Fdl Technologies, Inc. And Dale C. Nathan v. The United States

967 F.2d 1578, 1992 WL 142510

• Court: Court of Appeals for the Federal Circuit
• Decided: July 24, 1992
• Docket: 91-5141
• Status: Published

Opinions

ARCHER, Circuit Judge.

FDL Technologies, Inc. (FDL) and its attorney Dale C. Nathan (Nathan) appeal the orders of the United States Claims Court which on July 8,1991 dismissed their complaint and on June 11,1991 denied their claims that the attorney fees awarded to FDL pursuant to the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504(a)(1) (1988), should have been paid directly to Nathan and that interest should have been allowed on the unpaid attorney fee award pursuant to the Prompt Payment Act, 31 U.S.C. §§ 3901-3907 (1988). We affirm.

BACKGROUND

In its decision of May 14, 1990, the Armed Services Board of Contract Appeals (ASBCA) determined that the contracting officer for the Department of the Army improperly terminated for default a contract between FDL and the Army. As prevailing party, FDL submitted an application pursuant to the EAJA for $26,731.59 in attorney fees and costs. FDL subsequently filed a petition in bankruptcy on July 2, 1990, and is currently involved in bankruptcy proceedings.

The Army did not contest FDL’s application for attorney fees. On September 28, 1990, the contracting officer issued Contract Modification P00006, which increased the contract price by $26,731.59, as full and final settlement of the EAJA claim. Because the issue of attorney fees was resolved informally, the ASBCA never issued an order awarding attorney fees. ..When FDL did not receive the $26,731.59, appellants filed a complaint in the Claims Court on November 15, 1990. Nathan, who had been FDL’s attorney in the ASBCA proceeding, signed the complaint pro se. Appellants’ complaint sought a judgment against the United States in the amount of $26,731.59, an award of interest pursuant to the Prompt Payment Act, and an order that the $26,731.59 be paid directly to Nathan.

The Army asserts that on December 14, 1990, the Defense Logistic Agency (DLA) issued a check to FDL for the full amount of the attorney fees as reflected in Contract Modification P00006 and sent it to “FDL Technologies, Mr. Albert Baddin,” who was FDL’s trustee in bankruptcy. After confirming that this check was not cashed, the DLA sent, and Mr. Baddin on June 19, 1991, received, the second check payable to “FLD [sic] Technologies Mr. Albert Baddin Attorney.”

In its first order of June 11, 1991, the Claims Court rejected Nathan’s contention that the attorney fees should have been paid directly to him because it was “not shown that the Equal Access to Justice Act contemplates payments to other than the prevailing party.” In its second order issued the same day, the Claims Court denied the claim for Prompt Payment Act interest because “the Prompt Payment Act does not apply to a claim for attorneys’ fees under the EAJA since the item is not within the contemplation of the subject contract as a `complete delivered item, property `or service.'" Based on these two June 11, 1991 orders, as well as the issuance of the second check to FDL, the Claims Court in its July 8, 1991 order concluded that "all the matters prayed for in the complaint have now been resolved" and accordingly dismissed the complaint.

DISCUSSION

I.

The first issue in this case is whether an attorney is entitled to direct payment of fees awarded to a prevailing party in an agency adjudication pursuant to the EAJA, 5 U.S.C. § 504(a)(1). Section 504(a)(1) states, in pertinent part:

An agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and other expenses incurred by that party in connection with that proceeding.... [Emphasis added.]

By its terms, § 504(a)(1) states that the fee award is made to a prevailing party, not the prevailing party's attorney. Furthermore, the statute applies to fees incurred by that party. Thus, under the language of the statute, the prevailing party, and not its attorney, is entitled to receive the fee award. See Thompson/Center Arms Co. v. United States, 924 F.2d 1041, 1044-45 (Fed.Cir.1991); VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1579-80 (Fed.Cir.1990).

The legislative history of the EAJA quoted by appellants fully supports the plain meaning of the statute. It parrots the statute by stating that the United States is "to pay attorney fees and other expenses to a prevailing party other than the United States in an agency adversarial adjudication." II.R.CONF.REP. No. 1434, 96th Cong., 2d Sess. 21 (1980), reprinted in 1980 U.S.C.C.A.N. 4953, 5003, 5010 (emphasis added).

In considering a comparable fee shifting provision under the EAJA, 28 U.S.C. § 2412(d)(1)(A) (1988), this court concluded in Phillips v. General Services Administration, 924 F.2d 1577 (Fed.Cir.1991), that a fee award is payable to the prevailing party. The EAJA, in addition to providing for fee shifting in agency proceedings, amended 28 U.S.C. § 2412(d)(1)(A) to provide that in judicial proceedings "a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party" (emphasis added). In Phillips we held that under § 2412(d)(1)(A), the "attorney could not directly claim or be entitled to the award." 924 F.2d at 1582. Because the fee award provision for agency and judicial proceedings contain similar language, we see no reason to depart from the holding of Phillips.¹

