United States v. Christopher Kim

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, AKA No. 12-56922
Seal A,
Plaintiff-Appellant, D.C. No.
2:04-cv-02788-
v. ABC-PLA

CHRISTOPHER KIM, AKA Chris Kim,
AKA KJ Kim, AKA Kyung Joon
Kim; BORA LEE; OPTIONAL
CAPITAL, INC., AKA Optional
Ventures; FIRST STEPHORA AVENUE,
INC.; ERICA M. KIM; ALEXANDRIA
INVESTMENT, LLC; SE YOUNG KIM;
YOUNG AI KIM,
Claimants-Appellees,

LAW OFFICE OF ERIC HONIG,
Intervenor-Appellee,

and

475 MARTIN LANE, BEVERLY HILLS,
CALIFORNIA, Real Property Located
at, AKA Seal A,
Defendant.
2 UNITED STATES V. KIM

UNITED STATES OF AMERICA, No. 13-55555
Plaintiff-Appellant,
D.C. No.
v. 2:04-cv-02788-
ABC-PLA
CHRISTOPHER KIM, AKA Chris Kim,
AKA KJ Kim, AKA Kyung Joon
Kim; BORA LEE; OPTIONAL
CAPITAL, INC., AKA Optional
Ventures; FIRST STEPHORA AVENUE,
INC.; ERICA M. KIM; ALEXANDRIA
INVESTMENT, LLC; SE YOUNG KIM;
YOUNG AI KIM,
Claimants-Appellees,

LAW OFFICE OF ERIC HONIG; ERIC
HONIG,
Intervenors-Appellees,

and

475 MARTIN LANE, BEVERLY HILLS,
CALIFORNIA, Real Property Located
at, AKA Seal A,
Defendant.
 UNITED STATES V. KIM 3

UNITED STATES OF AMERICA, No. 13-55556
Plaintiff-Appellant,
D.C. No.
v. 2:04-cv-02788-
ABC-PLA
CHRISTOPHER KIM, AKA Chris Kim,
AKA KJ Kim, AKA Kyung Joon
Kim; BORA LEE; OPTIONAL OPINION
CAPITAL, INC., AKA Optional
Ventures; FIRST STEPHORA AVENUE,
INC.; ERICA M. KIM; ALEXANDRIA
INVESTMENT, LLC; SE YOUNG KIM;
YOUNG AI KIM,
Claimants-Appellees,

LAW OFFICE OF ERIC HONIG; ERIC
HONIG,
Intervenors-Appellees,

and

475 MARTIN LANE, BEVERLY HILLS,
CALIFORNIA, Real Property Located
at,
Defendant.

Appeal from the United States District Court
for the Central District of California
Audrey B. Collins, District Judge, Presiding

Argued and Submitted
March 2, 2015—Pasadena, California
4 UNITED STATES V. KIM

Filed August 13, 2015

Before: Stephen Reinhardt, N. Randy Smith,
and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge N.R. Smith

SUMMARY*

Anti-Assignment Act

The panel vacated the district court’s order awarding
attorneys’ fees, pursuant to the Civil Asset Forfeiture Reform
Act (“CAFRA”), directly to the Law Office of Eric Honig
because the Anti-Assignment Act applied to void an
assignment in the parties’ representation agreement; vacated
the district court’s post-judgment orders awarding additional
fees; and remanded for further proceedings.

In the underlying action, Honig represented claimants
who sought properties that were seized by the United States
government, and the district court entered summary
judgments in favor of the claimants. The district court found
that the claimants were prevailing parties under CAFRA, and
awarded attorneys’ fees against the government.

The panel held that the government was not estopped
from asserting the Anti-Assignment Act.

*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 UNITED STATES V. KIM 5

The panel held that the Anti-Assignment Act prohibited
a claimant from assigning an award of attorneys’ fees under
CAFRA to his attorney. The panel concluded that the Anti-
Assignment Act invalidated the assignment of the award of
attorneys’ fees against the United States from the claimant to
his attorney. The panel further held that the Act does not
prevent an attorney from taking an interest in the fees that is
effective against the government; it merely forbids an
assignment of the right to be paid directly from the United
States Treasury.

COUNSEL

Melissa Briggs, (argued), John E. Lee, Monica E. Tait,
Assistant United States Attorneys, Thomas J. Clark,
Supervisory Attorney, Gilbert S. Rothenberg, Deputy
Assistant Attorney General, Kathryn Keneally, Assistant
Attorney General, for Plaintiff-Appellant United States of
America.

Eric Honig (argued), Law Offices of Eric S. Honig, Marina
Del Rey, California, for Intervenors-Appellees.

John D. Cline, San Francisco, California, for Amicus Curiae
National Association of Criminal Defense Lawyers.
6 UNITED STATES V. KIM

OPINION

N.R. SMITH, Circuit Judge:

Christopher Kim and members of his family defeated the
Government’s attempts to forfeit property seized in
connection with a criminal investigation. Thereafter, Kim
received several significant awards of attorney’s fees. Eric
Honig, Kim’s lawyer, asked the district court that he be paid
those fees directly, pursuant to an assignment in their
representation agreement. The Government asserts that the
Anti-Assignment Act, 31 U.S.C. § 3727, voids such an
assignment.

We agree that the Anti-Assignment Act invalidates an
assignment of an award of statutory attorney’s fees against
the United States from the claimant to his attorney. However,
the Anti-Assignment Act goes no further. The Act does not
prevent an attorney from taking an interest in the fees that is
effective against the Government; it merely forbids an
assignment of the right to be paid directly from the United
States Treasury. We have jurisdiction under 28 U.S.C.
§ 1291, and we vacate and remand for further proceedings.

