United States v. Charpia

Case: 21-50288 Document: 00516343791 Page: 1 Date Filed: 06/03/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
No. 21-50288 June 3, 2022
Lyle W. Cayce
Clerk
United States of America,
Plaintiff—Appellee,
versus
Jill Ann Charpia,
Defendant—Appellant.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:12-CR-704-1
Before Stewart, Clement, and Elrod, Circuit Judges.
Per Curiam:*
After Jill Ann Charpia pled guilty to defrauding the Government, the
district court sentenced her to a 30-month term of imprisonment and ordered
her to pay restitution. It subsequently issued an order of garnishment to
enforce the restitution award. Charpia now appeals the order of garnishment,
*
Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
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claiming statutory exemptions for certain funds in her bank account. For the
following reasons, we affirm in part and reverse in part.
I. FACTUAL & PROCEDURAL BACKGROUND
In 2012, pursuant to a written plea agreement with the Government,
Charpia, former federal prisoner # 02076-380, pled guilty to an information
charging her with making false statements in documents seeking funds from
the United States Department of Defense (“DOD”), in violation of 18
U.S.C. § 1001(a)(1)-(3). She was sentenced to 30 months of imprisonment
and, pursuant to 18 U.S.C. § 3663A of the Mandatory Victims Restitution
Act (“MVRA”), was ordered to pay $920,000 to a unit of the DOD.
In 2019, the Government filed an application for writ of garnishment
related to the restitution order, seeking funds deposited at Key Bank N.A.,
and the district court issued the requested writ. In its answer, Key Bank
identified an account belonging to Charpia that had a balance of $65,245.
Charpia filed a pro se response requesting a hearing and claiming two
exemptions on grounds that the funds pertained to military service-
connected disability payments. The Government argued that the $65,245
was the remainder of a lump sum payment of over $100,000 in veteran’s
service-connected disability benefits as specified in 26 U.S.C. § 6334(a)(10)
and thus, not exempt under the statute.
The magistrate judge (“MJ”) scheduled a hearing and Charpia
retained counsel, filed a reply, and moved to quash the writ of garnishment.
Citing the language of § 6334(a)(10), Charpia reiterated that the funds were
exempt from garnishment because they had been awarded to her based on a
disability she had sustained during her military service. She testified that she
was initially denied receipt of periodic disability payments dating back to a
claim in 2006, but after a series of appeals, she was ultimately awarded $1,800
per month in disability payments. Consequently, she received a lump sum
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back-payment of $65,245 representing her previously withheld periodic
payments.
The Government argued that relevant caselaw and canons of statutory
interpretation demonstrated that the funds were subject to garnishment
because they had already been disbursed and, therefore, were no longer
“payable,” as required to claim the relevant exemption. The parties also
disagreed as to whether the amount of funds that could be garnished was
capped by the Consumer Credit Protection Act (“CCPA”), 15 U.S.C.
§ 1673(a)(1), and therefore partially exempt from garnishment, if a full
exemption could not be claimed under 26 U.S.C. § 6334(a)(10).
Following review of the pleadings, receipt of the parties’ joint
stipulations, and a hearing on the pleadings, the MJ issued a report
recommending that the motion to quash the writ of garnishment be denied
because the Government’s interpretation of § 6334(a)(10) was correct. The
MJ also agreed with the Government that the CCPA, 15 U.S.C. § 1673(a)(1),
did not limit the amount of funds that could be garnished.
The district court conducted a de novo review, overruled Charpia’s
objections to the MJ’s report, accepted the report, denied the motion to
quash the writ of garnishment, and allowed the Government to “proceed
accordingly.”1 The Government then moved for a Final Order of
Garnishment and the district court granted the motion. In April 2021, the
garnished funds were transferred to the district court’s registry.
1
Charpia’s premature appeal from the district court’s order denying her motion to
quash was dismissed for lack of jurisdiction. United States v. Charpia, 832 F. App’x 344,
344 (5th Cir. 2020).
