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United States v. Wyatt

United States District Court, D. Colorado

January 12, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
LARRY D. WYATT, Defendant, and J & L FARMS MONEY PURCHASE PLAN, Garnishee.

ORDER

R. BROOKE JACKSON, District Judge.

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.

BACKGROUND

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. ยง 656. [ECF No. 8]. The late Judge Daniel B. Sparr sentenced Mr. Wyatt to 21 months in prison with five years of 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 notified Mr. 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]

ANALYSIS

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.

A. Standing.

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 from garnishment. 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. ...

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