Society of Lloyd's v. Bennett

2006 WL 4791935 (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.

March 26, 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 Reply 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 TABLE OF CONTENTS

SUMMARY OF ARGUMENT ...

REPLY ARGUMENTS ... 2

POINT 1: Issues related to appellate subject-matter jurisdiction are expected to be separately submitted. ... 2

POINT 2: Lloyd's primary argument plainly violates the doctrine of ejusdem generis . Specific terms of a statute are controlling over general terms and should be so applied to 28 U.S.C. § 636(b)(1)(A) of the Federal Magistrate Act in light of the Order of Reference entered November 19. 2003. ... 3

POINT 3: Fulfilling the garnishment requirements of Rule 64D(s) is substantive, not merely ministerial. The consequences of a resulting continuing garnishment was post-judgment, dispositive, and injunctive in nature. ... 9

POINT 4: Wallace Bennett did not consent to Magistrate Judge Nuffer's exercise of jurisdiction ... 11

CONCLUSION ... 14

CERTIFICATE OF COMPLIANCE - WORD COUNT ... 15

CERTIFICATE OF SERVICE ... 16

*iii TABLE OF AUTHORITIES

Cases

Aldrich v. Bowen, 130 F.3d 1364 (9th Cir. 1997) ... 4

Bank of Ephram v. Davis, 581 P.2d 1001 (Utah 1978) ... 9

Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222 (1957) ... 5

In re McNeely, 51 B.R. 816 (Bkrtcy. 1985) ... 9, 10

Johnson v. Zerbest, 304 U.S. 458 (1938) ... 12, 13

Markair, Inc. v. CAB, 744 F.2d 1383 (9th Cir.1984) ... 4

Morrison v. International Programs Consortium, 205 F.R.D. 61 (D.D.C. 2002) ... 11, 12, 13

N.L.B.R. v. A-Plus Roofing, Inc., 39 F.3d 1410 (9th Cir. 1994) ... 3, 4, 6, 7

Peretz v. United States, 501 U.S. 923, 111 S.Ct. 2326, 115 L.Ed.2d 808 (1991) ... 4

Reiter v. Sonotone Corp., 442 U.S. 330, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979) ... 4

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

Wedding v. Wingo, 483 F.2d 1131 (1st Cir. 1973) ... 4, 6, 7

*iv U.S. Constitutional Provisions

U.S. constitution, Article III ... 12, 13

U.S. constitution, Article III, Sections 1 and 2 ... 6

U.S. Statues

28 U.S.C. § 636 ... 5, 6, 13

28 U.S.C. § 636 (b) ... 5

28 U.S.C. § 636 (b)(1)(A) ... 1, 3, 5, 6, 7, 8

28 U.S.C. § 636 (b)(1)(B) ... 5, 7, 8

28 U.S.C. § 636 (b)(3) ... 5

28 U.S.C. § 636 (c)(2) ... 5, 12, 13

28 U.S.C. § 1332 ... 6

Federal Appellate Rules

Federal Rules of Appellate Procedure, Rule 32(a)(7)(C) (Word Count) ... 15

Utah Rules

Utah Rules of Civil Procedure, Rule 64D(s) ... 9, 10

*1 SUMMARY OF ARGUMENT

In reply to Appellee's Brief, Wallace R. Bennett points out that The Society of Lloyd's primary position plainly violates the doctrine of ejusdem generis; that principal directs that specific terms of a statute are controlling over general terms. Ejusdem generis should be upheld when applied to the Federal Magistrate Act as cited by an Order of Reference entered November 19, 2003. Indeed, on August 23, 2004 Magistrate Judge David O. Nuffer acted outside the scope of that authority delegated under 28 U.S.C. § 636(b)(1)(A) when he purported to continue a Writ of Garnishment - - a post-judgment, dispositive and injunctive freezing of assets. The Magistrate's jurisdiction was not consented

Wallace Bennett seeks to set aside the purportedly-continued Writ of Garnishment as per an Order Regarding Pending Garnishment entered August 24, 2004 by Magistrate Nuffer wherein the magistrate exceeded specific statutory authority. As well, the Order entered April 22, 2005 and final Order and Memorandum Decision entered July 5, 2005 by District Judge Tena Campbell should be set aside as erroneously acquiescing to the magistrate's jurisdiction.

