Ad Hoc Committee on Garnishments

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1 The New Laws: What you should know. Bart Brand Faber & Brand Catherine Zacharias Office of State Courts Administrator Ad Hoc Committee on s Appointed in 2011 by the State Courts Administrator to review the garnishment process and to make recommendations for improvement. Members Judge Karl Demarce, chair Judge Mark Fitzsimmons Court clerks Collection Bar attorneys Paul Harper, DOR B--1 1

2 Ad Hoc Committee on s Focus Efficiency Consistency Fairness Submitted their report with recommendations to statutes and rules August Legislation 2014 Truly Agreed & Finally Passed HB1231 SB621 SB672 Effective January 15, 2015 B--2 2

3 Timing Issues Legislative changes effective January 1, 2015 Supreme Court Rules have a 6 month publication period before they can be effective Civil Rules Committee is reviewing the proposed rule changes. Earliest rules could be in effect is July 1, 2015 IF Supreme Court enters order before December 31, Timing Issues Forms Must be approved by State Judicial Records Committee No publication period B--3 3

4 Clerk Fee The clerk of the circuit court may charge and collect in cases where a garnishment is granted, a surcharge not to exceed ten dollars for the clerk's duties. Any moneys collected under this subsection shall be placed in a fund to be used at the discretion of the circuit clerk to maintain and improve case processing and record preservation. Continuous Wage Notice of garnishment, served as provided in sections to * shall have the effect of attaching all personal property, money, rights, credits, bonds, bills, notes, drafts, checks or other choses in action of the defendant in the garnishee's possession or charge, or under his or her control at the time of the service of the garnishment, or which may come into his or her possession or charge, or under his or her control, or be owing by him or her, between that time and the time of filing his or her answer, or in the case of a continuous wage garnishment, until the judgment is paid in full or until the employment relationship is terminated, whichever occurs first; but he or she shall not be liable to a judgment in money on account of such bonds, bills, notes, drafts, checks or other choses in action, unless the same shall have been converted into money since the garnishment, or he or she fails, in such time as the court may prescribe, to deliver them into court, or to the sheriff or other person designated by the court. 2. Writs of garnishment which would otherwise have equal priority shall have priority according to the date of service on the garnishee. If the employee's wages have been attached by more than one writ of garnishment, the employer shall inform the inferior garnisher of the existence and case number of all senior garnishments. B--4 4

5 Continuous Wage Proposed Rule defines a continuous wage garnishment as: the garnishment of earnings, as defined in section , RSMo, that does not have a return date and instead remains in effect until the judgment is paid in full, or until the employment relationship is terminated, whichever occurs first. Priority Priority of garnishments is determined by the date of service. The employer shall inform the inferior garnishor of the existence and case number of all senior garnishments. B--5 5

6 Filing the Application for Proposed Rule Requires the judgment balance as defined in section RSMo. Request the return date on writ, including a continuous wage garnishment Clerk to return the summons to filer Proposed Rule Service by sheriff If summons returned non est then request special process server Filing the Application for Electronic Filing Courts Clerk returns writ and summons to filer No need for triplicate forms New form should be available in January B--6 6

7 Judgment Balance Judgments shall accrue interest on the judgment balance as set forth in this section. The "judgment balance" is defined as the total amount of the judgment awarded on the day judgment is entered including, but not limited to, principal, prejudgment interest, and all costs and fees. Post-judgment payments or credits shall be applied first to post-judgment costs, then to post-judgment interest, and then to the judgment balance. Judgment Balance Judgment Balance = Judgment [Principal + Prejudgment interest + Prejudgment costs + Fees (including attorney fees)] Interest on prejudgment interest already allowed under law. See Good Hope Missionary Baptist Church v. St. Louis Alarm Monitoring Co., Inc., 358 S.W.3d 528 (Mo. App. E.D. 2012); Boatman s First Nat l Bank of Kansas City v. Bogina Petroleum Engineers, 794 S.W.2d 703 (Mo. App. W.D. 1990) B--7 7

