U.S. v. George

• Decision Date: 16 May 2001
• Docket Number: No. CV 97-6226(NG)(MDG).,CV 97-6226(NG)(MDG).
• Citation: 144 F.Supp.2d 161
• Parties: UNITED STATES of America, Plaintiff, v. Cheryl GEORGE, Defendant.
• Court: U.S. District Court — Eastern District of New York

144 F.Supp.2d 161

UNITED STATES of America, Plaintiff, v. Cheryl GEORGE, Defendant.

No. CV 97-6226(NG)(MDG).

United States District Court, E.D. New York.

May 16, 2001.

Francis E. Mullen, Mullen & Jannarone, PC., Smithtown, NY, for plaintiff.

ORDER

GERSHON, District Judge.

The unopposed Report and Recommendation of Magistrate Judge Marilyn Dolan Go dated April 6, 2001, is adopted in its entirety. The Clerk of Court is directed to amend the amount of the Judgment entered on June 11, 1998 to the total sum of $2,775.54. Plaintiff is entitled to recover from defendant Cheryl Y. George indebtedness of $1,453.93, plus a statutory 10% surcharge of $145.39, and any additional statutory interest on those amounts accruing after April 30, 2001.

Plaintiff's application for an order of garnishment is granted as modified in accordance with the Report and Recommendation of Judge Go. The court has signed a Garnishee Order in the amount of 10% of defendant's net disposable weekly earnings. Payments shall continue to be made until the debt to the plaintiff set forth in this Order has been paid in full or as otherwise provided in the Garnishee Order.

SO ORDERED.

REPORT AND RECOMMENDATION

GERSHON, United States Magistrate Judge.

The application of plaintiff United States of America for an order of garnishment of defendant Cheryl Y. George's wages to satisfy a judgment entered herein has been referred to me by the Honorable Nina Gershon for report and recommendation.

PROCEDURAL BACKGROUND

By complaint dated October 27, 1997, the plaintiff sought to recover amounts due on student loans on which defendant had allegedly defaulted (court document ("ct. doc.") 1). On June 11, 1998, this court (Gershon, J.) issued a default judgment for the sum of $3,041.53, plus interest at the legal rate in effect on the date of the judgment (ct.doc. 6).

On June 20, 2000, plaintiff applied for a writ of garnishment, serving the writ on defendant and her employer, the New York State Commission of Human Rights. (ct.docs.7, 8). The New York State Commission of Human Rights ("garnishee") responded by confirming that defendant was within its employ, and that she had pre-tax earnings of $41,332.00 (ct.doc. 9). Defendant responded on approximately July 17, 2000 by returning the Clerk's Notice of Post Judgment Garnishment with the box on that form checked to request a hearing. By Order dated October 2, 2000, Judge Gershon referred plaintiff's application for an order of garnishment and all other post-judgment matters to me (ct.doc. 11).

By Order dated November 29, 2000, in response to defendant's request, this Court set a hearing date of December 15, 2000 (ct.doc. 12). The notice of hearing was sent to defendant by mail at the same address as the other papers in this matter (to which defendant responded by requesting a hearing). Defendant failed to appear at the hearing and did not request rescheduling, or otherwise respond to the writ and order which had been served on her (ct. doc 13).

DISCUSSION

Defendant has not challenged the judgment entered against her nor presented any argument that any portion of her earnings is properly exempt from garnishment. Thus, the only issue to be determined is the appropriate percentage of her wages that may be garnished.

Plaintiff seeks an order permitting garnishment of 25% of defendant's disposable wages, relying on the provisions of the Federal Debt Collection Procedures Act ("FDCPA"), 28 U.S.C. § 3205(a) et seq., which permits a court to garnish up to 25% of nonexempt disposable earnings in order to repay a consumer debt. See 28 U.S.C. § 3002(9). However, the provisions of the FDCPA are not controlling in this case. In 1991, Congress amended the Higher Education Act of 1965 ("HEA") to authorize the Secretary of Education or guaranty agencies to collect a defaulted student loan by administrative garnishment of up to 10% of the defaulter's disposable pay. See Higher Education Technical Amendments of 1991, Pub.L. 102-26; 137 Cong. Rec. S7291-02, S7369; 20 U.S.C. § 1095a.

Specifically, 20 U.S.C. § 1095a provides:

a) Garnishment requirements:

Notwithstanding any provision of State law, a guaranty agency, or the Secretary in the case of loans made, insured or guaranteed under this subchapter ... that are held by the Secretary, may garnish the disposable pay of an individual to collect the amount owed by the individual, if he or she is not currently making required repayment under a repayment agreement with the Secretary, or in the case of a loan guaranteed under part B of this subchapter on which the guaranty agency received reimbursement from the Secretary under section 1078(c) of this title, with the guaranty agency holding the loan, as appropriate, provided that — (1) the amount deducted for any pay period may not exceed 10 percent of disposable pay....

