Opinion
For United States of America, Plaintiff: John Kucera, LEAD ATTORNEY, AUSA - Office of U.S. Attorney, Asset Forteiture Section, Los Angeles, CA.
ORDER GRANTING PLAINTIFF'S AMENDED MOTION FOR DEFAULT JUDGMENT
MARGARET M. MORROW, UNITED STATES DISTRICT JUDGE.
On May 20, 2014, the United States of America (" the government") initiated this civil forfeiture action under 18 U.S.C. § 981(a)(1) and 21 U.S.C. § 881(a)(4) against $30,270.00 in U.S. currency, one 2003 GMC G2500 van, and $5,670.00 in U.S. currency (" defendants"). On May 28, 2014, the government filed a first amended verified complaint against defendants. In the amended complaint, the government identified Sunny Hoa as an individual whose interests might be adversely affected by the proceedings. On September 8, 2014, at the request of the government, the clerk entered the defaults of Hoa and all other potential claimants. On September 19, 2014, the government filed a motion for entry of default judgment against Hoa and all other potential claimants.
Complaint, Docket No. 1 (May 20, 2014).
First Amended Complaint (" FAC"), Docket No. 7 (May 28, 2014).
FAC, ¶ 6.
Application for Clerk to Enter Default Against the Interests of Sunny Hoa and All Other Potential Claimants, Docket No. 11 (Sept. 5, 2014); Default by Clerk Entered Against the Interests of Sunny Hoa and All Other Potential Claimants, Docket No. 13 (Sept. 8, 2014).
Notice of Motion and Motion for Default Judgment Against the Interests of Sunny Hoa and All Other Potential Claimants, Docket No. 14 (Sept. 19, 2014).
On January 5, 2015, the court issued an order granting the government's motion in part and denying it in part. As respects the defendant property located at the Ralph residence -- the $30,270.00 in U.S. currency and the 2003 GMC van -- the court concluded that the government had met its burden of proving, by a preponderance of the evidence, that the property was connected to illegal narcotics trafficking and ordered that the property be forfeited to the United States. As respects the defendant currency found at the Ranger residence, however, the court denied the government's motion after finding that the government had not proven, by a preponderance of the evidence, that the $5.670.00 in U.S. currency was traceable to the proceeds of drug-related transactions. The court granted the government leave to file an amended motion for default judgment concerning the currency, however. On February 9, 2015, the government filed that motion.
Order Granting in Part and Denying in Part Plaintiff's Motion for Default Judgment (" Order"), Docket No. 17 (Jan. 5, 2015).
Id. at 25.
Notice of Motion and Amended Motion for Default Judgment Against Potential Claimant Sunny Hoa and All Other Potential Claimants (" Motion"), Docket No. 22 (Feb. 9, 2015). See also Declaration of Detective Ruben B. Semerena in Support of Amended Motion for Default Judgment Against Potential Claimant Sunny Hoa and All Other Potential Claimants (" Semerena Decl."), Docket No. 22-1 (Feb. 9, 2015).
Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court found this matter appropriate for decision without oral argument and thus took the matter off calendar and under submission on April 28, 2015.
See Text Only Entry: (In Chambers) Order Taking Hearing On Plaintiff's Motion For Default Judgment Off Calendar, Docket No. 23 (Apr. 28, 2015).
I. FACTUAL BACKGROUND
This forfeiture action arises from a residence fire and subsequent police investigation in Rosemead and El Monte, California. On November 22, 2012, officers with the Monterey Park Police Department (" MPPD") were dispatched to assist the Monterey Park Fire Department with an electric meter fire at a residence on Chandler Avenue in Rosemead, California (" Chandler residence"). When the MPPD officers arrived, the fire department informed them that marijuana plants were located throughout the residence and that the fire had been caused by an unlawful bypass device connected to the home's electric meter. Thereafter, MPPD officers conducted a protective sweep of the residence and observed, in various rooms throughout the house, more than 400 marijuana plants with a potential value of $250,000 to $350,000. Officers also observed, inter alia, hydrophonic lamps, water tubs, and timers, all of which the government alleges are commonly used to grow marijuana.
FAC, ¶ 8.
Id.
Id., ¶ 9.
Id.
