enforcement of civil judgments handouts
TRANSCRIPT
5/5/2021
1
Enforcement of Civil Judgments
Rachel Zummo, TJCTC Staff Attorney
New Judges Stage III
© Copyright 2021. All rights reserved. No part of this work may be reproduced or transmitted in
any form or by any means, electronic or mechanical, including photocopying and recording, or by any
information storage or retrieval system without prior written permission of the Texas Justice Court Training
Center unless copying is expressly permitted by federal copyright law. Address inquiries to: Permissions, Texas Justice Court Training Center, 1701 Directors Blvd, Suite
530, Austin, TX, 78744.
A Judgment for Money is Signed, Now What?Abstracts of Judgment
Writs of Execution and Garnishment
Turnover Orders & Receivers
Post‐Judgment Discovery
Payment of Unclaimed Judgments
1
2
3
5/5/2021
2
What About Writ of
Sequestration and Writs of Attachment?
• Writs of sequestration and writs of attachment are pre‐judgment writs and will not be covered in this presentation.
• Writs of sequestration and writs of attachment are discussed on pages 112–118 of the Civil Deskbook.
Discussion:• Which enforcement methods have you seen in your court?
• What are some questions you have about enforcement of judgments?
Most Common Methods of Judgment Enforcement
• Abstracts of judgment and writs of execution are the two most common tools used to enforce civil judgments.
4
5
6
5/5/2021
3
Abstractsof Judgment
Abstract of Judgment –Prop. Code 52.001‐.003
• A document that records facts about a judgment, that is placed in county records.
What is an abstract of judgment?
• Creates a lien on real property (second home, land, investment property).
• This means that if defendant sells the property, the buyer would be notified of the judgment and the defendant would have to pay the judgment with the profits of the sale.
What does an abstract of judgment do?
Abstract of Judgment –Timing and Costs
When can a party get an abstract of judgment?
• Can be requested by judgment creditor as soon as the judgment is final.
• The abstract must be issued when requested, even though if there is an appeal the abstract is now worthless since the judgment is no longer in effect.
There is a $5 abstract fee per abstract
• The party can get multiple abstracts, since they will need to file one with the county clerk in each county where they want to create a lien on property of the judgment debtor.
7
8
9
5/5/2021
4
Where Can an Abstract of Judgment Be Filed?
• An abstract of judgment may be filed in more than one county and typically a plaintiff would file an abstract in any county in which the plaintiff believes the defendant owns non‐exempt property.
How is the Abstract Prepared?
It is prepared by the court clerk.
The clerk fills it in with whatever information is provided to them.
The clerk does not research additional information.
Attorneys can create and file their own abstracts with the county clerk, without your court being involved.
What Does the Abstract of Judgment Include?
The names of the plaintiff and defendant
The defendant’s birth date
The last three numbers of the defendant’s driver’s license and social security number
The suit’s case number
The date and amount of judgment
The balance due on the judgment
The interest rate specified in the judgment
10
11
12
5/5/2021
5
When May an Abstract of Judgment be Issued?
• An abstract of judgment may be issued when a final judgment has been entered. There is no limit on the number of abstracts that can be issued on a given judgment, as long as they are issued when the judgment is not dormant. Property Code § 52.002.
• The plaintiff does not have to wait until the time for appeal has expired. But, if an appeal is filed after the abstract has been issued, the abstract is no longer valid because the judgment of a justice court is void once an appeal has been perfected.
Poll:
• Does filing an abstract of judgment extend the life of the judgment?
• A. Yes• B. No
Writs of Execution
13
14
15
5/5/2021
6
Writ of Execution –Rule 621
• What is a writ of execution?• An order from the court to a constable or sheriff to seize (“levy on”) the judgment debtor’s property and sell it to pay off the judgment.
• Certain items of property are “exempt,” meaning they cannot be seized and sold.
• See P. 85, Civil Deskbook
Writ of Execution –How Does it Work?
