          UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS


                                          NO . 00-2454

                               CHARLES F. CYCHOLL, APPELLANT ,

                                                V.


                                   ANTHONY J. PRINCIPI,
                         SECRETARY OF VETERANS AFFAIRS, APPELLEE.


                  On Appellant's Application for Attorney Fees and Expenses


                                (Decided December 19, 2001 )



       R. Edward Bates, of Naperville, Illinois, was on the pleadings for the appellant.

        Tim S. McClain, General Counsel; Ron Garvin, Assistant General Counsel; Michael A.
Leonard, Deputy Assistant General Counsel; and Christine M. Cote, all of Washington, D.C., were
on the pleadings for the appellee.

       Before HOLDAWAY, IVERS, and STEINBERG, Judges.

       STEINBERG, Judge, filed the opinion of the Court. HOLDAWAY, Judge, and IVERS,
Judge, filed separate concurring opinions.

       STEINBERG, Judge: The appellant, veteran Charles F. Cycholl, previously appealed through
counsel a November 29, 2000, decision of the Board of Veterans' Appeals (Board or BVA) that had
denied a Department of Veterans Affairs (VA) rating of total disability based on individual
unemployability (TDIU). On March 21, 2001, the Court vacated that Board decision and remanded
the matter for readjudication. Currently pending before the Court is the appellant's application,
timely filed through counsel, for attorney fees under the Equal Access to Justice Act, 28 U.S.C.
§ 2412(d) (EAJA). The Secretary has filed a response in opposition to the application. For the
reasons that follow, the Court will grant the EAJA application.
                                      I. Relevant Background
        On November 29, 2000, the Board determined that the veteran was not entitled to a TDIU
rating. On December 27, 2000, the appellant filed, through counsel, a Notice of Appeal. On
March 5, 2001, the Secretary filed the Designation of the Record and, on March 8, 2001, the
Secretary filed an unopposed motion for a remand. The basis for the Secretary's motion was the need
for the Board to address in its decision the potential applicability of the Veterans Claims Assistance
Act of 2000, Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000) (VCAA), which had been enacted
prior to the issuance of the BVA decision. On March 22, 2001, the Court, in an unpublished order
issued by the Clerk of the Court, granted the Secretary's motion.
        On April 16, 2001, the appellant filed through counsel the pending EAJA application seeking
$2,956.87 in attorney fees. On June 21, 2001, the Secretary filed a response to the appellant's
application; the Secretary asserts, alternatively, that the appellant is not a prevailing party entitled
to EAJA fees and that the position of the Secretary was substantially justified.


                                             II. Analysis
        "The Court has jurisdiction to award reasonable attorney fees and expenses pursuant to
28 U.S.C. § 2412(d)(2)(F)." Cullens v. Gober, 14 Vet.App. 234, 237 (2001) (en banc). The
appellant's April 16, 2001, EAJA application was filed within the 30-day EAJA application period
set forth in 28 U.S.C. § 2412(d)(1)(B) and satisfied any EAJA jurisdictional content requirements
that apply, because the application contained the following: (1) A showing that, by virtue of the
Court's remand, he is a prevailing party within the meaning of the EAJA; (2) a showing that he is
a party eligible for an award under the EAJA because his net worth does not exceed $2,000,000; (3)
an allegation that the position of the Secretary was not substantially justified; and (4) an itemized
fee statement. See 28 U.S.C. § 2412(d)(1)(A), (1)(B), (2)(B); Thayer v. Principi, 15 Vet.App. 204,
207 (2001); Cullens, supra; Bazalo v. Brown, 9 Vet.App. 304, 308 (1996), rev'd on other grounds
sub nom. Bazalo v. West, 150 F.3d 1380, 1384 (Fed. Cir. 1998) (holding that "statement that
[appellant] is a prevailing 'party' satisfies eligibility requirement for jurisdictional purposes").