MPPD officers interviewed neighbors, who allegedly reported that the Chandler residence was owned by an individual named Rachel Huang, and that Huang had rented the residence to Hoa. The neighbors reported that Hoa was at the residence approximately three times a week in the evening or early morning, and that he always drove a newer model Lexus or BMW luxury car. When Huang arrived at the residence and learned of the fire, she reported that Hoa, a man she had met through her boyfriend, Edmond Wong, was renting the residence for $2,500 per month under a 24-month lease.
Id.
Id.
Id., ¶ 10.
The same day, MPPD officers obtained and executed a search warrant at the Chandler residence, seizing a total of 442 marijuana plants, along with hydro lamps, plastic trays, water pumps, air pumps, light bulbs for hydro lamps, grow blocks, light controls, ballists, sprayers, air filters, Eco fans, timers, and 28 gallons of minerals, vitamins, and " flow grow, " which is purportedly used to assist in plant growth.
Id., ¶ 11.
On November 27, 2012, MPPD officers interviewed Wong and Huang. Wong stated that he first met Hoa at the Crystal Casino in Inglewood, California, and subsequently introduced him to Huang, who leased her residence to Hoa. Huang told officers that she began renting the apartment to Hoa in August 2012 after her attempt to sell the Chandler residence was unsuccessful. She said she did not know Hoa's source of income because she did not conduct a background check prior to renting the residence to him; she noted, however, that Hoa had always paid the $2,500 rent in cash. Wong and Huang each identified Hoa in a photo lineup.
Id., PP 12-13.
Id., ¶ 12.
Id., ¶ 13.
Id.
Id., PP 12-13.
On December 13, 2012, MPPD officers interviewed Billy Chao, the neighbor who first reported the November 22, 2012 fire at the Chandler residence. Asked to identify the individual who lived at the Chandler residence, Chao selected Hoa from a photo lineup. Also on December 13, police interviewed Gunawan Hartono, another neighboring homeowner. Hartono told police that he had not observed anyone move into the Chandler residence, but had seen Hoa enter the residence on multiple occasions. Hartono also said he had observed that the upstairs bathroom light was consistently on; the government alleges it is known that most indoor marijuana growers leave a single light on in the grow house to guide them when they enter the residence at night to check on the marijuana plants. It also alleges that marijuana growers typically visit grow houses in the evening to avoid being identified by witnesses.
Id., ¶ 15.
Id.
Id., ¶ 16.
Id.
Id., PP 16-17.
Id., ¶ 17.
As part of their investigation concerning Hoa and the Chandler residence fire, officers contacted the California Employment Development Department to check on Hoa's employment status. A search of state employment records revealed that Hoa's last known employment was at DONY Corporation, located in Montebello, California. DONY told MPPD officers that Hoa had once been a full-time employee, but had not been employed since January 2012.
Id., ¶ 14.
Id.
Id.
Following its investigation of the fire and marijuana grow operation at the Chandler residence, the MPPD purportedly learned that Hoa lived at a home on Ralph Street in Rosemead, California (" Ralph residence"). On January 9, 2013, MPPD officers conducted surveillance at the Ralph residence; they observed Hoa exit the home and enter a 1998 grey Lexus LS sedan. During subsequent surveillance at the Ralph residence on January 17, 2013, officers observed Hoa perform maintenance on a white GMC van, which they confirmed was registered in Hoa's name.
Id., ¶ 18.
Id.
Id.
On February 6, 2013, MPPD officers conducted surveillance at the Ralph residence and observed Hoa drive the grey Lexus sedan to a residence on Ranger Avenue in El Monte, California (" Ranger residence"). At the Ranger residence, Hoa met Phu Hy Ta and entered the home with him. Thereafter, police observed Hoa, Ta, and nine to eleven people playing a traditional Chinese game. Six days later, on February 12, 2013, officers again conducted surveillance at the Ralph residence and followed Hoa as he drove the Lexus to the Ranger residence. Upon Hoa's arrival, police observed Hoa, Ta, and An Tu Ma enter the Ranger residence and begin to play the same Chinese game with six to eight other people.
Id., ¶ 19.
Id.
Id.
Id., ¶ 20.
Id.
