L.F. Noll v. Premiere Bus. Sols., 21-1226
| Court | Court of Appeals of Iowa |
| Writing for the Court | BADDING, Judge. |
| Parties | L.F. NOLL, INC., Plaintiff-Appellee, v. PREMIERE BUSINESS SOLUTIONS, LLC, Garnishee-Appellant. |
| Docket Number | 21-1226 |
| Decision Date | 31 August 2022 |
L.F. NOLL, INC., Plaintiff-Appellee,
v.
PREMIERE BUSINESS SOLUTIONS, LLC, Garnishee-Appellant.
No. 21-1226
Court of Appeals of Iowa
August 31, 2022
Appeal from the Iowa District Court for Polk County, Samantha Gronewald, Judge.
A garnishee appeals entry of judgment against it for funds owed to a creditor by a defendant.
Daniel P. Kresowik of Brick Gentry P.C., West Des Moines, for appellant.
Kolby P. Warren of McCormally &Cosgrove, P.L.L.C., Des Moines, for appellee.
Heard by Vaitheswaran, P.J., and Tabor and Badding, JJ.
BADDING, Judge.
Should an employer who mistakenly withholds the wrong amount from a debtor's wages be liable for the entire balance on a judgment owed by the debtor to a creditor? This was the question put to the district court after a creditor sought to satisfy its judgment against a debtor by serving a notice of garnishment on her employer. Upon discovering that the employer made a withholding mistake, the creditor sought entry of judgment against the employer for the balance owed by the debtor. Due to the employer's failure to withhold the proper amount, the court entered judgment against it "for the full amount of the unpaid judgment," plus interest and costs. Because we conclude the employer was not liable to the creditor for the entire unpaid judgment against the debtor, we reverse and remand.
I. Background Facts and Proceedings
L.F. Noll, Inc. initiated a debt-collection suit against Amanda Zahnd in 2012. The parties entered into a "stipulation and agreement for judgment payable in installments," under which Zahnd would pay the principal amount of $6025.28 with interest and court costs in monthly installments of $40.00. The agreement provided that if Zahnd failed to make payments, L.F. Noll could file an affidavit of default and request issuance of execution for the remaining balance, plus interest and costs. The court entered judgment in accordance with the agreement.
In 2016, L.F. Noll filed an affidavit of default. It then made several attempts to collect the judgment through general executions. The most recent was issued in October 2020. A notice of garnishment and interrogatories was served on Zahnd's employer, Premiere Business Solutions, LLC (Premiere) the next month. See Iowa Code § 642.5(1) (2020). In its answer, Premiere admitted it
compensates Zahnd for personal services but denied it was indebted to her or possessed any of her property. See id.; Iowa R. Civ. P. 1.304. The writ of execution expired on February 17, 2021.[1] In March, the sheriff filed its return of service, which disclosed $221.50 was collected from Premiere with $125.00 issued to the court and $96.50 retained by the sheriff as fees. Following the clerk's notice of receipt of the funds, L.F. Noll sought and obtained an order condemning the funds.
In April, L.F. Noll applied for an order for the appearance of Premiere as the garnishee. The application alleged Premiere "failed to fully surrender garnished funds to the Sheriff." L.F. Noll sought an order for Premiere to "appear before this court and bring all books and records relating to the employment and payment of salaries, wages, or other compensation to [Zahnd], and then and there, to answer all interrogatories that may be propounded to it, as provided by law." In the event Premiere "fail[ed] to appear and fully answer the interrogatories," L.F. Noll asked that judgment be entered against Premiere. The court entered an order directing Premiere's representative to appear and be examined.
At the hearing, Premiere's co-owner, Brent Hood, testified the company was not indebted to Zahnd or in the possession of her property. But he confirmed Premiere compensates Zahnd as a full-time, hourly employee. She is paid biweekly and earns "[r]oughly $28,000 per year." Hood testified Premiere's payroll department implemented a garnishment on Zahnd's wages, but he agreed the
amount withheld was incorrect. Hood explained that instead of withholding 25% of Zahnd's wages-which he testified was the correct amount[2]-Premiere only withheld $25 from each paycheck. Hood said that in early February 2021, one of L.F. Noll's representatives told him the right amount hadn't been withheld but, because the writ of execution would be expiring, another notice of garnishment would need to be issued and served. See Iowa Code § 642.22(1)(b) (noting a notice of garnishment remains effective without serving another notice until the writ of execution expires).
