Bennett v. Society of Lloyd's

2006 WL 4791933 (C.A.10)

United States Court of Appeals, Tenth Circuit.

Wallace R. BENNETT, Appellant/Defendant,

THE SOCIETY OF LLOYD'S, Appellee/Plaintiff.

Nos. 05-4208, 05-4239.

February 6, 2006.

On Appeal from the United States District Court for the District of Utah, Central Division, The Honorable Tena Campbell, U.S. District Judge, District Court Civil Case No. 2:02-CV-0204 TC

Appellant's Brief

David D. Bennett, Esq., Attorney at Law, 1189 South 2100 East, Salt Lake City, Utah 84108, Telephone: (801) 581-9393, Facsimile: (801) 582-9445, Attorney for Defendant/Appellant, Wallace R. Bennett.

ORAL ARGUMENT REQUESTED

*ii CORPORATE DISCLOSURE STATEMENT

The corporate disclosure requirements of FEDERAL RULES OF APPELLATE PROCEDURE, Rule 26.1 do not apply to individual Appellant Wallace Bennett.

*iii TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT ... ii

STATEMENT OF RELATED CASES ... 1

JURISDICTIONAL STATEMENT ... 1

ISSUE PRESENTED ... 2

STATEMENT OF THE CASE ... 3

STATEMENT OF FACTS ... 8

SUMMARY OF ARGUMENT ... 23

ARGUMENT ... 24

POINT: A magistrate acted outside the scope of authority delegated under 28 U.S.C. §636(b)(1)(A) when he purported to continue a Writ of Garnishment - - a post-judgment, dispositive, injunction - - which exceeded his statutory and specific reference jurisdiction. ... 24

CONCLUSION ... 30

ORAL ARGUMENT STATEMENT ... 31

CERTIFICATE OF COMPLIANCE - WORD COUNT ... 31

CERTIFICATE OF SERVICE ... 32

*iv TABLE OF AUTHORITIES

Cases

Aldrich v. Bowen, 130 F.3d 1364 (9th Cir. 1997) ... 25, 29

Johnson v. Zerbest, 304 U.S. 458 (1938) ... 12

Markair, Inc. v. CAB, 744 F.2d 1383 (9th Cir. 1984) ... 25

Morrison v. International Programs Consortium, 205 F.R.D. 61 (D.D.C. 2002) ... 12

N.L.B.R. v. A-Plus Roofing, Inc., 39 F.3d 1410 (9th Cir. 1994) ... 25, 29

Peretz v. United States, 501 U.S. 923, 111 S.Ct. 2326, 115 L.Ed.2d 808 (1991) ... 26

Reiter v. Sonotone Corp., 442 U.S. 330, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979) ... 26

The Society of Lloyd's v. Reinhart, 402 F.3d 982 (10th Cir. 2005) (amended by Order dated May 6, 2004); cert, denied (October 3, 2005, U. S. Supreme Court, Case Nos. 04-1731) ... 1

U.S. v. Emmons, 107 F.3d 762 (10th Cir. 1977) ... 19

U.S. v. Gomez-Lepe, 207 F.3d 623 (9th Cir. 2000) ... 24

United Steelworkers of America v. Bishop, 598 F2d 408 (5th Cir. 1979) ... 28

*v Other Cases

In re Wallace Reed Bennett, U.S. Bankruptcy Court (Utah), Judge William T. Thurman, Case No. 04-39412, Chapter 7 Liquidation (main bankruptcy case) ... 6, 17

Bennett v. Lloyd's (Adversary Proceeding), U.S. Bankruptcy Court (Utah), Judge William T. Thurman, Case No. 05-02747 which is part of the main bankruptcy case In re Wallace Reed Bennett (04-39412) ... 23

U.S. Constitutional Provisions

U.S. constitution, Article III ... 3, 12

U.S. CONSTITUTION, Article III, Sections 1 and 2 ... 27

U.S. Statues

11 U.S.C. § 554(a) (Bankruptcy Code) (Abandonment of property of the estate) ... 20

11 U.S.C. §§701-728 (Chapter 7 Liquidation of the Bankruptcy Code, sections relevant to individual liquidations) ... 18

28 U.S.C. § 636 (Federal Magistrate Act) ... 4, 13, 15, 27

28 U.S.C. § 636(b)(1) ... 28

28 U.S.C. § 636(b)(1)(A) ... 2, 5, 9, 14, 15, 18, 19

28 U.S.C. § 636(b)(1)(B) ... 5, 15, 16

28 U.S.C. § 1291 ... 1

*vi 28 U.S.C. § 1332 ... 9, 27

28 U.S.C. § 1332(a)(2) ... 1

28 U.S.C. §1652

(Rules of Decision Act) ... 9

Federal Appellate Rules

Federal Rules of Appellate Procedure, Rule 4(a)(1) ("Appeal as of Right - When Taken" / "Appeal in a Civil Case" / "Time for Filing a Notice of Appeal") ... 2

Federal Rules of Appellate Procedure, Rule 26.1 ("Corporate Disclosure Statement") ... ii

Federal Rules of Appellate Procedure, Rule 28.1 ... 3, 6

Federal Rules of Appellate Procedure, Rule 32(a)(7)(C) (Word Count) ... 31

Non-Appellate Federal Rules

Federal Rules of Civil Procedure, Rule 6(a) ... 19

Federal Rules of Civil Procedure, Rule 59(e) ("New Trials; Amendment of Judgments" / "Motion to Alter or Amend Judgment") ... 1, 19, 21, 22

Federal Rules of Civil Procedure, Rule 64 ("Seizure of Person or Property") ... 9

Federal Rules of Civil Procedure, Rule 69 ("Execution") ... 9

*vii Federal Rules of Civil Procedure, Rule 72(b) ("Magistrate Judges; Pretrial Orders" / "Dispositive Motions and Prisoner Petitions") ... 14

Rules of Practice of the United States District Court for the District of Utah, Rule 69-1 ("Execution" - "Supplemental Proceedings") ... 9

Rules of Practice of the United States District Court for the District of Utah, Rule 72-2 ("Magistrate Judges; Pretrial Orders" - "Magistrate Judge Functions and Duties in Civil Matters") ... 18

Utah Rules

Utah Rules of Civil Procedure, Rule 64D(s), amended November 1, 2001 and repealed November 1, 2004 ... 4, 10, 16, 31

*1 STATEMENT OF RELATED CASES

A closely related ongoing appeal is Case No. 05-4239. Other directly related cases, involve now concluded appeals comprising Case Nos. 02-2301, 03-4002, 03-4065, 03-4082, 03-4094, 03-4183, 04-4004, and 04-4142, all eventually consolidated and decided in The Society of Lloyd's v. Reinhart, 402 F.3d 982 (10th Cir. 2005), cert. den., 126 S.Ct. 366 (2005). Finally, an effectively unrelated Case No. 05-4069 is pending.

