Tbf Financial, LLC v. Houston

• Decision Date: 01 July 2009
• Docket Number: No. A09A0380.,A09A0380.
• Citation: 680 S.E.2d 662,298 Ga. App. 657
• Parties: TBF FINANCIAL, LLC v. HOUSTON et al.
• Court: Georgia Court of Appeals

680 S.E.2d 662

298 Ga. App. 657

TBF FINANCIAL, LLC v. HOUSTON et al.

No. A09A0380.

Court of Appeals of Georgia.

July 1, 2009.

John M. Welch, Atlanta, for appellant.

Derrick Houston, pro se.

ADAMS, Judge.

TBF Financial, LLC appeals the dismissal of its post-judgment garnishment action for failing to timely notify the defendant, Derrick Houston, of the garnishment proceeding. TBF admits that it failed to comply with its chosen method of notification under OCGA § 18-4-64(a)(2),¹ which required it to send Houston notice of the garnishment by registered or certified mail within three days of service of the garnishment on the garnishee bank. The bank was served on January 4, 2008, and Houston was served by certified mail on June 11, 2008, more than six months later.² In support of TBF's request for disbursement of funds, its attorney submitted an affidavit affirming that Houston received the summons and attaching a copy of the certified mail receipt purporting to show Houston's signature. Houston failed to respond to the summons.³ The state court dismissed the garnishment sua sponte for lack of timely service. TBF argues on appeal that Houston waived all defenses by failing to respond to the garnishment. Moreover, TBF contends that its failure to comply with the statute did not render the garnishment void or voidable.

A garnishment action is ancillary to the original action determining a debt between a plaintiff/creditor and defendant/debtor. "In the main case the question is whether the defendant is indebted to the plaintiff. In the garnishment suit the question is whether the garnishee is indebted to the defendant." (Citation and punctuation omitted.) Ledbetter v. Goodroe, 176 Ga. 845, 169 S.E. 106 (1933). Thus, "[a] garnishment proceeding is a distinct suit against a separate party, and for an entirely new cause of action.... It involves different parties, different issues, and a different cause of action; it requires a special place on the docket, and a separate trial on the merits...." (Citations and punctuation omitted.) Holder v. C & S Nat. Bank, 136 Ga.App. 740, 222 S.E.2d 110 (1975). Although "[a] garnishment proceeding is an action between the plaintiff and the garnishee," OCGA § 18-4-93, "a judgment debtor named as a defendant in the proceeding may become a party to the garnishment ... by filing a traverse to the plaintiff's affidavit." (Citation and punctuation omitted.) Southern Land etc. Co. v. Brock, 213 Ga.App. 3, 5, 443 S.E.2d 647 (1994). By filing a traverse, a defendant "may challenge the existence of the judgment or the amount claimed due thereon." OCGA § 18-4-65(a). In addition, "[t]he defendant may plead any other matter in bar of the judgment," except "[t]he validity of the judgment upon which the garnishment is based." OCGA § 18-4-65(a), (b).

TBF argues that Houston waived any defense as to defective service by failing to file a traverse or any other response to the affidavit of garnishment. "Garnishment proceedings are governed by the pleading and practice provisions of the Civil Practice Act ["CPA"]. OCGA § 18-4-1." (Citation and punctuation omitted.) St. Paul Reinsurance Co. v. Ross, 276 Ga.App. 135, 143(2), 622 S.E.2d 374 (2005). And TBF is correct that under the CPA, the failure to file a responsive pleading raising a defect in service waives any defense on that ground. See Sidwell v. Sidwell, 237 Ga.App. 716, 717(1), 515 S.E.2d 634 (1999); Taylor v. Bentley, 166 Ga.App. 887(1), 305 S.E.2d 617 (1983). But even under the CPA, "[w]here there has been no legal service on the defendant and no waiver of service, the court has no jurisdiction to enter any judgment in the case unless it be one dismissing the case for lack of jurisdiction." (Citation omitted.) De Jarnette Supply Co. v. F.P. Plaza, Inc., 229 Ga. 625(2), 193 S.E.2d 852 (1972). See also Denny v. Croft, 195 Ga.App. 871, 872(2), 395 S.E.2d 72 (1990) ("In the absence of proper service, no jurisdiction over the defendant is obtained by the court.").

Applying these principles here, we note that the garnishment statutes require formal service upon the garnishee bank (OCGA § 18-4-62), but only require that "notice" of the summons be given to the defendant debtor. OCGA § 18-4-64. Moreover, the garnishee becomes a party to the action when service is accomplished, but the defendant does not become a party unless he files a traverse. OCGA § 18-4-93. Thus, while the failure to effect legal service on the garnishee would presumably deprive the trial court of jurisdiction, it is not clear that the failure to provide notice to the debtor has the same effect.

Nevertheless, the requirement of providing notice to the defendant is an essential element for due process. Black v. Black, 245 Ga. 281, 283(2), 264 S.E.2d 216 (1980) ("Constitutional due process requirements are adequately met by the judicial supervision and notice to the defendant mandated by the statutory procedure for garnishments...."). And because garnishment is in derogation of the common law, a plaintiff may not disregard its procedural requirements, although substantial compliance with those procedures may be sufficient. See Lamb v. T-Shirt City, 272 Ga.App. 298, 302(1), 612 S.E.2d 108 (2005); Nat. Loan Investors v. Satran, 231 Ga.App. 21, 22(1), 497 S.E.2d 627 (1998); Gainesville Feed etc. Co. v. Waters, 87 Ga. App. 354, 356(1), 73 S.E.2d 771 (1952) (substantial compliance with service requirements sufficient where notice is given).

OCGA § 18-4-64 provides several alternative methods for providing notice to a defendant. A plaintiff may serve a copy of the summons in accordance with the CPA "as soon as is reasonably practicable" after the summons is filed with the clerk. OCGA § 18-4-64(a)(1). Otherwise, depending upon the circumstances, a plaintiff has only three days after serving the garnishee to provide an...