In the United States Court of Federal Claims

No. 07-165 C

(Filed January 23, 2014)

HERNANDEZ, KROONE AND )

ASSOCIATES, INC. )

Plaintiff, )

)

v. )

)

THE UNITED STATES, )

Defendant. )

ORDER

On March 29, 2013, the court issued its decision following a two-week trial 

of this matter. See Doc. 197. The case is now before the court on plaintiff’s 

motion for attorneys’ fees, see Docs. 212 and 216, which is opposed by the 

government, see Doc. 221.

I. BACKGROUND

At trial, plaintiff asserted three claims: (1) that the scope of work under the 

contract did not include plaintiff’s January 25, 2005 proposal, and plaintiff was 

therefore entitled to an award of $240,148 to cover the cost of installing lights and 

cameras; (2) that the government improperly took a credit in the amount of $4,320 

when a 1-inch water line was substituted for a 1.5-inch water line; and (3) that the 

government was liable for the costs of sealing and re-striping the Indio Border 

Patrol parking lot, equaling $9,366. See Doc. 197 at 32, 36.

The court rejected plaintiff’s first claim, holding that the January 25, 2005 

proposal was part of the contract, and that plaintiff was not entitled to any 

additional compensation on that basis. See id. at 36. The plaintiff succeeded in 

part on its second claim, recovering $1,555.20, see id. at 37, and succeeded entirely 

on its third claim, recovering $9,366, see id. at 38.

The government asserted three fraud counterclaims under 28 U.S.C. § 2514, 

41 U.S.C. § 604 and 31 U.S.C. § 3729, seeking $837,884.53 in damages. See Doc. 

82 at 15-16; Doc. 188 at 59. The court concluded that “defendant has not met its 

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burden of proof under any of the three ‘fraud’ statutes involved,” see Doc. 197 at 

47, and went on to find that the government established no basis for recovery under 

41 U.S.C. § 7103, see id. at 50.

II. DISCUSSION

A. EAJA Fees

Plaintiff now claims that it is entitled to attorneys’ fees under the Equal 

Access to Justice Act (“EAJA”), which provides:

[A] court shall award to a prevailing party other than the United States 

fees and other expenses . . . incurred by that party in any civil action 

. . . , 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).

As this court has noted:

To be eligible for such an award, five criteria must be satisfied: (1) 

the applicant must have been a “prevailing party” in a suit against the 

United States; (2) the government’s position must not have been 

“substantially justified;” (3) there cannot be any “special 

circumstances [that] make an award unjust;” (4) any fee application 

must be submitted to the court within thirty days of final judgment in 

the action and also be supported by an itemized statement; and (5) a 

qualifying party must, if a corporation or other organization, have not 

had more than $7,000,000 in net worth and 500 employees at the time 

the civil action was initiated.

United Partition Sys., Inc. v. United States, 95 Fed. Cl. 42, 49 (2010) (citing 

Commissioner, Immigration & Naturalization Serv. v. Jean, 496 U.S. 154, 158 

(1990); Dallas Irrigation Dist. v. United States, 91 Fed. Cl. 689, 696 (2010); ACE 

Constructors, Inc. v. United States, 81 Fed. Cl. 161, 164 (2008). The plaintiff 

bears the burden of proving each of these criteria, except that the government must 

prove that its position was substantially justified. See id.

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1. Prevailing Party

“Under the EAJA, a prevailing party is one who ‘succeeded on any 

significant issue which achieves some of the benefits sought by the suit.’” 

Precision Pine & Timber, Inc. v. United States, 83 Fed. Cl. 544, 547 (2008) (citing 

Loomis v. United States, 74 Fed. Cl. 350, 353 (2006) (internal citations omitted). 

As the Federal Circuit has noted, “[a] party prevails in a civil action if he receives 

‘at least some relief on the merits of his claim.’” Davis v. Nicholson, 475 F.3d 

1360, 1363 (Fed. Cir. 2007) (quoting Buckhannon Bd. & Care Home, Inc. v. W. 

