Filed: Jun. 21, 1995
Latest Update: Feb. 21, 2020
Summary: United States Court of Appeals, Eleventh Circuit. No. 94-8621. UNITED STATES of America, Plaintiff-Appellant, v. Robert E. DOUGLAS, Jr., Defendant-Appellee. Noel LUSSIER, Petitioner, v. UNITED STATES of America, Respondent. June 21, 1995. Appeal from the United States District Court for the Middle District of Georgia. (No. CR91-4-THOM), J. Robert Elliott, Judge Before KRAVITCH and BIRCH, Circuit Judges, and GOODWIN*, Senior Circuit Judge. KRAVITCH, Circuit Judge: Following the entry of a prelimi
Summary: United States Court of Appeals, Eleventh Circuit. No. 94-8621. UNITED STATES of America, Plaintiff-Appellant, v. Robert E. DOUGLAS, Jr., Defendant-Appellee. Noel LUSSIER, Petitioner, v. UNITED STATES of America, Respondent. June 21, 1995. Appeal from the United States District Court for the Middle District of Georgia. (No. CR91-4-THOM), J. Robert Elliott, Judge Before KRAVITCH and BIRCH, Circuit Judges, and GOODWIN*, Senior Circuit Judge. KRAVITCH, Circuit Judge: Following the entry of a prelimin..
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United States Court of Appeals,
Eleventh Circuit.
No. 94-8621.
UNITED STATES of America, Plaintiff-Appellant,
v.
Robert E. DOUGLAS, Jr., Defendant-Appellee.
Noel LUSSIER, Petitioner,
v.
UNITED STATES of America, Respondent.
June 21, 1995.
Appeal from the United States District Court for the Middle
District of Georgia. (No. CR91-4-THOM), J. Robert Elliott, Judge
Before KRAVITCH and BIRCH, Circuit Judges, and GOODWIN*, Senior
Circuit Judge.
KRAVITCH, Circuit Judge:
Following the entry of a preliminary order of criminal
forfeiture under 18 U.S.C.A. § 982(a) (West Supp.1995), "[a]ny
person, other than the defendant, asserting a legal interest in
property which has been ordered forfeited to the United States" may
"petition the court for a hearing to adjudicate the validity of his
alleged interest in the property." 21 U.S.C.A. § 853(n) (West
Supp.1995).1 The question of first impression presented in this
case is whether this § 853(n) proceeding, ancillary to a criminal
forfeiture prosecution but instituted by a third-party claimant, is
*
Honorable Alfred T. Goodwin, Senior U.S. Circuit Judge for
the Ninth Circuit, sitting by designation.
1
The § 853(n) procedure is made expressly applicable to
criminal forfeitures under § 982(a) by 18 U.S.C.A. § 982(b)(1)
(West Supp.1995).
a "civil action" within the meaning of an Equal Access to Justice
Act ("EAJA") provision permitting attorneys' fee awards against the
United States. See 28 U.S.C.A. § 2412(d)(1)(A) (West 1994). 2 We
hold that § 853(n) proceedings are civil actions under the EAJA.
Because the government's litigation position in this case was not
substantially justified, we AFFIRM the district court's order
awarding attorneys' fees to the third-party claimant.
I.
Noel Lussier loaned a total of $157,500 to Robert E. Douglas,
Jr., between 1985 and 1987, and reduced the debt to judgment in
1989 following Douglas's default. In August 1990, in an effort to
collect his judgment, Lussier instituted an action in the district
court against Douglas's family members and corporations controlled
by Douglas, alleging a conspiracy with Douglas to defraud
creditors. In connection with that litigation, Lussier filed
proper notices of lis pendens for affected real and personal
property. In September 1990, pursuant to a consent decree, the
disputed property was deposited with the clerk of the district
court pending resolution of the action.