Police obtained a vehicle tracking device search warrant for Hoa's grey Lexus on April 16, 2013, and installed the device on April 20. On April 23, 2013, MPPD officers followed Hoa as he drove the Lexus to a residence located on Driftwood Place in Rancho Cucamonga, California (" Driftwood residence"). Officers observed that the front and side windows of the Driftwood residence were completely covered; this is allegedly consistent with use as a marijuana grow house. Police also observed a red Mercedes Benz registered to Ta and a Honda CRV registered to Ma Qiang Nan parked outside the Driftwood residence. Police reported that they had previously seen Hoa, Ta, and Nan at the Ranger residence.
Id., ¶ 21.
Id.
Id.
Id.
Id.
During the months of April and May 2013, police conducted surveillance at the Driftwood residence. On several occasions, MPPD officers observed Ta, Nan, and Hoa arrive in their respective vehicles. On May 28, 2013, officers contacted Southern California Edison (" SCE") to request a meter reading at the Driftwood residence. An SCE meter reader reported that the Driftwood residence had an electrical box that had been modified to obtain free electricity. SCE also reported that the Driftwood residence used approximately 120 amps of electricity, compared to surrounding residences, which used 21-25 amps. MPPD officers observed that the electricity use at the Driftwood residence was consistent with the amount of electricity required for a marijuana grow operation. At the MPPD's request, SCE read the meter a second time at the Driftwood residence on October 15, 2013; this reading revealed that the residence was consuming 115 amps of electricity.
Id., ¶ 22.
Id.
Id.
Id.
Id.
Id.
Id., ¶ 23.
Also on October 15, 2013, MPPD officers obtained search warrants for the Ralph residence, Ranger residence, and Driftwood residence. The warrants were executed at each residence on October 17, 2013. Inside the Ralph residence, police discovered: $21,270 in U.S. Currency; nine (9) blank U.S. Postal money orders, each with a value of $1,000; thirty-two (32) sealed bags containing one pound of marijuana each; one box of fresh marijuana; one jar of dried marijuana, and one Marlboro cigarette box containing a bud of marijuana. Parked outside the Ralph residence was the white 2003 GMC G2500 van on which officers had earlier seen Hoa work. A search of the van uncovered several large trash bags containing hydroponic grow blocks with marijuana plant roots. All of the marijuana plants were cut at the base of the stem. At the Ranger residence, police found $5,670 in U.S. currency.
Id., ¶ 24.
Id.
Id.
Id.
Id.
Id.
Id.
II. DISCUSSION
A. Standard Governing Motions for Entry of Default Judgment
A court may enter judgment against a party whose default has been taken pursuant to Rule 55(b) of the Federal Rules of Civil Procedure. See PepsiCo, Inc. v. California Security Cans, 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002); Kloepping v. Fireman's Fund, No. C 94-2684 TEH, 1996 WL 75314, *2 (N.D. Cal. Feb. 13, 1996).
B. Procedural Requirements
Before a court can enter default judgment against a defendant, the plaintiff must satisfy the procedural requirements for default judgments set forth in Rules 54© and 55 of the Federal Rules of Civil Procedure, and in Local Rule 55-1. As the court noted in its prior order, the government has satisfied each of these procedural requirements with respect to the defendant currency at issue in this motion.
See Order at 9.
C. Whether The Government Has Complied With Notice Requirements
" The Fifth Amendment's Due Process Clause prohibits the Government from taking property without due process of law." United States v. Approximately $ 24, 260.00 in U.S. Currency, 1:09-cv-01445-AWI-SMS, 2010 WL 1813529, *3 (E.D. Cal. May 5, 2010). Individuals whose property interests are at stake are entitled to " notice and an opportunity to be heard." United States v. James Daniel Good Real Property, 510 U.S. 43, 48, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993).
This is an in rem civil forfeiture action based on federal statutes, and is therefore governed by 18 U.S.C. § 983 and the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. United States v. $ 100, 348.00 in U.S. Currency, 354 F.3d 1110, 1117 (9th Cir. 2004) (citing United States v. 2659 Roundhill Drive, 283 F.3d 1146, 1149 n. 2 (9th Cir. 2002)); United States v. $ 142, 256.00 in U.S. Currency, No. 2:12-CV-2042 JCM (PAL), 2014 WL 547879, *1 (D. Nev. Feb. 11, 2014). As with the procedural requirements for entry of default judgment discussed supra, the court has already concluded that the government has complied with the notice requirements of Supplemental Rule G(4). Accordingly, the court now turns to the merits of the government's motion.
