Opinion ID: 580694
Heading Depth: 1
Heading Rank: 3

Heading: the second appeal (joel beane and carol beane)

Text: 27 The remaining two appellants, after regaining their interests in the subject property, petitioned for an award of attorneys' fees under the EAJA. 8 Determining that the government was substantially justified in pressing the forfeiture action as to Joel's and Carol's property interests, Great Harbor Neck, 769 F.Supp. at 450, the district court denied the EAJA application. The unsuccessful applicants ask us to review that order. 28
29 Under the EAJA, it is the government's burden to show, by a preponderance of the evidence, that its position was substantially justified. McDonald v. Secretary of HHS, 884 F.2d 1468, 1475 (1st Cir.1989); United States v. Yoffe, 775 F.2d 447, 450 (1st Cir.1985). To meet this benchmark, both the government's underlying (agency) position and its litigation position must be substantially justified. McDonald, 884 F.2d at 1475-76. In order to carry the devoir of persuasion, the government must show that it had a reasonable basis for the facts alleged, that it had a reasonable basis in law for the theories it advanced, and that the former supported the latter. Sierra Club v. Secretary of the Army, 820 F.2d 513, 517 (1st Cir.1987). 30 On appeal, we apply an abuse-of-discretion standard in gauging the appropriateness of the trial court's ruling anent substantial justification. See Pierce v. Underwood, 487 U.S. 552, 557-63, 108 S.Ct. 2541, 2545-49, 101 L.Ed.2d 490 (1988); Guglietti v. Secretary of HHS, 900 F.2d 397, 399 (1st Cir.1990). Under this standard, we will reverse only if, upon an assessment of the entire record, it appears that the court below made a clear error of judgment and reached the wrong conclusion. De Allende v. Baker, 891 F.2d 7, 11 n. 7 (1st Cir.1989); see also Independent Oil & Chem. Workers of Quincy, Inc. v. Procter & Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir.1988) (discussing abuse-of-discretion standard generally). 31 We start with bedrock. The fact that the government settles a case on unfavorable terms, or loses at trial, does not create a presumption that it operated without substantial justification. See Pierce, 487 U.S. at 568-69, 108 S.Ct. at 2551-52; De Allende, 891 F.2d at 12. Thus, in a forfeiture case, the fact that the government's attempt at confiscation misfired will not raise a presumption that its position lacked substantial justification. See United States v. Real Property, Etc. (2323 Charms Road), 946 F.2d 437, 440 (6th Cir.1991); United States v. B & M Used Cars, 860 F.2d 121, 124 (4th Cir.1988). Rather, the question of [w]hether the government's decision to initiate and to pursue forfeiture proceedings against [the claimant's property] was reasonable must be examined in light of its burden under the appropriate statute. B & M Used Cars, 860 F.2d at 124; see also McDonald, 884 F.2d at 1476 (in measuring substantial justification, one must compare the [government's conduct] with the Act it was supposed to implement). 32 Nor can the search for substantial justification be mounted in a legal vacuum. In a civil forfeiture proceeding, judicial inquiry into substantial justification must be tempered by the realization that the threshold for stating a prima facie case is low. To make out a prima facie case, the government need only show probable cause to believe that the property was used in a way that offended the forfeiture statute. See, e.g., $68,000, 927 F.2d at 32; 28 Emery St., 914 F.2d at 3; 1933 Commonwealth Ave., 913 F.2d at 3. Although we eschew a blanket rule that, in a forfeiture proceeding, a finding of probable cause is necessarily conclusive on the question of whether the seizure itself was substantially justified, but see United States v. One 1985 Chevrolet Corvette, 914 F.2d 804, 809 (6th Cir.1990) (since  'substantially justified' and 'probable cause' are standards which require reasonableness ... when the government establishe[s] probable cause in the forfeiture proceeding, its position [is] substantially justified); B & M Used Cars, 860 F.2d at 125 (Surely the government must be justified in pursuing litigation when it has sufficient evidence [of probable cause] to prevail at trial.), in favor of a case-by-case approach that recognizes the distinctiveness of the substantially justified criterion, see Sierra Club, 820 F.2d at 517, we agree that, frequently, the inquiries will overlap and the answers coincide. 33
