United States District Court, Eastern District of New York
September 30, 1991
UNITED STATES OF AMERICA, PLAINTIFF,
UNITED STATES CURRENCY IN THE SUM OF THREE HUNDRED NINETY-THREE THOUSAND NINE HUNDRED SIXTY-SEVEN ($393,967) DOLLARS, MORE OR LESS; CERTAIN ITEMS OF JEWELRY; AND THE PREMISES AND REAL PROPERTIES LOCATED AT 175-20 WEXFORD TERRACE APARTMENTS 3V, 9G, AND 16M, JAMAICA ESTATES, NEW YORK, AND ALL SHARES OF STOCK WHICH HAVE BEEN ALLOCATED TO SAID COOPERATIVE APARTMENTS, DEFENDANTS.
The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM DECISION AND ORDER
In this civil forfeiture action, the Court is asked to
determine whether the default of the claimant, Nidia Campos
("Campos"), should be excused and whether the Court should
grant her motion to vacate a decree of forfeiture and enlarge
the time within which to submit a claim and to file an answer.
For the reasons set forth below, the claimant's motion to
vacate the decree of forfeiture is denied.
The claimant Campos is currently incarcerated in relation to
a criminal action pending before the Honorable Carol Amon, and
entitled United States v. Edgar Vargas, et al., docketed at
CR-89-564. She is named as a defendant in that action.
The defendant property in this in rem action consists of
currency in the amount of $393,967, items of jewelry, two
cooperative apartments and cooperative shares for those
apartments. The Government initiated this forfeiture action
under the Comprehensive Drug Abuse Prevention and Control Act.
In its complaint, the Government alleges that the defendant
currency was "intended to be used to facilitate the sale,
manufacture, transportation and/or distribution of a controlled
substance in violation of 21 U.S.C. § 841 et seq." (¶¶ 23, 26).
In addition, the Government contends that the defendant
premises, real properties, and shares of stock allocated to the
cooperative apartments "constituted the proceeds of the sale
. . . of a controlled substance . . ." and were used ". . .
and/or intended to be used to commit or to facilitate the sale
. . ." (¶¶ 29, 32) and were therefore subject to forfeiture to
the United States under 21 U.S.C. § 881(a)(6) and (a)(7).
Pursuant to Rule C(3) of the Supplemental Rules for Certain
Admiralty and Maritime Claims, the clerk of the district court
issued a warrant of arrest for service on the defendant
property ordering the United States Marshal to direct the
defendant to appear, in accordance with Rule C(6), within ten
days of service of the notice to interpose a claim. The
defendant was also directed to file a responsive pleading
either within twenty days of filing the claim or within thirty
days of service, whichever was less (Rule B(3) of the
Supplemental Rules of Admiralty and Maritime Claims).
According to the Government, on September 26, 1990, the
United States Marshals Service personally served copies of the
verified complaint in rem on potential claimants Nidia Campos
and Jose Rincon-Maya, who were both incarcerated at the
Metropolitan Correctional Center (Declaration in Opposition to
Motion to Vacate Decree of Forfeiture ¶ 4). Pursuant to Rule
C(4), notification of the action was published in the New York
Post on October 1, 2 and 3, 1990 (¶ 7).
No responsive pleadings were filed and on December 4, 1990,
a default was entered in this Court against the property. On
motion of the Government, a default judgment was ordered
pursuant to Rule 55(b.) (¶¶ 9, 10).
On May 20, 1991, counsel for the claimant Campos moved to
vacate the decree of forfeiture and order of delivery that was
entered upon the default pursuant to Federal Rules of Civil
Procedure 55(c) and 60(b). Counsel also seeks an order
permitting him to serve (1) a claim within 10 days, and (2) an
answer to the complaint within 20 days, pursuant to Rule C(3)
of the Supplemental Rules for Certain Admiralty and Maritime
In his affidavit in support of the motion, counsel for the
claimant contends that unlike his prior contacts with the
Government in handling two previous forfeiture proceedings for
claimant Campos, he was not notified of the present forfeiture
proceeding despite his written request to be informed. The
relevant allegations are as follows:
"4. On or about December 26, 1989, pursuant to
21 U.S.C. § 881, the Drug Enforcement Administration
issued a Notice of Seizure, addressed to claimant
at a Queens, New York address, with respect to
$27,875.00 in United States Currency seized in this
District on or about August 9, 1989.
