United Student Aid v. Muracombi Ent Inc ( 2009 )

  •                              Revised June 10, 2009
                        FOR THE FIFTH CIRCUIT
                                                                           United States Court of Appeals
                                                                                    Fifth Circuit
                                         No. 08-11128                           FILED
                                       Summary Calendar                        May 12, 2009
                                                                         Charles R. Fulbruge III
    MURACOMBI ENTERPRISES INC, Individually and doing business as ABC
                       Appeal from the United States District Court
                            for the Northern District of Texas
                                  USDC No. 4:07-CV-139
    Before JOLLY, BENAVIDES, and HAYNES, Circuit Judges.
           Plaintiff-Appellant United Student Aid Funds (“USAF”) sued Defendant-
    Appellee Muracombi Enterprises, Inc., individually and doing business as ABC
    Wrecker Service (“Muracombi”), in the United States District Court for the
    Northern District of Texas under section 488 of the Higher Education Act of
    1965 (“HEA”), 20 U.S.C. § 1095a (2006), for failure to comply with orders of
             Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
    be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
    R. 47.5.4.
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    withholding from earnings. The district court granted summary judgment to
    Muracombi, and USAF has appealed to this Court. We REVERSE the district
    court’s grant of summary judgment and REMAND for further proceedings in
    accordance with this opinion.
                       I. Factual & Procedural Background
          USAF, an authorized student loan guaranty agency, guaranteed student
    loans for Kelby Hubbard. Hubbard defaulted on his loans. On November 19,
    2004, USAF gave Hubbard notice of its intent to initiate withholding
    proceedings. Because Hubbard did not request a hearing, on December 20, 2004,
    USAF mailed a withholding order to Hubbard’s employer, Muracombi,
    authorizing the garnishment of a portion of Hubbard’s earnings. USAF sent this
    order via first-class mail to 4020 Flory Street in Fort Worth, Texas, Muracombi’s
    registered office address.
          Muracombi neither responded to USAF’s notice nor remitted any portion
    of Hubbard’s wages. Consequently, on January 25, 2005, USAF mailed a second
    withholding order to Muracombi at its registered address, requesting compliance
    with the first order. Again, Muracombi did not respond to or comply with the
    withholding order, so USAF’s national counsel sent a demand letter to
    Muracombi at its registered address. Muracombi never responded.
          In 2007, USAF sued Muracombi alleging that Muracombi was liable for
    the portion of the wages it failed to withhold from Hubbard’s paycheck. The
    service of process was returned to USAF, unexecuted, with the notation:
    “Neither the registered agent, [sic] [n]or any corporate officer of the defendant
    corporation can be found at its registered office or any other address.” USAF
    arranged for substituted service on the Texas Secretary of State; service was
    returned with the notation: “No Forwarding Order on File.” USAF moved for
    and was granted a default judgment against Muracombi.
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           After becoming aware of the default judgment, Muracombi contacted
    USAF to inquire about the basis of the lawsuit. After communicating with
    USAF’s counsel, Muracombi paid all amounts due under the withholding order
    but refused to pay USAF’s attorney’s fees. Although the district court set aside
    the default judgment, USAF maintained the suit, seeking payment of its fees.
           On March 27, 2008, Muracombi moved for summary judgment, arguing
    that it never actually received the withholding orders, and, therefore, it was not
    liable under the HEA for noncompliance. The district court agreed, holding that
    “the HEA specifically requires that the employer receive notice of a withholding
    order before becoming liable,” and here, “Plaintiff [had] failed to provide any
    evidence tending to show that Defendants actually received1 notice of the
    orders.” The district court therefore granted Muracombi’s motion. USAF
                                  II. Standard of Review
           We review a grant of summary judgment de novo, applying the same
    standard as the district court. Bolton v. City of Dallas, 
    472 F.3d 261
    , 263 (5th
    Cir. 2006). Summary judgment is proper “if the pleadings, the discovery and
    disclosure materials on file, and any affidavits show that there is no genuine
    issue as to any material fact and that the movant is entitled to judgment as a
    matter of law.” FED. R. CIV. P. 56(c). A genuine issue of material fact exists if
    a reasonable jury could enter a verdict for the non-moving party. Anderson v.
    Liberty Lobby, Inc., 
    477 U.S. 242
    , 252 (1986). We must view the evidence in the
    light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v.
    Zenith Radio Corp., 
    475 U.S. 574
    , 587 (1986).
              The “actually received” language came from the district court’s construction of the
    following from the relevant statute: an employer is liable for “any amount that such employer
    fails to withhold from wages due an employee following receipt of such employer of notice of
    the withholding order[.]” 20 U.S.C. § 1095a(a)(6).
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          The movant bears the initial burden of demonstrating that no genuine
    issue of material fact exists. Celotex Corp. v. Catrett, 
    477 U.S. 317
    , 323 (1986).
    If the movant does not meet this burden, summary judgment must be denied.
    John v. Louisiana, 
    757 F.2d 698
    , 708 (5th Cir. 1985). But if the movant meets
    this burden, the nonmovant “must [then] identify specific evidence in the record
    and articulate the manner in which that evidence supports that party’s claim[.]”
    Johnson v. Deep E. Tex. Reg’l Narcotics Trafficking Task Force, 
    379 F.3d 293
    301 (5th Cir. 2004). “[S]uch evidence must be sufficient to sustain a finding in
    favor of the nonmovant on all issues as to which the nonmovant would bear the
    burden of proof at trial.” Id.
