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United States v. Real Property Located at 17 Coon Creek Road

United States Court of Appeals, Ninth Circuit

May 19, 2015

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
REAL PROPERTY LOCATED AT 17 COON CREEK ROAD, HAWKINS BAR CALIFORNIA, TRINITY COUNTY, APN: 008-760-12, INCLUDING ALL APPURTANCES AND IMPROVEMENTS THERETO, Defendant, and LEUNG CHINN; BETTY K. CHINN, Claimants, and BYRON PICKLE, Claimant-Appellant

Argued and Submitted, San Francisco, California November 19, 2014.

Page 969

Appeal from the United States District Court for the Eastern District of California. D.C. No. 2:09-cv-01937-GEB-DAD. Garland E. Burrell, District Judge, Presiding.

SUMMARY[**]

Civil Forfeiture

The panel reversed the district court's judgment of default and final judgment of forfeiture of real property, and held that the district court erroneously viewed claimant's failure to respond to special interrogatories the government propounded pursuant to Federal Rules of Civil Procedure's Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions G(8)(c)(i)(A) as a per se basis for striking his claim.

The panel held that the claimant's failure to answer the government's Rule G(6) interrogatories would not have warranted striking his claim as a discovery sanction without giving the claimant an opportunity to cure his lack of response. The panel also held that claimant's failure to comply with Rule G(6) did not vitiate his statutory standing to contest the forfeiture and dismissal of his claim forthwith. The panel remanded for further proceedings.

Judge Rawlinson dissented because she believed the majority's interpretation of the rules applicable to forfeiture actions conflicted with the court's precedent and the decisions of most other courts that considered the issue, and she would hold that the district court acted within its discretion in striking claimant's claim.

Editte D. Lerman, Ukiah, California, for Claimant-Appellant.

Kevin C. Khasigian (argued), Assistant United States Attorney; Benjamin B. Wagner, United States Attorney, Eastern District of California, Sacramento, California, for Plaintiff-Appellee.

Before: Marsha S. Berzon and Johnnie B. Rawlinson, Circuit Judges, and Elaine E. Bucklo, Senior District Judge.[*]

OPINION

Page 970

BUCKLO, Senior District Judge:

Byron Pickle (" Pickle" ) appeals the district court's June 15, 2012, default judgment and final judgment of forfeiture of real property located at 17 Coon Creek Road in Hawkins Bar, California (the " defendant property" ). The judgment was entered after the court granted the government's motion to strike Pickle's claim and answer based on Pickle's failure to respond to special interrogatories the government propounded pursuant to Federal Rules of Civil Procedure's Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (" Rule" ) G(8)(c)(i)(A), and then denied Pickle's motion to stay on the ground that without a claim, Pickle lacked standing to challenge the forfeiture action.

It is apparent from the district court's order that it viewed Pickle's failure to answer the Rule G(6) special interrogatories as a per se basis for striking his claim. Because that conclusion is incorrect as a matter of law, we reverse and remand the case for further proceedings consistent with this opinion.

BACKGROUND

On July 16, 2009, the United States initiated this in rem action seeking forfeiture of the defendant property. The forfeiture action was the result of criminal investigations by the California Bureau of Narcotic Enforcement (BNE) into suspected marijuana trafficking activities by claimant Byron Pickle, his son, James Pickle, and his brother, Thomas Pickle, all of whom were arrested after searches executed on the defendant property (where Pickle resided), and the " Hennessy Road property" (where Thomas and James resided), revealed, inter alia, a large marijuana cultivation site, several hundred marijuana plants, bagged marijuana, packaging materials, firearms, and tens of thousands of dollars in cash. James and Thomas were charged with state drug offenses, but the District Attorney declined to file criminal charges against Pickle, and the BNE closed its investigation into Pickle's conduct on May 27, 2010.

The government's verified complaint for forfeiture states that Pickle is " [t]he recorded owner of the defendant real property." It further asserts that " Pickle occupies the main residence" located on the defendant property, and that one of Pickle's sons occupies a travel trailer also located on the property.

Pickle filed a verified claim in this proceeding on August 11, 2009, in which he likewise stated that he is the " recorded owner" of the defendant property. Pickle also filed an answer on September 4, 2009, in which he claimed " an innocent possessory and/or ownership interest" in the defendant property.[1]

Page 971

On October 7, 2009, the parties stipulated, and the district court agreed, to a six month stay of the action based on the ongoing criminal investigation of Pickle and the ongoing prosecution of James and Thomas. The stay was extended, by court-approved stipulation, in May, August, and November of 2010. In all three of these stipulations, the parties observed that " it does not appear that any charges will be filed against claimant Byron Pickle," but agreed that the stay was warranted in view of the ongoing prosecution of James and Thomas, whose anticipated invocation of the Fifth Amendment would interfere with the government's ability to gather relevant information. The November 2010 stay was set to expire on March 28, 2011, and the parties were directed to file a status report by March 14, 2011, " advising the Court whether a further stay is necessary."

