Free Report and Recommendation - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Lawrence J. Warfield, as Receiver, Judgment Creditor, vs. Michael Alaniz; Patrick Wehrly and Andrea Wehrley; et al., Judgment Debtors, No. CV-03-2390-PHX-JAT (LOA) REPORT AND RECOMMENDATION

OM Financial Life Insurance Co., Garnishee.

This matter arises on Judgment-Creditor Lawrence J. Warfield's Application for Judgment on Garnishment and Notice of Lodging Proposed Judgment on Garnishment, filed on October 9, 2007. (docket # 791) Judgment-Creditor Warfield seeks entry of Judgment against Garnishee OM Financial Life Insurance Co. in the sum of $7.13 of non-earnings purportedly belonging to Judgment-Debtor Charles Davis. The Hon. James A. Teilborg, the assigned District Judge, broadly referred this case to the undersigned "to resolve any issues regarding the writs of garnishment in this matter." (docket # 761 and # 785)
Case 2:03-cv-02390-JAT Document 806 Filed 10/16/2007 Page 1 of 6

1 2 3 4 5 6 7 8 9 10 11 12

A review of the file indicates that on July 26, 2007, Amended Judgment was entered against Judgment-Debtor Charles Davis and "in favor of the Receiver, Lawrence J. Warfield, in the amount of the highest verdict, $109,900, plus post-judgment interest from February 28, 2007 at the rate of 5.05% per annum, together with costs taxed by the Clerk and prejudgment interest of $39,305." (docket # 624 at 2) Although a Notice of Appeal has been filed by, among others, Judgment-Debtor Charles Davis and the appeal is pending before the Ninth Circuit, no supersedeas bond has been posted and/or order entered staying execution of the Amended Judgment upon the property of Judgment-Debtor Charles Davis. (docket # 588) On August 19, 2007, Judgment-Creditor Warfield requested a writ of

13 14 15 16 17

garnishment against Garnishee OM Financial Life Insurance Co., alleging, inter alia, "the Garnishee is believed to be an employer of the Judgment Debtor [Charles Davis] or otherwise owes or will owe to the Judgment Debtor disposable earnings." (docket # 655 at ¶ 4) This writ indicates that the total amount due to Judgment-Creditor Warfield from

18 19 20 21 22 23 24 25 26 27 28 -2Filed 10/16/2007

Judgment-Debtor Charles Davis as of August 20, 2007 is $174,652.17. (Id. at 2) On October 9, 2007, Judgment-Creditor Warfield filed the subject Application, seeking a Judgment on Garnishment for non-earnings against Garnishee OM Financial Life Insurance Co. and attaching thereto as Exhibit 1 a purported copy of the verified but unfiled Answer of Garnishee OM Financial Life Insurance Co. (docket # 791) The verified but unfiled Answer of Garnishee OM Financial Life Insurance Co. indicates, inter alia, that at the time the writ was served, Garnishee was indebted to "the judgment

Case 2:03-cv-02390-JAT

Document 806

Page 2 of 6

1 2 3 4 5 6 7 8 9 10 11 12

debtor"1 in the total sum of $7.13 [for non-earnings] and that copies of the writ and summons, underlying judgment, notice to judgment debtor and request for hearing were mailed to Judgment-Debtor Charles Davis on September 17, 2007. (Id. at 5-7) Generally, a federal writ of garnishment is governed by the law of the state in which the district court sits. Fed.Rule Civ.P. 69(a)2; Hilao v. Estate of Marcos, 95 F.3d 848 (9th Cir. 1996). Arizona's statutory scheme regarding garnishment of non-earnings and garnishment of earnings are located at Arizona Revised Statutes ("A.R.S.") §§ 121571-1597 and §§ 1598-1598.17.3 Under Arizona law, "garnishment reaches only debts existing at the time of the service of the writ." Reeb v. Interchange Resources, Inc. of Phoenix, 106 Ariz. 458, 478 P.2d 82, 83 (Ariz. 1970). "[I]t is well settled in Arizona that

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
3 1

the rights of a garnishor-creditor to assets in the hands of a garnishee are no greater than

The Garnishee's Answer does not specifically identify the "judgment debtor" but the

October 9, 2007 Application indicates the judgment-debtor is Defendant Charles Davis. (docket # 791 at 1)
2

Rule 69(a), FED.R.CIV.P., provides in relevant part: In General. Process to enforce a judgment for the payment of money shall be a writ of execution, unless the court directs otherwise. The procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held, existing at the time the remedy is sought,. . . . (emphasis added).