JURISDICTIONAL STATEMENT

The jurisdiction of the underlying court was decided on appeal in Lloyd's v. Reinhart. This Circuit Court held the jurisdiction was based upon complete diversity-of-citizenship pursuant to 28 U.S.C. §1332(a)(2). See The Society of Lloyd's v. Reinhart, 402 F.3d 982 (10th Cir. 2005) (amended by Order dated May 6, 2004), cert. den. October 3, 2005, U.S. Supreme Court Case No. 04-1731.

In the case at bar, this appellate Court has jurisdiction of this matter pursuant to 28 U.S.C. §1291. This appeal is from a final decision entered by district court Judge Tena Campbell on July 5, 2005, where that order denied a motion under Rule 59(e) challenging an Order entered April 22, 2005. See Statement of Facts ("Facts"), below, paragraphs 29, 30 and 38. A Notice of Appeal Re: Order and Memorandum Decision Dated July 5, 2005 was filed on *2 July 31, 2005. federal rules of appellate procedure, Rule 4(a)(1). See below, Facts, para. 39.

ISSUE PRESENTED

This appeal presents the question whether an Order of Reference citing limitations under 28 U.S.C. §636(b)(1)(A) of the Federal Magistrate Act authorizes a federal magistrate judge to enter a post-judgment, dispositive and injunctive "order of the court" to continue a Writ of Garnishment?

This issue was raised by Wallace Bennett before the district court and it was ruled upon. The federal magistrate judge's authority was challenged soon after the Writ of Garnishment ostensibly expired on September 12, 2004. See below, Statement of Facts ("Facts"), paras. 13, 14, 18 and 23.

The district court decided the issue in an Order entered April 22, 2005. See below, Facts, para. 29. Wallace Bennett challenged that Order through a motion pursuant to Rule 59(e) on May 6, 2005. See below, Facts, para. 30. A final order was entered by the district court on July 5, 2005. See below, Facts, para. 38. Wallace Bennett timely filed a notice of appeal on July 31, 2005. See below, Facts, para. 39.

*3 STATEMENT OF THE CASE

The underlying case, Lloyds v. Wallace R. Bennett, contains relevant documents that are filed herewith in an accompanying Appellant's Appendix of Record Excerpts ("Aplt. App. at ___."). See Rule 28.1, F.R.App.P." References to the district court Docket Report entries are denoted "Doc. ___". See Aplt. App. at 1-65 (Docket Report).

On August 24, 2004, Magistrate Judge David Nuffer acted outside the scope of authority delegated to him under a standing Order of Reference, when the magistrate purportedly continued a Writ of Garnishment (a post-judgment, dispositive and injunctive matter).[FN1] Aplt. App. at 128-129 and 130-133. That Order Regarding Pending Garnishment should be set aside for lack of jurisdiction. Aplt. App. at and and 144-148.

FN1. That Order of Reference was first entered November 19, 2004 but was withdrawn as inappropriate for post-judgment matters, among other challenges described herein, on October 21, 2004 by Article III Judge Tena Campell. See Aplt. App. at 128 ( Order of Reference, November 19, 2003) and Aplt. App. at 165 ( Minute Entry, entered Oct. 21, 2004); see also Docs. 216 and 326.

The Order of Reference limited jurisdictional authority of that magistrate to principally 28 U.S.C. § 636(b)(1)( A) of the Federal Magistrate Act to pretrial, non-dispositive and non-injunctive matters. Aplt. App. at 128. That Writ of Garnishment should be deemed expired according to Utah law on September 12, *4 2005 due to Lloyd's failure to obtain a necessary "court order" within the required "60 days". Aplt. App. at 130-133; see Utah Rules of Civil Procedure, Rule 64D(s), amended November 1, 2001 and repealed November 1, 2004. See below, Facts, para. 5 and foot note 9.

After September 12, 2005, Wallace Bennett repeatedly challenged the authority of the magistrate, including:

1) at an Evidentiary Hearing re: Writ of Garnishment, before the Honorable David Nuffer, October 7, 2004, on pages 19-20, paras. 20-25 and 1-4, respectfully, as well as pages 21-22, paras. 19-25 and 1-3, resp.); Aplt. App. at 429-430 and 431-432;

2) in Specific Objections to a Magistrate Judge Effecting a Final Irrevocable Disposition, Oct. 15, 2004; Aplt. App. at 150-154; and

3) through Objections to Garnishee Judgment Drafted by Lloyd's Counsel 8 October 2004, Oct. 16, 2004; Aplt. App. at 159-164.

Lloyd's contemporaneously (October 16, 2005) confirmed Wallace Bennett's concerns:

Based on its research, Lloyd's does not believe that the Magistrate Judge has authority to issue such a [garnishment] judgment order.

* * *

Under 28 U.S.C. § 636, the magistrate judge does not have the authority to issue such orders without the consent of the parties, and the parties have not consented.

[Emphasis added] Aplt. App. at 156 and 157, respectively.

*5 Even Magistrate Judge Nuffer came to question the standing reference granted under the Federal Magistrate Act 28 U.S.C. § 636(b)(1)( A) and requested himself a corrected reference order from District Judge Tena Campbell, revealed in these terms:

"The Court: ... But there was a prior reference under [28 U.S.C. § 636 (b)(1)] A, and I talked to Judge Campbell yesterday and I said if you would like to have this [writ of garnishment] hearing tomorrow, you could have it or you could refer it to me and you can have a hearing on the objections, and so she referred it under [28 U.S.C. § 636 (b)(1)] B, and will then review it if you object."