At that time, claimant was in custody pursuant
to a Detention Order issued in the criminal
5. The agency Notice of Seizure was referred to me
as CAMPOS' attorney, and I thereafter timely
served and filed a Verified Claim of Ownership
executed by CAMPOS and a Cost Bond in the amount
of $2,788.00 . . . The Verified Claim and Cost
Bond were accompanied by a letter, addressed to
the Chief Counsel of the Asset Forfeiture Section
of the D.E.A., signed by me, and containing a
request that any further correspondence concerning
this matter be sent to me as counsel to CAMPOS
6. Thereafter the D.E.A. sent written
acknowledgement of this Claim to me, as CAMPOS'
attorney, at my office address. Copies of the
administrative Notice of Seizure, CAMPOS' Verified
Claim, my cover letter, and the D.E.A.
acknowledgment are annexed hereto collectively as
Counsel for Campos goes on to allege a second notice of
seizure with respect to jewelry valued at $42,280. Campos
apparently received the notice at the Metropolitan Correctional
Center in Manhattan and referred it to counsel. The attorney
summarizes the same procedure as noted above in handling this
second notice. Based on these actions, counsel for Campos
addressed a letter to Assistant United States Attorney Linda B.
Lakhdhir in the Eastern District of New York, in which he
"that a copy of the agency's seizure notice be
sent to me as CAMPOS' counsel. In the same letter
I also requested that if the agency had any other
plan for forfeiture proceedings, I be notified"
Having complied with the appropriate procedures and having
advised the Government that he wished to receive notice,
counsel for Campos additionally alleges that:
"10. . . . I respectfully submit that by virtue of
these various mailings, with enclosures, both the
D.E.A. and the United States Attorney's Office for
this District were on actual notice that I was
counsel to CAMPOS in both the criminal action
and in connection with any and all forfeiture
proceedings, administrative and/or judicial.
11. Upon information and belief, on or about
August 31, 1990, the United States Attorney . . .
commenced the instant in rem proceeding, pursuant
to 21 U.S.C. § 881(a)(6) and (7).
12. . . . counsel for the plaintiff thereafter
caused a copy of the pleadings to be delivered to
claimant by mail, at the Metropolitan Correctional
Center . . . the pleadings first actually came
into claimant's possession sometime in the latter
part of September, 1990.
13. Although the government mailed copies of the
pleadings to claimant . . . in complete and utter
disregard of my several letters both to the D.E.A.
and to . . . Linda B. Lakhdhir, the government
never served me, as CAMPOS' attorney, with a copy
of the pleadings.
Thereafter, on October 9, 1990, counsel for Campos wrote to
Judge Amon, who was presiding over the criminal action,
indicating that he first became aware of the pendency of these
forfeiture proceedings when he visited Campos at the
Metropolitan Correctional Center on September 28, 1990. Counsel
advised Judge Amon that he and his associate had tried on
several occasions to communicate with counsel for the
government to obtain a stay of the
proceeding to allow for the filing of a claim and answer.
Counsel requested a stay until the end of October because he
was engaged in a "lengthy, federal criminal trial in the
Central District of California" (¶ 14). A second letter went to
Judge Amon on October 12, 1990, reiterating his request and
refuting the Government's October 9, 1990 letter.
At that point, according to counsel for Campos,
"17. . . . I received no further communications
from either the government or the Court, and no
endorsements or other indications that my requests
for a stay or an enlargement of time had been
granted or denied by the Court. At no time did I
receive written notice of any application for a
default judgment under Rule 55(b)(2).
18. Finally, on January 8, 1991, via fax, the
government provided me with a copy of the Decree
of Forfeiture and Order of Delivery entered on
December 4 1990, which is the subject of this
In support of Campos' claim of a meritorious defense, counsel
notes that on April 2, 1991, Campos was acquitted after a jury
trial of all violations of Title 21. Based on the acquittal,
counsel maintains that Campos "possesses a viable claim to
property and assets seized pursuant to Title 21" (¶ 20).
The Government in opposing the motion maintains that Campos
has never filed a verified claim despite the fact that
she received copies of the verified complaint in September
1990. In referring to the allegations made by counsel for
Campos, the Government responds that counsel never filed a
verified claim by the end of October as he had represented by
letter. The Government also states that despite counsel's
admission that he received a copy of the decree of forfeiture
on January 18, 1991, he did not seek to vacate the decree for
an additional five months (Plaintiff's Memorandum of Law at p.
