United States v. Holland ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v.
RICHARD JOYNER HOLLAND, JR.;
No. 99-6823
SHIRLEY JEAN HOLLAND WRIGHT;
GREGORY F. HOLLAND, Co-executors
of the Estate of Richard Joyner
Holland, Sr., Deceased,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Henry C. Morgan, Jr., District Judge.
(CR-97-139-2)
Argued: January 27, 2000
Decided: June 15, 2000
Before LUTTIG and MOTZ, Circuit Judges, and
Norman K. MOON, United States District Judge for the
Western District of Virginia, sitting by designation.
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Affirmed by published opinion. Judge Moon wrote the opinion, in
which Judge Luttig joined. Judge Motz wrote an opinion concurring
in the judgment.
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COUNSEL
ARGUED: David S. Kris, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Appellant. James Crawford Roberts,
Jr., MAYS & VALENTINE, L.L.P., Richmond, Virginia; Hunter W.
Sims, Jr., KAUFMAN & CANOLES, Norfolk, Virginia, for Appel-
lees. ON BRIEF: Helen F. Fahey, United States Attorney, Justin W.
Williams, Assistant United States Attorney, Larry L. Gregg, Assistant
United States Attorney, James A. Metcalfe, Assistant United States
Attorney, Robert J. Seidel, Jr., Assistant United States Attorney,
UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellant. Alan D. Albert, John S. West, MAYS & VAL-
ENTINE, L.L.P., Richmond, Virginia; Patrick H. O'Donnell, Beth V.
McMahon, KAUFMAN & CANOLES, Norfolk, Virginia, for Appel-
lees.
_________________________________________________________________
OPINION
MOON, District Judge:
The United States appeals from the district court's denial of its
motion for reconsideration of the district court's decision to award
attorney's fees and costs to a criminal defendant under the Hyde
Amendment, a federal statute that permits courts to award attorney's
fees and costs to individuals who were subjected to a vexatious prose-
cution. For the reasons that follow, we affirm the district court's
denial of the United States' motion for reconsideration.
I.
A criminal investigation was launched in October 1993 against
Richard Holland, Sr., and Richard Holland, Jr., the respective chief
executive officer and president of Farmers Bank. On September 26,
1997, a grand jury issued a 31-count indictment, charging the Hol-
lands with making various false entries in bank records, misapplying
bank funds, making false statements, perjury, obstructing justice, and
conspiracy. After a two week trial, the district court issued an order
dated April 30, 1998, granting the Hollands' motion for acquittal on
all counts. The Hollands subsequently petitioned the district court for
attorney's fees and other costs pursuant to the Hyde Amendment of
the Departments of Commerce, Justice, and State, The Judiciary, and
Related Agencies Appropriations Act of 1998, Pub. L. No. 105-119,
2
§ 617, 111 Stat. 2440, 2519 (1997) (found as statutory note at 18
U.S.C. § 3006A).1 On February 3, 1999, the district court found that
the conduct of the FDIC and the U.S. Attorney's Office had been vex-
atious and granted the Hollands' motion for attorney's fees and costs
pursuant to the Hyde Amendment.
Twenty-nine days after the district court awarded attorney's fees
and costs to the Hollands, the government filed a"Motion for Recon-
sideration." On May 18, 1999, the district court ruled on the motion
for reconsideration and concluded that Hyde Amendment proceedings
are civil rather than criminal. Therefore, the district court concluded
that any motions made pursuant to the Hyde Amendment should be
treated as being filed in accordance with the Federal Rules of Civil
Procedure. Although the United States did not designate under what
rule it was filing its motion for reconsideration, the district court rea-
soned that the only motion for reconsideration that would not be time-
barred under the Federal Rules of Civil Procedure would be one made
pursuant to Rule 60(b). The court subsequently denied the Rule 60(b)
motion for reconsideration because the United States did not present
any new evidence or any other reason to reconsider the court's judg-
ment to assess attorney's fees and costs.2
Twenty-nine days later, on June 16, 1999, the government filed a
notice of appeal "from the decision of [the district court] on May 18,
1999." The government now argues that the February 3, 1999 award
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1 In pertinent part, the Hyde Amendment states that:
. . . the court, in any criminal case (other than a case in which
the defendant is represented by assigned counsel paid for by the
public) pending on or after the date of the enactment of this Act
[Nov. 26, 1997], may award to a prevailing party, other than the
United States, a reasonable attorney's fee and other litigation
expenses, where the court finds that the position of the United
States was vexatious, frivolous, or in bad faith, unless the court
finds that special circumstances make such an award unjust.
