In re Application of Mgndichian

• Decision Date: 23 October 2003
• Docket Number: No. CV 02-09580 MMM.,CV 02-09580 MMM.
• Citation: 312 F.Supp.2d 1250
• Parties: In re APPLICATION of Gerard MGNDICHIAN For Return of Property.
• Court: U.S. District Court — Central District of California

312 F.Supp.2d 1250

In re APPLICATION of Gerard MGNDICHIAN For Return of Property.

No. CV 02-09580 MMM.

United States District Court, C.D. California.

October 23, 2003.

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Paul L. Gabbert, Santa Monica, CA, for Plaintiff.

Steven R. Welk, Los Angeles, CA, for Defendant.

ORDER GRANTING MGNDICHIAN'S MOTION FOR ATTORNEYS' FEES AND COSTS PURSUANT TO THE EQUAL ACCESS TO JUSTICE ACT

MORROW, District Judge.

The present case concerns the administrative forfeiture of several motorcycles originally belonging to petitioner. Petitioner filed a motion for return of the property. While Judge Hupp of this court denied that relief, he declared that the administrative forfeiture proceedings were a nullity, equitably tolled the time within which the Bureau of Alcohol, Tobacco and Firearms ("ATF") could commence such proceedings, and authorized ATF to commence proper administrative forfeiture proceedings within sixty days of the date of his order. Petitioner has now moved for attorneys' fees and costs pursuant to the Equal Access to Justice Act.

I. FACTUAL AND PROCEDURAL BACKGROUND

On May 19, 2000, the Bureau of Alcohol, Tobacco and Firearms seized the subject motorcycles during a search of Gerald Mgndichian's ("Petitioner") motorcycle shop at 10792 Lower Azusa Avenue, El Monte, California. Petitioner was arrested the same day and charged with conspiracy to violate 18 U.S.C. §§ 371, 511, and 2321. ATF Special Agent William Queen identified the motorcycles as having been stolen by members of the Mongol criminal motorcycle gang, having vehicle identification numbers that had been removed, and/or having been altered with aftermarket parts. Given the value of the motorcycles and the circumstances of their seizure, the ATF deemed them eligible for administrative forfeiture.

Pursuant to 26 U.S.C. § 7325(2) and 27 C.F.R. § 72.22, the ATF was required to publish notice of the commencement of administrative forfeiture proceedings. It did so, and served written notice by mail on petitioner on August 22, 2000. The notice letters stated that a claim and cost bond had to be filed by September 21, 2000 (within thirty days of the date of first publication of the notice), that the bond had to be in the form of a certified cashier's check or other acceptable surety payable to ATF, and that, if petitioner lacked the financial means to post a bond, he could file a sworn affidavit setting forth the factual basis for his request that the bond requirement be waived.

Petitioner's claim, accompanied by an unsworn bond waiver request, was received on September 19, 2000. On March 30, 2001, ATF advised petitioner that his claim was insufficient, because he had failed to provide evidence of his inability to post a bond as instructed in the notice letters. The March 30 letter requested that petitioner provide a copy of his 1999 federal income tax return, that he complete an Application to Proceed in Forma Pauperis and that he sign an Authorization to Furnish Financial Information. It stated that the documents had to be received by ATF within thirty days of petitioner's receipt of the letter to avoid summary forfeiture. Petitioner timely submitted the additional financial documentation on April 27, 2001.

On or about December 4, 2001, ATF Special Agent John Ciccone telephoned petitioner to arrange for ATF auditor John DePasquale to review petitioner's financial documentation. During the course of the conversation, petitioner told Ciccone that he had sent his attorney a check for the cost bond because his attorney was going on vacation. On December 18, 2001, ATF sent petitioner and his attorneys a letter stating that his in forma pauperis application had been denied, and that petitioner had fifteen days from receipt of the letter to submit a cost bond in order to avoid summary forfeiture. Petitioner signed a return receipt for the letter on December 21, 2001. The deadline for filing a cost bond was therefore January 5, 2002. On January 7, 2002, two days after the deadline, petitioner's attorney mailed a personal check to ATF. ATF did not receive the check until January 9, 2002. On January 11, 2002, it advised petitioner's attorney that he had missed the deadline for filing a cost bond, and that a personal check was not acceptable collateral for a cost bond under 27 C.F.R. § 72.25(a). The subject motorcycles were deemed abandoned to administrative forfeiture.