BACKGROUND

Pursuant to a request for extradition from the Republic of
Korea, where Kim was charged with fraudulently obtaining
funds from companies that he controlled (DAS Corp. and
Optional Capital), the Government seized the properties at
issue in this case. See United States v. Real Prop. Located at
475 Martin Lane, 545 F.3d 1134, 1139 (9th Cir. 2008). Kim,
Erica Kim, Bora Lee, Se Young Kim, and Young Ai Kim (the
“Kim Claimants”) each filed claims to the seized properties.
 UNITED STATES V. KIM 7

The district court granted summary judgment to the Kim
Claimants. We affirmed in part, holding that “the
government failed to present admissible evidence sufficient
to demonstrate a triable issue of fact as to whether Kim
obtained DAS’s money in a fraudulent manner or whether his
dealings with Optional Capital were fraudulent.” United
States v. Real Prop. Located at 475 Martin Lane, 298 F.
App’x 545, 549 (9th Cir. 2008). However, we remanded for
further proceedings regarding certain other properties. Real
Prop. Located at 475 Martin Lane, 545 F.3d at 1146. On
remand, the district court entered summary judgment,
dismissing the Government’s claims on the remaining
properties.1

Throughout the proceedings, the Kim Claimants were
represented by the Law Office of Eric Honig (“Honig”). The
representation agreement between Honig and the Kim
Claimants provided that “[a]ny fees the Court orders the
government to pay for the work that I perform belongs to me
and not to the clients, however I will provide a credit to the
clients towards my fee agreed upon above for any part of my
fee that is paid to me by the government.” After the district
court’s first summary judgment order, the Kim Claimants
moved for an award of attorney’s fees pursuant to the Civil
Asset Forfeiture Reform Act (“CAFRA”). The district court
found that the Kim Claimants were the prevailing parties and

1
With the Government’s claims dismissed, the Kim Claimants litigated
primarily against Optional Capital for ownership of the properties seized
pursuant to the fraud investigation. Ultimately, the Kim Claimants
released their claims to the property to Optional Capital, and the district
court imposed a constructive trust over the seized properties on the
grounds that they had been purchased with funds illegally obtained from
Optional Capital.
8 UNITED STATES V. KIM

entered a substantial award of attorney’s fees against the
Government.

Thereafter, the Government filed tax liens against all of
the Kim Claimants except Se Young Kim and Young Ai Kim.
After the Government filed the tax liens, Honig moved to
intervene in the forfeiture action to protect his interest in the
award. The district court denied the motion. Subsequently,
the Kim Claimants moved for an additional award of
attorney’s fees for the second summary judgment order and
asked that the fees be paid directly to Honig. The district
court granted the award, but declined to award the fees
directly to Honig, because he was not a party to the forfeiture
action.

Honig also filed a wrongful levy action against the
Government. The Government moved to dismiss the
wrongful levy action, arguing that Honig should instead have
intervened in the forfeiture action. Honig then filed a second
motion to intervene in that action, which the district court
granted. The district court also ordered that the attorney’s
fees be paid directly to Honig. The Government appealed the
order. While that appeal was pending, we decided United
States v. $186,416.00, 642 F.3d 753 (9th Cir. 2011)
(“$186,416.00 I”), in which we held that “attorney fees
awarded under CAFRA are payable to the claimant, not to
claimant’s attorney.” Id. at 754. The parties agreed to
remand the case for further proceedings in light of
$186,416.00 I.

In order to protect his contractual interest in the attorney’s
fees, Honig filed a lien against the properties seized by the
Government. In litigation regarding priority of interests in
the seized properties, the district court held that the
 UNITED STATES V. KIM 9

Government admitted that Honig’s lien had priority over the
tax liens. However, with regard to the award of attorney’s
fees, the Government maintained that the fees belonged to the
Kim Claimants, and therefore its tax liens would take priority
over any interest that Honig had in the attorney’s fees awards.
The Government also invoked the Anti-Assignment Act,
31 U.S.C. § 3727, to argue that the assignment of the awards
from the Kim Claimants to Honig was ineffective as against
the United States.2

The district court held that the attorney’s fees awards
could be paid directly to Honig. The district court interpreted
$186,416.00 I to allow for the Kim Claimants to assign an
award of attorney’s fees to Honig. With regard to the Anti-
Assignment Act, the district court held that it did not prevent
the assignment of the attorney’s fees award. The district
court also held that the Government had, effectively, waived
its statutory right to set off the Kim Claimants’ tax liabilities
with the fee awards. The Government was therefore left with
only its tax liens, which it had previously admitted were
inferior in priority to Honig’s interest. The district court
relied on 26 U.S.C. § 6323(b)(8) to hold that an attorney’s
lien had priority over a tax lien. Accordingly, there was no
reason not to pay the fees directly to Honig.

Following the district court’s order, Honig and the Kim
Claimants moved for an additional award for fees incurred in
litigating the ownership of the fees. The Government failed
to respond in the time provided for by the local rules, and the
district court entered an order granting the requested fees.

2
The Government did not invoke the Anti-Assignment Act with respect
to Kim’s parents, Se Young Kim and Young Ai Kim, because no tax liens
were filed against them.
10 UNITED STATES V. KIM

The Government filed a Fed. R. Civ. P. 60(b)(1) motion
contesting the last award, which the district court denied.

The Government now appeals the district court’s order
that the attorney’s fee awards are payable directly to Honig
and the district court’s denial of its Rule 60(b)(1) motion.

DISCUSSION

We review a district court order granting an award of
attorney’s fees for abuse of discretion. See Childress v.
Darby Lumber, Inc., 357 F.3d 1000, 1011 (9th Cir. 2004).
The district court’s “[u]nderlying factual findings are
reviewed for clear error.” Native Vill. of Quinhagak v. United
States, 307 F.3d 1075, 1079 (9th Cir. 2002). “The legal
analysis underlying a fee decision is reviewed de novo.”
Childress, 357 F.3d at 1011.

I. The Government is not Estopped from Asserting the
Anti-Assignment Act

Before reaching the merits of the appeal, we address
Honig’s and the Kim Claimants’ contention that the
Government should be estopped from asserting the Anti-
Assignment Act. We disagree.

Honig and the Kim Claimants argue that the
Government’s shifting litigation positions in the district court
warrant application of the doctrines of equitable and judicial
estoppel. They identify two acts by the Government
warranting judicial estoppel: (1) placing tax liens on the
seized assets after it lost the forfeiture actions; and
(2) opposing Honig’s intervention in the forfeiture
proceedings, only to reverse course on the eve of summary
 UNITED STATES V. KIM 11

judgment in the wrongful levy action and insist that Honig
should have intervened in the forfeiture proceedings.