Except in certain circumstances not applicable here, Supplemental Rule G(4) requires notice by publication. SUPP. RULE G(4).
Order at 12.
D. Legal Standard Governing Forfeiture Under 18 U.S.C. § 981(a)(1)(C)
The government contends that the defendant currency is subject to forfeiture under 18 U.S.C. § 981(a)(1)(C). Section 981(a)(1)(C) authorizes forfeiture of " [a]ny property, real or personal, which constitutes or is derived from proceeds traceable to . . . any offense constituting 'specified unlawful activity, ' or a conspiracy to commit such offense." 18 U.S.C. § 981(a)(1)(C).
To prevail in an action under 18 U.S.C. § 981(a)(1)(C), the government must prove by a preponderance of the evidence that the property is subject to forfeiture. See 18 U.S.C. § 983(c) (" In a suit or action brought under any civil forfeiture statute for the civil forfeiture of any property . . . the burden of proof is on the Government to establish, by a preponderance of the evidence, that the property is subject to forfeiture"); see also United States v. $ 100, 348.00 in U.S. Currency, 354 F.3d 1110, 1116 (9th Cir. 2004) (noting that the Civil Asset Forfeiture Reform Act (" CAFRA") raised the government's burden of proof from probable cause to a preponderance of the evidence); United States v. $ 80, 180.00 in U.S. Currency, 303 F.3d 1182, 1184 (9th Cir. 2002) (" CAFRA transferred the burden of proof from the claimant to the government and required the government to establish forfeiture by a preponderance of the evidence rather than a lower probable cause standard"). This requires that " the relevant facts . . . be shown to be more likely true than not." United States v. Lawrence, 189 F.3d 838, 844 (9th Cir. 1999). When the government's theory of forfeiture is that the property must be used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, it must also establish that there is a substantial connection between the property and the criminal offense. 18 U.S.C. § 983(c)(3).
Where, as here, a claimant fails to file a response to a forfeiture complaint, the factual allegations in the complaint, except those concerning the government's entitlement to forfeiture, are deemed to have been admitted by the non-responding party. See FED.R.CIV.PROC. 8(d).
E. Whether the Government Has Met Its Burden of Proof
" The determination whether the government has met its burden of proof is based on the aggregate of the facts, including circumstantial evidence." United States v. $ 49, 790 in U.S. Currency, 763 F.Supp.2d 1160, 1166 (N.D. Cal. 2010) (citing United States v. Currency, U.S. $42,500.00, 283 F.3d 977, 980 (9th Cir. 2002)); see also United States v. $ 250, 000 in U.S. Currency, 808 F.2d 895, 899 (1st Cir. 1987) (" [T]he aggregate of the facts, even if no particular circumstance is conclusive, can support the conclusion that money is drug-related"). " Common experience considerations" are applied in determining whether money is derived from drug trafficking. See id.
As noted, in its January 5, 2015 order, the court concluded that the government had not met its burden of showing by a preponderance of the evidence that the defendant property seized from the Ranger residence was subject to forfeiture. The court noted that, despite allegations that the currency was connected to Hoa's, Ta's, and Nan's purported grow operation at the Driftwood residence, the government had proffered no evidence that a search of the Driftwood residence revealed a grow operation inside. It also noted that the government had adduced no evidence that the currency found at the Ranger residence was more likely than not traceable to a narcotics transaction.
Order at 18-20.
Id. at 19 (" [A]lthough the government alleges that the Driftwood residence had certain characteristics of a grow house, it tellingly provides no evidence from its search of the Driftwood residence that supports this assertion. Specifically, it adduces no evidence that there was any type of a grow operation inside the residence").
Id. (" Even accepting the government's allegation that the Driftwood residence was likely a marijuana grow house, the fact that Hoa and two others met there and also met at the Ranger residence does not make it more likely than not that the currency found in the Ranger Residence is traceable to, or the proceeds of, a narcotics transaction").
