Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

The Fifth Circuit affirmed the district court's final order of garnishment under the Mandatory Victims Restitution Act. Defendant pleaded guilty and was convicted of wire fraud, mail fraud, and falsifying a tax return, all in connection with the ongoing theft of funds from her employers. Defendant was then ordered to pay restitution of more than $2 million. In order to enforce the judgment, five investment retirement accounts (IRAs), held under defendant and her husband's names, were garnished. After defendant agreed to release the funds, the government reapplied to garnish two accounts in the husband's name and the district court granted the writ.The court first rejected defendant's claim under federal law that any non-defendant spouse's IRA an be part of a defendant spouse's property or rights to property under 18 U.S.C. 3613. The court has previously held that notwithstanding its anti-alienation provision, 29 U.S.C. 1056(d)(1), Employee Retirement Income Security Act retirement accounts are subject to MVRA restitution awards. Furthermore, under United States v. Loftis, 607 F.3d 173 (5th Cir. 2010), the court held that defendant's one-half interest in her husband's solely managed IRA is part of all property and rights to property of the spouse fined under section 3613.Under Texas law, the court held that the husband's IRAs are solely managed community property, and that a wife has only a one-half interest in her husband's solely managed community property. Finally, the court held that the Consumer Credit Protection Act was inapplicable in this case. Therefore, the court held that half the funds—around $1 million—may be garnished now. View "United States v. Berry" on Justia Law

Plaintiffs brought a putative class action under the Servicemembers Civil Relief Act (SCRA), alleging that they and similarly situated individuals were on active duty with the military when defendants variously foreclosed on their properties through executory proceedings in Louisiana state courts based on mortgage, privilege, or security agreements each plaintiff and putative class member had entered with one of the defendants.The Fifth Circuit affirmed the district court's grant of defendants' motions to dismiss and Trustmark National Bank's motion for judgment on the pleadings. The court held that 50 U.S.C. 3931 does not encompass Louisiana executory proceedings where, as here, the debtors confessed judgment. The court explained that the SCRA's waiver requirements were thus inapplicable because there was nothing to waive where plaintiffs were never protected under section 3931. Therefore, the court rejected plaintiffs' argument that the state court orders authorizing seizure and sale of their respective properties constitute default judgments under the SCRA. View "Fodge v. Trustmark National Bank" on Justia Law

The Fifth Circuit denied a petition for panel rehearing and withdrew its prior opinion, substituting the following opinion.At issue was whether a claimant in a civil forfeiture proceeding may counterclaim for constitutional tort damages against the United States. The district court adopted the First Circuit's reasoning and held that a claimant may never file counterclaims of any kind.The court affirmed the district court's judgment, dismissing the counterclaims for a different reason. The court found the First Circuit's reasoning unpersuasive and declined to adopt it. Rather, the court held that the United States has not waived sovereign immunity for claims seeking damages based on alleged Fourth and Fifth Amendment violations arising from the property seizure. View "United States v. $4,480,466.16 in Funds Seized from Bank of America Account Ending in 2653" on Justia Law

After a state court jury found that Mississippi state officials violated the Takings Clause by exceeding the scope of a state easement on private property, the jury granted a monetary award considerably lower than the amount of "just compensation" sought by the property owner.The Fifth Circuit affirmed the district court's grant of the State's motion to dismiss, on sovereign immunity grounds, plaintiff's federal case. While this case was pending on appeal, the Supreme Court decided Knick v. Township of Scott, 139 S. Ct. 2162 (2019), which overturned prior sovereign immunity law in cases arising under the Takings Clause. The court held that, to the extent that Knick has any effect on suits against state governments, the Court simply put takings claims against state governments on equal footing with claims against the federal government. Furthermore, nobody disputes that takings claims against the federal government require the waiver of sovereign immunity contained in the Tucker Act. Therefore, the court held that the takings claim against the Utah Department of Corrections must be dismissed based on Eleventh Amendment immunity. View "Bay Point Properties, Inc. v. MS Transportation Commission" on Justia Law

After the United States seized millions of dollars from a Texas vocational school, the school intervened as a claimant, denied the government’s allegations, and counterclaimed for constitutional tort damages against the government for ruining its business. The Fifth Circuit declined to address the correctness of the categorical rule barring all counterclaims in civil forfeiture proceedings, and held that the school's specific counterclaims were barred by sovereign immunity. Accordingly, the court held that the district court lacked subject matter jurisdiction and vacated the district court's dismissal, remanding with instructions to dismiss the counterclaims for lack of subject matter jurisdiction instead. View "United States v. $4,480,466.16 in Funds Seized from Bank of America account ending in 2653" on Justia Law

