B-242209 December 28, 1990

B-242209: Dec 28, 1990

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Claims Group is advised that. If it is clear that (1) the court's marginal notation was intended to be its final decision upon those matters. (3) it is certified that the government is waiving its right to receive judgment in the form of a separate document. 2. Claims Group is advised that awards of cost made (without findings of contempt) against the government under Rule 70 of the Federal Rules of Civil Procedure are authorized and payable from the Judgment Fund. Marginal notation upon the first page of a memorandum prepared by the plaintiff) does not conform to the usual form in which such judgments are issued and presented to Claims Group. You are uncertain of the character of the amounts awarded (attorney fees versus costs) and the authority for their payment from the Judgment Fund.

B-242209 December 28, 1990

DIGEST

Attorneys

DATE: December 17, 1990 TO: Claims Group Manager - Ken Schutt THRU: Assistant General Counsel - Tom Armstrong FROM: Attorney-Advisor - Neill Martin-Rolsky

SUBJECT: U.S. v. Parcel of Land and Residence thereon at 177 Ivanhoe Ave., Somerset, Mass., Z-2906993 (B-242209)

This responds to the memorandum of October 22, 1990, from Rufus Hill (through yourself) on whether to certify payment of the captioned matter from the Judgment Fund, 31 U.S.C. Sec. 1304 (1988). We understand that your uncertainty arises from two bases: First, the document submitted as proof of the judgment against the United States (consisting of the court's handwritten, marginal notation upon the first page of a memorandum prepared by the plaintiff) does not conform to the usual form in which such judgments are issued and presented to Claims Group. Second, you are uncertain of the character of the amounts awarded (attorney fees versus costs) and the authority for their payment from the Judgment Fund.

For the reasons given below, we conclude that, despite the court's resort to decision by marginal notation, its action does constitute a final judgment against the United States and, if otherwise proper, may be paid pursuant to 31 U.S.C. Sec. 1304. We also find that the amounts awarded represent costs awarded pursuant to Rule 70 of the Federal Rules of Civil Procedure which may be certified for payment from the Judgment Fund pursuant to 28 U.S.C. Sec. 2412(a) & (c)(11 (1988). Your "Z" file is returned as an attachment to this memorandum.

In order to better understand this case, I held several telephone conversations with the cognizant Assistant United States Attorney (AUSA), Mr. Christopher Bator (617-223-9402). We discussed the issues and he provided copies of the parties' pleadings and certain other materials via FAX transmission. (Copies of these items are attached to this memorandum.) I also spoke with Mr. John Showalter (307-0244) of the Justice Department's Commercial Litigation Branch, as well as GAO Senior Attorney Bob Centola.

BACKGROUND

In February of this year, the court ordered the government to have recorded in the appropriate Registry of Deeds the court's order to vacate a "lis pendens" /1/ filed on some real estate previously claimed by the government, but which, as the government eventually agreed, belongs to the plaintiff. After that order was issued, the AUSA then responsible for this case left the government for private practice. He did so, however, without recording the court's order. Apparently, this latter fact went unnoticed by either the plaintiff or the government for several months. When plaintiff's counsel discovered what had happened, he filed the captioned action and sought a finding of contempt, plus costs and attorney fees based on 18 U.S.C Sec. 401 and Rule 70 of the Federal Rules of Civil Procedure (FRCP).

Upon receipt of the complaint, the U.S. Attorney's Office investigated the matter and promptly filed a copy of the court's February order in the appropriate Registry of Deeds in order to correct the oversight. Mr. Bator was then assigned to defend the government in this case on the grounds that the failure to record the court's order was inadvertent and did not actually result in any damage or costs to the plaintiff. According to Mr.Bator, the judge considered this matter and issued a ruling from the bench, which she memorialized, in her own hand, in a notation along the bottom margin of the first page of plaintiff's motion for sanctions. The notation reads:

"Because the government violated the court's order dated February 27, 1990, it shall pay to claimant's counsel his costs In the amount of $1,000."

[Signed:] "Rye W. Zobel, J." [Dated:] "9/11/90"

According to Mr. Bator, it is commonplace for the courts in his judicial circuit to render judgments by means of handwritten notations along the margins of a party's pleading. He professed surprise at GAO's unfamiliarity with and concern about this practice. Mr. Showalter told me that while he could not verify that this practice was common in any of the circuits, he could attest to having seen it occur a number of times.

At my request, Mr. Bator agreed to investigate the possibility of either obtaining a "separate document" memorializing the order, or at least a copy of the handwritten order as certified by the clerk of the court. I do not know whether he attempted to secure the former. However, he did provide the latter to me via FAX transmission. (A copy of this submission is also attached to this memorandum.)

