UNITED STATES OF AMERICA v. TERRY

Filing 40

ORDER, MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE JOE L. WEBSTER on 08/31/2016; it is RECOMMENDED that Defendant's motions to Quash (Docket Entry 5 ), Motion to Transfer case (Docket Entry 6 ), Motion for Recusal (Docket Entry 7 ), Motion for Sanction (Docket Entry 10 ), Motion to Dismiss (Docket Entry 16 ), and be Denied. ORDERED that Defendant's Motion for Due Process Hearing on Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction (Docket Entry 31 ) be Denied, Defendant's Motion for Due Process Hearing on Defendant's Motion for Emergency Temporary Restraining Order (Docket Entry 32 ) be Denied, and Defendant's Motion for leave to conduct Discovery (Docket Entry 17 ) be Denied. (Garland, Leah)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
UNITED STATE,S OF AME,RIC,{,

)
)

Plaintiff,

)
)

Case

No.: 'I:14MC42

)

GARY IVAN TERRY,

)
)

Defendant.

)

ORDER, MEMORANDUM OPINION AND
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This matter is before the Court upon Defendant Gary lvanTerry's Motions to Quash
(Docket Etrt y 5), Motion to Transfer Case pocket Entty 6), Motion for Recusal (Docket

Entty 7), Motion for Sanction (Docket Entry 10), Motion to Dismiss (Docket Entry

1ó),

Motion for Leave to Conduct Discovery, (Docket Entry 17), Motion for Due Process Hearing
on Defendant's Motion to Dismiss for Lack of Subject MatterJurisdiction (Docket Entry 31),
and Motion fot Due Process Hearing on the Defendant's Motion for Emergency Tempoïaty

Restraining Order Q)ocket Entry 32). trot the following reasons the Court recoûunends that
Defendants Motions to Quash (Docket Entry 5), Motion to Transfer Case Q)ocket Entry 6),

Motion for Recusal (Docket Entry 7), Motion for Sanction (Docket Entry 10), and Motion to
Dismiss (Docket Entry 16) be denied. The Court further denies Defendant's Motion for
Leave

to Conduct Discovery pocket Entty

17), Defendant's Motion

for Due Process

Hearing on Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction (Docket

Etttty 31),

and

Motion for Due Process Hearing on the Defendant's Motion for Emergency

Temporary Restraining Order (Docket F,ntty 32).

I.

BACKGROUND
On August.3,2000, a fedenl grand jury in the ìØestern Disuict of Missouri returned

a

nineteen-count indictment against Defendant and his company, SCAT, Inc. for false claims,

theft of government property, false statements, and obstruction of justice. On September 26,
2000, Defendant appeared before a magisttate judge for a change plea hearing where he pled

guilty. (Entry of Plea Docket Ettt"y 23, USA
Sept. 28,

a. Ten1, No. 00-00308-01-CR-W6 flW.D.Mo.

2000). On September 26,2001, Defendant appeared for his sentencing

hearing.

(Sentencing Headng Docket E.,tty 48, U|'A u. Ten1,No. 00-00308-01-CR-W6 (1W.D.Mo. Sept.

28,2000). He was sentenced to imprisonment for 15 months anda supervised

release term

of three years. (d.) Defendant was also ordered to pay a special assessment in the amount of
$200.00 and restitution in the amount of $545,161,20 fludgment, Docket Entry 44, USA
Terry,

u.

No. 00-00308-01-CR-ìí6 (tXz.D.Mo. Oct. 5, 2001)).
Supervised Release jurisdiction over Defendants Gary Ivan Terry and SCÂT, Inc. was

transferred to the Middle Disttict of North Carolina and fìled with this Court onJuly 30,2003.

Ten1,No.00-00308-01-CR-W6 (tXz.D.Mo. Sept. 28, 2000).

,\

certification of the Missouri District Court judgment was registered in the Middle District

of

(Docket Entries 82,83, USA

u.

North Carcltna onJuly 1,2014 ftom the United

States

District Court for the \X/estern District

of Missouri. (Docket Entry 1, No.: 1,:1,4MC42 (I\4.D.N.C.)). A" ,{pplication for STdt of
Garnishment was fìled on October 20,2015. (Docket Entry 2, No.: 1:1,4MC42 (N4.D.N.C.)

