United States v. $186,416.00 in U.S. Currency , 722 F.3d 1173 ( 2013 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA , No. 07-56549
Plaintiff-Appellee,
D.C. No.
v. CV-05-06703-
SVW-SH
$186,416.00 IN U.S. CURRENCY ,
Defendant.
ORDER
UNITED MEDICAL CAREGIVERS
CLINIC, INC.,
Claimant-Appellant,
PAUL L. GABBERT ,
Intervenor.
Filed July 17, 2013
Before: Michael Daly Hawkins, Marsha S. Berzon,
and Richard R. Clifton, Circuit Judges.
2 UNITED STATES V . $186,416.00 IN U.S. CURRENCY
SUMMARY*
Attorneys’ Fees / Civil Forfeiture
The panel held that intervenor Paul Gabbert, an attorney
whose client substantially prevailed in a federal civil forfeiture
action, had standing to pursue an attorney’s fee award, and
was entitled to receive direct payment of the fee award under
the Civil Asset Forfeiture Reform Act and the parties’ fee
agreement.
ORDER
Intervenor Paul Gabbert represented United Medical
Caregivers Clinic (“UMCC”) in a civil forfeiture proceeding
initiated by the United States, in which UMCC prevailed. See
United States v. $186,416.00 in U.S. Currency, 590 F.3d 942
(9th Cir. 2009). The Civil Asset Forfeiture Reform Act
(“CAFRA”) provides that in “any civil proceeding to forfeit
property under any provision of Federal law in which the
claimant substantially prevails, the United States shall be liable
for reasonable attorney fees and other litigation costs
reasonably incurred by the claimant.” 28 U.S.C.
§ 2465(b)(1)(A).
UMCC moved for an award of attorney fees and
specifically requested that the fee award be paid directly to
counsel, rather than to UMCC as the claimant. The
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V . $186,416.00 IN U.S. CURRENCY 3
government did not contest UMCC’s entitlement to fees as a
substantially prevailing party but objected to the request that
the fee award be paid directly to UMCC’s attorney. We
denied UMCC’s request that the fee award be paid directly to
Gabbert, holding that a fee award under CAFRA is payable to
the claimant, not the claimant’s attorney. We referred the
matter to the Appellate Commissioner to calculate an
appropriate fee award to be awarded to be payable to UMCC.
See United States v. $186,416.00 in U.S. Currency, 642 F.3d
753 (9th Cir. 2011).
Gabbert learned that UMCC had been suspended as a
California corporation and was unable to further participate as
a party in the case. He requested permission to intervene to
request a petition for rehearing of the order we entered in
2011. We granted him intervenor status, though we denied the
petition for rehearing that he filed on his own behalf. Gabbert
has since moved for an award of attorney’s fees to be paid
directly to him, in light of fee agreements between him and
UMCC assigning any fee award to him. The government has
moved to dismiss the case, primarily on the basis that Gabbert
lacks standing to pursue the fee award.
We conclude that Gabbert has standing to pursue the fee
award and is entitled to receive payment of the fee award. We
deny the government’s motion to dismiss, and we refer the
matter back to the Appellate Commissioner to calculate the
amount of the fee award.
1. Motion to pay the fee award to Gabbert
Because this is a case where “jurisdiction is so intertwined
with the merits that its resolution depends on the resolution of
4 UNITED STATES V . $186,416.00 IN U.S. CURRENCY
the merits,” we first address whether Gabbert is entitled to
receive direct payment of a fee award by virtue of his fee
agreements with UMCC before turning to the issue of whether
Gabbert has standing. Orff v. United States, 358 F.3d 1137,
1150 (9th Cir. 2004), aff’d, 545 U.S. 596 (2005).
In our previous order, we did not address whether a
CAFRA fee award can be paid directly to a claimant’s
attorney when so provided in a fee agreement. We held that,
as a general matter, CAFRA fee awards are paid to the
claimant rather than the attorney. $186,416.00 in U.S.
Currency, 642 F.3d at 755–56. Since then, Gabbert has
brought to light fee agreements between him and UMCC that
assign the right to collect any fee award to Gabbert. Based
upon the agreements, Gabbert also obtained an order from the
state superior court, filed November 29, 2012, awarding him
an equitable interest in the fee award owed to UMCC. We
conclude that these agreements permit Gabbert to collect the
award.
In interpreting other fee award statutes, we have strongly
suggested that fees may be directed to an attorney on account
of a contractual assignment, even when the attorney has no
statutory right to collect fees directly. In Virani, the majority
opinion held that once a plaintiff demands attorney’s fees for
a successful False Claim Act qui tam action, the fees “must be
directed to the attorney.” U.S. ex rel. Virani v. Jerry M. Lewis
Truck Parts & Equip., Inc., 89 F.3d 574, 578–79 (9th Cir.
