HOUSE BILL REPORT

ESHB 927

BYHouse Committee on Judiciary (originally sponsored by Representative Armstrong)

Revising the enforcement of judgments.

House Committe on Judiciary

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (14)

     Signed by Representatives Armstrong, Chair; Crane, Vice Chair; Appelwick, Brough, Hargrove, Heavey, Locke, Moyer, Niemi, Padden, Patrick, Schmidt, Scott and Wineberry.

House Staff:Bill Perry (786-7123)

AS PASSED HOUSE MARCH 16, 1987

BACKGROUND:

A judgment in a lawsuit often involves a requirement that the losing party pay the winning party some money.  If the losing party is not forthcoming with payment, there are procedures that the winning party may use to satisfy the judgment.  These procedures involve the taking of the loser's property and future earnings.  In some instances, these procedures may be used before a judgment is obtained.

The law of enforcement of judgments includes a myriad of procedures and exemptions.  Following a lawsuit, courts can issue writs of "Execution" which direct the county sheriff to take the property of the judgment debtor.  The property is then subject to "Sale under Execution." Certain parties other than the creditor or debtor may be allowed to file an "Adverse Claim" indicating that they have an interest in the property potentially subject to sale.  Following a sale under an execution, there is a period of "Redemption" during which the judgment debtor or certain others may get the property by paying the purchase price paid at the sale plus certain expenses.  Under some conditions, a plaintiff can "Attach" the property of a defendant or get a writ of "Garnishment" against his or her earnings before judgment is entered.  Garnishment is also available after judgment. Attachment involves the seizure and holding of the defendant's property pending the outcome of the lawsuit.  Garnishment is a method of forcing the debtor's employer to pay the creditor directly out of the debtor's paycheck. Garnishment may also be used to get at other assets of the debtor, such as a bank account.  There have been a number of federal and state court decisions regarding attachment and garnishment.  These decisions generally require, as a matter of due process, that parties subject to attachment or garnishment be given adequate notice of what is going to happen and what their rights are, and in some cases that a hearing be provided.  Some property is specifically exempted from these procedures for enforcing judgments.  "Homestead" exemptions are provided for the real property of a debtor that is used or intended for use as his or her home.  Certain personal property is also exempted.

Much of the statutory law on enforcement of judgments is very old, dating from the last century, and contains archaic language and obsolete references.

SUMMARY:

The law on enforcement of judgments is reorganized.  The law is collected in one title of the code, and divided into ten chapters.

PART I, GENERAL PROVISIONS.  This part of the act collects and clarifies various existing provisions of law.  Among other things, part I indicates the act's general applicability to district courts as well as superior courts.  It directs that the county coroner is to take the place of the sheriff when the sheriff is an interested party in an enforcement of a judgment.  It also provides for a right of contribution when multiple parties or sureties are involved.

PART II, HOMESTEADS.  This part reconciles inconsistent or ambiguous provisions formerly found in the law.  It removes archaic terminology.  Clarification is provided that homestead property is not exempt from real estate taxes and assessments.  It is also made explicit that if homestead property is destroyed, any insurance proceeds will enjoy homestead protection for one year following their receipt.  Certain references and terms are updated in light of federal statutory changes and court decisions.

PART III, PERSONAL EXEMPTIONS.  This part provides an explicit method, similar to that already existing with respect to real property, for the sale of indivisible exempt personal property (e.g., a car) where the exemption allowed is less than the value of the property.  Obsolete terms are replaced, and the sections of prior law are reorganized.

PART IV, EXECUTIONS.  The timing of the existing ten year period during which an execution is valid is clarified.  The period runs from the entry of judgment. The statute is changed to reflect court interpretation of prior law that obtaining a court order of execution is not a prerequisite to a finding of contempt for disobeying a judgment.  Express provisions are added to cover a vendor's interest under a real estate sales contract, and to cover other intangible property.  The prior law is consolidated and reorganized, and many cross references are supplied.

PART V, ADVERSE CLAIMS.  The law is reorganized and definitions are supplied.  Due process provisions are provided for adverse claimants before they are required to post a bond.  A hearing must be held to determine whether the adverse claim is "probably valid".

PART VI, SALES ON EXECUTION.  Expanded notice is required for judgment debtors telling them of an impending sale.  The notice must indicate two additional circumstances in which the debtor may be able to stay in possession of real property during the redemption period following the sale.  Those circumstances involve agricultural property and property subject to a mortgage that expressly allows for continued possession during the redemption period.

