Gidner v. JPMorgan Chase Bank N.A. (In re Gidner)
| Decision Date | 11 October 2013 |
| Docket Number | CASE NO. 13-31303-BJH,ADV. PROC. NO. 13-03138-BJH |
| Parties | IN RE: JOHN GIDNER, Debtor. JOHN GIDNER, Plaintiff, v. JPMORGAN CHASE BANK N.A., RAYMOND JAMES AND ASSOCIATES, INC., and UNITED STATES OF AMERICA, Defendants. |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Northern District of Texas |
The following constitutes the ruling of the court and has the force and effect therein described.
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Before the Court is the Motion to Dismiss Based on Failure to State a Claim Upon Which Relief May Be Granted (the "Motion") [Dkt. No. 8] filed by defendant the United States of America ("U.S."). Although the U.S. filed the Motion with reference to Fed. R. Civ. P. 12(b)(6), as incorporated by Fed. R. Bankr. P. 7012, each party submitted supplemental materials to this Court. Accordingly, at the hearing held on August 21, 2013 (the "Hearing"), the parties and the Court agreed that the Motion is more properly treated as a motion for summary judgment under Fed. R. Civ. P. 56, as incorporated by Fed. R. Bankr. P. 7056. At the conclusion of the Hearing, the Court requested supplemental briefs from the parties on several issues. By agreement of the parties, the last of these briefs was filed on September 18, 2013, and the Motion is now ripe for ruling. For the reasons set forth in detail below, the Motion is granted.
In deciding a motion for summary judgment, a court must determine whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Bankr. P. 7056 (incorporating Fed. R. Civ. P. 56). In deciding whether a fact issue has been raised, the facts and inferences to be drawn from the evidence must be viewed in the light most favorable to the non-moving party. Berquist v. Washington Mut. Bank, 500 F.3d 344, 349 (5th Cir. 2007). A court's role at the summary judgment stage is not to weigh the evidence or determine the truth of the matter, but rather to determine only whether a genuine issue of material fact exists for trial. Peel & Co., Inc. v. The Rug Market, 238 F.3d 391, 394 (5th Cir. 2001) () (citing Reeves v. Sanderson Plumbing Prods, Inc., 530 U.S. 133, 135 (2000)); see also U.S. v. An Article of Food Consisting of 345/50 Pounds Bags, 622 F.2d 768, 773 (5th Cir. 1980) (). While courts must consider the evidence with all reasonable inferences in the light most favorable to the non-movant, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. V. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Pylant v. Hartford Life and Acc. Ins. Co., 497 F.3d 536, 538 (5th Cir. 2007) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
After the movant has presented a properly supported motion for summary judgment, the burden then shifts to the nonmoving party to show with "significant probative evidence" that there exists a genuine issue of material fact. Hamilton v. Segue Software Inc., 232 F.3d 473, 477 (5th Cir. 2000) (internal citation omitted). However, where "the burden at trial [as to the material fact at issue] rests on the non-movant, the movant must merely demonstrate an absence of evidentiary support in the record for the non-movant's case." Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 174 (5th Cir. 2000) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
On January 16, 2002, the U.S. obtained a judgment against Deborah C. Gidner (then Deborah C. Ingleman ("Ingleman")) in criminal case number 3:01-CR-268-01, U.S. District Court, Northern District of Texas, Dallas Division (the "District Court"). U.S. App. 00001-00005 [Dkt. 10-1] (the "Criminal Judgment"). Included within the Criminal Judgment is asection titled "Special Conditions of Supervision," which requires Ingleman to pay restitution in the amount of $174,567 pursuant to the Mandatory Victim Restitution Act of 1996 (the "MVRA"). U.S. App. 00004 [Dkt. 10-1]. The U.S. filed a notice of lien regarding the Criminal Judgment in the Dallas County Clerk's Office on March 25, 2002. U.S. App. 00001-00002 [Dkt. 21-1]. On December 31, 2008, after plaintiff John Gidner ("Gidner") and Ingleman were married, the U.S. filed a second notice of lien regarding the Criminal Judgment with the Dallas County Clerk's Office to reflect Ingleman's married name (Deborah C. Gidner). U.S. App. 00003-00004 [Dkt. 21-1]. The two notices are collectively referred to herein as the "Lien Notice."