In response, the government filed an amended motion for default judgment supported by the declaration of Detective Ruben B. Semerena of the Monterey Park Police Department. Semerena was involved in the underlying investigation. He states that, at approximately 6:00 a.m. on October 17, 2013, he and other Monterey Park officers executed a search warrant at the Ranger residence. During their search, Semerena found a safe in one of the bedrooms that contained the defendant currency; the $5,670.00 in currency was primarily small denomination bills -- i.e., twenty and fifty dollar bills -- that were old and did not appear to have been withdrawn from a bank. Based on his experience and specialized narcotics training, Semerena asserts he believes that the $5,670.00 in currency represents the proceeds of narcotics trafficking.
See generally Motion; Semerena Decl.
Semerena Decl., ¶ 5.
Id. (" The currency totaled $5,670.00 and consisted of bills in lower denominations, the majority of which were 20s and 50s. The currency also consisted mostly of older bills, as opposed to newer bills in bank wrappers, and did not look like it had been withdrawn from a bank").
Id., ¶ 6.
Having reviewed the evidence adduced by the government in support of its amended motion for default judgment, the court concludes that it has met its burden of showing by a preponderance of the evidence that the defendant currency seized from the Ranger residence is subject to forfeiture under 18 U.S.C. § 981(a)(1)(C). First, the large amount of money found in the residence suggests that the currency was associated with drug-related activity. See United States v. $ 22, 474.00 in U.S. Currency, 246 F.3d 1212, 1216 (9th Cir. 2001) (" [C]arrying a large sum of cash is 'strong evidence' of a connection to illegal drug activity, " citing United States v. $ 83, 310.78 in U.S. Currency, 851 F.2d 1231, 1236 (9th Cir. 1988)). Although this alone is not sufficient to satisfy the government's burden, see Currency, U.S. $42,500.00, 283 F.3d at 981 (" [P]ossession of a large amount of cash is strong evidence that the money was furnished or intended to be furnished in return for drugs[; ] [a] large amount of money standing alone, however, is insufficient [even] to establish probable cause"), the government does not rely on this alone.
Rather, it cites the fact that the defendant currency was found locked in a bedside safe in a bedroom at the Ranger residence. Hiding or concealing large amounts of currency is circumstantial evidence that the currency was derived from or used in connection with drug trafficking, such that it is subject to forfeiture. See United States v. $ 215, 300 U.S. Currency, 882 F.2d 417, 419 (9th Cir. 1989) (noting that " [c]arrying a large sum of cash is 'strong evidence' of th[e currency's] relationship [to narcotics trafficking] even without the presence of drugs or drug paraphernalia, " particularly when defendant attempted to conceal the currency); id. (" Support was lent to the inference that the money was drug-related by Hoyos' attempts to avoid detection -- through concealing and lying about the money"); United States v. U.S. Currency $83,310.78, 851 F.2d 1231, 1236 (9th Cir. 1988) (" [An] attempt to hide the money is also a relevant fact in considering whether there is more than a mere suspicion of its connection with an illegal drug transaction"); United States v. $ 79, 010.00 in U.S. Currency, No. CV-10-0244-PHX-DGC, 2012 WL 1150849, *6 (D. Ariz. Apr. 5, 2012) (observing that defendant's attempt to conceal a large amount of currency provided circumstantial evidence of a connection to illegal drug transactions); United States v. One Hundred Thirty Thousand Fifty-Two Dollars ( $130,052.00) in U.S. Currency, 909 F.Supp.1506, 1517 n. 13 (" [T]he court is well aware that drug traffickers maintain and handle large sums of United States currency in order to finance their ongoing drug business. As such, they frequently hide proceeds of illegal drug sales in their residences and safety deposit boxes, thus allowing them ready access to the cash, while at the same time, concealing the drug proceeds from law enforcement authorities"); see also United States v. $ 124, 700 in U.S. Currency, 458 F.3d 822, 826 (8th Cir. 2006) (" [W]e have adopted the commonsense view that bundling and concealment of large amounts of currency, combined with other suspicious circumstances, supports a connection between money and drug trafficking").
Motion at 4-5; Semerena Decl., ¶ 5.
