United States v. Wyatt
| Decision Date | 12 January 2015 |
| Docket Number | Criminal Action No. 96-cr-00468-RBJ |
| Court | U.S. District Court — District of Colorado |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. LARRY D. WYATT, Defendant, and J & L FARMS MONEY PURCHASE PLAN, Garnishee. |
ORDER
This matter is before the Court on Garnishee's Objection to the Application for a Writ of Garnishment [ECF No. 25-3], filed as an attachment to its Answer [ECF No. 25]. For the following reasons, the objection is sustained, and the application for a writ of garnishment is dismissed.
On December 16, 1996 the defendant, Larry Wyatt, pleaded guilty to one count of Theft, Embezzlement, or Misapplication by a Bank Officer, in violation of 18 U.S.C. § 656. [ECF No. 8]. The late Judge Daniel B. Sparr sentenced Mr. Wyatt to 21 months in prison with five yearsof supervised release; a special assessment fee of $50; and restitution in the amount of $191,261.21 ($177,208.51 to Kansas Bankers Surety and $14,052.70 to Valley State Bank). [ECF No. 13]. On July 15, 2014 the government filed an application for a writ of garnishment in the amount of $127,661.21, identifying J&L Farms Money Purchase Plan ("J&L Farms") as the garnishee. [ECF No. 22]. The Clerk's Office issued the writ the next day. [ECF No. 23].
The Clerk's Office notified J&L Farms that it was required by law to answer within ten days whether or not it had in its custody, control, or possession any property owned by Mr. Wyatt, including any and all retirement accounts and any and all investment accounts due to Mr. Wyatt. [ECF No. 23 at 1]. J&L Farms filed an untimely answer on August 16, 2014, a month after the writ was issued.1 [ECF No. 25].
J&L Farms listed one asset of which it had control: a retirement plan with a vested balance of $59,852.44 as of December 31, 2013. The garnishee denied, however, that the account balance was available for distribution and objected to the issuance of the writ. It based its objection on three pieces of information. First, the retirement plan was formed under and is subject to the provisions of the Employee Retirement Income Security Act (ERISA). Second, Mr. Wyatt is not eligible to receive plan payments while he remains employed by J&L Farms. And third, lump sum payments cannot be made without the consent of Mr. Wyatt's wife.
On July 16, 2014 the Clerk's Office also filed a Notice of Post-Judgment Garnishment and Instructions to Judgment Debtor. [ECF No. 24]. This notice was addressed to Mr. Wyatt, informing him that a writ of garnishment was being issued. It explained that Mr. Wyatt could protest the writ if he could show that his property fell into an exempt category. It also notifiedMr. Wyatt of his right to a hearing; all Mr. Wyatt had to do was check a box on the notice itself and send back the form to the clerk's office, with a copy addressed to the government attorneys. Mr. Wyatt did not respond in any way to the notice; he did not request a hearing nor did he file a written objection to the writ.2
J&L Farms objects to the writ of garnishment on three grounds: (1) it is untimely because Mr. Wyatt cannot currently elect to receive plan payments; (2) Mrs. Wyatt has a property interest in the plan, which she has not waived;3 and (3) the garnishment is subject to a 25% cap on disposable earnings under the Consumer Credit Protection Act (CCPA). The government contends that these arguments lack merit and, more importantly, that J&L Farms does not have standing to object to the writ of garnishment. The government maintains that it has a right to garnish the current balance of the retirement account in one lump sum payment.
Before addressing the merits of each of the arguments presented above, the Court must address the government's challenge to J&L Farms' standing. According to the United States, under the FDCPA the garnishee is only permitted to file an answer to the writ of garnishment. The judgment debtor and the government are then permitted to make objections and to seek a hearing on the question of whether property identified in the garnishee's answer is exempt fromgarnishment. Mr. Wyatt failed to make an objection or respond in any way. The government further argues that J&L Farms does not have Article III standing to adjudicate the merits of its objections because it would not suffer an injury in fact if it were to comply with the Court's order and release the funds.
