US v. One Rural Lot, Civ. No. RLA 89-0173 (JAF).

• Decision Date: 07 August 1991
• Docket Number: Civ. No. RLA 89-0173 (JAF).
• Citation: 770 F. Supp. 66
• Parties: UNITED STATES of America, Plaintiff, v. ONE RURAL LOT, etc., Defendant.
• Court: U.S. District Court — District of Puerto Rico

770 F. Supp. 66

UNITED STATES of America, Plaintiff, v. ONE RURAL LOT, etc., Defendant.

Civ. No. RLA 89-0173 (JAF).

United States District Court, D. Puerto Rico.

August 7, 1991.

Miguel A. Fernández, Asst. U.S. Atty., Civil Div., Daniel F. López-Romo, U.S. Atty., San Juan, P.R., for plaintiff.

Irma R. Valldejuli, San Juan, P.R., for claimant Alejandro López.

AMENDED OPINION AND ORDER¹

FUSTE, District Judge.

On February 10, 1989, the government filed an action for civil forfeiture against certain properties pursuant to 21 U.S.C. 881(a)(6).² Claimant Alejandro López, incarcerated in a New York State prison, contested the forfeiture action pro se and requested that counsel be appointed. On September 13, 1989, United States District Court Judge Raymond L. Acosta dismissed López' claim and entered a decree forfeiting defendant properties free of liens to the United States. Claimant appealed. The United States Court of Appeals for the First Circuit vacated the district court's judgment and ordered the lower court to allow López' motion to proceed in forma pauperis and to request appointment of counsel pursuant to 28 U.S.C. § 1915(d). See U.S. v. One Rural Lot, 915 F.2d 1556, No. 89-2072 (1st Cir.1990) (unpublished opinion). On remand, Judge Acosta appointed counsel for claimant and an answer was filed.

Subsequently, the case was reassigned to this court and an in-chambers status conference was held on December 26, 1990. The court heard the respective arguments of the parties and ironed out an agreement based on the following. If the claimant or his relatives could prove that legal monies were used in the purchase of the properties, then the government would recognize this fact and the proceeds of the sale of the properties would be divided accordingly. The parties were granted thirty days to explore the possibility of settlement. After the parties moved the court for a continuance, a subsequent status conference was held on February 8, 1991 and the parties informed the court that the parties had come to an agreement and the case was now settled. On March 25, 1991, the parties filed a Stipulation for Consent Decree settling the action and dividing the proceeds of the sale of the properties between the government and various members of claimant's family.

Before the court is claimant's motion for attorney's fees and costs pursuant to the Equal Access to Justice Act ("EAJA"), as amended, 28 U.S.C. § 2412. The government opposes claimant's motion arguing both that plaintiff was not a "prevailing party" within the meaning of the EAJA and that the government's position was substantially justified. After a careful review of the record before us and conscious that we were assigned the case well after the commencement of the action, for the reasons stated below, we find (a) that claimant was a "prevailing party" pursuant to the EAJA; and (b) that the government's position was not substantially justified. We therefore award to claimant attorney's fees and expenses in the amount of $6,327.04.

I.

Claimant's Eligibility for Attorney's Fees Under the EAJA

The EAJA, in relevant part, provides:

Except as otherwise specifically provided for by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any cost awarded pursuant to subsection (a), incurred by that party in any civil action (other then cases sounding in tort), including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, 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 United States Supreme Court has recently listed the four eligibility requirements under the EAJA:

(1) that the claimant be a "prevailing party"; (2) that the Government's position was not "substantially justified"; (3) that no "special circumstances make an award unjust"; and, (4) pursuant to 28 U.S.C. § 2412(d)(1)(B), that any fee application be submitted to the court within 30 days of final judgment in the action and be supported by an itemized statement.

Commissioner, I.N.S. v. Jean, ___ U.S. ___, ___, 110 S.Ct. 2316, 2319, 110 L.Ed.2d 134 (1990); Tapia Trinidad v. Secretary of Health and Human Services, 935 F.2d 13, 15-16 (1st Cir.1991). Here the government challenges both the "prevailing party" and the "substantially justified" conditions. We will treat each seriatim.

