United States v. Berry
| Decision Date | 28 February 2020 |
| Docket Number | No. 19-20050,19-20050 |
| Citation | 951 F.3d 632 |
| Parties | UNITED STATES of America, Plaintiff - Appellee v. Gwendolyn BERRY, also known as Gwen Berry, Defendant - Appellant Michael Berry, Appellant |
| Court | U.S. Court of Appeals — Fifth Circuit |
Karen Lansden, Carmen Castillo Mitchell, Assistant U.S. Attorney, U.S. Attorney's Office, Southern District of Texas, Houston, TX, for Plaintiff - Appellee.
Wendell A. Odom, Jr., Esq., General Counsel, Brian Thomas Hobson, Odom & Davis Law Office, Houston, TX, R. Trent Gaither, Gaither Law Firm, Houston, TX, for Appellant.
Michael Martin Essmyer, Sr., Esq., Essmyer Law Firm, Houston, TX, for Defendant - Appellant.
Before HIGGINBOTHAM, JONES, and DUNCAN, Circuit Judges.
Michael and Gwendolyn Berry appeal a final order of garnishment under the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3613, and 28 U.S.C. § 3205, contending that investment retirement accounts in Michael's name are not yet subject to restitution for Gwendolyn's crime victims and, alternatively, that no more than a quarter such funds can be garnished. We conclude that half the funds—around $1 million—may be garnished now and AFFIRM.
Gwendolyn Berry pled guilty and was convicted of wire fraud, mail fraud, and falsifying a tax return, all in connection with the ongoing theft of funds from her employers. As part of her sentence, she was ordered to pay restitution of more than $2 million.
To enforce the judgment, the government applied under 18 U.S.C. § 3613 and 28 U.S.C. § 3205 for a writ of garnishment directed to "Vanguard Marketing Corp. and/or The Vanguard Group" ("Vanguard"). The government sought to garnish five investment retirement accounts ("IRAs") held under Gwendolyn's or her husband's name. After Gwendolyn agreed to release the funds in the accounts in her name, the government reapplied to garnish Vanguard for 50% of the funds in two accounts in Michael's name. The district court granted the writ.
Michael and Gwendolyn each objected and moved to quash. After a hearing, the district court denied those motions and denied the Berrys' motion to reconsider. In January 2019, the district court issued a final order of garnishment requiring Vanguard to liquidate certain accounts held in Michael's name and pay half of their holdings, approximately $1 million, to the government. Michael and Gwendolyn each timely appealed and sought a stay of enforcement of garnishment pending appeal. The district court granted the motion to stay. This court separated this case from Gwendolyn's appeal of her criminal conviction.1
This court "review[s] garnishment orders for abuse of discretion." United States v. Tilford , 810 F.3d 370, 371 (5th Cir. 2016). We review "interpretation[s] of relevant statutory provisions ... de novo ." Id.
In MVRA, federal law provides for restitution to victims of federal crimes and affixes a lien on a defendant's property and rights to property to secure such restitution. Thus, 18 U.S.C. § 3613(a) states:
Federal law creates the lien, but state law defines the property interests to which the lien attaches. United States v. Elashi , 789 F.3d 547, 548–49 (5th Cir. 2015) (citing United States v. Rodgers, 461 U.S. 677, 683, 103 S. Ct. 2132, 2137, 76 L.Ed.2d 236 (1983) ).
The Berrys raise arguments grounded in both federal and state law to urge that Michael's IRAs are not part of "all property or rights to property of the person fined."2 As a fallback, they maintain that, if Michael's IRAs are part of Gwendolyn's "property or rights to property," the provisions of § 303 of the Consumer Credit Protection Act cap how much the government may garnish from them.3 We take these arguments in turn.
Relying on the federal tax code's treatment of IRAs, the Berrys first deny that any non-defendant spouse's IRA can be part of a defendant spouse's "property or rights to property" under 18 U.S.C. § 3613. Binding precedent is against them.
In United States v. Loftis , 607 F.3d 173 (5th Cir. 2010), this court stated:
The Mandatory Victims Restitution Act makes a restitution order enforceable to the same extent as a tax lien. 18 U.S.C. § 3613(c). Consequently, the district court also correctly held that the government could garnish Todd's [the defendant's] one-half interest in any community property solely managed by Lisa, including her retirement savings account. Id. at 179 n.7 (citation omitted).
Based in part on this analysis, the court affirmed the restitution order of the district court. Id. at 179–80. That is, the Loftis court affirmed a restitution order garnishing an IRA solely managed by a non-defendant spouse. See United States v. Loftis , No. 3:06-CV-1633-P, 2007 WL 9711722, at *4 n.3 (N.D. Tex. Sept. 28, 2007).
Failing to mention Loftis until a footnote in Michael's reply brief, the Berrys contend both that Michael's IRA is a species of federal property that preempts Gwendolyn's state law community property rights and that an anti-alienation provision for IRAs also prevents Gwendolyn from gaining access to Michael's IRAs. Either way, they contend, Gwendolyn has no present rights in Michael's IRAs, and his accounts are not (yet) subject to § 3613 -based garnishment for her crimes.
