Opinion
1:23-CV-00672-DAE
02-28-2024
UNITED STATES OF AMERICA, Plaintiff v. $537,000.00, MORE OR LESS, SEIZED FROM BANK OF AMERICA ACCOUNT NUMBER XXXXXX4620, Respondent
DUSTIN M. HOWELL, UNITED STATES MAGISTRATE JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
THE HONORABLE DAVID A. EZRA, SENIOR UNITED STATES DISTRICT JUDGE
Before the Court is Petitioner United States of America's Motion for Default Judgment of Forfeiture and Memorandum of Law in Support Thereof, Dkt. 9. The District Judge referred the motion to the undersigned for Report and Recommendation, pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. The undersigned recommends the Government's motion be granted.
I. JURISDICTION
This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1345 because it is an action commenced by the United States. The Court also has jurisdiction over this action pursuant to 28 U.S.C. § 1355(a) because it is an action for forfeiture. The Court has in rem jurisdiction over Respondent $537,000.00, more or less, in United States Currency pursuant to 28 U.S.C. § 1335(b) and 1395.
II. BACKGROUND
The United States filed a verified complaint for forfeiture against the Respondent Property in this case: $537,000.00, more or less. Dkt. 1. Federal agents seized the Respondent Property was seized from a Bank of America account held in the name of Dhiraj Singha. Id. at 7. The Government contends that the Respondent Property is derived from the proceeds traceable to violations of Title 18 U.S.C. §§ 1028 and 1343 and to property involved in § 1956 and § 1957 money laundering and therefore subject to forfeiture to the United States of America pursuant to Title 18 U.S.C. §§ 981(a)(1)(A) and (C). Id. at 5. The Court issued an order for warrant for arrest of the property on July 7, 2023. Dkts. 2, 3.
As required by Rule G(4) of the Supplemental Rules for Admiralty and Maritime and Asset Forfeiture Actions, the United States published a notice of complaint of this action on an official government website for at least 30 consecutive days, from September 1, 2023, through September 30, 2023. See Notice, Dkt.5; see also Fed. Supp. R. Civ. P. G(4)(a)(iv)(C). The Government also served notice to two known potential claimants-Abraham Toluleke Yussuff and Dhiraj Singha-as required by Rule G(4)(b)(i). Dkt. 9, at 2. Yusuff was served via FedEx on July 12, 2023, and Singha was served via FedEx on July 12, 2023, and personally on August 23, 2023. Dkts. 9, at 2; 7; 7-1; 7-2; 7-3. No answers have been filed in this action.
Further, the deadline to file a claim expired 35 days after service. Fed. Supp. R. Civ. P. G(5)(a)(ii). To date, no claims have been filed in this cause of action.
On November 29, 2023, the United States moved for final default judgment of forfeiture. Dkt. 9. The United States seeks a judgment of default in its favor for the Defendant Property against any and all right, title, and interest of Abraham Toluleke Yussuff, Dhiraj Singha, and any and all other potential third-party claimants in the Defendant Property. Id. at 1.
III. DISCUSSION
Under Rule 55 of the Federal Rules of Civil Procedure, federal courts have the authority to enter a default judgment against a defendant that has failed to plead or otherwise defend itself. Fed.R.Civ.P. 55(a)-(b). That said, “[d]efault judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). A party is not entitled to a default judgment simply because the defendant is in default. Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). Rather, a default judgment is generally committed to the discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977).
In considering the United States' motion, the undersigned must determine: (1) whether default judgment is procedurally warranted, (2) whether the United States' complaint sets forth facts sufficient to establish that it is entitled to relief, and (3) what form of relief, if any, the United States should receive. United States v. 1998 Freightliner Vin #: 1FUYCZYB3WP886986 , 548 F.Supp.2d 381, 384 (W.D. Tex. 2008); see also J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 813 (N.D. Tex. 2015) (using the same framework).