34 We bifurcate our analysis of the second appeal, differentiating between the government's agency position, i.e., the underlying decision to initiate a forfeiture proceeding, and the government's litigation position, i.e., the manner in which it implemented the decision to go forward with this particular forfeiture suit. 35 1. The Government's Agency Position. In this case, the government had overwhelming cause to conclude that the subject property was subject to forfeiture. See supra note 2. In the forfeiture context, probable cause is often the functional equivalent of substantial justification. See One 1985 Chevrolet Corvette, 914 F.2d at 809; B & M Used Cars, 860 F.2d at 125. That is true here. As the court below recognized, the government's initial decision to seize the Beane estate was altogether warranted. 36 The applicants' argument that the government needed to have reason to believe they were not innocent owners before it seized their aggregate two-thirds interest in the property puts the cart squarely in front of the horse and, in the bargain, misreads the allocation of burdens in civil forfeiture proceedings. As a general matter, a forfeiture action is properly conceptualized as a proceeding against the property, not against its owners. See United States v. United States Coin & Currency, 401 U.S. 715, 719-20, 91 S.Ct. 1041, 1043-44, 28 L.Ed.2d 434 (1971); United States v. On Leong Chinese Merchants Ass'n Bldg., 918 F.2d 1289, 1298 (7th Cir.1990) (Cudahy, J., concurring), cert. denied, --- U.S. ----, 112 S.Ct. 52, 116 L.Ed.2d 29 (1991); United States v. One 1975 Pontiac Lemans, Etc., 621 F.2d 444, 447 (1st Cir.1980). Under this rubric, [t]o obtain the civil forfeiture ... the government need show no more than the existence of probable cause to believe that the property had the requisite nexus to a specified illegal purpose. $68,000, 927 F.2d at 32. Once the government satisfies this burden, the onus shifts to the claimants to prove either that the property was not so used or that they were innocent owners. See supra Part II(B). Given this framework, a rule that requires the government accurately to foresee, and anticipatorily to contradict, an owner's possible affirmative defenses would be unreasonable. 37 2. The Government's Litigation Position. The applicants counter that, even if the government had substantial justification to seize the estate, it was not substantially justified in choosing the manner in which the seizure was effectuated. This approach constitutes a challenge to the government's litigation position rather than to its agency position. 38 We rehearse the critical events. As previously mentioned, the government seized the property pursuant to a seizure warrant issued by a magistrate-judge. The warrant was executed on October 27, 1989 (four days after its issuance). There were no exigent circumstances attendant to the seizure. Within the week, the government filed a complaint for forfeiture in rem and a warrant of arrest and notice in rem. The marshal was commanded to arrest, attach, and retain the property and serve all persons claiming an interest therein. Notice was then given to potential claimants, including Joel and Carol Beane, apprising them of the seizure and the forfeiture action. The claimants allege that this procedure, which involved neither advance notice of the seizure nor a pre-seizure hearing, amounted to both an uncompensated taking and a violation of due process. 9 a. 39 The contention that the seizure amounted to a governmental taking without compensation in violation of the Fifth Amendment deserves short shrift. This contention entirely overlooks that the government acted within its statutory authority when it seized the defendant property. We think it is settled that if the federal government's actions comport, procedurally and substantively, with the terms of a lawfully enacted forfeiture statute, it may seize private property without compensating the owner. See Bolt v. United States, 944 F.2d 603, 610 (9th Cir.1991); Redford v. United States Dep't of Treasury, Bureau of Alcohol, Tobacco & Firearms, 691 F.2d 471, 473 (10th Cir.1982). Thus, the Takings Clause does not support a finding that substantial justification was lacking. 40 b. 41 The centerpiece of the applicants' due process argument is the theory that the procedure used by the government in seizing their property was constitutionally deficient. The applicants, however, persist in asking us to answer the wrong question: the gist of an inquiry into substantial justification is not whether the procedures utilized by the government might ultimately be found wanting; it is whether the government was reasonable in utilizing those procedures, that is, in adopting its litigation position. See Sierra Club, 820 F.2d at 516-18. 