Under Article III of the United States Constitution, a federal court lacks jurisdiction to proceed on the merits of a claim in the absence of an actual case or controversy. E.g., Habecker v. Town of Estes Park, Colorado, 518 F.3d 1217, 1223 (10th Cir. 2008). Standing is a component of the case or controversy requirement. Id. "The doctrine of standing asks whether a litigant is entitled to have a federal court resolve his grievance." Kowalski v. Tesmer, 543 U.S. 125, 128 (2004). "This inquiry involves 'both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.'" Id. (quoting Warth v. Seldin, 422 U.S. 490, 498 (1975)). The party invoking federal jurisdiction bears the burden of establishing the elements of standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).
The basic components of standing are well-settled.
First, the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
Id. at 560-61 (internal citations, quotation marks, and alterations omitted). However, "even when the plaintiff has alleged injury sufficient to meet the requirement, Court has held that the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties."
Warth, 422 U.S. at 499. "This rule assumes that the party with the right has the appropriate incentive to challenge (or not challenge) governmental action and to do so with the necessary zeal and appropriate presentation." Kowalski, 543 U.S. at 129.4
J&L Farms makes two arguments in support of standing. First it contends that it has standing because it challenges the authority of the Court to make it act. Second, it claims that it would suffer an injury in fact if the Court were to enforce the writ.
J&L Farms does not claim that it has a statutory right to object to the writ under the FDCPA. Upon an independent review of the statute, the Court agrees that it does not. However, it maintains that it has standing insofar as it alleges that the Court lacks the power to make it act, citing United States v. DeCay, 620 F.3d 534 (5th Cir. 2010), in support. The DeCay holding, however, is not so broad in its strokes.
In DeCay two defendants, Kerry DeCay and Stanford Barre, pleaded guilty to one count each of mail fraud, conspiracy to commit mail fraud, and obstruction of justice. 620 F.3d at 536. At sentencing the district court ordered DeCay and Barre to pay $1,064,362.15, jointly and severally, in restitution. After judgment entered, the United States moved for writs of garnishment under the FDCPA seeking seizure of the defendants' interests in their pension funds to satisfy the restitution order. The district court issued the writs of garnishment to the Louisiana Sheriffs Pension and Relief Fund (LSPRF), the garnishee. In its answer, the LSPRF contended that the pension benefits were exempt from seizure under federal and Louisiana law, and that enforcement of the writs against it as garnishee would violate the Tenth Amendment of theUnited States Constitution. It also argued that to the extent garnishment was proper, the government failed to follow the appropriate procedures to withdraw DeCay's employee contributions, and that the CCPA limited the right to garnish Barre's pension to 25% of his monthly benefit. Unlike Mr. Wyatt, DeCay and Barre then both objected to the garnishment, adopting the reasons put forward by the LSPRF. The district court overruled the objections and denied the parties' motions to alter or amend the judgment. All three parties filed an appeal to the Fifth Circuit.
The first question addressed on appeal was whether the LSPRF had standing to bring the appeal. The Fifth Circuit held that the LSPRF had standing to adjudicate its Tenth Amendment claim. Id. at 538. The court reasoned that the LSPRF had the right as a sovereign entity to say "you can't make me do this," to assert that the United States lacked the constitutional authority to compel it to release the funds. Id. The court likened this argument as to one for lack of personal jurisdiction or sovereign immunity. See id. at 538 n.3.
J&L Farms takes this reasoning to mean that any time a third party demands "you can't make me do this" it has standing. However, its interpretation goes beyond the scope of the holding. Notably, the Fifth Circuit declined to address whether the LSPRF had standing to raise the remaining objections - including the argument that the CCPA limits garnishment to 25% of the debtor's monthly benefit. Id. at 538-39. And yet, according to J&L Farms the same defense is made under the CCPA as under the Tenth Amendment: "you can't make me do this." The Court disagrees. The "you can't make me do this" defense was based on the constitutional authority of the court to compel an action by a party before it, as is the case with personal jurisdiction and sovereign immunity defenses. J&L Farms has put forward no claim that theCourt lacks the authority to...
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