Report and Recommendation

Garnishment and Objection

1 USA v. Thomas; 08-15048

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA, Case No. 08-15048

Plaintiff, David M. Lawson

United States District Judge

v.

Michael Hluchaniuk

RAYWARD THOMAS, also known United States Magistrate Judge

as Raynard Thomas, also known as

Raymond Thomas,

Defendant.

 /

REPORT AND RECOMMENDATION

 REGARDING ANSWER OF GARNISHEE KEY BANK (Dkt. 14)

AND DEFENDANT’S OBJECTION TO WRITS OF GARNISHMENT TO 

MICHIGAN DEPARTMENT OF TREASURY AND KEY BANK (Dkt. 19)

The complaint in this matter was filed on December 6, 2008. (Dkt. 1). 

Plaintiff sought to obtain a judgment against defendant based on the allegation that

defendant had failed to pay back a student loan that had been extended to him. 

Defendant was served with a summons and copy of the complaint on January 27,

2009, but failed to respond. (Dkt. 3). A default judgment was entered against

defendant on February 26, 2009, in the amount of $7,900.21 plus post judgment

interest. (Dkt. 7). At the request of plaintiff, writs of continuing garnishment were

2:08-cv-15048-DML-MJH Doc # 31 Filed 11/06/09 Pg 1 of 7 Pg ID 94
Report and Recommendation

Garnishment and Objection

2 USA v. Thomas; 08-15048

issued against the Michigan Department of Treasury and Key Bank on May 28,

2009. (Dkt. 9, 10, 15 and 16).

On June 11, 2009, defendant filed a request for a hearing on plaintiff’s

request for a writ of garnishment. (Dkt. 13). Defendant’s pro se pleading

indicated that (1) he thought some of his tax returns had been taken to satisfy the

obligation and (2) he had certain exemptions that would have applied to the

collection efforts of plaintiff.

On June 12, 2009, garnishee Key Bank filed a response to the writ of

garnishment. This pleading was originally, incorrectly, docketed as Dkt. 14 but a

correction was later entered (Dkt. 20) and the pleading was ultimately docketed as

Dkt. 21. Key Bank disclosed that it held three accounts in defendant’s name with

the total balances of $3,010.60.

Defendant filed an objection to the writ of garnishment on June 22, 2009,

and raised several objections to the garnishment based on the contention that

exemptions from garnishment protected defendant’s assets from garnishment. 

(Dkt. 19). Plaintiff replied to defendant’s objection on July 22, 2009. (Dkt. 24).

On July 1, 2009, District Judge David M. Lawson referred defendant’s

objection (Dkt. 19) and the answer of Key Bank to the undersigned for report and

recommendation “on whether respective garnishee orders should enter.” (Dkt. 23). 

2:08-cv-15048-DML-MJH Doc # 31 Filed 11/06/09 Pg 2 of 7 Pg ID 95
Report and Recommendation

Garnishment and Objection

3 USA v. Thomas; 08-15048

Pursuant to that referral, a hearing, via telephone conference call, was held on

August 11, 2009. At that hearing, defendant asserted that he thought that some of

his tax returns had been taken to pay off the outstanding debt. Plaintiff

acknowledged that defendant’s 1995 tax return had been taken, but noted that the

amount recovered through that effort was only $240. Although defendant did not

argue the merits of the exemptions he had asserted in his written objection, the

undersigned informed defendant that none of the exemptions in his objection to the

writ of garnishment were applicable to the circumstances of his case. Defendant

had argued (1) that because the funds in at least one of the accounts was related to

his work that the limitations on wage garnishment should apply, (2) that the money

in his work account was “tools of his trade” and (3) that a portion of the funds was

exempt under the Michigan Constitution. Regarding the first of these claimed

exemptions, it would appear that federal and state authority would indicate that

even if the source of the funds in the accounts was “wages” they would not be

entitled to the limitation placed on the garnishment of wages. The Supreme Court

has ruled that the limitation on wage garnishment was not intended to include

every asset that could be traced to those wages. Kokoszka v Belford, 417 U.S. 642,

651 (1974). At least one federal court has determined that the limitation on wages

does not extend to funds in a bank account even if traceable to wages. Dunlop v

2:08-cv-15048-DML-MJH Doc # 31 Filed 11/06/09 Pg 3 of 7 Pg ID 96
Report and Recommendation

Garnishment and Objection

4 USA v. Thomas; 08-15048

First National Bank of Arizona, 399 F.Supp 855, 858 (D.Ariz. 1975). Courts in the

State of Michigan have ruled in a similar fashion. Edwards v Henry, 97 Mich.App.

