Warfield v. Bestgen, et al

Filing 829

ORDER TO SHOW CAUSE: Judgment-Creditor Warfield is to show cause in writing with citation to controlling case law and statutory authority on or before 02/19/08 why this Court should not recommend to the assigned District Judge that 827 Motion for Judgment be denied. Show Cause Response due by 2/19/2008. Signed by Magistrate Judge Lawrence O Anderson on 02/04/08. (DNH)

Warfield v. Bestgen, et al

Doc. 829

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UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Lawrence J. Warfield, as Receiver, Judgment Creditor, vs. Michael Alaniz; Robert Carroll; et al., Judgment Debtors, No. CV-03-2390-PHX-JAT (LOA) ORDER TO SHOW CAUSE

Penn Treaty Network America Insurance Co., Garnishee.

This matter arises on Judgment-Creditor Lawrence J. Warfield's Application for Judgment on Garnishment and Notice of Lodging Proposed Judgment on Garnishment, filed on December 26, 2007. (docket # 827) Judgment-Creditor Warfield seeks entry of Judgment against Garnishee Penn Treaty Network America Insurance Co. ("Penn Insurance"), in the sum of $350.25 which purportedly represents non-earnings belonging to Judgment-Debtor Robert Carroll held by Penn Insurance. Plaintiff Warfield and Garnishee Penn Insurance also stipulate and agree that because "Garnishee anticipates additional monies may be paid to Judgment Debtor [Robert Carroll]," that a
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form of Garnishment Judgment be entered that provides that Garnishee Penn Insurance shall pay to Plaintiff Warfield "any money due Robert Carroll payable by the Garnishee." Id. at 2-3. Judgment-Debtor Robert Carroll has neither filed an objection to the Application or proposed order nor stipulated in writing to the subject garnishment and request for a continuing lien. On August 24, 2007, Plaintiff Warfield served Garnishee Penn Insurance with writs of garnishment for both earnings and non-earnings of Judgment-Debtor Robert

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Carroll. (docket # 774; Exhibit ("Exh") 4) Answering only the Writ of Garnishment for Non-Earnings, Garnishee Penn Insurance indicates that the money it currently owes Judgment-Debtor Robert Carroll are "Non-Earnings" and represents "two commission checks (totaling $341.28)," presumably earned by Judgment-Debtor Robert Carroll selling Garnishee's insurance product. (docket # 798 at 1, 3) Plaintiff Warfield's Application contends that "Garnishee does not consider the Judgment Debtor an employee, but rather an independent contractor." (docket # 827 at 2) No such representation, however, is made in Garnishee's verified Answer nor does Garnishee's Answer state "[w]hether the judgment debtor was employed by the garnishee on the date the writ was served" as required by A.R.S. § 12-1598.08(B)(1). The significance of whether Garnishee Penn Insurance is holding earnings owed or belonging to JudgmentDebtor Robert Carroll is that A.R.S. § 33-1131(B)1 exempts 75% of his "disposable

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A.R.S. § 33-1131(B) provides:

B. Except as provided in subsection C, the maximum part of the disposable earnings of a debtor for any workweek which is subject to process may not exceed twenty-five per cent of disposable earnings for that week or the amount by which disposable earnings for that -2-

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earnings" from a judgment-creditor's garnishment. In Arizona, "disposable earnings" include "a debtor's wages, salary or compensation for his personal services, including bonuses and commissions . . . ." A.R.S. § 33-1131(A) (emphasis added). Arizona's statutes distinguish garnishment of "earnings" from garnishment of "monies which are not earnings." Frazer, Ryan, Goldberg, Keyt & Lawless v. Smith, 184 Ariz. 181, 183, 907 P.2d 1384, 1386 (Ariz. Ct. App.1995). A.R.S. § 12-1598.01 provides that its provisions apply "to indebtedness owed to a judgment debtor by a

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3week exceed thirty times the minimum hourly wage prescribed by federal law in effect at the time the earnings are payable, whichever is less.

garnishee for monies which are earnings as defined in § 12-1598, paragraph 4." A.R.S. § 12-1598 (4) defines "Earnings" as: compensation paid or payable for personal services, whether these payments are called wages, salary, commission, bonus or otherwise. Earnings include periodic payments pursuant to a pension or retirement program.

A.R.S. § 12-1598(4) (emphasis added). Moreover, A.R.S. § 12-1598.01(B) does not expressly exclude the garnishment of an independent contractor's earnings (commissions) from Arizona's statutory scheme which seeks to protect a portion of a worker's earnings. As to a request for a continuing lien which eliminates a writ every time a worker or commission is paid, Arizona law sets for the requirements, procedure and limitations on a continuing garnishment lien. A.R.S. §§ 1598.10-12. Plaintiff Warfield's Application makes no reference to this authority and how it complies with Arizona law. Generally, a federal writ of garnishment is governed by the law of the state

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in which the district court sits. Fed.Rule Civ.P. 69(a)2; Hilao v. Estate of Marcos, 95 F.3d 848 (9th Cir. 1996). It appearing that Plaintiff Warfield's Application and proposed order may not comply with Arizona law, IT IS ORDERED that Judgment-Creditor Warfield show cause is writing with citation to controlling case law and statutory authority on or before Tuesday, February 19, 2008 why this Court should not recommend to the assigned District Judge that Judgment-Creditor Lawrence J. Warfield's Application for Judgment on Garnishment, docket # 827, be denied. Dated this 4th day of February, 2008.

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Rule 69(a), FED.R.CIV.P., provides in relevant part: In General. Process to enforce a judgment for the payment of money shall be a writ of execution, unless the court directs otherwise. The procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held, existing at the time the remedy is sought,. . . . (emphasis added).
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