UNITED STATES v. 223 000 00 IN CURRENCY (2023)

ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AMENDED CLAIM [DKT. 37]

RULING

Before the court is Plaintiff the United States of America's (“Plaintiff” or “the government”) Motion to Strike Amended Claim (“Second Motion to Strike”). Dkt. 37 (“Second Mot.”).¹ On March 24, 2022, the court found the Motion appropriate for decision without oral argument and took the matter under submission. Dkt. 42; see also Fed. R. Civ. P. 78(b); Local Rule 7-15. For the reasons set forth below, the court GRANTS Plaintiff's Motion and STRIKES Claimant Donaldo Murillo-Cota's (“Claimant” or “Murillo”) Amended Claim (Dkt. 28), without leave to amend. Accordingly, Claimant's Motion to Suppress Evidence and Dismiss Complaint (Dkt. 32) is DENIED.

The government shall have 30 days to file a statement regarding the status of the action. Failure to file such statement timely may result in the dismissal of the action for lack of prosecution.

BACKGROUND 2

Operation Sergio Peralta is a joint Drug Enforcement Administration (“DEA”) and San Bernardino County Sheriff's Department (“SBCSD”) investigation into a Mexico-based Drug Trafficking Organization (“DTO”) and individuals directly involved in the coordination and transportation of illegal narcotics into the United States, as well as the laundering and transportation of illicit narcotics proceeds from the United States to Mexico. Dkt. 1 (“Compl.”) ¶ 8. During the investigation, a search warrant for Global Positioning System (“GPS”) pings was obtained for a telephone number associated with a courier working for the DTO. Id. ¶ 9.

On October 16, 2019, SBCSD investigators conducted surveillance on the GPS telephone ping locations to identify patterns for the user of the telephone. Id. ¶ 10. Investigators identified the person in possession of the telephone to be driving a blue 2014 Honda Civic (the “Honda”) and determined Murillo was the registered owner of the vehicle. Id. Later that day, SBCSD personnel observed the Honda traveling southbound on the I-215 freeway near McCall Boulevard in Menifee, California and initiated a traffic stop after observing the driver commit a violation of the California Vehicle Code. Id. ¶ 11.

Investigators identified Claimant as the driver and sole occupant of the Honda and obtained his verbal consent to search the Honda. Id. ¶ 12. A trained narcotics detecting canine, “Brix,” was used to conduct an exterior sniff of the Honda. Id. Brix alerted to the scent of a controlled substance to the rear seat of the Honda. Id. Investigators subsequently discovered three cell phones in the cabin area of the Honda and a sophisticated hidden compartment behind the rear seat. Id. ¶ 13. Claimant showed the investigators how to open the hidden compartment, wherein investigators discovered and seized four brick-shaped, cellophane-wrapped packages containing $223,000.00 in United States currency (the “Defendant Currency”) in total. Id.

After the Defendant Currency was seized, Claimant told investigators the Defendant Currency was given to him by a Hispanic male who went by the name “Gamborimbo.” Id. ¶ 14. Claimant told investigators he met Gamborimbo through a family member and was offered an opportunity to earn $1,500 for transporting money from Paramount, California to San Diego, California. Id. Claimant also told investigators he did not know how much money he was transporting, but knew the currency was wrapped in cellophane. Id. According to the Complaint, Claimant told investigators he believed the currency was proceeds of narcotics trafficking because of the way he was asked to transport the currency. Id.

Based on the above, the government alleges the Defendant Currency represents or is traceable to proceeds of illegal narcotics trafficking or was intended to be used in one or more exchanges for a controlled substance or listed chemical in violation of 21 U.S.C. § 841, et seq., and is, therefore, subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6). Id. ¶ 15.

The government filed the Verified Complaint for Forfeiture on October 6, 2020. Compl. Murillo filed a Notice of Possessory Interest Claim (“Claim”) on November 11, 2020. Dkt. 9. On March 11, 2021, the government filed a Motion to Strike Claim (“First Motion”), arguing Murillo lacked standing to defend against the forfeiture action. Dkt. 21 (“First Mot.”). On January 10, 2022, the court granted the First Motion and struck the Claim, with 14 days’ leave to file an amended claim. Dkt. 27. In granting leave to amend, the court stated: “[a]ny future amended claim based on a purported bailment agreement must state plausible facts to establish—and eventually show with evidence—that Claimant is authorized to file the claim on the bailor's behalf.” Dkt. 27 at 11.