In June 1991, the United States filed a criminal information
2
Section § 2412(d)(1)(A) provides, in pertinent part:
[A] court shall award to a prevailing party other than
the United States [attorneys'] fees and other expenses
... incurred by that party in any civil action (other
than cases sounding in tort) ... brought by or against
the United States in any court having jurisdiction of
that action, unless the court finds that the position
of the United States was substantially justified or
that special circumstances make an award unjust.
against Douglas, alleging money laundering3 and mail fraud4 in
connection with his insurance business. The government also sought
5
criminal forfeiture, under 18 U.S.C. § 982(a), of six items of
real and personal property. Douglas pleaded guilty and acceded to
this forfeiture demand in his plea agreement; the district court
then issued a preliminary order of forfeiture.
The forfeiture order covered three items previously placed in
the court's registry pursuant to the Lussier v. Douglas consent
decree. Lussier filed a § 853(n) petition opposing forfeiture of
these properties, demonstrating that they neither (i) were involved
in money laundering (or traceable to any involved property) within
the meaning of § 982(a)(1), nor (ii) constituted (or derived from)
proceeds of mail fraud within the meaning of § 982(a)(2).
Consequently, Lussier argued, the three properties simply were not
3
See 18 U.S.C.A. § 1957 (West Supp.1995).
4
See 18 U.S.C.A. § 1341 (West Supp.1995).
5
This section provides, in relevant part:
(1) The court, in imposing sentence on a person
convicted of an offense in violation of [inter alia, 18
U.S.C. § 1957], shall order that the person forfeit to
the United States any property, real or personal,
involved in such offense, or any property traceable to
such property....
(2) The court, in imposing sentence on a person
convicted of a violation of, or a conspiracy to
violate—
(A) [inter alia, 18 U.S.C. § 1341], affecting a
financial institution, ...
shall order that the person forfeit to the United
States any property constituting, or derived from,
proceeds the person obtained directly or indirectly, as
the result of such violation.
forfeitable under the statute. The government's sole response to
Lussier's summary judgment motion was that the rules of civil
procedure did not apply in the criminal forfeiture context (and
summary adjudication therefore was improper); it did not challenge
Lussier's factual contentions. The district court granted summary
judgment for Lussier and modified its forfeiture order.6
Lussier then moved for attorneys' fees pursuant to 28 U.S.C.
§ 2412(d)(1)(A). Noting that "the government apparently made no
investigation into factual background prior to seeking forfeiture,"
the district court found that the government's litigation position
with respect to the three properties was not substantially
justified, and awarded about $21,000 in attorneys' fees to Lussier.
II.
On appeal, the government contends that because a § 853(n)
proceeding is ancillary to a criminal forfeiture prosecution, it is
not a civil action within the meaning of the EAJA, and that an
attorneys' fee award against the United States consequently was
unauthorized. No appellate court has addressed this question.7
We begin by considering the nature of the § 853(n) proceeding.
Once a criminal forfeiture prosecution has been filed, third
parties are expressly barred by 21 U.S.C. § 853(k)(2) from
"commenc[ing] an action at law or equity against the United States
6
The government voluntarily dismissed its appeal from the
summary judgment order.
7
But see United States v. Bachner, 877 F. Supp. 625
(S.D.Fla.1995) (holding that § 853(n) proceedings are civil
actions under 28 U.S.C. § 2412(b), an EAJA attorneys' fee
provision similar to § 2412(d)(1)(A)); cf. United States v.
Reckmeyer,
836 F.2d 200, 209 (4th Cir.1987) (reserving question).
concerning the validity of [their] alleged interest in the
property," except "as provided in [§ 853(n) ]."8 Congress
therefore viewed a § 853(n) hearing as a species of an "action at
law or equity"—a substitute for separate civil litigation against
the government.9
The mere fact that Congress viewed § 853(n) proceedings as
generally civil,10 however, does not necessarily mean that they are
civil actions within the particular meaning of the EAJA. "The
application of each statute or rule using the words "civil action'
must be decided on the basis of its [own] language, its [own]
history and its [own] purpose." In re Grand Jury Subpoena Duces
Tecum Dated January 2, 1985 (Simels), 775 F.2d 499, 503 (2nd
Cir.1985). The EAJA does not define the term "civil action," and
the statute is, on its face, ambiguous as applied to § 853(n)
proceedings. Our examination of the legislative history of the
8
Section 853(k)(1) similarly bars third-parties from
intervening directly in the criminal forfeiture prosecution.
