United States District Court, District of Columbia
D. BATES, United States District Judge.
case involves the United States' effort to collect a
sixteen-year-old unpaid judgment from local real estate
developer T. Conrad Monts under the Federal Debt Collection
Procedures Act("FDCPA"). In 2001, the United States
obtained a nearly $1.3 million judgment against Monts and his
corporation, TDC Management Corp. ("TDC"), for
violations of the False Claims Act ("FCA"). Shortly
after the judgment was affirmed, TDC ceased operations and
dissolved. Then in 2008, in an effort to collect the
judgment, the United States sought and obtained a writ of
garnishment against a separate judgment (in an unrelated
case) owed to the Washington Development Group - A.R.D., Inc.
("WDG"), a corporation Monts and his wife owned as
tenants by the entireties. WDG intervened in this action to
claim the funds, which are now held in escrow, and to object
to the writ of garnishment. No other person or entity made a
valid objection. Monts died in December 2009, and WDG
dissolved in December 2012. Thereafter, the United States
moved for a disposition order, which this Court granted in
January 2015, based on its finding that Monts's status as
a principal shareholder and director of WDG gave him a
substantial property interest in the funds owed to WDG to
support garnishment. On appeal, the D.C. Circuit held that
Monts did not have a substantial interest, and remanded the
case for consideration of "the Government's
alternative argument that it may garnish WDGs assets by
piercing the corporate veil between WDG and Monts."
United States v. TDC Mgmt. Corp., Inc., 827 F.3d
1127, 1129 (D.C. Cir. 2016). Following remand, WDG moved for
a disposition order and the government filed an opposition,
requesting that the Court grant disposition in favor of the
United States based on the veil-piercing theory.
careful consideration of the parties' competing motions
and memoranda,  the applicable law, and the record, and
for the reasons explained below, the Court will deny WDGs
motion for a disposition order, grant the government's
motion, and direct the garnishee to pay the United States.
March 29, 2000, the Court, through another judge of this
District, granted summary judgment on the merits of this case
in favor of the United States, finding that Monts and TDC
violated the FCA. Mar. 29, 2000 Mem. Op. & Order [ECF
Nos. 148, 149]. The Court awarded the United States $1, 285
million in damages and civil penalties and found Monts and
TDC jointly and severally liable for this award. Feb. 6, 2001
Mem. Op. & Order [ECF Nos. 164, 165]; Apr. 10, 2001 Order
[ECF No. 171]. The D.C. Circuit affirmed the judgment.
United States v. TDC Mgmt. Corp., Inc., 288
F.3d 421 (D.C. Cir. 2002). Shortly thereafter, "TDC
ceased active operations and dissolved." Defs.'
& Interv'r's' Resp. to Gov't's
Objections to Magistrate's R&R [ECF No. 285] at 1.
effort to collect the judgment in this case, the United
States targeted an $8.4 million judgment obtained by WDG,
another corporation wholly owned by T. Conrad Monts and his
wife Barbara Monts, as tenants by the entireties, and for
which Monts served as president and a director.
Gov't's 2d Mot. for Order at 4; Interv'r's 2d
Opp'n at 4; Ex. 1 to Gov't's 2d Mot. for Order
[ECF No. 259-1] ("Hersh Decl.")at 1, 4; Ex. B to
Interv'r's 2d Opp'n [ECF No. 261-2] ("Rogers
Decl.") ¶43. In 2004, a jury in the D.C. Superior
Court awarded WDG the $8.4 million judgment against the
District of Columbia ("the District") in a lawsuit
concerning an air-rights lease. Upon the government's
application in July 2008, this Court issued a writ of
garnishment against the judgment funds owed to WDG. See
Gov't's Mots, for Writ of Garnishment [ECF Nos. 187,
188]; Jul. 8, 2008 Docket Notation. The government served the
writ on the garnishees, the District and WDG. See Affs. of
Service [ECF Nos. 218-3, 218-4].
District was the only party to file a timely response.
See Jul. 23, 2008 District's Answer to Writ of
Garnishment [ECF No. 189]. The District argued that the
Superior Court judgment did not direct it to pay money to TDC
or Monts, but to WDG, an entity "owned and controlled by
Monts"; that both the District and WDG were appealing
the judgment; and that at the same time the District and WDG
were attempting to negotiate a settlement. Sept. 3, 2008
District's Resp. [ECF No. 191] at 1-2. Neither Monts nor
TDC filed a timely objection to the writ or requested a
hearing. Monts subsequently died in 2009. See Notice
of Death of Def. T. Conrad Monts [ECF No. 203]. To date, no
party has been properly substituted for Monts.
February 2012, the government moved for a disposition order
pursuant to 28 U.S.C. § 3205(c)(7), directing the
District to pay, from the judgment funds owed to WDG, an
amount equal to the judgment against Monts and TDC in this
action. See Gov't's 1st Mot. for Order [ECF
No. 204]. Then, in March 2012-more than three-and-a-half
years after the writ was issued-WDG moved to intervene in
this action, arguing that the government could not garnish
funds owned by a non-party. See Mot. to Intervene by WDG [ECF
No. 211]; Interv'r's 1st Opp'n [ECF No. 210]. The
Court permitted WDG to intervene to challenge the garnishment
on its own behalf. See July 30, 2012 Mem. Op. &
Order [ECF No. 235] at 8-11. The Court denied without
prejudice the government's motion for a disposition
order. Id. at 1, 7.
