In 1986, Western Savings was placed in receivership and its assets transferred to the FSLIC, including the Note and guarantees involved here. In August 1991, the FDIC (as Manager of the FSLIC Resolution Fund) sued THCC, T. Todd, G. Todd, and R. Hughes on the Note and guarantees. The District Court entered judgment in favor of the FDIC in October 1992, and an abstract of judgment was filed in January 1993.
Through a series of assignments, Sobranes Recovery Pool inherited the judgment in October 2004. Meanwhile, a writ of execution was issued in April 2003. In July 2005, Sobranes filed a motion requesting a declaratory judgment that assets held by Hughes' wife were subject to execution, appointment of a receiver for successor entities to THCC, and/or an accounting of assets held by Hughes' wife and the successor companies.
The Defendants argued that collection of the judgment was barred by Texas law which required a writ to issue within ten years from entry of judgment. Sobranes countered that under the FDCPA the FDIC was not affected by state limitations periods and, as the FDIC’s assignee, it should have the same benefit.
The District Court denied Sobranes' motion on the limited ground that Sobranes failed to demonstrate that it was a proper party to invoke the FDCPA exception to the dormancy of the judgment under Texas law. Sobranes appealed.
The Court of Appeals held that whether Sobranes was entitled to invoke the FDCPA was a question of statutory interpretation. The FDCPA was passed to create a comprehensive statutory framework for the collection of debts owed to the United States government. It provides the exclusive civil procedures for the United States to recover a judgment on a "debt" as defined in the Act.
The statutory definition of "debt" specifies amounts owing to the United States--either the result of direct loans by the U.S. or the result of loans insured or guaranteed by the U.S. The Court held that the Note and judgment did not fall in either category. A broader portion of the definition refers to "other source of indebtedness to the United States", but that portion is limited to obligations "not owing under the terms of a contract originally entered into by only persons other than the United States." The Court held that the broader definition did not aid Sobranes.
The Court held that because there was no "debt" as defined by the FDCPA, it did not need to address the ability of private-party assignees of the government to invoke the FDCPA, or what statute of limitations the government enjoys under it. Under F.R.Civ.P. 69(a), state law governs execution on the judgment. The District Court entered judgment against the defendants in October 1992 and an abstract of judgment was filed in January 1993. The only writ of execution to issue was dated April 3, 2003, more than ten years after the entry of judgment, leaving the judgment dormant under Texas law.
The judgment denying Sobranes' motion was affirmed.
The Fifth Circuit Court of Appeals affirmed the decision of the district court.
Judge(s): Patrick E. Higginbotham, Circuit Judge
Jurisdiction: U.S. Court of Appeals, Fifth Circuit
Related Categories: Civil Remedies , Finance / Banking , Government / Politics , Property
|Appellant Lawyer(s)||Appellant Law Firm(s)|
|David Pavek||David Pavek & Associates|
|Appellee Lawyer(s)||Appellee Law Firm(s)|
|Mark Hamblin How||How Freds Rohde Woods & Duke|