Rappaport v. Federal Savings Bank et al

Filing 74

ORDER: IT IS ORDERED that the writ of garnishment issued as to TFSB (Doc. 68 ) is vacated [see attached Order for details]. Signed by Judge Dominic W Lanza on 12/7/21. (MAW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Jason E. Rappaport,
Plaintiff,

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ORDER

v.

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No. CV-18-01404-PHX-DWL

Federal Savings Bank, et al.,

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Defendants.

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Pending before the Court is Defendants’ objection to the writ of garnishment issued

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as to Defendant The Federal Savings Bank (“TFSB”). (Doc. 69.) For the following

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reasons, the writ of garnishment (Doc. 68) is vacated.

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BACKGROUND

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On August 27, 2021, the Court granted Plaintiff’s motion to confirm arbitration

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(Doc. 65) and judgment was entered in favor of Plaintiff and against Defendants TFSB and

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Stephen Calk. (Doc. 66.)

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On November 4, 2021, Plaintiff filed an application for a writ of garnishment,
naming TFSB as Garnishee (Doc. 67), and the writ issued (Doc. 68).
On November 19, 2021, Defendant/Garnishee TFSB filed an objection to the writ
of garnishment. (Doc. 69.)

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TFSB asserts that the writ of garnishment is “objectionable as the appropriate

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procedure” for enforcing the judgment in this action (Doc. 69 at 1), as the applicable federal

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rule provides that “[a] money judgment is enforced by a writ of execution, unless the court

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directs otherwise.” Fed. R. Civ. P. 69(a)(1). Furthermore, TFSB repeatedly notes in its

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objections that it “is both the named Garnishee and Judgment Debtor and it is unclear how

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it can respond.” (Doc. 69.)

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On November 23, 2021, the Court issued an order noting that it “appears . . . that

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the writ of garnishment is inapplicable and should not have issued” and ordering Plaintiff

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to respond by December 3, 2021. (Doc. 70.)

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On December 3, 2021, Plaintiff filed a response. (Doc. 71.) Plaintiff contends that

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the writ of garnishment was proper under Arizona law (id. ¶¶ 3-8), but alternatively,

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Plaintiff submitted an application for a writ of execution (id. ¶¶ 1, 9; Doc. 72).

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DISCUSSION

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“A money judgment is enforced by a writ of execution, unless the court directs

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otherwise.” Fed. R. Civ. P. 69(a)(1). “The procedure on execution—and in proceedings

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supplementary to and in aid of judgment or execution—must accord with the procedure of

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the state where the court is located, but a federal statute governs to the extent it applies.”

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Id.

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“Garnishment is commonly used by successful plaintiffs . . . to garnish wages from

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judgment debtors’ employers and savings from judgment debtors’ bank accounts.”

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Labertew v. Langemeier, 846 F.3d 1028, 1030 (9th Cir. 2017). A writ of garnishment

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“controls the funds owed to the principal debtor by the garnishee to assure that it is applied

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to the payment of the garnishor’s judgment against the debtor.” Jackson v. Phoenixflight

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Prods., Inc., 700 P.2d 1342, 1346 (Ariz. 1985). Thus, garnishment can only exist where

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there are there is a debtor, a creditor, and a third party in possession of some of the debtor’s

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funds. A.R.S. § 12-1571(C) (“The writ [of garnishment] may issue to the judgment creditor

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as garnishee for property of the judgment debtor in possession of . . . a third party.”)

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(emphasis added). See also Valley Bank & Trust Co. v. Parthum, 56 P.2d 1342, 1343 (Ariz.

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1936) (“The writ of garnishment is intended to reach the property and effects of a debtor

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that may be in the possession of a third party called the garnishee.”); Neeley v. Century

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Fin. Co. of Arizona, 606 F. Supp. 1453, 1462 (D. Ariz. 1985) (“It is important to note that

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the garnishment scenario is not merely an action between the creditor and debtor. These

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proceedings also involve a third party who is suddenly thrust into the middle of the dispute

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. . . when in fact the only relationship the garnishee has to the action is that they are the

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employer of the debtor or the debtor is one of a multitude of depositors with their financial

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institution. . . . The garnishee’s interest in the asset itself is nonexistent.”).

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Plaintiff does not dispute that TFSB is intended to be both the garnishee and the

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judgment debtor. By designating TFSB as a garnishee/judgment debtor, Plaintiff maintains

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that TFSB owes funds to TFSB: “Given that Garnishee TFSB acknowledges that it holds

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money due and owing, or otherwise belonging to, Judgment Creditor TFSB, it should have

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Answered the Garnishment and released those funds to Mr. Rappaport.” (Doc. 71 ¶ 7.)

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Plaintiff asserts that “the logic of having TFSB as the Judgment Debtor and the Garnishee

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is sound, given that it is a federally-chartered banking institution and, presumably, holds

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some of its own assets in that capacity.” (Id. ¶ 4.) The logic is not sound. If TFSB holds

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its own assets, they are not subject to “garnishment” because an entity cannot owe money

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to itself. If TFSB “is in possession of its own monies” and “should be required to turn

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those monies over to Mr. Rappaport in satisfaction of the Judgment” (id. ¶ 5), the proper

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way to accomplish this is not through a writ of garnishment but rather through a writ of

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execution.1 Garnishment is simply inapplicable here.

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Accordingly,

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IT IS ORDERED that the writ of garnishment issued as to TFSB (Doc. 68) is

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vacated.

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Dated this 7th day of December, 2021.

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Arizona’s statutes devote an article—separate from the articles devoted to
garnishment—to writs of execution. (12 AZ ST Ch. 9, Art. 3, A.R.S. § 12-1551 et seq.)
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