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United States of America v. $1

March 1, 2013

UNITED STATES OF AMERICA,,
PLAINTIFF,
v.
$1,026,781.61 IN FUNDS FROM
PENDING APPEAL FLORIDA CAPITAL BANK, DEFENDANT.



The opinion of the court was delivered by: Marc L. Goldman United States Magistrate Judge

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR STAY

I. Introduction

On November 20, 2012, in this civil forfeiture proceeding initiated by the United States, the Court entered an Opinion and Order granting the motion for summary judgment brought by Claimants Lonnie Kocontes and Katherine Kern. See U.S. v. $1,026,781.61 in Funds from Florida Capital Bank, Nos. SACV 09--04381--MLG, SACV 09--00716--MLG.*fn1 On January 17, 2013, the Government filed a notice of appeal. Presently before the Court is the Government's motion to stay the November 20, 2012 judgment pending the outcome of the appeal.

-MLG Document 269 Filed 03/01/13 Page 2 of 7 Page ID #:3544

II. Discussion

28 U.S.C. § 1355, which grants subject matter jurisdiction to district courts in civil forfeiture actions, provides in pertinent part:

In any case in which a final order disposing of property in a civil forfeiture action or proceeding is appealed, removal of the property by the prevailing party shall not deprive the court of jurisdiction. Upon motion of the appealing party, the district court or the court of appeals shall issue any order necessary to preserve the right of the appealing party to the full value of the property at issue, including a stay of the judgment of the district court pending appeal or requiring the prevailing party to post an appeal bond. § 1355(c).*fn2 The court is unaware of any Ninth Circuit authority addressing the appropriate standard to apply in determining whether to grant a stay under § 1355(c). Although the statute contains seemingly mandatory language, courts deciding this issue in other circuits have uniformly found that § 1355(c) does not necessarily mandate a stay in every case; rather, the usual four-part test for determining whether to grant a stay pending appeal also applies under § 1355(c). See United States v. Various Tracts of Land in Muskogee and Cherokee Counties, 74 F.3d 197, 198 (10th Cir. 1996); In re All Funds in Accnts. in Names Registry Pub., Inc., 58 F.3d 855, 856 (2d Cir. 1995); U.S. v. $1,399,313.74 in U.S. Currency, 613 F.Supp.2d 433, 435 (S.D.N.Y. 2009); United States v. Fourteen Various Firearms, 897 F.Supp. 271, 272 (E.D. Va. 1995); United States. v. 2001 Honda Accord EX VIN #1HGCG22561A035829, No. Civ.A. 3:02-CV-0831, 2003 WL 1339957 at *2 (M.D. Pa. March 18, 2003); United States v. 1993 Bentley Coupe, et al., No. Civ.A. 93-1282, 1997 WL 803914, at *1 (D.N.J. Dec. 30, 1997). Thus, courts determining whether to grant a stay under § 1355(c) consider: (1) the likelihood of success on the merits; (2) whether the moving party will suffer irreparable injury if a stay is denied; (3) whether the opposing party will suffer substantial injury if a stay is issued; and (4) the public interest. The Court will examine these factors to determine whether a stay is appropriate here.*fn3

A. Likelihood of Success

The first factor, the likelihood of success on appeal, "does not require the trial court to change its mind or conclude that its determination on the merits was erroneous." Fourteen Various Firearms, 897 F.Supp. 271 at 273 (quoting St. Agnes Hosp. v. Riddick, 751 F.Supp. 75, 76 (D. Md. 1990)). Rather, the court must determine whether there is a strong likelihood that the issues presented on appeal could be rationally resolved in favor of the party seeking the stay. Id.

Here, the Court's decision to grant summary judgment rested on the determination that the evidence did not give rise to a genuine issue of material fact as to whether Claimant Kocontes murdered his companion, Micki Kanesaki. The Court is unconvinced by the Government's arguments that the Court applied an erroneous legal standard, improperly excluded evidence, or improperly made factual determinations. (See Mot. to Stay at 7, Ex. B.) Nevertheless, the Court recognizes that reasonable minds could differ on the question of whether the Government presented sufficient circumstantial evidence to give rise to a genuine issue of material fact as to whether Kocontes murdered Kanesaki. Accordingly, this first factor weighs in favor of granting a stay.

B. Irreparable Injury to the Moving Party

The Government argues that it will suffer irreparable injury if a stay is not granted because Claimants will dissipate the assets, and/or may transfer the assets abroad, making them more difficult to recover. (Mot. for Stay at 7; Reply at 11.) Claimants do not deny that if the assets are returned, they intend to begin spending the seized funds. They explain that the seized assets are needed for living expenses and legal fees related to Kocontes's recent arrest. (Kocontes Decl.)

The Court therefore finds that if no stay is granted and the Government is successful on its appeal, the Government will be irreparably harmed because Claimants will likely have dissipated a large portion of the assets by that time. ...


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