8 Application of Post-Judgment Payments Post Judgment Payment 1 st Post-Judgment Costs 2 nd Post-Judgment Interest 3 rd Judgment Balance Application of payments in accordance with common accounting and lending practices. Post judgment interest is awarded on the theory that it is a penalty for delayed payment of the judgment. Lindquist v. Mid-America Orthopedic Surgery, Inc., 325 S.W.3d 461, 465 (Mo. App. E.D. 2010). Continuous Wage Common in other states Increase efficiency in clerk s office by decreasing work load Maximizes initial race to the courthouse and eliminates subsequent races Authorized by Section RSMo and Proposed Rule B--8 8

9 Continuous Wage Additional Requirements Proposed Rule The garnishor shall file with the issuing court a statement of judgment balance, which shall indicate all payments received by the garnishor within the preceding six months and the remaining unsatisfied portions of the judgment, which may include all unsatisfied postjudgment interest and costs. The statement shall be filed not later than fifteen days after the close of each such six-month period. The statement shall be filed with the issuing court beginning six months after issuance of the garnishment and shall continue every six months thereafter until the garnishment is satisfied or no longer effective. Copies of the statement shall be served by ordinary mail on the garnishee and judgment debtor. In the event a garnishor fails to file a statement of judgment balance as provided in subsection (b) of this rule, the court shall, upon its own motion or that of any party or junior garnishor, terminate the garnishment. Payment to the Attorney Sections & RSMo or if applicable, to the attorney for the party on whose behalf the order of garnishment was issued... Benefits Reduce clerk work load More efficient Concerns Attorneys ability to refund if quashed Report Judgment balance under proposed rule to be a payment on the record B--9 9

10 Employer Rights & Duties Rights Section Duties 1 time $20 fee for administrative handling Can petition the court for more Section & Proposed Rule New interrogatory will require the employer to inform the inferior garnishor of the existence and case number of all senior garnishments. State the gross amount of earnings, as defined in section , RSMo, due to the debtor, and the nonexempt portion of such earnings subject to garnishment; Employer Rights & Duties Duties - continued Report the last know address of debtor. Honor Exemptions if filed. Pay court or attorney as directed. Notify if when/if the employee is terminated. Change in Procedure Proposed Rule Treat interrogatories as other discovery and only have to file the certificate of service. B

11 Judgment Debtor Rights Proposed Rule Mirrors rule for serving notice of exemptions Exemptions served with writ of garnishment Claim of exemptions must be filed with the court within 20 days of service of garnishment on the judgment debtor Garnishor has 20 days to object Clerk submit the objection to the judge who can rule or have an expedited hearing Exemptions, objections etc. must be served on all parties, including employer. Motion to Quash Proposed Rule At any time after service of the summons and writ of garnishment, but not later than ninety days after any specific payment shall have been made by the garnishee to the garnishor with respect to that specific payment, any person against whom such writ has been issued may file with the issuing court a petition setting forth good cause why such garnishment ought to be stayed, set aside, or quashed. Reasonable notice of the time of the hearing on the petition shall be given to all interested parties. B

12 Judgment Creditor Duties Service of the writ on garnishee Service of the summons, writ of garnishment and notice of exemptions within 5 days of service of garnishment. Exception to Interrogatories Proposed Rule Must be filed within 20 days instead of 10 days Reponses to exceptions must be filed within 20 days instead of 10 days Writ of Sequestration Eliminated by Section RSMo/ Proposed Rule The state, municipal, or other political subdivision employer served with a garnishment shall have the same duties and obligations as those imposed upon a private employer when served with a garnishment. 2. Pay of any officer, appointee, or employee of the state of Missouri, or any municipal corporation or other political subdivision of the state, shall be subject to garnishment to the same extent as in any other garnishment. All garnishments against such employee shall proceed in the same manner as any other garnishment. 3. Service of legal process to which a department, municipal corporation, or other political subdivision of the state is subject under this section may be accomplished by personal service upon the paying, disbursing, or auditing officer of the state, municipal corporation, or other political subdivision of the state, charged with the duty of payment or audit of such salary, wages, fees, or earnings of such employees. B

13 New Law on s Focus Efficiency Consistency Fairness B