Judgment debtor files an application for a writ of execution (normally must be at least 30 days after judgment)
There is a $5 per page writ fee
The writ is returnable to the court in 30, 60, 90 days at the option of the plaintiff
Can only be issued from a court with jurisdiction over the judgment
What Must Be Included in the Writ?
• The judge’s signature
• Description of the judgment
• Requirement that the officer execute the writ and collect the costs adjudged against the defendant and the costs of execution
• The court in which and the time when the judgment was rendered
• Name of the parties
• A copy of the bill of costs taxed against the defendant
16
17
18
5/5/2021
7
When May a Writ of Execution Be Issued Before the 30th Day?
• When the plaintiff files an affidavit stating that the defendant is about to remove his personal property subject to execution out of the county or is about to transfer or hide his personal property for the purpose of defrauding his creditors. Rule 628.
Then What?
Now it goes to the constable's office for them to execute
The clerk will attach a copy of the bill of costs
This is a list of all the court costs that the judgment creditor has paid, such as filing fees & service fees
If the court finds the requirements are met, the court signs the writ
What if the Writ Expires Before the Property Can Be Sold?
• If, after the levy, there is not enough time to sell the seized property before the writ expires, the sheriff or constable must return the writ to the court and the plaintiff must secure a writ of venditioni exponas, which authorizes the sheriff or constable to sell the seized property after the writ of execution expires.
19
20
21
5/5/2021
8
Execution Docket– Rule 507.3
• The clerk must enter in the docket:
• Time when the writ of execution was issued.
• To whom it was directed and delivered.
• The amount of the debt, damages and costs.
• When the writ is returned, the clerk must note the return in the docket and show the manner in which it was executed.
What About Appeals?
• A writ of execution may not be issued once an appeal has been perfected.
• A justice court judgment is not set aside, and a writ of execution may be issued, if:
• the case is one which cannot be appealed; or • the county court dismisses the appeal because it has not obtained jurisdiction of the case.
Poll:
• A party properly files an appeal bond with the justice court but fails to pay the filing fee in the county court. Can the court issue a writ of execution?
• A. Yes
• B. No
22
23
24
5/5/2021
9
Stay of Execution
• A defendant might have a judgment rendered against him that he is currently unable to pay but believes he will be able to pay within three months.
• If he and a surety acknowledge the judgment and that they are bound to the plaintiff for the full amount of the judgment, then they may ask the court for a stay of execution for three months.
Application for a Stay of Execution
• In order for a stay to be granted, the judgment debtor must file an affidavit stating that:
• He does not have the money to pay the judgment
• Enforcement of the judgment by execution prior to three months would be a hardship on him and cause a loss of his property which would not be caused if execution of the judgment is stayed for three months.
• The judgment debtor, along with at least one surety approved by the judge, must appearbefore the judge and acknowledge that they are bound to the judgment creditor for the full amount of the judgment with interest and costs. Rule 635.
Stay of Execution ‐Timing
Within ten days after signing a judgment in justice court, the judge may grant a stay of execution for three months from the date of the judgment. Rule 635.
The judgment creditor is then not able to obtain a writ of execution or otherwise enforce the judgment (for example, through a writ of garnishment or a turnover order) until the three months have passed.
25
26
27
5/5/2021
10
Exempt Property Lightning Round
Urban Homestead
A. Exempt
B. Non‐exempt
Rural Homestead
A. Exempt
Non‐exempt
28
29
30
5/5/2021
11
Second Home
A. Exempt
B. Non‐exempt
Burial Plots
A. Exempt
B. Non‐exempt
Current Wages
A. Exempt
B. Non‐exempt
31
32
33
5/5/2021
12
Spousal Maintenance
A. Exempt
B. Non‐exempt
Bible or Other Religious Text
A. Exempt
B. Non‐exempt
Savings or Retirement Accounts
A. Exempt
B. Non‐exempt
34
35
36
5/5/2021
13
Exempt Personal Property with Aggregate Limits
Writs of GarnishmentNotes
37
38
39
5/5/2021
14
Writ of Garnishment – Rule 658
• What is a writ of garnishment?• An order from the court to a 3rd party who has some of the judgment debtor’s assets to turn those assets over to the judgment creditor.
