United States v. Int'l Human Rights Commission

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 9 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 19-56018

Plaintiff-Appellee, D.C. No. 2:18-cv-00670-SJO-GJS

v. MEMORANDUM*

INTERNATIONAL HUMAN RIGHTS COMMISSION; ROBERT SHUMAKE; DANIEL FLINT,

Claimants-Appellants,

v.

148,145.00 IN U.S. CURRENCY,

Defendant.

Appeal from the United States District Court for the Central District of California S. James Otero, District Judge, Presiding

Submitted October 7, 2020** Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: M. SMITH and OWENS, Circuit Judges, and CARDONE,*** District Judge.

This case arises from the appeal of default judgments entered against the

International Human Rights Commission (IHRC), Daniel Flint (Flint), and Robert

Shumake (Shumake) in a judicial forfeiture proceeding relating to money seized

from Flint at Los Angeles International Airport (LAX). Because the parties are

familiar with the facts, we do not recount them here, except as necessary to provide

context to our ruling. We have jurisdiction under 28 U.S.C. § 1291. We AFFIRM in

part, and REVERSE in part.

With respect to IHRC and Flint, the district court found they received direct

notice of the judicial forfeiture proceedings but failed to file claims in the

proceedings. By failing to file a claim, the district court correctly held they lacked

standing to challenge the forfeiture and properly entered default judgments against

them. See United States v. Real Prop., 135 F.3d 1312, 1317–18 (9th Cir. 1998).

In addition, because the district court held IHRC and Flint lacked good cause

to set aside the entry of defaults against them under Federal Rule of Civil Procedure

55(c), they also fail to demonstrate excusable neglect to set aside the default

judgments under Federal Rule of Civil Procedure 60(b)(1). Both analyses consider

*** The Honorable Kathleen Cardone, United States District Judge for the Western District of Texas, sitting by designation.

2 the same factors. See Brandt v. Am. Bankers Ins. Co. of Fla., 653 F.3d 1108, 1111

(9th Cir. 2011) (citing Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984)); see also

United States v. Aguilar, 782 F.3d 1101, 1109 (9th Cir. 2015).

With respect to Shumake, however, the district court abused its discretion in

granting the motion to strike his verified judicial claim because the district court

improperly weighed competing evidence at the pleading stage of the proceedings.

We addressed this issue in United States v. $999,830.00 in U.S. Currency, 704

F.3d 1042 (9th Cir. 2012) (per curiam). In that case, we reversed the district court’s

order striking a claim and subsequent default judgment against the would-be

claimant. Id. We concluded a claimant’s “unequivocal assertion of ownership

establishes Article III standing at this stage of proceedings” and held the district

court erred by considering the claimant’s alleged prior inconsistent statements to

negate his assertion of ownership at the pleading stage. See id. at 1043.

The Government argues on appeal that Shumake had actual notice of the

judicial forfeiture proceedings under Supplemental Admiralty and Maritime Claims

Rule G(4)(b)(v) such that his claim was untimely. In the Government’s first motion

for default judgment, the district court found Shumake did not receive direct notice

of the judicial forfeiture proceedings and denied default as to Shumake on that basis.

The Government contends the district court erred because it did not consider

knowledge Shumake allegedly had before the Government filed its complaint. But

3 whether Shumake filed a claim in the prior administrative proceeding, or whether

his attorneys had discussions with the Government before it filed its complaint that

initiated the judicial forfeiture proceeding, does not establish Shumake’s actual

knowledge of this judicial forfeiture proceeding under Supplemental Rule

G(4)(b)(v). As currently developed, the record does not indicate Shumake had actual

knowledge under Supplemental Rule G(4)(b)(v). Therefore, the district court did not

abuse its discretion in denying the Government’s first motion for default as to

Shumake.

Accordingly, we AFFIRM the default judgments as to IHRC and Flint.

Because the district court abused its discretion by granting the Government’s motion

to strike Shumake’s claim, we REVERSE that order and the subsequent default

judgment entered against Shumake, and REMAND the case for further proceedings

with respect to Shumake’s claim. Each party shall bear its own costs on appeal.