GARY S. AUSTIN, Magistrate Judge.
Claimant FELIX VELASCO ("Claimant") seeks summary judgment on Plaintiff UNITED STATES OF AMERICA's ("Plaintiff" or "Government") complaint for forfeiture in rem. More particularly, Claimant asserts the Government did not have probable cause to institute this forfeiture action. The Government contends that factual issues surrounding the forfeiture of the defendant currency do not support summary judgment.
On July 28, 2011, the Government filed its Verified Complaint for Forfeiture In Rem against approximately $77,000.00 in United States Currency. (Doc. 1.) In response, on August 15, 2011, Claimant filed both a verified claim opposing the forfeiture and an answer to the complaint, asserting, among others, an affirmative defense of innocent possessor or owner. (Docs. 7-8.)
On October 3, 2011, Claimant filed his Motion for Summary Judgment. On November 11, 2011, the Government filed its opposition. (Docs. 28-34.) On November 28, 2011, Claimant filed his reply thereto. (Doc. 35.)
Following the completion of briefing, the Court vacated the December 2, 2011, hearing on the motion and the matter was taken under submission pursuant to Local Rule 230(g). For the reasons discussed below, this Court DENIES Claimant's motion for summary judgment.
Rule 56(a) of the Federal Rules of Civil Procedure permits a party to move for summary judgment on all or part of a claim. Summary judgment is appropriate when there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). The purpose of summary judgment is to "pierce the pleadings and assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec., 475 U.S. at 586, n. 11, 106 S.Ct. 1348; International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).
In a motion for summary judgment, the moving party
Celotex Corp., v. Catrett, 477 U.S. 317, 323 (1986).
To carry its burden of production on summary judgment, a moving party "must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000); see High Tech Gays v. Defense Indus. Sec. Clearance Office, 895 F.2d 563, 574 (9th Cir. 1990). "[T]o carry its ultimate burden of persuasion on the motion, the moving party must persuade the court that there is no genuine issue of material fact." Nissan Fire, 210 F.3d at 1102; see High Tech Gays, 895 F.2d at 574. "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505 (1986).
"If a moving party fails to carry its initial burden of production, the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial." Nissan Fire, 210 F.3d at 1102-1103; see Adickes v. S.H. Kress & Co., 398 U.S. 144, 160, 90 S.Ct. 1598 (1970). "If, however, a moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense." Nissan Fire, 210 F.3d at 1103; see High Tech Gays, 895 F.2d at 574. "If the nonmoving party fails to produce enough evidence to create a genuine issue of material fact, the moving party wins the motion for summary judgment." Nissan Fire, 210 F.3d at 1103; see Celotex Corp. v. Catrett, 477 at 322 ("Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make the showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial").
"But if the nonmoving party produces enough evidence to create a genuine issue of material fact, the nonmoving party defeats the motion." Nissan Fire, 210 F.3d at 1103; see Celotex, 477 U.S. at 322, 106 S.Ct. 2548. "The amount of evidence necessary to raise a genuine issue of material fact is enough `to require a jury or judge to resolve the parties' differing versions of the truth at trial.'" Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 288-289, 88 S.Ct. 1575, 1592 (1968)). "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient." Anderson, 477 U.S. at 252, 106 S.Ct. 2505.
On summary judgment, a court must decide whether there is a "genuine issue as to any material fact," not weigh the evidence or determine the truth of contested matters. Fed. R. Civ. P. 56(c); Covey Hollydale Mobilehome Estates, 116 F.3d 830, 834 (9th Cir. 1997); see Adickes v. S.H. Kress & Co., 398 U.S. at 157; Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 467, 82 S.Ct. 486 (1962); Loehr v. Ventura County Community College Dist., 743 F.2d 1310, 1313 (9th Cir. 1984). The evidence of the party opposing summary judgment is to be believed and all reasonable inferences that may be drawn from the facts before the court must be drawn in favor of the opposing party. Anderson v. Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. 2505; Matsushita, 475 U.S. at 587, 106 S.Ct. 1348. The inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-252, 106 S.Ct. 2505.
