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March 20, 1992

U.S. CURRENCY IN THE AMOUNT OF $ 41,807, More or Less, etc., Defendant.


The opinion of the court was delivered by: SIFTON


SIFTON, District Judge

 This is a motion pursuant to Federal Rules of Civil Procedure 60(b) to vacate a decree of forfeiture and order of delivery and to grant leave for certain individuals to file claims against the defendant United States Currency.

 The following facts, except where expressly noted, are not disputed. Five claimants request this Court to vacate the decree of forfeiture and order of delivery ("the in rem order") and allow them to file claims asserting ownership of the defendant currency.

 Plaintiff, the United States, opposes this request on the ground that the claimants have no standing since they did not comply with Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure and have also failed to show an excusable basis for their neglect which would allow vacatur under Rule 60(b).

 In May 1990, Cheng Zhong Lin was stopped by the United States Customs Service ("Customs") in John F. Kennedy International Airport. He was carrying a sum of money in United States currency and travelers checks ("the currency") totaling approximately $ 50,000. On July 30, 1990, he pled guilty to a violation of 31 U.S.C. 5316(b) (failure to file a report when departing the United States when carrying over $ 10,000).

 On November 21, 1990, pursuant to 31 U.S.C. § 5317, an arrest warrant was issued against the currency. The currency was seized and arrested on January 7, 1991, by Customs. Also on January 7, 1991, Customs mailed notice to Cheng Zong Lin at the address of his attorney. Public notice of the arrest was also made in Newsday.

 No claim against the defendant currency was filed within the ten-day limit proscribed by Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure.

 On November 21, 1991, a verified complaint in rem was filed against the currency. United States v. United States Currency in the Amount of $ 41,807, more or less, and Travelers Checks in the Amount of $ 9,000, more or less, CV-90-4026. On February 9, 1991, this Court issued a decree of forfeiture and order of delivery against the in rem defendant.

 Cheng Zhong Lin now asserts that he did not receive actual notice of the in rem action because he had left for China. He further asserts that the currency and travelers checks involved were lawfully earned money belonging to himself and five friends which he was taking to the People's Republic of China to give to the owners' relatives. Supporting affidavits are filed by three of these individuals and the attorney representing all the current claimants.

 Plaintiff, the United States, forwards to this Court a copy of a letter to Customs dated July 24, 1990, from Cheng Zhong Lin's attorney in the criminal matter stating that his client wished to assert a claim against the currency. Declaration of Christopher G. Lehmann, Exh. B. Respondent also forwards a $ 5,000 claim and cost bond signed July 31, 1990, by Cheng Zhong Lin. Id., Exh. C.

 Plaintiff declares that a search of the litigation file of the in rem action has found no other documents from any of the movants or their counsel. He further alleges that at his arrest Cheng Zhong Lin stated he was not carrying funds for other persons.


 The first issue is the claimants' standing to bring this motion. Plaintiff contends that they lack standing to challenge the in rem order because they did not file timely notices of claim pursuant to Rule C(6).

 This position was rejected in United States v. Property at 4492 S. Livonia Rd., 889 F.2d 1258, 1262 (2d Cir. 1989). Livonia also involved a motion to vacate a default judgment in an in rem forfeiture proceeding by a person who had failed to comply with Rule C(6). The Court of Appeals distinguished between Article III standing and statutory standing.


"When, as here, a claimant has made a sufficient showing of interest in the property through filing with the court a motion and accompanying affidavits, technical noncompliance with the procedural rules governing the filing of claims may be excused."

 Id. See also United States v. Eng, 951 F.2d 461 (2d Cir. 1991) (to be published at 951 F.2d 461) (citing Livonia, supra).

 The instant motion is accompanied by the requisite affidavits from the claimants or their attorney alleging a possessory interest in the currency. Therefore, they have Constitutional standing. They are ordered to comply forthwith with the procedures of Rule C(6) to correct the technical defect and obtain statutory standing.

