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REFERENCE TITLE: writs of garnishment; attorney fees |
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State of Arizona House of Representatives Fifty-fifth Legislature First Regular Session 2021
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HB 2170 |
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Introduced by Representative Blackman
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AN ACT
amending sections 12‑1572, 12‑1574, 12‑1580, 12‑1591, 12‑1598.03, 12‑1598.04, 12‑1598.07, 12‑1598.10, 12‑1598.12 and 12‑1598.15, Arizona Revised Statutes; relating to garnishment.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 12-1572, Arizona Revised Statutes, is amended to read:
12-1572. Application for writ of garnishment for monies or property
A writ of garnishment shall be issued pursuant to this article after the judgment creditor or a person in his on the judgment creditor's behalf makes an application in writing. The application shall contain the following:
1. A statement that the applicant is a judgment creditor.
2. A statement that the applicant has good reason to believe one of the following:
(a) That the garnishee is indebted to the judgment debtor for monies which that are not earnings.
(b) That the garnishee is holding nonexempt monies on behalf of the judgment debtor.
(c) That the garnishee has in his the garnishee's possession nonexempt personal property belonging to the judgment debtor.
(d) That the garnishee is a corporation and the judgment debtor is the owner of shares in such the corporation, or has a proprietary interest in the corporation.
3. The amount of the outstanding balance due on the underlying judgment, together with interest, and accrued attorney fees, including fees for the garnishment, if allowed by the judgment or contract and accrued allowable costs, on the date the application is made, and the rate at which interest accrues on that judgment, or if no judgment has been entered, the amount of money damages requested in the judgment creditor's complaint.
4. The address of the garnishee.
Sec. 2. Section 12-1574, Arizona Revised Statutes, is amended to read:
12-1574. Issuance, service and return of writ; notice to debtor
A. When the judgment creditor has complied with the applicable provisions of sections 12‑1572 and 12‑1573, the clerk, justice of the peace or city or town magistrate shall issue a writ of garnishment of monies or property and a summons commanding the garnishee to appear before the court out of which the writ issued within the time specified in the writ to answer the writ.
B. The writ shall state:
1. The amount of the outstanding balance due on the judgment, including accrued attorney fees, interest and allowable costs, as of the date of the issuance of the writ, and the rate at which interest accrues on that judgment.
2. The name and address of the garnishee or the garnishee's authorized agent.
3. The name and address of the judgment creditor and the judgment creditor's attorney, if applicable.
4. The last mailing address of the judgment debtor known to the judgment creditor.
C. The judgment creditor, in the manner required for a summons by rules of the court in civil matters or by certified mail, return receipt requested, shall serve on the garnishee two copies of the summons and writ of garnishment, a copy of the underlying judgment, four copies of the answer form, two copies of the notice to judgment debtor and request for hearing form and one copy of the instructions to garnishee provided for in section 12‑1596. If served by certified mail, the effective date of service is the date of receipt by the garnishee.
D. Within three days, not including weekends and holidays, the garnishee shall deliver to the judgment debtor a copy of the summons and writ of garnishment, a copy of the underlying judgment and the notice to judgment debtor and request for hearing form.
Sec. 3. Section 12-1580, Arizona Revised Statutes, is amended to read:
12-1580. Objection to garnishment or answer; hearing
A. A party who has an objection to the writ of garnishment, the answer of the garnishee or the amount held by the garnishee or a party claiming an exemption from garnishment may, not later than ten days after the receipt of the answer, may file a written objection and request for hearing. Copies of the objection shall be delivered to all parties to the writ at the time of filing the request for hearing form.
B. The hearing on an objection to the writ, answer or amount on a claim of exemption shall be commenced within five days of after the request, not including weekends and holidays, but may be continued for good cause on terms the court deems appropriate after due consideration of the importance of the judgment debtor's rights and the need for a speedy determination. Good cause includes a situation in which the objection raised at the hearing is different from that set forth in the request for hearing. However, in no event shall The hearing shall not be held later than ten days from the date of the request unless the request for a continuance is made by the judgment debtor.
C. A party requesting a hearing pursuant to this section is required to state the grounds for his objection in writing, but the objecting party is not limited to those written objections at the hearing conducted pursuant to this section.