*2 Finally, Lloyd's should return the preemptively taken $528,570.38 with interest back to the bankruptcy estate of Wallace Bennett for the benefit of all claimants subject to an Adversary Proceeding determination.

REPLY ARGUMENTS

POINT 1: Issues related to appellate subject-matter jurisdiction are expected to be separately submitted.

On December 28, 2005, this U.S. Court of Appeals for the Tenth Circuit entered an Order which stated:

The court reserves judgment on the motion by Appellee-Plaintiff, The Society of Lloyd's, to dismiss for lack of appellate jurisdiction. The motion as well as Appellant-Defendant Wallace Bennett's response to the motion will be submitted to the panel selected to handle this appeal.

*3 POINT 2: Lloyd's primary argument plainly violates the doctrine of ejusdem generis . Specific terms of a statute are controlling over general terms and should be so applied to 28 U.S.C. § 636(b)(1)(A) of the Federal Magistrate Act in light of the Order of Reference entered November 19. 2003.

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). “[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 (9th Cir. 1994).

On August 24, 2004, Magistrate Judge David Nuffer exceeded his delegated authority under 28 U.S.C. § 636(b)(1)(A) when he purported to continue a Writ of Garnishment. Appellant's Appendix (“Aplt. App.”), 130-132. Therefore, the Order Regarding Pending Garnishment entered that day was a nullity and should be set aside. Aplt. App., at 144-149. The magistrate's authority was set by an Order of Reference entered November 19, 2003 by District Judge Tena Campbell. Aplt. App., at 128.

On April 22, 2005 and July 5, 2005, an Order and a final Order and Memorandum Decision, respectively, were entered by District Judge Tena Campbell wherein she erroneously acquiesced to the magistrate. Aplt. App. at 258-9 and 353-358. The final order should also be set aside. Aplt. App. at 357.

*4 In Aldrich v. Bowen the Court of Appeals for the Ninth Circuit 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 stated:

[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 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:

*5 ... [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 (1957) ... 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 dealt 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 § 636(b) of 28 U.S.C. supports this proposition.

[Bolded for emphasis; bracketed information added; some internal references omitted] 483 F.2d 1131, 1135-1136 (1st Cir. 1973).

In plain violation of the doctrine of ejusdem generis, Lloyd's now presumptively points to general language in “28 U.S.C. § 636 (b)(3)” as overriding when that provision is not specifically referred to in the Order of Reference of November 19, 2003; Lloyd's cannot ignore that 28 U.S.C. § 636 (b)(1)(A) is explicitly stated.[FN1] Aplt. App. at 128. This effort by Lloyd's should be rejected.

FN1. No provision of 28 U.S.C. § 636 grants authority to handle “post-judgment” or “post-trial” matters in a civil court. See statute attachment hereto.

*5 “ Ejusdem generis keeps the ‘additional duties' clause from swallowing up the rest of the statute.” N.L.B.R. v. A-Plus Roofing, Inc., 39 F.3d 1410, 1415 (9th Cir. 1994). In particular, the powers granted Magistrate Nuffer under 28 U.S.C. § 636 (b)(1)(A) is “exclusive on the topics which [it] cover [s]”: pretrial and non-injunctive matters. Wedding v. Wingo, 483 F.2d at 1135-1136 (1973). Thus, all tolled, the specific reference authority of Magistrate Nuffer was exclusively limited to pretrial, non-injunctive and non-dispositive acts. See Point 2, below. Indeed, 28 U.S.C. § 636(b)(1)( A) of the Federal Magistrate Act, 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] See statute attached hereto at page 19, below. District Judge Campbell included additional limitations in her Order of Reference, including:

