Opinion ID: 766070
Heading Depth: 2
Heading Rank: 1

Heading: The Section S 2412(d)(1)(A) Claim

Text: 8 While the EAJA contains no applicable definition of prevailing party, we consider claimants `prevailing parties for attorney's fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the par-ties sought in bringing suit.'  National Wildlife Fed'n v. Federal Energy Regulatory Comm'n, 870 F.2d 542, 544 (9th Cir. 1989) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (internal quotation marks omitted)). 9 The government argues that claimants are not prevailing parties because, viewing the civil forfeiture action as a whole, they ultimately prevailed as to only 28.7% of the total value of the defendant properties in the original complaint, which included, in addition to the Dolorosa property, two vehicles and five currency defendants. Even assuming that the government's valuation of the properties isreasonable, we reject the argument. There is no requirement that success be measured by comparison of the value of the respective properties. Forfeiture of the Dolorosa property was a significant issue even if its monetary value was less than that of the property forfeited.
10 Because claimants are prevailing parties, they are entitled to fees unless the court finds that the position of the United States was substantially justified. 28 U.S.C. S 2412(d)(1)(A). The government argues first, that because it successfully obtained forfeiture of the bulk of the assets involved in this action, it cannot be said that under the totality of the circumstances the governments's overall position was not substantially justified. We must, however, view the government's position separately with respect to each of the forfeiture defendants. Civil forfeiture actions under 21 U.S.C. S 881(a)(6) are in rem proceedings in which the property seized is the defendant. United States v. Real Property Located at Incline Village, 47 F.3d 1511, 1519 (9th Cir. 1995), rev'd on other grounds, 517 U.S. 820 (1996). That the government chose to join defendants under Federal Rule of Civil Procedure 20(a) (permitting, but not requiring, joinder of defendants), does not allow it to escape liability for unjustified positions with respect to any one of them. See Gregory C. Sisk, The Essentials of the Equal Access To Justice Act: Court Awards of Attorney's Fees for Unreasonable Government Conduct (Part Two), 56 La. L. Rev. 1, 14 (1995) (when a case involves different cases or controversies in the constitutional sense, the  `position of the United States' should be evaluated in the context of each separable claim joined in the single action.). We must, therefore, determine whether the government's position with respect to the Dolorosa property was substantially justified without regard to the forfeiture of most of claimants' other properties. 11 Next, the government argues that it had probable cause to seek the forfeiture of the Dolorosa property. That it had probable cause at the time of the initial seizure is not disputed but does not resolve the issue before us. This case presents a situation[ ] in which the government is justified initially but its subsequent unjustified actions [may] merit an award of attorney's fees for the unjustified portion of the conduct. See United States v. Rubin, 97 F.3d 373, 375 (9th Cir. 1996). Thus, in forfeiture actions, the government's position that the property is forfeitable must remain substantially justified throughout the action. See United States v. $12,248 U.S. Currency, 957 F.2d 1513, 1517 (9th Cir. 1992) (affirming EAJA fee award because, despite an earlier determination of probable cause, the government's poor investigation of claimant's case and unreasonable delay in pursuing the forfeiture action demonstrated that the government's position was not substantially justified); cf. United States v. 255 Broadway, 9 F.3d 1000, 1007 (1st Cir. 1993) (affirming denial of EAJA fees in part because the claimant points to no intervening evidence that might have given the government pause over whether to continue with the [forfeiture] case); United States v. One 1985 Chevrolet Corvette, 914 F.2d 804, 809 (6th Cir. 1990) (reversing award of EAJA fees where [t]he government's position in initiating the forfeiture proceeding was substantially justified, and nothing that occurred during the trial required the government to abandon the proceeding). 12 Once the district court suppressed all of the documentary evidence permitting tracing of funds, substantial justification for the government's forfeiture of the Dolorosa property ceased. That the district court nevertheless sustained the forfeiture action against the Dolorosa property does not shield the government from liability for fees.  `Our precedents do not treat the district judge's agreement with the government in the initial case as conclusive as to whether or not the government was reasonable.'  