D. The court shall notify the parties of the date and time of the hearing at least two days, not including weekends and holidays, before the date of the hearing.
E. The prevailing party may be awarded costs and attorney fees in a reasonable amount determined by the court. The award of attorney fees that are incurred due to the objection shall not be assessed against nor is it chargeable to the judgment debtor, unless the judgment debtor is found to have objected to the writ solely for the purpose of delay or to harass the judgment creditor.
Sec. 4. Section 12-1591, Arizona Revised Statutes, is amended to read:
12-1591. Taxing costs
A. When the garnishee is discharged upon his on the garnishee's answer, the cost of the proceeding, including reasonable compensation to the garnishee, shall be taxed against the judgment creditor.
B. When there is no written objection to the answer of the garnishee and the garnishee is held on his the garnishee's answer, the attorney fees that are allowed by section 12‑1572, paragraph 3 and costs as provided in subsection A of this section shall be taxed against the judgment debtor.
C. Where the answer is objected to in writing the attorney fees and costs shall abide the issue.
Sec. 5. Section 12-1598.03, Arizona Revised Statutes, is amended to read:
12-1598.03. Application for writ of garnishment for earnings
A writ of garnishment shall be issued pursuant to this article after the judgment creditor or a person in his on the judgment creditor's behalf makes an application in writing. The application shall state the following:
1. That he the judgment creditor is a party in an action to whom a money judgment has been awarded.
2. That he the judgment creditor has made demand on the judgment debtor for payment of the amount adjudged due, but the judgment debtor has not paid that amount and he the judgment debtor has not agreed and continued to pay the nonexempt portion of his the judgment debtor wages until the judgment is satisfied.
3. The amount of the outstanding balance due on the judgment on the date that the application is made, together with interest, accrued attorney fees, including fees for the garnishment, if allowed by the judgment or contract and allowable costs, is that amount stated on the application.
4. That the garnishee is believed to be an employer of the judgment debtor or otherwise owes or will owe to the judgment debtor disposable earnings.
5. The name and address of the garnishee or his the garnishee's authorized agent.
6. That he the judgment creditor has not received notice of the judgment debtor's intent to enter into an agreement for debt scheduling with a qualified debt counseling organization or, if such a notice has been received, that he the judgment creditor timely objected, in writing, to the judgment debtor's participation in such an agreement or that he the judgment creditor has been notified that the agreement is no longer effective.
Sec. 6. Section 12-1598.04, Arizona Revised Statutes, is amended to read:
12-1598.04. Issuance of writ of garnishment for earnings; service and return of writ; lien on nonexempt earnings
A. If a party in an action has been awarded a money judgment and has submitted the application provided for in section 12‑1598.03, the clerk, justice of the peace or city or town magistrate shall immediately issue a writ and summons of garnishment directed to the sheriff, the constable or any officer authorized by law to serve process in the county where the garnishee is alleged to be which commands him to immediately summon the garnishee to appear before the court out of which the writ issued within the time specified in the writ to answer the writ.
B. The writ shall state:
1. The amount of the outstanding balance due on the judgment, including accrued interest, attorney fees and allowable costs, as of the date of the issuance of the writ, and the rate at which interest accrues on that judgment.
2. The name and address of the garnishee or his authorized agent.
3. The name and address of the judgment creditor and his attorney, if applicable.
4. The last mailing address of the judgment debtor known to the judgment creditor.
C. The judgment creditor, in the manner required for a summons by rules of the court in civil matters, shall serve on the garnishee two copies of the writ of garnishment and summons, a copy of the underlying judgment, four copies of the answer form, two copies of the notice to judgment debtor and request for hearing form, two copies of the instructions to garnishee and four copies of the nonexempt earnings statement provided for in section 12‑1598.16.
D. The judgment creditor shall deliver to the judgment debtor a copy of the writ and the initial notice to judgment debtor and request for hearing form within three days, not including weekends and holidays, after service of the summons and writ of garnishment on the garnishee. The judgment creditor shall certify in writing to the court the date and manner of delivery.
E. The caption of pleadings in connection with a writ of garnishment shall identify which party is the judgment creditor, using that term, and which party is the judgment debtor, using that term, in addition to other party designations already in the caption.