“Judicial estoppel is an equitable doctrine that precludes
a party from gaining an advantage by asserting one position,
and then later seeking an advantage by taking a clearly
inconsistent position.” Hamilton v. State Farm Fire & Cas.
Co., 270 F.3d 778, 782 (9th Cir. 2001). The doctrine is
intended “to protect against a litigant playing ‘fast and loose
with the courts’ by asserting inconsistent positions.”
Rockwell Int’l Corp. v. Hanford Atomic Metal Trades
Council, 851 F.2d 1208, 1210 (9th Cir. 1988). When
determining whether judicial estoppel is warranted, we look
to three factors: (1) “a party’s later position must be ‘clearly
inconsistent’ with its earlier position”; (2) whether the party
succeeded in its prior position, because “[a]bsent success in
a prior proceeding, a party’s later inconsistent position
introduces no ‘risk of inconsistent court determinations’”; and
(3) “whether the party seeking to assert an inconsistent
position would derive an unfair advantage or impose an
unfair detriment on the opposing party if not estopped.” New
Hampshire v. Maine, 532 U.S. 742, 750–51 (2001) (citations
omitted).

The Government’s decision to pursue tax liens after
losing the forfeiture action is not inconsistent with its initial
decision to seek civil forfeiture of the Kim Claimants’ assets.
Even if the positions were inconsistent, the Government
failed to forfeit the seized assets, so there is no risk of
inconsistent court determinations.

Whether the Government’s shifting positions with regard
to Honig’s right to intervene merit judicial estoppel presents
a closer question. The Government’s positions were clearly
12 UNITED STATES V. KIM

inconsistent, and the Government initially succeeded in
convincing the district court that Honig should not be allowed
to intervene. Honig incurred additional costs from the
Government’s shifting positions, as he was forced to litigate
the wrongful levy action up to summary judgment. Indeed,
the district court strongly chastised the Government for its
actions.3 However, the judicial estoppel doctrine only
prevents the offending party from gaining an unfair advantage
by his litigation tactics. See Hamilton, 270 F.3d at 782. The
propriety of Honig’s intervention is not relevant to the issues
before us, and Honig is in no worse position now than he
would have been had he been allowed to intervene originally
or if he had continued to litigate the wrongful levy action. It
is not clear what benefit the Government has obtained aside
from imposing cost and delay. To the extent that Honig seeks
a general sanction against the Government, we decline to
grant it.

Next, Honig and the Kim Claimants contend that the
Government should be judicially estopped from asserting that
Christopher Kim and Erica Kim are separate entities from
their corporations, because the Government had already

3
The district court noted that the dispute between the Government and
Honig “has been marred by an ever-changing set of arguments advanced
by the Government both on the merits and procedural aspects of Honig’s
request for relief. For example, the Government’s initial response to
Honig’s request for an order establishing his priority was an unequivocal
statement that lien priority is not properly resolved in this Forfeiture
Action. . . . Not surprisingly, that led to more motion work and to the
filing of the separate Wrongful Levy Action. The Government maintained
this position until the Court was on the brink of deciding cross-motions for
summary judgment in the Wrongful Levy Action, at which time it
reversed its position, arguing that the priority issues should be resolved in
the Forfeiture Action instead.”
 UNITED STATES V. KIM 13

proven that the corporations were alter egos of the Kims. The
effect of estopping the Government would be (if all else fails
and only Se Young Kim and Young Ai Kim may receive the
attorney’s fees awards) to increase Honig’s recovery from
two-sevenths to two-fifths of the total award. Honig’s and
the Kim Claimants’ contention is flawed under California
law. They cite to no California authority for the proposition
that, once the veil is pierced, the corporation disappears and
becomes the same entity as its owner. Indeed, California has
rejected “reverse-piercing” actions that hold an alter ego
corporation liable for the actions of its shareholders. See
Postal Instant Press, Inc. v. Kaswa Corp., 77 Cal. Rptr. 3d
96, 102–06 (Cal. Ct. App. 2008). California also allows
corporations to bring alter ego actions against their
shareholders in limited circumstances. See Ahcom, Ltd. v.
Smeding, 623 F.3d 1248, 1251 (9th Cir. 2010) (permitting
alter ego suits by corporations against shareholders in certain
bankruptcy situations). In the absence of California
precedent demonstrating that an alter ego corporation and its
owner are to be treated the same in all respects once the veil
is pierced, the Government’s positions were not inconsistent
and judicial estoppel was not warranted.

Lastly, Honig and the Kim Claimants contend that the
Government’s assertion of the Anti-Assignment Act should
be subject to equitable estoppel based on the Government’s
filing tax liens against the Kim Claimants. To demonstrate
that equitable estoppel is warranted, a party must show:

(1) the party to be estopped knows the facts,
(2) he or she intends that his or her conduct
will be acted on or must so act that the party
invoking estoppel has a right to believe it is so
intended, (3) the party invoking estoppel must
14 UNITED STATES V. KIM

be ignorant of the true facts, and (4) he or she
must detrimentally rely on the former’s
conduct.

United States v. Hemmen, 51 F.3d 883, 892 (9th Cir. 1995).
Additionally, “[w]hen a party seeks to invoke equitable
estoppel against the government [he must show] that the
agency engaged in affirmative conduct going beyond mere
negligence and that the public’s interest will not suffer undue
damage.” Id. (internal quotation marks omitted).

Honig and the Kim Claimaints argue that they litigated
the forfeiture action in reliance on the Government not filing
tax liens, which they assert the Government knew it could
have filed all along. Again, Honig and the Kim Claimants
rely on an “abrupt change of position” from the Government.
United States v. Gamboa-Cardenas, 508 F.3d 491, 504 (9th
Cir. 2007). We are unpersuaded. There is no indication in
the record that Honig and the Kim Claimants relied on any
representation that the Government would not file tax liens
against the Kim Claimants. Even if Honig and the Kim
Claimants had some basis to believe that the Government
would not file tax liens, it is not clear what action they took
in reliance on that belief. The Government brought its civil
forfeiture action, and the Kim Claimants defended it. Honig
and the Kim Claimants cannot even allege that the
Government intended to file tax liens against the Kim
Claimants before or during the time that it pursued the
forfeiture action; they can allege only that the Government
was aware of the possibility that such liens might be filed.
Given that the Kim Claimants were accused of embezzling
tens of millions of dollars into the United States, Honig had
just as much knowledge as the Government that a tax issue
 UNITED STATES V. KIM 15

might arise in the case. Honig’s and the Kim Claimant’s
reliance theory simply does not add up.