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

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

*7 Attempts by District Judge Campbell to acquiesce in Magistrate Nuffer assertion of jurisdiction should be rejected. The following two orders entered by Judge Campbell should be set aside as erroneous:

1. Order entered April 22, 2005 (Aplt. App. at 258-259); and the final

2. Order and Memorandum Decision entered July 5, 2005 (Aplt. App. at 357 (“Order”, para. 1, only)).

In an April 18, 2005 hearing leading up to the initial April 22, 2005 order, Judge Campbell revealed a flawed determination. Citing the language of 28 U.S.C. § 636 (b)(1)(A), she erroneously stated: “an (A), even though it has in the statute the words pretrial, can cover post trial”. Aplt. App. at 477. However, under Wedding v. Wingo, the powers under 28 U.S.C. § 636 (b)(1)(A) are “exclusive on the topics which they cover”. 483 F.2d at 1135-1136 (1973).

Apparently realizing the limitations of the November 19, 2003 Order of Reference, on October 20, 2004, Magistrate Nuffer personally requested from District Judge Campbell new authority under 28 U.S.C. § 636 (b)(1) B to allow him to hold an “Evidentiary Hearing re: Writ of Garnishment” the next day. Aplt. App. 43 5-451. At that October 21, 2004 hearing, Magistrate Judge Nuffer revealed:

*8 [T]here was 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 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 ....

[Bolding added for emphasis], Aplt. App. at 442.

On October 22, 2004, District Judge Campbell entered a minute entry that stated:

CASE NO LONGER REFERRED TO Judge David Nuffer under (b)(1)(A) reference (alt) (Entered 10/22/2004)

[Bolded for emphasis] Aplt. App. at 165. A new Order of Reference was entered thereafter:

IT IS SO 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.

While this new reference order reveals the unique separateness of 28 U.S.C. § 636 (b)(1) (A) and (B) in the eyes of the district court, it did nothing to cure the magistrate's jurisdictional defects in the case at bar.

*9 POINT 3: Fulfilling the garnishment requirements of Rule 64D(s) is substantive, not merely ministerial. The consequences of a resulting continuing garnishment was post-judgment, dispositive, and injunctive in nature.

The U.S. Bankruptcy Court in the District of Utah in In re McNeely, held:

An attachment [garnishment] proceeding is essentially a proceeding for the purpose of establishing a lien to aid in collection of an unsecured debt, and the only way this lien can be established is by strictly adhering to every requirement of the rule. Bank of Ephram v. Davis, 581 P.2d 1001 (Utah 1978).

[Emphasis added] 51 B.R. 816, 818-819 (Bkrtcy. 1985).

Rule 64D(s) of the Utah RUles of Civil Procedure, stated in part:

(s) Failure to proceed against garnished properly (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....

[Italics in original; bolding added for emphasis] Rule 64D(s) of the Utah Rules of Civil Procedure, amend. Nov. 1, 2001, repealed Nov. 1, 2004. See statute attached herein at page 18, below.

*10 The Society of Lloyd's failed to comply with Rule 64D(s), U.R.Civ.P. in its effort to collect on a final judgment against Wallace Bennett. Aplt. App. 124-125. Lloyd's did not “strictly adher[e] to every requirement of the rule”. In re McNeely, 51 B.R. at 818-819 (Bkrtcy. 1985). After procuring the Writ of Garnishment on June 28, 2004, “plaintiff fail[ed] within sixty days ... to secure ... an order requiring the garnishee [Morgan Stanley] to pay [over] the property ....” In re McNeely, 51 B.R. at 818-819 (Bkrtcy. 1985); and Rule 64D(s), U.R.Civ.P. Further, the Writ expired by its own terms on September 12, 2004. See Appellant's Brief (“Aplt. Br.”), at 9 and 12, ¶¶ 5 and 12.

