Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_04-mc-00200/USCOURTS-caed-1_04-mc-00200-2/pdf.json

Nature of Suit Code: 999
Nature of Suit: 
Cause of Action: Civil Miscellaneous Case

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

)

Plaintiff, )

)

v. )

)

PHILLIP GARY CRAWFORD, )

)

Defendant and )

Judgment Debtor. )

____________________________________)

)

TIAA-CREF, )

)

Garnishee. )

____________________________________)

MISC. F-04-0200 TAG

ORDER OF GARNISHMENT

Background

On March 18, 2002, a Judgment in a Criminal Case was entered against Defendant/Judgment

Debtor Phillip Gary Crawford (hereinafter “Judgment Debtor). (Doc. 32, Exh. 1). Among other

things, that Judgment ordered the Judgment Debtor to pay an assessment of $1,100 and restitution in

the amount of $157,840.67, for a total of $158,940.67. (Doc. 32, Exh. 1). Since that time, and in

large measure due to a prior order of garnishment (Doc. 24), the Judgment Debtor has substantially

paid down the amount owed such that, as of June 16, 2006, the balance due on his prior criminal

judgment (CR-F-04-5050-OWW) was $92,326.23. (Doc. 25). 

On June 19, 2006, Plaintiff United States of America filed an “Application for Writ of

Garnishment (Accounts)” against Garnishee TIAA-CREF pursuant to 28 U.S.C. § 3205(b)(1).

(Doc. 25). On the same day, a writ of garnishment was issued by the Clerk of the Court. (Doc. 26). 

In conjunction with the foregoing, the Clerk issued a “Notice and Instructions to Judgment Debtor”

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which included a “Claim for Exemption” form and which directed Defendant/Judgment Debtor

Phillip Gary Crawford to request a hearing should he wish to claim such exemption. (Doc. 27).

On July 3, 2006, garnishee TIAA-CREF filed its “Acknowledgment of Receipt and Answer of

Garnishee (Accounts).” (Doc. 29). Three days later, on July 6, 2006, Defendant/Judgment Debtor

Crawford filed a Request for Hearing along with a completed Claim for Exemption, specifically, the

minimum exemption for wages, salary and other disposable earnings. (Doc. 30). Accordingly, a

garnishment hearing was conducted on August 22, 2006.

Issue

Defendant/Judgment Debtor Phillip Crawford possesses survivorship interests in two

annuities contracts held by Garnishee TIAA-CREF. (Doc. 28, Exh. 7 (referencing payments from

two “inherited annuit[ies]”) and Doc. 29). Plaintiff United States asserts that these annuities were

inherited from Judgment Debtor’s mother, Vera Crawford. (Doc. 32, p. 3). At the garnishment

hearing, Judgment Debtor claimed that these annuities were inherited from his father, who

voluntarily paid into the two TIAA-CREF accounts with income earned from his employment as a

professor. The approximate value of these two annuity contracts (GA24465-1 and GA24546-8) is

$32,000. (Doc 29). In opposition to a writ of garnishment filed by the United States, Judgment

Debtor Crawford contends that his interests in the two annuity contracts held by TIAA-CREF are

exempt from garnishment on the ground that they are disposable earnings under 18 U.S.C.

§ 3613(a)(3), which incorporates the restriction on garnishment as provided for under the Consumer

Credit Protection Act, 15 U.S.C. § 1673(a). (Doc. 30). At the garnishment hearing, Judgment

Debtor Crawford claimed simply that to garnish the annuities would leave him with insufficient

income. The Court disagrees.

Analysis

As set forth in 18 U.S.C. § 3613, the United States may enforce a judgment imposing a fine

“in accordance with the practices and procedures for the enforcement of a civil judgment under

Federal law or State law.” 18 U.S.C. § 3613(a). Furthermore, “a judgment imposing a fine may be

enforced against all property or rights to property of the person fined,” id. (italics added), with one

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limitation being that the provisions of the Consumer Credit Protection Act (15 U.S.C. § 1673) also

apply. 18 U.S.C. § 3613(a)(3).

Section 1673 of the Consumer Credit Protection Act (“CCPA”) imposes restrictions on

garnishment by, in certain circumstances, setting a maximum allowable amount of garnished funds. 

Specifically, the CCPA provides:

[T]he maximum part of the aggregate disposable earnings of an individual for any

workweek which is subjected to garnishment may not exceed

(1) 25 per centum of his disposable earnings for that week, or

(2) the amount by which his disposable earnings for that week

exceed thirty times the Federal minimum hourly wage . . . in effect at

the time the earnings are payable, whichever is less.

