U.S. v. Real Property Located at 2323 Charms Road, Milford Tp., Oakland County, Mich.

• Decision Date: 28 October 1991
• Docket Number: Nos. 90-1655,90-2001,s. 90-1655
• Citation: 946 F.2d 437
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. REAL PROPERTY LOCATED AT 2323 CHARMS ROAD, MILFORD TOWNSHIP, OAKLAND COUNTY, MICHIGAN; Personal Property--One 1977 Twin Engine Beech Aircraft, Registration Number N58EM; Personal Property--Miscellaneous Items of Personal Property Located at 2323 Charms Road; Currency $517.00, Defendants, David Gershon, Claimant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 437

946 F.2d 437

UNITED STATES of America, Plaintiff-Appellant, v. REAL PROPERTY LOCATED AT 2323 CHARMS ROAD, MILFORD TOWNSHIP OAKLAND COUNTY, MICHIGAN; Personal Property--One 1977 Twin Engine Beech Aircraft, Registration Number N58EM; Personal Property--Miscellaneous Items of Personal Property Located at 2323 Charms Road; Currency $517.00, Defendants David Gershon, Claimant-Appellee.

Nos. 90-1655, 90-2001.

United States Court of Appeals Sixth Circuit.

Argued May 17, 1991.

Decided Sept. 13, 1991.

Rehearing and Rehearing En Banc Denied Oct. 28, 1991.

Jennifer J. Peregord, Office of U.S. Atty., Detroit, Mich. (argued and briefed), for plaintiff-appellant U.S.

James W. Burdick, Hertz, Schram & Saretzky, Bloomfield Hills, Mich. (argued and briefed), for appellee David Gershon.

Before MERRITT, Chief Judge, and NORRIS and SUHRHEINRICH, Circuit Judges.

SUHRHEINRICH, Circuit Judge.

This is a consolidated appeal by the government from two orders of the district court in an unsuccessful civil forfeiture proceeding brought against a twin engine Beech aircraft owned by claimant David Gershon ("Gershon"). ¹ The first order awarded Gershon expenses and attorneys' fees pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412. ² The second order awarded Gershon storage expenses incurred while the aircraft was in the possession of the government. ³ For the reasons that follow, we reverse the order of the district court awarding EAJA fees and vacate and remand the order awarding storage fees.

I.

On March 8, 1989, officers of the Michigan State Police Narcotic Enforcement Team ("MSP-NET") seized, pursuant to a search warrant, over 500 grams of cocaine and a variety of drug paraphernalia, guns and currency from the residence of Duane Shuley Head ("Head"). Head was subsequently convicted on state felony drug charges. Two days later, the United States filed a verified complaint and affidavit against, inter alia, a twin engine Beech aircraft owned by Gershon, an alleged supplier of cocaine to Head. The proceeding against the aircraft was initiated pursuant to 21 U.S.C. § 881(a)(4), which allows for forfeiture of all conveyances, including aircraft, which are used, or are intended for use in any manner in the transportation, sale, receipt, possession or concealment of controlled substances. ⁴ The complaint, filed under the Supplemental Rules for Certain Admiralty and Maritime Claims ("Supplemental Rules"), ⁵ incorporated by reference an affidavit in support of the seizure warrant sworn by an officer of MSP--NET. On that same day, a magistrate approved a warrant upon an ex parte showing of probable cause under 21 U.S.C. § 881(b) and Fed.R.Crim.P. 41, authorizing the government to seize the aircraft. ⁶ Gershon claimed ownership of the plane on March 22, 1989, and answered the government's complaint on March 27, 1989.

Gershon moved for summary judgment on the grounds that the government's complaint was deficient. The district court treated the motion as a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Finding the original complaint to be inadequate in that it failed to set forth probable cause for forfeiture, the court allowed the government ten days in which to file an amended complaint. The government thereafter filed a first amended complaint for forfeiture, which is set forth in relevant part in the attached Appendix. Gershon moved for dismissal of the amended complaint; and on December 5, 1989, the district court dismissed the complaint with respect to the plane with prejudice and ordered its return to Gershon. See United States v. Certain Real Property at 2323 Charms Road, Milford Twp., 726 F.Supp. 164 (E.D.Mich.1989) ("Charms I "). The district court ruled that "there simply is not enough information set forth in the amended complaint to show that the government can demonstrate probable cause in a forfeiture trial." Id. at 168.