At the end of the hearing, L.F. Noll asked the court to enter judgment against Premiere for $6151.70[3]-the balance of the judgment Zahnd owed L.F. Noll- because of Premiere's failure to comply with the notice of garnishment. L.F. Noll acknowledged the garnishment expired on February 17, but it asserted there were outstanding funds that were not withheld under the garnishment when it expired. Hood responded that the total judgment requested by L.F. Noll would not have been satisfied before expiration. In its post-hearing brief, L.F. Noll simply argued "the garnishment was only partially satisfied" when the garnishment expired so, under Iowa Code section 642.13, judgment should be entered against Premiere in full.
In its ruling, the court found the garnishment was not satisfied when the writ of execution expired and entered judgment against Premiere "for the full amount
of the unpaid judgment, for interest at the legal rate, and the costs of this matter." Premiere appeals.
II. Standard of Review
Appellate review of garnishment proceedings is for legal error. Ellefson v. Centech Corp., 606 N.W.2d 324, 330 (Iowa 2000). "The district court's findings of fact are binding upon us if those findings are supported by substantial evidence. However, we are not bound by the district court's legal conclusions, and we may inquire into whether the district court's ultimate conclusions were materially affected by improper conclusions of law." Id. (internal citation omitted).
III. Analysis
Premiere claims the court erred in entering judgment against it for the full amount due from Zahnd to L.F. Noll, arguing (1) it "was never provided with prior notice that judgment could be entered . . . for the full amount"; (2) no judgment should have been entered against it under Iowa Code section 642.13 because it was neither indebted to Zahnd nor in the possession of her property when the notice of garnishment was served; and (3) if judgment in some form was proper, it should have been limited to the amount owed by Premiere to Zahnd. Because we find this last argument to be dispositive, we do not reach Premiere's final contention that the amount L.F. Noll claimed was due on its judgment against Zahnd is not accurate.
A. Notice
The last paragraph of L.F. Noll's application for Premiere to appear provided that "[i]n the event that [Premiere] fails to appear and fully answer the interrogatories, the Plaintiff requests that the Court enter judgment against
[Premiere] for the amount of the judgment plus court costs and interest at the legal rate." Premiere argues that nothing in this application, or the district court's order requiring it to appear, advised Premiere that it could be held liable for the entire amount of the underlying judgment even "if Premiere appeared for the . . . hearing and fully answered the interrogatories."
L.F. Noll contests error preservation on this issue, pointing out the argument was not raised or decided in the district court. See Woods v. Charles Gabus Ford, Inc., 962 N.W.2d 1,5 (Iowa 2021) ("It is a fundamental doctrine of appellate review that issues must ordinarily be both raised and decided by the district court before we will decide them on appeal." (citation omitted)). In its reply brief, Premiere argues "there was no reason nor opportunity for Premiere to raise the issue." Specifically, Premiere questions how it was expected "to somehow have the foresight to preemptively object" to the court impermissibly granting L.F. Noll relief that was not requested-the entry of judgment in its favor in full under section 642.13.
But L.F. Noll did request the challenged relief at hearing after Premiere acknowledged it erred in implementing the garnishment, and Premiere was given a chance to respond, both at the hearing and in a post-hearing brief. After the court granted L.F. Noll the relief it requested at hearing, Premiere had yet another opportunity to respond by filing a motion under Iowa Rule of Civil Procedure 1.904(2). See Thomas Mayes &Anuradha Vaitheswaran, Error Preservation in Civil Appeals in Iowa: Perspectives on Present Practice, 55 Drake L. Rev. 39, 69 (2006) ("If a litigant seeks reversal based on an issue not addressed by the district court, he or she has an obligation to seek a ruling on that issue. . . .A written
motion under rule 1.904 is one way to do so; however, any act requesting a district court's ruling should be sufficient."). It did not do so.
In a last-ditch effort to save the notice issue, Premiere asserted for the first time at oral arguments before this court that the claimed deficient notice deprived the district court of subject matter jurisdiction. See In re Est. of Falck, 672 N.W.2d 785, 789 (Iowa 2003) ("A party can raise subject matter jurisdiction at any time in the proceeding."). "If the trial court entered judgment on defective notice, [a party] cannot attack it collaterally unless there was what in law amounts to no notice." Id. at 791. We cannot say there was no notice here, considering that L.F. Noll's application expressly requested "judgment against the Garnishee Defendant for the amount of the judgment." While that was conditioned on Premiere's failure to appear and fully answer the interrogatories, Premiere was still on notice of the possibility.
More importantly, Premiere appeared at the hearing.
It is well-settled law when a party appears at trial in person or by counsel...
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