United States v. David Hughes ( 2019 )

Case: 18-20015 Document: 00514835726 Page: 1 Date Filed: 02/14/2019
REVISED February 14, 2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 18-20015 United States Court of Appeals
Fifth Circuit
FILED
UNITED STATES OF AMERICA, January 30, 2019
Lyle W. Cayce
Plaintiff – Appellee, Clerk
v.
DAVID THOMAS HUGHES,
Defendant – Appellant.
Appeal from the United States District Court
for the Southern District of Texas
Before REAVLEY, ELROD, and WILLETT, Circuit Judges.
REAVLEY, Circuit Judge:
David Thomas Hughes pleaded guilty to bank burglary. He was
sentenced to 240 months in prison and ordered to pay $189,933.31 in
restitution, with interest charged. The judgment provided that $100 was “due
immediately” and provided the following payment schedule for the remaining
amount:
Balance due in payments of the greater of $25 per quarter or 50%
of any wages earned while in prison in accordance with the Bureau
of Prisons’ Inmate Financial Responsibility Program. Any balance
remaining after release from imprisonment shall be paid in equal
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monthly installments of $500 to commence 60 days after the
release to a term of supervision.
Several years later the government discovered that Hughes had
accumulated $3,464.85—largely prison wages—in his inmate trust account.
Pursuant to 18 U.S.C. §§ 3613(a), 3664(n), and 3664(k), the government moved
for the immediate turnover of those funds. Hughes opposed the request and
filed a cross-motion to release funds, arguing, inter alia, that the district court
(1) only required him to make payments in installments and (2) “specifically
declined to order immediate payment of the entire amount.” Agreeing with the
government, however, the district court ordered the immediate turnover of
“funds up to the amount of $ 201,493.63,” with a $200 carve out for Hughes’s
telephone and commissary needs. Hughes timely appealed.
On appeal, Hughes argues that the district court erred in granting the
government’s motion because his criminal judgment required the restitution
balance owed beyond $100 to be paid in quarterly installments and did not
order that the balance be paid immediately. Because the government does not
allege that he defaulted on his restitution payments, Hughes argues, the
government lacked the authority to seek immediate payment of the full
restitution amount.
The parties do not cite, and research has not revealed, any binding
precedent from this court analyzing a case similar to Hughes’s, in which the
criminal judgment included a repayment schedule that began during the term
of imprisonment but did not state that the full restitution amount was due
immediately. Hughes, however, directs us to United States v. Martinez, in
which the Tenth Circuit confronted a structurally similar payment schedule.
812 F.3d 1200 (10th Cir. 2015). The judgment in Martinez required the
defendant to pay “$300 immediately,” with the “balance due” in accordance
with an installment schedule. Id. at 1203–04. Although the defendant had
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complied with his payment plan, the government nevertheless sought
garnishment of his retirement accounts. Id. at 1202.
The Tenth Circuit concluded that the government lacked the authority
to garnish the defendant’s retirement accounts because doing so would exceed
the terms of the restitution order; it reasoned that:
By statute, it is the district court—not the government—that
determines how a defendant is to pay restitution. See [18 U.S.C.] §
3664(f)(2) (“[T]he court shall . . . specify in the restitution order the
manner in which, and the schedule according to which, the
restitution is to be paid . . . .”) (emphasis added)). Thus, the
government can enforce only what the district court has ordered
the defendant to pay. See Enforce, Black’s Law Dictionary 645
(10th ed. 2014) (defining “enforce” primarily as “[t]o give force or
effect to [a law]; to compel obedience to [a law]”).
Id. The court rejected the government’s argument that it could enforce the full
amount notwithstanding the installment schedule, construing § 3572(d), which
provides that “[a] person sentenced to pay . . . restitution . . . shall make such
payment immediately, unless, in the interest of justice, the court provides for
payment . . . in installments,” to imply that the full restitution amount is not
due immediately when a court orders repayment pursuant to an installment-
based plan. Id. at 1205.
We are persuaded by the Tenth Circuit’s analysis. When a restitution
order specifies an installment plan, unless there is language directing that the
funds are also immediately due, the government cannot attempt to enforce the
judgment beyond its plain terms absent a modification of the restitution order
or default on the payment plan. See § 3572(d)(1); Martinez, 812 F.3d at 1205.
Turning to Hughes’s order, we find no language directing that the full
restitution amount was immediately due or owing, and the government does
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not allege he was in default. 1 Like Martinez, Hughes’s criminal judgment
specifies that a small amount ($100) was due immediately, and for the
remaining balance to be paid in installments. The government cannot enforce
restitution payments beyond those terms unless Hughes defaults on his
payments or the district court modifies the payment schedule.
The government points to United States v. Ekong, 518 F.3d 285 (5th Cir.
2007) (per curiam) and United States v. Diehl, 848 F.3d 629 (5th Cir. 2017) in
support of its argument that Hughes’s payment schedule is of no consequence.
Both are distinguishable because the judgments in those cases contained
different language. The payment schedule in Ekong, for example, was
conditioned on whether a balance remained when the defendant began her
term of supervised release. 2 In rejecting the defendant’s argument that the
government was barred from seeking immediate payment “because the
criminal judgment specified that restitution be paid in installments,” we noted
that “[t]here [was] nothing in the criminal judgment to the contrary.” Ekong,
518 F.3d at 286. From this, we infer that the full restitution amount was
collectible immediately simply because the payment schedule was never
triggered. See id.; see Martinez, 812 F.3d at 1207. Ekong is thus
distinguishable.
