U.S.A. v. Holland Jr

• Decision Date: 27 January 2000
• Docket Number: No. 99-6823,99-6823
• Citation: 214 F.3d 523
• Parties: (4th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellant, v. RICHARD JOYNER HOLLAND, JR.; SHIRLEY JEAN HOLLAND WRIGHT; GREGORY F. HOLLAND, Co-executors of the Estate of Richard Joyner Holland, Sr., Deceased, Defendants-Appellees. . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 523

214 F.3d 523 (4th Cir. 2000)

UNITED STATES OF AMERICA, Plaintiff-Appellant, v. RICHARD JOYNER HOLLAND, JR.; SHIRLEY JEAN HOLLAND WRIGHT; GREGORY F. HOLLAND, Co-executors of the Estate of Richard Joyner Holland, Sr., Deceased, Defendants-Appellees.

No. 99-6823.

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT.

Argued: January 27, 2000.

Decided: June 15, 2000.

Appeal from the United States District Court for the Eastern District of Virginia, at Norfolk.

Henry C. Morgan, Jr., District Judge. (CR-97-139-2) COUNSEL ARGUED: David S. Kris, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. James Crawford Roberts,

Jr., MAYS & VALENTINE, L.L.P., Richmond, Virginia; Hunter W. Sims, Jr., KAUFMAN & CANOLES, Norfolk, Virginia, for Appellees. ON BRIEF: Helen F. Fahey, United States Attorney, Justin W. Williams, Assistant United States Attorney, Larry L. Gregg, Assistant United States Attorney, James A. Metcalfe, Assistant United States Attorney, Robert J. Seidel, Jr., Assistant United States Attorney, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. Alan D. Albert, John S. West, MAYS & VALENTINE, L.L.P., Richmond, Virginia; Patrick H. O'Donnell, Beth V. McMahon, KAUFMAN & CANOLES, Norfolk, Virginia, for Appellees.

Before LUTTIG and MOTZ, Circuit Judges, and Norman K. MOON, United States District Judge for the Western District of Virginia, sitting by designation.

Affirmed by published opinion. Judge Moon wrote the opinion, in which Judge Luttig joined. Judge Motz wrote an opinion concurring in the judgment.

OPINION

MOON, District Judge:

The United States appeals from the district court's denial of its motion for reconsideration of the district court's decision to award attorney's fees and costs to a criminal defendant under the Hyde Amendment, a federal statute that permits courts to award attorney's fees and costs to individuals who were subjected to a vexatious prosecution. For the reasons that follow, we affirm the district court's denial of the United States' motion for reconsideration.

I.

A criminal investigation was launched in October 1993 against Richard Holland, Sr., and Richard Holland, Jr., the respective chief executive officer and president of Farmers Bank. On September 26, 1997, a grand jury issued a 31-count indictment, charging the Hollands with making various false entries in bank records, misapplying bank funds, making false statements, perjury, obstructing justice, and conspiracy. After a two week trial, the district court issued an order dated April 30, 1998, granting the Hollands' motion for acquittal on all counts. The Hollands subsequently petitioned the district court for attorney's fees and other costs pursuant to the Hyde Amendment of the Departments of Commerce, Justice, and State, The Judiciary, and Related Agencies Appropriations Act of 1998, Pub. L. No. 105-119, § 617, 111 Stat. 2440, 2519 (1997) (found as statutory note at 18 U.S.C. § 3006A).¹ On February 3, 1999, the district court found that the conduct of the FDIC and the U.S. Attorney's Office had been vexatious and granted the Hollands' motion for attorney's fees and costs pursuant to the Hyde Amendment.

Twenty-nine days after the district court awarded attorney's fees and costs to the Hollands, the government filed a"Motion for Reconsideration." On May 18, 1999, the district court ruled on the motion for reconsideration and concluded that Hyde Amendment proceedings are civil rather than criminal. Therefore, the district court concluded that any motions made pursuant to the Hyde Amendment should be treated as being filed in accordance with the Federal Rules of Civil Procedure. Although the United States did not designate under what rule it was filing its motion for reconsideration, the district court reasoned that the only motion for reconsideration that would not be time-barred under the Federal Rules of Civil Procedure would be one made pursuant to Rule 60(b). The court subsequently denied the Rule 60(b) motion for reconsideration because the United States did not present any new evidence or any other reason to reconsider the court's judgment to assess attorney's fees and costs.²

Twenty-nine days later, on June 16, 1999, the government filed a notice of appeal "from the decision of [the district court] on May 18, 1999." The government now argues that the February 3, 1999 award of attorney's fees and costs was made under the wrong section of 28 U.S.C. § 2412 and that attorney's fees and costs should not have been awarded because the government's prosecution was not vexatious within the meaning of the Hyde Amendment.

