U.S. v. Eleven Vehicles

• Decision Date: 30 May 1997
• Docket Number: Civil Action No. 91-6779.
• Parties: UNITED STATES of America, Plaintiff, v. ELEVEN VEHICLES, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

966 F.Supp. 361

UNITED STATES of America, Plaintiff, v. ELEVEN VEHICLES, et al., Defendants.

Civil Action No. 91-6779.

United States District Court, E.D. Pennsylvania.

May 30, 1997.

COPYRIGHT MATERIAL OMITTED

Michael L. Levy, Pamela Foa, Asst. U.S. Atty., Philadelphia, PA, Michael M. Baylson, Sonia C. Jaipaul, Robert Goldman, Ronald H. Levine, U.S. Attys. Office, Philadelphia, PA, for U.S.

Robert Clyde Ivy, Lancaster, PA, pro se.

Charles H. Ivy, Law Offices of Charles H. Ivy, Atlanta, GA, for Robert Clyde Ivy and Irene Ivy.

Wayne K. Radcliffe, Lancaster, PA, pro se.

Marilyn J. Gelb, Philadelphia, PA, for Wayne K. Radcliffe.

Bruce A. Franzel, Holtwood, PA, for Terrance P. Faulds.

Terrance P. Faulds, Holtwood, PA, pro se.

Irene Ivy, Lancaster, PA, pro se.

Fred D. Furman, Kleinbard, Bell & Brecker, Philadelphia, PA, for Kleinbard, Bell & Brecker.

James H. Foster, Mellon Bank, N.A., Harrisburg, PA, for Mellon Bank, N.A.

John H. Whitmoyer, Henry & Beaver, Lebanon, PA, for Lebanon Valley Nat. Bank.

Mark E. Cedrone, Carroll & Cedrone, Philadelphia, PA, for Gerald Schuler.

Elaine K. Radcliffe, Lancaster, PA, pro se.

Michelle E. Radcliffe, Lancaster, PA, pro se.

EDUARDO C. ROBRENO, District Judge.

In this civil forfeiture case, claimants Robert Clyde Ivy and Irene Ivy, and plaintiff United States, have each moved for reconsideration of the Court's Order of August 30, 1996 (as amended September 9, 1996),¹ which held that the government had reasonable cause for initiating the forfeiture action in this case but that the claimants were nevertheless entitled to attorney's fees under the Equal Access to Justice Act ("EAJA") because the government's position was not substantially justified. See Claimants' motion for reconsideration and supporting memoranda (doc. nos. 161 & 168); and the government's response thereto (doc. no. 166); the government's motion for reconsideration and supporting memorandum (doc. no. 162); and the claimants' response thereto (doc. no. 165).

Claimants have also filed a motion for cost of living adjustment for attorney's fees and supporting memoranda (doc. nos. 160 & 164), as well as an itemized statement of counsel's hours, rates and expenses and supporting affidavits and documentation (doc. no. 163). The government has countered with prolix objections to claimants' itemized statement of counsel's hours, rates and expenses (doc. no. 171) as well as a supplemental memorandum (doc. no. 172) to which the claimants have filed a reply (doc. no. 174).

For the reasons that follow, the motions for reconsideration are denied; the claimant's motion for a cost of living adjustment is granted in part and denied in part; and the government's objections to claimants itemized statement of attorney's fees and expenses are sustained in part and overruled in part.

I. MOTIONS FOR RECONSIDERATION

The Third Circuit has instructed that "the purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir.1985), cert. denied, 476 U.S. 1171, 106 S.Ct. 2895, 90 L.Ed.2d 982 (1986). The Court will thus review each party's motion for reconsideration under this standard.

A. The Government's Motion for Reconsideration

The government moves for reconsideration of the Court's determination that the government's position was not substantially justified. "Substantial justification under the [fee shifting provision of the Equal Access to Justice Act] has been defined by the Supreme Court as `justified in substance or in the main — that is, justified to a degree that could satisfy a reasonable person.' ... Alternatively phrased, an agency position is substantially justified if it has a reasonable basis in both law and fact." Hanover Potato Products, Inc. v. Shalala, 989 F.2d 123, 128 (3d Cir.1993) (quoting Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988)). The government has the burden of "demonstrating substantial justification for its position." Id.

While the Court found that the government's position taken pre-litigation, or agency position, was substantially justified (i.e., it had probable cause to initiate the forfeiture proceeding), it found that its litigation position was not. Eleven Vehicles III, 937 F.Supp. at 1153. In determining whether the government was substantially justified the Court was constrained to "treat[] the case as an inclusive whole." Commissioner, I.N.S. v. Jean, 496 U.S. 154, 161-62, 110 S.Ct. 2316, 2320, 110 L.Ed.2d 134 (1990). Thus, considering both the government's agency position pre-litigation and its litigation position, the Court concluded that the government's position was not substantially justified.² Eleven Vehicles III, 937 F.Supp. at 1154.

