Opinion ID: 146591
Heading Depth: 2
Heading Rank: 2

Heading: Garnishable Property

Text: Lisa next challenges the scope of the garnishment. The district court held that the government was entitled to garnish Lisa's one-half interest in any community property that was jointly managed or solely managed by Todd. Lisa argues that this holding conflicts with this court's opinion in Medaris v. United States, 884 F.2d 832 (5th Cir.1989). She further argues that the district court erroneously determined that the partitioned property was not her sole management community property. [6] The FDCPA provides that [c]o-owned property shall be subject to garnishment to the same extent as co-owned property is subject to garnishment under the law of the State in which such property is located. 28 U.S.C. § 3205(a). Lisa correctly states that she has a one-half ownership interest in the couple's community property under Texas law. Broday v. United States, 455 F.2d 1097, 1100-01 (5th Cir. 1972). But her ownership interest does not define what community assets may be seized by Todd's creditors, a question that is determined by reference to whether the community assets are solely or jointly controlled. A spouse's solely managed community property is not subject to any nontortious liabilities that the other spouse incurs during marriage. TEX. FAM.CODE § 3.202(b)(2). But any community property subject to a spouse's sole or joint management, control, and disposition is subject to the liabilities incurred by the spouse before or during marriage. Id. § 3.202(c). Section 3.202(c) permits the government to garnish Lisa's one-half interest in the couple's community assets that were jointly managed or solely managed by Todd. See Nelson v. Citizens Bank & Trust Co. of Baytown, Tex., 881 S.W.2d 128, 131 (Tex.App.1994). This court's opinion in Medaris, discussing the enforcement of a federal tax lien, is not to the contrary. In the portion of Medaris relied on by Lisa, the court held that the IRS was entitled to attach the debtor's one-half interest in his wife's income because her income was a community asset. 884 F.2d at 833-34. The court reached this conclusion despite the earnings in question being the wife's sole management community property under state law. Id. at 833. As noted, sole management community property is ordinarily beyond the reach of a spouse's creditors for nontortious liabilities incurred during marriage. TEX. FAM.CODE § 3.202(b). This exemption, however, was inapplicable to the federal government because the Tax Code made such state law exemptions void as to tax liens. Medaris, 884 F.2d at 833-34 (citing 26 U.S.C. § 6334(c)). Lisa contends that the Medaris court treated the sole management community property as joint management community property, and concluded that the government could seize half (rather than none) of the property. Accordingly, Lisa argues that the government should be limited to seizing Todd's one-half interest in the couple's community property, including jointly managed property. Contrary to Lisa's suggestion, there is no indication that the Medaris court treated the spouse's earnings as joint management community property. Rather, the court held that a provision of state law that would otherwise bar a creditor from attaching sole management property was inapplicable to tax liens. [7] The Medaris court had no occasion to interpret the equivalent of TEX. FAM. CODE § 3.202(c) when discussing whether the government could attach the spouse's wages, because that provision is only applicable to property subject to [the debtor] spouse's sole or joint management, control, and disposition. The relevant property in Medaris was the non-debtor wife's solely managed property. Section 3.202(c) is implicated here and renders all jointly managed community property subject to the nontortious liabilities incurred by Todd. Finally, Lisa argues that all of the partitioned property is her sole management community property, and so the government can only garnish Todd's one-half interest in these assets. During marriage, each spouse has the sole management, control, and disposition of the community property that the spouse would have owned if single. ... TEX. FAM.CODE § 3.102(a). Property that a spouse would have owned if single includes personal earnings, revenue from separate property, personal injury recoveries, and the increase and mutations of, and the revenue from the spouse's sole management property. Id. §§ 3.102(a)(1)-(4). Other community property is presumed to be joint management property unless the spouses provide otherwise by power of attorney in writing or other agreement. Id. § 3.102(c). Further, when the sole management property of one spouse is mixed or combined with the other spouse's sole management property, the commingled property is considered to be jointly managed property, absent a written agreement to the contrary. Id. § 3.102(b). Lisa has not attempted to show that any particular asset, other than her retirement savings account, consisted of sole management property that was not commingled with Todd's property. Indeed, when pressed at oral argument before the district court, the only sole management property her counsel could specifically identify was the retirement savings account. The partitioned assets consisted mostly of the couple's joint savings or assets attributable to Todd's income and stock sales, and assets purchased with those funds. These are not assets that Lisa would have owned if single. TEX. FAM.CODE § 3.102(a). The district court was correct to treat these assets as jointly managed property.