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United States v. Swenson

United States District Court, D. Idaho

October 1, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
DOUGLAS L. SWENSON, et al., Defendant, and IDAHO INDEPENDENT BANK, Garnishee.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill Chief U.S. District Court Judge

         INTRODUCTION

         Pending before the Court is third-party Ellen Suzann Swenson's Objection and Claim of Exemptions pursuant to a writ of garnishment issued against a checking account with Idaho Independent Bank (“IIB”), which is related to a judgment for restitution entered against her spouse, Douglas L. Swenson, in a criminal case, United States v. Swenson, 1:13-CR-00091-BLW. The objection originally addressed three accounts - IIB accounts ending in numbers 5784, 9227 and 6781. However, as explained in more detail below, only account 5784 is still at issue.

         BACKGROUND

         The facts are largely undisputed. In an underlying criminal case, defendant Douglas L. Swenson was ordered to pay restitution pursuant to the Mandatory Victim's Restitution Act (“MVRA”), 18 U.S.C. § 3666A in the amount of $180, 632, 025.00 (Dkt. 816). On July 9, 2018, the United States filed an ex parte application for writs of garnishment (Dkt. 969) with respect to four of Mr. and Mrs. Swenson's various bank accounts, including IIB accounts ending in 6781, 9227, and 5784 (Dkt. 975). The Clerk of Court issued writs of garnishment on these accounts on July 19, 2018 (Dkt. 975).

         IIB filed an answer to the writs of garnishment indicating that Mrs. Swenson has two checking accounts and one savings account held under her own name. (Dkt. 978). Mrs. Swenson then filed an objection, claim of exemptions, and request for hearing on three accounts claiming that: (1) account ending in 5784 is separate property consisting of social security funds; and (2) accounts ending in 9227 and 6781 are separate property consisting of IRA funds. Id.

         On August 16, 2018, the United States filed a Motion to Release Specific Accounts from the Ex Parte Writ of Garnishment (Dkt. 980) because all parties stipulated to Mrs. Swenson receiving $20, 163 from the funds in Account No's ending in 9227 and 6781 (Dkt. 898). Mrs. Swenson responded to the Motion without objection (Dkt. 981). On August 24, 2018, the Court filed an Order granting the release of funds from IIB Accounts ending in 9227 and 6781 (Dkt. 983).

         Therefore, the Court will only address Mrs. Swenson's objection and claim of exemptions to the United States' Ex Parte Writ of Garnishment on IIB checking account ending in 5784.

         ANALYSIS

         The Federal Debt Collection Procedures Act of 1990 (“FDCPA”) “provides the exclusive civil procedure for the United States to recover on a debt.” 28 U.S.C. § 3001; see also United States v. Webb, 2014 WL 2153954 at *3 (D. Ariz. May 15, 2014). The FDCPA defines “debt” to include “[a]n amount that is owing to the United States on account of … restitution ….” 28 U.S.C. § 3002(3)(B); see also United States v. Mays, 430 F.3d 963, 965 (9th Cir. 2005). The FDCPA further clarifies that it “shall preempt State law to the extent such law is inconsistent.” 28 U.S.C. § 3003(d).

         The procedures the United States must follow to collect a judgment by garnishment are provided by 28 U.S.C. § 3205. Under the FDCPA, the judgment-debtor must be given notice of the commencement and served a copy of the writ of garnishment. 28 U.S.C. § 3202(b). The United States must also serve the garnishee with a copy of the writ. 28 U.S.C. § 3205(c)(3). The copy served to the garnishee “shall be accompanied by-(A) an instruction explaining the requirement that the garnishee submit a written answer to the writ.” Id. The copy of the writ served to the judgment debtor “shall be accompanied by-(B) instructions to the judgment debtor for objecting to the answer of the garnishee and for obtaining a hearing on the objections.” Id. “Within 20 days after receipt of the answer, the judgment debtor. . . may file a written objection to the answer and request a hearing.” Id. The party objecting bears the burden of proof. Id.

         If a garnishment hearing is held, the issues that may be properly considered at the hearing are limited as a matter of law. United States v. Pugh, 75 Fed.Appx. 546, 547 (8th Cir. 2003) (a hearing concerning the enforcement of a judgment is limited to circumstances where the debtor has claimed a probable validity of an exemption, challenged compliance with statutory requirements, or the judgment has been obtained in default). In this case, the order of restitution was imposed after a guilty verdict, and not as a default. There is no claim that the Government failed to comply with the statutory requirements for the garnishment process. Therefore, the only issue before the Court is whether a spouse's social security payments are a valid exemption under the MVRA.

         In Idaho, it is presumed that “all property acquired by either a husband or wife after marriage is community property.” In re Herter, 456 B.R. 455, 465 (Bankr. D. Idaho 2011) (citing Idaho Code § 32-906); Banner Life Ins. Co. v. Mark Wallace Dixson Irrevocable Tr., 206 P.3d 481, 488 (Idaho 2009); Estate of Hull v. Williams, 885 P.2d 1153, 1157 (Idaho Ct. App. 1994) (“All property acquired during the course of a marriage is presumed to be community property”).

         When a spouse claims that property is separate, that spouse has the burden of establishing that the property is separate with “reasonable certainty and particularity.” Estate of Hull v. Williams, 885 P.2d 1153, 1157 (Idaho Ct. App. 1994) (citing Houska v. Houska, 512 P.2d 1317, 1319 (Idaho 1973)); Banner Life, 206 P.3d at 488. “This may be done by establishing that the property was acquired by one spouse prior to the marriage, by tracing the funds used to acquire the asset to a separate property source, or by showing that the property was acquired by gift, bequest or devise during the marriage.” Estate of Hull, 885 P.2d at 1157; Banner Life, 206 P.3d at 488. “Where the source of an asset is unknown or ...


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