II.

The issue in this case is simply whether Hyde Amendment proceedings are civil or criminal in nature, and whether the Federal Rules of Civil or Criminal Procedure apply accordingly. The United States contends that the Hyde Amendment proceedings are criminal and that its appeal from the denial of the motion for reconsideration is therefore an appeal from the February 3, 1999 judgment. The United States argues that an appeal from the denial of a motion for reconsideration in the criminal context "necessarily raise[s] the underlying judgment for review." United States v. Dickerson, 166 F.3d 667, 677 n.10 (4th Cir. 1999), cert. granted in part, 120 S. Ct. 578 (1999).³ The government does not contest that if the Hyde Amendment proceedings are instead civil in nature, then its appeal from the denial of the motion for reconsideration does not raise the underlying February 3, 1999 order for review on appeal.⁴

The question of whether Hyde Amendment proceedings are civil or criminal in nature for the purpose of applying rules of procedure is one of first impression in this court.⁵ We agree with the district court that the Hyde Amendment proceedings are civil in nature and that the United States, therefore, has not appealed the district court's February 3, 1999 order.

We turn first to the language of the Hyde Amendment. Contrary to the contention of the United States, nothing in the statute denominates the proceedings in which fees are sought as either civil or criminal. We recognize that the Amendment does begin with a reference to the nature of the case that could give rise to an award of attorney's fees: "the court, in any criminal case . . . may award," § 617, 111 Stat. at 2519 (emphasis added). However, the phrase "in any criminal case" merely limits to "criminal cases" the cases in which attorney's fees may be awarded under the Hyde Amendment. That is, the Amendment's language simply empowers the court to award fees for services rendered in the defense of a criminal case. It does not address whether the ancillary Hyde Amendment proceeding in which the issue of fees is adjudicated is itself criminal or civil.

Although the statute does not characterize the nature of Hyde Amendment proceedings, we are confident that they are civil in nature. Ancillary motions in a criminal case are not necessarily criminal. See Lee v. Johnson, 799 F.2d 31, 36-38 (3rd Cir. 1986) (separate action to quash grand jury subpoena considered civil action); United States v. Douglas, 55 F.3d 584 (11th Cir. 1995) (property adjudication proceeding ancillary to criminal forfeiture prosecution determined to be a civil action); United States v. Chan, 22 F. Supp. 2d 1123, 1127 (D. Haw. 1998) (third party motion for attorney's fees characterized as a civil action). Instead, a proceeding that is basically civil should be considered a civil action even if it stems from a prior criminal prosecution. See United States v. Lavin, 942 F.2d 177, 181-82 (3rd Cir. 1991). A proceeding is basically civil if it redresses private injuries; a criminal proceeding, by contrast, establishes guilt and punishes offenders. See Black's Law Dictionary 374 (6th ed. 1990); see also Lavin, 942 F.2d at 181 (criminal cases are prosecutions by the government to secure convictions for criminal conduct; civil cases are everything else). Hyde Amendment proceedings redress private injuries -- the costs accrued by an individual defending against a vexatious prosecution -- and do not establish guilt or punish offenders.⁶

The law of contempt provides a good analogy. In determining whether contempt is a civil or criminal proceeding, the Supreme Court instructs that courts ask "what does the court primarily seek to accomplish by imposing sentence?" Shillitani v. United States, 384 U.S. 364, 370 (1966). If the purpose of contempt is to coerce compliance, the penalty is civil; if the purpose of contempt is to punish for past disobedience, the penalty is criminal. Douglass v. First Nat'l Realty Corp., 543 F.2d 894, 898 (D.C. Cir. 1976). The test applies regardless of whether the underlying court proceedings are civil or criminal. See Shillitani, 384 U.S. at 368 (civil contempt penalty imposed when underlying proceeding was criminal); Douglass, 543 F.2d at 898 (criminal contempt fine imposed when underlying proceeding was civil).

Because the Hollands sought restitution -- not criminal sanctions -- for their prosecution, the ancillary motions concerning the award of attorney's fees are most properly characterized as motions pursuant to a civil action against the United States. The statute itself confirms that the award of attorney's fees and costs is remedial in nature because those individuals who did not incur attorney's fees cannot be awarded those fees. See § 617, 111 Stat. at 2519 ("[T]he court, in any criminal case (other than a case in which the defendant is represented by assigned counsel paid for by the public)... may award [fees] ..." (emphasis added).). Therefore, the focus of the statute is on compensating those individuals who are vexatiously prosecuted and who subsequently incur attorney's fees, not on forcing the government to pay fees as a form of punishment.

In these respects, a Hyde Amendment proceeding for attorney's fees is analogous to a motion for return of property made pursuant to Federal Rule of...