The U.S. filed an application for Writ of Garnishment against Ingleman on May 22, 2012, seeking to garnish Ingleman's property as payment for the debt owing under the Criminal Judgment. See Order, Case 12-cv-01597-B, Dkt. 43, at 1-2 (the "Order Denying New Trial") [Dkt. 19-2]. The District Court issued an Order for Issuance of Writ of Garnishment on August 30, 2012, and then issued a Writ of Garnishment on each of Edward D. Jones & Co. LP,1 JPMorgan Chase Bank, N.A. ("Chase"), and Raymond James Financial Services, Inc. ("RJFS"). The Writs of Garnishment were answered by the relevant garnishees in early October 2012. Id. at 2. Chase answered the writ stating that it held one checking account in Gidner's name. U.S. App. 00012-00015 [Dkt. 10-1]. RJFS answered stating that it held two IRA accounts and one retail brokerage account in Gidner's name. U.S. App. 00016-00020 [Dkt. 10-1].
On October 26, 2012, Gidner filed an Objection to the Writ of Garnishment and Request for Hearing, requesting a hearing pursuant to 28 U.S.C. § 3205(c)(5) and alleging that hepersonally owes no debt to the U.S. and that the garnished bank accounts are his separate property. Gidner App. 008-009 [Dkt. 18-1].
On March 7, 2013, without further hearing, the District Court entered a Final Order of Garnishment ordering that: (1) Chase pay to the U.S. all funds held in Chase Checking Account No. X4533, and (2) that RJFS and James Financial Services, Inc. liquidate to the extent necessary and pay to the U.S. one-half of IRA Acct. No. X8280, one-half of IRA Acct. No. X3008, and one-half of Retail Brokerage Acct. No. X1329. U.S. App. 00022-00023 [Dkt. 10-1]. The funds ordered to be paid to the U.S. pursuant to the Final Order of Garnishment are referred to herein as the "Garnished Funds."
Prior to payment of the Garnished Funds, however, Gidner filed for relief under Chapter 7 of the Bankruptcy Code on March 11, 2013 (the "Bankruptcy Petition Date"), which commenced the case styled In re Gidner, 13-31303-BJH (the "Bankruptcy Case"). In his Schedule C, Gidner lists the funds held by Chase, RJFS, and James Financial Services, Inc. as exempt. Bankr. Case No. 13-31303, Dkt. No. 17, p. 7.
Gidner then filed a Motion for New Trial with the District Court on April 3, 2013, arguing that the District Court was statutorily required to hold the hearing requested by Gidner pursuant to 28 U.S.C. § 3205(c). See Order Denying New Trial [Dkt. 19-2] at 2. Gidner's motion was denied by the District Court on June 26, 2013. Id. In its Order Denying New Trial, the District Court found that Gidner had not made an objection within the scope of 28 U.S.C. § 3205(c)(5), nor had he followed proper procedure, so the mandatory hearing requirement was never implicated. Id. at 6-7. As of the date of this Memorandum Opinion and Order, the District Court's Final Order of Garnishment and Order Denying New Trial are on appeal to the Fifth Circuit Court of Appeals. See U.S. v. John Gidner, Case No. 13-10798.
Gidner filed his Plaintiff's Original Complaint (the "Complaint") [Dkt. 1] on June 18, 2013, seeking the following relief:2
Count I - Avoidance of Lien Pursuant to § 522(f), seeking to avoid any lien alleged against Garnished Funds claimed as exempt on Gidner's Schedule C;
Count II - Avoidance of Preferential Transfer Pursuant to 11 U.S.C. § 547;
Count IV - Declaratory Relief, specifically a declaration that "[p]ursuant to §522(c) of the Code, property exempted in this case pursuant to which a garnishment lien was avoided, is not liable during or after the case for any debt of the Debtor that arose, or that is determined under §502 of the Code as if such debt had arisen, before the commencement of the case;" and
Count V - Recovery of Attorneys' Fees.4
The U.S. responded to the Complaint by filing the Motion on July 24, 2013 [Dkt. 8]. In the Motion, the U.S. alleges that: (1) the prepetition entry of the Final Order of Garnishment divested Gidner of any interest he held in the Garnished Funds for exemption purposes, and (2) it held a perfected lien in the Garnished Funds since September 28, 2012,5 which is outside the reach-back period found in 11 U.S.C. § 547 and makes both 11 U.S.C. §§ 544 and 547 inapplicable to the facts here.
III. ISSUES PRESENTED
An order of restitution made pursuant to the MVRA "is a lien in favor of the United States on all property and rights to property of the person fined as if the liability of the...
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