173, 180 (1980). Regarding the claimed exemption for “tool of the trade,” state

law does exempt from “levy” $1,000.00 in “tools, implements, materials, ...[that]

enable a person to carry on the profession, trade, occupation, or business...” MCL

600.6023(1)(e). Defendant did not cite any authority for extending that exemption

to funds in a bank account and none could be located by the undersigned. The

undersigned concludes that funds in a bank account is not a “tool” that a person

needs to carry on their trade. Regarding the exemption that may be created by the

Michigan Constitution, Art. 10, § 3 does indicate that up to $750 in personal

property is exempt for levy. However, defendant has not demonstrated that the

money taken from these bank accounts renders him in possession of less than $750

in personal property after the garnishment. Therefore, the undersigned concludes

that none of the claimed exemptions prevents the garnishment identified in these

pleadings. 

The hearing on the objection was adjourned until October 20, 2009 to allow

defendant to obtain any proof that prior tax returns had been used to satisfy some

portion of the debt. 

2:08-cv-15048-DML-MJH Doc # 31 Filed 11/06/09 Pg 4 of 7 Pg ID 97
Report and Recommendation

Garnishment and Objection

5 USA v. Thomas; 08-15048

Another hearing was held on October 20, 2009, again via telephone

conference call, and defendant reported that he was unable to obtain any additional

information to support his claim that tax returns had been taken regarding this debt. 

Defendant was informed that he would be given an additional period of time, until

November 4, 2009, to produce records relating to his tax returns or that an order

denying him any relief would be entered. Defendant has not produced any

additional documents or pleadings related to this issue.

Based on the above, it is RECOMMENDED that defendant’s objection to

the writs of garnishment be deemed without merit and he be denied any relief

based on those objections. It is further RECOMMENDED that garnishee Key

Bank’s response to the writ of garnishment be deemed adequate and acceptable. 

Therefore, the undersigned RECOMMENDS that plaintiff be allowed to proceed

with collection efforts consistent with requirements of the law and respective

garnishee orders should enter as necessary for that purpose. 

The parties to this action may object to and seek review of this Report and

Recommendation, but are required to file any objections within 10 days of service,

as provided for in 28 U.S.C. § 636(b)(1) and Local Rule 72.1(d)(2). Failure to file

specific objections constitutes a waiver of any further right of appeal. Thomas v.

Arn, 474 U.S. 140 (1985); Howard v. Sec’y of Health and Human Servs., 932 F.2d

2:08-cv-15048-DML-MJH Doc # 31 Filed 11/06/09 Pg 5 of 7 Pg ID 98
Report and Recommendation

Garnishment and Objection

6 USA v. Thomas; 08-15048

505 (6th Cir. 1981). Filing objections that raise some issues but fail to raise others

with specificity will not preserve all the objections a party might have to this

Report and Recommendation. Willis v. Sec’y of Health and Human Servs., 931

F.2d 390, 401 (6th Cir. 1991); Smith v. Detroit Fed’n of Teachers Local 231, 829

F.2d 1370, 1373 (6th Cir. 1987). Pursuant to Local Rule 72.1(d)(2), any objections

must be served on this Magistrate Judge.

Any objections must be labeled as “Objection No. 1,” “Objection No. 2,”

etc. Any objection must recite precisely the provision of this Report and

Recommendation to which it pertains. Not later than 10 days after service of an

objection, the opposing party must file a concise response proportionate to the

objections in length and complexity. The response must specifically address each

issue raised in the objections, in the same order, and labeled as “Response to

Objection No. 1,” “Response to Objection No. 2,” etc. If the Court determines that

any objections are without merit, it may rule without awaiting the response.

s/Michael Hluchaniuk 

Date: November 6, 2009 Michael Hluchaniuk

United States Magistrate Judge

2:08-cv-15048-DML-MJH Doc # 31 Filed 11/06/09 Pg 6 of 7 Pg ID 99
Report and Recommendation

Garnishment and Objection

7 USA v. Thomas; 08-15048

CERTIFICATE OF SERVICE

I certify that on November 6, 2009, I electronically filed the foregoing paper

with the Clerk of the Court using the ECF system, which will send electronic

notification to the following: Pamela S. Ritter, and I certify that I have mailed by

United States Postal Service the paper to the following non-ECF participant:

Rayward Thomas, 15490 Hemlock Street, Monroe, MI 48161.

s/James P. Peltier 

Courtroom Deputy Clerk

U.S. District Court

600 Church Street

Flint, MI 48502

(810) 341-7850

pete_peltier@mied.uscourts.gov

2:08-cv-15048-DML-MJH Doc # 31 Filed 11/06/09 Pg 7 of 7 Pg ID 100