Abex Corporation v. Ski's Enterprises, Inc. And United States of America v. Walton Shim and Sandra Shim

The government appeals the award of attorney fees to private parties in an inter-pleader action. The issue presented is whether the Equal Access to Justice Act, 28 U.S.C. § 2412 , authorizes an award of attorney fees to an interpleader party out of the interpleader fund before satisfaction of preexisting federal tax liens. We reverse.

I.

Abex Corporation contracted with the State of Hawaii for construction of loading bridges at the Honolulu Airport. Abex hired Ski’s Enterprises to do related installation work in August 1978. After partial completion of the work, Abex owed Ski’s approximately $14,000.

The government and other creditors of Ski’s claimed the amount in various portions. The total of all claims exceeded the amount owed to Ski’s which prompted Abex to file an interpleader action seeking discharge of the debt and attorney fees.

The government answered, claiming Ski’s owed about $18,000 in taxes from the first quarter of 1978 and that the government’s tax lien priority entitled it to the whole fund. The parties stipulated that the government’s liens were superior. A stipulation was entered to keep the fund open.

In February, 1980, the parties entered an agreement…