Oregon Natural Resources Council v. Madigan, 980 F.2d 1330, 1332(9th Cir. 1992) (quoting United States v. One 1984 Ford Van, 873 F.2d 1281, 1282 (9th Cir 1989)); see also Underwood, 487 U.S. at 569 (Conceivably, the government could take a position that is not substantially justified, yet win.). In our merits opinion we held that the tracing rationale for probable cause articulated by the district court was clearly erroneous because it was based on the evidence the court suppressed, see 22249 Dolorosa St., 167 F.3d at 513-14, and on appeal, the government did not defend the district court's rationale, implicitly conceding the error. 13 Thus, the government is left with its final argument that non documentary evidence provided circumstantial proof that Hopkins paid for substantial remodeling of the Dolorosa property with drug proceeds. There is no doubt that[c]ircumstantial evidence of drug transactions is sufficient to support the establishment of probable cause in a forfeiture proceeding. United States v. $5,644,540.00 in U.S. Currency, 799 F.2d 1357, 1363 (9th Cir. 1986) (quoting United States v. $93,685.61 in U.S. Currency, 730 F.2d 571, 572 (9th Cir. 1984)). We held in the merits opinion that the non documentary evidence tends to show that Hopkins was a large-scale drug dealer who possessed large amounts of cash and other expensive assets, which he tried to conceal, and that he lacked a legitimate source of income . . . [but that ] there is no admissible evidence that Hopkins invested any money in the property, let alone drug money. 22249 Dolorosa St., 167 F.3d at 514. We are aware of no support in this circuit for a finding of probable cause on so gossamer a showing as the government has made here: that Hopkins was on the title of the property, that he had $354,000 in cash in safe deposit boxes, that he owned a Ford pick-up truck and a Porsche Carrera, and that he had concealed his ownership in these vehicles. While the government may have succeeded in showing that Hopkins was a large-scale drug dealer, [w]hat the [evidence] lacks . . . is a sufficient connection between the detailed narcotics activity and the particular assets targeted by the Government's forfeiture proceeding. United States v. $405,089.23 U.S. Currency, 122 F.3d 1285, 1290-91 (9th Cir. 1997); see also United States v. One 1986 Ford Pickup, 56 F.3d 1181, 1187 (9th Cir. 1995) (stating in dictum that forfeiture under 21 U.S.C. S 881(a)(6) requires a showing of`probable cause for belief that a substantial connection exists between the property to be forfeited and the criminal activity' ) (quoting $5,644,540.00 in U.S. Currency, 799 F.2d at 1363); United States v. U.S. Currency, $30,060.00, 39 F.3d 1039, 1044 (9th Cir. 1994) ([S]uspicions of general criminality are not enough . . . . [T]he government must have probable cause to believe that the money is connected specifically to drug activities.) (quoting United States v. $191,910 in U.S. Currency, 16 F.3d 1051, 1072 (9th Cir. 1994)) (emphasis added). 14 The government attempts to distinguish $405,089.23 U.S. Currency on the strength of the court's statement in that case that the evidence did not demonstrate that it was any more likely that the cash originated from the drug activity than that it originated from another legal or illegal source. See $405,089.23 U.S. Currency, 122 F.3d at 1290 n.4. Here, the government argues, the evidence showed that Hopkins lacked a legitimate source of income. But it requires too great a leap of logic to go from that assertion to the conclusion that it is more likely that the funds used to remodel the Dolorosa property originated from drug activity than from some other legal or illegal source, particularly considering that the Lowndeses were co-owners of the property and could have been a source of funds. Cf. U.S. Currency, $30,060.00, 39 F.3d at 1044 (claimant's lack of employment, lies, and possession of large sum of money standing alone are not probative of probable cause). 15 The government bears the burden of demonstrating that its position in opposing the appeal was substantially justified. See Meinhold v. United StatesDep't of Defense, 123 F.3d 1275, 1277 (9th Cir.), amended by 131 F.3d 842 (9th Cir. 1997). While [t]he government's failure to prevail does not raise a presumption that its position was not substantially justified, Kali v. Bowen, 854 F.2d 329, 332 (9th Cir. 1988), it must demonstrate that its position had a reasonable basis both in law and fact. Underwood, 487 U.S. at 565. For the reasons stated, we conclude that the government has failed to sustain the burden that its position that probable cause existed after the suppression of all of the documentary evidence and its opposition to claimants's appeal were substantially justified. The government is liable to claimants for fees under 28 U.S.C. S 2412(d)(1)(A). 2