United States of America v. Drapeau et al

Filing 22

ORDER DENYING GARNISHEE'S OBJECTION TO WRIT OF GARNISHMENT (Dkts. 8 , 11 ), signed by Judge Benjamin H. Settle. (ERA)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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UNITED STATES OF AMERICA,
Plaintiff,

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EDWARD LEROY DRAPEAU,
Defendant / Judgment Debtor,

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(3:09-cr-5275-1 RJB)

v.

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CASE NO. 18-mc-5032 BHS

ORDER DENYING GARNISHEE’S
OBJECTION TO WRIT OF
GARNISHMENT

and
WASHINGTON STATE DEPT. OF
RETIREMENT SYSTEMS,

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Garnishee.

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Before the Court is Garnishee Washington State Department of Retirement

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Systems’s (“Department”) objections to the writ of garnishment issued in this case. Dkts.

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8, 11 (collectively “objections”). The Court has considered the pleadings filed in support

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of and in opposition to the objections and the remainder of the file and hereby denies the

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Department’s objections for the reasons stated herein.

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ORDER - 1

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I.

FACTUAL & PROCEDURAL HISTORY

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On December 18, 2009, the Honorable Robert J. Bryan entered a criminal

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judgment against defendant/judgment debtor Edward LeRoy Drapeau (“Mr. Drapeau”),

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adjudging him guilty of one count of wire fraud and one count of mail fraud. United

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States v. Drapeau, 09-cr-5275-1 RJB, Dkt. 25. The Court sentenced Mr. Drapeau to 18

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months’ imprisonment and ordered him to pay $502,475.78 in restitution. 1 Id. at 5.

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On December 12, 2018, the United States filed an application for writ of

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garnishment (“writ”). Dkt. 1. The United States sought to enforce the writ to collect from

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the Department as garnishee on the belief that:

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[T]he Garnishee owes or will owe money or property to the
Defendant/Judgment Debtor’s spouse, Terry Lynn Drapeau (Mrs. Drapeau),
or is in possession, custody or control of property in which Mrs. Drapeau
holds a substantial nonexempt interest. Defendant/Judgment debtor has a
presumptive community property interest in all property and income
acquired by his spouse, Mrs. Drapeau, during their marriage.

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Dkt. 1 at 2. On December 18, 2018, the Court entered an Order authorizing the issuance
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of the writ, Dkt. 3, and on December 20, 2018, the Clerk of Court issued the writ, Dkt. 4.
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On December 20, 2018, the United States served the Department with the writ and
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its associated pleadings by U.S. mail. Dkt. 6. On December 24, 2018, the Department
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received the writ by mail. Dkt. 8 at 1.
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On January 3, 2019 the Department answered the writ, indicating it had control
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over a teacher’s retirement account belonging to Mrs. Drapeau valued at $155,000. Dkt. 8
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at 3. However, the Department objected to the service of the writ and claimed property
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As of April 4, 2019, $478,193.92 remained outstanding. Dkt. 17-1.

ORDER - 2

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exemptions to the United States’ ability to collect Mrs. Drapeau’s retirement benefits. Id.

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at 6–10. The Department detailed its arguments regarding service and collection in a legal

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memorandum attached to its answer filed by the Washington State Attorney General’s

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Office. Id.

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On March 25 and 28, 2019, the United States re-served all parties with the writ

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and related documents via personal delivery by the United States Marshals Service. See

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Dkts. 12 (the Department), 13 (the Washington State Office of Attorney General), 14

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(Mr. Drapeau), 15 (Mrs. Drapeau).

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On April 4, 2019, the Department filed additional objections. Dkt. 11. In its April

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4 pleading, the Department incorporated its earlier objections, continued to contest

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service, and asserted that the United States’ attempt to cure service by personal delivery

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of the writ failed because such service fell outside the 90-day deadline for service of a

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complaint under Fed. R. Civ. P. 4(m). Id.

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II. DISCUSSION
A.

Service of Writ
Under the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. § 3663A et

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seq., the United States may enforce a criminal restitution order “in accordance with its

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civil enforcement powers.” 18 U.S.C. § 3613(a). In turn, the Federal Debt Collection

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Practices Act (“FDCPA”), 28 U.S.C. § 3001 et seq., sets forth the civil enforcement

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procedures the United States uses to recover restitution debts. 28 U.S.C. § 3001(a)(1); see

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also United States v. Mays, 430 F.3d 963, 965–66 (9th Cir. 2005) (FDCPA applies to

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United States’ collection of criminal restitution debts under MVRA). As authorized by

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§ 3613(a) of the MVRA, the United States obtained the writ of garnishment under the

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FDCPA. Dkt. 4 at 1. The FDCPA authorizes the United States to serve the writ on the

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Department in any manner consistent with the Federal Rules of Civil Procedure. 28

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U.S.C. § 3004(a).

