Broaddus v. U.S. Army Corps of Engineers

• Decision Date: 13 August 2004
• Docket Number: No. 03-2257.,03-2257.
• Citation: 380 F.3d 162
• Parties: Henry Ruffin BROADDUS, Plaintiff-Appellant, and Frances Broaddus Crutchfield, Plaintiff, v. UNITED STATES ARMY CORPS OF ENGINEERS, Defendant-Appellee, and County of Hanover, Virginia, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

380 F.3d 162

Henry Ruffin BROADDUS, Plaintiff-Appellant, and Frances Broaddus Crutchfield, Plaintiff, v. UNITED STATES ARMY CORPS OF ENGINEERS, Defendant-Appellee, and County of Hanover, Virginia, Defendant.

No. 03-2257.

United States Court of Appeals, Fourth Circuit.

Argued: May 7, 2004.

Decided: August 13, 2004.

Appeal from the United States District Court for the Eastern District of Virginia, Robert E. Payne, J.

COPYRIGHT MATERIAL OMITTED

ARGUED: Benjamin Adelbert Thorp, IV, Ellis, Thorp & Jewett, P.L.L.C., Richmond, Virginia, for Appellant. Michael Thomas Gray, United States Department Of Justice, Washington, D.C., for Appellee. ON BRIEF: William B. Ellis, Ellis, Thorp & Jewett, P.L.L.C., Richmond, Virginia, for Appellant. Thomas L. Sansonetti, Assistant Attorney General, Environment & Natural Resources Division, United States Department Of Justice, Washington, D.C.; Paul J. McNulty, United States Attorney, Alexandria, Virginia, M. Hannah Lauck, Assistant United States Attorney, Office Of The United States Attorney, Richmond, Virginia; John A. Bryson, United States Department Of Justice, Washington, D.C., Katherine Will, Army Corps Of Engineers, for Appellee.

Before WIDENER and GREGORY, Circuit Judges, and C. Arlen BEAM, Senior Circuit Judge of the United States Court of Appeals for the Eighth Circuit, sitting by designation.

Reversed and remanded with instructions by published opinion. Judge GREGORY wrote the opinion, in which Senior Judge BEAM joined. Judge WIDENER wrote a separate concurring opinion.

GREGORY, Circuit Judge:

This appeal arises from the district court's denial of Henry Ruffin Broaddus's ("Broaddus" or "Appellant") petition for attorney's fees, pursuant to the Equal Access to Justice Act ("EAJA" or "Act"), 28 U.S.C. § 2412. Broaddus successfully challenged a condemnation action brought by the United States Army Corps of Engineers (the "Corps" or "Appellee") and Hanover County (together, "Defendants") against land owned by Broaddus and his mother, Frances Broaddus Crutchfield ("Crutchfield") (together, "Plaintiffs"). The statute allows persons who have successfully sued the government to collect attorney's fees, provided they meet certain eligibility requirements, the relevant provision here being that the individual have a net worth of less than $2 million. The district court determined that Broaddus failed to establish financial eligibility under the statute and denied his petition for attorney's fees. Broaddus appeals. For the following reasons, we reverse and remand this matter to the district court for a determination of appropriate attorney's fees.

I.

On June 14, 2000, Hanover County condemned a portion of Newcastle Farm ("Newcastle"), two-thirds of which Broaddus inherited upon his father's death.¹ The County sought to build, on a portion of Newcastle, "a sewage forcemain and outfall/diffuser for the Totopotomoy wastewater treatment plant." Br. of Appellant at 6. In total, the County condemned "1.1 acres in fee simple, 5.719 acres for a permanent access and utility easement, and 10.66 acres for a temporary construction easement," id. at 6, and offered to compensate Broaddus $12,000 for the taking.

On August 8, 2000, Broaddus and Crutchfield filed suit against Defendants, challenging the amount of compensation offered for the condemnation proceeding and challenging the Corps's verification of three Nationwide Permits ("NWPs"), pursuant to Section 404 of the Clean Water Act ("CWA"), 33 U.S.C. § 1344. The NWPs served as the basis for the condemnation proceeding. Broaddus contended that the NWPs violated the CWA, the National Environmental Policy Act, 42 U.S.C. § 4321, et seq., and the National Historic Preservation Act, 16 U.S.C. § 470. The district court set aside the verifications and remanded the matter to the Corps for further proceedings. See Crutch-field v. U.S. Army Corps of Eng'rs, 154 F.Supp.2d 878 (E.D.Va.2001). Thereafter, the court enjoined the construction project, pending the Corps's consideration on remand. See Crutchfield v. U.S. Army Corps of Eng'rs, 192 F.Supp.2d 444 (E.D.Va.2001). We dismissed Hanover County's appeal as moot on May 31, 2002. Crutchfield v. County of Hanover, Va., No. 01-2488 (4th Cir. May 31, 2002), and issued an order awarding costs to the Plaintiffs, (4th Cir. July 23, 2002).²

Accordingly, Broaddus filed an application with the district court for attorney's fees and costs pursuant to EAJA. The Corps opposed his application, maintaining that Broaddus was ineligible to receive fees under EAJA because his net worth exceeded the $2 million statutory cap. On August 6, 2003, the district court entered an order denying Broaddus's application for attorney's fees, holding that he failed to meet his burden of establishing eligibility for fees under EAJA. This appeal followed.

