United States v. $34,918 U.S. Currency

70 F.4th 1058

UNITED STATES of America, Plaintiff - Appellee v. $34,918 UNITED STATES CURRENCY, DefendantChristopher Hester, Claimant - Appellant

No. 22-3007

United States Court of Appeals, Eighth Circuit

Submitted: April 13, 2023

Filed: June 13, 2023

Appeal from United States District Court for the Western District of Arkansas - Ft. Smith

Counsel who presented argument on behalf of the appellant and appeared on the brief was Eugene Clifford, of Little Rock, AR.

Counsel who presented argument on behalf of the appellee and appeared on the brief was Aaron L Jennen, AUSA, of Fort Smith, AR.

Before BENTON, GRASZ, and STRAS, Circuit Judges.

BENTON, Circuit Judge.

Christopher William Hester claimed $34,918 found in his car during a traffic stop. When he failed to fully respond to the government's special interrogatories, the district court sanctioned him by striking his claim and entering a default judgment forfeiting the money to the government. Hester appeals, arguing that the district court relied on an incorrect interpretation of Rule G(8). Having jurisdiction under 28 U.S.C. § 1291, this court reverses and remands.

I.

On November 2, 2021, police stopped a car for a traffic violation. Hester was driving. The passenger, Antonio Burris, had a backpack at his feet. Smelling marijuana, police searched the car, finding a few marijuana cigarettes, two empty suitcases, and $34,918 in cash vacuum-sealed and plastic-wrapped inside the backpack.

Hester and Burris claimed they had pooled their money for a trip to Las Vegas, where they planned to gamble, shop, and bring back winnings in the empty suitcases. The government thought the money was drug-related. The Drug Enforcement Administration sought forfeiture of the cash under 21 U.S.C. § 881(a)(6).

Hester claimed ownership of the money, filing a verified answer under Supplemental Rule G of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, which governs forfeiture actions in rem and establishes procedures for claiming defendant property.¹ See Fed. R. Civ. P. Supp. R. G.

Three provisions are relevant: First, Rule G(5) describes filing a claim. Supp. R. G(5). This "low threshold" is "a bare-bones requirement to 'state the claimant's interest in the property.' " United States v. $579,475.00 in U.S. Currency, 917 F.3d 1047, 1049 (8th Cir. 2019) (en banc), quoting Supp. R. G(5). Second, Rule G(6) allows the government to "serve special interrogatories . . . to test the claimant's relationship to the property." Id., citing Supp. R. G(6). Finally, Rule G(8) authorizes motions to strike a claim "for failing to comply with Rule G(5) or (6)." Supp. R. G(8)(c)(i)(A).

Hester filed a claim under Rule G(5). The government served 17 special interrogatories under Rule G(6). Hester responded, but just barely. He answered three days past the deadline, objected to 9 of the 17 interrogatories, provided incomplete responses to four, and failed entirely to respond to one. He did not even sign and swear to his answers.

The parties began a back-and-forth. Hester promised to supplement all but one of his (admittedly insufficient) responses. The government agreed to drop the one objectionable interrogatory and allow 15 days to supplement the rest. Hester supplemented his responses, verified the document, and attached financial records, but he also gave terse and incomplete answers.²

The government, still unsatisfied, identified deficiencies and threatened a motion to strike if Hester failed to fully supplement. Hester responded with some additional information,³ some objections,⁴ and much agitation.⁵ He again neglected to verify.

The government moved to strike Hester's claim as a sanction for failing to fully answer the special interrogatories. See Supp R. G(6), (8). It alternatively requested an order that Hester answer certain interrogatories. Hester's response to the motion had three parts: First, he provided more complete answers to the interrogatories, including new details about his withdrawals; an affidavit from his girlfriend saying she had gifted him part of the cash; and new annotations on the previously disclosed bank documents. Second, he argued that his responses sufficiently established standing. Finally, he asked that, if the court found his responses insufficient, it compel him to answer whatever interrogatories needed supplementing.

The district court found Hester's interrogatory responses insufficient and, rather than compel responses, struck his claim as a sanction for failing to fully respond. See Supp R. G(8). It found that Hester had violated Rule G(6), and that even Hester's more detailed responses to the motion to strike were "either incomplete or raise significant questions about his standing." (quotation omitted). It declined to order Hester to supplement because, the court explained, three months had passed since Hester received the special interrogatories and he had not identified the specific obstacles preventing him from producing financial records. Hester appeals, arguing that the district court abused its discretion by striking his claim, and that he had established standing.