Sec. 7. Section 12-1598.07, Arizona Revised Statutes, is amended to read:
12-1598.07. Objection to garnishment, answer or nonexempt earnings statement; hearing
A. A party who has an objection to the writ of garnishment, the answer of garnishee or a nonexempt earnings statement may file a written objection and request for hearing on a form similar to those set forth in section 12‑1598.16. The hearing must be requested no later than ten days after receipt of the answer or nonexempt earnings statement objected to unless good cause for filing the request later is shown. At the time of filing the request for hearing form, the party filing the objection shall deliver a copy of the form to all parties to the writ.
B. The hearing on an objection to the writ, answer or amount withheld or on a claim of exemption shall be commenced within ten days after receipt of the request by the court but may be continued for good cause on terms the court deems appropriate after due consideration of the importance of the judgment debtor's rights and the need for a speedy determination. Good cause includes a situation in which the objection raised at the hearing is different from that set forth in the request for hearing form. However, in no event shall The hearing shall not be held later than fifteen days after the date the request was received by the court unless the request for a continuance is made by the judgment debtor.
C. A party requesting a hearing pursuant to this section is required to state the grounds for his the party's objection in writing, but the objecting party is not limited to those written objections at the hearing conducted pursuant to this section.
D. The court shall notify the parties of the date and time of the hearing at least two days, not including weekends and holidays, before the date of the hearing.
E. The prevailing party may be awarded costs and attorney fees in a reasonable amount determined by the court. An award of attorney fees that are incurred due to the objection shall not be assessed against nor is it chargeable to the judgment debtor unless the judgment debtor is found to have objected solely for the purpose of delay or to harass the judgment creditor.
Sec. 8. Section 12-1598.10, Arizona Revised Statutes, is amended to read:
12-1598.10. Continuing lien on earnings; order
A. If it appears from the answer of the garnishee that the judgment debtor was an employee of the garnishee, or that the garnishee otherwise owed earnings to the judgment debtor when the writ was served, or earnings would be owed within sixty days thereafter and there is no timely written objection to the writ or the answer of the garnishee filed, on application by the judgment creditor the court shall order that the nonexempt earnings, if any, withheld by the garnishee after service of the writ be transferred to the judgment creditor who is entitled to such monies subject to the judgment debtor's right to objection and hearing pursuant to this article. The court shall further order that the garnishment is a continuing lien against the nonexempt earnings of the judgment debtor.
B. If a timely objection is filed the court shall conduct a hearing pursuant to section 12‑1598.07 and shall make the following determinations:
1. Whether the writ is valid against the judgment debtor.
2. The amount outstanding on the judgment at the time the writ was served, plus accruing attorney fees and costs.
3. Whether the judgment debtor was employed by the garnishee at the time the writ was served.
4. Whether earnings were owed or would be owed by the garnishee to the judgment debtor within sixty days after the service of the writ.
5. Whether the debt was, at the time of service of the writ, subject to an effective agreement for debt scheduling between the judgment debtor and a qualified debt counseling organization.
C. If the court makes an affirmative determination under subsection B, paragraph 1 of this section and subsection B, paragraph 3 or 4 of this section and determines that the debt was not, at the time of service of the writ, subject to an effective agreement between the judgment debtor and a qualified debt counseling organization, the court shall order that the nonexempt earnings, if any, withheld by the garnishee after service of the writ be transferred to the judgment creditor and further order that the garnishment is a continuing lien against the nonexempt earnings of the judgment debtor. Otherwise the court shall order the garnishee discharged from the writ.
D. A continuing lien ordered pursuant to this section is invalid and of no force and effect on the occurrence of any of the following conditions:
1. The underlying judgment is satisfied in full, is vacated or expires.
2. The judgment debtor leaves the garnishee's employ for more than sixty days or, if the judgment debtor is an employee of a school district, a charter school, the Arizona state schools for the deaf and the blind or an accommodation school and the judgment debtor is subject to an employment contract that specifies that paydays are restricted to the school year, for more than ninety days.
3. The judgment creditor releases the garnishment.
4. The proceedings are stayed by a court of competent jurisdiction, including the United States bankruptcy court.
5. The judgment debtor has not earned any nonexempt earnings for at least sixty days or, if the judgment debtor is an employee of a school district, a charter school, the Arizona state schools for the deaf and the blind or an accommodation school and the judgment debtor is subject to an employment contract that specifies that paydays are restricted to the school year, for at least ninety days.