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The Department argues that the United States’ service of the writ was improper,

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asserting that to be effective, the writ had to be served in the manner provided by Federal

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Rule of Civil Procedure 69(a), which requires compliance with state law. Dkts. 8 at 7–8,

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11 at 2–3; Fed. R. Civ. P. 69(a). In turn, RCW 4.92.020, made applicable to garnishment

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proceedings via RCW 6.27.040, dictates that summonses in civil actions brought against

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Washington State must be served directly on the Office of the Attorney General (as

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opposed to service on the Department). RCW 4.92.020.

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The United States does not dispute that service by mail was improper under

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Washington law. Rather, the United States counters that (1) Rule 69(a) does not control

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service of the writ, because the rule governs writs of execution, as opposed to writs of

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garnishment; (2) in the alternative, that Rule 69(a) expressly authorizes that any federal

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statute “governs to the extent it applies”; (3) that service was proper under the FDCPA,

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which authorizes service of a writ in accordance with the Federal Rules of Civil

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Procedure, and Fed. R. Civ. P. 5(b)(2)(C), which authorizes service by mail at a person’s

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last known address; and (4) that in any case, the United States re-served the garnishment

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on the Department via a Deputy United States Marshal as provided by Rule 4.1(a),

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governing service of process of papers other than a summons and complaint. Dkt. 16 at

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4–5.

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Examining these arguments, the Court rejects the United States’ assertion that

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service of the writ by mail was proper under Fed. R. Civ. P. 5(b)(2)(C). Rule 5 only

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governs service of “pleadings and other papers.” Fed. R. Civ. P. 5. Rule 4, of course,

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provides more stringent requirements governing service of a summons. Fed. R. Civ. P. 4.

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“Ordinarily, a writ of garnishment should be served as any other summons.” LONNIE E.

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GRIFFITH, JR., 6 AM. JUR. 2D Attachment and Garnishment § 339 (2d. ed. Feb. 2019

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Update) (citing In re American Freight System, Inc., 153 B.R. 906 (Bankr. D. Kan. 1993)

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(applying Kansas law) and Woods v. Quarles, 178 Ark. 1158, 13 S.W.2d 617 (1929)).

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Unlike Rule 5(b)(2)(C), Rule 4 does not authorize service of a summons on a state or

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local government agency by mail. Fed. R. Civ. P. 4(j)(2).
However, the United States endeavored to cure the defect in service by serving the

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Department and the Office of the Attorney General directly via Deputy United States

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Marshal on March 25, 2019. Dkts. 12, 13. The United States contends that this re-service

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of the writ on the Department was “consistent with Federal Rule of Civil Procedure 4.1’s

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requirements for serving ‘process’ other than a summons and complaint.” Dkt. 16 at 5.

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The Court need not belabor the analysis over whether a writ of garnishment more aptly

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constitutes a “process” or a “summons.” Service of the writ and its associated pleadings

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via personal delivery by United States Marshal satisfied Rule 4.1(a)’s requirements for

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service of process and Rule 4’s requirement for service of a summons on a state or local

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government, which includes “any other state-created government organization.” Fed. R.

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Civ. P. 4.1; Fed. R. Civ. P. 4(j)(2). This personal delivery, like the service by mail the

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United States attempted in December 2018, provided the Department with actual notice

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of the writ. See Dkts. 8 at 6, 11 at 2 (acknowledging receipt of the writ on December 24,

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2018, and on March 25, 2019, respectively). Therefore, service of the writ on the

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Department complied with the Federal Rules of Civil Procedure.

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Finally, service of the writ on March 25, 2019 was timely. Under the FDCPA, the

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United States may serve the writ at any time before the “postjudgment remedy is put into

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effect.” 28 U.S.C. § 3004(c). The United States has yet to move for a “disposition order”

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under 28 U.S.C. § 3205(7), which, if entered by the Court, would have the effect of

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enforcing the post-judgment remedy sought by the United States in this action. Because

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the United States served the writ on the Department prior to any enforcement of the

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remedy sought, service was timely as of March 25, 2019. Therefore, the Department’s

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objection on the basis that service was improper is denied.

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B.

