Davis v. Paschall

• Decision Date: 29 July 1986
• Docket Number: No. PB C 85 378.,PB C 85 378.
• Citation: 640 F. Supp. 198
• Parties: Rosemary DAVIS on Behalf of Herself and All Others Similarly Situated, Plaintiff, v. Marjorie PASCHALL, Individually and in Her Official Capacity as Circuit Clerk of Jefferson County, on Behalf of Herself and all others Similarly Situated; and Michael Motor Company, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

640 F. Supp. 198

Rosemary DAVIS on Behalf of Herself and All Others Similarly Situated, Plaintiff, v. Marjorie PASCHALL, Individually and in Her Official Capacity as Circuit Clerk of Jefferson County, on Behalf of Herself and all others Similarly Situated; and Michael Motor Company, Inc., Defendants.

No. PB C 85 378.

United States District Court, E.D. Arkansas, Pine Bluff Division.

July 29, 1986.

Griffin J. Stockley, Central Arkansas Legal Services, Pine Bluff, Ark., for plaintiff.

Wayne Matthews, Prosecutor by Steven Dalrymple, Deputy, Pros. Atty's Office, Pine Bluff, Ark., for Marjorie Paschall.

Terry Wynne, Bridges, Young, Matthews, Holmes & Drake, Pine Bluff, Ark., for Michael Motor Co.

MEMORANDUM AND ORDER

OVERTON, District Judge.

Before the court is plaintiff's motion for summary judgment.

This suit involves a challenge to the constitutionality of Arkansas' postjudgment garnishment statutes, Ark.Stat.Ann. § 31-501, et seq. (Repl.1962). Plaintiff makes class action allegations that the class she seeks to represent is composed of all judgment debtors in the State of Arkansas who may now or in the future be exempt from garnishment or entitled to claim state and/or federal exemptions. Plaintiff also seeks to have the defendants certified as a class composed of all officials in the State of Arkansas authorized to issue writs of garnishment.

The following facts appear to be undisputed by the parties:

Plaintiff, Rosemary Davis, is a judgment debtor of defendant Michael Motor Company, Inc. (Michael Motor). Ms. Davis is a low-income person who is the sole support of herself and her children. Defendant Marjorie Paschall is the Circuit Clerk of Jefferson County, Arkansas, and has among her duties and responsibilities, issuance of postjudgment writs of garnishment.

On or about September 24, 1979, defendant Michael Motor obtained a default judgment against plaintiff in the Circuit Court of Jefferson County in the case of Michael Motor Company, Inc. v. Davis, Jefferson County Circuit Court No. 79-294-1. On May 22, 1985, pursuant to Ark.Stat.Ann. § 31-501, et seq. (Repl.1962), and acting under color of state law, defendant Paschall issued a writ of garnishment at the request of Michael Motor which was served on Ms. Davis' employer, Holiday Inns. On the following dates Holiday Inns (garnishee in the state court action) paid into the registry of Jefferson County Circuit Court, the following wages owed to Ms. Davis: May 29, 1985—$51.50; June 12, 1985—$31.01; July 15, 1985—$84.00; again on July 15, 1985—$55.70. The payments were made without notice to or the written consent of Ms. Davis. During the time period set out above, plaintiff's disposable weekly wages were exempt under federal law as they were less than the amount permitted to be garnished pursuant to 15 U.S.C. § 1673 (1982). The writ of garnishment makes no mention of any federal or state statutory exemptions.

Plaintiff claims Ark.Stat.Ann. § 31-501, et seq. (Repl.1962) denies her due process of law insofar as they permit a post-judgment taking of property without notice and a prompt hearing for the purpose of allowing the judgment debtor the opportunity to claim exemptions. Ms. Davis also alleges that the garnishment statutes conflict with 15 U.S.C. § 1673 (1982) which prescribes the amount of wages which may be garnished and thus are in violation of the supremacy clause, U.S. Const. Art. VI, cl. 2.

Defendant Paschall filed a response admitting the facts as alleged by plaintiff, but denying the unconstitutionality of the garnishment procedure. Ms. Paschall also stated in her response that she stood prepared to comply with this court's findings and conclusions in the event the existing procedures were found to be inadequate to comply with due process. Defendant Michael Motors also admitted the allegations of fact and stated that it had tendered to plaintiff the sum of $222.23, the amount plaintiff alleges was wrongfully withheld from her wages.