This case is governed by the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"). Prior to CAFRA's passage, the Government had "the initial burden of establishing probable cause connecting seized property with illegal drug transactions." The burden then shifted to claimants to prove, by a preponderance of the evidence, that the money was not connected with illegal drug activity. See United States v. $42,500 in U.S. Currency, 283 F.3d 977, 980 (9th Cir. 2002). Congress passed CAFRA to "transfer[] the burden of proof to the government and required[] the government to establish forfeiture by a preponderance of the evidence rather than by the [former] lower probable cause standard." United States v. $80,180.00 in U.S. Currency, 303 F.3d 1182, 1184 (9th Cir. 2002). When the "the Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the Government shall establish that there was a substantial connection between the property and the offense." 18 U.S.C. § 983(c)(3). The burden then shifts to the claimant to prove by a preponderance of the evidence that the claimant is an innocent owner of the property. 18 U.S.C. § 983(d). The determination of whether the Government has met its burden of proof is based on the aggregate of facts, including circumstantial facts. United States v. $42,500 in U.S. Currency, 283 F.3d at 980; see also United States v. $30,060 in U.S. Currency, 39 F.3d 1039, 1041 (9th Cir. 1994).
In interpreting CAFRA, the Ninth Circuit retained the section 1615 probable cause pleading requirement. United States v. $493,850.00 in U.S. Currency, 518 F.3d 1159, 1169 (9th Cir. 2008) ("We hold that section 1615 continues to require that the government show probable cause to institute a forfeiture action").
In a civil forfeiture proceeding under Title 21 of the United States Code section 881(a)(6), seized money is subject to forfeiture if it was: "(1) furnished or intended to be furnished in exchange for a controlled substance; (2) traceable to such an exchange; or (3) used or intended to be used to facilitate a violation of federal drug laws." United States v. $191,910 in U.S. Currency, 16 F.3d 1051, 1071 (9th Cir. 1994). The Government must show that it had reasonable grounds to believe a connection existed between the property and drug activities, supported by more than mere suspicion but less than prima facie proof. United States v. $30,060 in U.S. Currency, 39 F.3d at 1041. "Each case stands upon its own facts, and the presence or absence of any one fact is not dispositive; indeed probable cause is not an exacting standard." United States v. $42,500 in U.S. Currency, 293 F.3d at 980, citation omitted. "Probable cause to believe that the property is involved in some illegal activity is not enough — the government must have probable cause to believe that the property is involved in the activity subjected to the specific forfeiture statute it invokes." United States v. $191,910 in U.S. Currency, 16 F.3d at 1071.
In opposition to Claimant's motion, the Government contends the totality of circumstances here establish the propriety of forfeiture. More particularly, the Government points to approximately twenty-five "aggregate facts" it contends establish a substantial connection between the currency and an illegal drug transaction:
(Doc. 28 at 16-17.)
Initially, the Court notes that the Government seeks to impute the various characteristics attributed to the driver of the vehicle — Jorge Luis Delgado — to Claimant Felix Velasco. Claimant is the owner of the vehicle but was not present when Delgado was stopped.
