CONTENTS 1 Provisional Process...Thomas W. Stilley 2 Alternatives to Bankruptcy: Assignment for Benefit of Creditors and Receivers... James Ray Streinz 3 Statutory and Possessory Liens... Stephen Werts 4 Enforcement of Foreign Judgments...Jonathan E. Cohen Paul Migchelbrink 5 Practical Discovery...William N. Stiles 6 Execution... Donald J. Churnside 7 Garnishment... Mark B. Comstock 8 Decedents Estates... Donald W. Green III 9 Exemptions... Hon. Elizabeth L. Perris Linda Johannsen 10 Supplementary Proceedings...William N. Stiles 11 Fraudulent Conveyances and Creditors Bills...Brent G. Summers Table of Forms Table of Statutes and Rules Table of Cases Subject Index vii
1 THOMAS W. STILLEY* PROVISIONAL PROCESS I. INTRODUCTION A. ( 1.1) Scope B. ( 1.2) Brief History of Provisional Process Law in Oregon II. EXPLANATIONS, DEFINITIONS, AND DISTINCTIONS A. Provisional Remedies Covered in This Chapter 1. ( 1.3) Attachment 2. ( 1.4) Garnishment 3. ( 1.5) Claim and Delivery B. Provisional Remedies Not Covered in This Chapter 1. ( 1.6) Receivership 2. ( 1.7) Temporary Restraining Order C. ( 1.8) Execution D. ( 1.9) Definitions Under ORCP 81 THOMAS W. STILLEY, B.B.A., University of Texas (1977); J.D., University of Houston (1988); member of the Oregon State Bar since 1988 and the Washington State Bar Association since 1992; partner, Sussman Shank LLP, Portland. *The author acknowledges Barry P. Caplan, John P. Davenport, and Nancy E. Hochman for their work on prior editions of this chapter. The case citations in this chapter were checked for overrulings and reversals through October 2002. The ORS citations were checked through 2001. 1-1
III. ( 1.10) ISSUANCE OF PROVISIONAL PROCESS A. ( 1.11) Facts Justifying Provisional Process 1. ( 1.12) General Showing 2. ( 1.13) Additional Facts Supporting Entitlement to Specific Relief 3. ( 1.14) Immediate Provisional Process vs. Allowance of Remedy After Show Cause Hearing B. ( 1.15) Motion and Affidavit: General Facts Alleged C. Obtaining the Order 1. ( 1.16) Immediate Process Requested 2. ( 1.17) The Show Cause Order 3. ( 1.18) Serving the Order 4. ( 1.19) Extension of Hearing Date 5. ( 1.20) Waiver of Right to Hearing D. The Hearing 1. ( 1.21) Burden of Proof 2. ( 1.22) Evidence Admissible at the Hearing 3. ( 1.23) Required Findings E. Form of Order After Hearing 1. ( 1.24) Writ of Attachment 2. ( 1.25) Writ of Garnishment 3. ( 1.26) Claim of Lien 4. ( 1.27) Claim and Delivery 5. ( 1.28) Restraining Order F. ( 1.29) Clarity of Order IV. UNDERTAKING ON PROVISIONAL PROCESS A. ( 1.30) When Required B. ( 1.31) Form of Security or Bond 1. Corporate Sureties a. ( 1.32) Qualifications and Affidavits b. ( 1.33) Procedure for Obtaining Corporate Surety Bond 2. ( 1.34) Individual Sureties C. ( 1.35) Service D. ( 1.36) Objections to Sureties 1-2
V. ATTACHMENT A. When Available 1. ( 1.37) Actions at Law 2. ( 1.38) ORCP 84 A 3. ( 1.39) Not Available in Certain Consumer Transactions 4. ( 1.40) Valid Underlying Claim 5. ( 1.41) Counterclaims 6. ( 1.42) Actions Against Financial Institutions B. Property Subject to Attachment 1. ( 1.43) Property Not Exempt from Execution 2. ( 1.44) Real Property 3. ( 1.45) Personal Property 4. ( 1.46) Partial Interest in Property 5. ( 1.47) Property in Custody of the Law 6. ( 1.48) Interest of an Heir in an Estate VI. VII. VIII. PREJUDGMENT GARNISHMENT A. ( 1.49) In General B. ( 1.50) When Available C. ( 1.51) Contents of Writ D. ( 1.52) Issuance E. ( 1.53) Service F. ( 1.54) Notice to Defendant G. ( 1.55) Procedure After Service CLAIM AND DELIVERY A. ( 1.56) When to Use B. ( 1.57) Prerequisites C. ( 1.58) Early Dismissal of Case Prohibited D. ( 1.59) Required Elements in Application for Claim and Delivery E. ( 1.60) Form of Order RESTRAINING ORDERS A. ( 1.61) Defined B. ( 1.62) When Available C. ( 1.63) Injunctions and Receiverships Not Covered 1-3
IX. SPECIAL PROVISIONAL PROCESS PROBLEMS A. ( 1.64) Service of Provisional Process 1. ( 1.65) Writ of Attachment 2. ( 1.66) Writ of Garnishment 3. ( 1.67) Claim of Attachment Lien 4. ( 1.68) Claim and Delivery B. ( 1.69) Redelivery of Attached Property C. ( 1.70) Third-Party Claims FORMS 1-1 Motion for Issuance of Provisional Process 1-2 Affidavit in Support of Motion for Provisional Process 1-3 Order to Show Cause 1-4 Temporary Restraining Order Pending Hearing 1-5 Order for Issuance of Writ of Attachment 1-6 Undertaking for Attachment 1-7 Writ of Attachment 1-8 Claim of Attachment Lien 1-9 Motion for Order to Show Cause 1-10 Affidavit in Support of Motion for Order to Show Cause 1-11 Instructions to Sheriff 1-12 Order Granting Provisional Process 1-13 Order of Claim and Delivery I. INTRODUCTION A. ( 1.1) Scope This chapter is intentionally broad. It will assist a lawyer in using all provisional (prejudgment) remedies except temporary restraining orders under ORCP 79 and receiverships under ORCP 80. See chapter 2, infra; 2 OREGON CIVIL PLEADING AND PRACTICE chs 30 31 (Oregon CLE 1994 & Supp 2001). The Council on Court Procedures and the legislature decided in 1981 to establish separate rules for those two very important provisional remedies. All other provisional remedies are subject to ORCP 81 85: 1-4