[Bracketed information and emphasis added] Aplt. App. at p. 442 ( Evidentiary Hearing re: Writ of Garnishment, before the Honorable David Nuffer, October 21, 2004, page 8, paras. 17-23).

On October 22, 2005, apparently in response to the reservations of the magistrate himself, as well as Wallace Bennett's challenges and Lloyd's confirmation of Mr. Bennett's objections, District Judge Tena Campbell withdrew her previous Order of Reference filed November 19, 2003 in these terms: "CASE NO LONGER REFERRED TO Judge David Nuffer under [28 U.S.C. § 636] (b)(1)(A) reference". [Emphasis in original] Aplt. App. at 52 and 165. ( Minute Entry, entered Oct. 22, 2004). On that same day, the district judge entered a new Order of Reference authorizing the magistrate under the limitations of *6 28 U.S.C. § 636 (b)(1)(B). Aplt. App. at 166. See also below, Facts, para. 20.

Between October 22, 2004, the date of the newly-corrected reference order, and December 2, 2004, the date Wallace Bennett entered bankruptcy - - no "writ of garnishment" was resurrected by Lloyds.

On December 2, 2004, Wallace Bennett filed for bankruptcy in In re Wallace Bennett[FN2] which triggered an automatic stay of execution on his assets including the Morgan Stanley brokerage account. See U.S. Bankruptcy Code, 11 U.S.C. § 362 (Automatic Stay of execution). The account was owned jointly with his wife Evalyn Bennett who was not a party in the bankruptcy or the underlying case.

FN2. Wallace Bennett entered Chapter 7 bankruptcy, In re Wallace Reed Bennett, Case No. 2:04-BR-39412, U.S. Bankruptcy Court, District of Utah, Judge William T. Thurman. Relevant documents filed in that case are referred to by page numbers in the above mentioned Appellant's Appendix of Record Excerpts ("Aplt. App. at ___"). See Aplt. App. 212-222 (U.S. Bankruptcy Docket Report).

On remand from the bankruptcy court, the District Judge Tena Campbell in the case at bar, Lloyds v. Wallace Bennett, erred on April 22, 2005 by entering an Order which somehow decided that magistrate Nuffer was authorized to continue the Writ of Garnishment on August 24, 2004 pursuant to 28 U.S.C. § 636 (b)(1)( A) of the Federal Magistrate Act. Aplt. App. at 258-259 ( Order, Apr. 22, 2005). Wallace Bennett challenged that Order through a motion pursuant to *7 Rule 59(e) on May 6, 2005. See below, Facts, para. 30. A final order was entered by the district court on July 5, 2005. See below, Facts, para. 38. Wallace Bennett timely filed a notice of appeal on July 31, 2005 that established the case at bar. See below, Facts, para. 39.

Wallace and Evalyn Bennett were injured by that erroneous Order entered April 22, 2005 and made final on July 5, 2005. Aplt. App. at 258-259 and 357-358. In addition to placing a purported injunctive freeze on the Bennett family's singularly most valuable asset, the Bankruptcy Court and then District Court issued a cascade of erroneous rulings based upon that Order entered April 22, 2005. Based upon that cascade, Lloyd's took some $528,570.38 from the Morgan Stanley Brokerage account. See Statement of Facts, paras. 31, 32, 33, 34, 35 and 37. The cascade of orders that gave rise to the purported Garnishee Judgment is the fundamental issue in Case No. 05-4239.

In the case at bar, Wallace Bennett seeks to set aside the Order entered April 22, 2005 and made final in the Order and Memorandum Decision entered July 5, 2005. Those rulings should be set aside as erroneous on the grounds that the magistrate judge lacked jurisdiction on August 24, 2004 under 28 U.S.C. § 636(b)(1)( A) of the Federal Magistrate Act - - when he purported to continue the Writ of Garnishment on Wallace and Evalyn Bennett's Morgan Stanley account. *8 Ultimately, Lloyds should return the preemptively taken $528,570.38 back to the bankruptcy estate for the benefit of all creditors.

STATEMENT OF FACTS

1. A Complaint was filed on March 8, 2002 in The Society of Lloyd v. Wallace R. Bennett, by plaintiff The Society of Lloyds under diversity-of-citizenship jurisdiction. Aplt. App. at 66-83.

2. A Response, Answer, and Affirmative Defenses of Wallace R. Bennett was filed on April 26, 2003. Aplt. App. at 84-123.

3. On March 18, 2003, Judge Tena Campbell entered a Judgment Against Defendant Bennett. Aplt. App. at 124-127. Judge Campbell found Wallace Bennett owed Lloyds "£415,679.50" (stated in United Kingdom Pounds), plus interest.

4. The operative Order of Reference entered November 19, 2003 by Judge Campbell stated:

IT IS SO ORDERED that, as authorized by 28 U.S.C. §636(b)(1)(A) and the rules of this court, the a above entitled case is referred to the United States Magistrate Judge. The United States Magistrate Judge is directed to hear and determine any nondispositive matters pending before this court.

*9 [Emphasis added] Aplt. App. at 128.[FN3] The Federal Magistrate Act under 28 U.S.C. §636(b)(1)( A) states in pertinent part:

FN3. The phrase "rules of this court" in the Order of Reference dated November 19, 2005 have "[n]o corresponding local rule" to Federal Rules of Civil Procedure, Rule 64 "Seizure of Person or Property". However, there is a specific local rule related to Federal Rules of Civil Procedure, Rule 69 "Execution". Local Rules of Practice of the United States District Court for the District of Utah ("DUCivR."), Rule 69-1 entitled "Supplemental Proceedings" prohibits a magistrate from issuing an order for restraint and requires that the district judge issue "an order for restraint" "to refrain from alienation or disposition of the property or assets". However, Utah law applies in the underlying complete-diversity-of-citizenship case. See 28 U.S.C. §1332 and Rules of Decision Act, 28 U.S.C. §1652 and supra., "Jurisdictional Statement", paragraph 1.

a Judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, except a motion for injunctive relief....

