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Springleaf Financial Services, Inc. v. Crumpton

United States District Court, D. Idaho

July 28, 2014

JOHN D. CRUMPTON, Defendant.


B. LYNN WINMILL, District Judge.


Before the Court is a motion to dismiss filed by the Defense Finance Accounting Service (DFAS). DFAS removed this case from state court after the state court ordered DFAS to appear for an examination related to Plaintiff Springleaf Financial Service, Inc.'s attempt to have DFAS garnish Defendant John D. Crumpton's wages. At issue is whether Springleaf, as a judgment creditor, can recover damages against DFAS, an agency of the United States, for its allegedly wrongful failure to garnish Crumpton's wages. It cannot. The doctrine of sovereign immunity prevents this Court, or any state court, from ordering DFAS to garnish Crumpton's wages. For the following reasoning Defendants Motion to dismiss for lack of subject matter jurisdiction (F.R.C.P. 12(b)(1)) is granted and the state order to appear is quashed.


Defendant Crumpton was on full-time National Guard duty from October 1, 2012 through September 27, 2013. On September 27, 2013, Crumpton became a part-time reservist. See Asher Decl. at 4-6, Dkt. 6-3.

According to the complaint filed against Crumpton in state court, he owed the plaintiff, Springleaf, $6, 262.93. Id. at 7. Springleaf moved for and obtained a default judgment against Crumpton on April 10, 2013-while he was on full-time National Guard duty. Id. at 8-9. On April 19, 2013, Springleaf filed its "Motion for Continuous Writ of Execution and Garnishment on Defendant Crumpton's Wages from United States Department of Defense, " which the state court granted on April 24, 2013. Hurwit Decl. at 10-11, Dkt. 9, 10. On June 3, 2013, DFAS informed Springleaf that the Writ of Garnishment could not be honored, but that Springleaf could apply for an involuntary allotment against Defendant Crumpton's pay pursuant to Title 32, Code of Federal Regulations, Parts 112 and 113. Asher Decl. at 12, Dkt. 6-7. Springleaf applied for an involuntary allotment. Dkt. 6-18.

On July 16, 2013, and September 9, 2013, DFAS informed Springleaf's counsel that its application could not be approved, however, because the procedural requirements under the Service members Civil Relief Act, 50 U.S.C. App. §§ 501 et seq. ("SCRA") were not satisfied. Through this litigation, DFAS also explained that Crumpton no longer would be on active duty status as of the end of September 2013, and that, at that point, the involuntary allotment process would no longer be available. Dkt. 6-12, 13.

On November 12, 2013, Springleaf filed its "Motion for Examination of Garnishee and Payment of Writ of Garnishment by DFAS." Dkt. 6-12. Ordering DFAS to appear in state court on February 4, 2013 for an "examination" regarding the Writ of Garnishment and stated that "[i]f the Garnishee DFAS fails to appear as ordered, they may be arrested and brought before the Court and punished for contempt." Dkt. 6-14.

On December 6, 2013, Springleaf served the state court's order on the United States Attorney's Office. In response, DFAS (through the United States Attorney's Office) explained again why it would not honor the Writ of Garnishment and Springleaf s involuntary allotment application. Exhibit at 3, Dkt. 6-16. Springleaf responded on December 6, 2013, and stated it would not withdraw its attempt to enforce the Writ of Garnishment against DFAS. Dkt. 6-17. The United States removed this action on January 6, 2014. Dkt. 1.

During the course of this litigation, and after denying Springleaf's involuntary allotment request for procedural deficiencies, DFAS discovered that Crumpton was never considered "active duty" but instead was on "full-time National Guard duty" from October 1, 2012 through September 27, 2013. Second Asher Decl. ¶¶ 6-9, Dkt. 11-1. DFAS now takes the position that Crumpton never was eligible for the involuntary allotment process, even if Springleaf's request had not been procedurally deficient. Id. ¶ 12.


1. Sovereign Immunity Prevents This Court from Having Subject Matter Jurisdiction

The Ninth Circuit case Nationwide Investors v. Miller controls here. Nationwide Investors v. Miller, 793 F.2d 1044, 1047 (9th Cir. 1986). In Nationwide the court stated that one of the purposes of a removal action to federal court is to "prevent state courts from unlimited exercise of their subpoena power against federal officers upon pain of contempt." Id. When there is no waiver of sovereign immunity, the state court has no jurisdiction, and a district court must properly dismiss the action for the same lack of jurisdiction. Id. In Nationwide there was no waiver of the United States sovereign immunity and consequently no state court jurisdiction over the garnishment action. Id.

Here, this court can find no waiver; the parties and state court have identified none. The finding of a waiver of sovereign immunity is rare: "[t]he United States has waived its immunity to such actions only in cases of child support and alimony, 42 U.S.C. § 659, in cases involving postal workers, see 39 U.S.C. § 401(1), and in a few other isolated situations..." Nationwide Investors v. Miller, 7 ...

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