3
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II. STANDARD OF REVIEW
We review orders of garnishment for abuse of discretion. United States
v. Clayton, 613 F.3d 592, 595 (5th Cir. 2010). Questions of law, including
statutory interpretations, are reviewed de novo. Id.III. DISCUSSION
On appeal, Charpia argues that the district court and the Government
misconstrued the statute because they focused on whether the funds were
payable or already paid. She continues that 26 U.S.C. § 6334(a)(10) should
be construed as exempting her lump sum veteran’s service-connected
disability payment from garnishment. Alternatively, she argues that if the
funds are not fully exempt from garnishment, the Government should have
only garnished 25% of the lump sum payment under the CCPA. See 15 U.S.C.
§ 1673(a)(1). We address each argument in turn.
A. Exemption Under 26 U.S.C. § 6334(a)(10)
“When interpreting statutes, we begin with the plain language used
by the drafters.” United States v. Uvalle-Patricio, 478 F.3d 699, 703 (5th Cir.
2007). “Unless otherwise defined, statutory terms are generally interpreted
in accordance with their ordinary meaning.” D.G. ex rel. LaNisha T. v. New
Caney Indep. Sch. Dist., 806 F.3d 310, 316–17 (5th Cir. 2015). “[E]ach part or
section of a statute should be construed in connection with every other part
or section to produce a harmonious whole.” Uvalle-Patricio, 478 F.3d at 703.
When the words of a statute are clear and unambiguous on their face, no
further inquiry is necessary. See Tenn. Valley Auth. v. Hill, 437 U.S. 153, 184
n.29 (1978).
Section 6334(a) enumerates several types of property and income that
are exempt from garnishment, and the MVRA has incorporated that
provision with respect to restitution awards in favor of the United States. See
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18 U.S.C. § 3613(a)(1), (c); 26 U.S.C. § 6334(a). Section 6334(a) provides
that the following types of income are exempt: “any amount payable to an
individual” (1) with respect to his unemployment, (2) as worker’s
compensation, and (3) certain service-connected disability payments.2 26
U.S.C. § 6334(a)(4), (7), (10).
Here, the relevant statutory language is “any amount payable to an
individual.” There is little precedential authority from this circuit construing
§ 6334(a)(10) or an analogous statutory provision. As the MJ observed,
however, Hughes v. IRS, 62 F. Supp. 2d 796 (E.D.N.Y. 1999), is instructive.
There, the plaintiffs claimed inter alia that the IRS unlawfully seized their
service-connected disability payments. Id. at 799. The IRS countered that
under § 6334(a)(10), only amounts “payable” to eligible disabled persons
were exempt from levy under the statute. Id. at 800. In other words, it
explained, based on the plain language of the statute, Congress had
intentionally distinguished between funds that are “payable” and funds that
are “paid.” Id. The district court agreed with the IRS and dismissed the
plaintiffs’ claims. Id. at 801. In doing so, it explained:
The plain meaning of the word “payable” is an
amount “[c]apable of being paid” or “suitable to
be paid.” Black’s Law Dictionary 1128 (6th ed.
1990). The term may also “signify an obligation
to pay at a future time.” Id. The [c]ourt holds,
after an examination of the plain language of the
statute, that §§ 6334(a)(10) and (11) exempt
from levy only amounts that are payable—that is,
amounts that are not yet paid. In this case, the
funds in plaintiffs’ bank account, which were
levied upon by the defendants, were no longer
2
It is undisputed that Charpia’s service-connected disability payments fall under
this section of the statute.
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capable of being paid. The funds, by plaintiffs’
own admission, were taken from their bank
account—they were not garnished at the source.
Thus, the very act of the levy—directly from the
plaintiffs’ account—signifies that the funds
already had been paid, and therefore were no
longer “payable.”
Id. at 800–01.
Here, the MJ determined that this reasoning was persuasive under an
ordinary-meaning interpretation of the statute. Additionally, he observed
that a reading of the statute as a whole supported this definition of “payable”
because other parts of the statute exempted from levy amounts “payable to
or received by” an individual. See 26 U.S.C. § 6334(a)(9), (d)(1), (d)(3).
Thus, if Congress had intended to exempt from garnishment the service-
connected disability benefits in § 6334(a)(10) that had already been paid, as
opposed to just those that are “payable,” it would have used the same
“payable to or received by” language that it used in other parts of the statute.