In addition to being concealed in a safe, the fact that the defendant currency was bundled without bank wrappers and was primarily low-denomination bills supports the government's contention that it represents the proceeds of Hoa's alleged narcotics trafficking. See, e.g., United States v. Approximately $ 28, 120.00 in U.S. Currency, No. 1:13-cv-00640-AWI-BAM, 2014 WL 7359189, *4 (E.D. Cal. Dec. 24, 2014) (" Courts generally give special weight [to] the currency's denominations when the currency is in small denominations, in non-uniformed bundles, bundled with rubber bands, and bundled without bank wrappers. . . . The manner in which the currency was bundled, the small denominations, lack of bank wrappers, and absence of any written documentation weighs in favor of finding that the currency was connected to an illegal drug transaction, " citing United States v. Real Property Located in N. Hollywood, No. CV 06-5508 CAS (JWJx), 2009 WL 3770639, *4 (C.D. Cal. Nov. 10, 2009)); United States v. Approximately $ 77, 000.00 in U.S. Currency, No. 1:11-cv-01251 GSA, 2012 WL 1196498, *10-11 (E.D. Cal. Apr. 10, 2012) (" Bundles of cash in various denominations wrapped in rubber bands has been found to be 'indicative of a drug organization bundling money.' . . . [T]his Court finds that the manner in which the currency was bundled, wrapped, and concealed does weigh in favor of finding that the currency is substantially connected to an illegal drug transaction, " citing United States v. $ 242, 484.00 in U.S. Currency, 389 F.3d 1149, 1161-62 (11th Cir. 2004)); United States v. Approximately $ 17, 872 in U.S. Currency, No. C 08-03346 WHA, 2009 WL 2990496, *3 (N.D. Cal. Sept. 11, 2009) (" Facts that have contributed to findings of probable cause have included: recovery of large amounts of currency not bound by standard bank currency straps, possession of a large amount of currency, and small denominations of bills. The large amounts of currency and small denominations of some of the bills in this action are strong evidence supporting a finding of probable cause, " citing United States v. $ 129, 727.00 in U.S. Currency, 129 F.3d 486, 490 (9th Cir. 1997); United States v. Padilla, 888 F.2d 642, 644 (9th Cir. 1989); United States v. Sixty-Eight Thousand Five Hundred Eighty Dollars ($ 68, 580.00) in U.S. Currency, 815 F.Supp. 1479, 1483 (M.D. Ga. 1993)); United States v. $ 80, 010.00 in U.S. Currency, No. 2:08-cv-5189-FMC-SSx, 2009 WL 7520021, *7 (C.D. Cal. July 9, 2009) (" The large number of smaller denomination bills and bundling of the Defendant currency in rubber banks supports a connection to drug activities as well, " citing $242,484.00 in U.S. Currency, 389 F.3d at 1161-62).
Finally, courts have found relevant the fact that seized currency consists of old bills rather than new bank notes. See, e.g., United States v. $ 321, 470.00 in U.S. Currency, 874 F.2d 298, 305 (5th Cir. 1989) (" The packaging in old bundles of cash in small denominations is characteristic of large drug deals"). The currency found at the Ranger residence consisted of well-worn bills rather than new bank notes. This too suggests that it was related to narcotics trafficking. Considering the totality of the circumstances -- including the fact that the Driftwood residence had certain characteristics of a marijuana grow house and that Hoa, Ta and Nan met there just as they did at the Ranger residence -- and the aggregate of evidence that the government has now adduced, the court concludes that, although the question is close, the government has satisfied its burden of showing, by a preponderance of the evidence, that the defendant currency at the Ranger residence had a substantial connection to illegal drug activities.
Semerena Decl, ¶ 5.
F. Whether Entry of Default Judgment is Proper Under The Eitel Factors
The court must next determine whether granting the government's amended motion for entry of default judgment is appropriate. Granting or denying a motion for default judgment is a matter within the court's discretion. Elektra Entertainment Group Inc. v. Bryant, No. CV 03-63814 GAF (JTLx), 2004 WL 783123, *1 (C.D. Cal. Feb. 13, 2004); see also Sony Music Entertainment Inc. v. Elias, No. CV 03-6387 DT (RCx), 2004 WL 141959, *3 (C.D. Cal. Jan. 20, 2004). The Ninth Circuit has directed that courts consider the following factors in deciding whether to enter default judgment: (1) the possibility of prejudice to plaintiff; (2) the merits of plaintiff's substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning the material facts; (6) whether defendant's default was the product of excusable neglect; and (7) the strong public policy favoring decisions on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986); see also Bryant, 2004 WL 783123 at *1-2.
