United States District Court, S.D. Alabama, Southern Division
V. S. Granade, Senior United States District Judge.
action is before the Court on the United States' Motion
for an Order Confirming Mortgage is VOID to Clear Title (Doc.
810), Xiulu Ruan's (“Ruan”) response thereto
(Doc. 814), the United States' Reply (Doc. 815), and
Ruan's Surreply (Doc. 816). For the reasons explained
below, the United States' motion is hereby GRANTED.
AND PROCEDURAL BACKGROUND
February 24, 2017, Ruan was found guilty of racketeering and
drug conspiracies in connection with his operation of a pain
clinic. (Doc. 503.) Following the return of the verdict, Ruan
agreed and stipulated to a forfeiture money judgment in the
amount of $5, 000, 000 in addition to the forfeiture of
multiple assets. (Docs. 498, 500, 503). On May 31, 2017, this
Court sentenced Ruan to 252 months imprisonment and to pay
$15, 239, 369.93 in restitution and a special assessment of
$1, 500. (Doc. 665). On June 12, 2017, the United States
filed a Notice of Lien for Fine/Restitution against Ruan in
Mobile County, Alabama Probate Court and in Milwaukee County
Wisconsin Register of Deeds. (Doc. 800-2). On May 3, 2018,
the United States filed a third Notice of Lien for Fine
and/or Restitution in Bay County, Panama City, Florida.
(Id.) The United States reports that Ruan has paid
no funds towards restitution and has paid only $100 towards
the special assessment through the Inmate Financial
Responsibility Program. (Doc. 800).
February 17, 2017, during his trial but prior to his
conviction, Ruan signed a Power of Attorney
(“POA”) granting his sister, Xiu Oing Martinie
(“Martinie”), general authority to act on his
behalf pursuant to the Alabama Uniform Power of Attorney Act.
(Doc. 800-3). The POA includes the following restrictive
language: “An agent that is not my ancestor, spouse, or
descendant MAY NOT use my property to benefit the agent
… unless I have included that authority in the Special
Instructions” (Id. at 2). The Special
Instructions state as follows: “This Power of Attorney
shall not be affected by my disability, incompetency, or
February 27, 2018, four days after his conviction, but before
his sentencing and before the Notices of Liens were filed,
Martinie executed a mortgage to twenty-one individuals for a
total of $559, 200.00 against Ruan's then-unencumbered
property located at 9073 Timbercreek Boulevard, Spanish Fort,
Alabama 36527. (Doc. 800-1). One of the twenty-one named
individuals was Steve Martinie (“Steve”), the
husband of Martinie. (Id.)
29, 2018, this Court issued an Order for a Writ of Execution
for 15 properties that were owned either solely by Ruan or
Ruan's single member LLC (XLR Properties, LLC) or jointly
by Ruan and his former wife, Ling Cui. (Doc. 772). The United
States Marshal's service seized the properties and filed
returns of service. (Docs. 781, 784, 790, 791, 793, 794,
November 8, 2018, the United States filed a motion to set
aside the above-mentioned mortgage as a fraudulent transfer.
(Doc. 800). Thereafter, Ruan responded to the motion and
submitted several documents relating to the transaction.
(Doc. 806). Upon review of the exhibits filed, and while the
motion remained pending, the United States filed the instant
motion asserting that the mortgage was void because Martinie
was without authority to execute the mortgage due to the
language of the POA which excluded Martinie's authority
to use Ruan's property to benefit herself. (Doc. 810).
The United States simultaneously filed a Motion to Stay the
ruling on its previous motion to declare the mortgage
fraudulent pending a ruling on the current
motion. (Doc. 811). Ruan filed a response (Doc.
814), the Government filed a reply (Doc. 815), and Ruan filed
a sur-reply (Doc. 816).
Government argues that the subject mortgage is void on its
face because Martinie did not have the legal authority to use
defendant's property to benefit herself, or self-deal.
(Doc. 810, generally). As such, the Government posits that
the mortgage did not and could not have transferred any
interest to either Martinie or to the other named mortgagees.
(Id. at 8-9). In response, Ruan contends that the
mortgage is not void because Martinie did not self-deal, but
alternatively, if self-dealing is determined, that the
mortgage is not void as to the remaining mortgagees. (Doc.
814 at 1-4, Doc. 816). Ruan also argues that this court is
without subject matter jurisdiction to determine the validity
of the mortgage. (Doc. 814 at 4-7). The Government contends
that jurisdiction exists and that the mortgage is not
severable (Doc. 815, generally). This Court will address each
response to the subject motion, Ruan suggests this District
Court lacks subject matter jurisdiction to determine the
facial validity of the mortgage at issue. (Doc. 814 at 7).
Curiously, Ruan does not specifically argue that this Court
does not have jurisdiction and plainly agrees that
“[o]f course, the issue of enforcing a federal
restitution order falls within the court's federal
question jurisdiction”. (Doc. 814 at 4). Instead, Ruan
acknowledges the Federal Debt Collection Procedures Act
(FDCPA) and then only questions whether or not
jurisdiction exists and challenges the Government to come
forward with a cited example of a similar matter being
adjudicated by a federal court. (Id.) In reply, the
Government argues that the validity of the mortgage is
squarely within this Court's jurisdiction pursuant to the
Federal Debt Collection Procedures Act “provides
‘the exclusive civil procedures for the United
States' to obtain satisfaction of a judgment in a
criminal proceeding that imposes a ‘fine, assessment,
penalty, [or] restitution' in favor of the United
States.” United States v. Bradley, 644 F.3d
1213, 1309 (11th Cir. 2011) (quoting 28 U.S.C. §§
3001(a)(1), 3002(3)(B), 3002(8)). The Act provides the United
States several remedies to satisfy a judgment, one of which
is to obtain a writ of execution. 28 U.S.C. §§
3202(a), 3203. The Act provides that the United States may
levy only property in which a judgment debtor has a
“substantial nonexempt interest.” Id.
§ 3203(a). As such, the FDCPA requires the government to
use reasonable diligence to identify and serve notice on any
person who may have an interest in the property it targets
for collection proceedings under the FDCPA. See 28
U.S.C. § 3202(c) (requiring the government to serve a
“copy of the notice and a copy of the application for
granting a remedy under this subchapter” on “each
person whom the United States, after diligent inquiry, has
reasonable cause to believe has an interest in the property
to which the remedy is directed.”). To that end, the
district court must determine whether the debtor has any
ownership interests in the property, and the district court
must determine the ownership interests of any person who
moves to dissolve or modify any writ. See U.S. v.
Duran, 701 F.3d 912 (11th Cir. 2012) (held that a
district court has the authority, under the FDCPA, to
determine under state law the ownership interests in property
against which the United States has obtained a writ of
execution to collect a judgment of restitution in a criminal
the circumstances of Duran may not be identical to
those currently before this Court, the rationale for the
Court of Appeals' holding remains applicable to the case
at hand. Specifically, because at issue in this action is the
validity of a mortgage that determines ownership interest in
a property over which the United States has obtained a writ
of execution, this Court has jurisdiction to determine the
ownership interest in the subject property. Ruan has
submitted no case law indicating that jurisdiction does not
exist under the FDCPA or that Duran should be
distinguished from this action. Further, Ruan's argument
with respect to this Court's jurisdiction suggests that
federal jurisdiction would exist if the mortgagees listed on
the subject mortgage were given notice such that they had an
opportunity to potentially seek to object to the writ, after
which this Court could then determine their property
interest, to the extent that they had any interest at all.
(See Doc. 814 at 4). However, Ruan has not provided
any case law to suggest that this Court does not have the
same jurisdiction before notice is given, ...