Roger Hawes v. William Stephens ( 2020 )

Case: 19-40341 Document: 00515482721 Page: 1 Date Filed: 07/09/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 9, 2020
No. 19-40341 Lyle W. Cayce
Clerk
ROGER HAWES,
Plaintiff - Appellant
v.
WILLIAM STEPHENS; BRAD LIVINGSTON; PAMELA PACE,
Defendants - Appellees
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ROGER HAWES,
Plaintiff - Appellant
v.
WILLIAM STEPHENS, Director, Texas Department of Criminal Justice,
Correctional Institutions Division; BRAD LIVINGSTON, Executive Director,
Texas Department of Criminal Justice, Correctional Institutions Division;
PAMELA PACE, Practice Manager, University of Texas Medical Branch;
Defendants - Appellees
Appeal from the United States District Court
for the Eastern District of Texas
Before SMITH, GRAVES, and HO, Circuit Judges.
JAMES E. GRAVES, Jr., Circuit Judge:
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Plaintiff-Appellant Roger Hawes, who is currently incarcerated in Texas,
contends that various employees of the Texas Department of Criminal Justice
violated federal law when they deducted a medical co-payment from his inmate
trust account. We disagree and affirm the district court’s grant of summary
judgment in favor of the defendants.
I. BACKGROUND
Title 38 U.S.C. § 5301(a) (“Section 5301(a)”) states that payments of
veteran’s benefits “shall be exempt from the claim of creditors, and shall not
be liable to attachment, levy, or seizure by or under any legal or equitable
process whatever.” 38 U.S.C. § 5301(a)(1). Veterans Affairs (“VA”) payments
protected under Section 5301(a) are covered by 31 C.F.R. § 212 (“Section 212”),
which was enacted in 2011 to “implement statutory provisions that protect
[f]ederal benefits from garnishment.” 31 C.F.R. §§ 212.1, 212.2(b)(2). Both
Section 5301(a) and Section 212 are at issue in this case.
As noted above, Plaintiff-Appellant Roger Hawes (“Mr. Hawes”), who is
proceeding pro se, is incarcerated in Texas. In December 2015, $100 was
deducted from his inmate trust as a copay for his medical care.1 Mr. Hawes,
who receives regular payments from the VA, believes this deduction violated
Section 5301(a) and Section 212.
After pursuing grievances regarding the deduction, Mr. Hawes filed the
instant suit. He named as defendants two directors of the Texas Department
of Criminal Justice (“TDCJ”) (together, the “TDCJ defendants”) and Pamela
Pace, a University of Texas Medical Branch practice manager (collectively,
“Defendant-Appellees”). Mr. Hawes alleged that the TDCJ defendants violated
Section 5301(a) by garnishing protected funds to satisfy his medical
1 An annual $100 medical copayment is collected from inmates pursuant to Texas law.
See Tex. Gov’t Code § 501.063.
2
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No. 19-40341
copayment, failed to implement institutional policies to identify prisoners who
received funds exempt from levy or garnishment, and engaged in a conspiracy
to convert funds belonging to him and thereby committed theft.2 He also
complained that Defendant Pace failed to fulfill her duty to properly and
thoroughly investigate his grievances and that the TDCJ grievance process
denied him due process. He sought injunctive and declaratory relief,
reimbursement of the $100 copayment, and compensatory damages.
The magistrate judge issued a report and recommendation granting
summary judgment in favor of Defendant-Appellees, which the district court
adopted. This appeal followed.
II. DISCUSSION
A. 42 U.S.C. § 1983 and Section 5301(a)
The magistrate judge found that Section 5301(a) may be enforced by
private suit pursuant to 42 U.S.C. § 1983. The defendants did not object to that
finding, presumably because the magistrate ultimately ruled in their favor on
the merits. There is therefore no need for us to reach the issue of whether Mr.
Hawes can sue under Section 1983. Review of an un-objected legal conclusion
from a magistrate is for plain error. See Duarte v. City of Lewisville, 858 F.3d
348, 352 (5th Cir. 2017). Affirmance on the merits is proper, as explained
below, so any error on this point could not have been plain. We therefore
assume arguendo that Section 5301(a) may be privately enforced through
Section 1983 and proceed.
2 Mr. Hawes argues that the theft of his property violated federal law because it
involved property transferred through the mail or through federal wire transfer of U.S.
Treasury funds.
3
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B. Section 5301(a) and the Medical Copayment
Mr. Hawes contends that the district court erred in concluding that the
TDCJ defendants did not violate Section 5301(a) when they used funds in his
inmate trust account, some of which were received as VA benefit payments, to
satisfy his medical copay. While we do not endorse the analysis of the
magistrate judge or district court, we find that they were correct in granting
summary judgment in favor of Defendant-Appellees on this point.