However, the Government has not identified any legal authority within this circuit wherein the various "aggregate facts" relative to the driver of the vehicle at the time of the stop are attributed to the claimant of the defendant currency where the driver and the claimant are not one in the same. In fact, a review of the authorities presented by the Government indicates that in each case referenced in its opposition, the claimant and the individual stopped were one in the same: United States v. $129,727 in U.S. Currency, 129 F.3d 486 (9th Cir. 1997) (Trujillo was airline passenger carrying currency and the claimant); United States v. $242,484 in U.S. Currency, 389 F.3d 1149 (11th Cir. 2004) (Stanford was airline passenger carrying currency and the claimant); United States v. $124,700 in U.S. Currency, 458 F.3d 822 (8th Cir. 2006) (Gonzolez was driver of rental car and one of three claimants [other claimants testified that they provided cash to Gonzolez]); United States v. $141,770, 157 F.3d 600 (8th Cir. 1998) (Moreno-Pena was driver and claimant); United States v. $107,840 in U.S. Currency, 784 F.Supp.2d 1109 (S.D. Iowa Apr. 29, 2011) (Pusey was driver of rental truck and claimant); United States v. $21,055 in U.S. Currency, 778 F.Supp.2d 1099 (D. Kan. Mar. 31, 2011) (Vennemann was driver of truck and claimant); United States v. $50,720 in U.S. Currency, 589 F.Supp.2d 582 (E.D.N.C. July 26, 2008) (Roberts was driver and claimant); United States v. $433,980 in U.S. Currency, 473 F.Supp.2d 685 (E.D.N.C. Jan. 17, 2007) (Rodriguez was driver and claimant); United States v. $9,135 in U.S. Currency, 1998 WL 329270 (E.D. La. June 18, 1998) (Davis was airline passenger and claimant); see also United States v. $493,850 in U.S. Currency, 518 F.3d 1159 (9th Cir. 2008) (Camacho & Bruno were driver and passenger in truck and claimants); United States v. $42,500 in U.S. Currency, 283 F.3d 977 (Hysell was airline passenger and claimant); United States v. $22,474 in U.S. Currency, 246 F.3d 1212 (9th Cir. 2001) (Malone was airline passenger and claimant); United States v. $49,576 in U.S. Currency, 116 F.3d 425 (9th Cir. 1997) (Lombera was airline passenger and claimant).
None of the cases cited involve a situation such as the one before the Court, where the driver of the vehicle is not a claimant to the currency. Therefore, this Court finds that those facts identified by the Government at pages 16 and 17 of its opposition as "a" through "d," "f," "h" through "j," and "s" should not be considered as weighing against Claimant here because they relate only to the driver of the vehicle rather than the Claimant.
In opposition to Claimant's motion, the Government relies in part on the fact that canine Cody alerted to the defendant currency.
Here, Detective Ramiro Rodriguez's declaration references the fact that canine Cody was trained to "search for narcotic odor . . . and alert to narcotic odor." More specifically, the dog can detect marijuana, heroin, cocaine, methamphetamine, and opium. (Doc. 32, ¶ 6.) Rodriguez further declares the certification process Cody completed involves "(1) whether the canine recognizes the odors of marijuana, cocaine, heroin, methamphetamine and opium; (2) whether the canine responds to those odors; and (3) whether the handler recognizes the canine's responses. As part of this process, the canine is also tested or `proofed' against non-narcotic items . . . such as food, plastics, cotton, currency, etc." (Doc. 32, ¶ 8, emphasis added.) Significant here, Rodriguez declares that in weekly training he "proof[s] Cody using currency, both uncirculated currency obtained from the United States Mint, as well as circulated currency, to test whether he alerts to the odor of currency or to any alleged trace odors of narcotics on currency. He does not." (Doc. 32, ¶ 14.) With specific regard to the defendant currency in this case, Cody "alerted on a specific shrub [where the currency had been placed], detecting the odor of illegal drugs. . . ." (Doc. 32, ¶ 25.)
The Ninth Circuit has given probative weight to positive alerts by "sophisticated" dogs — dogs that react only to ephemeral by-product of narcotics and not to commonly circulated currency — to show that currency is substantially connected to illegal drug activity. See United States v. $42,500 in U.S. Currency, 283 F.3d at 982; United States v. $22,474 in U.S. Currency, 246 F.3d at 1216.
More specifically, the Ninth Circuit has explained its jurisprudence on unsophisticated versus sophisticated dog alerts to currency:
United States v. $42,500 in U.S. Currency, 283 F.3d at 982-983. Here, Claimant relies on the two cases relied upon by claimant Hysell in the aforementioned excerpt. As explained above however, where a canine is trained not to alert to currency in general circulation, but instead the canine alerts only to the by product of illegal narcotics, that evidence is to be afforded greater weight in a determination of this kind.