On January 12, 2022, Murillo filed the verified Amended Claim, asserting an interest in the Defendant Currency on the bases of: “1) Possessory Interest; and 2) Bailee Interest ‘Not’ on Behalf of Bailor․” Dkt. 28 (“Am. Claim”) (emphasis in original). The Amended Claim identifies the bailor of the Defendant Currency as “Florentino Garcia [‘Garcia’], who claimant also knows as ‘Gamborimbo.’ ” Id.

On February 18, 2022, the government filed the subject Second Motion to Strike (Dkt. 37). Claimant opposes the Second Motion to Strike. Dkt. 37 (“Opp'n”).

DISCUSSION

I. Legal Standards

A. Civil Forfeiture Proceedings

“When the government initiates civil forfeiture proceedings against specified property, a person may contest the forfeiture by filing a claim in district court in accordance with the Supplemental Rules for Admiralty and Maritime Claims [‘Supplemental Rules’].” United States v. $11,500.00 in U.S. Currency, 710 F.3d 1006, 1010 (9th Cir. 2013) (citing 18 U.S.C. § 983(a)(4)(A)). “The claim must: (A) identify the specific property claimed; (B) identify the claimant and state the claimant's interest in the property; (C) be signed by the claimant under penalty of perjury; and (D) be served on the government attorney designated under Rule G(4)(a)(ii)(C) or (b)(ii)(D).” Fed. R. Civ. P. Supp. Rule G(5)(a)(i). A claim filed by a person asserting an interest as a bailee must identify the bailor, and if filed on the bailor's behalf must state the authority to do so.” Id. Rule G(5)(a)(iii).

“At any time before trial, the government may move to strike a claim or answer: (A) for failing to comply with Rule G(5) or (6), or (B) because the claimant lacks standing.” Id. Rule G(8)(c)(i). The motion to strike “may be presented as a motion for judgment on the pleadings or as a motion to determine after a hearing or by summary judgment whether the claimant can carry the burden of establishing standing by a preponderance of the evidence.” Fed. R. Civ. P. Supp. R. G(8)(c)(ii)(B). The 2006 Advisory Committee Notes for Rule G(8)(c)(ii)(B) explain the procedures for addressing claim standing:

If a claim fails on its face to show facts that support claim standing, the claim can be dismissed by judgment on the pleadings. If the claim shows facts that would support claim standing, those facts can be tested by a motion for summary judgment. If material facts are disputed, precluding a grant of summary judgment, the court may hold an evidentiary hearing. The evidentiary hearing is held by the court without a jury. The claimant has the burden to establish claim standing at a hearing; procedure on a government summary judgment motion reflects this allocation of the burden.

The government brings the subject Second Motion to Strike as a motion for judgment on the pleadings. Second Mot. at 2. “Judgment on the pleadings is proper when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989). “For purposes of the motion, the allegations of the non-moving party must be accepted as true, while the allegations of the moving party which have been denied are assumed to be false.” Id.³ “[J]udgment on the pleadings is improper when the district court goes beyond the pleadings to resolve an issue; such a proceeding must properly be treated as a motion for summary judgment.” Hal Roach Studios, 896 F.2d at 1550.

A review of the Second Motion to Strike demonstrates the government goes beyond the pleadings and relies on evidence, including Claimant's interrogatory responses, to challenge Murillo's standing to assert the Amended Claim. See Second Mot. at 10–15, 21–32. The court, therefore, construes the subject Motion as a motion for summary judgment on this issue. See Fed. R. Civ. P. Supp. Rule G(5)(c)(ii)(B).

