United States v. $186,416.00 in U.S. Currency
722 F.3d 1173
9th Cir.2013Background
- The United States filed a civil forfeiture action against $186,416 in currency; claimant United Medical Caregivers Clinic (UMCC) prevailed on appeal.
- Under CAFRA (28 U.S.C. § 2465(b)(1)(A)) a prevailing claimant is entitled to reasonable attorney fees and costs from the United States.
- UMCC moved for fees and asked the award be paid directly to its attorney, Paul Gabbert; the government did not dispute entitlement to fees but opposed direct payment to counsel.
- The Ninth Circuit initially held CAFRA awards are payable to the claimant and referred fee calculation to the Appellate Commissioner. Gabbert later revealed fee agreements assigning fee-collection rights to him and obtained a state-court order recognizing his equitable interest.
- UMCC was suspended/dissolved and unable to participate; Gabbert intervened and sought direct payment of the CAFRA fee award based on the assignment and state-court order. The government moved to dismiss, arguing Gabbert lacked standing.
Issues
| Issue | Plaintiff's Argument (Gabbert) | Defendant's Argument (U.S.) | Held |
|---|---|---|---|
| Whether a CAFRA fee award can be paid directly to counsel when claimant assigned the right to collect | Assignment and state-court equitable order give Gabbert the contractual right to collect fees; direct payment is appropriate | CAFRA awards belong to the claimant and payment should be made to claimant until final calculation; direct payment would undermine statutory scheme | Court: Assignment valid here; direct payment to Gabbert permitted given no competing creditors or offsets and UMCC’s inability to act |
| Whether Gabbert has standing to pursue the fee award | Gabbert holds valid contractual rights to collect the fee and thus has an injury to protect | Gabbert lacks standing (relying on Pony) because only claimants have rights to fees | Court: Gabbert has standing because he possesses valid contractual rights to collect; Pony is distinguishable |
| Whether the Anti-Assignment Act (31 U.S.C. § 3727) invalidates the assignment | Assignment is valid and government waived any Anti-Assignment Act challenge by failing to timely raise it | Assignment invalid under Anti-Assignment Act | Court: Government waived the argument by not timely presenting it |
| Whether awarding attorney directly would harm government or creditors (risk of offsets) | No competing creditors or offsets exist; UMCC cannot presently act; practical reality supports direct payment | Direct payment could circumvent offsets or creditor claims (citing Astrue) | Court: No present competing claims or offsets; direct payment will not prejudice the government or creditors here |
Key Cases Cited
- Orff v. United States, 358 F.3d 1137 (9th Cir. 2004) (jurisdictional questions intertwined with merits may be resolved by addressing merits first)
- U.S. ex rel. Virani v. Jerry M. Lewis Truck Parts & Equip., Inc., 89 F.3d 574 (9th Cir. 1996) (fees may be directed to attorney where assignment supports such payment)
- Gilbrook v. City of Westminster, 177 F.3d 839 (9th Cir. 1999) (recognizing assignment-based direction of attorney’s fees under § 1988)
- Image Technical Serv., Inc. v. Eastman Kodak Co., 136 F.3d 1354 (9th Cir. 1998) (attorney-fee assignment principles applied under the Clayton Act)
- Venegas v. Mitchell, 495 U.S. 82 (1990) (party retains right to waive, settle, or negotiate fee eligibility)
- Astrue v. Ratliff, 130 S. Ct. 2521 (2010) (EAJA fees are payable to the litigant and subject to offset for preexisting government debt)