5. On June 28, 2004, Lloyds sought a Writ of Garnishment, signed by a court clerk, which was served upon Morgan Stanley stating in pertinent part:

If you do not receive an order from the Court regarding this Writ and the property you held pursuant to this Writ within sixty (60) days after filing your answers to the attached Interrogatories, this shall expire and you may ignore it.

[Emphasis added]. The "60 day" Utah requirement is based upon Rule 64D(s) of the Utah Rules of Civil Procedure, amended November 1, 2001 (repealed *10 November 1, 2004), stated (emphasis added).[FN4] The face of the writ itself warned (holding in the original):

FN4. Rule 64D(s) of the Utah Rules of Civil Procedure, amended November 1, 2001 (repealed November 1, 2004), stated (emphasis added):

(s) Failure to proceed against garnished property (pre-judgment or after judgment). Notwithstanding any other provision of this Rule, if a plaintiff fails withing sixty days from the filing of the garnishee's answers to interrogatories, to secure and personally serve on the garnishee an order requiring the garnishee to pay the property garnished into court or as otherwise provided herein, then the writ, which commanded the garnishee to hold the amount or property, shall be • released and the garnishee discharged without further order of the court. * * * * A release under this subdivision may be stayed upon order of the court for good cause shown. Such order shall not be binding upon the garnishee until served upon it.

YOU ARE REQUIRED to answer the attached questions, called interrogatories, and file your answers with the Clerk of the Court within five (5) business days of the date of this Writ is served upon you.

[Emphasis added]. Aplt. App. at 130-133.

6. The Writ of Garnishment against garnishee Morgan Stanley froze a joint account held in the names of both Wallace Bennett and Evalyn Bennett, where Mrs. Bennett was not a party to the underlying case. Their joint margin-loaned brokerage account held a gross asset value of over $2,000,000.00 with a joint value net-of-loans at over $1,000,000.00. One-half of the net value was deemed attributable to Wallace Bennett individually at over $500,000.00.

*11 7. On July 3, 2004, Wallace Bennett objected to the Application for Writ of Garnishment, Affidavit and Writ of Garnishment (being without return of service) through an Objections to Issuance of Writ of Garnishment. Aplt. App. at 137-143.

8. On July 12, 2004, garnishee Morgan Stanley filed and entered their " Answer to Interrogatories" pursuant to Writ of Garnishment dated June 28, 2004, as required by Rule 64D(s), U.R.Civ. P., amended November 1, 2001 [Later repealed on November 1, 2004]. Aplt. App. at 46, see Docket entry 285.

9. On July 14, 2004, Wallace Bennett filed a Request for Hearing with the Utah federal district court objecting to the validity of the Writ of Garnishment served upon Morgan Stanley. Aplt. App. at 134-143 ( Request for Hearing, July 14, 2004 with the Objections to Issuance of Writ of Garnishment dated July 3, 2004 attached thereto).

10. On August 6, 2004, Magistrate Judge David Nuffer held a post-judgment hearing based upon Wallace Bennett's July 14, 2004 Request for Hearing regarding the June 28, 2004 Writ of Garnishment of his and Evalyn Bennett's joint Morgan Stanley account.

11. On August 24, 2004, Magistrate Judge Nuffer entered an "order" to "continue" the injunctive Writ of Garnishment upon the Morgan Stanley trading account in these terms:

*12 good cause exists to stay the release of the Writ of Garnishment; and it is ordered that such release be stayed and the [Morgan Stanley] account remain in the same frozen status.... "it is hereby ordered that such release [of the Writ of Garnishment] be stayed....

[Emphasis added]. Aplt. App. at 144-149.[FN5]

FN5. An accommodating time extension among the parties was not intended to change and did not change the authority of Magistrate Judge Nuffer to act within his Order of Reference. "It is consistently said that the consent to the exercise of a magistrate judge's jurisdiction must be "explicit, voluntary, clear and unambiguous". Morrison v. International Programs Consortium, 205 F.R.D. 61 (D.D.C. 2002); citing the U.S. Supreme Court in Johnson v. Zerbest, 304 U.S. 458, 463 (1938): "To be effective, the waiver of the constitutional right to have an Article III judge preside over a matter must be an 'intentional relinquishment or abandonment of a known right or priviledge' ".

12. On September 12, 2004, the Writ of Garnishment of the Morgan Stanley securities-brokerage account expired by its own terms pursuant to Rule 64D(s), U.R.Civ.P., to wit, "within sixty (60) days after filing your answers to the attached Interrogatories". The answers to the Interrogatories were filed on July 12, 2004. Aplt. App. at 130-133 ( Writ of Garnishment, June 28, 2004) and Aplt. App. at 46 ( Answer to Interrogatories, July 12, 2004). Rule 64D(s), U.R.Civ.P (as amended Nov. 1, 2001, later repealed effective Nov. 1, 2004).

13. On October 7, 2004, in an Evidentiary Hearing re: Writ of Garnishment, before the Honorable David Nuffer, Wallace Bennett, through counsel David Bennett, expressly objected to the jurisdictional authority of the *13 magistrate under 28 U.S.C. §636, including:

MR. [DAVID] BENNETT: Because this is a dispositive motion and under [28 U.S.C.] Section 636, a magistrate judge is limited [to] decisions, [that] are not dispositive. We would urge the Court to prepare recommendations in light of that authority for Judge Tena Campbell.

* * *

The only question I have is whether this should be a report recommendation or final [garnishee] judgment.... I want to give Mr. Bennett the chance to brief it if he wants to.

* * * *

[M]y job is to ... sign a garnishment judgment. Consequences are not my concern".

[Emphasis added] Aplt App. at 429-430 and 433.

14. On October 15, 2004, as directed by the court pursuant to the October 7, 2004 hearing, Wallace Bennett filed objections to the authority of the magistrate through Objections to Garnishee Judgment Drafted by Lloyds Counsel 8 October 2004. Aplt App. at 150-154.

