United States v. Tracts 31A, Lots 31 & 32, Lafitte's Landing Phase Two Port Arthur, Jefferson County Texas

Case: 16-40588 Document: 00513903939 Page: 1 Date Filed: 03/09/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-40588 FILED
March 9, 2017
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff - Appellee
v.
TRACTS 31A, LOTS 31 AND 32, Lafitte’s Landing Phase Two Port Arthur,
Jefferson County Texas, including all buildings, appurtenances, and
improvements thereon
Defendant
STACY WALKER,
Claimant - Appellant
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 1:12-CV-171
Before STEWART, Chief Judge, and KING and DENNIS, Circuit Judges.
PER CURIAM:*
The husband of Claimant–Appellant Stacy Walker agreed to forfeit two
annuities held solely in his name as a part of a plea agreement with Plaintiff–
Appellee, the United States of America. Stacy contends that the district court
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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: 16-40588 Document: 00513903939 Page: 2 Date Filed: 03/09/2017
No. 16-40588
erred in effectively ordering the forfeiture of her one-half community interest
in those annuities. Because the Government was entitled to rely on the legal
presumption that her husband was authorized to forfeit the annuities as a part
of his plea agreement, we AFFIRM.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 4, 2011, a federal grand jury indicted Calvin Walker, the
husband of Claimant–Appellant Stacy Walker, for various types of fraud and
money laundering. The indictment generally alleged that Calvin defrauded
the Beaumont Independent School District of more than $3.7 million by
submitting false or inflated invoices for electrical supplies and materials. The
indictment contained a notice of the Government’s intention to seek forfeiture
of, among other things, two Transamerica Preferred Choice Fixed Annuity
Contracts purchased for a total of $3.4 million. The indictment alleged the two
annuities represented proceeds from the charged fraud offenses and, therefore,
were subject to forfeiture pursuant to 18 U.S.C. §§ 981(a)(1)(C) and 982(a)(4),
and 28 U.S.C. § 2461(c). The two annuity contracts listed Calvin as the sole
owner and Stacy as the primary beneficiary. On December 12, 2011, Calvin’s
criminal trial ended in a mistrial after the jury was unable to reach a
unanimous decision.
On April 10, 2012, the Government filed a civil forfeiture complaint in
rem, initiating the present forfeiture proceeding. The complaint alleged, in
pertinent part, that the two annuities were subject to forfeiture because they
were “property involved in a transaction or attempted transaction in violation
of 18 U.S.C. §§ 666, 1343 or is property traceable to such violation.” 1 On June
1 18 U.S.C. §§ 666 and 1343 concern fraud upon programs receiving federal funds and
wire fraud, respectively. Calvin’s 32-count indictment charged him with 20 counts of fraud
upon programs receiving federal funds in violation of § 666 and five counts of wire fraud in
violation of § 1343.
2
Case: 16-40588 Document: 00513903939 Page: 3 Date Filed: 03/09/2017
No. 16-40588
7, 2012, Calvin and Stacy Walker filed their own verified claim. The claim
asserted that “Calvin Walker and Stacy Walker are the true owners of the . . .
two Transamerica Annuities made the subject of the government’s Complaint
for Forfeiture,” and alleged that the Government’s complaint was “a belated
attempt to bring pressure on Calvin Walker to enter a guilty plea to the false
charges he has fought vigorously.” The Walkers subsequently filed an answer
and counterclaim to the Government’s complaint, in which they denied that
the annuities were subject to forfeiture 2 and “demand[ed] the return of the
subject community property” after hearing and trial.