We decline to apply judicial or equitable estoppel against
the Government.4 Accordingly, we proceed to the merits of
the appeal.

II. The Anti-Assignment Act Applies to and Voids an
Award of Attorney’s Fees Pursuant to CAFRA

The Government’s primary contention on appeal is that
the Anti-Assignment Act bars the Kim Claimants from
assigning the attorney’s fees awards to Honig. Therefore, the
primary question before us is whether the Anti-Assignment
Act prohibits a claimant from assigning an award of
attorney’s fees under CAFRA to his attorney. We conclude
that it does.

A. The Anti-Assignment Act

Congress enacted the Anti-Assignment Act in its original
form in 1853, primarily as a means “to prevent persons of
influence from buying up claims against the United States,
which might then be improperly urged upon officers of the
Government.” United States v. Aetna Cas. & Sur. Co.,
338 U.S. 366, 373 (1949). The Act was later recodified as
31 U.S.C. § 3727. The Act prohibits the “assignment of any
part of a claim against the United States Government or of an
interest in that claim; or the authorization to receive payment

4
Because we conclude that estoppel is not warranted, we decline to
reach the Government’s argument that it cannot be estopped from
collecting taxes under the Anti-Injunction Act, 26 U.S.C. § 7421.
16 UNITED STATES V. KIM

for any part of the claim,” unless certain conditions are met.
31 U.S.C. § 3727(a)(1)–(2). Those conditions provide that:

An assignment may be made only after a
claim is allowed, the amount of the claim is
decided, and a warrant for payment of the
claim has been issued. The assignment shall
specify the warrant, must be made freely, and
must be attested to by 2 witnesses. The
person making the assignment shall
acknowledge it before an official who may
acknowledge a deed, and the official shall
certify the assignment. The certificate shall
state that the official completely explained the
assignment when it was acknowledged.

Id. § 3727(b). Under the plain terms of the Act, a claim
against the United States may not be assigned to a third party
unless these technical requirements are met. “In effect, the
[Anti-Assignment Act] serves as a defense that the
Government can raise against a claim.” Murkledove v.
Astrue, 635 F.3d 784, 794 (5th Cir. 2011). Indeed, the
Government concedes that it is all but impossible for any
assignment to comply with the strictures of the Anti-
Assignment Act, because the Treasury no longer uses
warrants. Nevertheless, “[i]t is well established . . . that the
Government can waive coverage of the Anti-Assignment
Acts.” Riviera Fin. of Tex., Inc. v. United States, 58 Fed. Cl.
528, 530 (Fed. Cl. 2003).5 Thus, in modern practice, the

5
Because the Government has the broad power to waive the Act, we
reject Honig’s and the Kim Claimants’s contention that the Government
waived the Anti-Assignment Act as to all of the Kim Claimants when it
waived the Act towards Se Young Kim and Young Ai Kim. To determine
 UNITED STATES V. KIM 17

obsolete language of the Anti-Assignment Act means that the
Government has the power to pick and choose which
assignments it will accept and which it will not. Although
this state of affairs may diverge sharply from what Congress
intended when it enacted the Anti-Assignment Act, it is not
for us to rewrite the statute or decline to enforce it (as Honig
urges) simply because circumstances have changed since it
was passed.6 See Xi v. INS, 298 F.3d 832, 839 (9th Cir. 2002)
(“[A] decision to rear-range [sic] or rewrite the statute falls
within the legislative, not the judicial, prerogative.”).

Despite the Anti-Assignment Act’s plain language, the
Supreme Court has carved out equitable exceptions to its
application, noting that the Act “must be interpreted in the
light of its purpose to give protection to the Government. . . .
[A]ssignments may be heeded, at all events in equity, if they
will not frustrate the ends to which the prohibition was

whether the Government has waived the Anti-Assignment Act, we look
to the Government’s “course of conduct” to determine whether “the
Government was aware of, assented to, and recognized the assignments.”
Tuftco Corp. v. United States, 614 F.2d 740, 745 (Ct. Cl. 1980). The
Government must waive the Act in its entirety; it cannot choose to waive
some of its requirements and not others. See Schwartz v. United States,
16 Cl. Ct. 182, 188 (1989). Honig and the Kim Claimants provide no
authority to suggest that the Government must waive the Anti-Assignment
Act towards all claimants in an action, and we have found none.
Accordingly, we reject Honig’s and the Kim Claimant’s assertion that the
Government may not assert the Anti-Assignment Act.
6
We also reject Honig’s contention that the Anti-Assignment Act
offends the separation of powers. Nothing in the Anti-Assignment Act
can be construed as setting conditions on when a court may render a
judgment or when that judgment may be considered final. It is solely a
prohibition on the right of a claimant to assign a claim against the United
States to another.
18 UNITED STATES V. KIM

directed.” Martin v. Nat’l Sur. Co., 300 U.S. 588, 596–97
(1937). For instance, the Anti-Assignment Act will not void
assignments that arise by operation of law, voluntary transfers
by will, or “general assignments for the benefit of creditors.”
United States v. Shannon, 342 U.S. 288, 292 (1952). We
have already noted that the Act’s primary purpose, when it
was originally enacted in the 1850s, was to prevent powerful
persons from buying up faulty claims against the government
and using their sway to get them paid. Aetna Cas. & Sur.
Co., 338 U.S. at 373. Another purpose, more relevant to the
modern context, is “to save to the United States ‘defenses
which it has to claims by an assignor by way of set-off,
counter claim, etc., which might not be applicable to an
assignee.’” Shannon, 342 U.S. at 291–92 (quoting Grace v.
United States, 76 F. Supp. 174, 175 (D. Md. 1948)).