December 2012, the District and WDG settled all claims in the
air-rights litigation, their cross-appeals were dismissed,
and the District paid the $8.4 million judgment to WDG, less
$2.1 million which the District held in escrow pending
resolution of this action. See District's Status
Report [ECF No. 238]. Within days of the settlement, WDG
dissolved. See Gov't's Objection to Magistrate's
R&R [ECF No. 284] at 3; Defs.' &
Interv'r's' Resp. to Gov't's Objection to
R&Rat 4. The net assets remaining in WDG, including the
judgment paid by the District (less the funds held in
escrow), were distributed to Barbara Monts, who was the sole
shareholder of WDG after her husband's death.
Gov't's 2d Mot. for Order at 5; Hersh Decl. at 2. WDG
remained a party to this action pursuant to D.C. Code §
29-312.05(a), which provides that "[a] dissolved
corporation continues its corporate existence ... to wind up
and liquidate its business and affairs."
referral of this case to a magistrate judge, the government
sought discovery from Monts, TDC, and WDG on its
veil-piercing theory, "which included, among other
documents, tax returns and balance sheets and . . . corporate
records." Defs.' & Interv'r's' Resp.
to Gov't's Objections to R&R at 2. The government
then filed another motion for a disposition order, directing
the District to pay the United States the judgment in this
case from the funds held in escrow. See
Gov't's 3d Mot. for Order; Interv'r's 3d
Opp'n. The government argued that the funds could be
garnished because (1) Monts had a sufficient property
interest in the funds as a shareholder and director of WDG,
or alternatively, that (2) WDG was Monts's alter ego and
the Court should disregard the corporate form and treat
WDG's assets as Monts's. In January 2015, this Court
granted the government's motion based on the first
argument, and therefore did not "reach the question of
veil-piercing." See Jan. 5, 2015 Mem. Op. [ECF No. 289]
appealed and the D.C. Circuit concluded that Monts did not
have a substantial property interest in the settlement funds
under the FDCPA. TDC Mgrnt. Corp., 827 F.3d at 1132.
The D.C. Circuit remanded the case for this Court to
"evaluate the Government's alternative argument that
it may garnish WDG's assets by piercing the corporate
veil between WDG and Monts." Id. at 1129. The
D.C. Circuit further "commend[ed] to the district
court's consideration, if necessary, the doctrine of
third-party standing and 28 U.S.C. §§ 3205(a) and
3010(a), which refer to state law on co-owned property."
LI at 1134.
remand, WDG moved for a disposition order, asking the Court
to direct the District to pay the escrow funds to
See Interv'r's Mot. for Order at 2. The
government filed an opposition and renewed its request that
the Court grant its disposition order. See
Gov't's Opp'n to Interv'r's Mot. for
Order at 15. This brings us to the present point, where the
Court must decide whether the government can garnish the
funds by piercing WDG's corporate veil.
FDCPA, 28 U.S.C. § 3001 et seq, covers the
collection of debts owed to the United States. Section 3205
sets forth the procedure by which the government may obtain
post-judgment garnishment against a debtor's property.
Id. § 32O5(a)-(c). It authorizes the United
States to garnish property "in which the debtor has a
substantial nonexempt interest and which is in the possession,
custody, or control of a person other than the debtor, in
order to satisfy the judgment against the debtor."
Id. § 3205(a). Property is broadly described as
any present or future interest, whether legal or equitable,
in real, personal (including choses in action), or mixed
property, tangible or intangible, vested or contingent,
wherever located and however held (including community
property and property held in trust (including spendthrift
and pension trusts))[.]
Id. § 3002(12). To validly garnish property,
the government must apply for a writ of garnishment against a
judgment debtor's property. LI § 3205(b). If a court
determines that the requirements for such a writ are met,
"the court shall issue an appropriate writ of
garnishment." Id. § 3205(c)(1). The
government must "serve the garnishee and the judgment
debtor with a copy of the writ of garnishment[.]" LI
§ 3205(c)(3). The garnishee must answer the writ within
ten days of service. Id. § 3205(c)(2)(E). The
judgment debtor or the United States may file a written
objection to the answer and request a hearing within twenty
days. Id. § 3205(c)(5). The objecting
party-here, the United States-must "state the grounds
for the objection and bear the burden of proving such
grounds." LI After a garnishee files an answer and if
no hearing is requested within the required time period, the
Court "shall promptly enter an order directing the
garnishee as to the disposition of the judgment debtor's
nonexempt interest in such property." Id.
D.C. LAW GOVERNING TENANCY BY THE ENTIRETIES
first argues that District of Columbia law governing tenancy
by the entireties bars the government from garnishing the
settlement funds owed to WDG to satisfy the judgment debt
owed by T. Conrad Monts in this case. Interv'r's Mot.
for Disposition Order at 5-8.
FDCPA itself creates no property rights, it merely attaches
property rights created under state law. TDC Mgmt.
Corp., 827 F.3d at 1131; Exp.-Imp. Bank of U.S. v.
Asia Pulp & Paper Co., 609 F.3d 111, 117 (2d Cir.
2010). Under the FDCPA, "[c]o-owned property shall be
subject to garnishment to the same extent as co-owned
property under the law of the State in which such property is
located." 28 U.S.C. § 3205(a); see also id
§ 3010(a). In the District of Columbia, "property
subject to a tenancy by the entireties ... is unreachable by
creditors of one but not of both of the tenants."
Morrison v. Potter, 764 A.2d 234, 236-37 (D.C.
2000). WDG contends that "[t]ogether, the FDCPA and
Morrison compel the conclusion that the government
cannot garnish" the settlement funds. Interv'r's
Mot. for Order at ...