• The assets must be non‐exempt personal property.
• The 3rd party is called the garnishee, and is usually a bank.
• Note – garnishments are almost always filed post‐judgment. For info on the limited situation where they are filed pre‐judgment, see P. 88 of the Civil Deskbook
Common Exempt Property in Garnishment
• Current wages• Worker’s compensation
• Public benefits
Important Note on “Garnishment”
Many people think of “garnishment” as something that happens with someone’s paycheck or wages.
In “wage garnishment”, a person’s wages are intercepted before they ever get delivered to the employee, and given to the person who is entitled to the garnishment.
In Texas, you cannot garnish wages for civil judgments. But once the paycheck is deposited into a bank account, that money is now subject to garnishment.
40
41
42
5/5/2021
15
Garnishment Example
• Becky sues Ronda for $7,500 and wins. Ronda doesn’t pay the judgment.
• Satisfying a judgment by using writs of execution can be difficult, because of how much property is “exempt,” so Becky has been unable to get her judgment paid that way.
• Ronda doesn’t own real property, so Becky has no real use for an abstract of judgment.
• But, Becky discovers that Ronda has a bank account with $10,000 in it.
• Becky can use a writ of garnishment to have the bank ordered to turn $7,500 (plus any costs of the garnishment) over to her to satisfy the judgment.
Writ of GarnishmentStep 1 –Application for the Writ
A writ of garnishment is filed as a new case and must be requested in the same court that issued the original judgment.
The judgment creditor’s application for a writ of garnishment must be supported by an affidavit.
The affidavit must state that there is a judgment and that the defendant doesn’t have enough assets subject to execution to satisfy the judgment.
The law is unclear, but TJCTC believes that the court would charge the standard civil filing fee for this filing. Check with your county auditor for your county’s policy and be consistent.
When May the Writ be Issued?
• A writ of garnishment may be issued either before a judgment has been entered or after judgment. In justice courts, writs of garnishment are almost always requested after a judgment has been entered.
• In order for a court to issue a writ of garnishment post‐judgment, the plaintiff must have a final judgment and file an affidavit with the court stating that the defendant does not possess property in Texas subject to execution sufficient to satisfy the judgment.
43
44
45
5/5/2021
16
Writs of Garnishment Are Almost Never Requested in Justice Courts While a Case Is Pending
If the plaintiff is requesting a prejudgment writ of garnishment, the suit must be for a debt and the amount of the debt must be “liquidated”.
Additionally, one of the following requirements must be met:
• A writ of attachment has been issued or
• The suit is for a debt and the plaintiff files an affidavit stating that:
• The debt is just, due, and unpaid;
• Within the plaintiff's knowledge, the defendant does not possess property in Texas subject to execution sufficient to satisfy the debt; and
• The garnishment is not sought to injure the defendant or the garnishee.
Also, there must be a hearing, which can be ex parte.
APPLICATION FORWRIT OFGARNISHMENT
Writ of GarnishmentStep 2 –Issuance of the Writ‐ Rule 659, 661‐663A
The court will issue two separate packets:
The writ of garnishment itself,
which is served on the garnishee, and must be
served just like a citation, and served by a constable or sheriff
The notice of the garnishment, which is served on the judgment debtor, can be served informally as described by Rule 21a, and by anyone who can serve a regular
citation (including private process servers)
The garnishment is docketed as a new case, with the judgment creditor as the plaintiff and the garnishee as the
defendant.
46
47
48
5/5/2021
17
Garnishment Step 3 ‐Service on the Defendant
• Along with notice of the garnishment, the actual writ must be served on the defendant, and it must contain the warning listed in Rule 663a. Additionally, the application for the writ must be included, along with any affidavits filed, and any other orders of the court.
Service of the Writ – Rule 659, 661‐663A
The writ orders the garnishee to hold any assets that they have belonging to the judgment debtor, and to file an answer stating what assets, if any, they have that belong to the judgment debtor.