Such awards shall be granted pursuant to the procedures and lim-
itations (but not the burden of proof) provided for an award
under section 2412 of title 28, United States Code.
2 The district court did grant the motion for reconsideration in part, but
that part is not relevant to this appeal.
3
of attorney's fees and costs was made under the wrong section of 28
U.S.C. § 2412 and that attorney's fees and costs should not have been
awarded because the government's prosecution was not vexatious
within the meaning of the Hyde Amendment.
II.
The issue in this case is simply whether Hyde Amendment pro-
ceedings are civil or criminal in nature, and whether the Federal Rules
of Civil or Criminal Procedure apply accordingly. The United States
contends that the Hyde Amendment proceedings are criminal and that
its appeal from the denial of the motion for reconsideration is there-
fore an appeal from the February 3, 1999 judgment. The United States
argues that an appeal from the denial of a motion for reconsideration
in the criminal context "necessarily raise[s] the underlying judgment
for review." United States v. Dickerson, 166 F.3d 667, 677 n.10 (4th
Cir. 1999), cert. granted in part, 120 S. Ct. 578 (1999).3 The govern-
ment does not contest that if the Hyde Amendment proceedings are
instead civil in nature, then its appeal from the denial of the motion
for reconsideration does not raise the underlying February 3, 1999
order for review on appeal.4
The question of whether Hyde Amendment proceedings are civil or
criminal in nature for the purpose of applying rules of procedure is
one of first impression in this court.5 We agree with the district court
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3 Because we conclude that the Hyde Amendment proceedings are civil
in nature, we do not address the question whether, in the criminal con-
text, an appeal from a motion for reconsideration always raises the
underlying order for appellate review.
4 Rule 60(b) of the Federal Rules of Civil Procedure merely provides
for the filing of a motion for reconsideration. It does not toll the running
of time for filing an appeal. Stone v. INS, 514 U.S. 386, 401 (1995).
Instead, the denial of a Rule 60(b) motion is appealable as a separate
final order. Id. Because a Rule 60(b) motion for reconsideration and the
original order are considered separate final orders, the appeal of one does
not incorporate the other by default. Browder v. Department of Correc-
tions, 434 U.S. 257, 263 n.7 (1978).
5 Two other Court of Appeals have addressed this issue. See United
States v. Robbins, 179 F.3d 1268, 1270 (10th Cir. 1999) (holding, with-
4
that the Hyde Amendment proceedings are civil in nature and that the
United States, therefore, has not appealed the district court's February
3, 1999 order.
We turn first to the language of the Hyde Amendment. Contrary to
the contention of the United States, nothing in the statute denominates
the proceedings in which fees are sought as either civil or criminal.
We recognize that the Amendment does begin with a reference to the
nature of the case that could give rise to an award of attorney's fees:
"the court, in any criminal case . . . may award," § 617, 111 Stat. at
2519 (emphasis added). However, the phrase "in any criminal case"
merely limits to "criminal cases" the cases in which attorney's fees
may be awarded under the Hyde Amendment. That is, the Amend-
ment's language simply empowers the court to award fees for services
rendered in the defense of a criminal case. It does not address whether
the ancillary Hyde Amendment proceeding in which the issue of fees
is adjudicated is itself criminal or civil.