PART VII, REDEMPTIONS.  Explicit provision is made regarding the extension of periods of re-redemption following a redemption.  Those periods may extend beyond the initial redemption period.  Several cross references are added, and some existing ones are corrected.

PART VIII, ATTACHMENTS.  This part provides due process safeguards for persons facing pre-judgment attachment consistent with federal and state court decisions.  Notice to the defendant and an opportunity for a hearing are required.  Ex parte attachments are allowed on limited grounds.  Those grounds are that the property involved is real property, or that it is personal property which is about to be moved, concealed or sold.  Following such an ex parte order, the defendant must be given notice and a chance for a hearing.

Misdemeanor and gross misdemeanor violations that caused the injury giving rise to the judgment being sought, may serve as the grounds for seeking a pre-judgment attachment.

The minimum bonds for plaintiffs seeking attachment are raised from $300 to $3,000 in superior courts, and from $50 and $500 in district courts.  Also, the judge is given discretion to set the bond at any amount above the minimum.

Explicit procedure is provided for the disposition of property still held by a sheriff under an attachment if the defendant has been declared bankrupt.

PART IX, PRE-JUDGMENT GARNISHMENT.  The same kind of due process protections as are provided for attachments are provided for pre-judgment garnishment.  Explicit provisions are added regarding posting of bonds and recovery against bonds in a pre- judgment garnishment.  These bond provisions parallel those in the attachment law, including an ability to recover exemplary damages for malicious garnishment.

PART X, GARNISHMENT.  Enhanced notice of garnishment is required to be given to defendants as well as garnishees. notice of writs of garnishment sent to the judgment debtor must explain that the debtor may have rights, including exemption rights, that must be exercised within ten days.

Explicit direction is provided for estimating the legal costs as part of the amount to be withheld in a garnishment.  A description is provided for what costs, including a $50 attorney fee may be recovered as part of the garnishment.

The relationship with federal laws on exemption is clarified.

A simplified form is provided for calculating the amount of wages exempt from a garnishment.

The period of a continuous lien against earnings subject to garnishment is increased from 30 days to 60 days.

PART XI, MISCELLANEOUS.  Various technical changes and cross references are made. Sections are reorganized within chapters.

EFFECT OF SENATE AMENDMENT(S):  In addition to making numerous technical changes, including conforming state law to federal requirements on garnishment and child support, the senate amendment makes several substantive changes and additions to the bill.

The amendment changes the amount which a garnishee is required to withhold.  The bill requires withholding of costs associated with garnishment and a $50 attorney fee.  The costs associated with garnishment include statutorily allowed attorney fees and costs.  The amendment requires withholding the greater of $50 or statutory costs or 10 percent of the unsatisfied judgment.

The amendment allows county officers or employees to purchase property at tax judgment sales.

The amendment changes the procedure for the assignment and recording of judgments.  The assignment must be filed with the county clerk where the judgment was decided, and a certified copy must be recorded with the county.  The certificate of a satisfaction of judgment must be filed with the county in which the judgment was entered.  The lien of the judgment is discharged upon the recording of the certificate.  A judgment lien on real property is commenced by the recording of a memorandum of the judgment with the county in which the property is located.

The amendment changes the criteria for destruction of unclaimed personal property by law enforcement officials.  The property may be destroyed if is has no substantial commercial value or if the costs of sale will exceed the value of the property.

The amendment affects the release of real property from a claim of lien.  Any bond recorded to gain such a release must be issued by an insurance company listed by the federal department of the treasury as an approved surety company.

Fiscal Note:    Not Requested.

Effective Date:The bill takes effect on November 1, 1987

House Committee ‑ Testified For:     Professor Marjorie Rombauer, Washington State Bar Association; Ben Wood, Jr., SCA Credit, Inc.; Bruce Neas, Puget Sound Legal Aid.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     The bill makes necessary changes to ensure the constitutionality of substantial portions of the law on enforcement of judgments.  It also reorganizes and updates the law.

House Committee - Testimony Against: None Presented.

VOTE ON FINAL PASSAGE:

     Yeas 93; Absent 1; Excused 4

Absent:    Representative Wang

Excused:   Representatives Allen, Madsen, Pruitt and C. Smith