On July 13, 2012, the Government filed an information in the criminal
proceeding, charging Calvin with one misdemeanor count of willful failure to
pay income tax in violation of 26 U.S.C. § 7203. Calvin pleaded guilty, with
the benefit of a plea agreement, to the charge on July 17, 2012. As relevant to
this appeal, the plea agreement contained a restitution provision, stating that
restitution “shall consist solely of taxes, penalties, and interest,” and that “[t]he
payment of any tax liability will be accomplished by . . . payment directly to
the Internal Revenue Service from the proceeds of the liquidation of any
annuity currently held under seizure warrant in this matter.” The plea
agreement also contained a forfeiture provision, stating, in pertinent part:
The defendant agrees to enter into an agreed order of forfeiture in
[the civil forfeiture proceeding] and agrees to forfeit to the United
States voluntarily and immediately all of the defendant’s right,
title and interest to the property which is subject to forfeiture
under the agreed order pursuant to 18 U.S.C. § 981. The property
subject to [the] agreed order of forfeiture are the liquidated value
of two annuities . . . less $200,000 to be returned to the defendant
2 Specifically, in the answer and counterclaim, Calvin denied “that he is guilty of any
acts that would justify seizure or forfeiture of the property in question,” noting that his
criminal trial resulted in “a hung jury in which the jurors were unable to agree on a verdict.”
For her part, Stacy noted that she “has not been accused of any acts or violations which would
justify seizing or forfeiting any of her interest in [the annuities].”
3
Case: 16-40588 Document: 00513903939 Page: 4 Date Filed: 03/09/2017
No. 16-40588
and the amount of any fine imposed by the court. . . . The
defendant agrees not to file a claim, and agrees to withdraw any
filed claim, to the [annuities] in any civil proceeding,
administrative or judicial, which may or has been initiated.
On November 12, 2013, the Government moved for entry of judgment in
the civil forfeiture proceeding, asserting that the plea agreement resolved all
of the issues in the proceeding except one—whether interest that accumulated
on the two annuities after entry of the plea agreement was subject to
forfeiture—and requesting that the district court resolve this dispute. 3 The
Walkers filed an objection to the Government’s motion, arguing that its
proposed judgment allocated a greater amount of funds to the IRS than had
been agreed because the IRS was impermissibly calculating interest and
penalties assuming a finding of fraudulent conduct.
On April 3, 2014 (more than 20 months after the execution of Calvin’s
plea agreement), the Walkers’ counsel moved to stay entry of judgment in the
civil forfeiture proceeding to address a conflict of interest in their joint
representation. Counsel stated that, although Calvin had agreed to forfeit his
interest in the two annuities and “abide[d] by that agreement,” Stacy “was not
a party to the plea agreement” and “would not consent to an entry of judgment
in this case that would divest her of her [community] interest in the annuities.”
Counsel asserted that Stacy informed him of her lack of consent on April 2,
3 The Government’s delay in moving for entry of judgment was attributable to two
factors. First, on September 4, 2012, the Beaumont Independent School District filed a claim
in the civil forfeiture proceeding, alleging that it had “assisted the United States Attorney’s
office in gathering information [and] witnesses for prosecution of [Calvin Walker]” and
seeking “to obtain payment for attorney fees and costs associated with the attempted
prosecution of Calvin Walker.” The district court granted the Government’s motion to strike
the District’s claim on June 10, 2013. That order is not at issue in this appeal. Second, the
proceedings were stayed for a period of time due a lapse in appropriation for the operation of
the Department of Justice. See W.D. Tex. Gen. Order No. 13-19.
4
Case: 16-40588 Document: 00513903939 Page: 5 Date Filed: 03/09/2017
No. 16-40588
2014, at which point he told her that he could not continue to represent her in
this matter.
On April 18, Stacy’s new counsel filed a response and objection to the
Government’s motion for entry of judgment. In pertinent part, Stacy asserted
that the two annuities were community property and, as such, she was the
owner of one-half of them. She further asserted:
While claimant Calvin Walker, as a part of his plea agreement,
waived notice of any forfeiture proceeding and expressly agreed to
forfeit “the defendant’s (his) interest” in the two annuities,
claimant Stacy Walker has not waived anything, and has never
agreed with the government to deal with her interest in the two
annuities. As such, Stacy Walker’s interest in the two annuities
has never been litigated in this proceeding.
Stacy requested the district court to deny the Government’s motion for entry
of judgment to the extent it sought to forfeit Stacy’s interest in the two
annuities.
