United States v. Swenson

• Decision Date: 19 August 2020
• Docket Number: No. 18-30215,18-30215
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Ellen Suzann SWENSON, Claimant-Appellant, Douglas L. Swenson; Mark A. Ellison ; Jeremy S. Swenson; David D. Swenson, Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

971 F.3d 977

UNITED STATES of America, Plaintiff-Appellee,

v.Ellen Suzann SWENSON, Claimant-Appellant,Douglas L. Swenson; Mark A. Ellison ; Jeremy S. Swenson; David D. Swenson, Defendants.

No. 18-30215

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 3, 2020 Seattle, Washington

Filed August 19, 2020

M. SMITH, Circuit Judge:

Following a conviction for wire and securities fraud, Douglas Swenson (Mr. Swenson) was ordered to pay restitution pursuant to the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A. The government sought to enforce the restitution order pursuant to the Federal Debt Collection Procedures Act (FDCPA), 28 U.S.C. §§ 3001 – 3308. To do so, the government applied for a post-judgment writ of garnishment against a bank account (Account 5784) that held the Social Security benefits of Mr. Swenson's wife, Suzann Swenson (Mrs. Swenson), on the theory that those funds were subject to garnishment pursuant to community property principles of Idaho state law. Mrs. Swenson objected to the writ. See 28 U.S.C. § 3205. The district court denied Mrs. Swenson's objections, concluding that the MVRA's enforcement provision, 18 U.S.C. § 3613(a) ( Section 3613(a) ), overrides the protections afforded Social Security benefits under the Social Security Act (SSA), 42 U.S.C. § 407(a), so the benefits were garnishable community property. Mrs. Swenson appealed. We hold that we have jurisdiction, following the district court's entry of an order directing the disposition of the funds at issue pursuant to the writ of garnishment. We also reverse the district court's disposition order and hold that Mrs. Swenson's Social Security benefits are not subject to garnishment pursuant to the MVRA in connection with her husband's criminal restitution order.

FACTUAL AND PROCEDURAL BACKGROUND

On April 14, 2014, a jury found Mr. Swenson guilty of 44 counts of securities fraud and 34 counts of wire fraud. Mr. Swenson was sentenced to 240 months in prison and ordered to pay over $180 million in restitution pursuant to the MVRA. On July 9, 2018, the government initiated garnishment proceedings pursuant the FDCPA, and moved for enforcement against certain bank accounts belonging to one or both of the Swensons.¹ See 28 U.S.C. § 3205. The government filed an application for a writ of garnishment that encompassed four accounts: three held in Mrs. Swenson's name, including Account 5784, and one joint account. Following receipt of an objection from Mrs. Swenson, the government released two of the accounts held in her name. Neither Mr. nor Mrs. Swenson objected to the writ with respect to the jointly held account. At issue in this appeal is Account 5784 held at Idaho Independent Bank, the remaining account belonging to Mrs. Swenson. Mrs. Swenson objected to the writ of garnishment for Account 5784, claiming that the funds it held consisted solely of deposits of her Social Security benefits, and therefore were exempt from garnishment because those funds were not community property under Idaho law.

The district court denied Mrs. Swenson's objections to the writ of garnishment regarding Account 5784, reasoning that her Social Security benefits were community property because Mrs. Swenson earned the right to receive them while working during her marriage to Mr. Swenson. The court recognized that those benefits would not be garnishable in "an action brought to collect on a common debt," but concluded that pursuant to Section 3613(a), "the protection afforded [S]ocial [S]ecurity payments against common garnishment proceedings or the division of community property in divorce proceedings, has no relevance in a collection action under the MVRA." The district court concluded that because Section 3613(a) "specifically provides that a judgment ordering restitution may be enforced against ‘all property or rights to property’ of the defendant," and a spouse's retirement and pension benefits are community property, the funds in Account 5784 were "presumed community property and subject to continued garnishment." The district court entered an order denying Mrs. Swenson's objections with respect to Account 5784, and Mrs. Swenson filed a notice of appeal.

However, in light of the notice of appeal, the government did not seek, and the district court did not immediately enter, an order directing the disposition of the garnished funds pursuant to the FDCPA. See 28 U.S.C. § 3205(c)(7) (requiring a court to enter an order directing the garnishee to dispose of the debtor's nonexempt property within five days of a hearing). Following oral argument in this appeal, the parties stipulated to suspend the appeal to allow further proceedings in the district court. Thereafter, and as relevant here, the district court entered disposition orders as to the two remaining accounts subject to the writ of garnishment, including Account 5784. We granted the parties’ subsequent stipulation to augment the record with the district court's latest orders, and we resume the appeal.