The Office of the Attorney General of the State of Arkansas acknowledged compliance with Ark.Stat.Ann. § 34-2510 (Repl.1962) by plaintiff's notice to that office of the lawsuit challenging the constitutionality of the garnishment procedure. By letter dated April 1, 1986, the Attorney General's Office stated that they did not wish to intervene in the pending action.

Until recently, the question of whether a judgment debtor was entitled to due process in the form of notice and a hearing to consider possible claims of exemptions was assumed to be settled by the decision of the United States Supreme Court in Endicott Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 288, 45 S.Ct. 61, 62, 69 L.Ed. 288 (1924):

The established rules of our system of jurisprudence do not require that a defendant who has been granted an opportunity to be heard and has had his day in court, should, after a judgment has been rendered against him, have further notice and a hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment. Thus, in the absence of a statutory requirement, it is not essential that he be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment he must take "notice of what will follow," no further notice being "necessary to advance justice."

It should be noted that the Supreme Court has signaled that its analysis of due process in debtor-creditor cases has begun to change with the cases of Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969); and North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975). The holdings of these cases have been succinctly summarized in Note, Due Process, Postjudgment Garnishment, and "Brutal Need" Exemptions, 1982 Duke L.J. 192:

In contrast to the rationale, the holdings of the cases appear consistent. In Sniadach and Fuentes the Court held that summary-seizure proceedings must provide for notice and a hearing prior to the deprivation of wages or consumer goods.

In Mitchell the Court upheld a procedure that lacked these two safeguards but that contained measures both to permit the debtor to correct an erroneous deprivation in a timely manner and to limit the occurrence of wrongful deprivations. In North Carolina, the Court struck down a garnishment statute because the statute contained neither notice and hearing provisions nor any surrogate protective measures. Accordingly, the factual holdings of the cases suggest that the prejudgment seizure of an asset is constitutional only if there exists adequate safeguards that limit the occurrence of erroneous deprivations and allow the debtor to correct an erroneous deprivation in a timely manner.

The United States Supreme Court has begun to analyze due process in terms of the requirements of the interests of the various parties as best stated in Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976):

Identification of the specific dictates of due process generally requires consideration of three factors: First, the private interest that will be affected by the official action; second, the risk of the erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.

Recently, in postjudgment garnishment cases, the courts have begun to use this same due process analysis and to consider the same interests the Supreme Court sought to accommodate in the prejudgment seizure cases cited above. In Finberg v. Sullivan, 634 F.2d 50 (3rd Cir.1980), recognition was given to the creditor's interest in seeking a quick and inexpensive satisfaction of the debt after having obtained a judgment. However, the Court also noted that the debtor had an interest in retaining exempt property to meet the basic expenditures of life. After having considered both the creditor's and debtor's interest in the garnishment procedure, the Court found the debtor's interest demanded an especially prompt hearing for adjudication of claims of exemptions under the provision of any act of Congress or under any Pennsylvania Act. The Court also found that for notice of the attempted garnishment to be meaningful, that it should inform the judgment debtor of statutory exemptions, basing its reasoning on the Supreme Court decision in Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978), that a shut-off notice denied due process because no provision in the notice explained the method for contesting termination. Finberg and the following cases held state statutes unconstitutional for not requiring notice and a prompt hearing after garnishment of a judgment debtor: Dionne v. Bouley, 583 F.Supp. 307 (D.R.I.1984), aff'd as modified, 757 F.2d 1344 (1st Cir.1985); Deary v. Guardian Loan Co., 534 F.Supp. 1178 (S.D.N.Y.1982); Harris v. Bailey, 574 F.Supp. 966 (W.D.Va. 1983); Betts v. Tom, 431 F.Supp. 1369 (D.Hawaii 1977); Clay v. Fisher, Inc., 584 F.Supp. 730 (S.D.Ohio 1984); and Green v. Harbin, 615 F.Supp. 719 (D.C.Ala.1985). In Brown v. Liberty Loan Corp., 539 F.2d 1355 (5th Cir.1976), the Florida garnishment statutes were upheld as constitutional even though they required neither notice to the debtor nor an opportunity for a hearing prior to the garnishment. However, a prompt postseizure hearing was available at which the debtor could present an exemption claim, a provision the Fifth...