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                                     A. Prevailing-Party Status
       As noted above, in order to be eligible for fees pursuant to the EAJA an applicant must have
been a "prevailing party". 28 U.S.C. § 2412(d)(1)(A); see Cullens, supra; see also Buckhannon
Board & Care Home v. W.V. Dep't of Health and Human Res., 121 S. Ct. 1835, 1839 (2001)
(defining "prevailing party" in fee-shifting statutes at issue in that case as requiring that applicant
have obtained some form of "judicially sanctioned change in the legal relationship of the parties" and
thus precluding the use of the "catalyst theory" to show "prevailing party" status); Sumner v.
Principi, 15 Vet.App. 256, 260-61 (2001) (en banc); Thayer v. Principi, 15 Vet.App. 204 (2001)
(applying in EAJA context Buckhannon definition of "prevailing party" so as to preclude use of
"catalyst theory" to show EAJA eligibility in this Court). In Sumner, the Court recently held that "a
remand does not constitute 'some relief on the merits' unless that remand is predicated upon
administrative error" and then held that no such remand had occurred there because neither one of
the criteria for finding such a remand were met – that is, "nowhere in his motion did the Secretary
acknowledge error, and because, alternatively, in remanding the matter, the Court did not recognize
administrative error". Id. at 265. In this case, the Secretary argues that the appellant is not a
prevailing party for EAJA purposes because "the remand ordered here was the result of the newly
enacted legislation found in the VCAA". Secretary's Response (Resp.) at 5. He also asserts that "the
Court remanded based solely on the change in law as reflected in the VCAA." Ibid. That is not the
point; no one disputes that the remand was due to the enactment of the VCAA. The question,
however, is whether either of the Sumner criteria were met for finding a remand "predicated upon
administrative error", Sumner, supra. Here, as concluded below, both criteria were satisfied.
       In the Secretary's unopposed motion for a remand, which was the basis for the Clerk's order
vacating the Board decision on appeal and remanding the matter, the Secretary noted, in the first
three sentences, that the VCAA's enactment on a date that was 20 days before the November 29,
2000, BVA decision on appeal; stated that "[t]he BVA's decision in the instant case was made on
the basis of chapter 51's previous requirements" and that the VCAA had "substantially amended the
provisions of chapter 51"; and noted that "the new statutory requirements", which had not been
addressed in the BVA decision, "must be addressed first by the BVA". March 8, 2000, Motion
(Mot.) at 1-3. He then proposed: "Remand for readjudication in light of the VCAA is required. See


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Karnas v. Derwinski, 1 Vet.App. 308, 313 (1991) (where the law or regulation changes after a claim
has been filed or reopened but before the administrative or judicial-appeal process has been
concluded, the version mo[re] favorable to the appellant should apply)." Mot. at 2 (emphasis added).
       The Board is required to consider, and discuss in its decision, all "potentially applicable"
provisions of law and regulation. Schafrath v. Derwinski, 1 Vet.App. 589, 593 (1991); see 38 U.S.C.
§ 7104(a); Weaver v. Principi, 14 Vet.App. 301, 302 (2001) (per curiam order); Sanden v. Derwinski,
2 Vet.App. 97, 100 (1992). Also, the Board must include in its decision a written statement of the
reasons or bases for its findings and conclusions on all material issues of fact and law presented on
the record; the statement must be adequate to enable an appellant to understand the precise basis for
the Board's decision, as well as to facilitate review in this Court. See 38 U.S.C. § 7104(d)(1); Allday
v. Brown, 7 Vet.App. 517, 527 (1995); Gilbert v. Derwinski, 1 Vet.App. 49, 57 (1990). In a nearly
identical factual situation, this Court concluded as follows:
       The Board's decision here, issued after the November 9, 2000, enactment of the
       VCAA, fails to mention the new statute or to indicate whether the Board considered
       if the appellant, in light of the VCAA, is entitled to additional notification or
       assistance from VA prior to adjudication of her claim. For these reasons, we hold
       that the Board failed to adequately consider "all . . . applicable provisions of law" and
       to provide an adequate statement of the reasons or bases for its decision. See
       38 U.S.C. § 7104(a).

