United States District Court, W.D. Washington, Seattle
S. Zilly, United States District Judge.
MATTER comes before the Court on defendant Luann
Renfrow's motions, docket no. 13 in C17-1305 and docket
no. 12 in C17-1306, to modify the Writs of Continuing
Garnishment issued in each case. Having reviewed all papers
filed in support of, and in opposition to, the motions, the
Court enters the following order.
pleaded guilty to aiding and abetting investment advisor
fraud and was sentenced to two years imprisonment.
See Am. Judgment (CR16-269, docket no. 25).
Defendant was ordered to pay restitution in the amount of $4,
183, 500. Id. In July 2017, the Government
successfully applied for three writs of continuing
garnishment, naming as garnishees Scottrade (Case No.
17-mc-67), Greenway-Southlake Office Partners, L.P. (Case No.
17-mc-65, now C17-1305), and Greenway-Lakewood Partners, L.P.
(Case No. 17-mc-66, now C17-1306). Defendant did not request
a hearing or otherwise object as to the garnishment
proceeding involving her rollover individual retirement
account (“IRA”) with Scotttrade, and the
garnishee was directed to pay to the Court the entire amount
in such account (estimated to be $114, 546.99, less any
federal tax withholdings paid to the Internal Revenue
Service), so that such funds could be applied to
defendant's restitution obligation. Order (17-mc-67,
docket no. 9).
regard to the other two proceedings, defendant moves to limit
the amount subject to garnishment, citing the Consumer Credit
Protection Act (“CCPA”), which provides, in
relevant part, that “the maximum part of the aggregate
disposable earnings of an individual for any workweek which
is subjected to garnishment may not exceed . . . 25 per
centum of his disposable earnings for that week.” 15
U.S.C. § 1673(a)(1). Under the CCPA, the term
“earnings” means “compensation paid or
payable for personal services, whether denominated as wages,
salary, commission, bonus, or otherwise, and includes
periodic payments pursuant to a pension or retirement
program.” 15 U.S.C. § 1672(a). The phrase
“disposable earnings” is defined as the part of
an individual's earnings that remains after deducting
amounts required by law to be withheld. 15 U.S.C. §
contends that the funds due to her on a quarterly basis from
garnishees Greenway-Southlake Office Partners, L.P. ($200 per
quarter) and Greenway-Lakewood Partners, L.P. ($3, 000 per
quarter) constitute “earnings” within the meaning
of the CCPA. According to defendant, while she was employed
with Med-Data, Inc., a portion of her salary was contributed
to a 401(k) pension plan administered by Nationwide Life
Insurance Company. Renfrow Decl. at ¶ 1 (C17-1305,
docket no. 15; C17-1306, docket no. 14). In 2003, when
defendant began working for her former husband's company,
the Spangler Group, Inc. (“Spangler”), the amount
in the Med-Data plan ($82, 814.73) was rolled over into
Spangler's retirement program. See id. at ¶
1 & Ex. 1. The assets of Spangler's retirement
program were invested with garnishees Greenway-Southlake
Office Partners, L.P. and Greenway-Lakewood Partners, L.P.
(collectively, “Greenway”). Id. at
retirement program was eventually placed into state court
receivership proceedings and liquidated. See Order
(C14-1203, docket no. 28). Defendant's share of the funds
in the retirement program was calculated to be 26.1% or $99,
963. Id.; see also Prelim. Jt. Stmt.
(C14-1203, docket no. 25); Stipulation (C14-1203, docket no.
27). The other 73.9% of the assets of Spangler's
retirement program were garnished and later applied to
defendant's ex-husband's special assessment and
restitution obligations. See Order (C14-1203, docket
no. 28); see also Order (CR12-133, docket no. 212).
After the amount subject to garnishment relating to
defendant's ex-husband's criminal matters was
disbursed, the ownership interest in the Greenway accounts
was apparently transferred from Spangler's retirement
program to defendant. See Renfrow Decl. at
¶¶ 3-4 & Ex. 3. Defendant argues that the funds
remaining in the Greenway accounts should be treated as
“disposable earnings” subject to the CCPA's
25% cap on garnishment.