The MJ’s analysis of the statutory text is both reasonable and
supported by caselaw. See Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–
54 (1992) (“[C]ourts must presume that a legislature says in a statute what it
means and means in a statute what it says there.”); see also Sorenson v. Sec’y
of Treasury, 475 U.S. 851, 860 (1986) (“The normal rule of statutory
construction assumes that identical words used in different parts of the same
act are intended to have the same meaning.” (internal quotation marks and
citation omitted)). Moreover, this court has drawn the same conclusion when
confronted with identical text in this statute. See Cathey v. IRS, No. 98-21035,
1999 WL 1093370, at *1 (5th Cir. Oct. 27, 1999) (per curiam) (unpublished)
(rejecting plaintiff’s claim that the IRS wrongfully levied her social security
benefits on grounds that Ҥ 6334(a)(7) does not prohibit a levy of funds
already paid—as opposed to payable—as workers compensation”). In light
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of the foregoing, we hold that the district court did not err in its
determination that the service-connected disability benefits that had been
deposited into Charpia’s bank account were not exempt from garnishment.3
B. Partial Exemption Under 15 U.S.C. § 1673(a)(1)
Charpia’s alternative argument is that, if this court holds that her
service-connected disability benefits are not fully exempt under the statute,
we should hold that the Government was entitled to garnish only 25% of her
lump sum payment under the CCPA, 15 U.S.C. § 1673(a)(1). This court has
already acknowledged that the CCPA’s 25% cap on garnishment is limited to
disposable earnings in the form of period payments. See United Sates v.
DeCay, 620 F.3d 534, 543 (5th Cir. 2010) (“The Supreme Court has
cautioned that the terms ‘earnings’ and ‘disposable earnings’ under the
CCPA are ‘limited to “periodic payments of compensation and (do) not
pertain to every asset that is traceable in some way to such
compensation.”’”); see also United States v. Lockhart, 584 F. App’x 268, 270
3
Charpia argues extensively that the Supreme Court’s opinions in Lagos v. United
States, 138 S. Ct. 1684 (2018) and Porter v. Aetna Cas. & Sur. Co., 370 U.S. 159 (1962)
compel a different result. This is not so. In Lagos, the Court was examining completely
different statutory text in the context of the calculation of restitution—not the enforcement
of a restitution award as in Charpia’s case. 138 S. Ct. at 1687. Accordingly, Lagos is
inapplicable here. Likewise, in Porter, a private creditor attempted to satisfy the debt it was
owed by attaching to its judgment the veteran debtors’ bank accounts that contained funds
comprised of disability benefits. 370 U.S. at 160. The Court agreed with the district court’s
judgment that the funds were exempt under the statute. Id. Charpia submits that the
Court’s reasoning in Porter and the text of 38 U.S.C. § 5301, which prohibits levies on
veterans’ benefits payments “before or after receipt by the beneficiary,” are applicable to
her case. Again, we are unpersuaded. Section 5301(a)(1) specifically exempts the United
States from claims under that section and the United States is a creditor here, unlike in
Porter. Additionally, § 5301(d) excludes claims under 26 U.S.C. § 6331 et seq. Consequently,
Porter does not support Charpia’s arguments. Furthermore, as the MJ observed, “[i]f
anything, § 5301(a)(1)’s language strengthens the Government’s argument, as it shows that
Congress knows how to daft language to protect veterans’ benefits ‘before or after receipt
by the beneficiary’—something it chose not to do in § 6334(a)(10)[.]”
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(5th Cir. 2014) (same). However, the only reason that Charpia did not receive
her disability payments periodically is because the Government initially
denied them to her. After a series of appeals though, Charpia was ultimately
awarded $1,800 per month in disability payments, and she received a lump-
sum payment to make up for payments that otherwise would have been paid
periodically. For these reasons, we hold that the partial exemption under 15
U.S.C. § 1673(a)(1) applies here and the Government was only entitled to
garnish 25% of the funds in Charpia’s bank account. We reverse the portion
of the district court’s order stating otherwise.
IV. CONCLUSION
For the aforementioned reasons, the district court’s Final Order of
Garnishment is AFFIRMED in PART and REVERSED in PART.
8