Weaver, supra. In view of the foregoing adjudicative requirements, here, just as the Court held in
Weaver, the Board unquestionably violated 38 U.S.C. § 7104(a) and (d)(1) in failing to address the
potentially applicable law (i.e., the VCAA) that had been enacted and became effective while the
veteran's claim was pending before the Board. See Karnas, supra; see also Allday, Sanden,
Schafrath, and Gilbert, all supra. Thus, the Secretary correctly argued in his motion for remand that
"readjudication in light of the VCAA [wa]s required" under Karnas, and also correctly cited to
Gilbert, supra, and section 7104(d)(1). Mot. at 2. Accordingly, both of the Sumner alternative
criteria for determining whether a remand was "predicated on administrative error" were met in this
case. First, the Secretary's motion for remand for "readjudication in light of the VCAA" in direct
reliance on Karnas, supra, was an "acknowledg[ment]" of the Board's "administrative error",
Sumner, supra, in not addressing a change in law that had occurred "before the administrative . . .
process ha[d] been concluded", Mot. at 2; see also Karnas, 1 Vet.App. at 313. Second, similarly,

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by granting that motion, the Court "recognize[d] administrative error", Sumner, supra. See Stephens
v. West, 12 Vet.App. 115, 117-18 (1999) (where Court granted joint motion for remand, "it is the
Court's order remanding the claim, and consequently the language of the joint motion, upon which
an evaluation of the basis for the remand must focus"). The Secretary's motion for remand and the
Court's action to vacate the Board decision at issue were therefore predicated on the Board's
adjudicative error in having failed to comply with the statutory requirements set forth in section
7104(a) and (d)(1) because the "change in law" cited by the Secretary, the enactment of the VCAA,
had already occurred when the Board issued the decision that had been appealed to this Court.
          The Secretary's argument against prevailing-party status on the ground that readjudication
was required due "solely [to] . . . the change in law as reflected in the VCAA" (Resp. at 5) confuses
what transpired in this case with the situation described in Vaughn v. Principi, __ Vet.App. ___, ___,
2001 WL 1402452, at *3 (Nov. 9, 2001). In Vaughn, in an appeal involving a BVA decision issued
before the VCAA's enactment on November 9, 2000, the Court held that the appellant was precluded
from achieving prevailing-party status "based on obtaining a remand solely for readjudication in light
of the enactment of the VCAA". The critical distinction between Vaughn and the instant case is that
the Board decision in Vaughn predated the enactment of the VCAA, whereas the Board decision in
this case postdated such enactment. As the Court stated in Vaughn, "[g]iven that the sole basis for
the remand was the enactment of the VCAA and that the Board's disposition of this case occurred
before the enactment of the VCAA, there could not have been any Board error with respect to the
VCAA." Id. at ___, 2001 WL 1402452, at *2. By contrast, where the Board's disposition of a case
occurs after the enactment of the VCAA, there can, in fact, be Board error with respect to a failure
to address the VCAA. We thus hold, under this Court's binding precedent, that the remand in this
case, which was predicated on adjudicative error by the BVA, affords the appellant prevailing-party
status.
                                     B. Substantial Justification
          This Court will award attorney fees to a prevailing party "unless the [C]ourt finds that the
position of the United States was substantially justified". 28 U.S.C. § 2412(d)(1)(A); Swiney v.
Gober, 14 Vet.App. 65, 70 (2000); Stillwell v. Brown, 6 Vet.App. 291, 301 (1994). In order to avoid
the payment of attorney fees and expenses, the Secretary bears the burden of demonstrating that his


