First National Bank of Arizona v. Halpern et al
Filing
247
ORDER Denying 231 Defendants' Motion for Attorney Fees. Signed by Judge Philip M. Pro on 2/27/13. (Copies have been distributed pursuant to the NEF - EDS)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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FEDERAL DEPOSIT INSURANCE
CORPORATION,
Plaintiff,
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v.
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JASON HALPERN, et al.,
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Defendants.
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2:08-CV-01571-PMP-GWF
ORDER
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Presently before the Court is Defendants’ Motion for Attorneys’ Fees (Doc.
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#231), filed on November 13, 2012. Plaintiff Federal Deposit Insurance Corporation
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(“FDIC”) filed an Opposition (Doc. #234) on November 30, 2012. Defendants filed a
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Reply (Doc. #240) on December 12, 2012. The Court held a hearing on this Motion on
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February 25, 2013. (Mins. of Proceedings (Doc. #246).)
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The parties are familiar with the facts of this case, and the Court will not repeat
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them here except where necessary. Defendants obtained a judgment in their favor after a
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bench trial, and now move for attorney’s fees from the date of an unaccepted offer of
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judgment they made to FDIC on April 24, 2012, in the amount of $150,000. Defendants
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seek attorney’s fees pursuant to the Equal Access to Justice Act (“EAJA”) and Federal and
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Nevada Rules of Civil Procedure 68. FDIC opposes, arguing that the EAJA is a limited
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waiver of sovereign immunity that applies only if federal statutory or common law provides
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a basis to award fees, and Defendants fail to identify any such applicable federal law.
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Pursuant to 12 U.S.C. § 1819(b), the FDIC “in any capacity, shall be an agency of
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the United States for purposes of section 1345 of Title 28 without regard to whether the
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Corporation commenced the action.” Section 1345 grants original jurisdiction to the federal
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district courts over “suits or proceedings commenced by the United States, or by any agency
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or officer thereof expressly authorized to sue by Act of Congress.”
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A court generally may not award costs or attorney’s fees against the United States
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absent a statute directly authorizing such an award. United States v. Chem. Found., 272
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U.S. 1, 20 (1926). The party seeking to recover attorney’s fees from the United States bears
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the burden of identifying an express, unequivocal waiver of sovereign immunity. Anderson
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v. United States, 127 F.3d 1190, 1191 (9th Cir. 1997).
The EAJA partially waives the United States’ sovereign immunity, thus
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authorizing a court to award costs and attorney’s fees against the United States in certain
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circumstances. W. Watersheds Project v. Interior Bd. of Land Appeals, 624 F.3d 983, 985
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(9th Cir. 2010). Because the EAJA is a partial waiver of sovereign immunity, the Court
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must construe the Act narrowly in the United States’ favor. Id. at 989.
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The EAJA authorizes an award of attorney’s fees where the United States would
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be liable for such fees “to the same extent that any other party would be liable under the
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common law or under the terms of any statute which specifically provides for such an
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award.” 28 U.S.C. § 2412(b). Courts interpreting this statute, including the United States
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Court of Appeals for the Ninth Circuit, have strictly construed the term “any statute” and
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“the common law” in § 2412(b) to mean only federal statutes and federal common law.
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United States v. Parsons Corp., 1 F.3d 944, 946 (9th Cir. 1993) (stating “‘any statute’ refers
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only to federal statutes” and noting the federal common law presumption in favor of the
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American rule of each party paying its own costs, albeit with some exceptions such as for
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bad faith); Olson v. Norman, 830 F.2d 811, 822 (8th Cir. 1987); Joe v. United States, 772
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F.2d 1535, 1537 (11th Cir. 1985).
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This Court is not free to disregard Parsons’ unequivocal holding that the term
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“any statute” and “the common law” in § 2412(b) mean only federal statutes and federal
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common law. Contrary to Defendants’ argument, Parsons was interpreting the statute, not
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the parties’ contract, when it concluded the EAJA requires a federal source of statutory or
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common law to support a fee award. Parsons, 1 F.3d at 946-47. Parsons referred to the
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parties’ contract only because in looking to whether federal law provided a basis for a fee
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award, the Parsons Court noted that “[f]ederal courts also have been known to recognize
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different fee arrangements when parties draft them.” Id. at 947. Parsons thus evaluated
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whether the parties’ contract at issue in that case had an enforceable fee provision. Id.
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Under Parsons, Defendants must identify a federal source of law to obtain a fee
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award under § 2412(b) of the EAJA. The only federal law Defendants identify as a basis
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for recovery of fees is Federal Rule of Civil Procedure 68. However, “Federal Rule 68 is
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inapplicable in a case in which the defendant obtains judgment” because by the Rule’s plain
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language, the offeree must obtain judgment in its favor that is less favorable than the offer
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of the party defending the claim to trigger the Rule. MRO Commc’ns, Inc. v. Am. Tel. &
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Tel. Co., 197 F.3d 1276, 1280 (9th Cir. 1999) (citing Delta Air Lines, Inc. v. August, 450
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U.S. 346, 352 (1981)). Because the Court entered Judgment in Defendants’ favor, Federal
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Rule 68 cannot be a source of recovery of attorney’s fees for Defendants in this action.
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Defendants identify no other federal statutory or federal common law basis for recovery.
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Consequently, the Court will deny Defendants’ Motion under § 2412(b).
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The Court also will deny Defendants’ Motion for fees under state law.
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Defendants contend they do not need to rely on the EAJA to recover attorney’s fees because
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under MRO Communications, Defendants can recover fees based on state law. However,
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MRO Communications did not involve the United States as the party against which fees
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were sought. Id. at 1278-79. Thus, while resort to state law may be appropriate against
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private parties under certain circumstances, Defendants still must show a waiver of
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sovereign immunity to support awarding fees against FDIC.
Defendants rely on Resolution Trust Corp. v. Titan Fin. Corp., 22 F.3d 923 (9th
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Cir. 1994) to argue FDIC is not entitled to sovereign immunity when FDIC is acting as a
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receiver for a failed institution. However, the issue in Titan was whether there was an
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exhaustion requirement under the Financial Institutions Reform, Recovery, and
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Enforcement Act of 1989 before a prevailing defendant could seek attorney’s fees against
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the Resolution Trust Corporation (“RTC”). Id. at 926-27. It is unclear from Titan whether
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the RTC ever asserted a sovereign immunity defense to an award of fees against it. Titan
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thus does not stand for the proposition that FDIC is not entitled to assert sovereign
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immunity in response to a request for a fee award when FDIC is acting in its capacity as a
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receiver. Nor does O’Melveny & Myers v. F.D.I.C., 512 U.S. 79 (1994) stand for this
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proposition. O’Melveny dealt with whether state or federal law should govern where the
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FDIC was acting as receiver and the issue was whether knowledge ought to be imputed to
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the FDIC through the failed bank. Id. at 85-87. O’Melveny did not discuss whether FDIC
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is entitled to invoke sovereign immunity in response to a request for attorney’s fees against
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it when it acts in its capacity as a receiver for a failed bank.
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It is Defendants’ burden to identify a specific, unequivocal waiver of sovereign
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immunity supporting an attorney’s fee award against FDIC. Defendants have not done so.
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Accordingly, the Court will deny the Motion for Attorney’s Fees.
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IT IS THEREFORE ORDERED that Defendants’ Motion for Attorneys’ Fees
(Doc. #231) is hereby DENIED.
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DATED: February 27, 2013
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PHILIP M. PRO
United States District Judge
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