9
The legislative history of § 853(n) similarly indicates
that Congress considered this ancillary proceeding to be
essentially civil. See H.R.Rep. No. 1030, 98th Cong., 2d Sess.
206-07 (1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3389-90
(legislative history of identically-worded RICO criminal
forfeiture provision) ("[O]nce the indictment or information is
filed, a third party is not to commence a civil suit against the
United States; instead the third party should avail himself of
the ancillary hearing procedure.... [I]t is anticipated that the
new hearing procedure should provide for more expedited
consideration of third party claims than would the filing of
separate civil suits.") (emphasis added); see also id. at 214,
reprinted in 1984 U.S.C.C.A.N. at 3397 (directing that
legislative history of RICO provision be used as legislative
history of § 853).
10
See also United States v. Lavin, 942 F.2d 177, 181-82 (3rd
Cir.1991) (§ 853(n) proceeding is a "civil case" under
Fed.R.App.P. 4(a)(1) for purposes of calculating time to appeal).
EAJA, however, suggests that these proceedings are the paradigm of
a civil action under that statute.
In enacting the EAJA, Congress noted that
[f]or many citizens, the costs of securing vindication of
their rights and the inability to recover attorney fees
preclude resort to the adjudicatory process. When the cost of
contesting a Government order, for example, exceeds the amount
at stake, a party has no realistic choice and no effective
remedy. In these cases, it is more practical to endure an
injustice than to contest it.
H.R.Rep. No. 1418, 96th Cong., 2d Sess. 9 (1980), reprinted in 1980
U.S.C.C.A.N. 4984, 4988. Recognizing that for "certain
individuals, partnerships, corporations and labor and other
organizations ... [t]he economic deterrents to contesting
governmental action [further] are magnified in these cases by the
disparity between the resources and expertise of these individuals
and their government," Congress intended to "reduce [such]
deterrents and disparity by entitling certain prevailing parties to
recover an award of attorney fees, expert witness fees and other
expenses against the United States, unless the Government action
was substantially justified." Id. at 5-6, reprinted in 1980
U.S.C.C.A.N. at 4984.11
Failure to apply the EAJA to § 853(n) proceedings would
contravene Congress's desire to instill governmental accountability
and to level the playing field in economic disputes between the
government and its citizens. The United States generally can
11
See also H.R.Rep. No. 120, Part I, 99th Cong., 1st Sess.
4, reprinted in 1985 U.S.C.C.A.N. 132, 132-33 (reiterating
purpose of EAJA).
12
choose between civil and criminal forfeiture remedies, and
consequently also choose the manner in which third parties must
defend their property interests. The EAJA clearly applies to
protect successful third-party intervenors in civil forfeiture
proceedings. See, e.g., United States v. Certain Real Estate
Property Located at 4880 S.E. Dixie Highway, 838 F.2d 1558 (11th
Cir.1988). If the EAJA did not also apply to protect § 853(n)
third-party petitioners, the government would have an obvious
incentive to channel substantially unjustified forfeiture attempts
into the criminal forfeiture "safe haven" in the hope that the
amount at stake for each individual petitioner would be too small
to make litigation worthwhile. Accord Bachner,
877 F. Supp. 627
("It seems fundamentally unfair for the availability of attorneys
fees [to third parties] to hinge upon the choice of the
[government] to bring the action under the civil or criminal
forfeiture statute.").