On September 30, 2014, a magistrate judge granted the government’s
motion for judgment of forfeiture. After Stacy appealed to the district court,
the magistrate judge withdrew the order, and the Government moved for
summary judgment. In its motion, the Government asserted, in pertinent part,
that the two annuities are presumed to be subject to Calvin’s sole management,
control, and disposition because they were held in his name; therefore, the
Government asserted, it was entitled to rely on Calvin’s authority to agree to
forfeit the two annuities under section 3.104 of the Texas Family Code. 4 On
4 Section 3.104 of the Texas Family Code, in relevant part, provides:
A third person dealing with a spouse is entitled to rely, as against the other
spouse or anyone claiming from that spouse, on that spouse’s authority to deal
with the property if:
(1) the property is presumed to be subject to the sole management,
control, and disposition of the spouse; and
(2) the person dealing with the spouse:
5
Case: 16-40588 Document: 00513903939 Page: 6 Date Filed: 03/09/2017
No. 16-40588
September 3, 2015, the magistrate judge entered a report and recommendation
that the district court grant the Government’s motion, finding that the
Government was entitled to rely on Calvin’s authority to deal with the two
annuities under section 3.104. Both Stacy and Calvin objected to the report
and recommendation, and on December 1, 2015, the district court, after
conducting a de novo review, adopted the report and recommendation and
granted summary judgment in favor of the Government. The district court
separately entered final judgment, and Stacy timely appealed the grant of
summary judgment.
II. STANDARD OF REVIEW
This court reviews a district court’s order granting summary judgment
de novo. United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 506 (5th
Cir. 2008). Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits show that there
is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(c). “A genuine dispute as to
a material fact exists ‘if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.’” Guar. Bank & Trust Co. v. Agrex, Inc., 820
F.3d 790, 794 (5th Cir. 2016) (per curiam) (quoting Rogers v. Bromac Title
Servs., L.L.C., 755 F.3d 347, 350 (5th Cir. 2014)). “[T]his court construes ‘all
facts and inferences in the light most favorable to the nonmoving party.’” Id.
(alteration in original) (quoting McFaul v. Valenzuela, 684 F.3d 564, 571 (5th
Cir. 2012)).
(A) is not a party to a fraud on the other spouse or another
person; and
(B) does not have actual or constructive notice of the spouse’s
lack of authority.
Tex. Fam. Code Ann. § 3.104(b).
6
Case: 16-40588 Document: 00513903939 Page: 7 Date Filed: 03/09/2017
No. 16-40588
III. FORFEITURE OF THE ANNUITIES
On appeal, Stacy argues that the district court erred in three respects in
granting summary judgment in favor of the Government. 5 Because Stacy’s
arguments turn in large part on Calvin’s ability to dispose of the two annuities
under Texas law, it is instructive first to review Texas law concerning a
spouse’s ability to manage, control, and dispose of community property assets. 6
In analyzing that issue, Texas distinguishes between joint management
community property and sole management community property. See Tex.
Fam. Code Ann. § 3.102. Under section 3.102 of the Texas Family Code, a
spouse’s sole management community property includes his or her “(1)
personal earnings; (2) revenue from separate property; (3) recoveries from
personal injuries; and (4) the increase and mutations of, and the revenue from,
all property subject to the spouse’s sole management, control and disposition.”
Id. § 3.102(a). All other community property is joint management community
property, unless the spouses have provided otherwise by power of attorney or
other written agreement. Id. § 3.102(c).
5 Stacy also appears to argue, in a footnote, that the district court erred in a fourth
respect—namely, granting summary judgment when Calvin’s plea agreement “is . . .
ambiguous as to whether . . . Calvin . . . was trying to contract away all of the annuities, or
rather, as the plea agreement states ‘his interest’ in the two annuities.” However, Stacy does
not raise this argument in the body of her brief; therefore, her argument is waived. See, e.g.,
Arbuckle Mountain Ranch of Tex., Inc. v. Chesapeake Energy Corp., 810 F.3d 335, 339 n.4
(5th Cir. 2016) (“Arguments subordinated in a footnote are ‘insufficiently addressed in the
body of the brief,’ and thus are waived.” (quoting Bridas S.A.P.I.C. v. Turkm., 345 F.3d 347,
356 n.7 (5th Cir. 2003))). Regardless, even if we were to conclude that the plea agreement
was ambiguous on this point, Stacy has failed to point to any extrinsic evidence that would
create a genuine issue of material fact as to the parties’ intent to merely contract with respect
to Calvin’s one-half interest in the annuities. See, e.g., Jhaver v. Zapata Off-Shore Co., 903
F.2d 381, 384 (5th Cir. 1990) (recognizing that summary judgment is appropriate when
extrinsic evidence does not raise genuine issue of material fact as to parties’ intent).