Because neither Honig nor the Kim Claimants contend
that the representation agreement satisfies the Anti-
Assignment Act’s requirements, the sole question is whether
the Act applies to an award of attorney’s fees under CAFRA
at all. To determine whether the Anti-Assignment Act voids
the assignment, we must determine (1) whether an award of
attorney’s fees under CAFRA is “a claim against the United
States”; and, if so, (2) whether the claim “belongs” to Honig
or the Kim Claimants. If the Act does apply and the
assignment is voided, we must then determine what interest,
if any, Honig retains in the awards.
 UNITED STATES V. KIM 19

B. An Award of Attorney’s Fees under CAFRA is a
Claim Against the United States to which the Anti-
Assignment Act Applies

1. A CAFRA Fee Award is a Claim Against the
United States

“What is a claim against the United States is well
understood. It is a right to demand money from the United
States.” Hobbs v. McLean, 117 U.S. 567, 575 (1886). In
determining whether a statutory award of attorney’s fees is “a
claim against the United States,” we note the Supreme
Court’s broad interpretation of the Anti-Assignment Act: “No
language could be broader or more emphatic than these
enactments. The words embrace every claim against the
United States, however arising, of whatever nature it may be,
and wherever and whenever presented.” United States v.
Gillis, 95 U.S. 407, 413 (1877). Consistent with Hobbs, a
claim is defined as “[t]he aggregate of operative facts giving
rise to a right enforceable by a court . . . [t]he assertion of an
existing right; any right to payment or to an equitable remedy,
even if contingent or provisional . . . [a] demand for money,
property, or a legal remedy to which one asserts a right.”
Black’s Law Dictionary 281–82 (9th ed. 2009).

An award of statutory attorney’s fees is, at base, a right to
demand money from the United States. Given the broad
construction we are required to give to the Anti-Assignment
Act, we see no reason to place statutory attorney’s fees
awards beyond the reach of the Act.

Honig and the Kim Claimants urge us to make an
exception to the applicability of the Anti-Assignment Act for
fees awarded under CAFRA. Honig first argues that
20 UNITED STATES V. KIM

forfeiture actions are unique, in that property owners
defending civil forfeiture actions from the government are not
making claims, they are in essence defending a prosecution.
Second, Honig contends that CAFRA is a remedial statute
specifically designed to make property owners whole after a
wrongful forfeiture, and therefore a request for attorney’s fees
should not be considered a claim.

We begin with a discussion of CAFRA. The statute was
enacted in 2000 as remedial legislation after “widespread
criticism” of the previous civil asset forfeiture regime.
United States v. $80,180.00, 303 F.3d 1182, 1184 (9th Cir.
2002). One element of CAFRA’s reforms was to include a
fee-shifting provision which, unlike its predecessor the Equal
Access to Justice Act (“EAJA”), would be mandatory.
28 U.S.C. § 2465(b)(1). CAFRA states, in relevant part, that
“in any civil proceeding to forfeit property . . . in which the
claimant substantially prevails, the United States shall be
liable for reasonable attorney fees and other litigation costs
reasonably incurred by the claimant.” Id. § 2465(b)(1)(A).

To support their assertion that the Anti-Assignment Act
does not reach CAFRA, Honig and the Kim Claimants cite to
several civil asset forfeiture cases in which the court rejected
the government’s assertion of the Anti-Assignment Act. In
United States v. 37.29 Pounds of Semi-Precious Stones, the
district court invalidated a claimant’s assignment of its
interest in various gemstones seized by the government to a
third party, holding that the Anti-Assignment Act barred the
assignment. 7 F.3d 480, 483 (6th Cir. 1993), abrogated on
other grounds by United States v. James Daniel Good Real
Property, 510 U.S. 43 (1993). The Sixth Circuit reversed,
holding that “the Assignment of Claims Act is not applicable
to an assignment of a claim in an in rem forfeiture action. . . .
 UNITED STATES V. KIM 21

The claim assigned to Newport was not a ‘claim upon the
United States, but of an interest in property adverse to the
interest held by the United States.’” Id. at 483–84 (quoting
United States v. Currency Totalling $48,318.08, 609 F.2d
210, 213 (5th Cir. 1980)). The other cases that Honig cites
are substantially similar: in every case the court concluded
that the Anti-Assignment Act does not apply to a purported
assignment of an interest in the assets subject to the forfeiture
proceedings. The Eighth Circuit stated the reasoning behind
this conclusion in United States v. Thirteen Thousand Dollars
in U.S. Currency: the assignor “did not assign a claim against
the United States . . . but rather assigned his ‘interest in the
property adverse to the interest held by the United States.’”
733 F.2d 581, 584 (8th Cir. 1984), (citation omitted)
superseded by statute on other grounds by 21 U.S.C.
§ 881(h); see also Currency Totalling $48,318.08, 609 F.2d
at 213; United States v. $22,993.00, 332 F. Supp. 1277, 1279
(E.D. La. 1971).

The claim asserted here is distinguishable. In this case,
we address the assignment, not of the seized properties
themselves, but of the right to receive an award of attorney’s
fees to be paid out by the United States. The United States
does not, as in Thirteen Thousand Dollars in U.S. Currency,
hold an adverse interest in that award. Thus, a claimant’s
attempt to retrieve their wrongfully seized property is not a
claim against the United States. In contrast, an award of
attorney’s fees represents a right to be paid the United
States’s money, wholly consistent with the definition of a
“claim” in Hobbs.

Honig and the Kim Claimants next argue that the purpose
of CAFRA will be frustrated if an award of attorney’s fees is
considered a claim against the United States or if we do not
22 UNITED STATES V. KIM

find an equitable exception to the Anti-Assignment Act.
Given that the purpose of CAFRA is “to give innocent
property owners the means to recover their property and
make themselves whole,” H.R. Rep. No. 105-358(I), at 27
(1997), Honig and the Kim Claimants argue that applying the
Anti-Assignment Act would prevent claimants from hiring
counsel to contest the wrongful seizure of their assets. This
concern is overstated. If the Anti-Assignment Act applies to
an award of attorney’s fees under CAFRA, it would bar only
the assignment (and thus the right to be paid directly by the
United States) of the award from the claimant to their
counsel. The Anti-Assignment Act does not, and cannot,
prohibit the district court from awarding attorney’s fees to a
prevailing claimant under Section 2465(b)(1)(A).