Provisional Process / 1.2 ORCP 81 is a general rule containing definitions, the method of serving notice or orders, and methods of challenge by adverse claimants to property for which provisional process is sought. ORCP 82 pertains to bonds and undertakings in all provisional process, including temporary restraining orders, preliminary injunctions, and receiverships. See ORCP 82 A(1) (2). This chapter is limited to applying that rule to attachment, prejudgment garnishment, and claim and delivery. ORCP 83 outlines the procedure for obtaining any form of provisional process, other than temporary restraining orders under ORCP 79 and receiverships under ORCP 80. ORCP 84, by its language, contains rules limited to an application for a writ of attachment. ORCP 84 A(1). However, an application for a prejudgment writ of garnishment is subject to ORCP 83 and 84. ORS 18.605(1)(b), (2)(c). Accordingly, the law is the same for applying for and obtaining a prejudgment writ of garnishment as it is for attachment. Although a prejudgment writ of garnishment may be issued by a lawyer or the clerk of the court, ORCP 84 D(2)(b), only the clerk of the court may issue a prejudgment writ, ORS 18.635. ORCP 84 D provides that when the writ of attachment is issued, the sheriff must attach and safely keep all of the defendant s nonexempt property except for property in the possession of and debts owed by third parties, which is attached by applying for and obtaining a prejudgment writ of garnishment as provided in ORS 18.600 18.850. CAVEAT: An open question exists regarding procedural steps for third-party claims in a prejudgment garnishment situation. ORS 18.725 does not refer to ORCP 81 C (rights of an adverse third-party claimant). Thus, whether an adverse claimant to property that has been seized under a prejudgment writ of garnishment should assert his or her claim under ORS 18.725 or ORCP 81 C is unclear. It appears that the courts will accept the challenge of an adverse party claimant under either authority. B. ( 1.2) Brief History of Provisional Process Law in Oregon Before 1973, Oregon s statutory scheme of provisional process was set forth in former ORS chapter 29. Those statutes regulated attachment and prejudgment claim and delivery (replevin). In the 1973, the Oregon Legislature established a procedure for obtaining provisional remedies 1-5
1.2 / Provisional Process that complied with the requirements of Fuentes v. Shevin, 407 US 67, 92 S Ct 1983, 32 L Ed2d 556 (1972), in which the Court struck down prejudgment replevin statutes that allowed seizure of property without notice to the debtor or an opportunity for a prior hearing. The Court held those statutes invalid as a deprivation of property without due process by denying the right to an opportunity to be heard before seizure. Postseizure hearings were found to be insufficient to protect the debtor s rights. The case was commonly thought to apply to all prejudgment provisional remedies, and subsequent cases confirmed this. (The Oregon courts do not always agree. See Rocky B. Fisheries v. No. Bend Fab., 66 Or App 625, 630 633, 676 P2d 319 (1984).) In 1981, the legislature adopted ORCP 81 85, which substantially followed former ORS 29.025 29.075. The writ of garnishment was the sole method of recovering property of the defendant that is in the possession of a third party. See generally ORS 18.618, 18.615. The prejudgment garnishment process has been incorporated by reference into ORCP 83 84. See ORS 18.605(1)(b), (2)(c). The method for obtaining prejudgment claim and delivery (replevin) also was addressed when the legislature passed ORCP 85 in 1981. CAVEAT: It is difficult to generalize regarding the precedential value of pre-1981 cases in the area of provisional process. If the Oregon courts were construing statutory language that has been perpetuated in the present law, those cases may be useful precedent. Carefully compare with current law the wording of the statutes being construed in pre-1981 cases. In 1987, the legislature further changed provisional process in Oregon by providing that before attachment is issued or any property is attached under ORCP 84, the plaintiff must obtain, and have recorded in the County Clerk Lien Record of that county, an order under ORCP 83 that provisional process may issue. ORCP 84 A(1). Between 1989 and 2001, the legislature adopted numerous amendments to the garnishment statutes, including the requirement that a garnishee search fee be paid when the garnishee is a financial institution (ORS 18.790) and creating a writ of continuing garnishment, which was valid to garnish wages for 90 days or more (ORS 18.625(2) (3)). The 2001 Legislature also provided a safe harbor for a garnishee who discovers that a voluntary or an involuntary bankruptcy petition has been filed before the garnishee delivers the garnishee s response pursuant to ORS 18.680. In that event, the garnishee may note the fact on the garnishee response form (ORS 18.835) and return that form without tendering any 1-6