6 The parties do not dispute that the funds used to purchase the two annuities were
from the community property of Calvin and Stacy Walker and, therefore, are community
property themselves under Texas law.
7
Case: 16-40588 Document: 00513903939 Page: 8 Date Filed: 03/09/2017
No. 16-40588
Joint management community property—as the name suggests—is
subject to the joint management, control, and disposition of the spouses. See
id. Accordingly, to effect a valid conveyance of joint management community
property, Texas law requires both spouses to join in the transaction. See, e.g.,
City of Emory v. Lusk, 278 S.W.3d 77, 85 (Tex. App.—Tyler 2009, no pet.); see
also, e.g., 38 TEX. PRAC., MARITAL PROPERTY AND HOMESTEADS § 15.13 (“[I]f a
spouse does not have a written power of attorney or other agreement, the
spouse may not convey or otherwise dispose of joint management community
property without the joinder of the other spouse.”). Conversely, Texas law
provides that each spouse has the power to convey his or her sole management
community property without approval of the other spouse, even though both
spouses have an undivided one-half interest in the property. See, e.g., Lemaster
v. Top Level Printing Ink, Inc., 136 S.W.3d 745, 748–49 (Tex. App.—Dallas
2004, no pet.); see also, e.g., 38 TEX. PRAC., MARITAL PROPERTY AND
HOMESTEADS § 15.8 (“A spouse, in dealing with that spouse’s sole management
community property, may act alone.”).
Because property that appears to be subject to sole management may, in
fact, be subject to joint management—and thus require joinder of both spouses
to affect a valid conveyance—third parties that enter into transactions
involving community property might be placed in a precarious position.
Section 3.104 of the Texas Family Code, however, offers third parties some
protection. Under section 3.104, property held in one spouse’s name is
presumed to be sole management community property, and if the named
spouse conveys such property to a third party, the third party is entitled to rely
upon the authority of that spouse to convey the property if, in pertinent part,
the third party “does not have actual or constructive notice of the spouse’s lack
of authority” to deal with the property. Tex. Fam. Code Ann. § 3.104(b)(2)(B).
8
Case: 16-40588 Document: 00513903939 Page: 9 Date Filed: 03/09/2017
No. 16-40588
With this background in place, we turn back to Stacy’s arguments. Stacy
first points to section 3.102(c) of the Texas Family Code, which states that
“community property is subject to the joint management, control, and
disposition of the spouses unless the spouses provide otherwise by power of
attorney in writing or other agreement.” She argues that, because the funds
used to purchase the two annuities were properly considered community
property, the annuities are subject to joint management and disposition under
section 3.102. As the magistrate judge pointed out, however, the annuities are
presumed to be Calvin’s sole management community property under section
3.104(a) because they were held in Calvin’s name only, and section 3.104(a)
“trumps” section 3.102. Jean v. Tyson–Jean, 118 S.W.3d 1, 5 (Tex. App.—
Houston [14th Dist.] 2003, pet. denied).
Stacy next argues that the Government knew of Calvin’s lack of
authority from the joint claim and answer filed in the forfeiture proceeding
that referred to the annuities as “community property” and stated Stacy’s (and
Calvin’s) objection to forfeiture. Therefore, Stacy argues, the Government is
not entitled to rely upon section 3.104 of the Texas Family Code. In support,
Stacy points to Williams v. Portland State Bank, 514 S.W.2d 124 (Tex. Civ.
App.—Beaumont 1974, writ dism’d). In Williams, a note and deed of trust were
initially prepared by a bank for execution by both the debtor and his spouse.