15. As well, on October 15, 2004, Lloyds contemporaneously confirmed Wallace Bennett's objections to the magistrate's authority as follows, in pertinent part:

Based on its research, Lloyds does not believe the Magistrate Judge has the authority to issue such a [garnishment] judgment or order.

In this case, the garnishee judgment will be a final and appealable order. Under 28 U.S.C. §636, the magistrate judge does not have the authority to issue such orders without the consent of the *14 parties, and the parties have not consented. Therefore, in accordance with Fed.R.Civ.P. 72(b), Lloyd's has prepared a proposed Magistrate Judge's Recommendation and proposed Garnishee Judgment. These documents are attached hereto as Exhibits A and B, respectively.

[Bolded and underlined for emphasis]. Aplt. App. at 156-157.

16. On October 16, 2004, Wallace Bennett filed an Objections to Garnishee Judgment Drafted by Lloyd's Counsel 8 October 2005 asserting violations of the Federal Magistrate Act, 28 U.S.C. § 636 (b)(1)(A). Aplt. App. at 159-164.

17. On October 18, 2004, Magistrate Judge Nuffer prepared a proposed Report and Recommendation regarding issues related to garnishment of Wallace Bennett's Morgan Stanley trading account[FN6]

FN6. Appellant believes that preparation of this Report and Recommendation by the magistrate judge is an implicit recognition that his Honor did not have jurisdictional authority under 28 U.S.C. § 636(b)(1)( A) to merely sign a Garnishment Judgment in favor of Lloyds as against Wallace Bennett's Morgan Stanley stock trading account. Indeed, a "report and recommendation" would require authorization under 28 U.S.C. § 636(b)(1)( B) which was not then available.

18. On October 21, 2004, in an Evidentiary Hearing re: Writ of Garnishment, before the Honorable David Nuffer, October 21, 2004, Magistrate Judge Nuffer held a hearing regarding his Honor's proposed Report and Recommendation reflecting limitations of his authority as follows:

THE COURT: There's a prior existing reference under [28 U.S.C. §636(b)(1)] A and that was done some months ago.... *15 [Emphasis added] Aplt. App. at 442 ( Evidentiary Hearing re: Writ of Garnishment, before the Honorable David Nuffer, October 21, 2004, Oct. 21, 2004, page 8, paragraphs 12-14). During the hearing, Magistrate Judge Nuffer evidently expected some kind of additional grant of authority by Judge Campbell under Federal Magistrate Act. Magistrate Nuffer remarked that a reference order under 28 U.S.C. §636(b)(1)( B) was yet "not docketed as of the date of this Report and Recommendation". Magistrate Judge Nuffer further stated:

.... There is a prior reference under [28 U.S.C. §636(b)(1)] A, I talked to Judge Campbell yesterday and I said if you would like to have this hearing tomorrow [on the objections to the Garnishment issues], you could have it or you could refer it to me and you can have a hearing on the objections, and so she referred it under [28 U.S.C. §636(b)(1)] B, and will then review it if you object.

[Bolded and underline emphasis added] Aplt. App. at 442.

19. On October 22, 2004, Judge Campbell explicitly cancelled Magistrate Judge Nuffer's jurisdictional authority under 28 U.S.C. §636 in these terms:

CASE NO LONGER REFERRED TO Judge David Nuffer under (b)(1)( A) reference (alt) [Entry Date 10/22/04]

[Emphasis added, capital-letter emphasis in original] Aplt. App. at 52 and 165 ( Minute Entry, entered Oct. 22, 2004).

20. On that same day, October 22, 2004, a new Order of Reference was *16 entered by Judge Campbell regarding the jurisdictional authority of Magistrate Nuffer:

IT IS ORDERED that, as authorized by 28 U.S.C. §636(b)(1)(B) and the rules of this court, the above entitled case is referred to United States Magistrate Judge David O. Nuffer. Judge Nuffer is directed to manage the case, receive all motions, hear oral arguments, conduct evidentiary hearings as deemed appropriate, and to submit to the undersigned judge a report and recommendation for the proper resolution of dispositive matters presented.

[Emphasis added] Aplt. App. at 166:

21. A Report and Recommendation was filed by the Magistrate Judge Nuffer on October 25, 2005 pursuant to that corrected Order of Reference dated October 22, 2004. Aplt. App. at 167-174.

22. On November 1, 2004, Rule 64D(s) of the Utah Rules of Civil Procedure was repealed. See supra., foot note "7".

23. On November 3, 2004 an Appeal to District Court of a Magistrate Report and Recommendation Signed October 25, 2004 was filed by Wallace Bennett.[FN7] Aplt. App. at 175-190. That appeal was referred to Judge Tena Campbell. A hearing was scheduled for December 3, 2004.

FN7. The "appeal" was treated as an objection to the Report and Recommendation and was referred to Judge Campbell, not the U.S. Court of Appeals for the Tenth Circuit. Objections to that Report and Recommendation were not finally decided until August 26, 2005.

*17 24. On December 2, 2004,[FN8] Wallace R. Bennett filed in U.S. Bankruptcy Court: In re Wallace Reed Bennett, Case No. 04-39412, Judge Thurman. Aplt. App. at 223-224 and 212-222 (Bankruptcy Docket Report). Thereby, Wallace Bennett triggered an automatic bankruptcy stay on executions against his Estate as administered by the Trustee. U.S. Bankruptcy Code, 11 U.S.C. § 362 (Automatic Stay of Execution). That stay included the valuable Morgan Stanley brokerage account. Wallace Bennett's wife, Evalyn Bennett, was never a party to bankruptcy.

FN8. Between October 22, 2004, the date of the newly-corrected reference order, and December 2, 2004, the date Wallace Bennett entered bankruptcy, no writ of garnishment was resurrected by Lloyds. Aplt. App. at 166 and 223-224.

25. On December 3, 2004, District Judge Campbell held a previously- set hearing entitled Objections to R&R [Report and Recommendations]; Pending Motions Before the Honorable Tena Campbell, U.S. District Court Judge. Aplt. App. at 453-458. That short hearing recorded in pertinent part:

THE COURT: [Mr. Gerald] Suniville, okay. I gather, Mr. Suniville that Mr. Bennett has filed for protection; am I correct?