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Merits of Objections
The Department objects to the garnishment on the grounds that (1) Mrs. Drapeau’s

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retirement benefits are exempt from collection under federal and state law; (2) Mrs.

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Drapeau does not have a present right to collect the retirement benefits; and (3) Mr.

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Drapeau possesses no present, tangible right to Mrs. Drapeau’s retirement benefits.

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First, the Department objects on the basis that Mrs. Drapeau’s retirement account

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Exemption of Retirement Benefits

is exempt from garnishment under federal and state law. Dkt. 8 at 8.
The MVRA broadly permits the United States to enforce a restitution order against

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“all property or rights to property of the person fined,” notwithstanding any other federal

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law. 18 U.S.C. § 3613(a). Section 3613(a) of the MVRA limits the exemptions that apply

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to the collection of restitution debt to certain tax levy exemptions enumerated in the

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Internal Revenue Code. 2 Notably, § 3613(a) does not provide any exemption for a

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restitution debtor’s community property interest in a spouse’s retirement benefits.

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Moreover, the Ninth Circuit has recognized that the MVRA’s “notwithstanding” clause

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overcomes anti-alienation provisions contained in other federal statutes. Analyzing the

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issue en banc in United States v. Novak, 476 F.3d 1041, 1049 (9th Cir. 2007), the Circuit

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held that when enacting the MVRA, “Congress intended to override [the Employee

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Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”)] anti-

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alienation provision and allow the government to reach defendants’ ERISA-covered

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retirement plan benefits when enforcing criminal restitution orders.” The Department

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therefore fails to demonstrate that Mrs. Drapeau’s retirement account is exempt from

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garnishment under federal law. Accordingly, the Department’s objection on the ground

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that federal law does not permit garnishment is denied.

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Neither do state law property exemptions defeat the United States’ enforcement of

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the restitution debt. Section 3613(a)(2) of the MVRA expressly states that state law

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exemptions to garnishment that would otherwise be applicable under the FDCPA, 28

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18 U.S.C. § 3613(a), applicable to restitution under subsection 3613(f), allows a
judgment imposing a fine to be enforced against all property or rights to property of the person
fined, except those exempt pursuant to 26 U.S.C. § 6334(a)(1), (2), (3), (4), (5), (6), (7), (8), (10),
and (12) of the Internal Revenue Code of 1986. Section 6334 exempts, in relevant part: (1)
Wearing apparel and school books; (2) Fuel, provisions, furniture, and personal effects; (3)
Books and tools of a trade, business, or profession; (4) Unemployment benefits; (5) Undelivered
mail; (6) Certain annuity and pension payments; (7) Workmen’s compensation; (8) Judgments
for support of minor children; (10) Certain service-connected disability payments; and (12)
Assistance under Job Training Partnership Act. 26 U.S.C. § 6334(a) (1)-(8), (10), (12).

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ORDER - 7

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U.S.C. § 3014, do not apply to a federal action seeking the collection of a criminal

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restitution debt under the MVRA. 18 U.S.C. § 3613(a)(2) (“section 3014 of chapter 176

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of title 28 shall not apply to enforcement under Federal law.”)

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Still, the Department invokes § 3205(a) of the FDCPA, which provides that “[c]o-

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owned property shall be subject to garnishment to the same extent as co-owned property

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is subject to garnishment under the law of the State in which such property is located.” 28

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U.S.C. § 3205(a). Thus, the FDCPA and the MVRA conflict in that the MVRA allows

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the United States to enforce a restitution order through garnishment of “all property or

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rights to property” of the judgment debtor, while the FDCPA protects against

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garnishment of co-owned property to the extent the co-owned property is also protected

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under state law. 18 U.S.C. § 3613(a); 28 U.S.C. § 3205(a).

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The United States concedes that the Ninth Circuit has not yet “squarely

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address[ed] the interplay between the MVRA and FDCPA in the context of a restitution

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debtor’s community property interest in a spouse’s earnings or retirement benefits.” Dkt.

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16 at 7. However, it points to two Fifth Circuit cases, United States v. Elashi, 789 F.3d

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547, 552–53 (5th Cir. 2015), and United States v. Loftis, 607 F.3d 173, 179 n.7 (5th Cir.

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2010), that both stand for the proposition that the MVRA overrides the FDCPA’s

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incorporation of state-law protections for co-owned property.

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In Loftis, the court held that a husband’s community property interest in his wife’s

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retirement benefits was subject to garnishment by the United States under the MVRA.