42 Here, the answer to the correct question is indisputably in the affirmative. In the forfeiture statute, Congress describes several ways in which the government can seize property putatively forfeitable under section 881. 21 U.S.C. § 881(b) (1982 & Supp.1988). One such way is for the government to request the issuance of a warrant authorizing the seizure of property subject to forfeiture under this section in the same manner as provided for a search warrant under the Federal Rules of Criminal Procedure. Id. In the case at hand, the government meticulously followed this directive. We agree with the Eleventh Circuit's statement in a similar case that [w]hen the government follows the express dictates of a given statute, and there is no reason to believe that such a course is otherwise unauthorized, its position, for purposes of the EAJA, cannot lack substantial justification. United States v. Certain Real Estate, Etc. (4880 S.E. Dixie Highway), 838 F.2d 1558, 1562 (11th Cir.1988). 43 The applicants' rejoinder is that, in their situation, the government should have known that the procedure it utilized, although authorized by Congress, was constitutionally deficient. We find it difficult to conceive how, short of an express statutory overruling, the Executive Branch can be faulted for hewing to lines drawn in bold relief by the Legislative Branch. At any rate, the reasons given by Joel and Carol Beane to support their claim that the government knew or should have known of the statute's infirmities simply will not wash. 44 The mainstay of the applicants' importuning is the Second Circuit's opinion in 4492 S. Livonia Rd., 889 F.2d 1258. There, the panel held that, absent exigent circumstances, the seizure of an individual's primary home pursuant to section 881 violated the Due Process Clause unless notice and a hearing were afforded before the seizure occurred. Id. at 1262-65. But that opinion was not handed down until November 17, 1989--several weeks after the government seized the Beane property. Only the most blatant post hoc rationalization could support a conclusion that the government lacked substantial justification because, when initiating a statutorily authorized seizure, it failed to anticipate what a court might later rule in connection with the constitutionality of an act of Congress. The EAJA requires the government to be substantially justified--not prescient. 45 Even if the government had known of 4492 S. Livonia Rd., we do not believe it would have been bound to abandon the wishes of Congress and follow the holding of a court outside of the circuit in which the seizure took place. 10 It is apodictic that nonmutual offensive collateral estoppel does not apply against the federal sovereign. United States v. Mendoza, 464 U.S. 154, 159-63, 104 S.Ct. 568, 571-74, 78 L.Ed.2d 379 (1984). We think it is equally well-settled that the government need not acquiesce, on a nationwide basis, in one circuit's construction of federal law adverse to the government's interpretation of the law. See, e.g., Georgia Dep't of Medical Assistance v. Bowen, 846 F.2d 708, 710 (11th Cir.1988); Railway Labor Executives Ass'n v. I.C.C., 784 F.2d 959, 964 (9th Cir.1986). Such a first in time rule would not only be contrary to the structure of our federal judicial system, see Mendoza, 464 U.S. at 160, 104 S.Ct. at 572, but would also run counter to the spirit of the EAJA, for the fact that one other court agreed or disagreed with the government does not establish whether its position was substantially justified. Pierce, 487 U.S. at 569, 108 S.Ct. at 2552. 46 In order for the Executive Branch, if it does no more than act on Congress's instructions, to incur liability under the EAJA, there must be a clear signal to government agents that those instructions are invalid. Put another way, the substantial justification requirement in the EAJA means that the government, when adhering to the dictates of Congress, can be found to lack substantial justification only if, at the time the government acted, the statute's invalidity was clearly established. After all, [w]hile the EAJA is designed to encourage relatively impecunious private parties to challenge abusive or unreasonable governmental behavior by relieving such parties of the fear of incurring large litigation expenses, it does not allow the automatic shifting of fees. Sierra Club, 820 F.2d at 516-17 (citations and quotations omitted). Discerning no such patent invalidity here, 11 we refuse to disturb the district court's determination that the government was substantially justified in the manner by which it seized the subject property.