Va. Dep’t of Health & Human Res., 532 U.S. 598, 603-604 (2001)). Put another 

way, a plaintiff prevails “when actual relief on the merits of his claim materially 

alters the legal relationship between the parties by modifying the defendant’s 

behavior in a way that directly benefits the plaintiff.” Neal & Co., Inc. v. United 

States, 121 F.3d 683, 685 (Fed. Cir. 1997) (citing Farrar v. Hobby, 506 U.S. 103, 

111-112 (1992)).

The government argues that because plaintiff recovered a relatively small 

percentage of the sum it sought in this litigation, it cannot be considered the 

prevailing party for purposes of EAJA fees. See Doc. 221 at 9. The size of 

recovery, however, clearly does not control determination of prevailing party 

status. In Farrar v. Hobby, for example, the Supreme Court held that a plaintiff 

who was awarded only nominal damages was the prevailing party, reasoning that 

“[a] judgment for damages in any amount, whether compensatory or nominal, 

modifies the defendant’s behavior for the plaintiff’s benefit by forcing the 

defendant to pay an amount of money he otherwise would not pay.” 506 U.S. at 

113.

In this case, plaintiff recovered on two of its three claims, and was awarded 

$10,921.20 in damages that the government had refused to pay. The fact that 

plaintiff failed to recover for its largest claim is of no moment in determining 

prevailing party status. Furthermore, although the government glosses over this 

fact in its response brief, plaintiff prevailed entirely with regard to the 

government’s counterclaims in which it sought to recover $837,884.53. As such, 

plaintiff is the prevailing party for purposes of the EAJA fee analysis.

2. Substantial Justification

An award of EAJA fees is precluded if the government can prove that the 

position it took in the case was “substantially justified.” 28 U.S.C. § 

2412(d)(1)(A). As an initial matter, in evaluating whether the government’s 

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position was substantially justified, the court must consider “the entirety of the 

government’s conduct and make a judgment call whether the government’s overall 

position had a reasonable basis in both law and fact.” Chiu v. United States, 948 

F.2d 711, 715 (1991). As the Supreme Court has explained, whether the 

government’s position was substantially justified is a “single finding” that 

“operates as a one-time threshold for fee eligibility.” Jean, 496 U.S. at 160 (1990); 

see also Manno v. United States, 48 Fed. Cl. 587, 590 (2001). Given the 

requirement of a single finding, the court must consider together the government’s 

conduct with regard to both its defense of plaintiff’s claims and its assertion of 

counterclaims.

Under this standard, the plaintiff cannot recover EAJA fees if the 

government demonstrates its position was “‘justified in substance or in the main’—

that is, justified to a degree that could satisfy the reasonable person.” Pierce v. 

Underwood, 487 U.S. 552, 565 (1988). The government’s position “can be 

justified though it is incorrect, and it can be substantially justified if a reasonable 

person could think it correct.” Manno, 48 Fed. Cl. at 589 (quoting Doe v. United 

States, 16 Ct. Cl. 412, 419 (1989)). “Substantially justified” is not to “‘be read to 

raise a presumption that the Government[’s] position was not substantially justified 

simply because it lost the case.’” Scarborough v. Principi, 541 U.S. 401, 415 

(2004) (quoting H.R. Rep. No. 96-1005 at 10 (1980)).

Although the court must follow these guidelines, ultimately, the 

determination of whether the government’s action meets the “substantially 

justified” standard is a “quintessentially discretionary inquiry.” Stillwell v. Brown, 

46 F.3d 1111, 1113 (Fed. Cir. 1995) (quoting Chiu, 948 F.2d 715).

The predominant issue in this case was the scope of the contract that the 

Corps of Engineers (“COE”) awarded to plaintiff. The scope issue comprised the 

majority of the claim plaintiff filed with the contracting officer. See Doc. 197 at 

26. The trial testimony of all witnesses dealt with this issue in some regard. 

Throughout this dispute, before both the contracting officer and the court, the 

government maintained the position that the awarded contract encompassed 

plaintiff’s January 25, 2005 proposal. As such, the government consistently 

asserted, plaintiff’s claim for additional sums to cover the acquisition and 

installation of lights and cameras at the Border Patrol site lacked validity. The 

government’s position was soundly based on plaintiff’s contract performance prior 

to the inception of the controversy, and the government prevailed on this issue in 

litigation. See Doc. 197 at 33-34.

