United States District Court, E.D. North Carolina, Eastern Division
C. DEVER III Chief United States District Judge
October 4, 2016, the United States of America filed this
civil action in rem seeking the forfeiture of $297,
683.00 in U.S. currency under 18 U.S.C. § 981(a)(1)(C)
[D.E. 1]. On December 11, 2017, the United States moved to
amend the pleadings to add a claim for forfeiture under 18
U.S.C. § 1955(d) [D.E. 16], moved for summary judgment
[D.E. 17], and filed a memorandum in support [D.E. 18]. On
December 29, 2017, claimant Charles Smith ("Smith"
or "Claimant") cross-moved for summary judgment
[D.E. 23] and filed a memorandum in support [D.E. 24].
Thereafter, both parties responded and replied. As explained
below, the court grants the United States's motion to
amend the pleadings and denies the motions for summary
2015, law enforcement authorities received numerous
complaints that Smith was operating an illegal gambling
business at his residence in Trenton, North Carolina. See
[D.E. 20-1] 8. Undercover agents visited Smith's
residence on numerous occasions and found approximately 40
video gaming machines ("VGMs") and individuals
playing the VGMs. See Id. at 8-9. On December 22,
2015, Special Agent Greg Murphy obtained a search warrant to
search Smith's residence and to seize any slot machines
and related documents or currency. See Id. at 11-12.
During the search, agents seized $297, 638.00 in U.S.
currency, 40 VGMs, and 1 ATM machine. See Id. at 13.
The $297, 638.00 in U.S. currency is the subject of this
dispute and was found in a plastic pickle barrel in
Smith's backyard. See id.
generally may amend its complaint once as a matter of course.
Fed.R.Civ.P. 15(a)(1). Further amendments are allowed
"only with the opposing party's written consent or
the court's leave, " although "[t]he court
should freely give leave whenjustice so requires."
Id. 15(a)(2). Leave should not be granted when the
amendment "would be prejudicial to the opposing party,
there has been bad faith on the part of the moving party, or
the amendment would be futile." Johnson v. Oroweat
Foods Co., 785 F.2d 503.509 (4th Cir. 1986): see
Newport News Holdings Corp. v. Virtual City Vision.
Inc., 650 F.3d 423, 439 (4th Cir. 2011). Once a district
court has issued a scheduling order, however, the scheduling
order "may be modified only for good cause."
the deadlines provided by a scheduling order have passed, the
good cause standard must be satisfied to justify leave to
amend the pleadings." Nourison Rug Corp. v.
Parvizian, 535 F.3d 295, 298 (4th Cir. 2008); see
Hexion Specialty Chems., Inc. v. Oak-Bark Corp., No.
7:09-CV-105-D, 2011 WL 4527382, at *8 (E.D. N.C. Sept. 28,
2011) (unpublished); Farrar & Farrar Dairy. Inc. v.
Miller-St. Nazianz. Inc., No. 5:06-CV-160-D, 2011 WL
1262159, at *l-2 (E.D. N.C. Mar. 31, 2011) (unpublished),
affd. 477 Fed.Appx. 981 (4th Cir. 2012) (per curiam)
(unpublished). "If the party fails to establish
'good cause' under Rule 16, a trial court may deny
the motion to amend and need not conduct the inquiry under
Rule 15." Hexion Specialty Chems., Inc., 2011
WL 4527382, at *8. Federal Rule of Civil Procedure 16's
"good cause" standard turns on "the timeliness
of the amendment and the reasons for its tardy submission;
the primary consideration is the diligence of the moving
party." Montgomery v. Anne Arundel Cty., 182
Fed.Appx. 156, 162 (4th Cir. 2006) (per curiam)
(unpublished): see Nourison Rug Corp., 535 F.3d at
298; Hexion Specialty Chems., Inc. 2011 WL 4527382,
at *8; Farrar & Farrar Dairy. Inc., 2011 WL
1262159, at *2. Establishing good cause requires the moving
party to show that the party could not reasonably have met
the deadline despite the party's diligence. See, e, g,,
Cook v. Howard, 484 Fed.Appx. 805, 815 (4th Cir.
2012) (per curiam) (unpublished); United States v.
Godwin, 247 F.R.D. 503, 506 (E.D. N.C. 2007).
United States originally sought forfeiture under 18 U.S.C.
§ 981 (a)(1)(C) believing that the currency was derived
from proceeds traceable to a violation of 18 U.S.C. §
1955, a "specified unlawful activity." See [D, E.