                                                   5
position was substantially justified at both the adjudicative (BVA) and litigation (Court) stages. See
Locher v. Brown, 9 Vet.App. 535, 537 (1996). This Court applies the following standard for
determining whether the Secretary's position was substantially justified:
       VA must demonstrate the reasonableness, in law and fact, of the position of . . . VA
       in a matter before the Court, and of the action or failure to act by . . . VA in a matter
       before . . . VA, based upon the totality of the circumstances, including merits,
       conduct, reasons given, and consistency with judicial precedent and VA policy with
       respect to such position, and action or failure to act, as reflected in the record on
       appeal and the filings of the parties before the Court.
Stillwell, 6 Vet.App. at 302-03. The Secretary argues that his position was substantially justified
because "[t]he basis for the remand . . . involved the Court's recent decision in Holliday v. Principi,
14 Vet.App. 280 [, 286, mot. for recons. denied, 14 Vet.App. 327 (per curiam order), mot. for full
Court review denied, 15 Vet.App. 21 (2001) (en banc order)], which . . . [held that all provisions of
the VCAA are potentially applicable to claims pending on the date of the VCAA's enactment and
which] was issued by this Court during the pendency of the [a]ppellant's appeal [to this Court] of the
Board's underlying decision." Resp. at 12. We conclude that the Secretary has not carried his burden
of demonstrating that his position was substantially justified.
       Perhaps the most fundamental reason why we must reject the Secretary's contention is our
holding in part II.A., above, that the Court's remand was predicated on administrative error because
the Secretary's motion acknowledged, and the Court recognized by granting that motion, the Board's
error under Karnas in not addressing the VCAA in a BVA decision postdating the VCAA's
enactment. Because Karnas was, in November 2000, a very well-established precedent, having been
issued over 10 years before, the Secretary cannot justify a Board error in failing to apply Karnas.
See ZP v. Brown, 8 Vet.App. 303, 304 (1995) (per curiam order) (Secretary's position at
administrative stage not substantially justified in failing to comply with applicable Court opinion
"long after" its issuance, in that case about 20 months earlier); Elcyzyn v. Brown, 7 Vet.App. 170,
176 (1996) (same as to BVA decision issued 5 months after applicable Court opinion).
       Moreover, on November 27, 2000, prior to the BVA decision on appeal, the VA General
Counsel issued a precedent opinion that concluded "that all of the [VCAA]'s provisions apply to
claims filed on or after November 9, 2000, as well as to claims filed before then but not finally
decided as of that date." VA Gen. Coun. Prec. 11-00 (Nov. 27, 2000) [hereinafter G.C. Prec. 11-00].

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Under section 7104(c) of title 38, the Board is bound by, inter alia, "the precedent opinions of the
chief legal officer of the Department." See 38 U.S.C. § 311 (General Counsel is VA's "chief legal
officer"); Herlehy v. Principi, 15 Vet.App. 33, 34 (2001) (per curiam order) (citing section 7104(c)
for proposition that "Board is bound by VA General Counsel precedential opinions"). Because the
November 29, 2000, Board decision in this case failed to discuss the applicability of the VCAA to
this claim, and because the Board was bound by G.C. Prec. 11-00, which concluded that the VCAA
was applicable to such claims, the Board failed to abide by section 7104(c). Furthermore, the
Board's failure to follow section 7104(c) and G.C. Prec. 11-00 constituted a failure to "consider[]
. . . [all] applicable provisions of law", as required by 38 U.S.C. § 7104(a), and also rendered
inadequate the Board's statement of reasons or bases. See ZP, supra (Court awarded EAJA fees and
expenses upon finding Secretary's position at administrative stage not substantially justified where
Court on merits had vacated BVA decision on appeal based on Board's failure to provide adequate
statement of reasons or bases pursuant to 38 U.S.C. § 7104(d)(1) for the Board's denial of rating-
increase claim, and Court cited, inter alia, Gilbert, supra, which had been decided over nine months
before Board decision vacated by the Court); see also Elcyzyn, supra (to same effect).
       Although the remand motion granted by the Court cited to the Court's post-BVA-decision
opinion in Holliday, 14 Vet.App. at 286, for the principle "that all provisions of the VCAA are
potentially applicable to claims pending on the date of the VCAA's enactment" (Mot. at 2), Karnas,
as our foregoing discussion concludes, clearly required a remand when the law changed while a case
was pending before the Board, whereas Holliday concerned a situation where the BVA decision had
predated the VCAA. In the instant case, the BVA decision postdated the enactment of the VCAA,
and remand was necessitated by the Board's failure to comply with 38 U.S.C. § 7104(a), (c), and
(d)(1) and well-established Court precedent, see Herlehy, Sanden, Karnas, and Gilbert, all supra,
by addressing the applicability of the new law enacted in the VCAA prior to the Board decision. The
instant case is therefore indistinguishable from ZP and Elcyzyn. Furthermore, the Secretary's
argument based on Holliday ignores the Board's failure to abide by section 7104(c) and G.C. Prec.
11-00. Finally, given the General Counsel's BVA-binding precedential opinion about VCAA general
applicability, the Board was obliged, at the time of its decision here, to address whether the VCAA's
change of the law regarding the Secretary's duty to notify (in 38 U.S.C. § 5103) and duty to assist


