that property to be forfeited and the criminal activity. 18 U.S.C. § 983. The government alleges that Elizondo knowingly and willfully purchased and sold the twenty-seven assorted firearms without a license in violation of 18 U.S.C. § 922(a)(1)(A), which subjected the firearms to forfeiture pursuant to 18 U.S.C. § 924(d)(1). After reviewing the government's verified complaint, the Court finds that the government has met its burden of proof. The Court further finds that the government has satisfied the requirements of Rule C(6) by filing the verified complaint of forfeiture on May 4, 2005, that Adam Elizondo and G. Rudolph Garza, Jr. (Elizondo's attorney) have been personally served, and that the government properly conducted service by publication of notice. There being no timely claim to the property, the Court GRANTS the United States' motion for default judgment (docket no. 11-2).
Therefore, IT IS HEREBY
ORDERED that a Default Judgment of Forfeiture is entered against the respondent property:
1. Colt Government Handgun, Serial No. CPE211;
2. Colt Government Handgun, Serial No. DE36823;
3. Colt Government Handgun, Serial No. DE35019;
4. Colt Government Handgun, Serial No. 70B18389;
5. Colt Government Handgun, Serial No. MM06186;
6. Colt Government Handgun, Serial No. CORR058;
7. Colt Government Handgun, Serial No. 176704;
8. Colt Government Handgun, Serial No. 42687;
9. Colt Government Handgun, Serial No. 201024;
10. Colt Government Handgun, Serial No. 3530;
11. Colt Government Handgun, Serial No. 53521;
12. Colt Government Handgun, Serial No. 27713;
13. Colt Government Handgun, Serial No. 159901;
14. Colt Government Handgun, Serial No. 91770;
15. Colt Government Handgun, Serial No. 64070;
16. Colt Government Handgun, Serial No. CSM151;
17. Colt Government Handgun, Serial No. 247;
18. Colt Government Handgun, Serial No. PER031;
19. Colt Government Handgun, Serial No. 38SS01225;
20. Colt Government Handgun, Serial No. 38SS01173;
21. Colt Government Handgun, Serial No. SG08345E;
22. Colt Government Handgun, Serial No. 70B13113;
23. Colt Government Handgun, Serial No. 38SS014081;
24. Walther Handgun, Serial No. 9289BAC;
25. Sig Arms Handgun, Serial No. BL304265;
26. Heckler and Koch SP89 Handgun, Serial No. 21-27497; and
27. Keltec, CNC Industries, Inc. P3AT Handgun, Serial No. H6541;
It is further ORDERED that any and all right, title, and interest of Adam Elizondo in the respondent property is forfeited to the United States of America, and it is further
ORDERED that any and all right, title, and interest of all other potential claimants in the respondent property is forfeited to the United States of America, and it is therefore further
ORDERED that the respondent property is forfeited to the United States of America and that the United States Marshals Service and/or its designated substitute custodian shall dispose of the Respondent Property in accordance with the law.
All costs and expenses regarding seizure, maintenance, custody, and control of the respondent property, including, but not limited to, any litigation costs and attorney's fees, shall be borne by the party incurring them.