DISCUSSION

As you know, under 31 U.S.C. Sec. 1304, GAO certifies payment from the Judgment Fund of (among other things) certain "judgments" and "awards" which are "final," and for which payment is "not otherwise provided." None of these terms are defined in the statute. Neither does the act prescribe the form or format for them or for their presentation to GAO. From our conversations and from my own experience in this area, I understand that, until now, judgments submitted to Claims Group pursuant to section 1304 usually took the form of a relatively brief, separate document originating with the court (or its clerk) which essentially stated that the court had ordered the award of a sum certain to the prevailing party. You have told me that Claims Group cannot recall ever having been previously asked to certify payment of a judgment rendered by means of a marginal notation upon a party's pleading or memorandum. /2/

Unfortunately, I have not been able to locate any case law which directly addresses this issue--i.e.: Does a court's marginal notation upon a party's pleading qualify as a final judgment for purposes of payment from the Judgment Fund? However, I was able to locate some case law and regulations which address what I take to be a sufficiently similar question-that being: Does a court's marginal notation upon a party's pleading or motion qualify as a final judgment for purposes of appeal?

Rule 58 of the Federal Rules of Civil Procedure (FRCP) specifies that to be appealable, a judgment must be set forth on a separate document (the so-called separate document rule). Several cases have held that the issuance of court orders by means of marginal notation will not satisfy this rule. /3/ E.g., Akers v. Ohio, 902 F.2d 477, 480 (6th Cir. 1990) citing United States v. Woods, 885 F.2d 352, 353 (6th Cir. 1989). Nevertheless, the Supreme Court has ruled that violations of the separate document rule may be waived by the parties. Bankers Trust Co. v. Mallis, 435 U.S. 381 (1978). Because the sole purpose of the rule is to clarify when the time to appeal begins to run, the Supreme Court held that a violation of the rule may be waived where among other things, the district court clearly evidenced its intent that the action from which appeal was taken represented its final decision in the case, the court's action was recorded in the clerk's docket, and the appellee did not object to the absence of a separate document and was not otherwise prejudiced by treating the action from which appeal was taken as the lower court's final decision in the matter. Mallis, 435 U.S. at 387-88. See also Diamond v. McKenzie, 770 F.2d 225, 231 (D.C. Cir. 1985).

Our reason for insisting on a copy of the court's order before certifying payment from the Judgment Fund is simply to document the fact of the judgment. With that in mind, and analogizing the foregoing to the issue posed by the case at hand, we conclude that where a district court has ordered the disposition of a case by means of a marginal notation upon the memorandum or pleadings of one of the parties to the suit, and the amounts awarded by that notation would otherwise be payable from the Judgment Fund, Claims Group may certify payment based upon the marginal notation, if it is clear that:

(1) the court's marginal notation was intended to represent its final decision upon those matters;

(2) the court's notation has been entered into the clerk's docket pursuant to FRCP Rule 79(a); and

(3) it was certified to GAO by the responsible authorized government attorney (i.e., the staff of the Justice Department, the cognizant United States Attorney, or some other government agency authorized to represent itself in court) that no objection Willie raised to the court's failure to issue a separate document--that is, that the government is waiving its right to receive judgment in the form of a separate document pursuant to FRCP Rule 58.

Of course, the application of these criteria will require Claims Group to consult OGC on a case-by-case basis. We believe that these criteria have been satisfied in the present case.

Having established that the judgment at issue here is "final" for purposes of section 1304, we turn to the question of whether the award itself is otherwise payable from the Judgment Fund. Based upon the clear language of the court's order, the data sheet submitted with it by the AUSA, and the absence of any findings of contempt, we find that the award constituted an award of costs pursuant to Rule 70 of the FRCP. As noted above, the plaintiff sought relief pursuant to both 28 U.S.C. Sec. 401 and FRCP Rule 70 of the FRCP.- Both section 401 and Rule 70 authorize sanctions for contempt of court. However, there is no indication that contempt was found here. It appears, instead, that the court based its award on that portion of FRCP Rule 70 which states that, if a party fails to perform a specific task ordered by the court, the court may direct the act be done by some other party acting, as a matter of law, on behalf of and "at the cost of" the disobedient party.

In a similar situation--i.e., where a defendant failed to implement stipulated judgment of court--it was held that Rule 70 authorizes courts to award costs and certain other charges upon private party defendants in order to enforce compliance with their udgments. TNT Marketing, Inc. v. Agresti, 796 F.2d 276 (9th Cir. 1986). Clearly, sovereign immunity has been waived -or such cost awards by 28 U.S.C. Sec. 2412(a), with payment to be made from the Judgment Fund, unless otherwise provided for. 28 U.S.C. Sec. 2412(c)(1). There being no indication that any other appropriation is legally available for the payment of this award, Claims Group may certify its payment pursuant to section 1304.

The AUSA has informed me that in January 1991, opposing counsel in this case will join the U.S. Attorney's staff. For this reason, expedited treatment of this matter is requested in order to avoid any possible appearance of conflict of interest. Please let me know if this poses any problems for you. As usual, should you have any further questions concerning this matter, please feel free to contact me.

Attachments

1. A lis peadens is a notice that a lawsuit affecting ownership of the indicated property is pending on the court's docket.

2. Neither does Bob Centola, I might add.

3. This question does not appear to have been squarely considered by the federal district or appellate courts of the circuit in which the case at hand was decided. But, cf. Alman v. Taunton Sportswear Mfg., 857 F.2d 840, 842, (1st Cir. 1988) (fact that district court used marginal notation to issue order ignored as appellate court considered whether Rule 8 was violated), cert. denied, 109 S. Ct. 1173 (1988).