II.

This court generally reviews the district court's decision to strike a claim for abuse of discretion. See United States v. One Parcel of Prop. Located at RR 2, Indep., Buchanan Cnty., 959 F.2d 101, 104 (8th Cir. 1992). When a district court bases its decision on an interpretation of the Supplemental Rules, this court reviews that interpretation de novo. United States v. Real Props. Located at 7215 Longboat Drive (Lot 24), 750 F.3d 968, 972 (8th Cir. 2014). See also Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996) ("A district court by definition abuses its discretion when it makes an error of law.").

The district court struck Hester's claim under Rule G(8), which permits motions to strike a claim for "failing to comply with" Rule G(6), the special-interrogatory rule. Hester argues that Rule G(8) did not authorize striking his claim because he did not "fail[ ] to comply" with the special interrogatories.

In determining what constitutes "failing to comply" with special interrogatories, this court relies first and foremost on the Rule's plain meaning. $579,475, 917 F.3d at 1049, citing Pavelic & LeFlore v. Marvel Entm't Grp., 493 U.S. 120, 123, 110 S.Ct. 456, 107 L.Ed.2d 438 (1989).

"Failing to comply" with an obligation requires actual or constructive awareness of it. "Compliance" presupposes a "requirement" or "direction." Compliance, Merriam-Webster's Dictionary, https://www.merriam-webster.com (last visited May 30, 2023); Compliance, Oxford English Dictionary (3d ed. 2009), https://www.oed.com (last visited May 30, 2023). A boss has not "required" or "directed" a subordinate to do something by typing up an email and forgetting to hit "send." It makes no sense to criticize the subordinate for "failing to comply" with the boss's unsent email when the subordinate neither read it (actual knowledge) nor could have read it (constructive). The term "failure to comply" simply does not fit. Another example: a driver fails to comply with a stop sign after overlooking or ignoring it, but not after a vandal removes the sign and the driver has no idea it existed.

An individual cannot "fail to comply" with an unknowable obligation. A party fails to comply with discovery obligations after a court order defines those obligations. See Aziz v. Wright, 34 F.3d 587, 589 (8th Cir. 1994). Even without a court order, a loan servicer fails to comply with statutory obligations when their scope—and their applicability to the loan servicer—is obvious and should be understood. See Wirtz v. Specialized Loan Servicing, LLC, 886 F.3d 713, 718 (8th Cir. 2018). But a citizen does not fail to comply with a police order—does not even have an "opportunity to comply"—when the official does not identify himself and the citizen is "unaware of a police presence." Atkinson v. City of Mtn. View, 709 F.3d 1201, 1210 (8th Cir. 2013).

Thus, Rule G(8) authorizes striking a claim for "failing to comply with" Rule G(6) only if the claimant has reason to know of, and violates, Rule G(6) special-interrogatory obligations.

Often, this bar is easily met. Rule G(6) imposes non-ambiguous obligations to answer or object to special interrogatories about "the claimant's identity and relationship to the defendant property." Supp. R. G(6)(a). See Supp R. G(6)(b). A claimant's total failure to respond to special interrogatories, for example, obviously runs afoul of Rule G(6). See, e.g., United States v. 2008 33' Contender Model Tournament Vessel, 990 F.3d 725, 726 (1st Cir. 2021); United States v. Real Prop. Located at 17 Coon Creek Rd., Hawkins Bar California, Trinity Cnty., 787 F.3d 968, 971 (9th Cir. 2015). Often, the district court need not hesitate to strike a claim under Rule G(8).

Sometimes Rule G(6)'s obligations are harder to understand. If a special interrogatory is arguably beyond the scope of Rule G(6), does objecting to it rather than answering it constitute "failing to comply" with the Rule? On the one hand, Rule G(6) explicitly authorizes "objections to [the] special interrogatories." Supp. R. G(6)(b) ("Answers or Objections. Answers or objections to these interrogatories must be served within 21 days after the interrogatories are served."). On the other, if a special interrogatory is appropriate, a claimant cannot avoid answering it merely by objecting.

If a claimant's special-interrogatory objections straddle the line between discovery dispute and "failing to comply," the record should indicate that Rule G(6) violations were known or should have been known by the claimant before the claim is struck under Rule G(8). The district court can explicitly make this finding. Or, if a court order has compelled responses, the claimant will have actual knowledge of the Rule's scope.

On this record, this court cannot conclude that Hester knew or should have known that Rule G(6)...