 The next issue is the propriety of vacating the default judgment pursuant to Federal Rules of Civil Procedure 60(b). Claimants argue for vacatur on the grounds of "mistake, inadvertence, surprise, or excusable neglect." Fed. R. Civ. P. 60(b)(1). Since the motion is made within one year of the default, it is timely. Fed. R. Civ. P. 60(b).

 A motion for relief under Rule 60(b) is addressed to the sound discretion of the court. Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986). The court must weigh the the interest in substantial justice against the need for preserving finality of judgments. Id. Therefore, relief is granted only for extraordinary circumstances. Mendell v. Gollust, 909 F.2d 724, 730 (2d Cir. 1990), aff'd, 115 L. Ed. 2d 109, 111 S. Ct. 2173 (1991).

 Since the judgment involved was entered on default, the applicable standard is drawn from Federal Rules of Civil Procedure 55(c) which requires "good cause shown." Such good cause is a discretionary judgment based on three criteria:


"whether the default was willful, whether setting it aside would prejudice the adversary, and whether a meritorious defense is presented."

 Traguth v. Zuck, 710 F.2d 90, 94 (1983).

 To apply the standard to this case, I review the supplied affidavits in greater detail.

 Cheng Zhong Lin asserts he did not actually receive notice of the forfeiture because he left for China before his attorney received the plaintiff's mailing. He supplies a copy of his airline ticket stub in support. His affidavit is dated December 20, 1991.

 Three other claimants, in affidavits dated August 28, 1991, assert they learned of the seizure a few weeks after it occurred. However, they claim they knew nothing else about the fate of the money they had entrusted to Chen Zhong Lin until "recently" when a friend advised them that Payne, a Mandarin-speaking attorney, was helping Cheng Zhong Lin retrieve the currency. According to Payne, these three claimants do not functionally speak or read English. This, of course, would make the notice in Newsday of no practical help in alerting them to the proper procedure.

 No personally signed affidavits are supplied from two additional claimants. They are mentioned in Cheng Zhong Lin's affidavit as persons who gave him money to take to China. He also stated he was carrying money belonging to a sixth friend, who has not joined this motion.

 Payne, attorney to the five claimants, asserts he was retained on May 24, 1991, to recover the money. As to the delay in filing this motion, he asserts that --


"communicating with the claimants and obtaining affidavits from them has been time-consuming, and together with my own hesitancy as I have not yet been admitted to this Court, have delayed this application."

 Payne Affid., Exh. E to Motion.

 In a reply declaration, Payne presents additional facts. He alleges that he received a letter on January 9, 1991, from the attorneys who represented Lin in the criminal matter. This letter advised Payne that they would not handle the civil forfeiture for Lin. Payne was so advised as he had originally recommended these attorneys to Lin. These attorneys also attempted to warn Lin of the possibility of default in the in rem action by mailing him a letter on January 7.

 Payne attempted to contact Lin but was unable to do so until April 1991, after the in rem judgment. Lin discussed the matter with Payne, but did not retain him. Payne alleges that Lin stated that he had believed his attorneys in the criminal matter were handling the in rem proceeding. Lin then returned to China. While Payne was retained by the other claimants in May 1991, he was unable to reach Lin at that time. The other claimants asked him to deal with them through Lin. All of the claimants speak Mandarin as a second language. Their native language is the Fozhou dialect. They speak or read little or no English.

 Plaintiff alleges that the extent of the delay was unnecessary since Payne was retained in May 1991 for this matter. Plaintiff also points to the letter sent by Lin's former attorneys expressing Lin's interest in recovering the currency. In addition, plaintiff points out that three of the affidavits were signed in August.

 However, one affidavit was only signed in December. Furthermore, the default was entered in February 1991. Therefore, actions in May and August of 1991 were not in time to prevent default. The next relevant statutory deadline is the one-year limit of Rule 60(b). Since this has not passed, the attorney should not be faulted for attempting to use his time and his clients' money economically by combining the claimants' motions. Plaintiff has pointed to no prejudice that accrued between August and January.