15 U.S.C. 1673(a). As used in section 1673 of the CCPA, the term “earnings” is defined as follows:

The term “earnings” means compensation paid or payable for personal services,

whether denominated as wages, salary, commission, bonus, or otherwise, and

includes periodic payments pursuant to a pension or retirement program.

15 U.S.C. § 1672(a). The Judgment Debtor would have this Court find that the periodic payments

from TIAA-CREF annuities that he inherited (whether from his mother or his father) are to be

included as his “earnings” within the meaning of section 1672(a). The Court disagrees for two

reasons.

First, the TIAA-CREF annuity contracts in which the Judgment Debtor has a survivorship

interest were funded not by the Judgment Debtor’s employer, but rather by his mother or father or 

either of their employers. That being the case, these funds cannot possibly be “his [Judgment

Debtor’s] disposable earnings” under 15 U.S.C. § 1673(a) (italics added). This is particularly so

given that “earnings” is defined in 15 U.S.C. § 1672(a) to mean compensation paid for “personal

services” that have been performed. When this definition is read into the exemption for “his . . .

earnings” in section 1673(a), it is evident that the Judgment Debtor’s argument must fail given that

his survivorship annuity interest simply was not created as a result of “his [Judgment Debtor’s]

personal services.” 

Second, even if two TIAA-CREF annuity contracts at issue here were funded by payments on

the Judgment Debtor’s behalf by the Judgment Debtor’s employer - which clearly is not the case -

the result would still be the same. That is because, in Usery v. First Nat’l Bank of Arizona,

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586 F.2d 107 (9th Cir. 1978), the Ninth Circuit explicitly held that application of the CCPA is

limited to the garnishment of payments by “employers (or those who stand in the position of

employers by virtue of paying or owing compensation for services to the individual debtor).” Id. at

110 (italics added). Therefore, and according to the circuit court, the CCPA does not protect wages

once they have left the control of the employer and have been placed in a bank account (or, as in the

case here, into the Judgment Debtor’s deceased parent’s retirement annuity). Id. at 110-111. See

Kokoszka v. Belford, 417 U.S. 642, 651(1974) (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’”) (citation omitted).

Consistent with Usery, it was held in United States v. Laws, 352 F. Supp. 2d 707 (E.D. Va.

2004) that retirement annuity payments do not constitute “earnings” under the CCPA:

The plain language of § 1672(a) indicates that it is meant to protect funds as they

pass from the employer to the employee, in whatever form that compensation takes,

including payments by the employer into a pension or retirement program on behalf

of the employee. It is not clear from the plain language of the statute to what extent

such funds are protected once they leave the hands of the employer, even if the

employee later receives the funds in periodic payments. . . . Wages which have

been voluntarily converted into savings are no longer earnings under the CCPA

. . . . Therefore, the payments being made to Defendant [from a Federal Thrift

Savings Plan annuity] are not “earnings” under the CCPA. Defendant is not entitled

to a reduction in the amount of garnishment pursuant to the CCPA.

Laws, 352 F. Supp. 2d at 713-714 (italics in original, bold added).

Here, while the Judgment Debtor’s deceased parent may have paid into his or her TIAACREF accounts at some time in the past, it is clear that the current payments out of the TIAA-CREF

annuity contracts are not - and never were - payments by the Judgment Debtor’s own employer to

him. Consequently, the Judgment Debtor’s annuity contract interests cannot be exempt as disposable

earnings under 15 U.S.C. §§ 1672(a) and 1673, as incorporated by 18 U.S.C. § 3613(a)(3).

Accordingly, it is therefore ORDERED that:

1. Garnishee TIAA-CREFF turn over all of Judgment Debtor’s interest in two annuity

contracts, numbers GA24465-1 and GA24546-8, to the Clerk of the Court and transmit all periodic

payments thereunder to:

U.S. District Court Clerk

501 I Street, Room 4-200

Sacramento, California 95814

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2. Plaintiff United States shall, once all proceeds from the above-referenced annuity

contracts have been received by the Clerk of the Court, file a proposed order terminating the writ of

garnishment (Doc. 26).

IT IS SO ORDERED.

Dated: August 22, 2006 /s/ Theresa A. Goldner 

j6eb3d UNITED STATES MAGISTRATE JUDGE 

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