Harris v. Bailey

• Decision Date: 15 November 1983
• Docket Number: Civ. A. No. 81-0001-C.
• Parties: Virginia HARRIS, Plaintiff, v. George BAILEY, Sheriff, et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

574 F. Supp. 966

Virginia HARRIS, Plaintiff, v. George BAILEY, Sheriff, et al., Defendants.

Civ. A. No. 81-0001-C.

United States District Court, W.D. Virginia, Charlottesville Division.

November 15, 1983.

D. Brock Green, Charlottesville, Va., for plaintiff.

Dennis G. Merrill, Asst. Atty. Gen., Richmond, Va., James M. Bowling, Deputy County Atty., Charlottesville, Va., for defendants.

MEMORANDUM OPINION

MICHAEL, District Judge.

I. PROCEDURAL HISTORY OF THE CASE

Plaintiff, Virginia Harris, a Social Security recipient, proceeding in forma pauperis, filed this action seeking declaratory and injunctive relief pursuant to 42 U.S.C. § 1983 to invalidate the post-judgment garnishment procedures permitted by Va.Code §§ 8.01-511 to 525 (1977 & Supp.1983) as violative of the due process and supremacy clauses of the United States Constitution. She named as defendants the Clerk of the Court and Sheriff of Albemarle County as well as the Attorney General of Virginia. Jurisdiction is conferred upon this court by virtue of 28 U.S.C. §§ 1343(3) and (4). Mrs. Harris' action for declaratory relief is authorized by 28 U.S.C. §§ 2201, 2202, and Fed.R.Civ.P. 57. Mrs. Harris' action for injunctive relief is authorized by 28 U.S.C. § 2202 and Fed.R.Civ.P. 65.

This court earlier dismissed Mrs. Harris' class action request and dismissed the Attorney General of Virginia as a party defendant, 521 F.Supp. 562; additionally, the court held that her individual action was moot because her garnisheed social security benefits had been returned to her. The Court of Appeals, 675 F.2d 614 for the Fourth Circuit, however, reversed this latter dismissal, finding that there was indeed a justiciable controversy with respect to Mrs. Harris under the "capable of repetition, yet evading review" doctrine of Southern Pacific Terminal Co. v. ICC, 219 U.S. 498, 515, 31 S.Ct. 279, 283, 55 L.Ed. 310 (1911). The case was remanded for Mrs. Harris to pursue her claim individually. This court then granted the Commonwealth of Virginia's petition to intervene as a defendant in this suit. Subsequently, the plaintiff and the Commonwealth filed cross motions for summary judgment. Oral argument on these motions was heard on December 22, 1982. The case is therefore ripe for disposition.

II. FACTUAL BACKGROUND

Mrs. Harris is a sixty-seven year old widow living in Albemarle County. In August, 1980, according to her affidavit, her only source of income was Social Security benefits in the amount of $222.60 per month. She avers by affidavit that the Social Security benefits in her bank account in 1980 were used to meet her daily living expenses, including food, fuel, transportation, and medical care. The Social Security benefits were sent by check directly to Mrs. Harris who then deposited the check in her checking account at Central Fidelity Bank in Charlottesville. On May 29, 1980, the University of Virginia Hospital ("Hospital") obtained a judgment of $439.33 against Mrs. Harris in the General District Court for the County of Albemarle. In order to satisfy this judgment against Mrs. Harris, the Hospital on August 18, 1980, instituted garnishment proceedings against her. The Hospital, pursuant to Va.Code §§ 8.01-511 and 512 (1977) swore out a garnishment summons directing the garnishee, Central Fidelity Bank, to withhold from Mrs. Harris the sums in her checking account and to appear on the return date of November 20, 1980, to answer the garnishment summons. This summons was served on both the garnishee bank and Mrs. Harris. The bank was served on August 20, 1980; Mrs. Harris was served six days later on August 26, 1980. On or about August 25, 1980, the bank wrote Mrs. Harris informing her that she could not use the money in her bank account. Mrs. Harris states in her affidavit that at this point she was forced to borrow money from her children in order to meet her daily living expenses. At about the same time, the bank sent to the defendant Clerk the balance of Mrs. Harris' account. On November 20, 1980, Mrs. Harris' attorney moved in the General District Court for Albemarle County to quash the garnishment under the authority of 42 U.S.C. § 407 which exempts Social Security benefits from state garnishment proceedings. An evidentiary hearing on the motion, set for January 5, 1981, was continued by consent of counsel until January 19, 1981; meanwhile, on January 16, 1981, the state garnishment action was settled and the garnisheed sum returned to Mrs. Harris, a full five months after her bank account was first seized and her Social Security benefits placed beyond her reach for her basic living necessities.

