Court Opinion

ID: 2720235
Source: CourtListenerOpinion
Date Created: 2014-08-22 18:00:31.083897+00
Date Added: 2024-06-11T15:34:35.901829
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                                    Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                              File Name: 14a0199p.06

                        UNITED STATES COURT OF APPEALS
                                         FOR THE SIXTH CIRCUIT
                                           _________________

 In re: JAMES D. ROBINSON, JR.,                                    ┐
                                     Debtor.                       │
                                                                   │
 __________________________________________                        │         No. 13-5857
                                                                   │
 UNITED STATES OF AMERICA,                                          >
                                                                   │
                                                     Appellee,     │
                                                                   │
            v.                                                     │
                                                                   │
                                                                   │
 JAMES D. ROBINSON, JR.,                                           │
                                                    Appellant.     │
                                                                   ┘
                              Appeal from the United States District Court
                           for the Western District of Tennessee at Memphis
                       No. 2:12-cv-03064—S. Thomas Anderson, District Judge.
                                    Decided and Filed: August 22, 2014

        Before: COLE, Chief Judge; GRIFFIN, Circuit Judge; PEARSON, District Judge.

                                             _________________

                                                   COUNSEL

ON BRIEF: John E. Dunlap, THE LAW OFFICE OF JOHN E. DUNLAP, P.C., Memphis,
Tennessee, for Appellant. Barbara M. Zoccola, UNITED STATES ATTORNEY’S OFFICE,
Memphis, Tennessee, for Appellee.

        
          The Honorable Benita Y. Pearson, United States District Judge for the Northern District of Ohio, sitting by
designation.

                                                         1
No. 13-5857                 In re Robinson                                     Page 2

                                       _________________

                                             OPINION
                                       _________________

       COLE, Chief Judge. After James Robinson defrauded more than one thousand victims in
mail and wire fraud schemes, the district court ordered him to pay criminal restitution. Robinson
did not comply with the court’s order, and he later filed a petition for Chapter 13 bankruptcy.
Filing for bankruptcy triggered the Bankruptcy Code’s automatic stay, which suspends all
activities related to the collection and enforcement of prepetition debts. See 11 U.S.C. § 362(a).
The government seeks to bypass the automatic stay by invoking 18 U.S.C. § 3613(a), which
provides that the government may enforce a judgment imposing restitution “notwithstanding any
other Federal law.” Based on the plain meaning of § 3613 and the approach adopted by our
sister circuits in interpreting this statute, § 3613 supersedes the automatic stay and allows the
government to enforce restitution orders against property included in the bankruptcy estate. We
therefore affirm the district court’s judgment.

                                       I. BACKGROUND

       In 1996, Robinson pleaded guilty to mail fraud and aiding and abetting under 18 U.S.C.
§§ 1341 and 1342. The district court sentenced Robinson to 97.5 months of imprisonment
followed by three months of supervised release and ordered him to pay criminal restitution in the
amount of $286,875.      A year later, Robinson pleaded guilty to a second set of criminal
violations, resulting in convictions of wire fraud and aiding and abetting under
18 U.S.C. §§ 1342 and 1343.        The district court imposed a twenty-four-month term of
imprisonment and once again ordered Robinson to pay restitution, this time in the amount of
$100,000. Although required to pay both restitution orders “in full immediately,” Robinson paid
only $7,779.44 of the first judgment and $200 of the second. Before satisfying the restitution
judgments, Robinson filed for bankruptcy under Chapter 13.

       The government, by virtue of the criminal restitution judgments, is a lien creditor. Thus,
the Department of Justice is listed as a general unsecured creditor on Robinson’s Bankruptcy
Schedule F, with a $283,101 claim. Robinson’s schedule of assets listed an IRA account valued
No. 13-5857                  In re Robinson                                      Page 3

at $47,000, a tax refund valued at $4,500, and three automobiles—a 2006 Toyota Highlander
valued at $6,000, a 2001 Toyota Solara valued at $2,000, and a 1999 Infiniti valued at $900.
Robinson claimed two exemptions under Tennessee law: the entire value of his IRA account and
$1,500 in the 2006 Toyota.