Both interpretations, however, fail to take account of the "notwithstanding" clause of § 3613(a) and conflicting authority. The Berrys cite no law exempting 26 U.S.C. § 408, which governs IRAs, from being an "other Federal law" expressly subject to the MVRA regime. The Berrys analogize to ERISA law, represented by their reliance on Boggs v. Boggs, 520 U.S. 833, 117 S. Ct. 1754, 138 L.Ed.2d 45 (1997), but ERISA has no direct application to IRAs. In any event, this court has held that notwithstanding its anti-alienation provision, 29 U.S.C. § 1056(d)(1), ERISA retirement accounts are subject to MVRA restitution awards. United States v. DeCay, 620 F.3d 534, 541 (5th Cir. 2010).
Equally fatal to the Berrys' interpretation of Michael's IRAs is that it contradicts the interpretation adopted in Loftis , and "a later panel of this court cannot overrule an earlier panel decision." Hill v. Carroll County , 587 F.3d 230, 237 (5th Cir. 2009). Michael counters that "[t]his Court's opinion in Loftis did not address the issues now presented for review." Under our rule of orderliness, though, an earlier panel decision binds even if that panel's opinion does not explicitly address arguments presented to the later panel. See Legendre v. Huntington Ingalls, Inc. , 885 F.3d 398, 403 (5th Cir. 2018). Accordingly, pursuant to Loftis , Gwendolyn's one-half interest in Michael's solely managed IRA is part of "all property and rights to property of the [spouse] fined" under § 3613.4
Turning to state law, the Berrys deny that Michael's IRAs are "solely managed" community property. Instead, they contend that the IRAs are Michael's separate property and, as such, not part of Gwendolyn's "property or rights to property" subject to garnishment under § 3613. We disagree.
The Berrys initially quibble5 about which state law applies. They propose Pennsylvania law because Michael's agreement with Vanguard includes a choice-of-law provision designating Pennsylvania law. The Berrys waive their proposal, though, by citing no authority to show that a custodial agreement determines what law governs the marital property rights of a non-party to that agreement. L & A Contracting Co. v. S. Concrete Servs., Inc. , 17 F.3d 106, 113 (5th Cir. 1994) (). In general, the law of the debtor's domicile state defines the property interests to which a judgment lien may attach. Compare Elashi , 789 at 548–49, with Rodgers , 461 U.S. at 683, 103 S. Ct. at 2137, and United States v. Mitchell , 403 U.S. 190, 190, 91 S. Ct. 1763, 1765, 29 L.Ed.2d 406 (1971). Thus, the relevant law is that of Gwendolyn's domicile state, Texas.
In Texas, the "separate property" of one spouse is not the community property of both spouses, TEX. FAM. CODE ANN. § 3.002 (West), and spouses may designate "separate property" by written agreement, signed by both parties, id. §§ 4.102, 4.104. In 2006, when Michael rolled over his ERISA account into an IRA, Gwendolyn signed the rollover document, acknowledging that she thereby waived her right to survivorship that federal law guaranteed her on the ERISA account. The Berrys contend that this document, signed by both spouses, constitutes a valid agreement to make the resulting IRAs Michael's separate property.6
Texas law runs contrary, however. "Absent a specific reference to a partition or language indicating that such a division was intended, Texas courts have refused to uphold transactions between spouses as partitions." Byrnes v. Byrnes , 19 S.W.3d 556, 559 (Tex. App. 2000) ; accord McPhee v. I.R.S. , No. CIV.A. 300CV2028D, 2002 WL 31045978, at *2 (N.D. Tex. Sept. 10, 2002). Further, "[t]he term ‘partition’ as used in [§ 4.102] contemplates a division of property among the parties, not a complete forfeiture or assignment." Byrnes , 19 S.W.3d at 559. Gwendolyn's waiver of a right to survivorship, however, included no specific reference to partition or language indicating such a division, and at the same time, her waiver of a right to survivorship was entire. The waiver was not a partition.
More broadly, "[p]roperty possessed by either spouse during ... marriage is presumed to be community property," ...
To continue reading
Request your trial
-
United States v. Swenson
...have addressed this issue) have expressly and uniformly adopted the framework set forth in the tax-lien cases. See United States v. Berry , 951 F.3d 632, 635 (5th Cir. 2020) (citing case law from the tax lien context in support of the proposition that though "[f]ederal law creates the lien,......
-
United States v. Clark
...government to garnish assets held in a retirement account, including an IRA, to satisfy a restitution order. See United States v. Berry , 951 F.3d 632, 636 (5th Cir. 2020). But we have not decided whether retirement account assets otherwise subject to garnishment may qualify as "salary, wag......
-
United States v. Egubuchunam
...... from Defendant Egubuchunam is the MVRA, 18 U.S.C. §. 3663A, which “provides for restitution to victims of. federal crimes and affixes a lien on a defendant's. property and rights to property to secure such. restitution.” United States v. Berry , 951 F.3d. 632, 635 (5th Cir. 2020). Under the MVRA, the Government has. authority to enforce a judgment that imposes a fine, and this. authority extends to orders of restitution and special. assessment fines. United States v. Onyeri , 996 F.3d. 274, 283 n.7 (5th ......
-
In re Estate of Tillotson, 05-19-01192-CV
...After Hoyl filed her brief here, the Fifth Circuit issued its opinion affirming the trial court's ruling in Berry. United States v. Berry, 951 F.3d 632, 636 (5th Cir. 2020). Thomas argues that Berry is inapplicable here because it does not address section 408(a), which states that IRAs are ......