514 S.W.2d at 125. The spouse refused to execute either, and the debtor gave
this information to the president of the bank; at that point, a new note and
deed were prepared for execution by the debtor alone. Id. The court concluded
that the bank’s knowledge of the wife’s refusal constituted constructive notice
of the debtor husband’s lack of sole authority to deal with the property. Id.
This case is readily distinguishable from Williams. Here, the Walkers’
joint claim and answer served to notify the Government that the annuities
were community property in which Stacy owned a one-half interest. However,
9
Case: 16-40588 Document: 00513903939 Page: 10 Date Filed: 03/09/2017
No. 16-40588
unlike in Williams, the Walkers’ joint claim and answer did nothing to suggest
that the annuities were joint management community property that Calvin
could not transfer without Stacy’s consent. Indeed, as the district court
recognized, the Government had good reason to believe that Calvin did have
authority to transfer the annuities without Stacy’s consent: Stacy was
represented in the present forfeiture proceeding by the same attorney who was
negotiating the plea agreement in Calvin’s criminal proceeding; Stacy was
present at Calvin’s plea hearing, at which Calvin confirmed his understanding
of the plea agreement; and Stacy never brought the lack of Calvin’s authority
to the attention of her attorney or the Government. Accordingly, under section
3.104 of the Texas Family Code, the Government was entitled to rely on
Calvin’s authority to deal with the annuities in executing the plea agreement.
See In re McCloy, 296 F.3d 370, 374 (5th Cir. 2002) (concluding that mere notice
of the fact that property held in one spouse’s name was community property
was insufficient to establish notice that the named spouse lacked authority to
deal with that property as sole management community property); see also,
e.g., Lemaster, 136 S.W.3d at 748–49.
Finally, Stacy argues that the Government was required by “statutory
and regulatory civil asset forfeiture protocol to protect her spousal interest in
[the annuities],” ostensibly by obtaining her express consent to the plea
agreement. Yet Stacy does not point to any statute or regulation that actually
requires the Government to obtain spousal consent to an agreement providing
for the forfeiture of property that is, under state law, presumptively subject to
a party’s sole management, control, and disposition. 7 And Stacy provides no
7Stacy instead cites primarily to two internal documents of the Department of Justice:
the United States Attorneys’ Manual and the Asset Forfeiture Policy Manual. Those
documents, however, are not intended to be binding. See DEPT. OF JUSTICE, UNITED STATES
ATTORNEYS’ MANUAL § 1–1.100 (2016), https://www.justice.gov/usam/united-states-
attorneys-manual (“The Manual provides only internal Department of Justice guidance. It is
10
Case: 16-40588 Document: 00513903939 Page: 11 Date Filed: 03/09/2017
No. 16-40588
compelling justification for this court to treat Calvin’s agreement in this case
any differently than another agreement he might have made under state law
to dispose of the annuities—that is, to enforce the agreement notwithstanding
the absence of spousal consent. 8
IV. CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
not intended to, does not, and may not be relied upon to create any rights, substantive or
procedural, enforceable at law by any party in any matter civil or criminal”); U.S. DEP’T OF
JUSTICE, ASSET FORFEITURE POLICY MANUAL 21 (2016), https://www.justice.gov/criminal-
afmls/file/839521/download (“These guidelines are intended to be sufficiently flexible to
enable each [United States Attorneys’ Office] . . . to establish and utilize local procedures that
clearly define and assign local pre-seizure/restraint planning responsibilities.”). Moreover,
the documents Stacy cites do not address the circumstances of this case, much less
recommend obtaining spousal consent in such cases. For example, the section of the Asset
Forfeiture Policy Manual that Stacy cites concerns foreign enforcement of judgments, which
is not implicated in this case. See ASSET FORFEITURE POLICY MANUAL, supra, at 142.
8 Indeed, Stacy herself may have benefited, at least in part, from Calvin’s agreement.
At the time the agreement was drafted, the Government had been seeking forfeiture of two
parcels of land and a vehicle, in addition to the two annuities. As part of the agreement, the
Government dropped its claim to the land and vehicle, and returned—to Stacy personally—
three checks payable to Calvin’s company for the sum of $520,000. The Government also
agreed that all of Calvin’s restitution would be paid from the proceeds of the two annuities.
11