       The government moved for a declaratory judgment to determine whether the automatic
stay prevented its actions to collect restitution. According to the government, it had the authority
to enforce the restitution judgments under 11 U.S.C. § 362(b)(1) and alternatively under
18 U.S.C. § 3613(a), which provides that “notwithstanding any other Federal law . . . a judgment
imposing a fine may be enforced against all property or rights to property of the person fined,”
with certain exceptions not relevant here. The government also sought to terminate the stay as to
all of Robinson’s assets, and specifically moved to allow for the enforcement and execution on
Robinson’s IRA account, pension fund, and two of his three automobiles under 11 U.S.C.
§ 362(d)(2)(B).

       The bankruptcy court denied the government’s “request to terminate the automatic stay as
to all assets,” but granted relief from the stay as to Robinson’s IRA account and two of his three
automobiles. With respect to the IRA account, the court found that “[i]t would be patently
unfair . . . to allow [Robinson] to save for his retirement utilizing the IRA at the expense of his
restitution creditors.” See 11 U.S.C. § 362(d)(1). After determining that three vehicles were
unnecessary for Robinson’s reorganization, the court terminated the stay as to two of his three
automobiles.

       Although the government relied on 11 U.S.C. § 362(b)(1) and 18 U.S.C. § 3613 to bypass
the stay, the bankruptcy court concluded that neither statute allowed the government to enforce
the restitution orders against property of the bankruptcy estate. Section 362(b)(1) excepts from
the automatic stay “the commencement or continuation of a criminal action or proceeding
against the debtor.” In ruling out this exception, the bankruptcy court concluded that § 362(b)(1)
allows enforcement actions only against the debtor, not against property of the estate. It noted
that the stay and its exceptions apply to different entities—the debtor in personam, property of
the debtor, and property of the estate—and that these categories must be examined carefully “to
assure that the correct entity . . . has the intended statutory protection of the automatic stay.”
No. 13-5857                 In re Robinson                                      Page 4

Because § 362(b)(1) does not mention property of the estate, the bankruptcy court concluded that
the government’s collection efforts were prohibited.

        The bankruptcy court then addressed 18 U.S.C. § 3613(a). While recognizing that this
statute is “powerful and far-reaching,” the court held that § 3613 does not overcome the
automatic stay, absent the court’s authorization. Reiterating its main premise that “property of
the debtor and property of the estate are separate legal terms of art,” the court reasoned
that § 3613 does not apply to property of the estate because it too mentions only “property of the
person fined.” Therefore, according to the bankruptcy court, property of the estate is protected
during the pendency of Robinson’s bankruptcy proceeding.

        The government appealed the bankruptcy court’s order and elected to have a district court
hear the appeal. See 28 U.S.C. § 158(c)(1)(B). The district court did not analyze the “criminal
action or proceeding” exception in § 362(b)(1); instead, it concluded that 18 U.S.C. § 3613(a)
“renders the Bankruptcy Code’s distinctions between . . . property of the debtor . . . and property
of the bankruptcy estate a nullity.” In the district court’s view, it did not matter “whether the
debtor in bankruptcy or the bankruptcy estate holds nominal title to such property” because
§ 3613(a) allows the government to enforce a restitution order against all property of the person
ordered to pay. The district court emphasized the “clear Congressional policy” of § 3613(a),
which was to ensure that “no Federal law . . . interfere with the United States’ enforcement of a
fine or restitution order.” It was therefore insignificant to the district court that Robinson’s
property was recast as property of the bankruptcy estate because § 3613 prevented application of
the stay. Any other interpretation, the court indicated, would “rob fines and restitution orders of
their teeth.”

        Robinson timely appealed the district court’s order.

                                         II. ANALYSIS

        When reviewing an appeal that originated in a bankruptcy court, “[w]e evaluate the
bankruptcy court decision directly, without being bound by the district court’s determinations,
and conduct an independent examination of the record.” In re John Richards Homes Bldg. Co.,
No. 13-5857                In re Robinson                                        Page 5

L.L.C., 439 F.3d 248, 254 (6th Cir. 2006). We review the bankruptcy court’s interpretation of 11
U.S.C. § 362 and 18 U.S.C. § 3613 de novo. See In re Vause, 886 F.2d 794, 798 (6th Cir. 1989).

       A debtor’s filing for bankruptcy automatically triggers several provisions of the
Bankruptcy Code. First, 11 U.S.C. § 541(a) divests a debtor of the property he or she owned at
the time of the filing and vests that property in a bankruptcy trustee. See, e.g., Bauer v.
Commerce Union Bank, 859 F.2d 438, 440–41 (6th Cir. 1988). In other words, property of the
debtor becomes property of the bankruptcy estate, which consists of “all legal or equitable
interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1).
Property of the estate is central to the bankruptcy process. It “becomes the ‘pot’ from which all
claims against the debtor will be paid pursuant to the [Bankruptcy] Code’s priority scheme.”
Chao v. Hosp. Staffing Serv. Inc., 270 F.3d 374, 382 (6th Cir. 2001) (internal citations omitted).