Nathan argues that this issue is governed by our decision in Jensen v. Department of Transportation, 858 F.2d 721 (Fed.Cir.1988). Under the facts of that case, this court held that an attorney fee award under the Civil Service Reform Act (CSRA), 5 U.S.C. § 7701(g)(1) (1982), must be paid to counsel. There the Merit Systems Protection Board (board) had held that the reasonable attorney fee it awarded had to be divided between the employee Jensen and her attorney because she had already paid her attorney a partial fee. On appeal to this court the attorney who had represented Jensen reiterated the argument he had made before the board that “he had received the right to pursue and to receive any fee awarded, and that Jensen had relinquished this right in consideration [of his] having waived part of his fee.” Id. at 723. The factual context of that decision is clearly distinguishable. Moreover, the attorney fee provisions of the CSRA contains different language, stating that:

the Board ... may require payment by the agency involved of reasonable attorney fees incurred by an employee ... if the employee ... is the prevailing party and the Board ... determines that payment by the agency is warranted in the interest of justice....

5 U.S.C. § 7701(g)(1). Similarly, the legislative history of the CSRA attorney fee provision does not require that fees be paid to the prevailing party. It states that “[sjection 7701© requires an agency to pay an employee’s reasonable attorney fees” under the standards contained in that section. S.REP. No. 969, 95th Cong., 2d Sess. 60 (1978), reprinted in 1978 U.S.C.C.A.N. 2723, 2782 (emphasis added).

Given the difference in language between the CSRA and the EAJA, as well as factual circumstances of Jensen, we do not consider Jensen to be applicable in this case, much less controlling as Nathan argues. We conclude that the prevailing party, and not counsel, is entitled to attorney fees awarded under 5 U.S.C. § 504(a)(1).

II.

The second issue is whether FDL is entitled to interest on the attorney fee award in this case, pursuant to the Prompt Payment Act, 31 U.S.C. §§ 3901-3907. Section 3902 states, in pertinent part, that:

the head of an agency acquiring property or service from a business concern, who does not pay the concern for each complete delivered item of property or service by the required payment date, shall pay an interest penalty to the concern on the amount of the payment due.

31 U.S.C. § 3902(a) (emphasis added).

It is well established that “interest cannot be recovered unless the award of interest was affirmatively and separately contemplated by Congress,” Library of Congress v. Shaw, 478 U.S. 310, 315, 106 S.Ct. 2957, 2962, 92 L.Ed.2d 250 (1986), and that “in the absence of specific provision by contract or statute, or ‘express consent ... by Congress,’ interest does not run on a claim against the United States.” United States v. Louisiana, 446 U.S. 253, 264-265, 100 S.Ct. 1618, 1626, 64 L.Ed.2d 196 (1980) (quoting United States v. N. Y. Rayon Importing Co., 329 U.S. 654, 659, 67 S.Ct. 601, 603-04, 91 L.Ed. 577 (1947)); see also Servidone Construction Corp. v. United States, 931 F.2d 860, 863 (Fed.Cir.1991). Thus, in interpreting the Prompt Payment Act, this court may not enlarge the waiver of sovereign immunity beyond what the language of the Act requires. See Library of Congress, 478 U.S. at 318, 106 S.Ct. at 2963.

FDL argues that it is entitled to interest on the attorney fee award because it was made by means of Contract Modification P00006, rather than through an order of the ASBCA; hence, it was reduced to a contract debt. Section 3902, however, provides for interest only on amounts due for property or service delivered to the head of an agency. In this case, the amount owed by the Army was for attorney fees incurred by FDL, not for property or service delivered to the Army by FDL. Thus, even if we view the fee award as a contract, the Claims Court correctly determined that the Army’s obligation under the contract did not arise from delivery of property or services. Section 3902 does not apply and FDL is not entitled under the Prompt Payment Act to interest on the attorney fee award.

AFFIRMED.

1 . The dissent argues that Phillips supports its position that an attorney is entitled to direct payment of a fee award under the EAJA, apparently because the Phillips court stated that Phillips was "obligated to turn [the fee award] over to her attorney." 924 F.2d at 1582. That statement, however, was made in the context of construing the fee arrangement between Phillips and her attorney, and was completely unrelated to the EAJA.

The issue in Maher v. Gagne. 448 U.S. 122, 100 S.Ct. 2570, 65 L.Ed.2d 653 (1980), was not who was entitled to receive the fee award. Although the Court made the statement that "the District Court awarded respondent's counsel a fee of $3,012.19," Id. at 126, 100 S.Ct. at 2573, it said elsewhere: "The fact that respondent prevailed through a settlement rather than through litigation does not weaken her claim to fees." Id. at 129, 100 S.Ct. at 2575 (emphasis added). Further, it is clear that the district court held "that the plaintiff is entitled to an attorney's fee." Gagne v. Maher, 455 F.Supp. 1344, 1348 (D.Conn.1978) (emphasis added).

Cases from other courts where attorney fee awards, under various statutes, have been paid directly to counsel are unpersuasive. All involve pro bono counsel where the award was paid directly to counsel in order to avoid giving the prevailing parties, usually prisoners or indigents, a windfall. Here, the record does not indicate that Nathan represented FDL under anything other than an ordinary compensation arrangement; his claim against FDL for fees is that of an unsecured creditor. FDL is now in bankruptcy and there is no basis under the EAJA to elevate Nathan's unsecured claim above the claims of secured and priority creditors.