In support of its claim that the default should not be
vacated, the Government posits the following arguments: (1) the
res no longer exists and the Court therefore lacks jurisdiction
over the claim; (2) Campos has not demonstrated any excusable
neglect and therefore has not standing to contest the
forfeiture; (3) Campos has not asserted any meritorious
defenses nor substantiated them with credible evidence; and (4)
Campos received sufficient notice to satisfy due process and
Federal Rule of Civil Procedure 60(b) provides in relevant
"the court may relieve a party or a party's legal
representative from a final judgement, order, or
proceeding for the following reasons: (1) mistake,
inadvertence, surprise or excusable neglect . . .
or (6) any other reason justifying relief from the
operation of the judgement." (Fed.R.Civ.P. 60[b])
Recently, the Second Circuit clarified this standard and
outlined this rule in detail:
"We have noted, however, `courts have gone beyond
the bare wording of the rule and established
certain criteria which should be considered in
deciding whether the designated standards have
been satisfied. These criteria . . . include (1)
whether the default was willful; (2) whether the
defendant has a meritorious defense; and (3) the
level of prejudice that may occur to the
nondefaulting party if relief is granted.'"
(Wagstaff-El v. Carlton Press Co., 913 F.2d 56, 57
[2d Cir. 1990], cert. denied [___ U.S. ___], 111
S.Ct. 1332 [113 L.Ed.2d 263 ] [quoting Davis
v. Musler, 713 F.2d 907, 915 [2d Cir. 1983]]; see
also Marziliano v. Heckler, 728 F.2d 151 [2d Cir.
1983]; Traguth v. Zuck, 710 F.2d 90, 94 [2d Cir.
1983]; Brown v. DeFelippis, 695 F. Supp. 1528, 1530
A motion to vacate a default judgment pursuant to
Fed.R.Civ.P. 60(b) is left primarily to the discretion of the
district court (Davis v. Musler, supra, 713 F.2d at p. 912;
United States v. Erdoss, 440 F.2d 1221
, 1223 [2d Cir. 1971],
cert. denied, 404 U.S. 849
, 92 S.Ct. 83
, 30 L.Ed.2d 88 ).
As the court in Musler noted, "default judgments implicate
sharply conflicting policies" (id.); see 10 C. Wright, A.
M. Kane, Federal Practice and Procedure: Civil, § 2693 at p.
477-93 ). Rule-60 is to be liberally construed in the
context of a judgment of default in view of the absence of a
trial on the merits (Davis v. Musler, supra; Seven Elves, Inc.
v. Eskenazi, 635 F.2d 396
, 403 [5th Cir. 1981]; United States
v. $22,640.00 In United States Currency, 615 F.2d 356
, 360 [5th
In order to determine whether vacating the default and
setting aside the forfeiture decree in this case is
appropriate, the Court must examine the three factors outlined
in Wagstaff-El v. Carlton Press Co., supra, 913 F.2d at p. 57:
(1) was the default willful? (2) does the claimant Campos set
forth a meritorious defense? (3) what level of prejudice, if
any, may accrue to the government?
A. Willful Default
To merit relief in the instant case, claimant Campos needs to
prove that her failure to timely file a notice of claim and
answer was the result of excusable neglect. Based on the
uncontroverted facts presented by counsel for Campos in filing
this motion, it is clear that the claimant had been involved in
at least two prior forfeiture proceedings in which counsel had
followed the appropriate procedures, including the posting of
a supersedeas bond pursuant to Fed.R.Civ.P. 62(b). In those
proceedings, Campos claimed an ownership interest in the
properties that were the subject of the actions.
It is also clear that counsel for Campos had communicated
with the Government and made them aware of his representation
and the need to communicate with him if there were to be
further proceedings. Although Campos herself did not respond,
she did give the notice she received from the Government to her
attorney when he subsequently visited her at the Metropolitan
Correctional Center. It was reasonable to assume that, based on
the prior history, Campos believed her counsel had received the
notices and responded to them.
In addition, counsel for Campos related relevant facts that
his time was occupied with a protracted trial in California
during the period in question. It is understandable that Campos
was not able to communicate with counsel at various times
during that period. Such circumstances have been found to
constitute excusable neglect (United States v. $135,290 United
States Currency, 750 F. Supp. 359 [N.D.Ill. 1990]. It is also
apparent that counsel could not respond to that which he did
not have. He had to ask for the notice and finally received it
by means of a FAX communication.