III. ISSUES

Mrs. Harris filed this suit challenging the constitutionality of the post-judgment garnishment procedures on January 2, 1981. She claims first that the procedures violate due process, alleging that the post-judgment garnishment scheme fails to provide timely and effective notice and a prompt opportunity for a hearing. Second, she challenges the state garnishment procedures on the ground that the scheme impermissibly interferes with 42 U.S.C. § 407, the exemption from garnishment for Social Security benefits, and thus violates the supremacy clause, U.S. Const. art. 6, cl. 2. The court will address these issues seriatim.

A. Due Process

The Virginia garnishment provisions permit a judgment creditor to execute its lien, obtained by delivery of the writ of fieri facias to the sheriff, on intangible property of the debtor, such as a bank account, by presenting to the Clerk of the Court a "suggestion". The judgment creditor swears out a garnishment summons that must be delivered to both the garnishee and the debtor. See Va.Code §§ 8.01-501, 511. The summons is returnable within ninety days. Id. § 8.01-514. The form of the summons is set out in Va.Code § 8.01-512.3. This summons must reprint Va. Code § 34-29, which sets forth exemptions from wage garnishment. Id. No procedure specifically applicable to garnishment of bank accounts, however, is included. The garnishee can respond to the summons by paying the amount due to the court. Id. § 8.01-520. It may respond simply by filing a verified statement of the debt it owes the judgment debtor. Id. § 8.01-515. Or it may respond by appearing in person and being examined under oath. Id. No provision of the garnishment procedures provides the judgment debtor with an opportunity for a mandated hearing in which to challenge the garnishment.

No one disputes that Mrs. Harris had the type of property interest in the Social Security benefits that must be afforded the protection of due process of law. See Brown v. Liberty Loan Corp., 539 F.2d 1355, 1365 n. 9 (5th Cir.1976), cert. denied, 430 U.S. 949, 97 S.Ct. 1588, 51 L.Ed.2d 797 (1977). The issue in dispute, rather, is how much process is due debtors when creditors garnish potentially exempt property. Mrs. Harris contends that the line of United States Supreme Court cases dealing with due process in regard to prejudgment creditors' remedies should be applied to post-judgment remedies as well. See North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975); 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). In sum, these four cases stand for the proposition that, with regard to prejudgment provisional remedies, due process in all but extraordinary situations requires prior notice to the debtor and a prompt opportunity to be heard. The defendant argues that these four cases are inapplicable to post-judgment procedures, relying heavily on a Supreme Court case decided a half century before Sniadach and its progeny's due process analysis. In Endicott Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 45 S.Ct. 61, 69 L.Ed. 288 (1924), the Court held that notice and a hearing are not required under the due process clause in post-judgment proceedings. The Court reasoned that adequate notice and opportunity for a hearing are given by the judgment and foregoing proceedings that alert the debtor that statutory means of enforcing the judgment may likely be used against him. Id. at 288, 45 S.Ct. at 62.

This court observes that Endicott did not deal with post-judgment seizure of exempt property, at issue in this case. See Finberg v. Sullivan, 634 F.2d 50, 56-57 (3rd Cir.1980) (en banc). Furthermore, the four recent Supreme Court cases, while dealing with pre-judgment rather than post-judgment remedies, indicate a strong shift away from the narrower due process approach of Endicott. Finally, the distinction relied on by the defendant between pre- and post-judgment seizure of a debtor's assets is not crucial; the fact that a judgment has already been rendered in favor of a creditor only represents an adjudication of Mrs. Harris' liability to the Hospital on the underlying debt. The judgment does not entitle the Hospital to any particular assets of Mrs. Harris out of which satisfaction can be made. See Finberg, 634 F.2d at 58; Simler v. Jennings, 50 U.S.L.W. 2470 (S.D.Ohio 1982).

Consequently, this court holds applicable to a post-judgment deprivation of property the recent Supreme Court cases that balance the various interests of the creditor, the debtor, and the state in order to determine the amount of due process required. The factual holdings of Sniadach, Fuentes, Mitchell, and Di-Chem suggest that the pre-judgment seizure of an asset is constitutional only if there exist adequate safeguards that limit the occurrence of erroneous deprivations and allow the debtor the opportunity for a prompt correction of an erroneous deprivation. In the post-judgment setting, the balance of interests indicates that adequate notice to the debtor of garnishment of a bank account is required; similarly, the opportunity for a prompt post-seizure hearing is...