United States v. Cluck, 5-95-CR-099(1)-DAE
| Decision Date | 18 September 2018 |
| Docket Number | 5-95-CR-099(1)-DAE |
| Parties | UNITED STATES OF AMERICA Plaintiff, v. EDWARD "JACK" CLUCK Defendant. AND KRISTINE ARLITT Third Party-In-Interest |
| Court | U.S. District Court — Western District of Texas |
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This Report and Recommendation concerns several filings related to the Government's efforts to collect on order of restitution. Specifically, at issue are the following: the Petition to Foreclose Lien filed by Plaintiff United States of America, Dkt. No. 403; the Motion to Dismiss the Petition Under Fed. R. Civ. P. 12(b)(6) filed by Third Party-in-Interest Kristine Arlitt, Dkt. No. 405; the Motion to Dismiss Counterclaim filed by Counter-Defendant United States of America, Dkt. No. 408; and the Motion to Strike Kristine Arlitt's Original Answer filed by the United States of America, Dkt. No. 416. These matters were referred to the undersigned pursuant to Rules CV-72 and 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. The Court has jurisdiction pursuant to 18 U.S.C. § 3231,1 and the undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). This matter is suitable for disposition without a hearing. See Local Rule CV-7(h).
For the reasons discussed below, it is recommended that the District Court DENY Arlitt's Motion to Dismiss, Dkt. No. 405. It is further recommended that the District Court GRANT the Government's Motion to Dismiss Arlitt's Counterclaim, Dkt. No. 408. It is finally recommended that the District Court DENY the Government's Motion to Strike Arlitt's Original Answer, Dkt. No. 416.
On January 16, 1997, a jury found Defendant Elwood Cluck guilty on seven counts in connection with charges of bankruptcy fraud. See Dkt. No. 218. Cluck received a 24-month prison sentence. Id. He was also ordered to pay $185,000 in restitution. Id. The trial court entered judgment against Cluck on May 28, 1997. Id. Upon entry of judgment, the Government asserts, a lien pursuant to 18 U.S.C. § 3613(c) arose against all of Cluck's property rights. Pet. ¶ 6. The Government alleges it perfected the lien by recording notice of it in the Official Records of Bexar County, Texas on August 8, 1997. Id. ¶ 8.
Cluck unsuccessfully sought to vacate his conviction and restitution obligation on several occasions. See, e.g., Dkt. Nos. 381, 383 & 386. Although the Government has not provided the Court with Cluck's release date, all parties appear to concede that Cluck was released from prison on May 28, 1997. See Dkt. No. 405 at 4; Dkt. No. 407 at 2.
Prior to Cluck's conviction, Third Party-in-Interest Kristine Arlitt filed for divorce from Cluck. On May 2, 1996, the Bexar County District Court entered a Decree of Divorce, dissolving the marriage between Cluck and Arlitt. Pet. ¶ 10 & Ex. A. The court, however, declined to divide the marital estate at that time because Cluck was a debtor in a bankruptcy proceeding, and the court determined that the bankruptcy stay had been lifted as to the divorce only. Id.
On May 11, 1999—almost two years after the trial court entered judgment against Cluck—the Bexar County District Court divided Cluck and Arlitt's marital property. Pet. ¶ 11 & Ex. B. The Final Divorce Decree awarded Arlitt various property including the following items in her sole personal possession: furniture, fixtures, goods, clothing, jewelry, personal effects, cash, as well as life insurance policies, certain tax refunds, and a 1992 Chrysler Lebaron. Id. The Final Divorce Decree, however, was the subject of a subsequent appeal that resulted in reversal and remand. Pursuant to the remand, on June 6, 2003, the Bexar County District Court entered a Revised Final Decree of Divorce (After Appeal), which awarded Arlitt, in addition to the aforementioned property, a one-half interest in unimproved land in Liberty County, Texas, as well as a .0975% interest in oil, gas, and minerals below 351 acres in McMullen County, Texas. Pet. ¶ 12 & Ex. C.
The Government asserts, and Arlitt does not dispute, that Cluck died in April 2017. See Dkt. No. 405 at 4.
On January 30, 2018, over 20 years after the trial court sentenced Cluck, the Government filed the instant Petition to Foreclose Lien, naming Arlitt as a Third Party-in-Interest. See Pet. The Government seeks to foreclose on the aforementioned Liberty County real property as well as on the McMullen County mineral interests. The Government also seeks to foreclose on the following items of personal property: a credenza, a blue leather chair, a safe, and a desk. According to the Government, Arlitt testified while serving as defense counsel in United States v. Andrew Maxwell Parker, No. 5-08-cr-292-FB-1 (W.D. Tex. filed Apr. 30, 2008), and stated in that testimony that these personal effects, which the Government discovered when conducting an inspection of a storage unit thought to be Parker's, were given to her in her divorce. Id. ¶¶ 13-15 & Ex. D. As of January 23, 2018, the Government has collected only $9,782.22 of the $185,000 Cluck owed in restitution. Pet. ¶ 7.