This court reviews a grant of summary judgment de novo, applying the
same standard as the district court. Austin v. Kroger Tex., L.P., 864 F.3d 326,
328 (5th Cir. 2017); Mississippi River Basin Alliance v. Westphal, 230 F.3d 170,
174 (5th Cir. 2000). Summary judgment is appropriate “if the movant shows
that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A genuine issue
of material fact exists when the evidence is such that a reasonable jury could
return a verdict for the non-moving party.” Austin, 864 F.3d at 328 (internal
quotation marks and citation omitted). All facts and reasonable inferences are
construed in favor of the nonmovant, and the court should not weigh evidence
or make credibility findings. Deville v. Marcantel, 567 F.3d 156, 163–64 (5th
Cir. 2009). The resolution of a genuine issue of material fact “is the exclusive
province of the trier of fact and may not be decided at the summary judgment
stage.” Ramirez v. Landry’s Seafood Inn & Oyster Bar, 280 F.3d 576, 578 n.3
(5th Cir. 2002).
Here, Mr. Hawes asserts that the TDCJ defendants violated Section
5301(a) and Section 2123 by deducting the $100 medical copayment from his
3In addition to his other claims, Mr. Hawes asserts that the TDCJ defendants violated
his procedural due process rights by failing to comply with the procedures set out in Section
212. But the regulations, which set out procedures for financial institutions to follow with
regard to a garnishment order against an account holder into whose account a federal benefit
payment has been directly deposited, do not give rise to a private cause of action. Indeed,
4
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inmate trust account, which contained benefits paid to him by the VA. The trial
court determined that the TDCJ is not a financial institution for purposes of
Section 212, which is obvious given the definition provided in the regulations.4
But that court nonetheless deemed Section 212 a “framework for the
evaluation of the monies” in Mr. Hawes’s account that “assists in the
determination of what funds are protected” by Section 5301(a). It therefore
applied the direct-deposit5 and lookback provision6 of Section 212 to the facts
of this case and concluded that Section 5301(a) had not been violated.
Mr. Hawes argues that if the TDCJ does not qualify as a “financial
institution,” none of the provisions of Section 212 should apply. We agree. No
authority addresses what role Section 212 plays when the alleged
“garnishment” of federal benefits involves something other than a “financial
institution.” But the regulation itself is expressly limited to those institutions,
31 C.F.R. §212.2(a), and it was intended only to “establish[] procedures that
financial institutions must follow when they receive a garnishment order . . . ,”
76 Fed. Reg. 9,939 (Feb. 23, 2011). Moreover, enactment of Section 212 directly
preceded the implementation of garnishment exemption identifiers encoded by
the Treasury Department into automated clearinghouse (“ACH”) payments. 76
Section 212 explicitly provides that “[f]ederal banking agencies will enforce compliance with
this part.” 31 C.F.R. § 212.11(a).
4 A “financial institution” is defined as “a bank, savings association, credit union, or
other entity chartered under Federal or State law to engage in the business of banking.” 31
C.F.R. § 212.3. TDCJ possesses no such charter.
5 Section 212 provides that a “benefit payment” is “a “Federal benefit payment . . .
paid by direct deposit to an account,” and an “account” is “an account . . . at a financial
institution and to which an electronic payment may be directly routed.” 31 C.F.R. § 212.3.
6 Under Section 212, funds are protected during a two-month “lookback period” that
“begins on the date preceding the date of account review and ends on the corresponding date
of the month two months earlier.” 31 C.F.R. § 212.3. The “protected amount” in an account is
“the lesser of the sum of all benefit payments posted to an account between the close of
business on the beginning date of the lookback period and the open of business on the ending
date of the lookback period.” Id.5
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Fed. Reg. 9,940 (Feb. 23, 2011). All evidence thus suggests that Section 212
was intended to apply only to those institutions expressly covered by its text.
Consequently, we must consider whether Section 5301(a) was violated
without reference to the procedures outlined in Section 212. Answering that
question requires understanding the status of the funds in Mr. Hawes’s inmate
trust account on December 11, 2015, the day the medical copayment was
deducted.
According to Mr. Hawes, his VA benefits were previously directly
deposited into an outside account at Altra Federal Credit Union until January
2014. Between January 2015 and December 2015, Mr. Hawes made several
$80 transfers from that account into his inmate trust account. But other than
a declaration, he offers no evidence that U.S. Treasury deposits were the only
source of funds for the Altra account. And while four $133.17 VA benefit
payments were directly deposited into Mr. Hawes’s inmate trust account prior
to the copayment deduction, that deduction was also preceded by two $300
deposits into the inmate account by a private citizen.
