Opinion
Nos. 3-04-CV-69-H, 3-04-CV-70-H.
April 29, 2004
CONSOLIDATED REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Pursuant to the District Court's orders of reference the following pleadings and motions have been referred to the magistrate judge for report and recommendation:
1. Guy Sparkman's Motion to Transfer, to Conduct Hearing, etc. filed on December 22, 2003 in No. 3-04-CV-69-H.
This motion was filed prior to the Eastern District of Texas' Order filed on January 8, 2004, transferring the garnishment applications to the Northern District of Texas.
3. Guy Sparkman's Motion to Transfer, to Conduct Hearing, etc. filed on December 22, 2003, in No. 3-04-CV-70-H.
See n. 1, supra.
4. Southside Bank's request for attorney's fees included in its answer filed on December 17, 2003, in No. 3-04-70-H.
On March 17, 2003, Southside Bank filed its amended response withdrawing its request for attorney's fees.
5. Plaintiff's Motion for Disposition Order filed on February 9, 2004, in No. 3-04-69-H.
On March 11, 2004, Plaintiff filed its amended memorandum in support of its motion.
6. Plaintiff's Motion for Disposition Order filed on February 9, 2004, in No. 3-04-70-H.
On March 11, 2004, Plaintiff filed its amended memorandum in support of its motion.
On April 22, 2004, a hearing was held before the undersigned magistrate judge pursuant to 28 U.S.C. § 3205(c)(5) at which the United States appeared through its counsel and at which Guy E. Sparkman, the judgment debtor, appeared in person pro se. Neither of the garnishee parties chose to appear. Having considered the relevant pleadings and the statements and representations made at the hearing the magistrate judge finds and recommends as follows:
FINDINGS OF FACT:
1. On September 23, 2003, judgment against Guy E. Sparkman in criminal cause No. 6-03-CR-21 in the Eastern District of Texas was entered. In pertinent part Guy E. Sparkman was ordered to pay restitution in the amount of $43,866.00 to the Veterans Administration. Sparkman filed a timely appeal from the conviction which is currently pending in the Fifth Circuit in No. 03-41383. Sparkman is presently confined at FCI, Seagoville, serving the incarceration portion of his sentence.
On October 9, 2003, an amended judgment was entered correcting a clerical error in the prior judgment. However, it did not change the amount of restitution imposed in the initial judgment.
2. After Sparkman failed to pay any sums due under the District Court's order, for which the United States Attorney for the Eastern District of Texas made demand pursuant to letters dated September 23, 2003, the government filed garnishment applications in the criminal action on November 13, 2003, against his funds in the possession of the Smith County District Clerk and Southside Bank, respectively.
3. On December 17, 2003, the Smith County District Clerk filed an answer stating that it had funds in its possession due and owing to Guy E. Sparkman in the amount of $34,907.17.
4. On December 17, 2003, Southside Bank filed its answer stating that it had funds in its possession due and owing to Guy E. Sparkman in the amount of $9,039.17.
5. On December 22, 2003, Guy E. Sparkman filed motions to transfer and to conduct a hearing with respect to each garnishment application, and on January 8, 2004, the garnishment actions were transferred to this court by the District Court for the Eastern District of Texas pursuant to 28 U.S.C. § 3202.
CONCLUSIONS OF LAW:
Guy E. Sparkman raises several objections to the government's motions for entry of disposition orders, which the court considers seriatim:
1. Sparkman initially claims that he was not given timely notice of the government's garnishment applications. His conclusory claim that the filing of the applications without prior notice to him violates rights under the Fifth Amendment is without merit. The records show that he was notified of the garnishment proceedings by personal service effected on December 12 and December 16, 2003, respectively. See Government's Amended Memorandum filed on March 11, 2004, Exhibits D and E. He in turn signed his motions to transfer, etc. on December 18, 2003, which were filed of record on December 22, 2003, in the Eastern District of Texas. Moreover, any claim of lack of timely notice is rendered harmless, if not moot, by the fact that he was permitted to appear in person before this court to present his objections in opposition to the government's motions for entry of disposition orders.