1 Although the government argues that it can seek payment beyond the installment
schedule because the judgment says that “[u]nless the court has expressly ordered
otherwise . . . payment of criminal monetary penalties is due during imprisonment,” this is a
default provision and, as explained, the court expressly ordered otherwise. See United States
v. Roush, 452 F. Supp. 2d 676, 681 (N.D. Tex. 2006) (“The negative pregnant of that default
provision is that if the court has expressly ordered otherwise—as this Court did by checking
box D—then payment is not due during imprisonment.”).
2 See Martinez, 812 F.3d at 1207 (“If upon commencement of the term of supervised
release any part of the restitution remains unpaid, the defendant shall make payments on
such unpaid balance beginning 60 days after the release from custody at the rate of $500 per
month until the restitution is paid in full.”) (quoting Judgment in a Criminal Case at
6, United States v. Ekong, No. 3:04–CR–030–M (N.D. Tex. Sept. 10, 2004), ECF No. 74).
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And the judgment in Diehl did not specify a payment schedule; rather, it
provided that “[i]f the defendant is unable to pay this indebtedness at this
time, the defendant shall cooperate fully with the [government] to make
payment in full as so[o]n as possible, including during any period of
incarceration.” 848 F.3d at 630. The relevant issue there was whether the
defendant’s participation in the BOP’s inmate financial responsibility program
and adherence to its payment schedule barred the government from enforcing
the full restitution amount. Id. at 633. Although we agreed with the decisions
of other courts “determining that an inmate’s compliance with an IFRP
payment schedule does not change the fact that the Government may collect
on a criminal monetary penalty immediately,” we noted this would only be the
case “where the judgment does not specify a payment schedule.” Id. Indeed, we
held the government could demand immediate payment in Diehl because the
judgment “did not . . . specify installment payments for satisfaction of either
the fine or the special assessment as required by 18 U.S.C. § 3572(d) to disrupt
the default rule of immediate payment.” Id. at 635. Importantly, we noted that
the government’s “enforcement of the order against Diehl’s property, including
surplus funds held in his inmate trust account, did not exceed the terms of the
original judgment.” Id. (emphasis added). As discussed, that is not the case
here, as the government’s attempt to enforce the full restitution amount
conflicts with the installment-based directive in Hughes’s original judgment.
The government argues in the alternative that it is entitled to the funds
in Hughes’s trust account by virtue of § 3664(n), which provides:
If a person obligated to provide restitution, or pay a fine, receives
substantial resources from any source, including inheritance,
settlement, or other judgment, during a period of incarceration,
such person shall be required to apply the value of such resources
to any restitution or fine still owed.
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We do not think the gradual accumulation of prison wages constitutes
“substantial resources” such that it fits within § 3664(n)’s ambit; rather we
think this provision refers to windfalls or sudden financial injections. 3 Indeed,
in United States v. Scales, we suggested that this provision contemplates
“unanticipated resources” that become “suddenly available.” 639 F. App’x 233,
239 (5th Cir. 2016) (per curiam); see also United States v. Bratton-Bey, 564 F.
App’x 28, 29 (4th Cir. 2014) (“Additionally, a defendant’s receipt of a windfall
during imprisonment triggers an automatic payment requirement.”); United
States v. Key, No. 3:12-CV-3026-L, 2013 WL 2322470, at *2 (N.D. Tex. May 28,
2013) (“There is no indication that Key has received a ‘windfall’ or ‘substantial
resources’ of the type in section 3664(n).”). 4 Put simply, we think the examples
listed in § 3664(n)—“inheritance, settlement, or other judgment”—fit the mold
of “substantial resources,” but that prison wages do not. As a result, the
government is not entitled to the immediate turnover of Hughes’s inmate trust
account under § 3664(n).
The government’s final argument arises under § 3664(k), which grants a
district court the authority to modify a payment schedule upon receiving
notification of a “material change in the defendant’s economic circumstances.”
§ 3664(k); see United States v. Franklin, 595 F. App’x 267, 272 (5th Cir. 2014)
(per curiam) (“A district court may adjust a restitution-payment schedule when
3 Although the government urges us to follow United States v. Poff, in which the Ninth
Circuit concluded that veteran disability benefits deposited into an inmate’s trust account
constituted “substantial resources,” we note the Supreme Court recently vacated and
remanded the judgment in that case. 727 F. App’x 249, 251 (9th Cir. 2018), cert. granted,
judgment vacated, 18-195, 2019 WL 113040 (U.S. Jan. 7, 2019).
4 See also United States v. French, No. 3:09-CV-1657-BF, 2010 WL 11618076, at *1
(N.D. Tex. Aug. 19, 2010) (“Similarly, a windfall during incarceration triggers an automatic
obligation to pay restitution.”); Roush, 452 F. Supp. 2d at 679 (“Moreover, a defendant’s
receipt of a windfall during imprisonment triggers an automatic payment requirement.”). We
also note the Supreme Court recently favored a narrower reading of the MVRA. See Lagos v.
United States, 138 S. Ct. 1684, 1689 (2018) (“To interpret the statute broadly is to invite
controversy on those and other matters; our narrower construction avoids it.”).
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there has been a ‘material change in the defendant’s economic circumstances
that might affect the defendant’s ability to pay restitution.’”). Although it is
dubious whether the gradual accumulation of prison wages constitutes a
“material change in the defendant’s economic circumstances,” we note that the
district court’s turnover order was not based on § 3664(k), and we find no
language demonstrating that it intended to adjust or modify the payment
schedule contained in Hughes’s original judgment.
The district court’s order dated November 27, 2017, is VACATED.
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