Court Opinion

ID: 3046334
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:18:43.791726+00
Date Added: 2024-06-11T08:20:45.804909
License: Public Domain

Case: 12-12227    Date Filed: 11/29/2012    Page: 1 of 9

                                                                         [PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                          ________________________

                                 No. 12-12227
                             Non-Argument Calendar
                           ________________________

                      D.C. Docket No. 1:10-cr-20767-JLK-1

UNITED STATES OF AMERICA,
                                                                 Plaintiff - Appellee,

                                       versus

LAWRENCE S. DURAN,

                                                                          Defendant,

CARMEN DURAN,
                                                               Claimant - Appellant.
                          ________________________

                   Appeal from the United States District Court
                       for the Southern District of Florida
                         ________________________
                              (November 29, 2012)

Before PRYOR, FAY and ANDERSON, Circuit Judges.

PER CURIAM:

      The issue presented is whether a district court has the authority, under the

Federal Debt Collection Procedure Act, to determine under state law the ownership
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interests in property against which the United States has obtained a writ of

execution to collect a judgment of restitution in a criminal action. The United

States obtained a judgment for restitution of more than $85 million against

Lawrence Duran for crimes that he committed in a conspiracy to defraud Medicare.

After the United States obtained a writ of execution against an apartment that,

according to property records, was owned jointly by Lawrence and his former

wife, Carmen Duran, she moved to dissolve or stay the writ on the ground that she

had acquired sole title to the property as part of their divorce settlement several

months before his prosecution. The district court denied the motion without

prejudice on the ground that it lacked “jurisdiction to make findings with respect to

Duran’s divorce proceedings and corresponding property dispute.” Carmen

argues, and the United States concedes, that the district court erred in refusing to

adjudicate her motion. Because the Act provides that the United States may levy

only “property in which [a] judgment debtor has a substantial nonexempt interest,”

28 U.S.C. § 3203(a), the district court erred in refusing to adjudicate Carmen’s

motion. We vacate the order that denied Carmen’s motion and remand for further

proceedings consistent with this opinion.

                                I. BACKGROUND

      In May 2011, Lawrence Duran pleaded guilty to 38 crimes related to his role

in a conspiracy to defraud Medicare. The district court sentenced Lawrence to 50

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years of imprisonment, followed by three years of supervised release. The district

court also entered a judgment against Lawrence and in favor of the United States

for $87,533,863.46 in restitution.

      On October 19, 2011, the United States applied, under the Federal Debt

Collection Procedure Act, for a writ of execution against an apartment to collect

the judgment of restitution against Lawrence. See id. § 3203(c)(1). The United

States alleged that Lawrence had “possession, custody, or control” and “a

substantial nonexempt interest” in an apartment in New York City. The United

States stated in its certificate of service that it had “filed the [application] with the

Clerk of the Court” and that the application was “being served . . . by CM/ECF.”

Carmen was not served a copy of the application.

      That same day, the Clerk of the district court granted the application of the

United States, and the Clerk issued a writ of execution. The writ ordered the

United States Marshal to satisfy the judgment of restitution against Lawrence by

“levying on and selling” the apartment.

      On November 17, 2011, Carmen Duran moved to dissolve or stay the writ of

execution. Carmen argued that she was an “innocent owner” of the apartment, and

she requested an evidentiary hearing “on the critical issues of [her] legitimate

ownership of the apartment in question, the pertinent concerns of notice and due

process under Florida Law and [Federal Rule of Civil Procedure] 69, and [her]

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complete independence from [Lawrence], her former spouse.” Carmen alleged

that she had divorced Lawrence in June 2010; Lawrence had agreed as part of the

divorce settlement to transfer his interest in the apartment to Carmen; in July 2010,

Lawrence had executed a deed that conveyed his interest in the apartment to

Carmen; and she had “retained counsel to properly record the deed in New York.”

Carmen attached to her motion copies of the deed to the apartment, correspondence

between attorneys in Florida and New York about recording the deed, the

judgment of divorce, the divorce settlement agreement, and a financial affidavit

executed by Lawrence.

      The United States opposed Carmen’s motion to dissolve. The United States

“[did] not dispute that Carmen Duran [was] entitled to recover one-half of the net

proceeds from the sale of the [apartment] since she was the one-half owner of the

property” when the United States recorded its lien. But the United States argued

that its lien had priority over Carmen’s unrecorded claim to sole ownership of the

apartment. See 28 U.S.C. § 3203(b). The United States attached to its response a

copy of its judgment lien and the deed it had found in the property records of New

York, which stated that the apartment was owned jointly by Carmen and

Lawrence.

      Carmen replied that the United States could not levy the apartment to satisfy

Lawrence’s debt because he lacked any ownership interest in the apartment.