B. Standing on Motions for Summary Judgment

“In order to meet the case-or-controversy requirement of Article III, a plaintiff (including a civil forfeiture claimant) must establish the three elements of standing, namely, that the plaintiff suffered an injury in fact, that there is a causal connection between the injury and the conduct complained of, and that it is likely the injury will be redressed by a favorable decision.” United States v. $133,420.00 in U.S. Currency, 672 F.3d 629, 637 (9th Cir. 2012) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)). “Claimants in civil forfeiture actions can satisfy this test by showing that they have ‘a colorable interest in the property,’ which includes an ownership interest or a possessory interest.” Id. at 637 (citations omitted). “Article III's standing requirement is thereby satisfied because an owner or possessor of property that has been seized necessarily suffers an injury that can be redressed at least in part by the return of the seized property.” Id. at 638 (citation and quotation marks omitted).

“The elements of standing ‘must be supported in the same way as any other matter on which the [claimant] bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.’ ” Id. Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The substantive law determines which facts are material; only disputes over facts that might affect the outcome of the suit under the governing law properly preclude the entry of summary judgment.” Nat'l Ass'n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1147 (9th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute about a material fact is “ ‘genuine,’ ․ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248.

“[T]o withstand a motion for summary judgment on the ground that the [claimant] lacks standing, a [claimant] cannot rely on mere allegations but rather must ‘set forth’ by affidavit or other evidence ‘specific facts,’ which for purposes of the summary judgment motion will be taken to be true.” $133,420.00 in U.S. Currency, 672 F.3d at 638 (citing Lujan, 504 U.S. at 561) (quotation marks omitted). “At the summary judgment stage, the district court must ask itself whether ‘a fair-minded jury’ could find that the claimant had standing on the evidence presented.” Id. (citing Anderson, 477 U.S. at 252). “The mere existence of a scintilla of evidence in support of the plaintiff ‘s position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Id. (citing Anderson, 477 U.S. at 252). “Although the burden of proving that the property is subject to forfeiture is on the government, 18 U.S.C. § 983(c), the burden of establishing standing is on the claimant.” Id. at 644 (citing Lujan, 504 U.S. at 560).

II. Analysis

“To have standing to contest a forfeiture, one must be a ‘claimant.’ ” Baker v. United States, 722 F.2d 517, 518 (9th Cir. 1983). “A ‘claimant’ is one who claims to own the article or merchandise or to have an interest therein.” Id. (quotation marks and citation omitted). “State law determines whether Claimants have a property interest, but federal law determines whether or not that interest can be forfeited.” United States v. Hooper, 229 F.3d 818, 820 (9th Cir. 2000).

Claimant asserts the Amended Claim on the bases of: “1) Possessory Interest and 2) Bailee Interest ‘Not’ on Behalf of Bailor․” Am. Claim at 1 (emphasis in original). As Claimant emphasizes he is not asserting a claim on behalf of Garcia, the alleged bailor, the court will evaluate the Amended Claim based solely on Murillo's claimed status as the possessor and bailee of the funds, and not from any interest Garcia may claim. See id. The court will address each claimed basis in turn.

A. Possessory Interest

“A possessory interest involves ‘the fact of having or holding property in one's power; the exercise of dominion over the property.’ ” United States v. JP Morgan Chase Bank Account No. Ending 8215 in the Name of Ladislao V. Samaniego, VL: $446,377.36, 835 F.3d 1159, 1165–66 (9th Cir. 2016) (brackets omitted). “In forfeiture proceedings, ․ the risk of false claims ‘requires courts to demand more than conclusory or hearsay allegations of some “interest” in the forfeited property.’ ” Id. at 1166 (quoting United States v. $100,348.00 in U.S. Currency, 354 F.3d 1110, 1118–19 (9th Cir. 2004)). “[A] claimant's bare assertion of an ownership or possessory interest, in the absence of some other evidence, is not enough to survive a motion for summary judgment.” $133,420.00 in U.S. Currency, 672 F.3d at 638. “[A] claimant asserting a possessory interest must provide some evidence supporting his assertion that he has a lawful possessory interest in the money seized to survive a summary judgment motion.” Id. at 639 (citations and quotation marks omitted). “Neither naked possession nor bare title, standing alone, will do.” JP Morgan Chase, 835 F.3d at 1166. “Rather, a claimant must offer some additional explanation concerning his ‘lawful possessory interest in the money seized.’ ” Id. (quoting $133,420.00 in U.S. Currency, 672 F.3d at 639). “Unexplained naked possession of a cash hoard ․ does not rise to the level of the possessory interest requisite for standing to attack the forfeiture proceeding at the summary judgment stage.” $133,420.00 in U.S. Currency, 672 F.3d at 639 (citations and quotation marks omitted).