II.

Pursuant to EAJA, we review a district court's award or denial of attorney's fees for an abuse of discretion. Reich v. Walter W. King Plumbing & Heating Contractor, Inc., 98 F.3d 147, 151 (4th Cir.1996). We review legal errors in construing EAJA de novo. Thomas v. Nat'l Science Found., 330 F.3d 486, 491 (D.C.Cir.2003) (citing Nat'l Ass'n of Mfrs. v. Dep't of Labor, 159 F.3d 597, 599 (D.C.Cir.1998)); Levernier Constr., Inc. v. United States, 947 F.2d 497, 499 (Fed.Cir.1991).

III.

A.

EAJA provides as follows:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A). Congress's aim in adopting this statute was "`to ensure that certain individuals, partnerships, corporations ... or other organizations will not be deterred from seeking review of, or defending against, unjustified governmental action because of the expense involved.'" Scarborough v. Principi, ___ U.S. ___, 124 S.Ct. 1856, 1861, ___ L.Ed.2d ___ (2004) (quoting H.R.Rep No. 120, 99th Cong., 1st Sess., at 4 (1985)). See also Kelly v. Bowen, 862 F.2d 1333, 1334-35 (8th Cir.1999) ("`The very purpose of the EAJA is to ensure that persons aggrieved by unreasonable governmental actions are not prevented from vindicating their claims by the potentially high costs involved in doing so.'") (quoting Trichilo v. Sec'y of HHS, 823 F.2d 702, 707 (2d Cir.1987)). In 1980, Congress enacted EAJA "to eliminate the barriers that prohibit small businesses and individuals from securing vindication of their rights in civil actions and administrative proceedings brought by or against the Federal Government." Scarborough, ___ U.S. at ___, 124 S.Ct. at 1860 (internal quotation marks and citations omitted).

In order to establish eligibility for an award of attorneys fees,

SEAJA requires: (1) that the claimant be a "prevailing party"; (2) that the government position was not "substantially justified"; (3) that no "special circumstances make an award unjust"; and, (4) that the fee application be submitted to the court within 30 days of final judgment and be supported by an itemized statement.

Crawford v. Sullivan, 935 F.2d 655, 656 (4th Cir.1991) (quoting 28 U.S.C. § 2412). The government neither argues that its position was "substantially justified" nor that any special circumstances exist to make the award unjust; nor does it assert that Broaddus did not prevail. Instead the government maintains that Broaddus was not a "party" as defined by the statute. EAJA defines a "party" as "an individual whose net worth did not exceed $2,000,000 at the time the civil action was filed." 28 U.S.C. § 2412(d)(2)(B). Accordingly, the sole issue in dispute on appeal is whether Broaddus sufficiently demonstrated financial eligibility pursuant to EAJA.

B.

The text of EAJA does not define "net worth" or give instructions on how to calculate an applicant's net worth; the statute merely unambiguously states that an award of EAJA fees is dependent upon one's net worth falling below the statutory maximum. Id. § 2412(d)(2)(B). Our sister circuits, however, have determined that generally accepted accounting principles³ ("GAAP") should be used when determining one's net worth for EAJA fee purposes. For example, the Seventh Circuit acknowledged Congress's failure to define net worth, and responded as follows:

[I]f [Congress] had thought about the question, it would have wanted the courts to refer to generally accepted accounting principles. What other guideline could there be? Congress would not have wanted us to create a whole new set of accounting principles just for use in cases under the Equal Access to Justice Act.

Cont'l Web Press, Inc. v. NLRB, 767 F.2d 321, 323 (7th Cir.1985); see also Am. Pac. Concrete Pipe Co. v. NLRB, 788 F.2d 586, 590-91 (9th Cir.1988) (agreeing with Continental Web Press). More recently, the Tenth Circuit confirmed that "generally accepted accounting principles apply to the net worth inquiry." Shooting Star Ranch LLC v. United States, 230 F.3d 1176, 1178 (10th Cir.2000) (citing Am. Pac. Concrete Pipe, 788 F.2d at 591); see also Kuhns v. Bd. of Governors of Fed. Reserve Sys., 930 F.2d 39, 41 (D.C.Cir.1991) (applying GAAP to EAJA); City of Brunswick, Ga. v. United States, 849 F.2d 501, 503 (11th Cir.1988) (holding that GAAP applies to EAJA, and stating that Congress intended "net worth" to be determined by subtracting total liabilities from total assets). Cf. United States v. Heavrin, 330 F.3d 723, 732 (6th Cir.2003) (following Shooting Star Ranch and applying GAAP to calculation of net worth in the analogous Hyde Amendment, 18 U.S.C. § 3006(A), context). We agree with our sister circuits that GAAP applies to EAJA, and net worth is calculated by subtracting total liabilities from total assets.

While the district court recognized, in its order denying attorney's fees, that it must use "generally accepted accounting principles" to determine Broaddus's net worth,...