It thus appears that Cody's training lends itself to a finding that Cody is in fact a "sophisticated" dog. Therefore, Cody's alert to the presence of illegal drugs on the currency found in Claimant's vehicle is strong evidence going to the determination of whether the Government had met its burden.
Claimant's vehicle contained a substantial sum of money. The Ninth Circuit has observed that a large amount of money alone may be "strong evidence that the money was furnished or intended to be furnished in return for drugs." United States v. $29,959.00 in U.S. Currency, 931 F.2d 549, 553 (9th Cir. 1991) (finding cash amounting to $29,959.99 is an "extremely large amount" to be kept in the home); see also United States v. $83,310.78 in U.S. Currency, 851 F.2d 1231, 1236 (9th Cir. 1988) (carrying a large sum of cash is "strong evidence" of a connection to illegal drug activity).
The Court notes that the cases relied upon by the Government in support of its position are factually distinguishable. For example, in United States v. $29,959.00 in U.S. Currency, 931 F.2d 549, the amount of cash was found along with drugs and drugs paraphernalia on property owned by claimants; in United States v. $80,180.00 in U.S. Currency, 303 F.3d 1182, the claimant offered no documentation to explain the source of the currency coupled with several inconsistent statements; and in United States v. $84,615 in U.S. Currency, 379 F.3d 496 (8th Cir. 2004), the driver/claimant possessed drugs at the time of the stop and claimed the money was his life savings, money from his uncle, and money from the closure of a gem and mineral business — explanations found not credible.
Here, neither drugs nor drug paraphernalia were found, nor were inconsistent statements offered. In fact, as is discussed more fully below, there is documentation regarding legitimate sources of the defendant currency. Nevertheless, the fact remains that $77,000 is a large sum of money to be stored in the trunk of a vehicle. United States v. $29,959.00 in U.S. Currency, 931 F.2d at 553.
In the totality of circumstances, the large sum of money at issue here is "strong evidence that the money was furnished or intended to be furnished in return for drugs." United States v. $93,685.61 in U.S. Currency, 730 F.2d 571, 572 (9th Cir. 1984).
In this circuit, it has been noted that "cellophane is not a normal repository for carrying large amounts of money. Rather, cellophane, which is largely impermeable to gas, is commonly used to conceal the smell of drugs and avoid detection by drug dogs." United States v. $42,500 in U.S. Currency, 283 F.3d at 982, citing to United States v. $129,727 in U.S. Currency, 129 F.3d at 490. Here, the currency was wrapped in "green plastic wrap" and "was hidden in a natural void above the wheel well." (Doc. 19 at 3, ¶¶ 10-11.)
More specifically, the defendant currency had been bundled in rubber bands, then wrapped in green plastic wrap and blue tape. Six of the seven packages were labeled "9.5" and one package was labeled "21," containing $9,500 each and $21,000 respectively. In total, according to the parties, the purported $77,000 consisted of the following denominations:
(See Doc. 1, ¶ 6; Doc. 19, ¶ 13.)
By the Court's calculations, the amount of currency located in the trunk of Claimant's car was either $77,000 or $78,000.
Next, the Government points to an air freshener or fresheners in the cabin of the vehicle and an air freshener in the "empty trunk" as factors establishing a substantial connection between the currency and an illegal offense. More particularly, Detective Israel Rubalcava's declaration states that he "noticed . . . air fresheners in a vent on the dash." (Doc. 31, ¶ 19; see also Doc. 29, ¶ 17.) Detective Jensen searched the trunk and "noticed that there was an air freshener in the trunk . . . an unusual place for an air freshener. . . ." (Doc. 29, ¶ 20; see also Doc. 31, ¶21.) And, Special Agent Ramirez's declaration references the "presence of air freshener" in the cabin and trunk. (Doc. 30, ¶ 7.)
