Opinion
Case No. 2:10-cv-684.
November 9, 2010
ORDER
This civil forfeiture case is before the Court to consider Tyrone Taylor's motion for leave to file an answer. The United States has filed a memorandum in opposition, and Mr. Taylor has not filed a reply. For the following reasons, the Court will ask for supplementation of the record on this issue before making a ruling.
I.
According to the verified complaint, the money involved in this case was seized from Mr. Taylor on April 10, 2010, by Columbus police officers during a traffic stop. The complaint alleges that several months earlier, one of these officers had observed Mr. Taylor leaving a "known `dope house'" and had questioned him about the large amount of money he was carrying at that time, but no money was seized on that occasion. However, during the April traffic stop, the officers noticed a digital scale on the floor of the car behind the driver's seat, and upon performing a pat down on Mr. Taylor, removed what appeared to be $14,000.00 from his right front pocket. When asked how he came to have this money, Mr. Taylor explained that his sister had just sold a vehicle and that this money belonged to her.
Apparently unsatisfied with Mr. Taylor's explanation, the officers called for a narcotics canine and the canine alerted on the money. Mr. Taylor was again asked to explain how he got the money, and he said that his girlfriend had placed the money in the car. Mr. Taylor's sister then unexpectedly arrived at the scene, told the officers that the money belonged to her, and requested its return. The officers, however, retained the money for further investigation. The United States now claims it as drug proceeds.
II.
After this case was filed, as is customary, the Court issued a warrant of arrest in rem authorizing the arrest and seizure of the money. Beginning on August 7, 2010, notice of the arrest and the right to contest forfeiture was published for at least thirty consecutive days on a government internet website. Additionally, on August 16, 2010, the United States filed a certificate of service stating that Mr. Taylor (and also his attorney, Michael Siewart) had been sent notice of the filing of the case by certified mail. The letter was dated August 4, 2010, and clearly stated that the deadline for filing a claim to the money was September 10, 2010. That letter also explained to Mr. Taylor how to file a claim. See Doc. 5.
Neither Mr. Taylor nor anyone else filed an answer and verified claim by September 10, 2010. On September 15, 2010, the United States moved for an entry of default. The Clerk entered the default of Mr. Taylor and the other potential claimants the next day. One day later, Mr. Taylor filed his motion for leave to file an answer.
III.
In his motion, Mr. Taylor does not argue that he did not get notice of the filing of this action. Rather, he asserts that his counsel inadvertently failed to file an answer in a timely fashion. He did not attach a proposed answer or verified claim, and none of the statements in his short motion (which consists of only eleven sentences and which cites no case law or rule of procedure) have been sworn to. He does advance, as reasons to grant his motion, that he "has a valid claim" and that the only crime he committed on the day of the forfeiture was a "minor traffic violation." He also claims that no contraband was found on him or in his car at the time.
Given the procedural posture of the case, the only way that Mr. Taylor would be allowed to file an answer and a claim would be if the default were set aside. Therefore, the Court will use the legal principles which apply to setting aside a default to decide if Mr. Taylor should be permitted to file an answer.
In its memorandum in opposition to Mr. Taylor's motion, the United States candidly acknowledges that a recent decision from the United States Court of Appeals for the Sixth Circuit, United States v. $22,050 in United States Currency, 595 F.3d 318 (6th Cir. 2010), sets forth the controlling legal standard. Before that decision, the courts sometimes used the "more forgiving" Rule 55(c) standard when asked to set aside the entry of default in a forfeiture case, and sometimes used a stricter standard under Supplemental Rule G. This issue has now been resolved in favor of the "good cause" standard found in Rule 55(c) and the judicial gloss which attaches to it.
As the court in $22,050 in United States Currency explains, there are three factors used in deciding whether a default should be set aside under Rule 55(c): why no timely response to the complaint was filed, whether there may be a meritorious defense to the case, and whether the plaintiff will be prejudiced if the default is set aside. Id. at 324, citing Waifersong, Ltd. v. Classic Music Vending, 976 F.2d 290, 292 (6th Cir. 1992). The United States also candidly admits that the first and third factors do not favor retaining the default; Mr. Taylor provided at least an arguable excuse for being late, it does not appear that he, personally, was at fault, and, given the extremely short time which elapsed between the entry of default and Mr. Taylor's motion (one day) the United States would be hard-pressed to argue prejudice. Thus, the resolution of the motion comes down to the second factor, which is whether Mr. Taylor has a meritorious defense.
The Unites States argues he does not. Obviously, in order to have a valid claim to property which the United States wishes to have forfeited, the claimant must be able to say, and then prove, that he or she owns the property outright, or at least has some legally recognized interest in it. That is, in order to have standing to contest a forfeiture of property, "a claimant must demonstrate a legally cognizable interest in the defendant property." United States v. Currency $267,961.07, 916 F.2d 1104, 1107 (6th Cir. 1990). According to the United States, Mr. Taylor could not validly assert such an interest because when the money was taken from him, he denied that it was his, and said it belonged either to his sister or his girlfriend.
The court in United States v. Currency $267,961.07 recognized that a "possessory interest" in seized property may be sufficient for Article III standing and for purposes of Supplemental Rule C(6), which requires a claimant to "describe the right or interest in the property that supports the person's demand for its restitution or right to defend the action. . . ." See id. There appears to be no question that the money was in Mr. Taylor's possession when it was seized, and his statements about who owned it were, of course, not made under oath. It is certainly possible, therefore, that he could file a verified claim that says something different and which identifies an interest in the property sufficient to confer standing on him. Were he to do so, and were he to repeat in that verified claim that he did not commit any crime that would justify the forfeiture of the money, he might have a defense.
The burden of demonstrating a potentially meritorious defense is not high, and it does not require that the claimant come forward with facts that actually support the defense as long as the defense itself is legally sufficient. As the Court of Appeals also said in United States v. $22,050.00 in United States Currency, 595 F.3d at 326,
all that is needed is a hint of a suggestion which, proven at trial, would constitute a complete defense. This is because likelihood of success is irrelevant. All that matters is whether a well-stated defense, if sustained, would change the outcome.
(internal citation and quotation marks omitted).
The problem here is the state of the record. In $22,050.00 in United States Currency, the claimant had actually tendered an answer denying that any violation of the controlled substances or money laundering laws had occurred, and asserting three affirmative defenses. The court acknowledged that the pleading was not detailed (in fact, it was described as very conclusory), but it held that the defenses stated in the answer, "if sustained," would be enough to support the claim. That was all the court needed to conclude that the claimant had met his burden of showing that he had a meritorious defense to the action.
Here, neither a proposed answer nor proposed verified claim has been filed. Given the extremely sparse nature of Mr. Taylor's motion, the Court does not feel comfortable making a decision about whether he may be able to assert a meritorious claim unless it actually sees the claim he intends to file. If that claim meets the standard set forth in $22,050.00 in United States Currency, as that case holds, it would be an abuse of discretion to refuse to let Mr. Taylor file it. And given the strong preference for deciding cases on their merits, see id., Mr. Taylor should be given an opportunity to convince the Court he can meet that standard. He shall therefore file, within fourteen days, a response to this order to which he has attached, as exhibits, his proposed answer and verified claim. Within fourteen days thereafter, the United States may file a supplemental memorandum, if it wishes to do so, addressing the issue of whether those proposed filings would be sufficient under$22,050.00 in United States Currency. A ruling on the motion for leave to file an answer will be held in abeyance pending these further submissions.