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In addition to the scope issue, plaintiff asserted a claim to recover funds 

related to a substitute water line. See Doc. 197 at 36-37. The government’s 

position that the substitution of a 1-inch water line for a 1.5-inch water line entitled 

it to a credit of $4,320 was factually incorrect. The government’s own expert 

witness confirmed that this credit was excessive, and the court awarded plaintiff 

$1,555.20 to correct the government’s error. See id.

Plaintiff also recovered $9,366 for sealing and re-striping the Indio Border 

Patrol parking lot. See id. at 37-38. The sealing and re-striping were necessary to 

correct an appearance problem caused by the large aggregate in the asphalt, which 

was required by COE. See id. The government asserted an arguable position that 

plaintiff’s claim was barred by the California statute of limitations, but the court 

ultimately rejected this defense. See id.

The court also dismissed the government’s three fraud counterclaims. See 

id. at 41-50. There is no evidence in the record that the agency considered any

fraud allegations. Substantial proceedings occurred in this litigation concerning 

the scope of the contract prior to the government asserting the counterclaims. The 

government’s position with respect to the alleged fraud appears to be based on 

what it asserted was an “obviously inflated claim” submitted by plaintiff to the 

contracting officer on December 13, 2005. See Doc. 221 at 10. The court noted 

suggestions that the December 13, 2005 claim could be excessive, see Doc. 197 at 

49 n.7, but the counterclaims were dismissed because the government failed to 

present adequate evidence at trial to sustain the claims. See Doc. 197 at 50.

It is clear that the scope of the contract issue consumed a majority of the 

time and effort involved in this litigation. The time devoted to the issues of the 

substitute water line, the parking lot sealing and re-striping, and the fraud claims

was comparatively minor. This disparity in time and effort between the issues is 

illustrated by the voluminous documents introduced into evidence concerning the 

scope of the contract. No additional documentation was introduced to support the 

fraud counterclaims. The two expert witnesses did not address the fraud 

counterclaims, but dealt primarily with the damages issues involved with the

controversy regarding the scope of the contract.

In short, the question of the “single finding” required for determining 

whether the government’s position was substantially justified is appropriately 

addressed to the major issue in this litigation—the scope of the contract. In this 

regard, the court concludes that the government’s position on the scope of the 

contract was substantially justified. Plaintiff’s own actions in performance of the 

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contract before the controversy arose, and the subsequent decision on the merits of 

the issue by the court, confirm this determination. While the government’s 

positions on the other minor issues arguably lack the necessary justification to 

independently support this conclusion, they represent only a tiny portion of the 

parties’ time expended in this matter.

Accordingly, the court holds that the government’s position in this litigation, 

as a whole, was substantially justified for purposes of the EAJA fee application.

B. “Bad Faith” Fees

In its brief, plaintiff argues that the government’s attorney acted improperly 

in asserting counterclaims against it. See Doc. 216-1 at 11-19. Plaintiff makes this 

claim as part of its argument that the government’s conduct was not “substantially 

justified.” See id. The allegations, however, may have been intended to assert an 

additional basis for fee recovery, namely an exception to the American rule on 

attorneys’ fees which permits the prevailing party to recover fees “when the losing 

party has ‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’” 

Alyeska Pipeline, 421 U.S. 240, 247 (1975) (quoting F.D. Rich Co., Inc. v. United 

States for the Use of Indus. Lumber Co., Inc., 417 U.S. 116, 129 (1974)). 