       Second, filing for bankruptcy stays a number of enforcement actions against the debtor,
his or her property, and property of the estate. See 11 U.S.C. § 362(a). The stay seeks to
“preserve what remains of the debtor’s insolvent estate and . . . provide[s] a systematic equitable
liquidation procedure for all creditors, secured as well as unsecured, thereby preventing a
‘chaotic and uncontrolled scramble for the debtor’s assets in a variety of uncoordinated
proceedings in different courts.’” Chao, 270 F.3d at 382–83 (quoting Holtkamp v. Littlefield,
669 F.2d 505, 508 (7th Cir. 1982)). The purpose of the automatic stay is to

       give[] the debtor a breathing spell from his creditors. It stops all collection
       efforts, all harassment, and all foreclosure actions. It permits the debtor to
       attempt a repayment or reorganization plan, or simply to be relieved of the
       financial pressures that drove him into bankruptcy.

H.R. Rep. No. 95–595, at 340 (1978). In effect, the stay offers debtors a “new opportunity” to
organize their financial affairs, “unhampered by the pressure and discouragement of pre-existing
debt.” Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).

       But the stay is not absolute: while it “repel[s]” many prepetition collection actions,
“[s]ome governmental attacks on the estate . . . penetrate the barrier.” In re Javens, 107 F.3d
359, 363 (6th Cir. 1997). For example, under the “criminal action or proceeding” exception,
filing for bankruptcy does not stay the “commencement or continuation of a criminal action or
proceeding against the debtor.” 11 U.S.C. § 362(b)(1) (emphasis added). The government
No. 13-5857                      In re Robinson                                                  Page 6

claims that this exception allows it to collect restitution judgments from property of the
bankruptcy estate. The plain language of § 362(b)(1), however, limits this exception to actions
against the debtor. It does not enable the government to collect from property of the estate.
Nevertheless, we conclude that the government may proceed against estate property by virtue of
18 U.S.C. § 3613.

         We first consider the plain meaning of this statute because the “starting point in every
case involving construction of a statute is the language itself.” Blue Chip Stamps v. Manor Drug
Stores, 421 U.S. 723, 756 (1975). If the statute’s language is transparent, “the sole function of
the courts—at least where the disposition required by the text is not absurd—is to enforce it
according to its terms.” Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S.
1, 6 (2000) (internal quotation marks omitted).

         In relevant part, § 3613(a) provides that “[n]otwithstanding any other Federal law . . . a
judgment imposing a fine may be enforced against all property or rights to property of the person
fined . . . .” (emphasis added).1 In construing “notwithstanding” clauses, the Supreme Court and
the circuit courts have indicated that this language supersedes conflicting laws. See Cisneros v.
Alpine Ridge Grp., 508 U.S. 10, 18 (1993) (“As we have noted previously in construing statutes,
the use of such a ‘notwithstanding’ clause clearly signals the drafter’s intention that the
provisions of the ‘notwithstanding’ section override conflicting provisions of any other section.
Likewise, the Courts of Appeals generally have interpreted similar ‘notwithstanding’
language . . . to supersede all other laws, stating that ‘[a] clearer statement is difficult to
imagine.’” (citation and internal quotation marks omitted)). In Dean v. Veterans Administration
Regional Office, the Sixth Circuit examined Chapter Five of the United States Code and found
that the phrase “notwithstanding any other provision of law” supplanted a conflicting provision
in 42 U.S.C. § 2000e–16(c). 943 F.2d 667, 670 (6th Cir. 1991), vacated and remanded on other
grounds by 503 U.S. 902 (1992).                  The D.C. Circuit interpreted expansively the phrase
“notwithstanding any other provision of law” in concluding that this language surpassed § 705 of
the Merchant Marine Act. Liberty Mar. Corp. v. United States, 928 F.2d 413, 416–18 (D.C. Cir.

         1
          In addition to fines, restitution judgments are encompassed by 18 U.S.C. § 3613. See 18 U.S.C. § 3613(f)
(“[A]ll provisions of this section are available to the United States for the enforcement of an order of restitution.”).
No. 13-5857                 In re Robinson                                      Page 7

1991); see also Deutsche Bank Nat’l Trust Co. v. Tucker, 621 F.3d 460, 464 (6th Cir. 2010)
(“[T]he term ‘notwithstanding’ functions in its normal supplanting way: it simply excludes
application of the referenced [law].”).