Although the statute does not characterize the nature of Hyde
Amendment proceedings, we are confident that they are civil in
nature. Ancillary motions in a criminal case are not necessarily crimi-
nal. See Lee v. Johnson, 799 F.2d 31, 36-38 (3rd Cir. 1986) (separate
action to quash grand jury subpoena considered civil action); United
States v. Douglas, 55 F.3d 584 (11th Cir. 1995) (property adjudication
proceeding ancillary to criminal forfeiture prosecution determined to
be a civil action); United States v. Chan, 22 F. Supp. 2d 1123, 1127
(D. Haw. 1998) (third party motion for attorney's fees characterized
as a civil action). Instead, a proceeding that is basically civil should
be considered a civil action even if it stems from a prior criminal
prosecution. See United States v. Lavin, 942 F.2d 177, 181-82 (3rd
Cir. 1991). A proceeding is basically civil if it redresses private inju-
ries; a criminal proceeding, by contrast, establishes guilt and punishes
offenders. See Black's Law Dictionary 374 (6th ed. 1990); see also
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out explanation, that the Federal Rules of Criminal Procedure apply to
Hyde Amendment proceedings); United States v. Truesdale, ___ F.3d
___, 2000 WL 554543 (5th Cir. May 5, 2000) (holding that an appeal
from the denial of fees under the Hyde Amendment is subject to the
appeal period applicable in civil cases).
5
Lavin, 942 F.2d at 181 (criminal cases are prosecutions by the gov-
ernment to secure convictions for criminal conduct; civil cases are
everything else). Hyde Amendment proceedings redress private inju-
ries -- the costs accrued by an individual defending against a vexa-
tious prosecution -- and do not establish guilt or punish offenders.6
The law of contempt provides a good analogy. In determining
whether contempt is a civil or criminal proceeding, the Supreme
Court instructs that courts ask "what does the court primarily seek to
accomplish by imposing sentence?" Shillitani v. United States, 384
U.S. 364, 370 (1966). If the purpose of contempt is to coerce compli-
ance, the penalty is civil; if the purpose of contempt is to punish for
past disobedience, the penalty is criminal. Douglass v. First Nat'l
Realty Corp., 543 F.2d 894, 898 (D.C. Cir. 1976). The test applies
regardless of whether the underlying court proceedings are civil or
criminal. See Shillitani, 384 U.S. at 368 (civil contempt penalty
imposed when underlying proceeding was criminal); Douglass, 543
F.2d at 898 (criminal contempt fine imposed when underlying pro-
ceeding was civil).
Because the Hollands sought restitution -- not criminal sanctions
-- for their prosecution, the ancillary motions concerning the award
of attorney's fees are most properly characterized as motions pursuant
to a civil action against the United States. The statute itself confirms
that the award of attorney's fees and costs is remedial in nature
because those individuals who did not incur attorney's fees cannot be
awarded those fees. See § 617, 111 Stat. at 2519 ("[T]he court, in any
criminal case (other than a case in which the defendant is represented
by assigned counsel paid for by the public)... may award [fees] ..."
(emphasis added).). Therefore, the focus of the statute is on compen-
sating those individuals who are vexatiously prosecuted and who sub-
sequently incur attorney's fees, not on forcing the government to pay
fees as a form of punishment.
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6 In fact, in a Hyde Amendment proceeding, the defendant has the bur-
den of proof to establish that the prosecution was vexatious in order to
obtain reimbursement for attorney's fees. This is contrasted with the tra-
ditional criminal trial burden on the government to establish the defen-
dant's guilt beyond a reasonable doubt.
6
In these respects, a Hyde Amendment proceeding for attorney's
fees is analogous to a motion for return of property made pursuant to
Federal Rule of Criminal Procedure 41(e), which is"a civil action
against the United States," "at least where no criminal proceedings are
pending." United States v. Garcia, 65 F.3d 17, 19 n.2 (4th Cir. 1995)
(citing Hunt v. Department of Justice, 2 F.3d 96, 97 (5th Cir. 1993)
("Rule 41(e) motions represent a means by which a criminal defen-
dant can determine her rights in property, and not a part of the trial
and punishment process that is criminal law.")). As in a Rule 41(e)
motion, a Hyde Amendment proceeding is a means by which a crimi-
nal defendant can seek redress, and is not a part of the trial and pun-
ishment process that is traditionally the subject of criminal law.