STANDARDS OF REVIEW

Whether this court has subject matter jurisdiction is a question we review de novo. Chang v. United States , 327 F.3d 911, 922 (9th Cir. 2003). We likewise review de novo decisions involving the interpretation of federal statutes like the MVRA, cf. UFCW Local 1500 Pension Fund v. Mayer , 895 F.3d 695, 698 (9th Cir. 2018), and "questions of law regarding the application of restitution statutes," United States v. Berger , 574 F.3d 1202, 1204 (9th Cir. 2009).

ANALYSIS

I. Appellate Jurisdiction

We have jurisdiction over "appeals from all final decisions of the district courts of the United States." 28 U.S.C. § 1291. The government initially sought to dismiss this case for lack of appellate jurisdiction, contending that the district court's order denying Mrs. Swenson's objections to the writ of garnishment was not a final appealable order. However, after Mrs. Swenson filed the notice of appeal, and during a temporary suspension of this appeal, the district court entered disposition orders pursuant to 28 U.S.C. § 3205(c)(7), directing the garnishee bank to disburse the funds held in the two accounts subject to the writ of garnishment, including Account 5784. Following those further proceedings in the district court, we are satisfied this case is properly before us.

Our caselaw does not conclusively resolve which post-judgment orders entered pursuant to the FDCPA are final for purposes of appeal. In United States v. Mays , 430 F.3d 963 (9th Cir. 2005), we concluded that a district court's denial of a motion to dismiss a writ of garnishment was a final judgment where there were "no other matters before the district court relating to [the defendant's] criminal case." United States v. Mays , 430 F.3d 963, 965 (9th Cir. 2005). That holding turned on the fact that the denial order resolved all pending matters in the criminal case, including the post-judgment garnishment proceedings. Id. On that basis, we distinguished United States v. Moore , 878 F.2d 331 (9th Cir. 1989), where the appeal involved an interlocutory order denying the defendant's motion to quash a writ of garnishment.² Id. at 331. On its face, Mays seems to hold that orders denying motions to dismiss a writ of garnishment, or other orders akin thereto, including denials of a debtors’ objections to the writ, can be final, appealable orders.

However, upon closer investigation, the district court in Mays had entered an "order of garnishment" after the defendant filed a notice of appeal. Consistent with 28 U.S.C. § 3205(c)(7), that order directed the garnishee to pay to the government the garnished funds. See Order of Garnishment, United States v. Mays , No. 98-cr-03213-JM, (S.D. Cal. Aug. 4, 2004), ECF No. 83. Although the notice of appeal concerned the denial of the motion to dismiss the writ of garnishment and we otherwise did not address the district court's disposition order in our decision, see Mays , 430 F.3d at 965, we assumed jurisdiction only after entry of the disposition order.

The Fifth and Seventh Circuits have held that disposition orders directing the release of funds for garnishment under the FDCPA are final, appealable orders. See United States v. Branham , 690 F.3d 633, 635 (5th Cir. 2012) ; United States v. Kollintzas , 501 F.3d 796, 799, 801–02 (7th Cir. 2007) ; United States v. Minneman , 6 Fed. App'x 422, 424 (7th Cir. Apr. 24, 2001) ("The disposition order concludes the garnishment proceedings and therefore that order, and not the order denying the debtor's objections, is the final order from which a debtor should appeal."); see also United States v. Grigsby , 630 F. App'x 838, 841 (10th Cir. Oct. 29, 2015).

We agree with the reasoning of our sister circuits that disposition orders directing release of the garnished funds conclude garnishment writ proceedings. Pursuant to the FDCPA, the garnished funds remain in the garnishee's possession unless and until the court orders those funds disbursed in a disposition order. See 28 U.S.C. § 3205(c)(7). The denial of a judgment debtor's objections may not be final for any number of reasons, including, for example, if a judgment debtor files a motion for reconsideration. A disposition order (or termination of the garnishment otherwise, see id. § 3205(c)(10) ) concludes litigation of the writ on the merits and is thus a final judgment for purposes of appeal.

To the extent Mays held that the denial of objections to a writ of garnishment is a sufficiently final order for purposes of appellate jurisdiction, there is reason to question that precedent. The district court below therefore advisedly entered § 3205(c)(7) disposition orders when questions about our jurisdiction were raised. Those orders concluded litigation of the post-judgment writ proceedings on the merits and left nothing more for the district court to resolve regarding Mrs. Swenson. Because the district court entered these disposition orders, it is clear we have appellate jurisdiction. Wh...