Because Mr. Hawes’s VA benefits were commingled with transfers from
his Altra account and with sizeable deposits by a private individual, it is
impossible to know whether the medical co-payment was charged against
funds that originated from the Department of the Treasury. Mr. Hawes
therefore cannot state a claim under Section 5301(a), which protects only
payments of federal benefits. With respect to Mr. Hawes’s claims arising from
the TDCJ defendants’ purported violations of Section 5301(a), we therefore
affirm the district court’s grant of summary judgment.7
7 Given this conclusion, it is unnecessary to analyze Mr. Hawes’s claims involving
conspiracy and theft or the defendants’ argument that they are entitled to qualified
immunity.
6
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C. Section 5301(a) and the Prison Litigation Reform Act
After Mr. Hawes filed his complaint, the magistrate judge granted him
leave to proceed in forma pauperis and assessed an initial partial filing fee of
$43 pursuant to the Prison Litigation Reform Act (“PLRA”). Mr. Hawes
objected, asserting that his VA benefits were his sole source of income and that
they were exempt from garnishment or levy under Section 5301(a). The
magistrate judge overruled both that objection, a subsequent objection, and a
request for reimbursement.
On appeal, Mr. Hawes continues his challenge to the assessment of the
initial partial filing fees, including the one associated with his appeal. He
maintains that there is no support for the trial court’s conclusion that funds
protected under Section 5301(a) may still be used for payment of judicial filing
fees. And according to Mr. Hawes, the plain language of Section 5301(a)
precludes consideration of his VA benefits to calculate the initial filing fee.
Under 28 U.S.C. § 1915(b)(1) and (2), a prisoner filing a civil action or
appeal in forma pauperis must pay the full filing fee over time through the
assessment of an initial partial filing fee and the monthly withdrawal of funds.
While Section 5301(a) does protect federal benefit payments from “attachment,
levy, or seizure,” nothing in the statute suggests (1) that recipients of benefits
are exempt from statutory filing fee requirements; or (2) that assets acquired
from VA benefits cannot be taken into account for purposes of determining
whether a litigant is eligible for in forma pauperis status. See 38 U.S.C.
§ 5301(a)(1). We therefore affirm the trial court’s assessment of filing fees.
D. Due Process and the Prison Grievance System
Mr. Hawes filed a Step One grievance following the seizure of his medical
copay, in which he stated that the money he receives as a disabled veteran is
exempt from collection by any creditor for any reason. Defendant Pace
responded that the charge was for a dental plan and was correct. Mr. Hawes
7
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then filed a Step Two grievance, in which he complained that the Step One
grievance response ignored the impact of Section 5301(a). The response to the
Step Two grievance affirmed the Step One response and indicated that the unit
medical department and the health services division do not handle inmate
money. Mr. Hawes now alleges that the prison grievance system did not afford
him adequate due process and that Defendant Pace failed to meet her duty to
adequately investigate grievances. Case law dictates that these claims be
dismissed.
The Fourteenth Amendment protects inmates from deprivation of their
property without due process of law. Parratt v. Taylor, 451 U.S. 527, 536–37
(1981), overruled on other grounds by Daniels v. Williams, 474 U.S. 327, 106
(1986). “We assume arguendo that inmates have a protected property interest
in the funds in their prison trust fund accounts, entitling them to due process
with respect to any deprivation of these funds.” Morris v. Livingston, 739 F.3d
740, 750 (5th Cir. 2014) (citations omitted). However, a state actor’s
unauthorized deprivation of an inmate’s prison account funds “does not
constitute a violation of the procedural requirements of the Due Process Clause
of the Fourteenth Amendment if a meaningful postdeprivation remedy for the
loss is available.” Hudson v. Palmer, 468 U.S. 517, 533 (1984).
We have long acknowledged that Texas provides inmates challenging the
appropriation of monies in their inmate trust fund account “with meaningful
postdeprivation remedies, either through statute or through the tort of
conversion.” Washington v. Collier, 747 F. App’x 221, 222 (5th Cir. 2018)
(unpublished) (per curiam) (citing Myers v. Klevenhagen, 97 F.3d 91, 95 (5th
Cir. 1996); Murphy v. Collins, 26 F.3d 541, 543–44 (5th Cir. 1994)). Because
Texas affords Mr. Hawes an adequate postdeprivation remedy for the
confiscation of the $100 in his inmate trust account, no actionable violation of
his rights occurred, and his § 1983 claim against the TDCJ defendants “lacks
8
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an arguable basis either in law or in fact.” See Neitzke v. Williams, 490 U.S.
319, 325 (1989). Mr. Hawes’s claim against Defendant Pace also fails, not least
because prisoners do not have a federally protected liberty interest in having
their grievances resolved to their satisfaction. See Geiger v. Jowers, 404 F.3d
371, 373–74 (5th Cir. 2005).
We therefore affirm the district court’s grant of summary judgment in
favor of the defendants on these claims.
III. CONCLUSION
The district court’s grant of summary judgment is AFFIRMED.
9