1996). Judge Thomas concurred with the result, that the fees
be paid directly to the attorney, but on the narrower ground
that the plaintiff had assigned his right to the fees to his
lawyers. Id. at 580. Subsequent decisions interpreting other
fee award statutes have specifically endorsed Judge Thomas’s
UNITED STATES V . $186,416.00 IN U.S. CURRENCY 5
reasoning. See, e.g., Gilbrook v. City of Westminster,
177 F.3d 839, 875 (9th Cir. 1999) (attorney’s fees under
42 U.S.C. § 1988); Image Technical Serv., Inc. v. Eastman
Kodak Co., 136 F.3d 1354, 1359 (9th Cir. 1998) (attorney’s
fees under the Clayton Act). We fail to see why this reasoning
would not similarly apply to fee awards under CAFRA.
The government, noting the principle that “it is the party’s
right to waive, settle, or negotiate [attorney’s fees]
eligibility,”Venegas v. Mitchell, 495 U.S. 82, 88 (1990),
argues that these rights remain with the party up until a final
fee amount is calculated and ordered. Whether or not that may
be generally true, in this case there is no discernable conflict
between direct payment of the fee award to Gabbert and
UMCC’s right to waive, settle, or negotiate eligibility for a fee
award. UMCC moved for a fee award in this case and
assigned the right to collect that award to Gabbert. UMCC
has not waived or settled its claim for a fee award, nor has it
expressed any interest in doing so. Indeed, as a suspended
corporation, it may not even be capable at present to take such
action on its own behalf. The possibility of UMCC waiving or
settling its eligibility for a fee award appears at most
theoretical. If UMCC takes such action prior to payment of
the award to Gabbert, there might be a question for us to
consider, but the award should not be forfeited in the
meantime based on such a remote possibility.
We also note that this is not a case where the attorney is
seeking a direct assignment of fee awards to jump ahead of
other creditors. In Astrue v. Ratliff, the Supreme Court
determined that the attorney has no statutory right to direct
the payment of fees awarded under the Equal Access to
Justice Act to himself rather than the prevailing party. 130
6 UNITED STATES V . $186,416.00 IN U.S. CURRENCY
S. Ct. 2521, 2529 (2010). In that case, because the award was
payable to the party, it was subject to an offset to satisfy a
preexisting debt that the party owed the United States. Id. at
2524. The Court noted, however, the “practical reality that
attorneys are the beneficiaries and, almost always, the ultimate
recipients of the fees” because of “nonstatutory (contractual
and other assignment-based) rights that typically confer upon
the attorneys the entitlement to payment of the fees award the
statute confers on the prevailing litigant.” Id. at 2529.
Here, UMCC has been dissolved, and no other creditor
has come forward to contest the assignment to Gabbert. The
government has not asserted an offset claim. There is no
concern that direct payment of the fee award to the attorney
will deprive the government or another creditor of what it is
due. The government should not be able to negate the fees it
owes to UMCC just because UMCC has been dissolved and
the only creditor who appeared to collect in its stead is the
attorney. Whatever might be the case where there are
competing creditors, we conclude that, under these
circumstances, Gabbert is entitled to receive payment of the
fee award.1
1
The government has waived any argument that the UMCC’s
assignment of the award to Gabbert was invalid under the Anti-
Assignment Act, 31 U.S.C. § 3727. The government only mentions the
Act in its reply brief and even then does not explain its application to this
case. See United States v. Anderson, 472 F.3d 662, 668 (9th Cir. 2006)
(“Issues raised for the first time in an appellant’s reply brief are generally
deemed waived.”).
UNITED STATES V . $186,416.00 IN U.S. CURRENCY 7
2. Motion to dismiss
The government moves to dismiss this action, arguing that
Gabbert lacks standing to litigate the fee award under Pony v.
County of Los Angeles, 433 F.3d 1138 (9th Cir. 2006). Pony
did not hold that an attorney can never have standing to
litigate a fee award. Rather, the standing inquiry turned on
whether the attorney had valid contractual rights he sought to
protect. In that case, the client had assigned to her attorney
the right to apply for, waive, settle, or collect any fee award,
but the client nonetheless entered into a settlement that waived
any claim to a fee award. Id. at 1140–42. The court rejected
the attorney’s argument that he had standing to pursue a fee
agreement by virtue of the assignment because the assignment
of the right to apply for a fee award was invalid as a matter of
law. Id. at 1142. The court concluded that the attorney lacked
standing to bring a claim because he lacked valid contractual
rights. Id. at 1145. In so concluding, the court specifically
distinguished between the right to collect fee awards, which
can generally be freely assigned, and the right to assign the
right to seek or waive attorney’s fees, which cannot be
transferred. Id. at 1144–45.
This case does not present the same situation as Pony.
UMCC has not entered into a settlement that waived any claim
to a fee award, and Gabbert has a valid contractual right to
collect the fee award. Gabbert has standing to protect his
right.
3. Conclusion
We grant Gabbert’s motion for fees insofar as he requests
that the fee award be paid directly to him and refer the
8 UNITED STATES V . $186,416.00 IN U.S. CURRENCY
question of the amount of the award to the Appellate
Commissioner. We deny the government’s motion to dismiss
the appeal.
MOTION TO DISMISS DENIED; MOTION FOR
FEE AWARD GRANTED; REFERRED TO THE
APPELLATE COMMISSIONER.