2

^nd ^

Writ of Continuing Garnishment was issued

as

to Gary Ivan Terry and APCO Freight

Systems, Inc. (Docket Entry 3, No.: 1,:14MC42 (À4.D.N.C.). Defendant Terry was served

with a copy of the application of \)7rit of Continuing Garnishment and other relevant
documents on Novemt¡er 21, 2015. (Docket E.rtty 11, No.: 1:1,4MC42 (À4.D.N.C.))

O"

November 25, 201,5 the garnishee filed an Answer. pocket Entry 9, No.: 1:14MC42
(rvr.D.N.c.)).

Over the last 15 years, Defendant has filed numerous post iudgment attacks regarding
his conviction and sentence imposed in the Western Disuict of Missouri. In that Distict,
Defendants have filed at least 22 post-conviction moti ons,

a. Teny, No. 00-00308-01-CR-ïø6 flXz.D.Mo.)).

1

(S ee generalþ

Docket Entries UJZ

Numerous Coufts have ruled against

Defendant regarding the same underþing subject matter of the dispute before this

Court-

the criminal testitution judgment in the amount of $545,621.20. The United States District
Court for the Western District of Missouri has ordered that Defendant fìle no further motions

in that Court. (Docket Entries 63,1.06, \ü/estern District of Missouri 00-00303-01-CR-!øó
flX/.D.Mo. Sept. 28, 2000).
Defendant also sought relief in a civil action fìled in the United States District Court
for the District of Columbia tegarding the undedying subject of all of these proceedings- the
claim of the United States Government that Defendant owed ir ($545,161.20) foroverpaymenr

The Government cites much of the case history in its "Factual Background" sections in the
Government's Response in Opposition to Defendant's Motion to Quash (Docket Entry 13 and in
Government's Response in Opposition to Defendant's Motion for Sanctions (Docket Entry 19).
Many of the Defendant's Motions, or other entries, cited in the Criminal docket Sheet in Case #4:00cr-00308, Western District of Missouri are too old to
on Pacer. Therefore, the undersþed
^ppeaf
cannot independently cite much of the activity in this case that would normally be public record.
1

I

-)

on duplicate orders ("overpayment claim"). Terry u. U.S. Snall Bu¡. Admin.,699 tr. Supp. 2d
49 (D.D.C. 201,0). The United States Court of ,{.ppeals for the District of Columbta affirmed
the lower court ruling that the case should be dismissed as being time barred pursuant to 28
U.S.C. S 2401. The United States Court of ,\ppeals for the Fourth Circuit has also ruled
against Defendant in which Defendant moved to vacate the court's December 16,20'11, order

denying Defendant's motion

to disquali$' the presiding ¡udges based upon rulings in

Defendant's cases. In its order the Court stated:
The court entered judgment in these matters over fìve years ago. Since then, the
court has denied three motions by appellant to recall the mandate. ,{.ppellant
now moves to disquali$' the presiding judges based on their rulings in his cases.
The motion is denied. The court having considered these appeals and having
denied multiple motions to recall the mandate, further rel-ief will not be
considered.

Order: In

II.

re: Terry,

No. 05-1433

(th

Cir. Dec. 20,20't1) (internal citations omitted).

Discussion
Defendant Terry now attacks the garnishment proceeding in the Middle District

of

North Catolina. It is clear that each of the Motions now pending in this Disuict have at their
genesis the restitution ordered by the United States District Court for the Western District

of

Missouri judgment ordering Defendant to p^y restitution, which is a part of the garnishment
ptoceeding in the Middle Disttict of North Carohna. For the reasons cited below none

of

Defendants'motions have merit and the undersigned recommends that they be dismissed with
prejudice or denied.

4

A.

Defendant's Motion to Quash the Writ of Continuing Garnishment

Defendant filed a motion to Quash the Writ of Continuing Garnishment.2 (Docket

Entty 5, No.: 1!I4MC42 (I\4.D.N.C.)).