Based on counsel's representations, this Court concludes that
Campos and her attorney did not willfully ignore
communications. Further, counsel for the claimant took quick
action to correct the situation once it was made known to him.
Although counsel states that he subsequently received no
further communications from the Government or the court in
response to his request for a stay, he proffers no further
explanation for the additional delay in filing this motion.
That gap in and of itself is not sufficient to defeat the
Court's finding that there was excusable neglect in this case.
B. Meritorious Defense
The threshold question in this case is whether counsel for
Campos has set forth a meritorious defense. To begin with,
there is no affidavit from the claimant Campos attesting to her
interest in the property.
Further, in regard to this prong of the test, counsel for
Campos makes only the barest assertions. In his affidavit,
"20. Under indictment CR-89-564 (CBA), the
claimant, NIDIA CAMPOS, was tried before a jury,
and on April 2, 1991, she was acquitted on any and
all violations of Title 21. She was found guilty
of a violation of 18 U.S.C. § 1956, and is
presently awaiting sentencing. As such, in the
absence of a criminal verdict on the Title 21
counts, it appears that CAMPOS possesses a viable
claim to property and assets seized pursuant to
21. . . . Certain of the assets and property
recited in the Complaint . . . belonged to CAMPOS,
who was, therefore, their lawful owner prior to
their seizure and arrest in connection with this
In his accompanying three-page Memorandum of Law, counsel for
Campos fares no better in setting forth a meritorious defense.
In an already terse format, counsel spends 99% of his time on
the "excusable neglect" issue and reserves one sentence to set
forth a meritorious defense — ". . . since she otherwise
possesses a viable claim to the property and/or assets that are
the subject of this action . . ." (Defendant's Memorandum of
Law at p. 3).
On the other hand, the Government has alleged facts which
meet its burden of showing probable cause to believe that the
monies seized were intended to be used to purchase and
distribute a controlled substance. The complaint avers that the
money was seized from Costa Rica Realty, a business owned and
operated by Campos along with documents relating to narcotics
transactions (¶¶ 17, 18). The Complaint states that a
co-defendant, Edgar Vargas, informed the police that 25
kilograms of cocaine were to be delivered to Nidia Campos (¶
11). The Government has also demonstrated that a grand jury
indicted Campos and that a jury convicted her of one count of
conspiring to launder narcotics proceeds.
The Government is correct in its assertion that because of
the different standards and burdens of proof between civil and
criminal proceedings, the Government is not precluded from
forfeiting the defendant properties in a civil action even
though Campos was acquitted of conspiracy to distribute and
intent to possess cocaine.
An acquittal in a related criminal prosecution does not
preclude the United States from seizing and forfeiting property
in a civil action pursuant to 21 U.S.C. § 881(a)(6) and (a)(7)
(One Lot Emerald Cut Stones and One Ring v. United States,
409 U.S. 232, 234-35, 93 S.Ct. 489, 491-92, 34 L.Ed.2d 438 ;
United States v. One 1986 Mercedes Benz, 660 F. Supp. 410, 414
[S.D.N.Y. 1987], aff'd, 846 F.2d 2 [2d Cir. 1988]; United
States v. One Rural Lot, 739 F. Supp. 74, 77 [D.Puerto Rico
1990]). Even if the claimant had been acquitted of all charges,
the Government would not be precluded from bringing such an
action (United States v. One Rural Lot, supra, at p. 77).
By her silence, Campos herself has failed to deny a single
averment made by the Government. Her attorney is similarly
culpable in failing to allege the bare minimum of information
required to set forth a meritorious defense. In addition,
neither Campos nor her counsel has even questioned whether the
Government has met its burden of establishing probable cause.