Provisional Process / 1.5 funds to the garnishing creditor. ORS 18.838. The garnishment is stayed pursuant to 11 USC 362. The legislature also amended the garnishment statutes to allow process servers, other than a sheriff, to charge any fee agreed to by the server and the person requesting the service, for service of process or delivery of a writ of garnishment. However, in a cost bill, no more than the statutory amounts may be claimed for service of process under ORS 21.410. ORS 20.115(1)(b). Fees for delivering a writ of garnishment are not so limited. See ORS 18.652(5). The garnishment statutes were completely revised in 2001, and are now set forth in ORS 18.600 18.910. See chapter 7, infra. II. EXPLANATIONS, DEFINITIONS, AND DISTINCTIONS A. Provisional Remedies Covered in This Chapter 1. ( 1.3) Attachment Attachment is the procedure by which an unsecured creditor obtains a judicial lien on the debtor s property before judgment. See ORCP 81 A(1). Attachment is available only in limited situations specified in ORCP 84 A(2) and should not be used unless a favorable judgment is virtually certain. To obtain attachment, a party must follow all the steps and procedures provided under ORCP 83. See 1.37 1.48, infra, for discussion of attachment. 2. ( 1.4) Garnishment Prejudgment garnishment is the procedure by which a creditor reaches a debtor s tangible or intangible personal property that is in the possession, control, or custody of a third person (the garnishee). See ORCP 84 D(2)(b). A creditor may obtain a prejudgment writ of garnishment in the same situations in which attachment would be allowed. Garnishment is available only to an unsecured creditor. The procedure for obtaining prejudgment garnishment is identical to that for attachment and includes all necessary steps under ORCP 83. See 1.49 1.55, infra, for discussion of prejudgment garnishment. 3. ( 1.5) Claim and Delivery Claim and delivery is a form of provisional process permitting a secured creditor or party claiming other than as an unsecured creditor (i.e., a party from whom property has been converted) to recover 1-7
1.6 / Provisional Process possession of personal property held by the debtor. The prejudgment remedy was traditionally known as replevin but is now referred to in ORCP 85 as claim and delivery. A party seeking claim and delivery under ORCP 85 also must comply with the procedures set forth in ORCP 82 and 83. See ORCP 85 A. See 1.56 1.60, infra, for discussion of claim and delivery. B. Provisional Remedies Not Covered in This Chapter 1. ( 1.6) Receivership A receiver is an officer appointed by a circuit court to take charge of a party s property while a civil action is pending. The receiver is responsible for managing and disposing of the property as the court may direct. See ORCP 80 A. The rules for obtaining a receiver before judgment are set forth in ORCP 80. The only portion of ORCP 81 85 that applies is ORCP 82 A(2), relating to bonds. An attaching creditor is entitled to appointment of a receiver pursuant to ORCP 80 B(5). See chapter 2, infra, and 2 OREGON CIVIL PLEADING AND PRACTICE ch 31 (Oregon CLE 1994 & Supp 2001) for discussion of receivership under ORCP 80. 2. ( 1.7) Temporary Restraining Order A court may issue a restraining order pending a hearing under ORCP 83 at which a party is seeking a writ of attachment, writ of garnishment, or order for claim and delivery. ORCP 83 F. See Forms 1-1, 1-2, and 1-4. ORCP 83 also provides that a restraining order can be the ultimate provisional remedy sought by a party. ORCP 83 I. ORCP 79 deals with restraining orders that are not coupled with other forms of provisional process under ORCP 83. ORCP 79 also pertains to cases in which a preliminary injunction is being sought. See 2 OREGON CIVIL PLEADING AND PRACTICE ch 30 (Oregon CLE 1994 & Supp 2001). C. ( 1.8) Execution Execution is the means by which a judgment is enforced against property in the possession of the judgment debtor. Execution is exclusively a postjudgment remedy. After judgment, the judgment creditor can cause the court clerk to issue a writ of execution directing the sheriff to seize the defendant debtor s property in the defendant s possession. If the judgment debtor s property is in the possession of a 1-8