       Several circuits have held that § 3613(a) defeats other statutory provisions that safeguard
an individual’s property. See, e.g., United States v. DeCay, 620 F.3d 534, 540 (5th Cir. 2010)
(holding that the government could enforce its restitution judgment under § 3613(a) against the
defendant’s retirement benefits that the Internal Revenue Code protected from assignment or
alienation); United States v. Novak, 476 F.3d 1041, 1047 (9th Cir. 2007) (en banc) (holding that
the government could enforce its restitution judgment under § 3613(a) against funds of the
defendant in a pension plan covered by an ERISA anti-alienation provision); United States v.
Hyde, 497 F.3d 103, 108 (1st Cir. 2007) (holding that “notwithstanding” language is obvious;
therefore, “neither Massachusetts law nor the Bankruptcy Code restricts the reach of [§ 3613’s]
clear language”). Although only one of these cases arose in the bankruptcy context, these
decisions are instructive because they demonstrate that the Bankruptcy Code, like any other
federal statute, must yield if it conflicts with § 3613(a). Though the automatic stay prohibits the
enforcement of prepetition judgments against property of the estate, § 3613 allows the
government to collect criminal restitution despite “any other Federal law.”         This language
overrides the application of § 362(a)’s various stays, which distinguish among the debtor in
personam, property of the debtor, and property of the estate. Unlike the Bankruptcy Code,
§ 3613 does not use these terms of art. We therefore conclude that the government may enforce
the restitution orders against property of the bankruptcy estate.

       The legislative history of § 3613 also supports our interpretation. Section 3613 and the
Mandatory Victims Restitution Act (“MVRA”) are enforcement statutes, granting the United
States the power to collect restitution for the victims of specified crimes.       See 18 U.S.C.
§ 3663A. The MVRA removed judicial discretion in ordering restitution and made such orders
mandatory in nearly all cases where a victim suffered an identifiable monetary loss. Id.; see
United States v. Perry, 360 F.3d 519, 524 (6th Cir. 2004). Congress envisioned that the MVRA
would “ensure that criminals pay full restitution to their victims for all damages caused as a
result of the crime,” regardless of a defendant’s financial circumstances. H.R. Rep. No. 104-16,
No. 13-5857                 In re Robinson                                         Page 8

at 4–5 (1995). Under 18 U.S.C. § 3613, the government can enforce restitution judgments “in
accordance with the practices and procedures for the enforcement of a civil judgment under
Federal law or State law.” See 18 U.S.C. §§ 3613(a) & 3664(m)(1)(A)(i). Restitution is
enforceable by the United States, through the Department of Justice, and by the victims named in
the restitution order. 18 U.S.C. § 3664(m)(1). The MVRA provides that

       [n]otwithstanding any other provision of law, when sentencing a defendant
       convicted of an offense described in subsection (c), the court shall order, in
       addition to, or in the case of a misdemeanor, in addition to or in lieu of, any other
       penalty authorized by law, that the defendant make restitution to the victim of the
       offense or, if the victim is deceased, to the victim’s estate.

18 U.S.C. § 3663A(a)(1) (emphasis added).

       Moreover, the MVRA incorporated the term “notwithstanding” in 1996, whereas the
automatic stay provision and 11 U.S.C. § 541 were enacted in 1978. See Mandatory Victims
Restitution Act, Pub. L. No. 104-132, Title II, § 207(c)(3), 110 Stat. 1238 (1996); Bankruptcy
Reform Act of 1978, Pub. L. No. 95-598, 92 Stat. 2594. As the Supreme Court has observed:
“[t]he classic judicial task of reconciling many laws enacted over time, and getting them to make
sense in combination, necessarily assumes that the implications of a statute may be altered by the
implications of a later statute.” Food & Drug Admin. v. Brown & Williamson Tobacco Corp.,
529 U.S. 120, 143 (2000) (internal citations and quotation marks omitted). In addition, a
“specific policy” expressed in a subsequent statute should govern the interpretation “of the
[earlier] statute even though it ha[s] not been expressly amended.” United States v. Estate of
Romani, 523 U.S. 517, 530–31 (1998). The “specific policy” underlying the MVRA ensures that
victims “receive the restitution that they are due” and that bankruptcy laws do not frustrate the
prosecution of criminal offenders. S. Rep. No. 104-179, at 12 (1995); H.R. Rep. No. 595, 95th
Cong., 1st Sess. at 342 (1977); S. Rep. No. 989, 95th Cong., 2d Sess. at 51 (1978). With the
MVRA, “Congress has specifically subordinated the goals of economic rehabilitation and
equitable distribution of assets to the states’ interest in prosecuting criminals.” In re Gruntz,
202 F.3d 1074, 1086 (9th Cir. 2000); see also United States v. Novak, 441 F.3d 819, 823 (9th
Cir. 2006) (The MVRA and § 3613 demonstrate that “Congress has made the policy choice to
elevate the collection of criminal restitution orders in the debt-collection food chain.”).
No. 13-5857                 In re Robinson                                         Page 9