I"

response the Government corectly cites the

statutorT rule of law that while a judgment debtor may move to quash an enforcement order
such as a garnishment pursuant to 28 U.S.C. S 3202(d), the issues are restticted to the validity

of

any claim

of exemption and whether the Government

complied with the statutory

requirements of the F'DCPA, citing United State¡ u. Pagh,75 Fed. Âpp'r. 546, 547 (8th Cir.

2003)3 Here the Defendant did not make

^îy ^tgument

that the Government did not comply

with the statutoly tequirements nor Defendant did claim any statutory exemptions. Moreover,

to the extent that Defendant relies upon his right to seek address for any violation of the
Contract Disputes Act
Disputes Act

of

201,1,

of 201,1.,Title 41 U.S.C.

SS

601-613, re-codified under the Contract

Title 41 U.S.C. SS 7101-7109, his argument is misplaced. Here the

garnishment is being enforced based solely upon the restitution ordered
criminal case. Sudgment, Docket Entry 44, USA

u. Ten54

in Defendant's

No. 00-00308-01-CR-W6 flXl.D.Mo.

Oct. 5, 2001)) and as asserted by the Government, it's authority to enfotce fines and restitution
using post-judgment procedures set

foth in the Federal Debt Collection Procedures

,{.ct

Defendant also captions his Motion to Quash the Writ of Continuing Garnishment alternatively as
Motion to Hold Unlawful and Set-Aside Plaintiffs Application for \ü/rit of Continuing Garnishment
Pursuant to 5 U.S.C. S 706(2), and Request for A Hearing to Quash the 30 October, 2015 Order
Granting an Enforcement Remedy pursuant to $ 3202(d).

2

a

¡

Did not file any claim of exemption.
5

("FDCPA").4 The Government also asserts it followed the procedures set fotth in 28 U.S.C
SS 3001,

et. seq.; 18 U.S.C. S 3ó12(C) in seeking post-judgement gatnishment against

"propetty... in which the debtor has a substantial nonexempt interest." (Docket F,ntty

'1.3

at

7). The undersigned fìnds that Government followed the correct post-judgment procedures
applicable
required

to enfotcing the judgment of restitution. Moreover, the Government was not

to follow the rules set forth in the federal regulations regarding federal contract

disputes as argued by Defendant

in his Motion and Reply (Docket Entries 5, 27, No.:

1,:14MC42 (N4.D.N.C.)). Therefore the Motion to Quash the writ of continuing garnishment

should be denied.

B.

Motion to Ttansfer the

case

to the

'Western

District of Missouri

The Motion to Transfer the case to the \il/estern District of Missouri, and arguments
made

in support of it are also misplaced. (Docket Entry 6, No.: 1:14MC42

Defendant contends that 28 U.S.C.
garnishment proceedings and allows

$

1a0a(a) governs the transfer

of

(N4.D.N.C.).

post-judgment

it to be transferred to the Western District of Missouri

to "promote the best ends of justice . . .

."

(Id. at 1, No.: 1:14MC42 (À4.D.N.C.)). To the

contlatf , proceedings filed under the Fedetal Debt Collection Ptocedures A,ct ("FDCP,{.") are

subject

to

nationwide enforcement and may be served

3004þX1)(Ð&(B). Moreover,

S

3004(bX2) provides that:

"If

in

any State. 28 U.S.C.

SS

the debtor so requests, within

Congress enacted the Mandatory Victims Restitution Act, which made restitution mandatory for
certain crimes. Unind Sutes u. Ma1s,430 F'.3d 963,965 (9th Cir. 2005) (citing 18 U.S.C. SS 371, 1341,
3663,4.(a)(1), 36634,(c)(1XÐ(ü) (",{lthough the MVRA is a criminal statute, it expressly, albeit
tortuously, provides that the FDCPA's civil enforcement remedies may be used to enforce orders of
restitution entered under the MVRA.").
a

6

20 days after receiving the notice described in section 3101(d) or 3202þ), the action or
proceeding in which a writ, otder, ot judgment was issued shall be ransfered to the district

court for the disttict in which the debtor resides." 28 U.S.C.

S

3004þX2). ,{.t the time the

writ was issued, Defendant was residing in the Middle District of North Carohna. Therefore,
he is not entitled to have the action or proceeding tansfered to the Western District

of

Missouri.

