United States v. Gerald Stone , 430 F. App'x 365 ( 2011 )

Case: 10-10917 Document: 00511518549 Page: 1 Date Filed: 06/23/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 23, 2011
No. 10-10917 Lyle W. Cayce
Clerk
United States of America
Plaintiff-Appellee
v.
Gerald Stone, Individually, also known as Gerald A. Stone,
doing business as Ranscott Construction Incorporated,
Defendant-Appellant
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:07-CV-1632
Before KING, WIENER, and CLEMENT, Circuit Judges.
PER CURIAM:*
In an earlier, criminal case, both Defendant-Appellant Gerald Stone and
his wife, Barbara Hildenbrand, pleaded guilty to Conspiracy to Commit Theft
from an Organization and Attempt to Evade or Defeat Tax. As part of his
sentence, Stone was required to pay $672,221 in restitution to the Department
of Housing and Urban Development. In the instant civil case, the government
brought a separate garnishment action against only Stone, seeking funds from
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
Case: 10-10917 Document: 00511518549 Page: 2 Date Filed: 06/23/2011
No. 10-10917
a number of his bank accounts. Stone now asserts that the judgment in the
criminal case was illegal and that the district court in that case has already
quashed his garnishment. Stone requested a hearing to voice his grievances.
The district court disagreed and ordered civil writs of garnishment issued. We
affirm.
I. FACTS AND PROCEEDINGS
Defendant-Appellant Gerald Stone pleaded guilty to Conspiracy to Commit
Theft from an Organization in violation of 18 U.S.C. §§ 371 and 666 and Attempt
to Evade or Defeat Tax in violation of 26 U.S.C. § 7201. As part of his sentence,
Stone was required to pay $672,221 in restitution to the Department of Housing
and Urban Development. A lien for this amount arose automatically against
Stone pursuant to 18 U.S.C. § 3613(c). A payment schedule was created as part
of Stone’s sentence, which mandated that he pay $200 per month in satisfaction
of his restitution obligation, commencing sixty days after his release from prison.
In the same criminal case, Hildenbrand pleaded guilty to defrauding the
Department of Housing and Urban Development and Aiding and Abetting, in
violation of 18 U.S.C. § 1012 and 2. She was ordered to pay restitution in the
same amount as Stone, and her obligation was made joint and several with his.
Hildenbrand and Stone unsuccessfully appealed their convictions and sentences.
The government initiated two separate civil garnishment cases, one
against Hildenbrand and the other against Stone. Meanwhile, Hildenbrand filed
a motion in the criminal case to quash the liens against both her and Stone.
Stone did not sign this motion. The district court in the criminal case granted
Hildenbrand’s motion, and the government voluntarily dismissed the
garnishment action against her. Interpreting the order as inapplicable to Stone,
the government continued to pursue the instant civil garnishment action against
him.
2
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In the district court, Stone insisted that the order granting the motion to
quash filed by Hildenbrand in the criminal case barred the government from
civilly garnishing his assets here. He also contended that the underlying
criminal judgment was invalid because (1) the district court lacked subject
matter jurisdiction, (2) the restitution ordered was not for the count of
conviction, (3) the sentencing court did not explain how it arrived at the
restitution amount, and (4) the judgment was imposed in violation of his plea
agreement. The district court rejected these claims and entered a final order of
garnishment. Stone timely filed a notice of appeal.
II. ANALYSIS
A. Standard of Review
We review the district court’s determination of the res judicata effect of a
prior judgment de novo.1 We review the denial of Stone’s request for a hearing
for abuse of discretion.2
B. Subject Matter Jurisdiction and the Validity of the Restitution
Order
Stone advances that the district court in his criminal case did not have
subject matter jurisdiction and that the restitution judgment was illegally
imposed. Stone cannot collaterally attack issues fully and finally decided in a
prior proceeding.3 As the parties in this case and those in privity with them
1
See United States v. Davenport, 484 F.3d 321, 326 (5th Cir. 2007).
2
See, e.g., United States v. Jimenez, 509 F.3d 682, 694 (5th Cir. 2007).
3
Travelers Indem. Co. v. Bailey, 129 S. Ct. 2195, 2205 (2009) (“[O]nce the [orders in the
previous case] became final on direct review (whether or not proper exercises of bankruptcy
court jurisdiction and power), they became res judicata to the parties and those in privity with
them, not only as to every matter which was offered and received to sustain or defeat the claim
or demand, but as to any other admissible matter which might have been offered for that
purpose.” (quotation marks and citation omitted)); Kontrick v. Ryan, 540 U.S. 443, 455 n.9
(2004) (noting that, although a litigant may raise an issue of subject matter jurisdiction at any
time, “[e]ven subject-matter jurisdiction [ ] may not be attacked collaterally”).
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No. 10-10917
were parties in the criminal case and were given a fair opportunity to challenge
these issues in the trial court and on appeal, they cannot challenge them now.4
Even if neither the district court nor any of the parties addressed subject matter
jurisdiction, it still may not be attacked collaterally.5 Stone’s criminal judgment
became final on direct appeal during proceedings in which he made many of the
same arguments that he advances here. He cannot now make arguments that
he made or should have made on direct appeal.
C. The Government May Seek Writs of Garnishment Against Stone
Stone asserts that the government may not seek writs of garnishment
against him because the district court in the criminal case granted
Hildenbrand’s motion to quash the restitution lien.6 The district court in the
criminal case has affirmatively dispelled this interpretation of its order granting
the motion to quash. Stone and Hildenbrand had filed a motion to correct
clerical error in the criminal case because, as only she had signed that motion
and only she was listed in the header of court’s the order, the government
interpreted the order granting Hildenbrand’s motion to quash as applying to her
only. In a November 18, 2008 hearing, the district court denied this motion to
correct, clarifying that Stone had not signed the motion and that Hildenbrand
could not have acted as his attorney in filing such motion. We decline to disturb
the district court’s clarification. That court’s order granting Hildenbrand’s
motion to quash does not provide relief for Stone and thus does not preclude the
government from bringing the instant action.
4
Travelers Indem. Co., 129 S. Ct. at 2206.
5
See United States v. County of Cook, Ill., 167 F.3d 381, 388 (7th Cir. 1999).
6
Hildenbrand titled her motion as one to quash restitution lien, but the district court
interpreted it as a motion to quash writs of garnishment. Moreover, we have found no
authority for quashing statutorily imposed liens.
4
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D. The District Court did not Abuse its Discretion in Denying the
Hearing
The issues that may be raised at a hearing like the one sought by Stone
are (1) the probable validity of a claim of exemption by the debtor, (2) the
government’s compliance with statutory requirements for the issuance of the
postjudgment remedy, and (3) particular issues dealing with default judgments.7
This case does not involve a default judgment, so only the first two issues could
potentially be in play. Stone fails to assert any noncompliance with the
statutory requirements for the remedy granted here. Neither does he
adequately demonstrate the probable validity of a claim of exemption because
he does not coherently describe the exemption that he is asserting. Stone has
not shown in any way that the district court abused its discretion in refusing to
grant a hearing.
III. CONCLUSION
As Stone may not collaterally attack issues in his underlying criminal
case, and as the order granting the motion to quash in that case did not apply
to Stone, the district court’s issuance of the final order of garnishment and its
denial of the request for a hearing are, in all respects,
AFFIRMED.
7
28 U.S.C. § 3202(d).
5