Mandatory Victims Restitution Act of 1996
(“MVRA”) authorizes the United States to
“enforce a judgment imposing a fine in accordance with
the practice and procedures for the enforcement of a civil
judgment under Federal law or State law.” 18 U.S.C.
§ 3613(a). The MVRA provides that,
“[n]otwithstanding any other Federal law . . ., a
judgment imposing a fine may be enforced against all
property or rights to the property of the person fined,
” except that certain property exempt from levy for
taxes is likewise exempt under the MVRA. Id.
(emphasis added). The MVRA is also subject to the CCPA's
25% limit on the garnishment of disposable earnings.
Id. at § 3613(a)(3).
Ninth Circuit has interpreted the MVRA to allow the
Government to reach retirement plan benefits despite the
anti-alienation provision of the Employee Retirement Income
Security Act of 1974 (“ERISA”). United States
v. Novak, 476 F.3d 1041 (9th Cir. 2007) (en banc). The
Government, however, can garnish the corpus of an ERISA plan
to satisfy a restitution obligation only if the terms of the
plan permit the judgment debtor to demand a lump sum payment
at the present time. Id. at 1060-64. As in the tax
levy context, in enforcing a restitution order, the
Government's right is merely “to step into the
defendant's shoes, ” and it cannot cash
out a retirement plan when the defendant would be prohibited
by ERISA or the terms of the plan from doing so. See
id. at 1063 (emphasis in original); see also United
States v. Sayyed, 186 F.Supp.3d 879, 882-83 (N.D. Ill.
movant seeking to amend the Writs of Continuing Garnishment,
defendant bears the burden of proving that the Writs are, in
their present form, invalid. See Novak, 476 F.3d at
1064; see also 28 U.S.C. § 3205(c)(5).
Defendant has not, however, met her burden. She has offered
no evidence to suggest that she could not immediately
withdraw the entire amount in either or both of the Greenway
accounts. Instead, she has relied on cases that are
factually distinguishable because they deal with monthly
pension benefits, as opposed to the corpus of a 401(k)
account. See United States v. DeCay, 620 F.3d 534
(5th Cir. 2010) (holding that the United States could garnish
only 25% of the defendant's monthly benefit from the
Louisiana Sheriffs Pension and Relief Fund); United
States v. Miller, 588 F.Supp.2d 789 (W.D. Mich. 2008)
(issuing order of garnishment allowing the United States to
seize 25% of the defendant's monthly benefit from the
General Motors Hourly Pension Plan); United States v.
Wilson, 2007 WL 4557774 (S.D. Ga. Dec. 20, 2007)
(granting the Government's proposed writ of continuing
garnishment in the amount of 25% of the defendant's
monthly benefit from the Teachers Retirement System of
courts that have addressed the specific issue before the
Court have held that the Government is not bound by the
CCPA's 25% limit when garnishing either the corpus of, or
periodic disbursements from, a 401(k) account. See
Sayyed, 186 F.Supp.3d at 881-82; United States v.
Gaddis, 2010 WL 908666 at *2 (W.D. Okla. Mar. 9, 2010)
(reasoning that “when Defendant's wages were
deposited into his [401(k)] retirement account, they were
essentially transformed into investments, since the value of
the account could fluctuate depending on a number of market
factors, ” and thus, garnishment of the distributions
from the account was “not limited by the provisions of
the CCPA”); United States v. Beasley, 2010 WL
99363 (N.D. Tex. Jan. 8, 2010). Unlike in Gaddis, in
this matter, defendant has made no showing that she is
precluded from requesting a lump-sum withdrawal of the funds
in the Greenway accounts. See Gaddis, 2010 WL 908666
at *1. Defendant has not sustained her burden to demonstrate
that the Writs of Continuing Garnishment must be modified to
limit the Government to 25% of the funds remaining in the
Greenway accounts or that the Government may not garnish the
corpus of, as opposed to the quarterly distributions from,