6. The court orders that the garnishment be quashed.
E. If no objections are filed to the answer of the garnishee and an order of continuing lien is not entered within forty‑five days after the filing of the answer of the garnishee, any earnings held by the garnishee shall be released to the judgment debtor and the garnishee shall be discharged from any liability on the garnishment.
F. If at the hearing the court determines that the judgment debtor is subject to the twenty‑five percent maximum disposable earnings provision under section 33‑1131, subsection B and based on clear and convincing evidence that the judgment debtor or the judgment debtor's family would suffer extreme economic hardship as a result of the garnishment, the court may reduce the amount of nonexempt earnings withheld under a continuing lien ordered pursuant to this section from the twenty‑five percent to not less than fifteen percent.
G. A court order entered pursuant to this section if recorded does not constitute a lien against real property pursuant to section 33‑961.
H. The court, sitting without a jury, shall decide all issues of fact and law.
Sec. 9. Section 12-1598.12, Arizona Revised Statutes, is amended to read:
12-1598.12. Reporting by judgment creditor
A. Except as provided in subsection B of this section, as long as the order of continuing lien is in effect the judgment creditor shall issue a report in writing to the garnishee and the judgment debtor within twenty‑one days after the end of each calendar quarter.
B. The judgment creditor shall report in writing to the garnishee and judgment debtor within twenty‑one days after payment is received from the garnishee reducing the outstanding balance on the judgment to five hundred dollars $500 or less and within the first ten days of each calendar month thereafter until the judgment is satisfied.
C. The reports required in subsections A and B of this section shall contain the following:
1. The beginning and ending date of the reporting period for that report. The beginning date of the first reporting period is the date the writ was served.
2. The date and amount of each payment received during the reporting period.
3. The total amount credited to the judgment balance for that reporting period.
4. The interest, attorney fees and costs accrued during that reporting period.
5. The total outstanding balance due on the judgment as of the ending date of the reporting period.
D. It is the obligation of the judgment creditor to take reasonable action to assure ensure that the garnishee does not withhold more nonexempt earnings of the judgment debtor than are necessary to satisfy the underlying judgment. Reasonable action includes at least written notice directed to the garnishee or his the garnishee's authorized representative if the balance due on the judgment is less than double the amount of nonexempt earnings received in the preceding two pay periods. The judgment creditor shall instruct the garnishee to cease withholding earnings after the full amount of the judgment has been paid to the judgment creditor or when the judgment creditor has been notified that sufficient monies have been withheld to satisfy the underlying judgment.
E. Immediately after the underlying judgment is satisfied or expires, the judgment creditor shall file with the clerk of the court a satisfaction or release of the writ and shall deliver a copy of that satisfaction or release to the garnishee, the judgment debtor and any creditor who has delivered a written request for such a notice to the judgment creditor or his the judgment creditor's attorney.
Sec. 10. Section 12-1598.15, Arizona Revised Statutes, is amended to read:
12-1598.15. Taxing costs
A. If the garnishee is discharged on his the garnishee's answer, the cost of the proceeding, including reasonable compensation to the garnishee, shall be taxed against the judgment creditor.
B. If there is no written objection to the answer of the garnishee and the garnishee is held on his the garnishee's answer, the attorney fees that are allowed by section 12‑1598.03, paragraph 3 and costs as provided in subsection A of this section shall be taxed against the judgment debtor.
C. If the answer or nonexempt earnings statement is objected to in writing the attorney fees and costs shall abide the issue.
D. If no objection is filed to the answer of the garnishee, the costs provided in subsections A and B of this section shall not exceed fifty dollars $50 excluding costs of service and the cost of issuance of the writ.
E. While a continuing lien is in effect the garnishee may deduct from the nonexempt earnings of the judgment debtor the amount of five dollars $5 each pay period as a fee for preparing and delivering the nonexempt earnings statement. If there were not sufficient nonexempt earnings to collect this fee, and an amount arising from this fee remains owing when the writ becomes invalid or is released, the amount is chargeable against the judgment creditor and not the judgment debtor.