Nevertheless, the Supreme Court cautions us that, before
we apply the Anti-Assignment Act to CAFRA fee awards, we
should consider whether applying the Act in this context is
consistent with its purposes. Martin, 300 U.S. at 596–97.
We conclude that applying the Anti-Assignment Act to
CAFRA awards is consistent with the purpose of the Act
identified by the Supreme Court in Shannon, which is “to
save to the United States ‘defenses which it has to claims by
an assignor by way of set-off, counter claim, etc., which
might not be applicable to an assignee.’” Shannon, 342 U.S.
at 291–92 (citation omitted). The Supreme Court has
recognized that the Government has the right to offset
statutory attorney’s fees awards against preexisting debts
owed to the United States. See Astrue v. Ratliff, 560 U.S.
586, 589 (2010). Here, the parties ultimately dispute the
Government’s right to offset the Kim Claimants’ tax
liabilities against the CAFRA awards. Therefore, applying
the Anti-Assignment Act to attorney’s fees awards under
CAFRA would further the purposes of the Act.
 UNITED STATES V. KIM 23

The purpose of the Anti-Assignment Act, to preserve
defenses to the United States, does not conflict with CAFRA.
The right of a claimant to be made whole under CAFRA
cannot be taken to mean that the government is forbidden to
offset preexisting debts before it pays out a sum of money to
a claimant. The government has a right to be made whole as
well, and the Anti-Assignment Act allows the government to
balance its obligation to make a CAFRA claimant whole
against that claimant’s debts to the United States. Because
CAFRA attorney’s fees awards are payable to the client, not
to the attorney, as detailed below, the Anti-Assignment Act
ensures that the Government preserves its defenses even
when an attorney is the beneficiary of the fee award.

2. Attorney’s Fees Under CAFRA Belong to the
Client

In determining whether the Anti-Assignment Act applies
in this case, we must decide whether the attorney’s fees
awards “belong” to the Kim Claimants or to Honig. If the
awards belong to and are directly payable to Honig, then the
Anti-Assignment Act will not apply, as no assignment will
have been necessary to place the awards in Honig’s hands.
Honig contends that his right to the fee award arose from the
representation agreement and vested the moment that the Kim
Claimants prevailed against the Government. Honig
interprets our precedent to mean that fee awards are an asset
of the attorney, not the client. Again, the question before us
is not who is ultimately entitled to the fee awards, but
whether that award can be paid directly to the attorney from
the United States.

In Astrue v. Ratliff, the Supreme Court confronted a
similar question: whether an award of attorney’s fees under
24 UNITED STATES V. KIM

the EAJA could be paid directly to the attorney. 560 U.S. at
589. The attorney in Ratliff sought direct payment, because
the government asserted a right to offset the judgment against
the litigant’s preexisting debt. Id. Within the EAJA context,
the Supreme Court held that a “fees award is payable to the
litigant and is therefore subject to a Government offset to
satisfy a pre-existing debt that the litigant owes the United
States.” Id. The Supreme Court so held, even though it
recognized “the practical reality that attorneys are the
beneficiaries and, almost always, the ultimate recipients of
the fees that the statute awards to prevailing parties.” Id. at
598 (alteration and internal quotation marks omitted). We
extended Ratliff to the CAFRA context in $186,416.00 I,
holding that “attorney fees awarded under CAFRA are
payable to the claimant, not to claimant’s attorney.” 642 F.3d
at 754. We further observed that “[d]irect payment to the
attorney is the exception, not the rule. . . . Unless the statute
specifies payment to the litigant’s attorney, payment to the
attorney is not assumed.” Id. at 756. There is no language in
CAFRA providing for direct payment of a fee award to the
attorney.

Honig and the Kim Claimants rely on pre-Ratliff cases to
argue that the fee awards should be paid directly to Honig.
The primary case they rely upon is U.S. ex rel Virani v. Jerry
M. Lewis Truck Parts & Equip., Inc., 89 F.3d 574 (9th Cir.
1996). In that case (a qui tam action where fees were
awarded under the False Claims Act), we determined that
“the fee is for the attorney and the attorney should receive it,”
that is, the fees should be paid directly to the attorney. Id. at
578. We left no doubt there: a fee award “must be directed to
the attorney. Were the rule otherwise, plaintiffs would obtain
possession of fee awards, and attorneys would be left to
attempt to obtain the money paid for their services as best
 UNITED STATES V. KIM 25

they could.” Id. at 579. Honig also cites to Marre v. United
States, where the Fifth Circuit squarely held that the
government could not set off an award of fees to the client’s
attorney against the client’s tax liability, because the fee
belongs to the attorney.7 117 F.3d 297, 304 (5th Cir. 1997).

However, the reasoning in these cases does not survive
Ratliff. In Virani, we recognized that the language of the
False Claims Act provided that attorney’s fees awards were
to be paid to the clients, but interpreted this language to mean
that a client had only the “power” to decide whether to seek
fees or not. 89 F.3d at 576–79. In Ratliff, the Supreme Court
interpreted the text of the EAJA, providing that fees are to be
awarded to the prevailing party, to mean that an award of
attorney’s fees was to be paid directly to the party and not to
the attorney. 560 U.S. at 592–93. Ratliff arrived at this
holding in the same posture as Marre: whether the fee was
paid directly to the attorney or not affected the government’s
right to use the fee award to offset a preexisting liability. Id.
at 590–91. The Supreme Court in Ratliff recognized that it
was overturning circuit precedent that provided for direct
payment of fee awards under the EAJA to attorneys. Id.
Accordingly, Ratliff abrogated Virani,8 and we are bound by

7
Notably, the Fifth Circuit’s reasoning was motivated in part by a
recognition that, if the attorney’s ownership of the fees derived from an
assignment, that interest would be voided by the Anti-Assignment Act.
Marre, 117 F.3d at 305.
8
“As a three-judge panel of this circuit, we are bound by prior panel
decisions . . . and can only reexamine them when their ‘reasoning or
theory’ of that authority is ‘clearly irreconciliable’ with the reasoning or
theory of intervening higher authority.” Rodriguez v. AT&T Mobility
Servs. LLC, 728 F.3d 975, 979 (9th Cir. 2013) (quoting Miller v. Gammie,
335 F.3d 889, 893 (9th Cir. 2003) (en banc)). “It is not enough for there
26 UNITED STATES V. KIM

our holding in $186,416.00 I that “attorney fees awarded
under CAFRA are payable to the claimant, not to claimant’s
attorney.” 642 F.3d at 754.