MR. SUNIVILLE: Yes your Honor. He filed yesterday. The petition was filed at 3:06 p.m.

THE COURT: What does that do here, Mr. Barton and Mr. Zundel [Lloyd's counsel]?

MR. ZUNDEL: Your Honor, I think we're stayed.

THE COURT: We're stayed?

MR. ZUNDEL: Yes.

*18 Aplt. App. at 454. Consequent to that hearing, Judge Campbell entered the following Minute Entry:

Minute entry: Mr. Suniville states Mr. Wallace Bennett has filed for Chapter 7 Bankruptcy [11 U.S.C. §§ 701 - 728] yesterday. The court stays Bennett portion of the case. The court will administratively close case on 4/1/05 if it is still in bankruptcy.

Aplt. App. at 55 (Minute Entry, Dec. 3, 2004; Doc. 364).

26. On December 28, 2004, by letter, Lloyds made the following significant concession:

On December 3, 2004, Judge Campbell was scheduled to rule on Magistrate Judge Nuffer's proposed garnishee judgment. However, the debtor filed bankruptcy on December 2, 2004.

[Emphasis added]. Aplt. App. at 225-226.

27. On March 25, 2005, bankruptcy Judge Thurman entered an Order... Remanding Issues to the District Court requesting that Judge Tena Campbell:

determine whether Judge Nuffer's ruling was proper, and thus whether Lloyds does, in fact hold a security interest in the Debtor's property.

Aplt. App. at 254.

28. On April 18, 2005 a hearing was held by Judge Campbell, stating:

MR. ZUNDEL: Well, Your Honor, in the order that you asked me to prepare, do you want me to assert that an (A) reference includes post-trial matters as well, or do you want me to rely on the [RULES OF practice of the united states district court for the district of utah] Rule 72-2 of the court?

*19 THE COURT: ... Even though it [28 U.S.C. § 636(b)(1)( A)] has in the statute the words pre-trial, can cover post-trial. * * *

THE COURT: ... Because counsel for Mr. Bennett is correct, Our local rules could not go beyond the statute. And it could not give authority to the Magistrate Judges that the statute does not contemplate.

[Emphasis added]. Aplt. App. at 475-477.

29. On April 22, 2005, Judge Campbell signed a decision pursuant to a March 25, 2005 remand from by the bankruptcy court that stated:

THE COURT HOLDS that pursuant to the Order of Reference dated November 19, 2003, and applicable statutes and rules cited therein, Magistrate Judge Nuffer had jurisdiction and authority to issue the Writ of Garnishment, and as such the Writ of Garnishment was valid and binding upon the parties in all respects. Having decided the issue before it, the Court hereby refers the matter back to the Bankruptcy Court for a determination of Lloyd's motion for relief from the automatic stay.

Aplt. App. at 258-259.

30. That April 22, 2004 Order was challenged by Wallace Bennett on May 6, 2005 in a timely[FN9] filed Joint Motion Under Rule 59(e) re an Order Dated April 22, 2005: Remand from Bankruptcy Court and supporting memorandum. Aplt. App. at 260-261 and 262-290.

FN9. Judge Campbell miscalculatingly erred in an observation otherwise. See Federal Rules of Civil Procedure, Rule 6(a) and U.S. v. Emmons, 107 F.3d 762, 764 (10th Cir. 1977).

*20 31. Relying on that April 22, 2004 Order, the bankruptcy Judge Thurman on May 10, 2005 entered a Memorandum Decision Granting Lloyd's Motion for Relief that stated in pertinent part:

On April 22, 2005, Judge Campbell entered an order determining that, pursuant to the Order of Reference dated November 19, 2003, and applicable statutes and rules cited therein, Magistrate Judge Nuffer had jurisdiction and authority to issue the Writ of Garnishment, and as such the Writ of Garnishment was valid and binding upon the parties in all respects.

* * *

Based upon the foregoing, the Court concludes that Lloyd's Motion for Relief should be granted. A separate order will follow.

Aplt, App. at 300-302.

32. Also on May 10, 2005, bankruptcy Judge Thurman entered an Order Granting Lloyd's Motion for Relief which stated: "Lloyd's Motion for Relief [from the automatic bankruptcy stay] is hereby GRANTED. Aplt. App. at 303.

33. On May 23, 2005, bankruptcy Judge Thurman entered an Order Approving Abandonment of the Estate's Interest in Morgan Stanley Account which stated in pertinent part:

ORDERED as follows:

1. The trustee's proposed abandonment of the estate's interest in the Morgan Stanley Account is approved; and

2. The estate's interest in Morgan Stanley Account No. XXX-xxxxxx-064 is hereby abandoned pursuant to [11 U.S.C.] Section 554(a) of the Bankruptcy Code effective May 23, 2005.

[Account number redacted with "x's". Bracketed information added.] Aplt. App. *21 at 317-318.

34. On May 24, 2005, after the Morgan Stanley account was abandoned by the bankruptcy court, district court Judge Campbell entered an Order Approving Stipulation for Partitioning of Stock Account at Morgan Stanley that divided the margined account between Wallace Bennett and his wife Evalyn Bennett (not in bankruptcy). Aplt. App. at 333-336.

35. Also on May 24, 2005, district court Judge Campbell entered a Garnishee Judgment (Morgan Stanley, as Garnishee) which stated in pertinent part:

2. This Garnishee Judgment shall extend to one-half the net value in Account... and any other property of Defendant Bennett held by Morgan Stanley, less standard commissions and fees.

* * *

4. After payment of the standard commissions or fees, the amount remaining of the one-half net value of the accounts shall be paid to Plaintiff/Judgment Creditor, The Society of Lloyds, in care of plaintiff's counsel, within ten days after the entry of this Garnishee Judgment.

Aplt. App. at 338-339.

36. Wallace Bennett challenged that May 24, 2005 Garnishee Judgment later on that same day by filing a Joint Motion Under Rule 59(e) Re a Garnishment Judgment Dated May 24, 2005. Aplt App. at 340-342.

