United States v. $10,300
694 F. App'x 10
| 2d Cir. | 2017Background
- DEA seized $10,300 cash and contents (~$15,232) of Conolly’s bank account after a search of his home following an incident where he and another were found carrying large bags of freshly cut marijuana.
- DEA issued administrative Notices of Seizure; Conolly filed verified administrative claims with the DEA, which referred the matter to the U.S. Attorney and did not complete administrative forfeiture.
- The Government filed a verified civil forfeiture complaint in the Western District of New York and served/published notice that a judicial claim under Supplemental Rule G(5) had to be filed by April 7, 2010.
- Conolly did not file a Rule G(5) judicial claim; he filed an answer in district court and repeatedly argued his DEA administrative claims sufficed to confer standing.
- The Government moved for default; the district court entered default judgment after finding Conolly lacked standing, acted willfully by failing to file a Rule G(5) claim, had no meritorious defenses, and showed no excusable neglect.
- The Second Circuit affirmed the district court’s denial of relief from default and the grant of default judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Conolly’s administrative DEA claims satisfied federal standing and supplanted the need to file a Rule G(5) judicial claim | Government: Supplemental Rule G(5) requires a judicial claim to obtain statutory standing; administrative DEA filings do not suffice | Conolly: His verified DEA administrative claims put the government on notice and suffice to contest forfeiture | Held: Administrative DEA claims do not satisfy Rule G(5); Conolly lacked statutory standing because he did not file a judicial claim |
| Whether the district court abused its discretion in denying relief from entry of default under Fed. R. Civ. P. 55(c) | Government: Default was properly entered and should not be set aside; Conolly willfully failed to file required claim | Conolly: Failure to file was not willful; he relied on DEA filings and sought leave later to file an untimely claim | Held: No abuse of discretion; default was willful and district court’s factual finding was not clearly erroneous |
| Whether Conolly showed a meritorious defense that would justify vacating the default judgment | Government: No meritorious defense because Conolly never established standing to litigate the merits | Conolly: His underlying ownership claim would defend the forfeiture if considered on the merits | Held: No meritorious defense; without Rule G(5) claim, merits could not be adjudicated |
| Whether Conolly demonstrated excusable neglect warranting relief from judgment (Rule 60(b)) | Government: Conolly’s repeated failure to follow clear Rule G(5) notice requirements is not excusable | Conolly: Long proceedings and reliance on DEA process justify relief | Held: Failure to comply with clear Supplemental Rule G notice was not excusable neglect; vacatur denied |
Key Cases Cited
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir. 1993) (three-factor test for vacating default/default judgment)
- United States v. Cambio Exacto, S.A., 166 F.3d 522 (2d Cir. 1999) (strict compliance with Supplemental Rules in forfeiture actions)
- United States v. Vazquez-Alvarez, 760 F.3d 193 (2d Cir. 2014) (Supplemental Rule G governs forfeiture standing)
- Bricklayers & Allied Craftworkers Local 2 v. Moulton Masonry & Constr., LLC, 779 F.3d 182 (2d Cir. 2015) (articulation of factors in default-relief analysis)
- New York v. Green, 420 F.3d 99 (2d Cir. 2005) (standard of review for factual findings on willfulness)
- Silivanch v. Celebrity Cruises, Inc., 333 F.3d 355 (2d Cir. 2003) (excusable neglect does not include failures to follow rules that are entirely clear)