Under the statute, disposable pay is defined as that part of earnings remaining after all deductions required by law have been withheld. 20 U.S.C. § 1095a(d). Thus, the HEA authorizes garnishment of up to 10% of disposable pay, not the 25% requested by plaintiff.

Courts addressing the question of the proper amount of garnishment for repayment of student loans have all held that the more specific limitation in the HEA should govern federally guaranteed student loans, rather than other more general limitations on garnishment expressed in other federal statutes such as the FDCPA. See United States v. Reid, 2000 WL 264334 (E.D.N.Y. January 21, 2000) (ILG), reconsid. denied, United States v. Reid, 2000 WL 1843291 (E.D.N.Y. Oct. 31, 2000);¹ Green v. Kentucky Higher Education Assistance Authority, 78 F.Supp.2d 1259, 1264-65 (S.D.Ala.1999).

Further, even if the FDCPA were applied here, contrary to plaintiff's position, a 25% garnishment of disposable income (as opposed to any lesser amount) is not mandatory, and the court may properly consider the circumstances of this individual garnishee. Under the FDCPA, 28 U.S.C.A. § 3205(a) states that "[a] court may issue a writ of garnishment against property (including nonexempt disposable earnings) in which the debtor has a substantial nonexempt interest" (emphasis added). Nothing in that language mandates a garnishment of a particular amount.

Moreover, 28 U.S.C. § 3002(9) defines "nonexempt disposable earnings" under the FDCPA as "25 percent of disposable earnings, subject to section 303 of the Consumer Credit Protection Act."² Section 303 of the Consumer Protection Act, 15 U.S.C. § 1673(a), which 3002(9) explicitly references, in turn provides in relevant part:

(a) Maximum allowable garnishment

Except as provided in subsection (b) of this section and in section 1675 of this title, the maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed

(1) 25 per centum of his disposable earnings for that week.

Thus, nothing in the FDCPA states that 25% of nonexempt disposable income is the mandatory amount of any federal garnishment under the FDCPA; rather, all the pertinent statutory language indicates that 25% is a maximum figure. Common sense dictates the same result. Cf. United States v. Kaye, 93 F.Supp.2d 196, 198 (D.Conn.2000) (holding in context of garnishment for purposes of restitution that court had ability to consider circumstances of individual defendant and award federal garnishment of nonexempt disposable earnings of less than 25%).

I have reviewed the documents relating to defendant's earnings and am familiar with living expenses in the areas in which she resides and works. Taking this information into account, as well as the legal background against which the claim is made, including New York State's limitation on garnishment under equivalent circumstances of 10% of gross income set out in C.P.L.R. § 5231(b), I respectfully recommend entry of an order of garnishment of 10% of plaintiff's disposable pay.

As set out above, the HEA defines "disposable pay" as "that part of the compensation of any individual from an employer remaining after the deduction of any amounts required by law to be withheld." 20 U.S.C. § 1095a(d); cf. 28 U.S.C. § 3002(5) (FDCPA defines disposable wages in virtually identical manner). In light of this definition, I further recommend that defendant's "disposable pay" subject to garnishment be determined based on her current pay, minus deductions required by law, without any alteration in defendant's current exemptions.

I also recommend that the amount of the judgment be amended. In its initial application for a default judgment, the United States sought and received a statutory surcharge of 10% on the entire debt pursuant to 28 U.S.C. § 3011, to cover attorney's fees, calculated as of the date of that judgment. However, that statute provides in pertinent part that:

(a) In an action or proceeding under Subchapter B or C, and subject to subsection (b), the United States is entitled to recover a surcharge of 10 percent of the amount of the debt in connection with the recovery of the debt, to cover the cost of processing and the handling of litigation and enforcement under this chapter of the claim for such debt.

Under the plain language of § 3011, the government is not entitled to the surcharge as of the date of judgment. Instead, the provision permits recovery of the surcharge only when the government has either sought prejudgment remedies of attachment, receivership, garnishment or sequestration governed under subchapter B, or engaged in post-judgment enforcement proceedings under subchapter C of the Act.³ United States v. Sackett, 114 F.3d 1050 (10th Cir.1997); United States v. Maldonado, 867 F.Supp. 1184, 1199 (S.D.N.Y.1994); Rendleman v. Shalala, 864 F.Supp. 1007, 1013 (D.Or.1994); United States v. Smith, 862 F.Supp. 257, 263 (D.Haw.1994); United States v. Mauldin, 805 F.Supp. 35, 36 (N.D.Ala.1992). However, although plaintiff was not entitled to the surcharge as of the date of the judgment in June,...