Unpublished Disposition, 862 F.2d 318 (9th Cir. 1984)

MEMORANDUM^* 

On November 4, 1984, an administrative law judge (ALJ) ruled that Carolin Davidian, a severely mentally retarded 20-year-old, was no longer eligible for SSI benefits. The basis for the decision was the ALJ's finding that Carolin had resources in excess of $1,500 and that her parents had resources in excess of $2,250, the allowable resource limits for an individual and for a couple, respectively. See 20 C.F.R. Sec. 416.1205 (1987).

The ALJ found that Carolin had her own bank account in the amount of $1,120.61 and was co-beneficiary of a bank account held in trust by her mother, Emile Simonian, which totalled $2,179.46 in March 1983 and reached $3,241.25 as of November 30, 1983. In addition, Carolin's parents had $1,849.41 in a checking account which the ALJ added to half of the savings account in the name of Emile in finding that Carolin's parents' assets exceeded their $2,250 limit. The ALJ assumed that these parental resources could be "deemed" the property of Carolin. Based on these findings, the ALJ concluded that Carolin's resources exceeded the statutory limit by the end of November 1983.

Upon denial of Carolin's request for administrative review, her mother filed a complaint in district court. The court remanded the case to the Secretary to sort out discrepancies in the testimony of Emile regarding ownership of the savings accounts in question. On remand, a second ALJ found "no evidence" to support the prior finding that Carolin owned a savings account, and that discrepancies in Emile's testimony "might well be attributed to language difficulties as she is Iranian." The ALJ found that Carolin would be eligible for SSI benefits unless her parents had income in excess of the limits that could be "deemed" to Carolin under 20 C.F.R. Sec. 416.1202. The Appeals Council ruled that under the statute and regulations, no such income could be deemed to Carolin, as she was over the age of 18. It affirmed her eligibility for benefits.

Simonian now appeals denial of her motion for attorneys' fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412, arguing that the Secretary's initial adverse determination was not "substantially justified."

DISCUSSION

Under the EAJA, a court may award attorneys fees and other expenses to a party prevailing against the United States in a civil action, "unless the court finds that the position of the United States was substantially justified ..." 28 U.S.C. § 2412(d) (1) (A). This court reviews a district court's decision whether or not to award attorneys fees under Sec. 2412(d) for an abuse of discretion. Pierce v. Underwood, 108 S. Ct. 2541, 2543 (1988); Barry v. Bowen, 825 F.2d 1324, 1330 (9th Cir. 1987).

In evaluating whether the government's position was substantially justified, the court looks both to the underlying government conduct at issue and the totality of the circumstances before and during litigation. The government's position is substantially justified if it has a reasonable basis in fact and law. Pierce, 108 S. Ct. at 2549-50; Barry, 825 F.2d at 1330. The government has the burden of demonstrating that its position was substantially justified. Petition of Hill, 775 F.2d 1037, 1042 (9th Cir. 1985).

In this case, the second ALJ found "no evidence" that Carolin ever had her own bank account. We agree that the record shows no such evidence. In addition, as pointed out by the Appeals Council on remand, the first ALJ plainly misapplied the applicable regulations in "deeming" parental resources to Carolin, who was over 18 years of age in November 1983. See 20 C.F.R. Sec. 416.1202 (1987). Thus, the only evidence to support the Secretary's position prior to remand by the district court is Emile Simonian's "trust" bank account. According to the district court and the government, there are discrepancies between Emile's testimony at the first and second hearings, perhaps due to language difficulties, regarding the sources of the funds in Emile's bank account. At the first hearing, Emile's position seemed to be that five family members' funds were comingled there, whereas, at the second hearing, she appeared to contend that no funds belonging to Carolin were deposited there.

If this supposedly discrepant testimony were material, we might have agreed that some factual support existed for the Secretary's position. However, even if we accept the view of the facts most supportive of the Secretary's position, that position lacks a reasonable basis in fact and law.

The ALJ, pursuant to departmental policy, assumed that Carolin owned half of the funds in Emile's bank account because Carolin was one of two named beneficiaries. The record shows that, for four months (from December 1983 to March 1984), this account contained $3,241.25. Counting half of this money as Carolin's would give her about $1,620, or an amount in excess of the $1,500 limit. However, this bank account is on its face a "Totten Trust," that is, an account belonging to the depositor with beneficiaries designated to succeed to the funds only in the event of the depositor's death. Thus, nothing in the bank account records indicates that Carolin owned half the funds. Moreover, Emile testified that five family members comingled funds in the account. This supports the view that Carolin was not half-owner as a trust beneficiary, and makes it unlikely that Carolin was the source of half the funds. To find that Carolin's resources exceeded $1,500, the ALJ would have had either to disregard the "comingling" testimony entirely or else to assume that Carolin--whose SSI benefit accounted for $378 of the $1,955 monthly income for the five-member family--was the source of half of the money in that account. We find no basis in the record to support either approach.

We conclude that the government did not sustain its burden to show that its position was substantially justified. Accordingly, Emile Simonian is entitled to attorneys fees under 28 U.S.C. § 2412(d) (1) (A).

REVERSED and REMANDED.