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Carmen alleged that she owned the apartment and that she had been unaware that

her divorce attorney had failed to record the deed. Carmen attached to her reply an

affidavit of her divorce attorney, which stated that he had attempted to file the

deed, had mistakenly omitted a required tax return, and had later “chose[n] not to

complete the recording of the deed” because the United States had filed criminal

charges against Lawrence. Carmen also attached to the reply her affidavit, which

explained how she was the lawful owner of the apartment.

      The district court denied Carmen’s motion “without prejudice to re-file in a

court with jurisdiction.” The district court ruled that it lacked “jurisdiction to make

findings with respect to [Carmen’s] divorce proceedings and corresponding

property dispute.” Carmen filed this appeal.

                          II. STANDARD OF REVIEW

      “Our review of a district court’s determination of subject matter jurisdiction

as well as statutory interpretation is de novo.” United States v. Rendon, 354 F.3d
1320, 1324 (11th Cir. 2003).

                                 III. DISCUSSION

      The Federal Debt Collection Procedure Act “provides ‘the exclusive civil

procedures for the United States’ to obtain satisfaction of a judgment in a criminal

proceeding that imposes a ‘fine, assessment, penalty, [or] restitution’ in favor of

the United States.” United States v. Bradley, 644 F.3d 1213, 1309 (11th Cir. 2011)

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(quoting 28 U.S.C. §§ 3001(a)(1), 3002(3)(B), 3002(8)). The Act provides the

United States several remedies to satisfy a judgment, one of which is to obtain a

writ of execution. 28 U.S.C. §§ 3202(a), 3203. Under section 3203(a), the United

States may levy “[a]ll property in which the judgment debtor has a substantial

nonexempt interest.”

      The Act limits the authority of the United States to levy against jointly-

owned property. The United States may levy “property which is co-owned by a

debtor and any other person only to the extent allowed by the law of the State

where the property is located.” Id. § 3010(a). With regard to levying against

property under a writ of execution, “[c]o-owned property [is] subject to execution

[only] to the extent such property is subject to execution under the law of the State

in which it is located.” Id. § 3203(a).

      The Act provides that co-owners and other persons interested in the property

have rights to receive notice of and to challenge the levy. The United States must

provide notice that the property “is being taken by the United States Government,”

id. § 3202(b), and the United States must serve a copy of the notice and its

application for the writ of execution “on each person whom the United States, after

diligent inquiry, has reasonable cause to believe has an interest in property to

which the remedy is directed,” id. § 3202(c). And after the district court issues the

writ, “[t]he court may[,] . . . [on] the motion of any interested person, and after

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such notice as it may require, make an order denying, limiting, conditioning,

regulating, extending, or modifying the use of any” remedy available to the United

States. Id. § 3013.

      The Act obliges a district court to adjudicate any contested ownership

interests in property subject to a writ of execution. The Act provides that the

United States may levy only property in which a judgment debtor has a

“substantial nonexempt interest.” Id. § 3203(a). To that end, the district court

must determine whether the debtor has any ownership interests in the property, and

the district court must determine the ownership interests of any person who moves

to dissolve or modify any writ.

      Two sister circuits also have interpreted the Act to allow nonparties to

participate in these proceedings to adjudicate their interests in the property under

state law. In United States v. Kollintzas, 501 F.3d 796 (7th Cir. 2007), the Seventh

Circuit explained that “[t]he FDCPA’s third-party notice requirement and the

provision regarding jointly owned property together imply that nonparties with an

interest in the targeted property may participate in the collection proceedings for

the purpose of asserting their interest in the property.” Id. at 801. And the court

determined that “the government’s liens were perfected and the garnishment

proceedings commenced before [the debtor’s spouse had] filed for divorce.” Id. at

803; see also United States v. Rogan, 639 F.3d 1106, 1107–09 (7th Cir. 2011)

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(vacating an order that granted a writ of garnishment obtained by the United States

priority over creditors’ claims to collect from a housing business under state law).

And in United States v. Coluccio, 51 F.3d 337 (2d Cir. 1995), the Second Circuit

allowed the mother of a defendant to challenge the right of the United States to

seize a cost bond that the mother had posted on her son’s behalf. Id. at 339–42.

The Second Circuit remanded the case to the district court to determine, under state

law, whether the mother was the beneficiary of a constructive trust on the cost

bond. Id. at 342.

      The district court erred when it refused to adjudicate Carmen’s motion to

dissolve or stay the writ of execution. Because the district court had a duty to

determine what, if any, “substantial nonexempt interest” Lawrence held in the

apartment, 28 U.S.C. §§ 3203(a), 3013, when the United States levied against the

property, id. § 3203(b), we vacate the order that denied Carmen’s motion. On

remand, the district court must determine the respective ownership interests, if any,

of Carmen and Lawrence in the apartment when the United States obtained the writ

of execution and whether Lawrence had a “substantial nonexempt interest” in the

apartment that the United States could levy.

                                IV. CONCLUSION

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      We VACATE the order that denied Carmen’s motion to dissolve, and we

REMAND for the district court to conduct further proceedings consistent with this

opinion.

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