Our analysis also is consistent with the way other courts have
classified hybrid proceedings in applying the EAJA. When brought
by persons not under criminal indictment, proceedings that are
usually ancillary to criminal prosecutions have been held to be
civil actions. See Purcell v. United States, 908 F.2d 434, 437
(9th Cir.1990) (Fed.R.Crim.P. 41(e) motion for return of property
by person under government investigation was civil action under
EAJA, as no formal criminal proceedings had been initiated); Lee
12
See United States v. Elgersma, 971 F.2d 690, 695 (11th
Cir.1992) (en banc) (noting that if beyond a reasonable doubt
standard were applied to § 853(a)(1) criminal forfeiture,
government would invariably choose to employ civil forfeiture
under 21 U.S.C. § 881).
v. Johnson,
799 F.2d 31, 36-38 & n. 6 (3rd Cir.1986) (separate
action by grand jury targets, against whom no criminal charges were
pending, to quash grand jury subpoena and obtain injunctive relief
against government actors was civil action under EAJA). Section
853(n) claimants are, by definition, third parties who are not even
under investigation in connection with the pertinent criminal
forfeiture prosecution, as the ancillary proceedings are instituted
by persons "other than the [forfeiture] defendant" after the main
criminal proceedings are concluded. See 21 U.S.C. § 853(n)(2).
Consequently, the case for holding § 853(n) proceedings to be civil
under the EAJA is even stronger than that supporting the results in
Lee and Purcell.13
We recognize that because "[t]he EAJA renders the United
States liable for attorney's fees for which it would not otherwise
be liable, and thus amounts to a partial waiver of sovereign
immunity ... [the] waiver must be strictly construed in favor of
the United States." Ardestani v. INS, 502 U.S. 129, 137,
112 S. Ct.
515, 520,
116 L. Ed. 2d 496 (1991). But while "the rule requiring
clear statement of waivers of sovereign immunity ... applies even
to determination of the scope of explicit waivers," it does not
"require explicit waivers to be given a meaning that is
implausible." United States v. Williams, --- U.S. ----, ----, 115
13
Furthermore, decisions holding that proceedings related to
criminal prosecutions are not civil actions under the EAJA when
brought by indicted or convicted criminal defendants therefore
are distinguishable. See In re Simels, 775 F.2d at 502-04
(Fed.R.Crim.P. 17(c) motion by criminal defendant-intervenor to
quash grand jury subpoena issued against his attorney); Ewing v.
Rodgers,
826 F.2d 967, 969-71 (10th Cir.1987) (federal prisoner
habeas petition); Boudin v. Thomas,
732 F.2d 1107, 1112-15 (2nd
Cir.1984) (same).
S.Ct. 1611, 1620, --- L.Ed.2d ---- (1995) (Scalia, J., concurring).
Accordingly, we hold that litigation between an innocent third-
party claimant and the government, ancillary to a criminal
forfeiture proceeding, is a civil action within the purview of the
EAJA.14
III.
Under § 2412(d)(1)(A), the attorneys' fee award against the
government is mandatory "unless the court finds that the position
of the United States was substantially justified or that special
circumstances make an award unjust." The government's position is
substantially justified under the EAJA when it is "justified to a
degree that would satisfy a reasonable person"—i.e. when it has a
reasonable basis in both law and fact. Pierce v. Underwood, 487
U.S. 552, 565,
108 S. Ct. 2541, 2550,
101 L. Ed. 2d 490 (1988). The
district court in this case concluded that the government's
14
In Bachner, the court concluded that § 853(n) proceedings
are civil under the EAJA because, under the express terms of §
853(n)(6), the third-party claimant "carrie[s] the burden of
proof at trial, the burden of proof [is] by a preponderance of
the evidence, and [the claimant seeks] to protect its property
rights which are ordinarily protected by civil actions."
Bachner, 877 F. Supp. at 627.
Although we agree with the result in Bachner, we
expressly disclaim reliance on this aspect of its reasoning.