2. Sparkman next argues that the government's garnishment applications are prematurely filed due to the fact that the underlying judgment requiring the payment of restitution is not a final judgment. In its amended memoranda filed on March 11, 2003, the government points out that 18 U.S.C. § 3664(o) expressly provides that a sentence imposing an order of restitution is final, notwithstanding the fact that it is subject to later modification. Although a judgment which requires the payment of restitution may be stayed, See F.R.A.P. 8(a) and F.R.Crim.P. 38(e)(1), Sparkman has not sought such relief from either the convicting court or the Fifth Circuit.
Were the Fifth Circuit to vacate in whole or in part the restitution order contained in the District Court's judgment in No. 6-03-CR-21, once the subsequent judgment became final, Sparkman could seek remission of the garnished funds from the government.
3. Finally, Sparkman contends that the funds in the possession of the garnishees are exempt from execution pursuant to 11 U.S.C. § 522(d), incorporated by reference in 28 U.S.C. § 3014(a)(1).
a. The Smith County District Clerk funds (No. 3-04-CV-69-H). Sparkman claims that these funds are exempt from execution, relying on 11 U.S.C. § 522(d)(11)(C). These funds constitute the proceeds of an insurance policy on the life of Sparkman's deceased mother. See the government's post-hearing letter to the court dated April 26, 2004, with attachments. The insurance policy was the subject of a lawsuit in which the insurer deposited the death benefit proceeds with the court. The trial court ultimately awarded the entire proceeds of the policy to Sparkman. See Reliastar Life Insurance Co. vs. Gary Sparkman and Larry Sparkamn, No. 00-1330-A, Final Judgment signed on May 1, 2003. Given Guy Sparkman's own advanced age and the absence of any evidence that he was a dependent of his mother at the time of her death, he has failed to prove that this exemption applies to the proceeds of the state court judgment. Moreover, since he is presently confined serving the sentence imposed in the Eastern District of Texas, such funds are not reasonably necessary for his support.
Guy E. Sparkman, proceeding pro se filed an appeal from the judgment which is pending in the Court of Appeals for the Thirteenth District at Corpus Christi, No. 13-03-00500.
b. The Southside Bank funds (No. 3-04-CV-70-H). At the hearing before the magistrate judge Sparkman represented that the funds in the bank account constitute payments received from the Social Security Administration and from the Veterans Administration, the federal agency that he was convicted of defrauding and the agency to which he has been ordered to make restitution. He relies on the exemptions set out in § 522(d)(10)(A) and (B).
28 U.S.C. § 3014(b)(2) expressly imposes upon the debtor seeking to invoke an exemption the burden of persuasion. See also United States v. Santee Sioux Tribe of Nebraska, 254 F.3d 728, 732-734 (8th Cir. 2001).
Aside from Sparkman's conclusory statements that the bank account consisted entirely of government benefit check proceeds, nothing was presented to the court to establish that the funds in the bank's possession at the time it was served with the government's garnishment application or at the time it filed its answer were the proceeds of government checks. Absent some corroboration to support his contention, the magistrate judge finds that Sparkman has failed to prove that the funds in the Southside Bank's possession constitute property which is exempt from execution.
Therefore, the objections raised by Guy E. Sparkman are wholly without merit.
RECOMMENDATION:
For the foregoing reasons it is recommended that the objections asserted by Guy E. Sparkman to the government's garnishment actions be overruled and denied, and that the District Court enter the disposition orders requested by the government in Nos. 3-04-CV-69-H and 3-04-CV-70-H.
A copy of this recommendation shall be transmitted to counsel for the government, for the Smith County District Clerk and for Southside Bank and to Guy E. Sparkman, pro se.