Honig and the Kim Claimants’ final argument that the
fees should be paid directly to Honig depends upon language
in United States v. $186,416.00 that “fees may be directed to
an attorney on account of a contractual assignment, even
when the attorney has no statutory right to collect fees
directly.” 722 F.3d 1173, 1175 (9th Cir. 2013) (“$186,416.00
II”). However, in that case, the government had waived its
rights under the Anti-Assignment Act. Id. at 1176 n.1.
$186,416.00 II did not reach this question: whether a
contractual assignment of an attorney’s fees award can
survive after the government invokes its rights under the
Anti-Assignment Act. Because an award of attorney’s fees
under CAFRA is “a claim against the United States” and the
fees are payable directly to the Kim Claimants, the Anti-
Assignment Act applies to the assignment in this case. The
remaining question is the scope of the Anti-Assignment Act
and what rights, if any, Honig retains in the fee awards.

to be ‘some tension’ between the intervening higher authority and prior
circuit precedent, or for the intervening higher authority to ‘cast doubt’ on
prior circuit precedent. The intervening higher precedent must be ‘clearly
inconsistent’ with the prior circuit precedent.” Lair v. Bullock, 697 F.3d
1200, 1207 (9th Cir. 2012) (citations omitted) (quoting United States v.
Delgado-Ramos, 635 F.3d 1237, 1239 (9th Cir. 2011) and United States
v. Orm Hieng, 679 F.3d 1131, 1140–41 (9th Cir. 2012)). We are unable
to reconcile Virani with Ratliff under even this demanding standard.
 UNITED STATES V. KIM 27

C. The Anti-Assignment Act Voids the Assignment of
the Fee Awards, but Honig Retains an Attorney’s
Lien in the Proceeds

The plain language of the Anti-Assignment Act compels
the conclusion that the purported assignment of the Kim
Claimants’ attorney’s fees awards to Honig is void. The Act
states that “[a]n assignment may be made only after” the
laundry list of requirements has been met. 31 U.S.C.
§ 3727(b). It is undisputed that the Kim Claimants and Honig
failed to abide by the Anti-Assignment Act. Because it
applies to the assignment at issue in this case, that assignment
is void. Therefore, the award of attorney’s fees must be paid
to the Kim Claimants, and not to Honig.

Cases interpreting the Anti-Assignment Act over its long
history have been unequivocal: the Act, where it applies, is a
total bar on the assignment of claims against the United
States. In United States v. Gillis, the Supreme Court held that
assignments that ran afoul of the Anti-Assignment Act “were
made void by the statute.” 95 U.S. at 415. Failure to comply
with the Act renders an “assignment ‘null and void as against
the United States.’” Northrop Grumman Computing Sys.,
Inc. v. United States, 709 F.3d 1107, 1113 (Fed. Cir. 2013).
However, voiding the assignment is the extent of the Act’s
reach; applying the Act “leaves the claim where it was before
the purported assignment.” Colonial Navigation Co. v.
United States, 181 F. Supp. 237, 240 (Ct. Cl. 1960). The
underlying agreement is untouched, only the assignment is
voided. See Murkledove, 635 F.3d at 794. Thus, although the
assignment is voided by the Anti-Assignment Act, there is
nothing in the Act to prevent Honig from obtaining an interest
in the attorney’s fees awards through another mechanism.
28 UNITED STATES V. KIM

Under California law, Honig obtained an attorney’s lien
against the CAFRA attorney’s fees awards. “In California, an
attorney’s lien is created only by contract—either by an
express provision in the attorney fee contract or by
implication where the retainer agreement provides that the
attorney is to look to the judgment for payment for legal
services rendered.” Carroll v. Interstate Brands Corp.,
121 Cal. Rptr. 2d 532, 534 (Ct. App. 2002) (citations
omitted). “An attorney’s contractual lien is created and takes
effect when the fee agreement is executed.” Waltrip v.
Kimberlin, 79 Cal. Rptr. 3d 460, 465 (Ct. App. 2008). “A
contractual lien for attorney fees is a secret lien; no notice is
required before it is effective against a judgment creditor who
levies on the judgment.” Id. The language of the fee
agreement in this case states that a fee award under CAFRA
belongs to Honig. This language is likely sufficient under
California law to give rise to a lien in the attorney’s fees
awards for Honig’s benefit. The Government concedes that
Honig likely obtained a lien in the fee awards as a matter of
California law. The Government argues, however, that the
Anti-Assignment Act reaches beyond the assignments at issue
and voids any interest that Honig might have in the awards,
at least as against the United States, leaving the
Government’s tax liens with priority over all other interests.

The Government relies primarily on two Supreme Court
cases for its expansive view of the Anti-Assignment Act’s
scope. In Nutt v. Knut, the Supreme Court held that a clause
in a contract “making the payment of the attorney’s
compensation a lien upon the claim asserted against the
government” was “null and void upon its face.” 200 U.S. 12,
20 (1906). However, the Supreme Court declined to reverse
the state court judgment in favor of the attorney, holding that
the contract “created a legal obligation upon the part of the
 UNITED STATES V. KIM 29

[client] which, if not recognized after collection of the
money, could have been enforced by suit for the benefit of the
attorney, without doing violence to the statute or to the public
policy established by its provisions.” Id. at 21. At most,
voiding the clause in the contract meant that the “agreement
did not give the attorney any interest or share in the claim
itself, nor any interest in the particular money paid over to the
claimant by the government.” Id. That said, the Supreme
Court in Nutt did not confront the issue here: the contract “did
not assume to give [the attorney] any lien upon the claim, or
any priority in the distribution of the money . . . . Indeed, no
lien is asserted by the plaintiff in his pleadings.” Id.