In 1985, Arizona's post-judgment garnishment procedures were held unconstitutional in Neeley v. Century Fin. Co., 606 F.Supp. 1453, 1469-70 (D. Ariz. 1985). In 1986, the Arizona legislature extensively amended §§ 12-1571 et seq. and added new provisions governing the garnishment of earnings. A.R.S. §§ 12-1598 et seq.; Frazer, Ryan, Goldberg Keyt & Lawless v. Smith, 184 Ariz. 181, 183, 907 P.2d 1384, 1386 (Ariz. App. 1995).
Case 2:03-cv-02390-JAT Document 806 -3Filed 10/16/2007 Page 3 of 6

1 2 3 4 5 6 7 8 9 10 11 12

rights of the defendant-debtor to those assets." Mid-State Electric Supply Co. v. Arizona Title Insurance & Trust Co., 123 Ariz. 130, 598 P.2d 108, 110 (Ariz. App. Ct. 1979) (citing Ellery v. Cumming, 40 Ariz. 512, 14 P.2d 709 (Ariz. 1932)). Under Arizona law, a "party who has an objection to the writ of garnishment [of non-earnings], the answer of the garnishee or the amount held by the garnishee or a party claiming an exemption from garnishment" may file a "written objection and request a hearing" "not later than ten days after receipt of the answer." A.R.S. § 12-1580(A); 12-1598.07(A) for earnings. "One purpose of [such a] hearing is to determine whether the garnishee was indebted to the judgment debtor when the writ was served." Able Distributing Co., Inc. v. James Lampe, General Contractor, 160 Ariz. 399, 403, 773 P.2d

13 14 15 16 17

504, 508 (Ariz. App. Ct. 1989). If the answer of the garnishee "shows that the garnishee was indebted to the judgment debtor at the time of service of the writ, and no objection to the writ or answer is timely filed, on application by the judgment creditor the court shall enter judgment on the writ against the garnishee for the amount of the nonexempt monies

18 19 20 21 22 23 24 25 26 27 28

of the judgment debtor owed or held by the garnishee at the time of service of the writ." A.R.S. § 12- 1584(B). Under Arizona's garnishment statute, a presumption exists "that a document has been received five days after it is mailed." A.R.S. § 12- 1597(A). The Court finds that Judgment-Creditor Warfield has properly complied with Arizona's garnishment statutes regarding the subject writ of garnishment for non-earnings. Judgment-Debtor Charles Davis presumptively received notice of the writ of garnishment and the Application for Judgment on Garnishment as his counsel is still endorsed on the District Court's filings. A.R.S. § 12- 1597(A). Moreover, the Court finds that such notice
-4Filed 10/16/2007

Case 2:03-cv-02390-JAT

Document 806

Page 4 of 6

1 2 3 4 5 6 7 8 9 10 11 12

is "reasonably calculated under all the circumstances to apprise [Judgment-Debtor Charles Davis] of the pendency of the [garnishment] action and afford [him] an opportunity to present [his] objections." Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1 (1978); Mullane v. Central Hanover Trust Co., 339 U.S. 306, 314 (1950). JudgmentDebtor Charles Davis has not filed an objection to this writ of garnishment or Application for Judgment on Garnishment, much less a timely one. The undersigned recommends that Judgment-Creditor Warfield's Application for Judgment on Garnishment be granted and that the proposed Judgment on Garnishment be signed and entered by the Hon. James A. Teilborg, the assigned District Judge. In accordance with the foregoing,

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

IT IS HEREBY RECOMMENDED that Judgment-Creditor Warfield's Application for Judgment on Garnishment, docket # 791, against Garnishee OM Financial Life Insurance Co. be GRANTED. IT IS FURTHER RECOMMENDED that the Hon. James A. Teilborg sign and enter the proposed Judgment on Garnishment against Garnishee OM Financial Life Insurance Co. in the total sum of $7.13. This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the District Court's judgment. The parties shall have ten (10) days from the date of service of a copy of this recommendation within which to file specific written objections with the Court. 28 U.S.C. ' 636(b)(1); Rules 72, 6(a) and (e), Federal Rules of Civil Procedure. Thereafter, the
-5Filed 10/16/2007

Case 2:03-cv-02390-JAT

Document 806

Page 5 of 6

1 2 3 4 5 6 7 8 9 10 11 12

parties have ten (10) days within which to file a response to the objections. Failure to timely file objections to this Magistrate Judge's Report and Recommendation may result in the acceptance of this Report and Recommendation by the assigned District Judge without further review. United States v. Reyna- Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003); Thomas v. Arn, 474 U.S. 140, 149 (1985) (district courts are not required to conduct "any
review at all . . . of any issue that is not the subject of an objection."). Failure to timely file

objections to any factual determinations of this Magistrate Judge will be considered a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to the Magistrate Judge's recommendation. Rule 72, Federal Rules of Civil Procedure.

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6Filed 10/16/2007

Dated this 16th day of October, 2007.

Case 2:03-cv-02390-JAT

Document 806

Page 6 of 6