Springleaf Financial Services, Inc. v. Crumpton

Filing 15

MEMORANDUM DECISION AND ORDER Defendants Motion for Summary Judgment (Dkt. 6 ) is GRANTED. The state order to appear and account is QUASHED. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
SPRINGLEAF FINANCIAL
SERVICES, INC.

Case No. 1:14-cv-00006-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
JOHN D. CRUMPTON,
Defendant.

INTRODUCTION
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

MEMORANDUM DECISION AND ORDER - 1

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.
BACKGROUND
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

MEMORANDUM DECISION AND ORDER - 2

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.

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ANALYSIS
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, 793 F.2d 1044, 1048 (9th Cir.
1986). The limited instances of waivers do not include wage garnishment.
In a factually similar case concerning a federal agency’s failure to garnish wages,
the Ninth Circuit declined to find a waiver of the government’s sovereign immunity:
“Nationwide is the law of this circuit. Only an en banc court has the power to reject our
precedent unless some intervening Supreme Court opinion has undermined that

MEMORANDUM DECISION AND ORDER - 4

precedent.” Landreth v. C.I.R., 859 F.2d 643, 648 (9th Cir.1988). The Supreme Court
cases on sovereign immunity do not contradict the holding in Nationwide. Nat'l Bus.
Factors, Inc. v. Rollins, 991 F.2d 803 (9th Cir. 1993). The Supreme Court has
specifically stated that a waiver of sovereign immunity by the United States must be
“unequivocally expressed.” Id. This Court is likewise constrained to honor the sovereign
immunity of DFAS, absent an “unequivocally expressed” waiver.
Even assuming DFAS wrongfully failed to garnish Crumpton’s wages, sovereign
immunity still bars Springleaf from collecting payment from DFAS. This issue is not
whether DFAS should have garnished Crumpton’s wages. Instead, the issue is whether
sovereign immunity has been waived, allowing Springleaf to recover directly from DFAS
for its failure to garnish Crumpton’s wages. Therefore, Springleaf’s arguments pertaining
to whether DFAS should have garnished Crumpton’s wages are irrelevant. The Court will
therefore grant DFAS’s motion to dismiss.
ORDER
IT IS ORDERED:
1.

Defendants Motion for Summary Judgment (Dkt. 6) is GRANTED.

2.

The state order to appear and account is QUASHED.

MEMORANDUM DECISION AND ORDER - 5

DAT
TED: July 2 2014
28,

__________
__________
_____
___
B. L
Lynn Winm
mill
Chief Judge
ited
District Cou
urt
Uni States D

MEMORA
ANDUM DECI
ISION AND ORDER - 6