United States v. Janice Stallons , 565 F. App'x 314 ( 2014 )

Case: 13-10668 Document: 00512609760 Page: 1 Date Filed: 04/28/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-10668 FILED
Summary Calendar April 28, 2014
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff–Appellee
v.
JANICE L. STALLONS,
Defendant–Appellant
MICHAEL G. STALLONS,
Appellant
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:12-CV-2462
Before REAVLEY, JONES, and PRADO, Circuit Judges.
PER CURIAM:*
Janice and Michael Stallons (“the Stallonses”) appeal the district court’s
final order of garnishment. The Stallonses contend the district court erred by
issuing an order of garnishment to the extent the garnishment order includes
Michael Stallons’s one-half community property interest in their joint
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 13-10668
accounts. The Stallonses assert that the garnishment order effects an
unconstitutional taking of property without just compensation and due process
in violation of the Fifth and Fourteenth Amendments. We reject these
arguments and affirm.
I. BACKGROUND
After Janice Stallons (“Janice”) pled guilty and was convicted of bank
fraud in violation of 18 U.S.C. §§ 371 and 1344, the district court ordered her
to pay $8,581,970.30 in restitution to her victims. To enforce the judgment,
the government sought writs of garnishment on various accounts and a life
insurance policy held in Janice’s name. Several of these accounts were joint
accounts Janice shared with her husband Michael Stallons (“Michael”).
Michael was not a party to the criminal case against his wife, and it is
undisputed that Michael was not implicated or otherwise involved in Janice’s
criminal activity.
The Stallonses were served with notice of each writ of garnishment.
They filed an answer to the writs of garnishment in which they admitted they
were the owners of the money held by the banks that the government sought
to garnish.
The Stallonses also asserted in their answer that any garnishment of the
money in their joint accounts would be unconstitutional in violation of the Fifth
and Fourteenth Amendments.
After initially entering a garnishment order, the district court vacated
the order and held a hearing. The district court provided the Stallonses an
opportunity to present their constitutional arguments, and the court also heard
testimony from Michael himself. Michael testified that he was not involved in
the bank fraud. Michael also testified that he was not personally sued or
otherwise notified that the bank-fraud judgment was being entered against
him personally.
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The district court rejected the Stallonses’ constitutional arguments and
reinstated the order of garnishment. The court noted that it “fully underst[ood]
Mr. Stallons’[s] sense that this is unfair to him.” But the court reasoned that
Fifth Circuit law on this topic was “clearly settled in the government’s favor.”
The district court reinstated the order of garnishment, and the Stallonses
timely appealed.
II. DISCUSSION
This Court has jurisdiction under 28 U.S.C. § 1291. We review the
district court’s final garnishment order de novo because the facts are
undisputed leaving only questions of law. United States v. Clayton, 613 F.3d
592, 595 (5th Cir. 2010).
Under 28 U.S.C. § 3205, a court may issue a writ of garnishment to
satisfy a judgment, and co-owned property “shall be subject to garnishment to
the same extent as co-owned property is subject to garnishment under the law
of the State in which such property is located.” Under Texas law, “community
property subject to a spouse’s sole or joint management, control, and
disposition is subject to the liabilities incurred by the spouse before or during
the marriage.” Tex. Fam. Code Ann. § 3.202(c). Thus, the government may
garnish a non-debtor spouse’s “one-half interest in the couple’s community
assets that were jointly managed or solely managed by” the debtor spouse.
United States v. Loftis, 607 F.3d 173, 178 (5th Cir. 2010).
Here, it is undisputed that the community assets in question were jointly
managed by Janice, the debtor spouse, and those assets may therefore be
garnished under applicable federal and state law. See id. at 178–80. The
Stallonses instead challenge the constitutionality of the garnishment of
Michael’s assets—without a finding of guilt on his part—on two grounds:
(1) the garnishment of Michael’s property without a finding of guilt deprives
him of property without due process of law in violation of the Fifth and
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Fourteenth Amendments, and (2) the garnishment of Michael’s property
affects a taking without compensation in violation of the Fifth and Fourteenth
Amendments. 1 These arguments are addressed in turn below.