The recited factors are not necessarily determinative of
whether a proceeding is a civil action under the EAJA. For
example, the § 853(n) petitioner's attempt to protect her
property rights may, as in Lussier's case, simply involve
consideration of the same issues as those involved in the
criminal forfeiture prosecution itself. See Reckmeyer, 836
F.2d at 206 (although § 853(n) petitioner usually tries to
defeat forfeiture by establishing ownership of superior
interest or bona fide purchaser for value status, she also
may relitigate nexus between property and criminal offense
established in criminal prosecution by showing "that a
particular asset was not forfeitable [to begin with] under
the terms of the statute").
position was not substantially justified, and that no special
circumstances were present, as "the government apparently made no
investigation into factual background prior to seeking forfeiture."
We review this determination for abuse of discretion. See Pierce,
487 U.S. at 558-63, 108 S.Ct. at 2546-49.
The government first argues that its decision to seek
forfeiture of the three properties in question must have been
substantially justified because it received the imprimatur of the
district court. The district court, the government contends, must
have found a "factual basis" for the criminal forfeitures recited
in the plea agreement when it accepted Douglas's guilty plea. See
Fed.R.Crim.P. 11(f). We disagree. In United States v. Boatner,
966 F.2d 1575, 1581 (11th Cir.1992), this court held that because
"a forfeiture provision in a Rule 11 agreement is not a plea to a
substantive charge, but [rather] a sanction to which the parties
agree as a result of the defendant's plea ... a sentencing judge is
not required under Rule 11 to determine whether there is a factual
basis for a defendant's concession to a criminal forfeiture
pursuant to his plea bargain with the government." Consequently,
in accepting the plea, the district court made no determination on
which the government was entitled to rely in its subsequent
decision to seek a preliminary order of forfeiture.
The government next contends that its position was
substantially justified because it raised a question of first
impression in opposing Lussier's summary judgment motion. After
the initial grant of summary judgment against it, the government
15
moved to alter or amend judgment, arguing, in reliance on
decisions from other circuits, that general creditors do not have
standing to bring § 853(n) petitions. See, e.g., United States v.
BCCI Holdings (Luxembourg), S.A., 46 F.3d 1185, 1191-92
(D.C.Cir.1995), petition for cert. filed, (U.S. May 2, 1995) (No.
94-1806-CFY). The district court denied the motion.
We need not consider the issues raised by decisions such as
BCCI Holdings, as these cases clearly do not apply here. 16 BCCI
Holdings explains that general creditors do not have standing
"unless they have already secured a judgment against the debtor and
perfected a lien against a particular item [among those to be
forfeited]." BCCI Holdings, 46 F.3d at 1191 (emphasis added).17
It is undisputed that Lussier had obtained a judgment against
Douglas, filed appropriate notices of lis pendens, and segregated
the affected property into the registry of the court almost a year
before the commencement of the criminal proceedings. Thus the BCCI
Holdings argument did not render the government's position
substantially justified.18
15
See Fed.R.Civ.P. 59(e).
16
The government implicitly conceded as much by not pursuing
an appeal from the final summary judgment order.
17
Accord United States v. Schwimmer, 968 F.2d 1570, 1581
(2nd Cir.1992) (general creditor does not have standing "until he
has obtained some judgment and secures [the relevant] asset or
... funds. At that point, he is no longer merely a general
creditor.").
18
The government's Rule 59(e) motion also was untimely. It
is unclear from the district court's order whether it denied this
motion as untimely or reached the merits. If the motion was
denied as untimely, then the BCCI Holdings argument never was
properly presented to the district court, and therefore cannot
count as part of the government's position in deciding whether
The government's remaining arguments do not warrant
discussion. The frivolousness of its forfeiture attempt is
palpably illustrated by its initial opposition to Lussier's motion
for summary judgment on the sole ground that the rules of civil
procedure did not apply. The district court did not abuse its
discretion in finding a lack of substantial justification for the
government's position.
IV.
For the foregoing reasons, the order awarding attorneys' fees
against the United States is AFFIRMED.
that position was substantially justified. We need not decide
the issue, however, as the argument was, in any event, frivolous
on the merits.