Murillo contends he has a possessory interest in the Disputed Currency because it is undisputed the money was seized from a compartment in a vehicle registered to and driven by Claimant. Opp'n at 12. According to Murillo, he detailed how he came into lawful possession of the seized currency in his verified responses to the government's special interrogatories. Id. (quoting Dkt. 40-2 (Interrogatory Responses) at 3–4). Claimant's response stated in relevant part:

The job was to take possession of money from Mr. Garcia and transport it to a designated location in San Diego, California where Claimant was to take a specific exit and go [to] a gas station located just off the exit. ․ Upon arriving at the gas station, Claimant was to call Mr. Garcia to inform him of his arriv[al], then park the car and leave the keys on the windshield. Someone was to come get the car to remove the money, then return the car to the gas station. Claimant does not know who was going to be sent to retrieve the money. Claimant was to wait until the car was brought back and then ․ return home.

Dkt. 40-2 (Interrogatory Responses) at 3–4. Claimant's argument appears to be that he had a lawful possessory interest in the Defendant Currency because he agreed to transport the money for a fee. Id. at 12–13. The court disagrees.

Pursuant to California Health and Safety Code § 11370.6(a) (“Section 11370.6(a)”), it is unlawful to possess “moneys or negotiable instruments in excess of one hundred thousand dollars ($100,000) which have been obtained as the result of the unlawful sale, possession for sale, transportation, manufacture, offer for sale, or offer to manufacture any controlled substance ․ with knowledge that the moneys or negotiable instruments have been so obtained․” For purposes of federal forfeiture law, willful blindness is the equivalent of actual knowledge. See United States v. 874 Gartel Drive, 79 F.3d 918, 924 (9th Cir. 1996).

Claimant admits he does not know the origin of the Defendant Currency or whether it was lawfully obtained. Dkt. 40-2 (Interrogatory Responses) at 4 (“Claimant lacks knowledge of the original origin of Defendant Asset.”). Claimant further admits he did not know who would receive the money and states facts consistent with the transportation of illicit narcotics proceeds. See id. (“[A]bout a week before the date of transporting the money, Mr. Garcia picked up the Claimant[’]s car to put the compartment inside. ․ As Claimant waited, Mr. Garcia brought money out and placed it on a table. He then wrapped the money up in some kind of clear wrapping. Claimant then [took] the money over to his car and Mr. Garcia placed the money inside of the locked compartment.”).

Claimant's explanation establishes only his “[u]nexplained naked possession of a cash hoard”, which “does not rise to the level of the possessory interest requisite for standing to attack the forfeiture proceeding at the summary judgment stage.” See $133,420.00 in U.S. Currency, 672 F.3d at 639; id. at 640 (recognizing claimant “never offered any explanation of how he came to possess the money seized from his vehicle, and an unexplained possessory interest is insufficient to establish standing at any state of a forfeiture proceeding”); cf. JP Morgan Chase, 835 F.3d at 1166–67 (finding claimants presented adequate evidence and explanation of their possessory interest in funds in bank accounts where they were the sole individuals with signatory authority over the accounts and identified a lawful business as the source of the funds). Claimant, thus, fails to meet his burden to plead sufficient facts to establish standing based on his naked possession of the Defendant Currency. Accordingly, the court GRANTS the government's Second Motion to Strike with respect to Murillo's claimed possessory interest and STRIKES this portion of the Amended Claim.

B. Bailee's Interest

“Under California law, a bailment is the deposit of personal property with another, usually for a special purpose.” $100,348.00 in U.S. Currency, 354 F.3d at 1120. A bailment may be gratuitous, id., or based on a contractual relationship, Windeler v. Scheers Jewelers, 8 Cal. App. 3d 844, 850 (1970).⁴ A contractual bailment “must comply with the requisites of a valid contract, including parties capable of contracting, assent, consideration, and legality.” Eric C. Surette, 9 Cal. Jur. 3d Bailments § 2 (Aug. 2023 update); see also Cal. Civ. Code § 1550. “Contracts that are contrary to express statutes or to the policy of express statutes ․ are illegal contracts.” Green v. Mt. Diablo Hosp. Dist., 207 Cal. App. 3d 63, 73 (1989). “Any such illegality voids the entire contract.” Id.

