U.S. v. Certain Real Property, Huntsville, al

• Decision Date: 19 August 2009
• Docket Number: No. 08-14334.,08-14334.
• Citation: 579 F.3d 1315
• Parties: UNITED STATES OF AMERICA, Plaintiff-Appellant, v. CERTAIN REAL PROPERTY, LOCATED AT 317 NICK FITCHARD ROAD, N.W., HUNTSVILLE, AL, together with all improvements, fixtures, and appurtenances thereon, All Funds on Deposit in Account Number 8011402644 Held in the name of Axion Corporation, located at Colonial Bank, P.O. Box 1887, Birmingham, AL 35201, All Funds On Deposit in Account Number 8036513417 Held in the name of Axion Corporation, located at Colonial Bank, P.O. Box 1887, Birmingham, AL 35201, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

579 F.3d 1315

UNITED STATES OF AMERICA, Plaintiff-Appellant, v. CERTAIN REAL PROPERTY, LOCATED AT 317 NICK FITCHARD ROAD, N.W., HUNTSVILLE, AL, together with all improvements, fixtures, and appurtenances thereon, All Funds on Deposit in Account Number 8011402644 Held in the name of Axion Corporation, located at Colonial Bank, P.O. Box 1887, Birmingham, AL 35201, All Funds On Deposit in Account Number 8036513417 Held in the name of Axion Corporation, located at Colonial Bank, P.O. Box 1887, Birmingham, AL 35201, Defendants-Appellees.

No. 08-14334.

United States Court of Appeals, Eleventh Circuit.

August 19, 2009.

Richard A. Friedman, USDOJ, Appellate Section, Washington, DC, Jenny Lynn Smith, Acting Chief of Appellate Div., Birmingham, AL, for Plaintiff-Appellant.

James Elliott Walthall, James F. Barger, Jr., Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Catherine C. Long, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Henry I. Frohsin, Frohsin & Barger, LLC, Birmingham, AL, for Defendants-Appellee.

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

Before DUBINA, Chief Judge, and EDMONDSON and HILL, Circuit Judges.

DUBINA, Chief Judge:

The government appeals from a final order of the district court awarding attorney fees in a civil forfeiture action. This case requires that we determine, as a matter of first impression, whether attorney fees incurred in the defense of a criminal action may be awarded in a related civil forfeiture action under the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA") § 4(a), 28 U.S.C. § 2465(b)(1) (2006), without regard for the stringent limitations on attorney-fee awards in criminal cases under the Hyde Amendment, Act of Nov. 26, 1997, Pub.L. No. 105-119, tit. VI, § 617, 111 Stat. 2440, 2519 (1997), reprinted in 18 U.S.C. § 3006A (2006), historical and statutory notes [hereinafter Hyde Amendment].

I. BACKGROUND

In August 2003, Axion Corporation ("Axion") secured a $3.7 million contract with the United States Army to supply parts for a Black Hawk helicopter. In June 2006, the government filed a civil in rem forfeiture complaint in the United States District Court for the Northern District of Alabama pursuant to 18 U.S.C. § 981(a)(1)(A) (2006) against two of Axion's bank accounts and the parcel of real property where the company is located on the basis that Axion had violated the terms of the contract, as well as several federal laws. There are three claimants to the defendant properties: Axion; its president, Alex Nooredin Latifi ("Latifi"); and Latifi's wife, Beth Latifi (collectively, "the claimants"). The government filed a motion before Judge Virginia Emerson Hopkins to stay the civil forfeiture proceeding pursuant to CAFRA § 8(a), 18 U.S.C. § 981(g)(1), which directs the district court to "stay the civil forfeiture proceeding if the court determines that civil discovery will adversely affect the ability of the Government to conduct a related criminal investigation or the prosecution of a related criminal case."¹ Judge Hopkins granted the motion to stay the civil forfeiture action.

In March 2007, the government filed an indictment against Axion and Latifi in the United States District Court for the Northern District of Alabama. The criminal case was assigned to Judge Inge Prytz Johnson. A superseding indictment charged Latifi and Axion with two counts of exporting without the required license defense articles or defense services designated by the President for inclusion in the United States Munitions List, in violation of the Arms Export Control Act, 22 U.S.C. § 2778(b)(2), (c) (Counts 1 and 6); making a false representation concerning an aircraft part, in violation of 18 U.S.C. § 38(a)(1)(C) (Count 2); and making false statements, in violation of 18 U.S.C. § 1001 (Count 3). The indictment also included two criminal forfeiture counts (Counts 4 and 5).² Judge Johnson held a seven-day bench trial that resulted in an acquittal on all counts.