37. On June 7, 2005 and again on August 2, 2005, The Society of Lloyds *22 executed upon the Garnishee Judgment and received a total of $528,570.38 from garnishee Morgan Stanley.[FN10]

FN10. Had those funds remained in the bankruptcy estate, Wallace Bennett's account at Morgan Stanley would have substantially appreciated in net asset value.

38. On July 5, 2005, Judge Campbell filed an Order and Memorandum Decision which relevantly stated in part:

1. Defendant Wallace Bennett's "Joint Motion Under Rule 59(e) Re: an Order Dated April 22, 2005: Remand from Bankruptcy Court" (Docket No. 413 is DENIED; * * *; and

4. The court defers ruling on Defendant Wallace Bennett's "Joint Motion Under rule 59(e) Re: Garnishment Judgment Dated May 24, 2005" (Docket No. 425) until the court has considered the issue for which additional briefing has been requested.

Aplt. App. at 357-358.

39. On July 31, 2005, Wallace Bennett filed a protective Notice of Appeal Re: Order and Memorandum Decision Dated July 5, 2005 establishing Case No. 05-4208 in the case at bar. Aplt. App. at 359-360.

40. On August 26, 2005, Judge Campbell entered an Order which stated in part:

... Defendant Wallace Bennett's "Joint Motion Under Rule 59(e) Re: Garnishment Judgment Dated May 24, 2005" (Docket No. 425) is DENIED.

Aplt App. at 362-363.

*23 41. On September 5, 2005, Wallace Bennett timely filed a Notice of Appeal Re: Order Dated August 26, 2005 which established Case No. 05- 4239 in the case at bar. Aplt. App. at 364-365.

42. On November 30, 2005, Wallace Bennett filed an Adversary Proceeding Complaint in the U.S. Bankruptcy Court captioned: Wallace Bennett v. The Society of Lloyds, Case No. 2:05-BR-02747. Aplt. App. at 366-410. Therein Wallace Bennett challenges the Proof of Claim filed by Lloyds (March 3, 2005) in the bankruptcy proceeding In re Wallace R. Bennett. Case No. 2:04-BR-39412. Wallace Bennett presents offsets that could almost equal the amount Lloyds claims against him.

SUMMARY OF ARGUMENT

Wallace Bennett seeks to set aside the Order entered April 22, 2005 and made final in the Order and Memorandum Decision entered July 5, 2005 by the District Court Judge. Those rulings are erroneous on the grounds that the magistrate judge lacked jurisdiction on August 24, 2004 under 28 U.S.C. § 636(b)(1)( A) of the Federal Magistrate Act purportedly "to continue" the Writ of Garnishment against Wallace and Evalyn Bennett's Morgan Stanley brokerage account. The Writ of Garnishment should be deemed to have expired on September 12, 2005. The Magistrate Judge's underlying Order Regarding *24 Pending Garnishment entered August 24, 2004 should also be set aside.

ARGUMENT

The Standard of Review: "We review de novo the delegation of authority to a magistrate judge." U.S. v. Gomez-Lepe, 207 F.3d 623, 627 (9th Cir. 2000).

This Appellate Court should set aside the Order entered April 22, 2005 and made final in the Order and Memorandum Decision entered July 5, 2005 by District Court Judge Tena Campbell. Aplt. App. at 258-259 and 353-358. Those rulings are erroneous on the grounds that Magistrate Judge David Nuffer lacked statutory and specific reference jurisdiction on August 24, 2004 to enter an Order Regarding Pending Garnishment purporting "to continue" a Writ of Garnishment - - a post-judgment, dispositive, injunctive matter. Aplt. App. at 130-133 and 144-149. A long standing Order of Reference entered November 19, 2003 (until October 22, 2004) granted only limited jurisdiction under 28 U.S.C. § 636(b)(1)( A) of the Federal Magistrate Act. That statute provision expressly *25 limited jurisdiction of the magistrate to pre-trial, non-dispositive and non-injunctive matters. Aplt. App. at 128-129. As such, the Writ of Garnishment expired on September 12, 2004 pursuant to Utah law. See supra., Facts, paras. 5 (including foot note 7), 6 and 12. Plaintiff The Society of Lloyds failed to secure the necessary "court order" to continue the writ within the required "60 days". See supra., Facts, paras. 5 (including foot note 7). Aplt. App. at 130-133.

The United States Court of Appeals for the Ninth Circuit in U.S. v. Gomez-Lepe, stated: "We review de novo the delegation of authority to a magistrate judge." 207 F.3d 623, 627 (9th Cir. 2000). In Aldrich v. Bowen that same Appellate Court held:

Because the magistrate judge acted without jurisdiction, the judgment is a nullity ....

130 F.3d 1364, 1365 (9th Cir. 1997).

In N.L.B.R. v. A-Plus Roofing, Inc., the Ninth Circuit Court also held:

[F]ederal magistrates are creatures of statute, and so is their jurisdiction. We cannot augment it; we cannot ask them to do something Congress has not authorized them to do.

* * * *

Our search for meaning must begin with the language of the statute itself.

* * * *

It is a well-settled canon of statutory interpretation that specific provisions prevail over general provisions. Markair, Inc. v. CAB, 744 F.2d 1383, 1385 (9th Cir.1984). It is an equally well-settled canon that "[i]n construing a statute we are obliged to give effect, if *26 possible, to every word Congress used." Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 2331, 60 L.Ed.2d 931 (1979).

* * * *

[Quoting from Peretz v. United States, 501 U.S. 923, 955, 111 S.Ct. 2326, 2679, 115 L.Ed.2d 808 (1991)(Scalia dissenting).] "The canon of ejusdem generis keeps the 'additional duties' clause from swallowing up the rest of the statute."

[Bracketed information added; some internal references omitted] 39 F.3d 1410, 1415 (9th Cir. 1994).

In Wedding v. Wingo, the First Circuit Court stated, in pertinent part:

... [T]he well-established doctrine of statutory construction denominated ejusdem generis .... directs that a general provision of a statute will be controlled and limited by subsequent statutory language more specific in scope. The Supreme Court in Fourco Glass Co. V. Transmirra Prods. Corp., 353 U.S. 222, 228-229 ... articulated the rule as follows:

"[T]he law is settled that 'However inclusive may be the general language of a statute, it "will not be held to apply to a matter specifically delt with in another part of the same enactment * * * Specific terms prevail over the general in the same or another statute which otherwise might be controlling.

