U.S. v. $12,248 U.S. Currency

• Decision Date: 27 February 1992
• Docket Number: No. 90-15912,90-15912
• Citation: 957 F.2d 1513
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. $12,248 U.S. CURRENCY, Defendant-Appellee, and Jack Johnson, Claimant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1513

957 F.2d 1513

UNITED STATES of America, Plaintiff-Appellant, v. $12,248 U.S. CURRENCY, Defendant-Appellee and Jack Johnson, Claimant-Appellee.

No. 90-15912.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 4, 1991.

Decided Dec. 17, 1991.

As Amended Feb. 27, 1992.

Stephen P. Freccero, Asst. U.S. Atty., San Francisco, Cal., for plaintiff-appellant.

William G. Panzer, San Francisco, Cal., for claimant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before TANG, FARRIS and D.W. NELSON, Circuit Judges.

ORDER

It is ordered granting the petition of the United States for modification of opinion. The attached amended opinion and amended dissent are ordered filed.

Attorney's Fees

It is further ordered that the appellee Jack Johnson's unopposed request for attorney's fees on appeal is granted. See 28 U.S.C. Sec. 2412(d). Fees are awarded in the amount of $7,290.26.

OPINION

TANG, Circuit Judge:

In this appeal we decide whether the government having established probable cause to forfeit seized currency was "substantially justified" under the Equal Access to Justice Act (EAJA) in its delay of the institution and prosecution of forfeiture proceedings and in investigating whether the currency had an innocent source. We conclude that the district court did not abuse its discretion in finding that the government's position was not "substantially justified." Neither did the district court abuse its discretion in awarding and determining the amount of the fees granted. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On September 10, 1985, pursuant to an informant's tip, Oakland Police obtained a warrant to search Johnson's home where Johnson and Terrie Gibbs resided. The officers conducted the search on September 11, 1985. When the police officers arrived, Johnson was in the living room. The female, Terrie Gibbs, was found running out the back door. During the course of the search, the officers found over five pounds of marijuana, 1.2 grams of cocaine, seven tabs of L.S.D., five scales, marijuana and cocaine packaging paraphernalia, three handguns, four shotguns, a rifle, and the defendant $12,248 in U.S. currency.

The State of California filed a criminal complaint against Johnson and Gibbs on September 13, 1985. Johnson pleaded guilty to possession of cocaine on November 18, 1986. The remaining counts against him were dismissed. Johnson received a suspended sentence on January 26, 1987, and was placed on probation. The charges against Gibbs were also subsequently dismissed. Gibbs returned to her native England and Johnson has not seen her since June or July of 1986.

The currency was turned over to the United States Drug Enforcement Agency on September 12, 1985, the day after the search. In a declaration dated November 15, 1985, Johnson claimed a valid ownership interest in the defendant currency. The United States Attorney's office first opened their file in this matter in January 1986. There was no investigation done other than to conduct one interview of Johnson. At that interview, Johnson informed the government that the funds seized were not related to any drug transactions but were the partial proceeds of a Home Maintenance and Improvement Loan Program (HMILP) loan he had obtained from the City of Oakland in 1977 or 1978 to renovate his home.

Johnson offered explanation for why he still had the bulk of the loan funds at the time of the government raid. He explained that he and contractor, Robert Beckstrom, had submitted a bid proposal in March 1984, to bring the building to code requirements. The bid for the project was $18,750. Johnson was to be the subcontractor for the project and would do all work and furnish all materials described in the bid. Johnson received a $12,500 HMILP loan with no interest rate in April 1984. He also received a $7,500.00 grant from the office of Community Development for the rehabilitation project.

Many of Johnson's friends worked at no charge on the project. Contractor Beckstrom and the cement finisher were the only two people who were paid for their services in the remodeling. Johnson documented with photographs the work done on the premises. He also presented the court with receipts to evidence the purchase of materials, rental of equipment, the work performed by the cement finisher, and inspection fees paid. Beckstrom was paid approximately $1,300 to $1,500 for his work. The other receipts totaled $5,540.27. Beckstrom presented corroborating testimony as to the work done and the arrangements for doing the rehabilitation work. The work on the property was completed approximately six months before the September 11, 1985 raid.