After the criminal charges against Latifi and Axion were dismissed, the civil case was transferred to Judge Johnson. The government filed a motion to dismiss the civil forfeiture case with prejudice, which also contained a request for a certificate of reasonable cause under 28 U.S.C. § 2465(a) (2006). In their response, the claimants agreed that the case should be dismissed with prejudice and asserted that such a dismissal entitled them to attorney fees under CAFRA. The claimants also objected to the government's request for a certificate of reasonable cause. The government then filed a motion for leave to withdraw its motion to dismiss with prejudice. Judge Johnson granted the motion to withdraw and set a hearing on the motion for a certificate of reasonable cause. The government filed a motion to dismiss without prejudice, stating that it no longer intended to pursue the civil forfeiture case. The claimants again asserted that the case should be dismissed with prejudice. The government then filed a notice with the court stating that the government was withdrawing its request for a certificate of reasonable cause. On April 2, 2008, the district court dismissed the case with prejudice and concluded that the claimants were "entitled to recover reasonable attorneys' fees and costs along with interest pursuant to the provisions of CAFRA." (Or., R. 72 at 8.)

On May 29, 2008, the district court opined that, pursuant to CAFRA, the claimants are entitled to recover both fees incurred in defending the civil forfeiture action and fees incurred in defending the criminal case and ordered the payment of such fees and interest. United States v. Certain Real Prop., 566 F.Supp.2d 1252, 1261-62 (N.D.Ala.2008). Citing Webb v. Board of Education of Dyer County, Tennessee, 471 U.S. 234, 105 S.Ct. 1923, 85 L.Ed.2d 233 (1985), the district court found that the attorney fees incurred in the criminal case, a "related proceeding," are recoverable in the civil forfeiture action because the work was "`useful and of a type ordinarily necessary to secure the final result obtained from the litigation.'" Id. at 1261 (quoting Webb, 471 U.S. at 243, 105 S.Ct. at 1928). The court first found that the criminal case work was useful, saying:

[T]he work done by the claimants' attorneys in the criminal case was clearly useful as it directly resulted in the dismissal of the civil forfeiture case. In fact, the claimants were required to litigate the civil forfeiture case through the criminal case because of the stay imposed on the civil forfeiture case. If Latifi and Axion had been convicted in the criminal case, then the property would have been immediately subject to forfeiture. If the defendants were acquitted, as they were, then that result would not have had res judicata effect on this civil forfeiture case.... [T]he government had no intention of pursuing the civil forfeiture case after Latifi and Axion were acquitted. Thus, the acquittal in the criminal case directly led to the dismissal of the civil forfeiture case. Indeed, the only way for the claimants to obtain a dismissal of the civil forfeiture case was by obtaining an acquittal in the criminal case.

Id. (citations omitted). The court then concluded that "[t]he work was ... of a type ordinarily necessary to secure the final result obtained from the litigation since the civil proceeding was stayed pursuant to CAFRA and ... the only way for the claimants to succeed was to gain an acquittal in the criminal trial." Id. The court acknowledged that "[a]warding the claimants fees for work done in the criminal case clearly allows the claimants to avoid the stricter requirements for recovering attorneys' fees under the Hyde Amendment," id., which requires claimants recovering such fees in a criminal case to prove "that the position of the United States was vexatious, frivolous, or in bad faith." Hyde Amendment. The district court added that "if [it] were to find that fees incurred defending the criminal case were not recoverable under CAFRA, then the government would be allowed to avoid CAFRA, as it has tried to do in this case, by moving for a stay in the civil case and prosecuting the criminal case." 566 F.Supp.2d at 1261.

The district court's total attorney-fee award before deductions³ was $414,198.50; the district court attributed $292,929.50 of this award to 1327.7 hours of work on the criminal case.⁴ Id. at 1262. The ultimate award minus deductions was $363,956.92.⁵ The government then perfected this appeal.

On appeal, the government urges, inter alia, that CAFRA's plain language limits the award of attorney fees under § 4(a), 28 U.S.C. § 2465(b)(1) to those fees incurred for work done explicitly for the civil forfeiture proceeding.⁶ The claimants counter, in accord with the district court, that the Supreme Court has decided in other contexts that similarly-worded fee-shifting statutes encompass the award of fees incurred outside of the statutorily-named litigation and that this precedent allows them to recover under CAFRA fees incurred in the defense of a related criminal case.

II. STANDARD OF REVIEW

"`The proper standard for an award of attorney's fees is a question of law that we review de novo.'" Morillo-Cedron v. Dist. Dir. for the U.S. Citizenship & Immigration Servs., 452 F.3d 1254, 1256 (11th Cir.2006) (quoting Smalbein v. City of Daytona Beach, 353 F.3d 901, 904 (11th Cir.2003)).

III. DISCUSSION

After thorough review of the record, we conclude that the contours of Congress's waiver of the United States government's sovereign immunity in the CAFRA fee-shifting provision can be determined by looking to the plain language and structure of CAFRA. We hold that attorney fees incurred in the defense of a criminal action, even if related to a civil forfeiture action as in the present case, cannot be awarded under CAFRA. This holding is supported by CAFRA's legislative history, and we find the Supreme Court cases cited by the district court inapplicable...