A. Procedural Requirements
To determine whether entry of a default judgment is procedurally warranted, district courts in the Fifth Circuit consider six factors: “(1) whether material issues of fact are at issue, (2) whether there has been substantial prejudice, (3) whether the grounds for default are clearly established, (4) whether the default was caused by a good faith mistake or excusable neglect, (5) the harshness of a default judgment, and (6) whether the court would think itself obliged to set aside the default on the defendant's motion.” Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
On balance, the Lindsey factors weigh in favor of entering a default judgment against the Respondent Property. The United States' Verified Complaint for Forfeiture, Dkt. 1, was filed on June 15, 2023. Service with notice of this civil forfeiture action was effected on Yusuff on July 12, 2023, and Singha on July 12, 2023, and again on August 23, 2023. Dkts. 9, at 2; 7; 7-1; 7-2; 7-3. Any other potential claimant was adequately served by publication after the United States published a notice of complaint of this action on an official government website for at least 30 consecutive days (here, from September 1, 2023, through September 30, 2023). See Notice, Dkt. 5; see also Fed. Supp. R. Civ. P. G(4)(a)(iv)(C). To date, no verified claims or answers are pending in this cause of action as required by Federal Supplemental Rule of Civil Procedure G and this Court's Order for Warrant of Arrest of Property. See Order, Dkt. 2. Accordingly, Abraham Toluleke Yussuff, Dhiraj Singha, along with any other potential claimants, are now in default.
Because no verified claim has been filed, there are no material facts in dispute. See Nishimatsu Constr. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact.”). The failure of any potential claimant to appear has ground the adversary process to a halt, prejudicing the United States' interest in pursuing forfeiture of the Defendant Property. See J & J Sports, 126 F.Supp.3d at 814 (“Defendants' failure to respond threatens to bring the adversary process to a halt, effectively prejudicing Plaintiff's interests.”) (citation and quotation marks omitted). The grounds for default are established: Abraham Toluleke Yussuff, Dhiraj Singha, and all other potential claimants were properly served yet have failed to appear. The undersigned is not aware of any facts that would obligate the Court to set aside the default if challenged by Abraham Toluleke Yussuff, Dhiraj Singha, or any other claimant. The undersigned therefore finds that default judgment is procedurally warranted.
B. Sufficiency of the Complaint
Default judgment is proper only if the well-pleaded factual allegations in the United States' complaint establish a valid cause of action. Nishimatsu Constr. Co., 515 F.2d at 1206. By defaulting, a defendant “admits the plaintiff's well-pleaded allegations of fact.” Id. In determining whether factual allegations are sufficient to support a default judgment, the Fifth Circuit employs the same analysis used to determine sufficiency under Rule 8. Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The factual allegations in the complaint need only “be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Wooten, 788 F.3d at 498 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). While “detailed factual allegations” are not required, the pleading must present “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
The United States contends that the Respondent Property is subject to forfeiture pursuant to Title 18 U.S.C. §§ 981(a)(1)(A) and (C) because it is derived from the proceeds traceable to violations of Title 18 U.S.C. §§ 1028, 1343, 1956, and 1957. Dkt. 1, at 5. The United States supports its allegations by showing that the Respondent Property was seized under circumstances that reasonably suggest the Respondent Property is derived from proceeds traceable to the alleged crimes. See id. at 2-5. The undersigned finds that the United States has proven by a preponderance of the evidence that there is a nexus between the Respondent Property and violations of Title 18 U.S.C. §§ 1028, 1343, 1956, and 1957 and further, that the Respondent Property is subject to the forfeiture to the United States pursuant to Title 18 U.S.C. §§ 981(a)(1)(A) and (C).
C. Relief Requested by the United States
Federal Rule of Civil Procedure 54(c) states that “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c). In other words, the relief prayed for in a complaint defines the scope of relief available on default judgment. Id. The undersigned finds that the United States' requested relief-that the Court enter a default and final judgment of forfeiture in its favor against the Defendant Property-is appropriate given the uncontested allegations in the complaint.
IV. RECOMMENDATION
In accordance with the foregoing discussion, the undersigned RECOMMENDS that the District Court GRANT the Unites States' Motion for Default Judgment of Forfeiture, Dkt. 9. The undersigned further RECOMMENDS that a Final Default Judgment of Forfeiture be entered against the Respondent Property, $537,000.00, more or less, in United States Currency and that the Respondent Property be FORFEITED to the United States of America.
V. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).