Therefore, although the Magistrates Act of 1968 provides that Magistrates are "not restricted to" the three powers explicitly outlined in the Act, by virtue of ejusdem generis those three powers [28 U.S.C. § 636 (b)(1)(A), (B) and (C)] are exclusive on the topics which they cover. ... The legislative history of Section 636(b) of 28 U.S.C. supports this proposition.

[Bracketed information added; some internal references omitted] 483 F.2d 1131, 1135-1136(1973).

*27 In the case at bar, Magistrate Nuffer's statutory and specific reference jurisdiction was limited by District Judge Tena Campbell through an Order of Reference entered November 19, 2003 based upon 28 U.S.C. § 636(b)(1)( A) of the Federal Magistrate Act, which states in pertinent part:

a Judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, except a motion for injunctive relief....

[Emphasis added] District Judge Campbell included additional limitations:

The United States Magistrate Judge is directed to hear and determine any nondispositive matters pending before the court.

[Emphasis added] See supra., Statement of Facts, para. 4 and Aplt. App. at 128. See also U.S. Constitution, Article III, Sections 1 and 2; Federal Magistrates Act, 28 U.S.C. §636; and 28 U.S.C. §1332 (jurisdiction based on diversity of citizenship).

On August 24, 2004, Magistrate Judge Nuffer entered an Order Regarding Pending Garnishment that exceeded his reference authority. Aplt. App. at 144-149. In that decision the magistrate stated:

good cause exists to stay the release of the Writ of Garnishment; and it is ordered that such release be stayed and the [Morgan Stanley] account remain in the same frozen status.... "it is hereby ordered that such release [of the Writ of Garnishment] be stayed ....

[Emphasis added]. Aplt App. at 148 ( Order Reg. Pend. Garnishment, Aug. 24, *28 2004). See Facts, paragraph 11. As a consequence of that ruling, the magistrate purportedly ordered that Wallace and Evalyn Bennett's largest family asset, their Morgan Stanley trading account, should remain "frozen". Such an order on its face involves post-judgment, injunctive and dispositive matters. Freezing an asset based upon a final judgment in the underlying case is a post-judgment (not a pretrial) determination on its face. Also, maintaining the "frozen status" of both Wallace and Evalyn Bennett's brokerage account - - then with a joint-net worth of over $1,000,000 - - should be seen as injunctive in nature.[FN11] Particularly prejudicial is the fact that Evalyn Bennett, not a party to either the case at bar nor the underlying bankruptcy proceedings, was herself thereby enjoined from accessing, trading or enjoying the benefits of that Morgan Stanley account. Finally, especially as to Evalyn Bennett, the magistrate purportedly continued the dispositive and injunctive writ of garnishment with no apparent concern for an *29 ending-date.[FN12]

FN11. The Fifth Circuit Court in United Steelworkers of America v. Bishop, stated:

[A]lthough none of the parties has raised the question, we are bound to note that a magistrate lacks power to enter an injunction even in a case where the district court has jurisdiction. * * * Rather, the Court observed, 28 U.S.C. § 63 6(b)(1) provides for close supervision of the magistrate and for district court review of findings and recommendations.

[Emphasis added] 598 F2d 408, 411 (5th Cir. 1979).

FN12. In open court, Magistrate Nuffer admitted:

[M]y job is to ... sign a garnishment judgment. Consequences are not my concern".

Aplt. App. at 433 (Hg. Tr., Oct. 7, 2004, page 23, paragraphs 2-5 and page 23, paragraphs 16-20, respectively).

In short, the magistrate acted outside his scope of authority under 28 U.S.C. § 636(b)(1)(A) when he purported "to continue" a Writ of Garnishment, a post-judgment, dispositive, injunctive matter - - which exceeded his statutory and specific reference authority which was limited to pretrial, non-dispositive and non-injunctive matters. Aplt. App. 128-129.

[F]ederal magistrates are creatures of statute, and so is their jurisdiction. We cannot augment it; we cannot ask them to do something Congress has not authorized them to do.

N.L.B.R. v. A-Plus Roofing, Inc., 39 F.3d 1410, 1415. The Magistrate Judge's underlying Order Regarding Pending Garnishment entered August 24, 2004 purporting to continue the Writ of Garnishment should also he set aside as a "nullity", where the magistrate acted outside is statutory and specific reference jurisdiction. Aldrich v. Bowen 130 F.3d 1364, 1365 (9th Cir. 1997). It was error for District Judge Campbell to find otherwise in an Order entered April 22, 2005 and a final Order and Memorandum Decision entered July 5, 2005 - - both should *30 be set aside. As well, any orders that relied upon that flawed ruling should also be set aside. See Case No. 05-4239. Ultimately, Lloyds should return the preemptively taken $528,570.38 back to the bankruptcy estate for the benefit of all creditors. See supra., Facts, para. 37.

CONCLUSION

Wallace Bennett ultimately seeks to set aside the purportedly continued Writ of Garnishment as per an Order Regarding Pending Garnishment entered August 24, 2004 by Magistrate Nuffer. As well, the Order entered April 22, 2005 and final Order and Memorandum Decision entered July 5, 2005 should be set aside for the same reason, lack of statutory and specific reference jurisdiction of the magistrate. Finally, Lloyds should return the preemptively taken $528,570.38 with interest back to the bankruptcy estate of Wallace Bennett for the benefit of all creditors.

*31 ORAL ARGUMENT STATEMENT

Oral argument is requested by appellee Wallace Bennett in light of the important fundamental legal questions and confusing facts as well as a challenging long cascade of events including a bankruptcy filing underpinning the issues and arguments herein. Finally, given a confusing rule change regarding Rule 64D(s) of the Utah Rules of Civil Procedure, amended November 1, 2001 and later repealed on November 1, 2004, oral argument might well serve the Court.

Appendix not available.