The government's motion for reconsideration is merely a rehash of the arguments it made earlier in the litigation. Upon reexamination, the Court finds no manifest error of law or fact in its holdings, and the government has presented no newly discovered evidence to persuade the Court otherwise. Therefore, the Court denies the government's motion for reconsideration.

B. The Claimant's Motion for Reconsideration

The claimants seek reconsideration, in the main, of (1) the Court's Order granting of a certificate of reasonable cause to the government; and (2) the Court's denial of the claimants' entitlement to attorney's fees at market hourly rates.

1. The Issuance of a Certificate of Reasonable Cause

The claimants base their argument for reconsideration of the issuance of a certificate of reasonable cause partly on the ground that the affidavit of Special Agent David G. Herbert ("Herbert Affidavit"), upon which the seizure warrant was issued, was insufficient to establish probable cause for forfeiture. The claimants argue that the Herbert Affidavit was insufficient because it did not reference money laundering or the money laundering statutes.

Agent Herbert, in his affidavit, states that he investigated "methods used by those engaged in corporate financial fraud to attempt to shield their activities and I have specialized in this investigation in tracing the proceeds of the unlawful activities of, among others, Robert C. Ivy...." Herbert Affidavit at ¶ 9. He also states "I believe that there is probable cause that the defendant properties are subject to forfeiture under Title 18, United States Code, Section 981(a)(1)(A), (C)." Id. at ¶ 17.

In turn, section 981(a)(1)(A) provides for civil forfeiture of property involved in a transaction in violation of, inter alia, the money laundering statutes, 18 U.S.C. §§ 1956 or 1957. 18 U.S.C. § 981(a)(1)(A). The Herbert Affidavit thus identifies money laundering by reference and, therefore, adequately supplies the probable cause needed for the initiation of forfeiture proceedings. Additionally, the civil forfeiture complaint incorporated the criminal indictment which explicitly invoked the money laundering statutes.

The claimants also rehash their previous argument that the government, two years prior to initiating this forfeiture case, entered into an agreement with Ferranti, the company taken over by ISC to facilitate illegal activity, in which the government accepted Ferranti's representation of ignorance and innocence of criminal activities at the time of its merger with ISC and through the date of the agreement. The claimants contend that the Ferranti agreement is patently inconsistent with a finding of probable cause. The claimants reason that if any part of Ferranti was not forfeitable then the government could not have had probable cause to believe that all of Ferranti's assets were forfeitable and, thus, the government could not seek civil forfeiture of all of the claimants' assets without tracing those assets to the illegal activities of Ferranti. The Court found this argument unconvincing and cited Agent Herbert's conclusion that "`substantially all of Robert Clyde Ivy['s] ... incomes were the proceeds of [the] unlawful conduct [alleged in the underlying criminal indictment] and these proceeds have been traced to the defendant properties herein.'" Eleven Vehicles III, 937 F.Supp. at 1148 (quoting Herbert Affidavit at ¶ 12).

Finally, claimants argue that the Court erred in issuing the certificate of reasonable cause in spite of its findings that the government relied on statutes which were enacted after some or all of the forfeitable conduct occurred. The claimants were, indeed, successful on two summary judgment motions in which the Court found that the statutes in question were impermissibly applied retroactively. See United States v. Eleven Vehicles, 836 F.Supp. 1147 (E.D.Pa. 1993) ("Eleven Vehicles I"); United States v. Eleven Vehicles, 898 F.Supp. 1143 (E.D.Pa. 1995) ("Eleven Vehicles II"). The Court nevertheless determined that the government had probable cause to seize the property at the time of seizure, which is the appropriate time to determine probable cause. Eleven Vehicles III, 937 F.Supp. at 1148 (citing United States v. One DLO Model A/C, 30.06 Machine Gun, 904 F.Supp. 622, 637 (N.D.Ohio 1995); United States v. Parcels of Real Property with the Bldg., Appurtenances, and Improvements Located at 255 Broadway, 795 F.Supp. 1225, 1230 (D.Mass. 1992), aff'd, 9 F.3d 1000 (1st Cir.1993)). On reconsideration, the Court concludes that the government met its "relatively light burden," and despite the Court's later findings achieved with the benefit of hindsight, the Court finds that, under "the circumstances on the date of the institution of the forfeiture proceeding `taken as a whole,'" "the government had probable cause to believe the subject property [was] forfeitable." 255 Broadway, 9 F.3d at 1004, 1005. Therefore, the Court denies the claimants' portion of the motion seeking reconsideration of the issuance of the certificate of reasonable cause.³

2. Denial of Claimants' Attorney's Fees at Market Rates

The claimants...