Argued
and Submitted March 17, 2017 San Francisco, California
Appeal
from the United States District Court for the Northern
District of California, D.C. No. 3:95-cr-00227-TEH-1 Thelton
E. Henderson, District Judge, Presiding
Howard
D. Neal (argued), Neal & Associates, Oakland, California,
for Appellants.
Julie
C. Reagin (argued), Assistant United States Attorney; Sara
Winslow, Chief, Civil Division; Brian Stretch, United States
Attorney; United States Attorney's Office, San Francisco,
California; for Plaintiff-Appellee.
Before: Richard C. Tallman and Paul J. Watford, Circuit
Judges, and Louis Guirola, Jr., [*] Chief District Judge.
SUMMARY[**]
Garnishment
The
panel affirmed the district court's decision that a writ
of continuing garnishment attaches to a beneficiary's
interest in discretionary support trusts, in a case in which
the beneficiary, Michael Harris, owes restitution ordered
following his 1997 conviction.
The
panel held that Harris's interest in the trusts, which
were established by his parents for his support, qualifies as
"property" under 28 U.S.C. §§ 3002(12),
3205(a) and 18 U.S.C. § 3613(c). The panel wrote that
because Harris has a right to receive distributions under
California law, his interest in the discretionary trusts is
not a mere expectation; that his disclaimer of his interest
in the trusts does not prevent the attachment of the writ of
garnishment; and that the trusts' spendthrift clauses do
not protect the trusts' assets from the enforcement of a
federal lien.
Noting
that the government is not attempting to compel distributions
from the trusts, the panel wrote that any current or future
distributions from the trusts to Harris shall be subject to
the continuing writ of garnishment until the restitution
judgment is satisfied.
OPINION
PER
CURIAM
In
1997, Michael Harris was convicted of eight federal criminal
counts related to theft from an employee benefit plan. He was
sentenced to 30 months in prison and ordered to pay $646, 000
in restitution. He has paid only a small fraction of that
amount. The government later learned that Harris is a
beneficiary of two irrevocable, discretionary trusts
established by his parents for his support. In 2015, the
government applied for a writ of continuing garnishment for
any property distributed to Harris from the trusts.
See 28 U.S.C. § 3205(a).[1] The trustees
opposed the application on the ground that Harris had
disclaimed his interest in the trusts, with the exception of
several checking and investment accounts. The district court
granted the writ and ordered the trustees to pay to the
United States all current and future amounts distributed to
Harris under the trusts.
We have
jurisdiction under 28 U.S.C. § 1291 and must decide
whether a writ of continuing garnishment may attach to a
beneficiary's interest in a discretionary support trust.
We review the district court's legal conclusions on this
issue de novo. See Lim v. City of Long Beach, 217
F.3d 1050, 1054 (9th Cir. 2000).
We
begin with the procedure for identifying property subject to
federal writs of garnishment. A federal restitution order is
"a lien in favor of the United States on all property
and rights to property" as if the liability were for
"a tax assessed under the Internal Revenue Code of
1986." 18 U.S.C. § 3613(c). In examining the
statutes that govern tax liens, as we must do here, the
Supreme Court has noted that Congress used broad language so
as "to reach every interest in property that a taxpayer
might have." United States v. Nat'l Bank of
Commerce, 472 U.S. 713, 720 (1985). "Property"
subject to garnishment under these statutes "includes
any present or future interest, whether legal or equitable,
in real, personal (including choses in action), or mixed
property, tangible or intangible, vested or contingent,
wherever located and however held (including community
property and property held in trust (including spendthrift
and pension trusts))." 28 U.S.C. ยง 3002(12). In
determining whether a property right falls within this
definition, "the important consideration is the breadth
of the control ...