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Loftis, 607 F.3d at 179 n.7. In so concluding, the court determined that the FDCPA

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yielded to the MVRA under the FDCPA’s own rule of construction, which provides that

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the FDCPA “shall not be construed to curtail or limit the right of the United States under

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any other Federal law” to enforce criminal restitution orders. Loftis, 607 F.3d at 179 n.7

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(citing 28 U.S.C. 3003(b)(1)). In Elashi, the court similarly concluded that the MVRA

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allowed the United States to enforce a criminal restitution debt against the defendant’s

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community property interest in his wife’s wages, which were exempt from collection

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under state law. Elashi, 789 F.3d at 552. The court reasoned that the MVRA’s

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“notwithstanding” clause “underscores the conclusion that the state-law limitations in the

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FDCPA are inapplicable when the United States is enforcing a federal criminal debt.” Id.

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The Court finds no reason why the Fifth Circuit’s reasoning should not apply with equal

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force here. Therefore, the Court concludes that although the MVRA and the FDCPA

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have conflicting provisions on the applicability of state-law property exemptions, the

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MVRA controls. The Department’s objection to the garnishment in reliance on

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Washington law property exemptions, incorporated into the FDCPA under § 3205(a), is

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accordingly denied.

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2.

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Next, the Department objects that neither Mr. nor Mrs. Drapeau has any present

Present Right to Retirement Benefits

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right to disbursement of Mrs. Drapeau’s retirement benefits, so those benefits cannot be

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garnished. Dkt. 8 at 8–9; Dkt. 11 at 2 (incorporating objections from Dkt. 8). The

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Department’s arguments fail for two reasons.

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First, the Department wrongly assumes the United States seeks to use the writ to

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acquire an immediate lump sum garnishment of Mrs. Drapeau’s retirement account. Dkt.

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8 at 11 (citing Novak, 476 F.3d at 1063, for the proposition that lump sum garnishment of

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a defendants’ retirement account is permissible “only if, the terms of the plan allow the

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defendant to demand a lump sum payment at the present time.”). The United States

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counters that it “does not claim a right to force the Department to disburse” the benefits

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immediately. Dkt. 16 at 9. Moreover, the United States explains that the continuing

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nature of the writ allows it to collect a portion of the benefits when, “after retirement or

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some other qualifying event, Mrs. Drapeau receives disbursements.” Id. Under the

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FDCPA, writs of garnishment are continuing in nature, terminating only by court order,

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exhaustion of the debtor’s property in the hands of the garnishee, or satisfaction of the

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debt. 28 U.S.C. § 3205(a). Therefore, the fact that neither Drapeau has a present right to

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collect Mrs. Drapeau’s retirement benefits, or alternatively, that neither has a right to

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unilaterally cash out the account, is immaterial to the question of whether the writ

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attaches to Mr. Drapeau’s community property interest in the benefits. 3

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Second, both the FDCPA and the MVRA support the conclusion that the writ

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attaches to Mr. Drapeau’s interest in the retirement benefits, even if that interest is

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assumed to be an intangible future interest. See 28 U.S.C. § 3002(12) (broadly defining

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property under the FDCPA as “any present or future interest, whether legal or equitable,

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in real, personal (including choses in action), or mixed property, tangible or intangible,

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vested or contingent, wherever located and however held (including community property

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and property held in trust (including spendthrift and pension trusts)); 18 U.S.C. §

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3613(a)(1) (authorizing enforcement of a restitution debt under the MVRA against “all

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Mr. Drapeau possess a community property interest in Mrs. Drapeau’s retirement
benefits under state law. See RCW 26.16.030; RCW 6.15.020(6).

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property or rights to property” of the judgment debtor). When interpreting the MVRA,

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the Novak court noted that the Supreme Court has previously interpreted “[t]he statutory

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language ‘all property and rights to property,’” in the context of the tax code, finding that

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the language “is broad and reveals on its face that Congress meant to reach every interest

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in property . . . .” of a judgment debtor. Novak, 476 F.3d at 1046 (citing United States v.

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Nat’l Bank of Commerce, 472 U.S. 713, 719 (1985) (emphasis added) (quoting 26 U.S.C.

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§ 6321). Thus, the writ of garnishment attaches to Mr. Drapeau’s community property

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interest in his wife’s retirement benefits, regardless of the current status of his interest in

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the account. Therefore, the Department’s objections to the writ on this basis are denied.

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III. ORDER

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Therefore, it is hereby ORDERED that the Department’s objections to the writ of
garnishment, Dkts. 8, 11, are DENIED.
Dated this 22nd day of May, 2019.

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BENJAMIN H. SETTLE
United States District Judge

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ORDER - 11