Strong v. Laubach

443 F.3d 1297, 2006 U.S. App. LEXIS 8813, 2006 WL 925676
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 11, 2006
Docket05-6207
StatusPublished
Cited by28 cases

This text of 443 F.3d 1297 (Strong v. Laubach) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Strong v. Laubach, 443 F.3d 1297, 2006 U.S. App. LEXIS 8813, 2006 WL 925676 (10th Cir. 2006).

Opinion

KELLY, Circuit Judge.

William and Carolyn Strong appeal from a district court order requiring them to return exempt workers’ compensation funds that they had collected through garnishment proceedings related to a judgment entered in their favor against Donald Laubach. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm. 1

I

The Strongs obtained a judgment against Laubach in 1994 in the amount of $484,432.29. The judgment was domesticated in the Western District of Oklahoma. As part of their post-judgment collection efforts, the Strongs initiated garnishment proceedings. The Strongs sought to garnish workers’ compensation proceeds that were being paid to Laubach in a series of monthly annuity payments by Liberty Mutual Insurance Company. Laubach objected to the Strongs’ attempts to garnish these workers’ compensation proceeds and claimed that the annuity payments were exempt from garnishment.

The district court found that Laubaeh’s exemption for workers’ compensation benefits was limited to $50,000 and permitted the Strongs to garnish the annuity payments from Liberty Mutual. Laubach appealed the district court’s order. He did not request a stay of the order pending appeal. During the pendency of the appeal, the garnished proceeds were distributed to the Strongs. On appeal, this court held that all of the workers’ compensation proceeds were exempt based on the Oklahoma Supreme Court’s response to this court’s certified question on the issue. Strong v. Laubach, 371 F.3d 1242, 1246 (10th Cir.2004). The judgment was reversed and the case was remanded for further proceedings.

After the remand, the district court held a status conference. The parties stipulated that the Strongs had collected $25,505.38 through the garnishment of the Liberty Mutual annuity payments. Lau-bach argued that the Strongs should be required to return the garnished funds to him, and the Strongs objected. The district court agreed with Laubach and determined that the Strongs must return the garnished funds. The Strongs now appeal from the district court’s order.

We review de novo the district court’s determination that the Strongs must return the garnished funds to Laubach. See, e.g., Dang v. UNUM Life Ins. Co. of Am., 175 F.3d 1186, 1189 (10th Cir.1999) (stating that questions of law are reviewed de novo).

*1299 II

The Strongs seek to avoid returning funds to which they are not entitled by arguing that because Laubach failed to request a stay of the district court’s judgment, he is now barred from requesting return of the garnished funds. Federal Rule of Civil Procedure 62(d) allows a stay of a judgment effective upon a district court’s approval of a supersedeas bond. The bond secures the judgment against insolvency of the judgment debtor and is usually for the full amount of the judgment, though the district court has discretion in setting the amount. Olcott v. Del. Flood Co., 76 F.3d 1538, 1559-60 (10th Cir.1996). A judgment debtor who is unable or is unwilling to post a supersedeas bond retains the right to appeal even if the judgment is executed. Koster & Wythe v. Massey, 262 F.2d 60, 62 (9th Cir.1958). Should the judgment be reversed on ap peal, a district court may, on motion or sua sponte, order the judgment creditor to restore the benefits obtained. Baltimore & Ohio R.R. Co. v. United States, 279 U.S. 781, 786, 49 S.Ct. 492, 73 L.Ed. 954 (1929) (“The right to recover what one has lost by the enforcement of a judgment subsequently reversed is well established. And, while the subject of the controversy and the parties are before the court, it has jurisdiction to enforce restitution and so far as possible to correct what has been wrongfully done.” (citations omitted)); Restatement (First) of Restitution § 74 cmt. a. (1937). Of course, in such circumstances, the judgment creditor may be insolvent and that risk falls on the judgment debtor. Thorpe v. Thorpe, 364 F.2d 692, 693 (D.C.Cir.1966).

With these general principles in mind, we turn to the Strongs’ arguments. First, the Strongs assert that the district court lost subject matter jurisdiction when the garnished funds were distributed to the Strongs during the pendency of the appeal. To support this argument, the Strongs cite Secure Engineering Services, Ltd. v. International Technology Corp., 727 F.Supp. 261 (E.D.Va.1989) for the proposition that garnishment proceedings are in rem proceedings and that once garnished funds are distributed, “the District Court los[es] jurisdiction over the ‘res ’ of the in rem judgment.” Aplt. Br. at 12.

Secure Engineering, however, is completely distinguishable on its facts and does not support the Strongs’ position. In Secure Engineering, the district court addressed what happens when a supersedeas bond and motion for stay pending appeal are filed after the prevailing party has already begun executing on the judgment through garnishment proceedings. The issue in that case was “whether the issuance of a stay pending appeal operates retroactively to dissolve a garnishment which was served after judgment but before the grant of the stay.” Id. at 262. In this case, the Strongs began executing on their judgment and there was no bond posted or stay entered. Secure Engineering has no relevance to the issue presented in this appeal: whether the Strongs must return funds they received when they executed on their judgment once that judgment was reversed on appeal. Moreover, there is ho discussion in Secure Engineering about a district court losing subject matter jurisdiction once garnished funds are distributed.

To further support their argument that once they executed on their judgment the district court lost jurisdiction, the Strongs cite to a series of forfeiture cases. See Aplt. Br. at 12-13. These cases do not aid the Strongs in their argument. Forfeiture cases arise from in rem jurisdiction over specific pieces of property, which are treated as the defendants in the case. The district court must retain control over the defendant property (the “res” of the in *1300 rem proceeding) in order to maintain jurisdiction. See, e.g., United States v. $57,480.05 United States Currency & Other Coins, 722 F.2d 1457, 1458 (9th Cir.1984). This is not a forfeiture case.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
443 F.3d 1297, 2006 U.S. App. LEXIS 8813, 2006 WL 925676, Counsel Stack Legal Research, https://law.counselstack.com/opinion/strong-v-laubach-ca10-2006.