On March 20, 2018, the Government filed a Motion for Entry of Default against Arlitt. Dkt. No. 404. The motion, however, was subsequently mooted by the Government's Notice of Withdrawal, Dkt. No. 411. Arlitt thereafter moved to dismiss the Petition under Rule 12(b)(6), Dkt. No. 405, and counterclaimed "for any amounts of monies/property collected by the government that she [Arlitt] has an ownership interest therein by law," id. at 19-21. The Government then moved to dismiss Arlitt's Counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 408.
On June 3, 2018, Arlitt filed a Motion for Leave to File an Original Answer with Reaffirmation of Previously Filed Affirmative Defenses and Counterclaim One (1) Day Late. Dkt. No. 413. While the Government did not file a response in opposition to Arlitt's motion, it moved to Strike Arlitt's Original Answer pursuant to Federal Rule of Civil Procedure 12(f). Dkt. No. 416. Contemporaneous with this recommendation, the undersigned will grant Arlitt leave to file her Answer, subject to the Government's Motion to Dismiss and Motion to Strike.2
The Mandatory Victims Restitution Act ("MVRA") provides that "[a]n order of restitution may be enforced by the United States in the manner provided for in subchapter C of chapter 227 and subchapter B of chapter 229 of this title [18 U.S.C. § 3613]; or . . . by all other available and reasonable means." 18 U.S.C. § 3664(m)(1)(A). Here, the Government chooses to enforce Cluck's restitution obligation pursuant to 18 U.S.C. § 3613 and in a manner consistent with enforcing a judgment imposing a fine. See United States v. Pickett, 505 Fed. App'x 838, 841 (11th Cir. 2013) ("The United States can enforce a restitution judgment 'in the manner provided for the collection and payment of fines' in 18 U.S.C. § 3613.") (quoting United States v. Fuentes, 107 F.3d 1515, 1533 n.33 (11th Cir. 1997)).
Section 3613 permits the Government to "enforce a judgment imposing a fine in accordance with the practices and procedures for the enforcement of a civil judgment under Federal law or State law." 18 U.S.C. § 3613(a). Pursuant to § 3613, the entry of judgment caused a lien in favor of the United States to attach "on all property and rights to property of [Cluck] as if the liability of [Cluck] were a liability for a tax assessed under the Internal Revenue Code of 1986." Id.(c); see also United States v. Mills, 991 F.2d 609, 612 (9th Cir. 1993) ().
Arlitt's Motion to Dismiss. Arlitt seeks dismissal of the Government's Petition under Federal Rule of Civil Procedure 12(b)(6) on the following grounds: (1) the statute of limitations expired before the Government filed its Petition; (2) the assets sought by the Government are Arlitt's separate property; (3) Arlitt was not properly served; (4) the Government violated Arlitt's Fifth, Sixth, Eight, and Fourteenth Amendment rights by naming Arlitt as a defendant in its Motion for Entry of Default and attempting to secure separate property without a judgment; (5) the Government violated Arlitt's Fourth Amendment rights by inspecting her storage unit in the Parker case without her consent; and (6) the personal property on which the Government seeks to foreclose is exempt pursuant to 18 U.S.C. § 3613 and 26 U.S.C. § 6334. See Dkt. No. 405.
A. The Court Will Apply the Civil Rules. All parties here invoke the Federal Rules of Civil Procedure, even though the Government filed its Petition in Cluck's criminal case.3 This does not appear inappropriate, notwithstanding the parties' omission from their briefing of any citation to authority supporting the application of the Federal Rules of Civil Procedure in these circumstances. See 18 U.S.C. § 3613(a) & (c); United States v. Davis, 681 Fed. App'x 338, 340 (5th Cir. Mar. 9, 2017) (applying the Federal Rules of Civil Procedure to tax lien foreclosure action brought by the Government); United States v. Stallons, No. 3:16-CV-2730-L (BK), 2018 WL 3640201, at *1 (N.D. Tex. Apr. 23, 2018), report and recommendation adopted, 2018 WL 3631821 (N.D. Tex. Jul. 31, 2018) ().
B. A Note on the Scope of the Record. A court's review of a motion to dismiss is "limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V (U.S.), L.P. v. Barclays Bank...
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