                                     III. Discussion
          Under the HEA, an employer is liable for “any amount that such employer
    fails to withhold from wages due an employee following receipt of such employer
    of notice of the withholding order . . . .” 20 U.S.C. § 1095a(a)(6). This language
    requires receipt of the order, but it does not specify that the party asserting the
    withholding order must serve the employer personally or by certified mail. The
    disagreement in this case centers on the question of what evidence of proof of
    receipt is required to raise a fact issue for summary judgment purposes.
          “‘Proof that a letter properly directed was placed in a [United States] post
    office mail receptacle creates a presumption that it reached its destination in the
    usual time and was actually received by the person to whom it was addressed.’”
    United States v. Ekong, 
    518 F.3d 285
    , 287 (5th Cir. 2007) (quoting Beck v.
    Somerset Techs., Inc., 
    882 F.2d 993
    , 996 (5th Cir. 1989)). This presumption does
    not require the use of certified mail; it simply requires that a letter be properly
    addressed, stamped, and placed in the care of the United States Postal Service.
    See Mulder v. Comm’r of Internal Revenue, 
    855 F.2d 208
    , 212 (5th Cir. 1988); see
    also Lyle Cashion Co. v. McKendrick, 
    204 F.2d 609
    , 611 (5th Cir. 1953). The
    placement of a letter in the mail may be proved by a sworn statement, Ekong,
                                             No. 08-11128
    518 F.3d at 287, or by circumstantial evidence such as the sender’s customary
    mailing practice. Custer v. Murphy Oil USA, Inc., 
    503 F.3d 415
    , 420 (5th Cir.
    2007). “[T]he presumption may only be overcome by evidence that the mailing
    was not, in fact, accomplished.” In re Eagle Bus Mfg., Inc., 
    62 F.3d 730
    , 735 (5th
    Cir. 1995) (internal quotation marks and citation omitted). Thus, evidence of
    mailing is some evidence of receipt, though it may not be conclusive.
           As the movant, Muracombi had the initial burden to show that no genuine
    issue of material fact existed as to whether it received USAF’s withholding
    orders. Muracombi submitted the affidavit of Kathy Routh, the President and
    Registered Agent of Muracombi. Ms. Routh averred that Muracombi never
    received a copy or any other form of notice of the withholding order before USAF
    filed its lawsuit. Ms. Routh’s affidavit did not (1) state that she was the only
    person to open mail at Muracombi or even that she, as its president, would ever
    be the person to receive and open the general mail; (2) deny that the Flory Street
    address was the registered office at the relevant time; or (3) deny that
    Muracombi received mail forwarded from the Flory Street address.2 Thus, we
    question whether this affidavit was sufficient to sustain summary judgment in
    the absence of a response.3
           Even if we found this affidavit sufficient, USAF’s response raises a
    contrary fact issue. USAF submitted to the district court the affidavit of Gary
    Mooneyham, USAF’s records custodian. Mr. Mooneyham averred that USAF
              Given that her affidavit indicated that the Flory Street address was “abandoned”
    earlier that same year that the order was sent, it is not unreasonable to wonder whether mail
    was forwarded, since the usual forwarding period for U.S. mail is one year.
             A “bare assertion of non-receipt” is insufficient to rebut the presumption of receipt that
    results from proof of mailing; it is sufficient to raise a fact issue. Custer, 503 F.3d at 421; see
    also In re Eagle Bus Mfg., 62 F.3d at 735.
                                         No. 08-11128
    sent wage withholding orders to Muracombi at its registered address4 on
    December 20, 2004, and January 25, 2005, and that the routine practice is to
    send such orders through the mail. Mr. Mooneyham described the mailing
    process as follows: the orders are put in addressed envelopes, the envelopes are
    placed in the “mail going out box,” the postage is applied to the envelopes, and
    the orders “go out in the regular mail deposit.” In sum, USAF submitted both
    a sworn statement that the withholding orders were mailed and circumstantial
    evidence of the customary mailing practice, both of which this Court has
    recognized as sufficient to trigger the presumption that the mailed material
    reached its destination and was actually received by the addressee. See Ekong,
    518 F.3d at 287; Custer, 503 F.3d at 421. USAF also presented evidence that
    its attorney’s pre-suit demand letter sent to the Flory Street address did not
    come back in the mail.
          This case, then, presents the classic fact question. Do we believe the
    evidence that suggests receipt or the evidence that suggests non-receipt? Of
    course, when a genuine issue of material fact exists, it must be submitted to the
    trier of fact rather than disposed of by the district court through summary
    judgment. FED. R. CIV. P. 56(c); see Peel & Co. v. The Rug Market, 
    238 F.3d 391
    397 (5th Cir. 2001).
                                       IV. Conclusion
          Because a genuine issue of material fact exists, summary judgment was
    improper. Accordingly, we REVERSE the district court and REMAND for
    further proceedings consistent with this opinion. We express no opinion on
             Muracombi has never disputed that the Flory Street address was its registered
    address when USAF mailed the withholding orders. The purpose of requiring a company to
    maintain a registered address is to provide a location to send service of process and other
    notices. See TEX. BUS. CORP. ACT ANN. art. 2.09 (Vernon 2003). Under Texas law, it was
    Muracombi’s responsibility to notify the Secretary of State of any change in its registered
    address. See TEX. BUS. CORP. ACT ANN. Art. 2.10(A)(3) (Vernon 2005).
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    whether attorney’s fees should be awarded to USAF or the amount of same.