As stated, Claimant admits he lacks knowledge of the origin of the Defendant Currency, while admitting to facts regarding his receipt of the money that is consistent with the receipt of illicit narcotics proceeds. See Dkt. 40-2 (Interrogatory Responses) at 3–4. Based on the evidence presented, a “fair-minded jury” could not find Claimant has met his burden to present evidence demonstrating the Defendant Currency was originally lawfully obtained or that he was not willfully blind to the illegal nature of the funds. See $133,420.00 in U.S. Currency, 672 F.3d at 638. Claimant, thus, fails to establish he has standing to challenge the forfeiture as the bailee of a valid bailment contract. See 9 Cal. Jur. 3d Bailments § 2.

Claimant cites United States v. Hooper, 229 F.3d 818, 820 n. 4 (9th Cir. 2000), to argue:

[T]he Ninth Circuit has determined that when a “lawful possessory interest [is required],’ [it] do[es] not mean that a claimant must prove that his possession is lawful, which is an inquiry better left for the merits stage of an asset-forfeiture action.”

Opp'n at 17–18 (emphasis, brackets, grammar errors in original).

Hooper does not contain the language quoted. To the contrary, the Ninth Circuit recognized in the footnote cited, 229 F.3d at 820 n. 4, that “[t]he district court's concluding statement that Claimants lacked ‘standing’ [was] simply another way of stating that Claimants had failed to establish on the merits a property interest entitling them to relief.” The Ninth Circuit ultimately affirmed the district court's denial of the Hooper claimants’ claim. Id. at 823. Rather than establishing it is improper for the court to require Claimant to demonstrate his possession of the Defendant Currency was lawful, Hooper establishes a claimant's claim is properly denied for lack of standing if the claimant cannot establish a lawful possessory interest in the property at issue. See id. (holding claimants’ claimed interests as transferees in “[illicit] drug proceeds (or items purchased with those proceeds) ․ is not one Congress intended to protect for forfeiture under § 853(n)(6) of the criminal forfeiture statute”). Claimant's argument, thus, fails.

In sum, Claimant fails to meet his burden to establish a valid bailee's interest in the Defendant Currency. The court, therefore, GRANTS the government's Second Motion to Strike with respect to Murillo's claimed bailee interest and STRIKES this portion of the Amended Claim.

CONCLUSION

For the reasons stated herein, the court GRANTS the government's Second Motion to Strike (Dkt. 37) and STRIKES Claimant's Amended Claim. As Claimant has admitted he does not know the origin of the Defendant Currency or if money was lawfully obtained, leave to amend is DENIED, as amendment would be futile based on the undisputed evidence in the record.

Claimant's Motion to Suppress Evidence and Dismiss Complaint (Dkt. 32) is DENIED as moot. The government shall have 30 days to file a statement regarding the status of the action. Failure to file such statement timely may result in the dismissal of the action for lack of prosecution.

IT IS SO ORDERED.

FOOTNOTES

1.   The court cites documents by the page numbers added by the CM/ECF system rather than any page numbers listed on the documents natively.

3.   The government cites Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), to argue the court must treat all factual allegations of the Complaint as true. Second Mot. at 8 n. 1. In Iqbal, the Supreme Court recognized that, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (emphasis added, quotation marks omitted). Iqbal does not stand for the proposition that courts must consider the factual allegations pleaded by a plaintiff as true on the plaintiff's motion for judgment on the pleadings, and reflects only an application of the general principle that, on a challenge to the pleadings, the court must consider all factual allegations by the non-moving party as true. See Hal Roach Studios, 896 F.2d at 1550.

4.   “A bailment is generally defined as the delivery of a thing to another for some special object or purpose, on a contract, express or implied, to conform to the objects or purposes of the delivery which may be as various as the transactions of men.” Windeler, 8 Cal. App. 3d at 850 (citations and quotation marks omitted). “In sum, a bailment is a contractual relationship.” Id.

FERNANDO L. AENLLE-ROCHA, United States District Judge