       Although we are mindful that “[s]tatutory interpretation requires more than concentration
[of] isolated words,” the structure of § 3613 suggests that the government’s collection efforts are
permitted. See Boys Mkts., Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 250 (1970).
After Congress drafted § 3613(a) indicating that no other federal law would prevent enforcement
of a restitution judgment, it later provided, in § 3613(e), that criminal debts and liens survive
bankruptcy discharge. An explicit reference to bankruptcy discharge in § 3613(e) suggests that
Congress had the potential effects of the Bankruptcy Code in mind when it drafted § 3613(a).
See South Dakota v. Yankton Sioux Tribe, 522 U.S. 329, 351 (1998) (“[W]e assume that
Congress is aware of existing law when it passes legislation.”).

       We find additional support for our conclusion based on the exceptions listed in § 3613(a).
The exceptions provide as follows:

       [A] judgment imposing a fine may be enforced against all property or rights to
       property of the person fined, except that –
               (1) [P]roperty exempt from levy for taxes pursuant to section
                   6334(a)(1), (2), (3), (4), (5), (6), (7), (8), (10), and (12) of the
                   Internal Revenue Code of 1986 shall be exempt from
                   enforcement of the judgment under Federal law;
               (2) [S]ection 3014 of chapter 176 of title 28 shall not apply to
                   enforcement under Federal law; and
               (3) [T]he provisions of section 303 of the Consumer Credit
                   Protection Act (15 U.S.C. 1673) shall apply to enforcement of
                   the judgment under Federal law or State law.

Conspicuously, the Bankruptcy Code, including the automatic stay, is absent from the list of
exceptions, and its absence informs our discussion because “[w]here Congress explicitly
enumerates certain exceptions to a general prohibition, additional exceptions are not to be
implied, in the absence of evidence of a contrary legislative intent.” Andrus v. Glover Constr.
Co., 446 U.S. 608, 616–17 (1980). Additionally, this court has explained that “if a statute
specifies exceptions to its general application, other exceptions not explicitly mentioned are
excluded.” United States v. Lewis, 900 F.2d 877, 881 (6th Cir. 1990) (citation and internal
quotation marks omitted). Consistent with these cases, we will not impute a Bankruptcy Code
exception in § 3613 where none has been enumerated. As the district court correctly determined,
No. 13-5857                   In re Robinson                                      Page 10

“[h]ad Congress wished to exempt a defendant’s property transferred to the legal fiction of a
bankruptcy estate from 3613(a)’s ambit, it knew how to do so.” Since Congress specifically
exempted certain property from the enforcement of a criminal fine, but failed to mention estate
property, Robinson may not take refuge in the stay.

          The distinctions made throughout the Bankruptcy Code impacting the debtor in
personam, property of the debtor, and property of the estate in different ways should not be
overlooked. Without minimizing these distinctions, Congress, by incorporating such broad
language in § 3613, has authorized the government to proceed against property of the bankruptcy
estate.

          While we agree with the district court’s ultimate conclusion that the government may
proceed against property of the estate, we disagree with its statement that for purposes of the
government’s efforts to collect restitution “there is no ‘property of the bankruptcy
estate’ . . . only property of the person ordered to pay restitution.” In the bankruptcy context,
property is either property of the estate or it is not; it cannot be property of the estate for one
purpose and not for another. To hold otherwise would create confusion on the part of trustees,
debtors, and courts as they await governmental collection action. As discussed previously,
Robinson’s bankruptcy filing immediately transferred his property to the bankruptcy estate.
Even so, the government may satisfy the restitution judgments from estate property.

                                         III. CONCLUSION

          For the reasons stated above, we affirm the judgment of the district court.