 The United States' arguments based on actions by Lin's attorney before the beginning of the forfeiture procedure are unconvincing. Lin left for China before he actually knew of the pendency of this action. Absent any showing of an ongoing relationship between Lin and the counsel who handled the criminal matter, this Court will not assume counsel was authorized to handle the civil forfeiture at the time Lin left for China. Counsel's notification to the government of Lin's interest in the funds was a routine act and does not establish such a relationship.

 Plaintiff relies on Jafree v. Scott, 590 F.2d 209 (7th Cir. 1978), in which a court refused to find excusable neglect under Rule 60(b)(1) when a party was out of the country and, therefore, could not furnish affidavits. The situation is clearly distinguishable. In Jafree, the plaintiff in an ongoing proceeding was ordered by the court to file certain affidavits. Judgment was entered against him when he failed to do so after several extensions. Jafree implicates a plaintiff's duty to prosecute a suit he has chosen to bring. Jafree does not involve a default judgment.

 In light of the basic policy favoring decisions on the merits, C. Wright & A. Miller, Federal Practice & Procedure § 2857, at 159, the claimants' language limitations, and the main claimant's absence from the country, I find this default not to have been willful.

 The next issue is prejudice to the plaintiff. The government has offered no argument or fact supporting prejudice. Therefore, I find no prejudice hindering vacatur.

 The third factor is the merit of the offered claims. Forfeiture was ordered pursuant to 31 U.S.C. § 5317(b) which allows forfeiture to the government of any "monetary instrument being transported . . . when a report on the instrument under 5316 of this title has not been filed or contains a material omission or misstatement."

 Claimant Cheng Zhong Lin pleaded guilty to transporting the defendant currency without filing the required report. Such a guilty plea collaterally estops him from currently denying he violated the statute. United States v. Twenty Thousand Seven Hundred Fifty-Seven Dollars, 769 F.2d 479, 481-82 (8th Cir. 1985); Ivers v. United States, 581 F.2d 1362, 1366 (9th Cir. 1978) (S.J. Palmieri, S.D.N.Y., sitting by designation). Cf. United States v. $ 395,500 in United States Currency, 828 F.2d 930, 931 (2d Cir. 1987) (elements of criminal statue include all elements required for civil forfeiture).

 This guilty plea covers all the money forfeited and is, therefore, sufficient proof that the entire sum is subject to forfeiture. Twenty-Seven Thousand, supra at 482.

 In general, forfeiture statutes provide that an owner's interest in the property is forfeited regardless of his lack of knowledge of the offense. United States v. United States Currency in the Amount of Twenty Three Thousand Four Hundred Eighty One Dollars, 740 F. Supp. 950, 954 (E.D.N.Y. 1990) ("Twenty Three Thousand").

 One exception exists for property taken from its owner without his consent. Id. (citing Van Oster v. Kansas, 272 U.S. 465, 467, 71 L. Ed. 354, 47 S. Ct. 133 (1926)). The claimants state they voluntarily gave the money to Lin.

 The other exception was adopted by the Second Circuit in United States v. One Tintoretto Painting, 691 F.2d 603, 607 (2d Cir. 1982), from Supreme Court dicta. The exception protects --


"an owner who proves not only that he was uninvolved in and unaware of the wrongful activity, but also that he had done all that reasonably could be expected to prevent the proscribed use of his property."

 One Tintoretto, supra at 607 (citing Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 689-90, 40 L. Ed. 2d 452, 94 S. Ct. 2080 (1974)); Twenty Three Thousand, supra at 954.

 None of the claimants has alleged any actions to prevent Lin's offense. Therefore, they have not alleged the elements of a meritorious claim.

 For the reasons discussed above, the motion is denied in its entirely.

 The Clerk is directed to mail a copy of the within to all parties.


 Dated: Brooklyn, New York

 March 20, 1992

 Charles P. Sifton

 United States District Judge


© 1992-2004 VersusLaw Inc.

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