The Fifth Circuit certified the following question of law to the Supreme Court of Texas: Is a lender entitled to equitable subrogation, where it failed to correct a curable constitutional defect in the loan documents under section 50 of the Texas Constitution?The court also held that a secondary lender is not entitled to contractual subrogation without a valid contract. In this case, without a signature, Freddie Mac has no ability to enforce the contract itself or its subrogation provision. Therefore, the court affirmed the district court's denial of Freddie Mac's contractual subrogation claim. View "Zepeda v. Federal Home Loan Mortgage Corp." on Justia Law

After a bankruptcy sale extinguished an easement of the Port, the Port filed an adversary proceeding against debtors, seeking to invalidate the sale and regain its easement. The district court affirmed the bankruptcy court's rejection of the Port's sovereign immunity and fraud claims.The Fifth Circuit affirmed the district court's judgment, finding no Eleventh Amendment violation or basis for a claim of fraud. In this case, the bankruptcy court approved a section 363(f) of the Bankruptcy Code sale "free and clear" of encumbrances, including the Port's easement; the bankruptcy court did not award affirmative relief nor deploy coercive judicial process against the Port and did not exercise in personam jurisdiction over the state; and any section 363(f) objection had to have been raised on direct appeal of the confirmation order and could not be raised in this collateral adversary proceeding. Furthermore, the Port failed to allege any false representation, and the district court did not abuse its discretion in denying the Port leave to amend. View "Port of Corpus Christi Authority v. Sherwin Alumina Co." on Justia Law

Appellants, pro se, asserted interests in a convicted criminal defendant's property that was subject to criminal forfeiture and criminal restitution. The district court denied their motions for ancillary hearings and return of property.The Fifth Circuit applied the standard of review under Federal Rule of Civil Procedure 12 to the pleading-stage dismissal of a petition for an ancillary proceeding; held that appellants' appeals were timely because the deadline for a civil notice of appeal applied; held that Appellant Huma's petition for ancillary hearing did not state a claim under 21 U.S.C. 853(n), where she has not demonstrated the existence of the necessary written security agreement to establish her as a secured creditor with a lien on the cash or devices, and she cannot demonstrate that she is a bona fide purchaser for value of that property; and held that Appellant Salahuddin presented no persuasive allegation that he has a priority claim to the cash senior to the restitution lien of the United States, but has adequately alleged a secured interest in the devices at issue. Therefore, the court vacated in part, remanded in part, and otherwise affirmed the judgment. View "United States v. Butt" on Justia Law

Plaintiff filed suit under 42 U.S.C. 1983 against the Board and its president, alleging that defendants unlawfully deprived him of the use of several of his properties. After a jury returned a verdict for plaintiff, the district court denied the Board's motion for judgment as a matter of law or a new trial.The Fifth Circuit affirmed and held that there was legally sufficient evidence for a reasonable jury to conclude that the Board ratified the unlawful initiation of condemnation proceedings. The court rejected the Board's challenges to the jury instructions and held that, even if the instructions were erroneous, they could not have affected the outcome of the case. View "Young v. Board of Supervisors of Humphreys County" on Justia Law

The Fifth Circuit reversed the district court's dismissal of Cherry Knoll's complaint against the City of Lakeway, the city manager, and HDR Engineering in a dispute over a plat of land that Cherry Knoll had purchased in Lakeway. Cherry Knoll asserted a claim against the City under 42 U.S.C. 1983 for violating its rights to procedural due process, substantive due process, and equal protection by filing the Subdivision Plats without its consent and over its objection. The court held that these allegations satisfied the standard for official municipal policy under Pembaur v. City of Cincinnati and the district court erred in finding otherwise.The court also held that the district court erred in determining that the city manager was entitled to the protection of qualified immunity at the Rule 12(b)(6) stage. Finally, the court held that Cherry Knoll's well-pleaded factual allegations and supporting documents make plausible its claim that HDR was a "willful participant in joint action" for purposes of section 1983. Accordingly, the court remanded the matter and reinstated Cherry Knoll's state law claims. View "Cherry Knoll, LLC v. Jones" on Justia Law