C.

Motion to Disqualify US Attorney's Office from Enforcing Writ of Continuing
Garnishment
Defendant moves the Court to recuse or disqualiSz the US Attorney's Office in the

Middle District of North Ca.rolina and appoirit a special prosecutor. (Docket Entry

7).

Defendant offers no sound rationale to support his Motion to remove the US Attorney's

Office. First, it is the obligation and duty of the US attorney's office to collect

any unpaid fìne

or restitution owed by Defendant. "As the Government points out, under the Mandatory
Victims Restitution Act (À{VR {,), compliance with
.,{.ttorney General, pursuant

ML,2007

wL

1,847396, at

asserts thete are grounds

employees

in the United

a

restitution order is to be enforced by the

to 18 U.S.C. $ 3612(c)." Unind

Stute¡ u. Lastvla,

No. CR 00-133

x2 (D.R.I.
June 25,2007);1s U.S.C. g 3612(c). The Defendant

to suspect serious wronging and impropdeties" on the part of the
States ,{.ttorney's

Q)ocket Etttty 7 at29, No.: 1:14MC42

Office in the Middle District of North Carolina.

M.D.N.C.).

This is a conclusory allegation without

any evidence to support it. Such conclusory allegations cannot be grounds for this Court to

ordet the United States Attorney's Office or employees to recuse themselves from enforcing

7

the continual garnishment proceeding here in question. The cases relied upon by Defendant

point to specifìc improprieties or misconduct on the part of government officials. To the
contralf ; Defendant does not point any such conduct on the part of employees of the United
States -A,ttorney's Office.

Defendant's assertions that at some point the US attorney's may be called as witnesses
is mere conjecture. The undersigned fìnds that there is no reason to believe that anyone from

that office will be required to testify at this garnishment proceeding or any related proceeding,

including any matter related to the fìfteen year old restitution judgment to which Defendant
is still seeking to contest. Defendant's arguments that the prior proceedings in the \ffestern

District of Missouri and Middle Distict of North Carolina are fraudulent, unlawful, improper
and characterized as conspiracies are also without merit. At various times over the last fifteen
years Defendant has accused numerous persons

of being part of a conspiracy to deprive him

of his dght to a fair rial or hearing. On at least one occasion Defendant "allegefd] that his
privately retained defense attorney colluded with the prosecutor to 'devise a scheme to conceal'

the conÚacting officer's supposed failute to apprise plaintiff of his rþht to adminisuatively
appeal the overpayment determination." Terry u. U.S. Snall Bal Adnin.,699 F. Supp. 2d 49,

51

p.D.C.

201,0).

Additionally, Defendant has sought to disqualify governmental participants in his legal
proceedings or to discredit them, including Judges ruling against

No. 05-1433 (4th Cir. Dec. 20,2011),

see

al¡oinTerry

u.

him.

See

Otde4 In re: Terrlt,

Spanow,328 B.R. 450 (I\,{.D.N.C. 2005).s

sDefendant's Motion to disquali$rJudge, Docket Entry 89, No. 4:00-cr-0030S ('$ø.D.Mo. Aprl,24,
2006) $aotion Denied Docket Etrtty 94), Motion to Disqualify the Office of the United Srares
8

In an appeal before The HonorableJames,t. BeatyJr., Defendant moved to have a bankruptcy
trustee removed. Terry,328 B.R. at 459. In that case,Judge Beaty dismissed all of Defendant's

grounds for appeal. Judge Beaty noted that "Mr. Terry currently has pending before this Court
over 30 motions

in7 sepante bankruptcy appeals and that Mr. Terry continues to fìle various

appeals, all based on the same general contentions disputing the undedying civil and criminal

claims against

him." Id.

Defendant has not been successful in the many appeals and collateral attacks that he
has brought to challenge the undedying restitution order arising

from his criminal conviction.

Furthet, Defendant's arguments made to support recusal and disqualifìcation pursuant to the
Citizens Protection Á,ct of 1.998 arc also without merit since that Âct was never enacted into

law.