The claimant has therefore not met her burden of setting forth
any allegations which would constitute a meritorious defense to
this forfeiture action, if proven at trial. Although counsel
has not been granted an opportunity to submit an answer, it is
clear on the face of the papers in support of this motion that
the claimant has not met her threshold burden of setting forth
a meritorious defense. The motion papers are "couched solely in
conclusionary language" and are "nothing more than a verbatim
excerption of the statutory language" of 21 U.S.C. § 881 (see
United States v. $55,518.05 In United States Currency,
728 F.2d 192 [3d Cir. 1984]).
In United States v. $55,518.05 In United States Currency, the
court stated that "[i]f we allow the setting aside of a default
judgment on the mere recitation of the relevant statutory
language . . . then we will be establishing a new right to
automatically set aside any default judgment if counsel is
diligent enough to quote the applicable statute or rule of
civil procedure" (id. at p. 196). Judge Higgenbotham made a
particularly apt observation that has relevance to the instant
case, as follows:
"In this case, Golden's silence speaks ever so
loudly. For most Americans, $55,518 is not casual
pocket change which one leaves on the bureau at
night. Golden offers no explanation as to what
was the specific source of the $55,518. One might
ask: Did he recently withdraw this money from his
bank account? Did he inherit it? Was he in a
check-cashing business requiring such cash for
legitimate customers? Were these profits from
recent legitimate earnings? An affirmative answer
to any of the above questions might raise a
meritorious defense. Yet, upon scanning his answer
and pleadings, one cannot find a word suggesting
even one alleged fact that might provide an
inference of a meritorious defense. Default
judgments cannot be set aside simply because of a
lawyer's artistry in offering ambiguous
conclusions" (id. at p. 196) [emphasis supplied].
Judge Higgenbotham's inquiry concerning the source of the
$55,518 is significant. One can only imagine the response in
the instant case where the funds seized total $393,967, in
addition to the forfeiture of jewelry and real property.
No such explanations have been provided by counsel or by
Campos, no other affidavits supplied, and no additional facts
proffered. On the record in this case, the Court concludes that
the claimant has failed to set forth a meritorious defense,
sufficient to ground a motion to vacate a default.
Unlike the situation in Davis v. Musler, supra, where the
Court of Appeals determined that a hearing was necessary before
denying the defendant's motion to vacate a default judgment,
this motion can be determined based on the papers submitted to
the Court. The claimant's motion papers do not raise
substantial questions of law and fact (id.). On the contrary,
they are straight-forward and contain few disputed facts. In
contrast to Musler, this Court has delineated the standards it
has applied in denying the motion and has outlined the
arguments pressed by the claimant (id. at p. 913). The reasons
for the denial are fully set forth. We therefore expect that
there need not be any guesswork regarding the grounds upon
which this Court relies. The reason for the denial of the
claimant's motion is a total lack of even an arguable
C. Prejudice to the Government
Based on the fact that the claimant has failed to set forth
a meritorious defense, the Court does not reach the issue of
whether the Government would be prejudiced if the Court were to
permit counsel for Campos to file a verified claim and answer
at this juncture. Suffice it to say that on this record, the
Government has not demonstrated any prejudice.
However, the Court does draw the Government's attention to
the fact that the "no res, no jurisdiction" rule is no longer
good law in this jurisdiction (see U.S. v. Aiello, 912 F.2d 4
[2d Cir. 1990], cert. denied, ___ U.S. ___, 111 S.Ct. 757, 112
L.Ed.2d 777 ). In Aiello, the Second Circuit adopted the
position of the dissenters in United States v. One Lear Jet
Aircraft, Serial No. 35A-280, 836 F.2d 1571, 1573 (11th Cir.
1988), cert. denied, 487 U.S. 1204, 108 S.Ct. 2844, 101
L.Ed.2d 881 (1988), that there is no good reason why the
Government should be permitted to "insulate itself from the
appellate process by wrapping itself in the mantle of an
admiralty fiction designed at an earlier time to meet a problem
totally unrelated to present day civil forfeiture proceedings"
(United States v. One Lot of $25,721.00 In Currency,
938 F.2d 1417, 1419 [1st Cir. 1991]). Although certain realities must be
faced when the assets are real property, this doctrine is
particularly onerous in a currency forfeiture proceeding. As
the court in One Lot of $25,721.00 In Currency noted:
"The government has possession and control of the
currency from the time it seizes it. The execution
of the judgment merely transfers it from one
government pocket to the other. Basing
jurisdiction on what pocket contains the currency
is nothing more than a shell game. In addition to
being bereft of logic it is also unfair"
In sum, the Government's argument here, that the monies have
been deposited with the United States Department of the
Treasury and are therefore irretrievable, is without merit.
Because counsel for the claimant has failed to set forth a
meritorious defense, his motion to set aside the entry of
default and to vacate the forfeiture decree must be denied.
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