Opinion ID: 1204244
Heading Depth: 2
Heading Rank: 4

Heading: Neiswonger's Remaining Arguments

Text: Neiswonger also asserts the district court's contempt order violates state and federal law, and is overly broad because the provision in the district court's contempt order which requires Neiswonger to turn over certain assets to the receiver in partial satisfaction of the judgment violates state and federal law. [5] First, Neiswonger claims the district court cannot compel Neiswonger to turn over real property located in Las Vegas, Nevada, because Neiswonger's wife, who is not a party to the action, has a marital interest in the property. To support his argument, Neiswonger relies upon a case which interpreted New Jersey law. See S.E.C. v. Antar, 120 F.Supp.2d 431 (D.N.J.2000). In Antar, the court considered whether, under New Jersey law, a husband's creditor could obtain partition or foreclosure of a marital home to satisfy the debts of the husband when the husband held the home in tenancy by the entirety with his wife. Id. at 449-50. The court held, under the circumstances of that case, foreclosure and partition of the family home were inappropriate. Id. at 450. However, Antar has no bearing on this case. The subject Neiswonger real property is located in Nevada. Nevada is a community property state, and under the law of Nevada, community property is subject to a spouse's debt irrespective of whether both spouses were a party to the action. Jones v. Swanson, 341 F.3d 723, 738 n. 6 (8th Cir.2003) (citing Randono v. Turk, 86 Nev. 123, 466 P.2d 218, 224 (1970)); see also Cirac v. Lander County, 95 Nev. 723, 602 P.2d 1012, 1017 (1979) (noting community property of spouses may be subject to liability of judgments whether or not the wife was a party to the suit (citation omitted)). Neiswonger next argues the district court abused its discretion by ordering him to turn over the real property in Nevada because the property is owned by a trust that bears Neiswonger's wife's initials, Neiswonger no longer resides in the home, and Neiswonger's wife resides in the home with her son. Our review of the trust documents reveals Neiswonger is a trustor/grantor, trustee, and beneficiary of the named trust, and Neiswonger cites no authority to support his arguments that he cannot be compelled to turn over property owned by the trust. See F.T.C. v. Affordable Media, 179 F.3d 1228, 1241 (9th Cir. 1999) (stating a defendant who asserts he is unable to comply with a court order requiring him to turn over assets held in trust must show `categorically and in detail' why he is unable to comply, and observing, [i]n the asset protection trust context, ... the burden on the party asserting an impossibility defense will be particularly high because of the likelihood that any attempted compliance with the court's orders will be merely a charade rather than a good faith effort to comply (citation omitted)). Finally, Neiswonger contends the portion of the amended contempt order requiring Neiswonger to turn over the assets in his A.G. Edwards individual retirement account (IRA) conflicts with state and federal law. Neiswonger claims he should not be required to comply with this provision of the contempt order because (1) the funds in his IRA are exempt from collection by creditors under Nevada law, and (2) he would be required to pay a penalty to the Internal Revenue Service in order to liquidate and transfer the funds in his IRA. Neiswonger relies upon Dudley v. Anderson (In re Dudley), 249 F.3d 1170, 1172 (9th Cir.2001), wherein the Ninth Circuit considered whether, under California law, IRAs were exempt from creditors' claims in a bankruptcy estate. The Ninth Circuit recognized an IRA designed and used solely or principally for retirement purposes would be exempt under California law. Id. at 1176-77. Neiswonger, however, cites no authority to support his contention that the district court's authority to order him to turn over the assets in his IRA was limited by any Nevada state law exemptions. On the other hand, the FTC cites other authority demonstrating a district court is not constrained by state law exemptions in fashioning disgorgement orders. See Steffen v. Gray, Harris & Robinson, P.A., 283 F.Supp.2d 1272, 1282 (M.D.Fla.2003) (A district court has broad discretion in fashioning a disgorgement order. For example, a district court can ignore state law exemptions as well as other state law limitations on the ability to collect a judgment in fashioning a disgorgement order. (internal citations omitted)); see also S.E.C. v. Musella, 818 F.Supp. 600, 602 (S.D.N.Y.1993) (Contrary to [defendant's] assertion, the extent to which [his] assets and income would be exempt from attachment under New York law does not alter his duty to pay the amount he owes under the [federal civil contempt] order. (citation omitted)). In this case, Neiswonger is not an innocent debtor covered by state debtor protection legislation. Neiswonger violated a permanent injunction and used a deceptive and misleading marketing scheme to sell business opportunity programs. Neiswonger has failed to demonstrate the district court abused or exceeded its discretion or clearly erred in imposing the amended civil contempt order.