Sandouøl u. United Statet,

No.04-CV-4056,2007 WL2937124, at x6 (C.D. Ill. Sept. 26,

2007), af?d, 574 tr.3d 847 (7th Cit. 2009) (internal citation omitted) ("The problem is that on

June 1ó, 1998,

the Citizens Protection ,\ct of 1998 was referred to a subcommittee where it

died.") However, a portion of the Protection Act was

passed as part

of the

Omnibus

Consolidated and Emergency Supplemental Appropriations ,{.ct. H.R. 4328,105th Cong.
801 (1998) ("Omnibus

Act"). This

section of the Omnibus Act was codifìed as 28 U.S.C.

$

$

5308 and addresses only the ethical standards for attorneys for the Federal Government. 28
U.S.C. $ 5308;

see

al¡o Sandoual u. 2007

WL 2937124, at*6.

Attorney for the \Western Distict of Missouri, Docket Entty 114, No.4:00-cr,00308 (\ü/.D.Mo.June
22,201,2) (Motion Denied (Docket Entry 726),Pro Se Motion to disqualify judge, Docket F;ntry 1,28,
No. 4:00-cr-00308, flV.D.Mo. June2,2014) (Motion Denied (Docket Entry 131)
9

D.

Defendant's Motion fot Sanctions

Defendant's Motion

for

Sanctions

is also without merit. pocket Ent y 10 No.:

1:14MC42 (I\4.D.N.C.). Defendant moves that the Court sanction the Govetnment by
ordering a dismissal of the Writ of Continuing Garnishment Proceeding for duty of candor
violations and bad faith conduct pursuant to the Cäzen Protection act of 1998, 28 U.S.C.

S

5308(a). Defendant also requests the Court to refer counsel for the United States, Assistant

United States AttorneyJoan B. Binkley, and other United States Attorneys in the United States

Âttorney's Office for the Middle Distict of North Carolina, to the Office of Professional
Responsibility pursuant to the Code of Federal Regulations, citing 28 C.F.R. $ 0.39a(a) and 28
U.S.C. $ 5308(a) so that it could investigate whether they have violated federal laws or engaged

in professional misconduct. Aftet reviewing Defendant's Motion and supporting arguments,

the undersigned finds no grounds supported by law or facts to refer the United

States

Attorney's Offìce fot the Middle Distict of North Caroltna to the Offìce of Professional
Responsibility for investigation. Therefore the undersigned recommends that Defendant's

motion be denied.

E.

Defendant's Motion to Dismiss for Lack of Subject MatterJurisdiction

Defendant's Motion to Dismiss for lack of Subject mattet jurisdiction (Docket Etttty
1ó) lacks

medt. Subject matter jurisdiction is both

a Constitutional and statutory requitement

which resfficts federal judicial pov/er to a limited set of cases and controversies. Thus, "no
action of the parties can confer subject matter jurisdiction upon a federal court."
Ireland u. Conþagnie de¡ bauxin¡ de Gainee,456 U.S. 694,702 (1982).

10

Im

Corþ. of

To the extent that Defendant argues that this Court does not have subject matter
jurisdiction to hear disputes involving garnishment proceedings to enforce criminal penalties,
fìnes or restitution orders, his arguments are meritless. The district court has subject-matter

judsdiction to enforce the \)Ørit of Garnishment against Defendant. A number of courts have
reasoned that federal coutts have the authority

to

decide garnishment related disputes

"because the coutt had ancillary jurisdiction to enforce its undedying judgment, as well
original jurisdiction over the government's effort to collect a debt on its own behal
re/. McCandli¡s u. Sekendur, 631, F.

App'"

447

State¡ u. Vin,ë Snppù Corþ.,151 F.3d 580,

as

f." (J.5. ex

, 449 (7th Cir. 2015) (citing 28 U.S.C. $ 1345; United

585-86 Qth Cir. 1998));

:ee alro

28 U.S.C.

\

3202;28

U.S.C. $ 3205; United Smns u. A//en, 57 F'. Srrpp. 3d 533, 539 (E.D.N.C. 201,4) ("Typical
examples

of such ancillary jurisdiction include the power reserved to the court to enjoin

actions elsewhete,

to impose sanctions, and to order

garnishment

proceeding.)" (intetnal citation and quotation omitted);United

States u.

or other incidental

Harrh,847

F'.