The Joint Status Report the parties submitted pursuant to the November stay order did not request a further stay of the proceedings, but instead specified topics for discovery; proposed discovery deadlines; provided for motions and filing deadlines; and proposed a trial date. The district court issued a Pretrial Scheduling Order on March 23, 2011, setting February 16, 2012, as the discovery cutoff, April 16, 2012, as the deadline for hearing dispositive motions, and September 11, 2012, as the trial date.

On July 21, 2011, the United States served a Request for Admissions, General Interrogatories, Special Interrogatories, and a Request for Production of Documents. The special interrogatories specifically asked Pickle to:

(1) State your full name for all names by which you are now known, or have been known in the past, including any and all aliases;
(2) State every Social Security Number and driver's license number you have used with each name;
(3) State the date and place of your birth;
(4) State your present residence address; and
(5) Identify and describe with particularity the nature of your interest in the defendant real property.

Pursuant to Rule G(6)(b), Pickle had twenty-one days, i.e., until August 15, 2011, to respond to the special interrogatories.

Pickle did not timely respond to the special interrogatories, but on August 17, 2011, the parties agreed to extend the deadline to September 19, 2011. Meanwhile, on August 2, 2011, Pickle moved to suppress the marijuana evidence obtained from the search of his property in 2008, and to dismiss the forfeiture proceedings pursuant to Rule G(8)(b)(i) and Fed.R.Civ.P. 12(b)(6), arguing that without the marijuana evidence, the United States could not state a claim for forfeiture. Then, on September 6, 2011, Pickle moved for a stay of the proceedings on the ground that " all of the discovery requests" the government served on July 21, 2011, sought information that implicated his Fifth Amendment protection against self-incrimination.

On October 11, 2011, the government filed both an opposition to Pickle's motion to stay and a motion to strike Pickle's claim. In both of these submissions, the government argued, inter alia, that Pickle's failure to respond to the Rule G(6) special interrogatories caused him to lack the " statutory standing" required to seek a stay of the proceedings or to contest the forfeiture of the defendant property.

On October 21, 2011, the district court issued a scheduling order resetting the dates on which the various pending motions

Page 972

would be heard. The court concluded that the government's motion to strike must be resolved before either of Pickle's pending motions.

The court granted the government's motion to strike Pickle's claim on December 20, 2011. In the same order, the court denied Pickle's motion to stay, explaining that " absent a claim to the defendant property, Pickle no longer has standing to contest this forfeiture action." On June 15, 2012, the district court entered a judgment of default and final judgment of forfeiture. Petitioner timely appealed.

STANDARD OF REVIEW

We review the district court's interpretation of the Supplemental Admiralty and Maritime Claims Rules de novo. United States v. $11,500.00 in U.S. Currency, 710 F.3d 1006, 1010 (9th Cir. 2013). While " [d]ismissal of a forfeiture claim for failure to comply with procedural requirements is reviewed for abuse of discretion, id. at 1011, a claimant's standing " is a threshold issue which we review de novo." United States v. 22249 Dolorosa Street, 167 F.3d 509, 511 (9th Cir. 1999).

DISCUSSION

Pickle assigns three errors to the district court's final judgment. First, Pickle claims that the court abused its discretion by adjudicating the government's motion to strike before considering Pickle's first-filed motion to stay. Relatedly, Pickle asserts that the court abused its discretion when it held that Pickle lacked standing to challenge the forfeiture once his claim was stricken, reasoning that the ground on which the claim was stricken would not have arisen had the action been stayed. Third, Pickle contends that the district court abused its discretion by failing to afford him the opportunity to cure his violation of Rule G(6) prior to striking his claim.

The challenged district court decisions all rested on one central error in the district court's analysis--its conclusion that it was compelled to strike Pickle's claim once it determined that he had failed to comply with Rule G(6). As we will explain, Pickle's failure to answer the G(6) interrogatories would not have warranted striking his claim as a discovery sanction without giving Pickle an opportunity to cure his lack of response. Nor did Pickle's failure to comply with Rule G(6) vitiate his statutory standing. For both of these reasons, the district court erred in striking Pickle's claim.

1. The constitutional and procedural requirements of claims pursuant to CAFRA

The Civil Asset Forfeiture Reform Act of 2000 (" CAFRA" ), 18 U.S.C. § 983, governs all in rem civil forfeiture proceedings commenced on or after August 23, 2000. See United States v. Approximately $ 1.67 Million in United States Currency, Stock, & Other Valuable Assets, 513 F.3d 991, 998 (9th Cir. 2008). Section 983(a)(4)(A) of the statute provides:

In any case in which the Government files in the appropriate United States district court a complaint for forfeiture of property, any person claiming an interest in the seized property may file a claim asserting such person's interest in the property in the manner set forth in ...

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