Not only are we confident that Hyde Amendment proceedings are
of a civil nature, but our conclusion that the Rules of Civil Procedure
should apply is supported by the fact that the Hyde Amendment pro-
vides that "awards shall be granted pursuant to the procedures and
limitations ... provided for an award under section 2412 [of the Equal
Access to Justice Act]." The procedures in the Equal Access to Justice
Act are, in turn, governed by the Federal Rules of Civil Procedure. It
is, therefore, likely that Congress intended that the Hyde Amendment
also be governed by the Federal Rules of Civil Procedure. Thus, the
United States' motion for reconsideration was filed pursuant to Rule
60(b) of the Federal Rules of Civil Procedure. As the timely appeal
from the denial of the Rule 60(b) motion did not bring up the underly-
ing judgment for review, the motion for reconsideration is the only
appeal properly before this Court.
When a motion for reconsideration is appealed, the standard of
review is abuse of discretion. See Browder v. Department of Correc-
tions, 434 U.S. 257, 263 n.7 (1978). Thus, we cannot consider the
merits of whether the district court awarded attorney's fees pursuant
to the incorrect section of 28 U.S.C. § 2412 or whether the United
States' position in the criminal case was "vexatious" within the mean-
ing of the Hyde Amendment. The United States does not assert that
the district court abused its discretion in denying the motion for
reconsideration. Therefore, the district court's denial of the motion is
affirmed.
AFFIRMED
7
DIANA GRIBBON MOTZ, Circuit Judge, concurring in the judg-
ment:
The Hyde Amendment authorizes an award of attorney's fees "in
any criminal case." Based on this language, and on the reasoning of
our sister circuit in United States v. Robbins , 179 F.3d 1268, 1270
(10th Cir. 1999), I would hold, if left to write on a clean slate, that
an award of fees under the Hyde Amendment is part of the underlying
criminal matter and therefore subject to the time limits for appeal
applicable to criminal cases.
I believe that both substantive and practical considerations would
support such a holding.
Because a decision to award or deny fees under the Hyde Amend-
ment represents a close assessment of the merits (or meritlessness) of
a criminal prosecution, that decision is quite close, in its substance,
to the culpability determination itself. Cf. United States v. Lavin, 942
F.2d 177, 182 (3d Cir. 1991) (noting that action by third-party to
recover property subject to criminal forfeiture, deemed to be "civil"
in nature, "will have absolutely no effect on . .. the criminal defen-
dant"). A district judge other than the one who presided over the trial
would be, for this reason, at a distinct disadvantage in ruling on a
motion for fees. This substantive congruity between the underlying
culpability determination and the decision on a Hyde Amendment
application cuts in favor of viewing the two as being subject to the
same set of procedural rules.
Furthermore, a decision on a Hyde Amendment application will
typically come at the close of a case, at the same time that other mat-
ters clearly subject to the criminal rules, such as a decision by the dis-
trict judge to dismiss an indictment, also come up for appeal. It would
make practical sense to view all appeals arising at this time, at the
immediate close of the case, as subject to the same set of procedural
rules.
The majority correctly demonstrates, however, that other courts,
when faced with the choice of whether to designate a matter civil or
criminal, have construed "civil" broadly and"criminal" restrictively.
See 20 James Wm. Moore et al., Moore's Federal Practice, § 304.10
8
(3d ed. 1999) ("The term ``civil,' although not defined in Appellate
Rule 4, has been broadly construed to cover all cases that are not
criminal prosecutions."). Although in making such a designation,
those courts did not face a proceeding both so substantively and tem-
porally close to the underlying criminal proceeding as a Hyde
Amendment application, they have been reluctant to view anything
beyond the prosecution itself as "criminal" in nature, recognizing only
limited exceptions. See 20 id. § 304.20 (noting that courts have
treated as "criminal" motions to quash a grand jury subpoena, motions
for a correction or reduction of sentence, and motions for a new trial
in a criminal case; also recognizing a circuit split in the treatment of
coram nobis petitions). This reluctance to regard a matter as a "crimi-
nal" action counsels caution here. Further, the Hyde Amendment spe-
cifically incorporates by reference the "procedures" of the Equal
Access to Justice Act, which regulates fees in a civil context, suggest-
ing that a Hyde Amendment application, too, should be viewed as
"civil." For these reasons, I cannot conclude that my good colleagues
are incorrect in their holding.
Accordingly, I concur in the judgment.
9