Supp.2d

828,831 (D. Md. 201,2) (internal citation and quotation omitted).

The undersigned fìnds that the Defendant's rights to Due Process and Equal
Protection of the Law have not been violated, and the Defendant's reliance upon Due Process,
Equal Protection, the Contract Disputes r{,ct of 1978, the False Statements Accountability Act

of

201,1, the

,\il

nØrits -A,ct and Rule 12(b)(1)

of the Federal Rules of Civil Procedure are ro no

avail. In Defendant's motion fot lack of subject matter judsdiction he obviously desires to
reargue his fifteen year old conviction, referring

indictment. (Docket E.rtty

1,6

to counts seventeen and nineteen of

his

at1.) This Court will have no part in re-litigating what has been

1t

ftnaltzed in the various courts that have heard his direct or collateral appeals. This Court has
subject matter jurisdiction over rhis writ of garnishment proceeding.

F.

Motion for Leave of Court to Conduct Discovery on the Jurisdictional Issues
The undersigned denies Defendant's Motion for Leave of Cout to Conduct Discovery

on the Jurisdictional Issues pursuant to Rule 26(a)(1)-þ)(1) of the Federal Rules of Civil
Procedure. (Docket Entry 17). The undersigned fìnds that none of the issues in the dispute
before this Court, including any jurisdictional issues, require Discovery. To the contrary, all
disputes can be decided by the Court based upon the underlying facts set forth in the pleadings

and applicable regulations and case law. Âssuming arguendo there is potential discovery
relevant to either party's claims or defenses regarding "jurisdictional issues," such discovery

would not be proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1). Moreover, the

Court finds that based upon the history of this case, there is a strong likelihood that the
Defendant would abuse the discovery process. Therefore, Defendant's Motion is denied. No
hearing is waranted in this matter.

G.

Defendant's Motion fot

a

Due Process Hearing andf or Evidentiary Hearing

As to Defendant's Motion for a Due Process Hearing andf or Evidentiary Hearing on
the Defendant's Motion to Dismiss for Lack of Subject MatterJurisdiction pursuant to the

Writs Act, 28 U.S.C.

S 1ó51 (a) and Rule

Âll

12þ)(1) of the Federal Rules of Civil Procedure and

the Motion to Conduct Discovery on the Jurisdictional issues and the on the Defendant's

Motion to Flold unlawful and Set-Aside the Plaintiffs Agency ,{ction pursuanr to

t2

rhe

Administrative Procedure Act, 5 U.S.C. SS 702-706 are denied. (Docket E.rt y 31), the Court
denies this

H.

Motion. No hearing is warranted in this matter.
Defendant's Motion for Due Process Hearing andf or an Evidenlary Hearing on
the Defendant's Motion for Emergency Temporary Restraining

,A.s

to Defendant's Motion for Due Process Hearing andf or an Evidentiary Hearing on

the Defendant's Motion for Emergency Temporary Restraining Order Pursuant to Rule 65þ)

of the Federal Rules of Civil

Procedure, et

a,1.,

Motion for Preliminary Injunction and

DeclaratoryJudgment (Docket Entry 32) the Court has previously ruled upon these motions

without aheanng. (Docket Entry 35.)

III.

CONCLUSION

For the reasons set forth above,IT IS RECOMMENDED that Defendant's motions

to Quash (Docket Entry 5), Motion to Ttansfer case (Docket Entry 6), Motion for

Recusal

(Docket Entty 7), Motion for Sanction (Docket Entty 10), Motion to Dismiss (Docket Entry
1.6),

and be Denied.

IT IS FURTHER ORDERED

that Defendant's Motion for Due Process Hearing

on Defendant's Motion to Dismiss for Lack of Subject MatterJurisdiction pocket Entry 31)

be Denied, Defendant's Motion fot Due Process Hearing on Defendant's Motion for
Emergency Temporary Restraining Order (Docket Entry 32) be Denied, and Defendant's

Motion fot leave to conduct Discovery @ocket Ent"y 17) be Denied.

13

Uni

August 31,201,6
Durham, North Carolina

t4

ebster
State Magistrate Judge