In United States v. $493,850 in U.S. Currency, 518 F.3d 1159, during a traffic stop, as the officer approached the vehicle, he "could smell the strong odor of air freshener," a technique employed in masking the odor of narcotics. Here, there is no evidence of a "strong odor" of air freshener. None of the declarations provided assert anything other than the mere presence of one or perhaps two air fresheners in the cabin of the vehicle and a single air freshener in the trunk of the vehicle. In the absence of a strong odor, rather than the mere presence of air fresheners, an air freshener may be employed to do just that: freshener the air. The mere presence of an air freshener, or even two, is not particularly suspicious. Moreover, while it may in fact be unusual to place an air freshener in the trunk of a vehicle, this factor amounts to nothing more than mere suspicion. Accordingly, this Court finds little probative value in the presence air fresheners in the Claimant's vehicle at the time it was stopped.
Considering the aggregate of facts — namely the canine alert or sophisticated dog sniff, the large amount of currency, and the manner in which the currency was both packaged and bundled — the Government has met its burden of proof and established that there is a substantial connection between the defendant currency and an illegal drug transaction. Thus, the burden shifts to the claimant to prove he is an innocent owner of the property, or that there exists a legitimate source for the money.
Because the Government has presented factors pertaining to the seizure of the currency establishing a substantial connection to an illegal drug transaction, Claimant must prove innocent ownership. Claimant must prove he "(1) did not know of the conduct giving rise to forfeiture; or (2) upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property." United States v. $493,850.00 in U.S. Currency, 518 F.3d at 1170. Claimant has the burden to "prove the money had an independent source and had not been used illegally." United States v. $22,474.00 in U.S. Currency, 246 F.3d at 1217, citing United States v. $215,300.00 in U.S. Currency, 882 F.2d 417, 420 (9th Cir. 1989).
Claimant's declarations are silent as to any knowledge of the conduct giving rise to the forfeiture, nor does he assert that upon learning of the conduct he terminated such use of the property. In no way does Claimant address Delgado's use of his vehicle. (Docs. 19-2 & 35-1.) However, Claimant does offer evidence to establish an independent source for the currency at issue here.
Claimant declares that he is eighty-three years old and has never been convicted of a crime.
While the Government asserts there is "no legitimate source for such [a] large quantity of cash," that assertion is simply incorrect. In fact, using only the verifiable income reflected above — the retirement benefits Claimant has received for approximately twenty years — this Court calculated, for example, that saving fifteen percent of that sum every month would result in an overall savings of $76,320.00.
Finally, Claimant is or was a party to litigation involving asbestos exposure in the workplace. On January 12, 2011,
It is mere speculation to conclude that a retired person receiving monthly benefits that are supplemented by the proceeds of a primarily cash-based service business, whom also has received significant settlement proceeds from ongoing litigation to which he is a party, does not have a legitimate source for the quantity of currency at issue here.
Nonetheless, this Court notes a complete lack of explanation by Claimant regarding the presence of the currency in the trunk of his vehicle. In other words, he has offered no reason for keeping a large amount of money in his trunk, such as, for example, a distrust of banking institutions. It is thus somewhat significant to note that Claimant maintains a bank account with Bank of America and relies upon evidence related thereto in order to establish a legitimate source for the defendant currency. Moreover, Claimant has failed to explain or address the fact the currency was wrapped in green plastic wrap or cellophane — a substance "commonly used to conceal the smell of drugs and avoid detection by drug dogs." United States v. $42,500 in U.S. Currency, 283 F.3d at 982. Therefore, while Claimant may be able to account for the fact he could have amassed a large amount of cash given his pension, cash-based small business, and asbestos litigation settlement funds, his failure to address or explain the use of his vehicle's trunk as a bank, or explain the needs to store that money wrapped in cellophane, cannot overcome the evidence proferred by the Government in the form of a sophisticated dog sniff, large sum of money, and the packing and bundling of that money.
In sum, the Government has met its burden by establishing that the defendant currency at issue here is substantially connected to an illegal drug transaction. The burden then shifted to Claimant to establish, by a preponderance of the evidence, that he is an innocent owner. This is a burden that Claimant could not meet on summary judgment. Thus, there exist genuine issues of material dispute and summary judgment is inappropriate.
In accordance with the foregoing, Claimant Felix Velasco's motion for summary judgment is DENIED.