1. Possibility of Prejudice to Plaintiff
The first Eitel factor considers whether a plaintiff will suffer prejudice if a default judgment is not entered. PepsiCo, Inc., 238 F.Supp.2d at 1177; see also Eitel, 782 F.2d at 1471-72. Because no claimant has filed a timely claim, the government would be left without a remedy if default judgment was not entered in its favor. See PepsiCo, Inc., 238 F.Supp.2d at 1177 (stating that plaintiffs would have no other recourse if a default judgment were not entered). The government, moreover, would be required to expend further time and effort in an action where no claimants have appeared, and suffer prejudice as a result. See United States v. Approximately $ 57, 890 in U.S. Currency, No. C 10-01829 WHA, 2010 WL 3987397, *4 (N.D. Cal. Oct. 12, 2010) (concluding that requiring the government to expend further time in a case where no claimant had appeared would be prejudicial). The first Eitel factor therefore weighs in favor of the entry of default judgment.
2. Substantive Merits and Sufficiency of the Claims
The second and third Eitel factors assess the substantive merits of the movant's claim and the sufficiency of its pleadings. These factors " require that a [movant] 'state a claim on which [it] may recover.'" PepsiCo, Inc., 238 F.Supp.2d at 1175 (quoting Kloepping, 1996 WL 75314 at *2); see also Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978) (stating that the issue is whether the allegations in the pleading state a claim upon which plaintiff can recover).
The court has already found, based on the allegations in the complaint and the additional evidence adduced by the government in connection with its amended motion, that it has met its burden of showing by a preponderance of the evidence that the defendant currency seized from the Ranger residence is subject to forfeiture. The government's claim therefore has substantive merit and its pleadings are sufficient to warrant entry of default judgment as to that property. The second and third Eitel factors therefore weigh in favor of the entry of default judgment. See, e.g., United States v. $ 128, 760 in United States Currency, No. 13-CV-01554-JCS, 2013 WL 4647501, *5 (N.D. Cal. Aug. 29, 2013) (" The second and third [ Eitel ] factors also support granting default judgment, as the United States' allegations, assumed to be true, show that the defendant funds are subject to forfeiture under 21 U.S.C. § 881(a)(6), as the funds were related to drug trafficking").
3. Amount at Stake
The fourth Eitel factor balances " the amount of money at stake in relation to the seriousness of the [defaulting party's] conduct." PepsiCo, Inc., 238 F.Supp.2d at 1176; see also Eitel, 782 F.2d at 1471-72. This determination requires a comparison of the recovery sought and the nature of defendant's conduct to determine if the remedy is appropriate. See Walters v. Statewide Concrete Barrier, Inc., No. C-04-2559 JSW (MEJ), 2006 WL 2527776, *4 (N.D. Cal. Aug. 30, 2006) (" If the sum of money at issue is reasonably proportionate to the harm cause by the defendant's actions, then default judgment is warranted"). Here, as noted, the defendant currency was part of a marijuana growing and trafficking scheme. As the court noted in its prior order granting in part the government's initial motion for default judgment, although the amount seized by the government here is not insubstantial, it is not disproportionate to the seriousness of the trafficking alleged. Given the magnitude of the trafficking alleged in the complaint, the need to deter criminal behavior weighs in favor of a finding that the amount of money at stake is not excessive. See HTS, Inc. v. Boley, 954 F.Supp.2d 927, 2013 WL 3187362, *8 (D. Ariz. 2013) (" Although these are sizeable amounts, considering the seriousness of the allegations and the need to deter such behavior in the future, the amount at stake is not necessarily excessive"). The court therefore finds that the fourth Eitel factor weighs in favor of the entry of default judgment. See $128,760 in United States Currency, 2013 WL 4647501 at *5 (granting default judgment after finding, under the fourth Eitel factor, that the amount of money at stake -- $128,760 in U.S. currency associated with drug trafficking -- " though substantial, is not so large as to warrant denial of the Motion [for Default Judgment]"); United States v. Twenty-Four Thousand Dollars ($ 24, 000) in U.S. Currency, No. 02:09-CV-2319-LRH-RJJ, 2010 WL 2695637, *3 (D. Nev. July 2, 2010) (granting default judgment and noting, with respect to the amount of money at stake, that " [u]nder the fourth Eitel factor, the court considers 'the amount of money at stake in relation to the seriousness of Defendants' conduct.' Plaintiff has provided evidence that the currency, a sum of $24,000, was furnished or intended to be furnished in exchange for marijuana, a serious violation of federal law").
