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Click here for the full text of this decision FACTS:J. Stephen Nail is the sole shareholder and president of Intervest, an S corporation that manages several properties subsidized through HUD’s Farmer’s Home Administration. Intervest submitted monthly payment vouchers to HUD, which contained certificates indicating that each unit subject to the subsidy was in a “decent, safe, and sanitary condition.” In 1998, the government filed a False Claims Act suit against Nail and Intervest, saying the properties were not as Nail and Intervest described them, but a district court dismissed the case, finding HUD had been aware of the condition of the units when it made payment, and that any false certifications were immaterial. In January 2002, HUD debarred Nail and Intervest for failing to maintain two Mississippi properties in proper condition. During the three-year debarment, Nail and Intervest were to maintain the properties with private funds. Nail and Intervest immediately filed a declaratory judgment action that HUD’s debarment was illegal. The district court entered summary judgment for Nail and Intervest, finding HUD’s decision to be “arbitrary and capricious.” Intervest then filed an application for recovery of fees and costs under the Equal Access to Justice Act. Nail did not join because his net worth made him ineligible. The district court agreed that the EAJA created a presumption that Intervest, as a prevailing party, would be entitled to attorneys’ fees since HUD’s action lacked a substantial justification. However, the district court found that it was Nail who was the real party in interest, and that Intervest was merely Nail’s alter ego. The district court reached this conclusion by reasoning that since Intervest was an S corporation, all of its income passes through to its shareholders (Nail) for tax purposes. As only real parties in interest can recover under the EAJA, the district court denied Intervest’s request for attorneys’ fees. HOLDING:Reversed in part; vacated in part. The court finds that the district court erred in adopting the real-party-in-interest test. The court notes that Intervest falls within the definition of “party” in 2412(d)(2)(B)(ii) of the EAJA in that it is a corporation whose net worth did not exceed $7 million and employed fewer than 500 people at the time the civil action was filed. The court declines to follow a D.C. U.S. Circuit Court of Appeals case that adopted the real-party-in-interest test because the court finds the statute precisely defines the term “party.” There is no ambiguity in the statute that would warrant looking beyond the plain language. “It is certainly true that Congress was concerned that large entities capable of purchasing legal services might inappropriately recover fees and costs under the EAJA. That concern is precisely why it included in the EAJA the net-worth and employee-number limitations. If Congress had wanted to incorporate a real party in interest test into the EAJA’s definition of a”party,’ then it could have done so. Nowhere does Congress limit the EAJA’s application to corporations whose shareholders individually are eligible for an award of fees and costs under the EAJA.” The court then finds that the district court did not conduct the required analysis for determinations of whether HUD’s debarment decision lacked substantial justification and so remands for that analysis. OPINION:Jolly, J.; Garwood, Jolly and Barksdale, JJ.

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