Specifically, plaintiff alleged that the government’s attorney stated an 

intention to use this case to “set a new standard for FCA counterclaims against 

small companies,” and said that “he had recently moved to the DOJ from a large 

law firm in order to augment his trial experience before returning to private 

practice.” Id. at 15. Plaintiff then describes, at length, several publications that it 

claims should call into question the government’s motives in asserting 

counterclaims in this case. See id. at 15-19.

Even assuming that the statements and articles that plaintiff submits are 

admissible, they are not probative of the government’s motive behind its litigation 

position. As such, there is no evidence of bad faith, vexatiousness, wantonness or 

oppression on which the court could award fees in this case.

C. EAJA Costs

Despite the fact that plaintiff is not entitled to EAJA fees under 2412(d), 

because the court has determined that it is the prevailing party, it may recover 

limited, specific costs:

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Except as otherwise specifically provided by statute, a judgment for 

costs, as enumerated in section 1920 of this title, but not including the 

fees and expenses of attorneys, may be awarded to the prevailing 

party in any civil action brought by or against the United States or any 

agency or any official of the United States acting in his or her official 

capacity in any court having jurisdiction of such action. A judgment 

for costs when taxed against the United States shall, in an amount 

established by statute, court rule, or order, be limited to reimbursing in 

whole or in part the prevailing party for the costs incurred by such 

party in the litigation.

28 U.S.C. § 2412(a)(1). The costs that plaintiff is permitted to recover include the 

following:

(1) Fees of the clerk and marshal;

(2) Fees for printed or electronically recorded transcripts 

necessarily obtained for use in the case;

(3) Fees and disbursements for printing and witnesses;

(4) Fees for exemplification and the costs of making copies of any 

materials where the copies are necessarily obtained for use in 

the case;

(5) Docket fees under section 1923 of this title;

(6) Compensation of court appointed experts, compensation of 

interpreters, and salaries, fees, expenses, and costs of special 

interpretation services under section 1828 of this title.

28 U.S.C.A. § 1920. The statute further provides that “a bill of costs shall be filed 

in the case and, upon allowance, included in the judgment or decree.” Id.

A bill of costs must typically be filed within thirty days after the date of final 

judgment. See RCFC 54(d)(1)(B). In this case, plaintiff requested costs as part of 

its application for attorneys’ fees. See Doc. 216-1 at 27-28. Plaintiff specifically 

noted that “for convenience, HKA is also electing to pursue those costs to which it 

would be entitled under 28 U.S.C. § 2412(a) in the instant EAJA motion in lieu of 

filing a Bill of Costs.” Id. at 27. In its response, the government did not object to 

an award of costs. See generally Doc. 221. Although combining the costs allowed 

under 2412(a) with the request for fees under 2412(d) is not the preferred method 

of recovering costs, because the plaintiff timely filed the motion that included the 

request for costs under 2412(a), the court will consider its initial filing timely. 

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Since the court is not awarding costs in the context of the motion for 

attorneys’ fees, however, plaintiff must file a bill of costs with the clerk, according 

to the procedure set forth in Court of Federal Claims Rule 54(d)(1). Plaintiff’s 

filing will be deemed a supplement to its initial request, and must include only 

costs extracted from those that it has previously submitted. See First Fed. Sav. & 

Loan Ass’n. of Rochester v. United States, 88 Fed. Cl. 572, 593-595 (concluding 

that Court of Federal Claims Rule 54 only prohibits time extensions of the initial 

filing for fees and costs, and does not strictly apply to subsequent filings).

III. CONCLUSION

Plaintiff’s motion for attorneys’ fees, Docs. 212 and 216-1, is DENIED, but 

as the prevailing party, plaintiff is entitled to recover costs.

Plaintiff is directed to file its bill of costs no later than 30 days from the date 

of this order, and the government will have the opportunity to file any objections in 

accordance with the applicable rule.

SO ORDERED.

s/ James F. Merow

James F. Merow, Senior Judge

United States Court of Federal Claims

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