Order at 22-23.
4. Possibility of Dispute
The fifth Eitel factor considers the possibility that material facts may be in dispute. PepsiCo, Inc., 238 F.Supp.2d at 1177; see also Eitel, 782 F.2d at 1471-72. As no claimant has filed a timely claim to the defendant currency found at the Ranger residence, the government's allegations regarding the property are deemed true. See PepsiCo, Inc., 238 F.Supp.2d at 1177 (" Upon entry of default, all wellpleaded facts in the complaint are taken as true, except those relating to damages, " citing Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Consequently, there is little possibility of dispute concerning the material facts, and this factor weighs in favor of granting the government's motion for entry of default judgment.
5. Possibility of Excusable Neglect
The sixth Eitel factor considers whether a claimant's default may have been the product of excusable neglect. See PepsiCo, Inc., 238 F.Supp.2d at 1177; see also Eitel, 782 F.2d at 1471-72. Here the possibility of excusable neglect is remote. As the court noted in its prior order, the government served a copy of the forfeiture complaint on Hoa, in care of his attorney, Leslie Amponsah. Amponsah thereafter contacted the government, stating that Hoa did not intend to contest the forfeiture of the defendant assets, including the currency at the Ranger residence. Moreover, as noted, the government has complied with the service by publication requirements of Supplemental Rule G. The court thus concludes that the sixth Eitel factor weighs in favor of granting the motion for default judgment.
Order at 24.
See Motion for Default Judgment at 4.
Id.
6. Policy of Deciding Cases on the Merits
" Cases should be decided upon their merits whenever reasonable possible." Eitel, 782 F.2d at 1472. The fact that Rule 55(b) has been enacted, however, indicates that " this preference, standing alone, is not dispositive." PepsiCo, Inc., 238 F.Supp.2d at 1177 (quoting Kloepping, 1996 WL 75314 at *3). Rule 55(a) allows a court to decide a case before the merits are heard if a defendant fails to appear and defend. See id. (" Defendant's failure to answer plaintiff's complaint makes a decision on the merits impractical, if not impossible"). Thus, " although it is always preferable to decide a case on its merits, when no party has appeared to oppose an action (as is the case here), reaching a decision on the merits is an impractical if not impossible task." Approximately $57,890 in U.S. Currency, 2010 WL 3987397 at *4. Accordingly, the seventh Eitel factor does not preclude the entry of default judgment in this case.
7. Conclusion Regarding Eitel Factors
Aside from the policy of deciding cases on the merits, all of the Eitel factors weigh in favor of the entry of default judgment in the government's favor. " [T]he mere existence of [Rule] 55(b)[, however, ] indicates that the seventh Eitel factor is not alone dispositive." Philip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 501 (C.D. Cal. 2003) (citing PepsiCo, Inc., 238 F.Supp.2d at 1177). Accordingly, the court finds that it is appropriate to enter default judgment in the government's favor and against all potential claimants as to the defendant currency found at the Ranger residence.
III. CONCLUSION
For the reasons stated, the court concludes that the government has met its burden of proving, by a preponderance of the evidence, that the defendant currency located at the Ranger residence is traceable to or the proceeds of illegal narcotics trafficking. As the court noted in its January 5 order, the government has also demonstrated compliance with all of the procedural requirements of CAFRA, Supplemental Rule G, Rules 55(a) and 54(c), and Local Rules 55-1 and 55-2. As a result, the government has shown that forfeiture is proper under 18 U.S.C. § 981(a)(1)(C). Because the government has demonstrated that the entry of a default judgment is proper and the Eitel factors weigh in favor of entering such a judgment, the court grants the government's motion for entry of default judgment against Hoa and all other potential claimants to the defendant property found at the Ranger residence. The court orders this property forfeited to the United States forthwith.
See Order at 9, 12.
JUDGMENT FOR PLAINTIFF
On January 5, 2015, the court granted in part the United States of America's motion for entry of default judgment. On May 28, 2015, the court granted the United States of America's amended motion for entry of default judgment. Accordingly, IT IS ORDERED AND ADJUDGED that
1. The defendant property is forfeited to the United States; and
2. The action is hereby dismissed.