PATRICK J. DUGGAN, District Judge.
In early 2003, Presley bought a 2003 GMC Sierra pickup truck from Superior Pontiac GMC, a dealership in Dearborn, Michigan, paying the purchase price with $44,000 in cash. Two dealership employees apparently used this cash to purchase five cashier's checks from local banks and credit unions, then documented the transaction to reflect that the purchase price was paid with the cashier's checks and $9,800 in U.S. currency.
Presley owned a produce business and employed a number of truck drivers. During 2002 and 2003, law enforcement authorities stopped two of his drivers and seized large quantities of marijuana. The DEA began to investigate Presley's activities, leading to his indictment on one charge of conspiracy to distribute more than one hundred kilograms of marijuana, in violation of 21 U.S.C. §§ 846, 841(a)(1), 841(b)(1)(B)(vii). The government also obtained a warrant to seize the GMC pickup truck. The seizure took place on June 15, 2005. The government subsequently filed this forfeiture action, which was stayed pending completion of the criminal proceedings.
The two truck drivers who had been stopped by law enforcement authorities testified against Presley during a two-day jury trial held in October 2006. Presley was found guilty, and his conviction was affirmed on appeal. United States v. Presley, 349 Fed. App'x 22 (6th Cir. Oct. 13, 2009). The government filed a motion to allow an interlocutory sale of the vehicle, and on July 15, 2009, the Court granted this motion. The pickup truck was sold for approximately $17,500.
In August 2010, Presley's attorney moved to withdraw from this case, and the Court granted his motion soon afterward. At that time, Presley began representing himself in this litigation.
On October 20, 2010, Presley filed a motion to vacate his conviction pursuant to 28 U.S.C. § 2255. Presley argued that he was denied the effective assistance of counsel, as his attorney failed to introduce evidence that would have impeached the government's key witnesses.
After an evidentiary hearing held on June 9, 2011, the Court concluded that due to the error of Presley's counsel, the government's case had not been subjected to meaningful adversarial testing. The Court granted Presley's § 2255 motion in an Opinion and Order dated August 16, 2011, directing that he be released from custody unless the government commenced a new trial within 180 days. The Court subsequently dismissed the indictment pursuant to a motion filed by the government.
On October 26, 2011, the government moved for summary judgment in the forfeiture action. The government asserted that the proceeds of the vehicle's sale are subject to forfeiture pursuant to 31 U.S.C. § 5317(c)(2) as property involved in a transaction structured to evade reporting requirements. A hearing was held on January 23, 2012. The Court denied the government's motion, concluding that a genuine dispute of fact existed with respect to Presley's "innocent owner" defense. If Presley proved this defense, the proceeds of the vehicle would not be subject to forfeiture. See 18 U.S.C. § 983(d).
A settlement conference relating to this forfeiture action was held on May 14, 2012, before Magistrate Judge David R. Grand. No settlement was reached. Presley has resisted efforts to settle the case for less than the fair market value of the vehicle at the time of the seizure, an amount that he believes is considerably higher than the auction price.
The government has now moved for entry of an order voluntarily dismissing this forfeiture action pursuant to Rule 41(a)(2). The government has determined that it would not be cost-effective to try this case for the amount remaining in controversy. Therefore, the government seeks an order of voluntary dismissal with prejudice and providing for the payment of the sale's net proceeds to Presley. Presley has apparently indicated in e-mail correspondence that he will not agree to entry of the requested order unless it makes clear that he is free to bring a future action for the full value of the truck. See Pl.'s Mot. 3.
Rule 41(a)(2) provides that an action may be dismissed at the plaintiff's request by court order "on terms that the court considers proper." The rule further provides:
Fed. R. Civ. P. 41(a)(2). As the government notes, no counterclaim has been filed in this action.
Despite having failed to file a counterclaim, Presley has suggested that he intends to seek recovery of the full value of the seized truck. The Court considers whether voluntary dismissal would affect Presley's ability to pursue such relief, and concludes that it would not. The Court believes that Presley's claim is in the nature of a compulsory counterclaim, and that Presley has effectively waived it. The federal rules provide:
Fed. R. Civ. P. 13(a)(1). Failure to assert a compulsory counterclaim as required by Rule 13(a) results in waiver of the claim. Kane v. Magna Mixer Co., 71 F.3d 555, 562-63 (6th Cir. 1995). Presley's claim for the full value of the vehicle would arise from the seizure which is the focus of this forfeiture suit, and the government is already a party to the suit. Having effectively waived his potential counterclaim for money in excess of the proceeds of the sale, Presley would be unable to assert this claim in a subsequent action.
The government has requested that the order of dismissal state that the United States and its agents had reasonable cause for the seizure of the defendant vehicle under 28 U.S.C. § 2465, and that the government's position in this suit was substantially justified under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d)(1)(B).
The court first considers the question of "reasonable cause" for the seizure. The statute provides:
28 U.S.C. § 2465(a)(2). "`Reasonable cause' within the meaning of section 2465 is essentially synonymous with probable cause." United States v. One 1996 Ford Pickup, 56 F.3d 1181, 1186 (9th Cir. 1995) (citing Stacey v. Emery, 97 U.S. 642, 646 (1878); United States v. 255 Broadway, 9 F.3d 1000, 1006 n.9 (1st Cir. 1993)). The Court notes that the government obtained a seizure warrant in connection with the seizure of Presley's truck. This warrant was issued by Magistrate Judge Virginia Morgan on June 14, 2005. Gov't Br. Supp. Mot. Summ. J. Ex. 1. The Court is unaware of any evidence indicating that the statements supporting the warrant were false, and believes that the issuance of this warrant definitively resolves the question of reasonable cause in the government's favor.
The Court next considers whether the government's position was "substantially justified" for purposes of the EAJA. This statute provides in pertinent part:
28 U.S.C. § 2412(d)(1)(B). The Supreme Court has concluded that in this context, the term "substantially justified" means "`justified in substance or in the main' — that is, justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550 (1988). "That is no different from the `reasonable basis both in law and fact' formulation" that had previously been adopted by some Courts of Appeals. Id. at 565, 108 S. Ct. at 2550. "To be `substantially justified' means . . . more than merely undeserving of sanctions for frivolousness; that is assuredly not the standard for Government litigation of which a reasonable person would approve." Id. at 566, 108 S. Ct. at 2550. "In other words, to be substantially justified, the position of the government must have a reasonable basis in both fact and law; however, it need not hold a winning hand." United States v. Certain Land Situated in the City of Detroit, 600 F.Supp.2d 880, 895 (E.D. Mich. 2009).
Even if the Court were to assume that Presley is a "prevailing party" under the statute,
For the reasons set forth above, the Court concludes that no prejudice will result from voluntary dismissal of this suit, and believes that the government's motion should be granted. The Court further concludes that the United States and its agents had reasonable cause for the seizure of the defendant vehicle under 28 U.S.C. § 2465, and that the government's position in this action was substantially justified for purposes of 28 U.S.C. § 2412(d)(1)(B).
Accordingly,