Nutt was followed by the second Supreme Court case
relied upon by the Government, Calhoun v. Massie, 253 U.S.
170 (1920). In Calhoun, the Supreme Court held that the
Anti-Assignment Act voided “[t]he provision in the contract
sued on purporting to give a lien upon any warrant issued.”
Id. at 175. This was the only line in Calhoun that pertained
to the Anti-Assignment Act, the rest of the case was devoted
to a statute limiting contingency fee agreements for Civil War
claims. Id. Other cases have followed Nutt and Calhoun to
hold that attorneys may not take a contingency interest in or
a lien against claims against the United States. See United
States v. Transocean Air Lines, Inc., 386 F.2d 79, 82 (5th Cir.
1967) (“A contingent fee in a judgment against the United
States is an assignment subject to the Anti-assignment Act.”);
Kearney v. United States, 285 F.2d 797, 800 (Ct. Cl. 1961)
(“[A] contract between an attorney and a client which gives
the attorney an interest in the client’s claim against the
Government is exactly what the anti-assignment statute
forbids.”); Pittman v. United States, 116 F. Supp. 576, 580
(Ct. Cl. 1953) (holding that Nutt “stands for the broad
principle that any attempt to impress a lien upon the proceeds
30 UNITED STATES V. KIM

of a claim against the United States as security for the
payment of an attorney’s fee is within the ends to which the
prohibition of [the Act] was aimed.”).

However, Honig is not asserting a right akin to a
contingency fee in the awards, which could be voided by
operation of the Anti-Assignment Act. His lien against the
awards arose from the representation agreement by operation
of California law. The Government’s cited precedents stand
for a narrow proposition: an assignee may not stand in the
shoes of the assignor and seek payment directly from the
United States. In all of the cases cited, the attorney was
seeking direct payment from the United States, and thus stood
in the shoes of the assignor. See Transocean Air Lines, Inc.,
386 F.2d at 81; Kearney, 285 F.2d at 799; Pittman, 116 F.
Supp. at 577; see also Shannon, 342 U.S. at 290–91; Aetna
Cas. & Sur. Co., 338 U.S. at 369; Gillis, 95 U.S. at 411.
Calhoun reinforces this interpretation of the Anti-Assignment
Act. Calhoun stated only that the Anti-Assignment Act
prohibited the creation of a lien on the warrant. 253 U.S. at
175. The warrant, at that time, was not the proceeds of a
claim against the United States but the right to be paid
directly from the Treasury. See Black’s Law Dictionary 1724
(9th ed. 2009) (defining “treasury warrant” as “[a]n order in
the form of a check on which government disbursements are
paid”). Notably, the predecessor to the Anti-Assignment Act
stated only that a claim allowed by Congress “shall not . . . be
paid to any person or persons other than the claimant or
claimants.” Act of July 29, 1846, ch. 66, 9 Stat. 41. From the
beginning, then, the Anti-Assignment Act has been concerned
with direct payment of claims.

Subsequent to Nutt and Calhoun, the Supreme Court
relaxed the harsh strictures of the Anti-Assignment Act. In
 UNITED STATES V. KIM 31

Martin, the Court confirmed that the Anti-Assignment Act
reaches only the initial payment from the Treasury, holding
that “[a]n assignment ineffective at law may none the less
amount to the creation of an equitable lien when the subject
matter of the assignment has been reduced to possession and
is in the hands of the assignor.” Martin, 300 U.S. at 597.
This interpretation is consistent with the Act’s purposes. The
United States has no need to worry about fraud or any of the
other evils associated with the assignment of claims against
it once the proceeds of the claim have been reduced to the
possession of the purported assignor. The key purpose of the
act in this case, “to save to the United States ‘defenses which
it has to claims by an assignor . . . which might not be
applicable to an assignee,’” Shannon, 342 U.S. at 291–92
(citation omitted), is not implicated when the proceeds of the
claim have already been paid out. By the time the CAFRA
awards have been paid to the Kim Claimants, as they must,
the Government has had every opportunity to assert any
defenses that it had against the Kim Claimants. Adopting the
Government’s position would transform the Anti-Assignment
Act from its core purpose as a defense that the Government
may assert to claims against the United States, see
Murkledove, 635 F.3d at 794, to a far reaching mechanism
that the Government can use to interfere with the private
arrangements of a claimant solely because the claimant has
come into possession of federal moneys.

The circumstances of this case illustrate why the Anti-
Assignment Act should be so circumscribed. The
Government urges us to extend the Anti-Assignment Act to
invalidate all interests that Honig has in the attorney’s fees
awards that he earned, because such an interpretation is
necessary to protect the Government’s ability to collect taxes.
However, the Government had an opportunity to protect its
32 UNITED STATES V. KIM

ability to collect taxes in this case and will have that ability in
the future. Nothing in our opinion today impinges upon the
Government’s statutory right to offset an award of attorney’s
fees against a claimant’s tax liabilities. The Government in
this case simply waived its right to do so, and now seeks to
stretch the Anti-Assignment Act beyond all recognition to
rescue it from its litigation decision. Having waived the right
to set off the attorney’s fees awards, the Government must
rely on its tax liens against the Kim Claimants, and it is free
to enforce them. But in doing so, the Government will have
to contend with Honig’s attorney’s lien.

Because the Anti-Assignment Act applies to void the
assignment in the representation agreement between the Kim
Claimants and Honig, we vacate the district court’s order
awarding attorney’s fees directly to Honig. We remand for
further proceedings, including determining the priority of
liens in the awards.9

CONCLUSION

The Government also appeals the district court’s order
denying its Rule 60(b)(1) motion. “A district court’s denial
of relief from a final judgment, order, or proceeding under

9
The Government’s position as to lien priority if the Anti-Assignment
Act does not apply is not clear. In a footnote in its brief, the Government
concedes that, if the Anti-Assignment Act does not bar the assignment,
Honig’s interest is superior to the Government’s tax lien. However, in the
same footnote the Government cites to a later page in its brief asserting
that its admission with regard to lien priority in the properties does not
carry over to the attorney’s fees awards. We remand for further
proceedings, because the Government’s position is unclear, and the
Government did not anticipate our holding that Honig’s interest in the fee
awards could survive the Anti-Assignment Act.
 UNITED STATES V. KIM 33

Federal Rule of Procedure 60(b) is reviewed for abuse of
discretion.” Lemoge v. United States, 587 F.3d 1188,
1191–92 (9th Cir. 2009). Honig and the Kim Claimants agree
that, if we were to conclude that the Anti-Assignment Act
applies, that the additional awards at issue in the Rule
60(b)(1) motion must also be vacated. In light of our
conclusion that the Anti-Assignment Act applies to an award
of attorney’s fees under CAFRA, we vacate the district
court’s post-judgment orders awarding additional fees and
remand for further proceedings.

The parties are to bear their own costs on appeal.

VACATED AND REMANDED.