18] 1-2. During discovery, Smith contended that the currency
came from the sale of his tire business to Charlie Gray. See
[D.E. 20-2] 5. Smith stated that
Gray paid $2, 000 down, then $2000/month for 10 years, then a
final payment of $60, 000, for a total sale price of $300,
000 for the business. [Smith] deposited the payments he
received in his BB&T account and then withdrew the total
amount in May 2014 in the form of cashier checks, which he
then cashed and stored the cash in the barrel from which it
Id. At the time of Smith's withdrawal, the
BB&T account contained $215, 844.14. See p.E. 20-3] 22.
On October 26, 2017, the United States deposed Smith and
learned additional information concerning the currency.
Specifically, Smith admitted that he earned approximately
$81, 793.85 from the VGMs. See Id. at 46-48.
Moreover, Smith admitted that he stored the gambling proceeds
with the money withdrawn from his BB&T account. See
id. at 74-75. The United States moves to amend the
pleadings to include a claim that the $297, 638.00 in
currency is forfeitable under 18 § U.S.C. 1955(d)
because it was "used in" the illegal gambling
business. See [D.E. 18] 16; 18 U.S.C. 1955(d).
Rule 16(b), the United States has demonstrated "good
cause" for the amendment. The United States acted
diligently and could not have discovered the extent to which
Smith commingled his funds without Smith's sworn
deposition testimony. No. other party involved in the case
knew that Smith had $297, 638.00 in the pickle barrel or that
he withdrew money from the barrel to make pay-outs to
customers. See [D.E. 19] 7. There also is no reason to
believe the United States should have known this information
before deposing Smith. See, e.g., Franklin
Livestock. Inc. v. Boehringer Ingelheim Vetmedica. Inc.,
No. 5:15-CV-00063-BO, 2016 WL 7613690, at *2(E.D. N.C. Sept.
23, 2016) (unpublished). Moreover, the United States timely
moved for leave to amend after discovering this information.
Thus, the United States has shown "good cause."
See, e.g., Carolina Coupon Clearing. Inc. v. Cardinal
Health Managed Care Servs, LLC. No. 1:16CV412, 2017 WL
5634903, at *2 (M.D. N.C. June 9, 2017)
(unpublished); Baverische Landesbank v. Aladdin Capital
Mgmt. LLC, 289 F.R.D. 401.404 (S.D.N.Y. 2013);
Farrar & Farrar Dairy. Inc. v. Miller-St. Nazianz.
Inc., No. 5:06-CV-160-D, 2007 WL 4118519, at *6 (E.D.
N.C. Nov. 16, 2007) (unpublished); Burton v. United
States, 199 F.R.D. 194, 197-98 (S.D. W.Va. 2001). As for
Rule 15(a)(2), Smith would not be prejudiced by the amendment
because "[t]he relevant facts alleged remain
substantially the same." Green v. Baltimore City
Police Dep't. No. WMN-10-3216, 2011 WL 335868, at *1
(D. Md. Jan. 31, 2011) (unpublished). Furthermore, the United
States did not act in bad faith and the amendment would not
be futile. Accordingly, the court grants the motion to amend.
court reviews the parties' cross-motions for summary
judgment under the familiar standard of Rule 56 of the
Federal Rules of Civil Procedure. See, e.g..
Fed.R.Civ.P. 56; Scott v. Harris, 550 U.S. 372, 378
(2007); Celotex Corp. v. Catrett, 477 U.S. 317,
325-26 (1986); Anderson v. Liberty Lobby. Inc., 477
U.S. 242, 247-55 (1986); Matsushita Elec. Indus. Co. v.
Zenith Radio Corp.,475 U.S. 574, 585-87 (1986). Summary
judgment is appropriate "if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a); see Anderson, 477 U.S. at
247-48. The party seeking summary judgment must demonstrate
an absence of a genuine issue of material fact. See
Celotex Corp., 477 U.S. at 325. Once the moving
party has met its burden, the nonmoving party then must
demonstrate that there exists a genuine issue of material
fact for trial. See Matsushita, 475 U.S. at 587.
"[T]here is no issue for trial unless there is
sufficient evidence favoring the nonmoving party for a jury
to return a verdict for that party." Anderson,
477 U.S. at 249. Conjectural arguments will not suffice. See
Id. at 249-52; Beale v. Hardy, 769 F.2d
213, 214 (4th Cir. 1985) ("The nonmoving party... cannot
create a genuine issue of material fact through mere
speculation or the building of one inference upon