On December 17, 2002, petitioner filed a motion for return of property. The motion was referred to Judge Harry L. Hupp for decision. After full briefing, Judge Hupp denied petitioner's motion for return of property. He found, however, that "the administrative forfeiture proceedings were a nullity," and that the "just result ... is not to order the motorcycles returned at this point, but to allow ATF within 60 days correctly to notice an administrative forfeiture proceeding, to allow petitioner to file his claim and a bond which satisfies ATF, [and] to allow the United States to correctly start a judicial foreclosure action, which petitioner may defend." Administrative forfeiture proceedings against the subject motorcycles were recommenced on March 20, 2003.

On June 2, 2003, petitioner filed the instant motion for attorneys' fees and costs pursuant to the Equal Access to Justice Act ("EAJA"). The government filed opposition on June 30, 2003. Having reviewed the briefs and evidence presented by the parties, the court finds that petitioner is entitled to recover attorneys' fees and costs incurred in connection with the prosecution of his motion for return of property.

II. DISCUSSION

A. Legal Standard For Attorneys' Fees Under 28 U.S.C. § 2412

Section 2412(d)(1)(A) provides:

"Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, 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." 28 U.S.C. § 2412(d)(1)(A).¹

The prerequisites for a fee award under § 2412(d)(1)(A) are: (1) the claimant must be a "prevailing party"; (2) the government's position must not have been "substantially justified"; (3) there must be no "special circumstances [that make] make an award unjust"; and (4) a fee application must be submitted to the court within thirty days of final judgment in the action and be supported by an itemized statement. Commissioner, Immigration and Naturalization Service v. Jean, 496 U.S. 154, 158, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990); Krecioch v. United States, 316 F.3d 684, 687 (7th Cir.2003) ("To be eligible for a fee award under the EAJA, Krecioch must show: (1) that he was a `prevailing party'; (2) that the Government's position was not `substantially justified'; (3) that no `special circumstances make an award unjust'; and (4) that any fee application be submitted to the court within 30 days of final judgment in the action and be supported by an itemized statement"); Perales v. Casillas, 950 F.2d 1066, 1072 (5th Cir.1992) ("Eligibility for a fee award under the EAJA requires, at a minimum, that the claimant be a `prevailing party'; that the Government's position was not `substantially justified'; that no `special circumstances make an award unjust'; and that any fee application be submitted to the court within 30 days of final judgment and be supported by an itemized statement").

"The party seeking fees has the burden of establishing its eligibility." Love v. Reilly, 924 F.2d 1492, 1494 (9th Cir.1991). A plaintiff may satisfy the second and third prongs of the test, however, simply by alleging that the government's position was not substantially justified and that no special circumstances exist that make an award unjust. The government then has the burden of proving that its actions were substantially justified in law and in fact and/or that special circumstances make awarding fees unjust. Id. at 1495 ("The burden of proving the special circumstances or substantial justification exception to the mandatory award of fees under the EAJA rests with the government"); Oregon Environmental Council v. Kunzman, 817 F.2d 484, 498 (9th Cir.1987) ("the government bears the burden of showing that its position was substantially justified").

B. Whether Petitioner Is Entitled To Attorneys' Fees And Costs Under 28 U.S.C. § 2412

1. "Prevailing Party"

A plaintiff or petitioner is deemed the "prevailing party" if, as a result of a judgment or consent decree entered in the legal action he or she brought, there is a "material alteration of the legal relationship of the parties." Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 604, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001); Miles v. State of California, 320 F.3d 986, 989 (9th Cir.2003) ("The Supreme Court has squarely held that there is a `prevailing party' when there has been a `material alteration of the legal relationship of the parties,'" quoting Buckhannon, supra, 532 U.S. at 604, 121 S.Ct. 1835); id. at 989, n. 3 ("The Court specifically identified two instances in which a plaintiff can be considered a `prevailing party': (1) an enforceable judgment on the merits; or (2) an enforceable court-ordered consent decree").

Voluntary action by the defendant that is not compelled by a judgment or consent decree does not constitute a "material alteration" in the parties' legal relationship sufficient to support a fee award under Buckhannon. Buckhannon, supra, 532 U.S. at 605, 121 S.Ct. 1835 ("A defendant's voluntary change in conduct, although perhaps accomplishing what the...