A. Prevailing Party

The government argues that claimant is not a "prevailing party" in this action. They cite the standard for a "prevailing party," first enunciated in Nadeau v. Helgemoe, 581 F.2d 275, 278-279 (1st Cir. 1978), and adopted by the United States Supreme Court in Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983). Plaintiffs are a "prevailing party" where they have "succeeded on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit." Plaintiff then argues that claimant did not succeed on any significant or substantive issue since settlement negotiations produced a consent decree. We disagree.

Here, from the moment that claimant first appeared pro se in the action, the following events transpired. Claimant filed numerous letters to the court explaining that he was incarcerated in New York State; that he himself was not capable of proceeding pro se; and that he had no money to hire counsel. The judge originally assigned the case denied his request for counsel and entered a decree forfeiting the property to the government. Claimant appealed pro se and prevailed at the appellate level as the First Circuit remanded and ordered a readjudication of the forfeiture action and assignment of counsel. After counsel was appointed (and the action was transferred to this judge), instead of a second decree of forfeiture being entered, the parties settled. The agreement called for a division of $110,000, the proceeds of the sale of the properties, whereby claimant's family members divided $65,000 while the government received $45,000.³ Also, the government assumed the costs of custody, maintenance, and disposition of the property.

We think that the above-recited facts clearly demonstrate that claimant meets the "prevailing party" standard. Claimant went from having the property forfeited to the ultimate resolution where family members received almost 60% of the proceeds of the sale of the properties. The fact that this result was arrived at through negotiation and settlement rather than litigation has no bearing as to whether plaintiff "prevailed" in the action. See Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 2574, 65 L.Ed.2d 653 (1980); Nadeau, 581 F.2d at 279 ("It is abundantly clear and the Senate Report specifically states that in general `parties may be considered to have prevailed when they vindicate rights through a consent judgment or without formally obtaining relief.' Citations omitted"). We therefore, find that claimant was a prevailing party in the action.

B. "Substantially Justified"

The government also argues that its position was "substantially justified" in that it had a reasonable basis in law and in fact and that, therefore, claimant was not entitled to fees under the EAJA. As proof, the government points to the findings of probable cause, first by the magistrate and then by the district judge, as well as other circumstantial evidence. Again, recognizing that this judge was recently assigned the case well after its commencement, we find that the government has not met its burden of proof and rule that the government's position was not "substantially justified" within the meaning of the EAJA.

In Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988), the Court discussed the "substantially justified" standard.

We are of the view, therefore, that as between the two commonly used connotations of the word "substantially," the one most naturally conveyed by the phrase before us here is not "justified to a high degree," but rather "justified in substance or in the main" — that is, justified to a degree that could satisfy a reasonable person. That is no different from the "reasonable basis both in law and fact" formulation adopted by the Ninth Circuit and the vast majority of other Courts of Appeals that have addressed this issue. Citations omitted.

See United States v. Yoffe, 775 F.2d 447, 449-50 (1st Cir.1985) ("The test breaks down into three parts: did the government have a reasonable basis for the facts alleged; did it have a reasonable basis in law for the theories advanced; and did the facts support the theory."); De Allende v. Baker, 891 F.2d 7, 11-12 (1st Cir.1989). The government has the burden of proving "substantial justification" by a preponderance of the evidence. De Allende, 891 F.2d at 12; McDonald v. Secretary of Health & Human Services, 884 F.2d 1468, 1475-76 (1st Cir.1989); Yoffe, 775 F.2d at 450.

Here, the only evidence produced by the government in support of its position consists in the allegations in the verified complaint and the findings of probable cause by the Magistrate-Judge and Judge Acosta. In the complaint, the government alleged extensive facts about claimant's criminal activities in New York which resulted in his conviction on narcotics-related charges. Among the allegations pertinent to the forfeiture inquiry were: that claimant headed a cocaine organization for fifteen years and, based on his own statements to law enforcement officials and his criminal record, the properties in question were purchased with proceeds related to narcotics trafficking (Complaint ¶ 6); claimant was arrested at one of the defendant properties (Complaint ¶ 23); claimant's statement that his family and home is in Puerto Rico (Complaint ¶ 24); his discussion with FBI agents about animals that he...