Thereafter, Gershon filed a motion for attorneys' fees pursuant to section 2412 of the EAJA, 28 U.S.C. § 2412, alleging that the dismissal of the complaint for insufficiency supported a finding that the government's claim against the plane had not been substantially justified. See 28 U.S.C. § 2412(d)(1)(A) & (B). The district court agreed and granted claimant's motion. See United States v. Certain Real Property at 2323 Charms Road, Milford, Twp., 728 F.Supp. 1326 (E.D.Mich. January 18, 1990) ("Charms II "). The district court also concluded that an upward departure from the $75.00 per hour cap of § 2412(d)(2)(A) was justified, and found an hourly rate of $125.00 to be reasonable compensation for Gershon's attorney. Id. at 1329-30. Following submission of an itemized time record, the court ordered $12,500.00 in attorneys' fees and $678.12 in expenses. In addition, the court granted Gershon's motion to require the government to pay for expenses incurred for storage of the aircraft while in the government's possession during the pendency of the forfeiture litigation. See United States v. One 1977 Twin Engine Beech Aircraft, Registration Number N58EM, No. 89-70751 (E.D.Mich. June 28, 1990). This appeal followed.

II.

A.

The government raises two arguments in support of its contention that the district court erred in awarding claimant EAJA fees. The government asserts that its position was substantially justified because the complaint set forth a sufficient factual basis for forfeiture; and secondly, that on the basis of the complaint and affidavit, a magistrate found probable cause for the seizure of the airplane.

The EAJA provides in pertinent part that a court "shall award to a prevailing party other than the United States fees and other expenses" in any civil action brought by or against the United States, "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). The government's position under section 2412(d)(1)(A) is "substantially justified" if it is " 'justified in substance or in the main'--that is, justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988)). See also Willis v. Sullivan, 931 F.2d 390 (6th Cir.1991); United States v. One 1985 Chevrolet Corvette, 914 F.2d 804, 808 (6th Cir.1990). In Pierce, the Supreme Court further explained that "a position can be justified even though it is not correct, and we believe it can be substantially (i.e., for the most part) justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact." Id., 487 U.S. at 566 n. 2, 108 S.Ct. at 2550 n. 2; One 1985 Chevrolet Corvette, 914 F.2d at 808. The Court in Pierce also indicated that objective indicia, such as the stage in which the proceedings were resolved and the legal merits of the government's position may be relevant in assessing a district court's determination of reasonableness. 487 U.S. at 568-70, 108 S.Ct. at 2551-53. A district court's award under EAJA is reviewed for an abuse of discretion. One 1985 Chevrolet Corvette, 914 F.2d at 807 (citing Pierce, 487 U.S. at 563, 108 S.Ct. at 2549).

In order to determine whether the government's conduct in initiating forfeiture proceedings against the defendant aircraft was reasonable, we must examine its burden under the appropriate statutes. The fact that the government failed to achieve forfeiture raises no presumption that its position lacked substantial justification. United States v. B & M Used Cars, 860 F.2d 121, 124 (4th Cir.1988). Because this case was dismissed on the pleadings, we must evaluate the government's burden at this stage in the litigation. A complaint for forfeiture under 21 U.S.C. § 881 is subject to the particularity requirements set forth in Supplemental Rule E(2). See 21 U.S.C. § 881(b). ⁷ Supplemental Rule E(2)(a) provides: In actions to which this rule is applicable the complaint shall state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading.

Supplemental Rule E(2)(a) imposes a more stringent standard than the pleading requirements of the Federal Rules of Civil Procedure. "The requirement is not merely a procedural technicality, but a way of ensuring that the government does not seize and hold, for a substantial period of time, property to which, in reality, it has no legitimate claim." United States v. Pole No. 3172, Hopkinton, 852 F.2d 636, 638 (1st Cir.1988); United States v. Premises and Real Property at 4492 South Livonia Road, Livonia, New York, 889 F.2d 1258, 1266 (2d Cir.1989) (quoting Pole No. 3172, Hopkinton ). As noted by the First Circuit:

The Supplemental Rule E(2)(a) particularity requirement is designed to assure that the forfeiture complaint apprises potential claimants of the circumstances which support the government's contention that there is probable cause to believe that the defendant property was connected with illegal drug activity, thus enabling claimants to commence an investigation of the facts and to frame a responsive pleading.

United States v. One Parcel of Real Property, 921 F.2d 370, 375 (1st Cir.1990) (citations and internal quotations omitted; emphasis in original). Thus, a section 881(a) forfeiture complaint "must allege sufficient facts to provide a reasonable belief that the property is subject to forfeiture." Pole No. 3172, Hopkinton, 852 F.2d at 638 (quoting United States v. $38,000.00 in United States Currency, 816 F.2d 1538, 1548 (11th Cir.1987). See also United States v. Real Property and Residence at 3097 S.W. 111th Avenue, Miami, Florida, 921 F.2d 1551, 1554-55 (11th Cir.1991) ("[e]ssentially the complaint must contain factual allegations sufficiently particular to enable a claimant to begin an...