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U.S. v. ONE RESIDENTIAL PROPERTY LOC. AT 8110 E. MOHAVE RD.

September 30, 2002

UNITED STATES OF AMERICA, PLAINTIFF
V.
ONE RESIDENTIAL PROPERTY LOCATED AT 8110 E. MOHAVE ROAD, PARADISE VALLEY, ARIZONA, AND ALL APPURTENANCES AFFIXED THERETO, DEFENDANT.



The opinion of the court was delivered by: Thomas J. Whelan, United States District Judge

ORDER DENYING CLAIMANT'S MOTION FOR SUMMARY JUDGMENT

On July 30, 2002 Claimant Tommy Thompson ("Thompson") moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff United States of America ("Plaintiff") timely opposed. All parties are represented by counsel. The Court decides the matter on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1(d.1).

I. BACK

On July 31, 2001 Ed and Sherry Stewart (the "Stewarts"), the previous owners of 8110 E. Mohave Road, Paradise Valley, Arizona (the "Property"), executed a second deed of trust from Real Estate Equity Lending, Inc. ("REEL"). The Stewarts thereafter defaulted on the loan and REEL commenced nonjudicial foreclosure proceedings on the second deed of trust.

On April 30, 2002 Plaintiff filed a civil forfeiture Complaint. Plaintiff alleges that the Property is subject to civil forfeiture pursuant to 18 U.S.C. § 981 because it was purchased with the proceeds of a mail and wire fraud scheme and/or is property traceable to money laundering transactions. On May 2, 2002 Plaintiff recorded a Notice of Lis Pendens against the Property with the Maricopa County, Arizona Recorder's Office. On May 9, 2002 Claimant Thompson purchased the Property at a nonjudicial foreclosure sale conducted by REEL. On June 7, 2002 Thompson filed a claim to the Property in response to Plaintiff's Complaint. Thompson now moves for summary judgment.

II. LEGAL STANDARD

Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See FED. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute is genuine if a reasonable jury could return a verdict for the nonmoving party. See Anderson, 477 U.S. at 248. Summary judgment is appropriate when a party cannot meet an essential element of its claim or defense. Nissan Fire & Marine Ins. Co v. Fritz Cos., 210 F.3d 1099, 1103 (9th Cir. 2000).

When making this determination, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The court must not weigh the evidence, draw legitimate inferences or make credibility determinations in evaluating a motion for summary judgment. See Anderson, 477 U.S. at 255.

A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the non-moving party s case or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. Id. at 322-23, 106 S.Ct. at 2552-53. However, where the moving party bears the burden of proof on an issue, it cannot obtain summary judgment unless it presents evidence so compelling that no rational jury would fail to award judgment for the moving party. See, e.g., Torres Vargas v. Santiago Cummings, 149 F.3d 29, 35 (1st Cir. 1998) ("The party who has the burden of proof on a dispositive issue cannot attain summary judgment unless the evidence that he provides on that issue is conclusive."); Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) ("[I]f the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor."); Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (same). If the moving party fails to discharge this initial burden, summary judgment must be denied and the court need not consider the non-moving party's evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60, 90 S.Ct. 1598, 1609-10 (1970).

III. DISCUSSION

Claimant Thompson contends that Plaintiff's interest in the Property was extinguished when REEL instituted nonjudicial foreclosure proceedings against the Property and foreclosed its interest under the deed of trust by selling the Property at public auction. See Claimant's Mem. of P. & A. at 3 (citing U.S. v. Real Property at 2659 Roundhill Dr., Alamo, Cal. ("Roundhill"), 194 F.3d 1020 (9th Cir. 1999)). The Court disagrees.

The Civil Asset Forfeiture Reform Act of 2000 ("CAFRA") governs civil forfeitures to the United States. See 18 U.S.C. § 981. CAFRA provides that "[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to . . . any offense constituting "specified unlawful activity' (as defined in 1956(c)(7) of this title)" is subject to forfeiture. 18 U.S.C. § 981(a)(1)(C) (section 1956(c)((7)(A) enumerates federal mail and wire fraud as "specified unlawful activity").*fn1 Section 983 sets forth rules governing civil forfeiture proceedings and delineates the circumstances in which property described in § 981 cannot be forfeited. See 18 U.S.C. § 983. Section 983(d) protects property from forfeiture through the "innocent owner" defense. It states:

(1) An innocent owner's interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden proving that the claimant is an innocent owner by a preponderance of the evidence.
(3)(A) With respect to a property interest acquired after the conduct giving rise to the forfeiture has taken place, the term innocent owner means a person who, at the time that ...

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