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(in 38 U.S.C. § 5103A, superceding section 5107(a)) was more favorable to the appellant than the
pre-VCAA law on those matters. See Karnas, supra.
        Therefore, we hold that the Secretary has failed to carry his burden of demonstrating that his
position at the administrative stage was substantially justified when the Board failed to comply with
the existing statutory requirements of sections 7104(a), (c), and (d)(1). See Swiney, Locher, Stillwell,
and Karnas, all supra. The Court thus need not address the justification for the Secretary's position
at the litigation stage, and will grant the appellant's EAJA application in the amount requested. See
Elcyzyn, supra.


                                           III. Conclusion
        Upon consideration of the foregoing analysis and the pleadings of the parties, the Court
grants the appellant's EAJA application in the amount of $2,956.87.
        APPLICATION GRANTED.


        HOLDAWAY, Judge, concurring: I concur with both the principal opinion and also the
views expressed by Judge Ivers.
        I, however, am not prepared to say that the "failure" of the Board to discuss the VCAA will,
in all cases, automatically constitute a lack of substantial justification. When that law was passed,
this Court struggled for a time with its full implications. We resolved this by remanding most cases
even though we recognized there were cases where the applicability of the VCAA was problematic.
We should not require the Board to be prescient as a condition precedent of being "substantially
justified." If the Secretary offers a defense of substantial justification in a case where the Board
"failed" to discuss the VCAA, I, for one, will carefully consider the arguments in the context of the
facts of the particular case.


        IVERS, Judge, concurring: The administrative error in this case, upon which the remand was
predicated, was patent. The Board's decision post-dated the effective date of the VCAA, so failure
to address the applicability of the VCAA was clearly administrative error. Furthermore, the
Secretary moved for a remand because the Board did not address the VCAA with respect to the


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appellant's claim for TDIU. As is pointed out in the opinion, had the Board's decision pre-dated the
enactment of the VCAA, see, e.g., Vaughn v. Principi, __ Vet.App. __, No. 00-1534 (Nov. 9, 2001),
failure to address the VCAA would, of course, not have been administrative error.
       When, as in this matter, administrative error is facially apparent, the Secretary acknowledges
the error in a motion for remand, and the Court orders a remand based on the acknowledged
administrative error, the appellant can be recognized as a prevailing party under the rule pronounced
in Sumner v. Principi, 15 Vet.App. 256 (2001). The Court did not in this decision, and should not
in future decisions, strive to read into a Secretary's motion for remand, or into the pleadings
generally, an admission of administrative error. The administrative error, whether admitted by the
Secretary or not, should be clear before it can be the basis of the Court's determinations concerning
an EAJA application.




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