“The essential requirements of due process are notice and an opportunity
to respond.” McDonald v. City of Corinth, Tex., 102 F.3d 152, 155 (5th Cir.
1996). An opportunity to respond must come “at a meaningful time and in a
meaningful manner.” Mathews v. Eldridge, 424 U.S. 319, 334 (1976) (citation
and internal quotation marks omitted). Here, both Michael and Janice were
provided notice weeks in advance of the garnishment order and afforded an
opportunity to respond. Moreover, Michael was permitted to testify and argue
his point, and it is clear from the record that the district court considered his
testimony and arguments. Therefore, we find no violation of constitutional due
process in the garnishment proceedings below. See also Lind v. Midland
Funding, L.L.C., 688 F.3d 402, 405–09 (8th Cir. 2012) (affirming the
garnishment of a non-debtor spouse’s joint bank account under Minnesota law
and concluding that because the non-debtor spouse “had actual notice and an
opportunity for a postdeprivation hearing, . . . her Fourteenth Amendment
right to due process was not violated when defendants attached funds from the
Linds’ joint bank account pursuant to Minnesota garnishment statutes.”).
The Stallonses’ takings argument is similarly unavailing. The
proponent of a takings claim “bears a substantial burden in proving that
government action inflicts an unconstitutional taking.” U.S. Fid. & Guar. Co.
v. McKeithen, 226 F.3d 412, 416 (5th Cir. 2000). As discussed above, the final
postjudgment order of garnishment was lawful under applicable federal and
1 Before the district court, the Stallonses appear to have asserted an Equal
Protection Clause argument that they did not include in their appellant brief. Because “the
failure to raise an issue on appeal constitutes waiver of that argument,” United States v.
Griffith, 522 F.3d 607, 610 (5th Cir. 2008), we need not and do not reach this issue.
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state law. The Stallonses argue in their brief the government is unfairly
seizing Michael’s property even though he “did nothing wrong, his only ‘crime’
was being married to Janice L. Stallons who got caught up in a bank fraud
scheme.” But the Stallonses have not presented a cogent constitutional
argument that this statutory scheme, imposing postjudgment garnishment to
obtain restitution, effects an unconstitutional taking in violation of the Fifth
or Fourteenth Amendments, nor have they pointed us to any cases holding as
much. Thus, the Stallonses have not met their burden.
Moreover, the Stallonses’ takings argument does not fall within the two
narrow channels this Court has identified for takings claims. This case
presents neither a “classic taking in which the government directly
appropriates private property for its own use,” nor a regulatory taking, in
which the government enacts “an economic regulation” that adjusts “‘the
benefits and burdens of economic life to promote the common good.’”
McKeithen, 226 F.3d at 416 (quoting E. Enters. v. Apfel, 524 U.S. 498, 522
(1998)). Instead, the statutory scheme enables the victims of criminal conduct
to obtain restitution from assets accessible to the perpetrator of the crime.
Thus the Stallonses’ taking claim is not within the Takings Clause of the Fifth
Amendment, which this Court has previously recognized “prevent[s] the
government from ‘forcing some people alone to bear public burdens, which, in
all fairness and justice, should be borne by the public as a whole.’” Id. (quoting
E. Enters., 524 U.S. at 522). In this sense, the only case the Stallonses cite—
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922)—is inapplicable, because
that case dealt with the latter category—a “regulatory taking.” See id. at 415–
16. The private monetary burdens of the victims were imposed by Janice’s
criminal conduct, and need not in fairness be borne by the public. See
McKeithen, 226 F.3d at 416.
Therefore, the Stallonses’ takings argument is without merit.
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III. CONCLUSION
Accordingly, the district court did not err in rejecting the Stallonses’
constitutional arguments. For the foregoing reasons, we AFFIRM the final
order of garnishment.
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