After taking into account the expenses paid, Johnson had approximately $12,700 to $12,900 left from the loan funds; which approximated the amount of the funds seized. Johnson kept this cash in his home and did not bank it even though he had a checking account and credit card. ¹

The government disbelieved Johnson's story, but conducted no other investigation into his claim. On December 12, 1986, approximately fifteen months after gaining possession of Johnson's money, the government finally instituted forfeiture proceedings.

Approximately two years later, on March 1, 1988, the U.S. Attorney's office filed a motion for partial summary judgment on the issue of probable cause to justify its initial seizure of the currency under 21 U.S.C. § 881. The court granted this motion. With consent of the parties, further proceedings for determination were referred to a magistrate.

On July 21, 1989, almost a year and a half after that, Johnson moved for summary judgment based on the government's unreasonable delay. This motion was denied on August 25, 1989. The magistrate applied the four factor test for determining unreasonable delay which amount to a due process violation, in forfeiture cases, as set forth in United States v. $8,850, 461 U.S. 555, 103 S.Ct. 2005, 76 L.Ed.2d 143, (1983). The magistrate found that Johnson had demonstrated a lengthy delay and a timely assertion of his rights to the property. Summary judgment was denied, however, because there were issues of fact concerning the reasons for the government's delay and whether Johnson suffered prejudice because of the delay.

Four years after the initial seizure, the case proceeded to trial on September 13, 1989. The court found that the defendant currency in fact had an independent innocent source and had not been used illegally. The court also found that the government had unreasonably delayed in instituting and prosecuting these proceedings and had violated Johnson's due process rights.

The Assistant U.S. Attorney in charge of this case failed to present any reason why it had taken fifteen months to file forfeiture proceedings. He could only speculate that the reason might have been because the office generally preferred to wait until the state criminal charges were resolved before instituting forfeiture proceedings. He was uncertain, however, that this was the factor involved. The government's attorney also noted that the U.S. Attorney's office did not have an asset forfeiture division when this case was filed, and that it was common for cases to be delayed because of the work load. Again, the prosecutor could not say definitely that this was the factor in this case.

Johnson then moved to recover fees, costs, and prejudgment interest as the prevailing party pursuant to 28 U.S.C. Section 2412(d)(1)(A), the Equal Access to Justice Act (EAJA). The fee application submitted by Johnson's attorney, William Panzer, listed the tasks performed and the total hours the tasks took cumulatively. On the first declaration in support of the fee application, Panzer described the various tasks performed, which totalled approximately seventy-five hours. On the supplemental declaration, Panzer described additional tasks performed which took approximately eighty more hours. The court granted the motion and awarded attorney fees for the estimated 160 hours at the rate of $102.22. ² The government appeals (1) the decision to award fees and (2) the actual amount awarded. ³

STANDARD OF REVIEW

We review the district court's determination of lack of substantial justification and the amount of the fee award for an abuse of discretion. Barry v. Bowen, 825 F.2d 1324, 1330-31 (9th Cir.1987).

DISCUSSION

1. Substantial Justification.

The EAJA provides:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees ... unless the court finds that the position of the United States was substantially justified....

28 U.S.C. § 2412(d)(1)(A). "A position is 'substantially justified' if it is 'justified in substance or in the main,' that is, if it has a 'reasonable basis both in law and fact.' " United States v. One 1984 Ford Van, 873 F.2d 1281, 1282 (9th Cir.1989) (quoting Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988)). The burden is on the government to prove substantial justification. Barry v. Bowen 825 F.2d at 1330. "In evaluating the government's position to determine whether it was substantially justified, we look to the record of both the underlying government conduct at issue and the totality of circumstances present before and during litigation." Id.

In Johnson's case, the government argues that because it won a grant of partial summary judgment on the issue of probable cause to justify the initial seizure of the currency, it was necessarily substantially justified in pursuing its forfeiture claim as it did. Because probable cause is sufficient to trigger forfeiture, the government argues that it was substantially justified in pursuing this litigation to its completion. ⁴ We do not take issue with the determination that the government satisfied the statutory requirement of probable cause to pursue forfeiture under 21 U.S.C. § 881....