Additionally, the Writ of Garnishment issued June 28, 2004 was overly broad. Aplt. App. at 130-132. It froze[FN2] the assets of non-party Evalyn Bennett in the joint Morgan Stanley account - - not just securities owned by Wallace Bennett. Aplt. App. at 124-127 and 130-132.

FN2. On August 24, 2004, Magistrate Judge Nuffer entered a purported “order” to “continue” the injunctive Writ of Garnishment upon the Morgan Stanley trading account against both Wallace and Evalyn Bennett in these terms:

good cause exists to stay the release of the Writ of Garnishment; and it is ordered that such release be stayed and the [joint 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.

*11 Indeed, it was not until almost one year (May 24, 2005) after initially procuring the Writ of Garnishment that Lloyd's made any effort to free Evalyn Bennett's stipulated one-half interest in the Morgan Stanley brokerage account. Aplt. App. at 333-336. Magistrate Nuffer reflected his indifference in these terms: “My job is to ... sign a garnishment judgment. Consequences are not my concern”. Aplt. App. at 433.

POINT 4: Wallace Bennett did not consent to Magistrate Judge Nuffer's exercise of jurisdiction.

Wallace Bennett did not consent to Magistrate Judge David Nuffer's jurisdiction in the case at bar.

An accommodating time extension among the parties to allow some limited “discovery and investigation [] needed as to the respective interests of Mr. and Mrs. Bennett in the Account” was not intended to change and did not change the authority of Magistrate Judge Nuffer to act within his Order of Reference. Aplt. App. at 128 and 146-148. “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, 64 (D.D.C. 2002), citing the U.S. Supreme Court *12 in Johnson v. Zerbest, 304 U.S. 458, 463 (1938). The Morrison court continued:

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 privilege”

205 F.R.D. at 64 (D.D.C. 2002).

The Federal Magistrates Act, under 28 U.S.C. § 636(c)(2), provides the only mechanism for consent:

If a magistrate is designated to exercise civil jurisdiction under paragraph (1) of this subsection, the clerk of the court shall, at the time the action is filed, notify the parties of the availability of a magistrate to exercise such jurisdiction. The decision of the parties shall be communicated to the clerk of the court. Thereafter, either the district court judge or the magistrate may again advise the parties of the availability of the magistrate, but in so doing, shall advise the parties that they are free to withhold consent without adverse substantive consequences. Rules of the court for the references of civil matters to magistrates shall include procedures to protect the voluntariness of the parties' consent.

[Emphasis added] 28 U.S.C. § 636(c)(2), the relevant aspects of that statute are attached hereto on page 19, below.

*13 On November 19, 2003, in the case at bar, when District Judge Tena Campbell first entered an Order of Reference to involve a magistrate in the instant case, no record in this case shows and attempt to procure consent of the parties under 28 U.S.C. § 636(c)(2). Indeed, no “clerk of the court” approached the parties at any time during the lower district court proceedings to solicit the parties “consent” to the “jurisdiction” of any magistrate. And even if Wallace Bennett had been approached, he would have categorically refused to waive his “constitutional right to have an Article III judge preside over [the] matter”. Morrison v. International Programs Consortium, 205 F.R.D. 61, 64 (D.D.C. 2002); and Johnson v. Zerbest, 304 U.S. at 463 (1938).

Finally, on October 15, 2004, Lloyd's itself contemporaneously confirmed Wallace Bennett's objections to the magistrate's authority in these terms:

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.

[Bolded and underlined for emphasis]. Aplt. App. at 156-157. Lloyd's cannot now argue otherwise and should be judicially estopped.

*14 CONCLUSION

Wallace Bennett seeks to set aside the purportedly continued Writ of Garnishment as per an Order Regarding Pending Garnishment entered August 24, 2004 by Magistrate Nuffer where the magistrate exceeded his specific statutory authority. As well, the acquiescing Order entered April 22, 2005 and the relevant part of the final Order and Memorandum Decision entered July 5, 2005 by Judge Tena Campbell should be set aside as erroneous for the same reasons. 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 claimants subject to an Adversary Proceeding determination.

Appendix not available.