Joe Dent on Recent Updates on the Constitutionality of Georgia Garnishments
Wednesday, December 2nd, 2015
On September 8, 2015, Judge Marvin H. Shoob, Senior Judge of the United States District Court for the Northern District of Georgia turned the collection world on its head when he held that Georgia's post-judgment garnishment statute, O.C.G.A. § 18-4-60 et seq. was unconstitutional. In Strickland v. Alexander, Civil Action File No.: 1:12-cv-02735-MHS Tony W. Stricklandfiled suit against a number of individuals and entities including, Richard T. Alexander, the Clerk of Court for the State Court of Gwinnett County. Among the allegations of his complaint, Strickland challenged the constitutionality of the Georgia garnishment statute alleging it unlawfully deprived him of his property in violation of the Due Process Clause of the 14th Amendment and in violation of the Due Process Clause of the Georgia Constitution. After years of protracted litigation, Judge Shoob ultimately agreed with Strickland. The Order entered by Judge Shoob held that the Garnishment Statute failed "to require that judgment debtors be notified that there are certain exemptions under state and federal law which the debtor may be entitled to claim with respect to the garnished property;" failed "to require that judgment debtors be notified of the procedure to claim an exemption;" and failed "to provide a timely procedure for adjudicating exemption claims." Judge Shoob enjoined Richard Alexander from issuing any garnishment subpoenas until the constitutionality of the garnishment statute could be somewhat clarified. Somewhat troublingly, Judge Shoob's Order originally did not delineate between the various different garnishment proceedings under O.C.G.A. § 18-4-1 et seq. and as such all garnishments including continuing garnishments under O.C.G.A. § 18-4-110 and child support garnishments for support under O.C.G.A. § 18-4-130 were temporarily deemed unconstitutional.
The muddy water was slightly cleared on October 5, 2015, when Judge Shoob amended the September 8, 2015 Order. Ultimately, Judge Shoob amended his September Order holding that the Order was not to apply to continuing garnishments under O.C.G.A. § 18-4-110 and was not to apply to continuing garnishments for child support under O.C.G.A. § 18-4-130.
Each Court throughout the State is handling the constitutionality issue in its own manner. Some Courts are refusing to issue any subpoenas in garnishment, while others are allowing the filing of continuing garnishment and child support garnishments. The ruling continues to especially affect banks and entities who may be in possession of property that may be subject to garnishment subpoena. It likewise affects collection efforts on behalf of all judgment creditors. Due to the refusal of some courts to issue any garnishment subpoenas, collection firms who were filing hundreds of garnishments per week, have effectively been estopped from conducting any work.
Judge Shoob's order leaves a bank with the question of whether it should answer a garnishment summons or not. Banks are now left with questions about their potential liability to both judgment creditors and debtors when participating in the garnishment process, and litigating over each garnishment summons issued to a bank is not practical or economical.
In light of Judge Shoob's order, the first option is to contact the judgment creditor to see if a release of the garnishee can be filed. This may work with a represented judgment creditors as they are also faced with questions of liability arising from use of the garnishment process, but an unrepresented judgment creditors may not be as willing to release the garnishment.
If the judgment creditor will not release the garnishment, the next step is to answer the summons after reviewing if the funds may be subject to an exemption, but determining if statutory exemptions apply to the funds held by a bank may be difficult. If a determination that the funds are exempt is made, then, the answer should be filed stating the exemption and stating no funds will be paid into court. Just as the account holder can challenge the answer, the judgment creditor also can challenge an answer by filing a traverse. If no exemption is found to apply to the funds, the non-exempt funds should be paid into the registry of the court which will eliminate any risk of the judgment creditor seeking a default against the bank for failing to respond to the summons. Even Judge Shoob found the bank involved in Strickland v. Alexander could not be found liable for responding to the summons. Furthermore, the garnishment statutes provides a safe harbor to a bank in answering a summons and making a payment if the bank believes doing so is "reasonably required by a good faith effort to comply with the summons." O.C.G.A. § 18-4-92.1(b).
Debtors may also challenge any payments they believe may be exempt from garnishment. Another step to obtain additional insulation from liability is to provide a notice to the account holder about the existence of the statutory exemptions and the procedures available to raise those exemptions during the garnishment process.
At Watson Spence, our attorneys are versed in collection issues and specifically in garnishment issues from the perspective of both garnishees required to file answers in garnishment and judgment creditors seeking to collect on recorded judgments through the garnishment process. We are happy to answer any questions and provide consultation with regard to the garnishment process.