The judgment debtor must not be served with the garnishment notice before the garnishee is served with the writ. Why not?
49
50
51
5/5/2021
18
Writ of Garnishment Step 4 –Garnishee Answer or Default‐ Rule 665‐668
• If the garnishee doesn’t answer by the Monday after 10 days have expired, a default judgment may be entered against the garnishee!
• However, if the garnishee is a financial institution, the default judgment may be entered solely as to the existence of liability and not as to the amount of damages.
• Discussion question: Garnishee is served on Friday, March 15th. When is the answer due?
Writ of Garnishment –Dispute of the Garnishee’s Answer – Rule 665‐668
• If the garnishee does answer, either side may file an answer disputing their answer.
• So, if they say, “we don’t have anything” the judgment creditor can answer and say, “yes you do.”
• Or if they say, “we have these assets” the judgment debtor could answer and say, “those aren’t actually my assets.”
Writ of GarnishmentStep 5 –Judgment Based on Garnishee’s Answer‐ Rule 665‐668
• If no one disputes the garnishee’s answer, a judgment is rendered based on that answer.
• This will either be a judgment ordering the assets turned over to the judgment creditor, or a judgment discharging the garnishee if they have no assets that belong to the judgment debtor.
52
53
54
5/5/2021
19
Judgmenton writ of garnishment
Judgmentdischarginggarnishee
Writ of Garnishment Step 6 – Trial After Garnishee’s Answer Disputed – Rule 665‐668
• If the garnishee’s answer is disputed, a full trial must be held to determine what assets belonging to the judgment debtor, if any, the garnishee has.
• All the normal trial rules would apply, such as ability to request a jury trial, etc.
55
56
57
5/5/2021
20
What if the Judgment Debtor Has Filed for Bankruptcy?
• If the garnishment is issued before the bankruptcy petition is filed, any funds in the account before the bankruptcy filing may be garnished, but none of the funds deposited after the bankruptcy filing may be garnished, as there would be an automatic stay on the garnishment.
• If the garnishment was not issued before the bankruptcy petition was filed, there would be an automatic stay on the garnishment proceeding. If an order from the bankruptcy order is issued lifting the stay, a copy must be provided to the justice court before the garnishment case can proceed. The judge must review the bankruptcy order and make sure not to enter any orders that conflict with it.
Court Costs and Attorney’s Fees
• If the garnishee is discharged based on its answer, the costs (including reasonable attorney’s fees for the garnishee) in both the original case and the garnishment case are taxed against the plaintiff. If the answer of the garnishee is not controverted and judgment is against the garnishee, then costs are taxed against the defendant. Those costs will be taken from the amount that the garnishee owes the defendant, and then the rest will be applied to the plaintiff’s judgment. If the answer is contested, then costs are awarded based upon the outcome of the trial
• While the garnishee can recover attorney’s fees, if the plaintiff (garnishor) is successful, they may not collect attorney’s fees.
Defendant’s Rights: Right to Replevy
• The defendant has a right to replevy (that is, to recover) any property subject to garnishment by posting a bond payable to the plaintiff in the amount fixed by the court’s order, or at the defendant’s option, for the value of the property or indebtedness sought to be replevied, plus one year’s interest, conditioned that the defendant will satisfy any judgment rendered against him in the action.
58
59
60
5/5/2021
21
Defendant’s Rights: Motion to Substitute Property
The defendant may also file a motion to substitute property for the property garnished.
The substituted property must be worth enough to satisfy the order of garnishment, and the court is required to make findings as to the value of the property to be substituted.
If property is substituted, the property released from garnishment must be delivered to the defendant and any lien created by the original order of garnishment no longer applies to that property.
Defendant’s Rights: Motion to Dissolve or Modify the Writ
• The defendant may move to dissolve or modify the writ of garnishment.
• The filing of a motion to dissolve or modify will stay and further proceedings under the writ, except where there are orders concerning the care, preservation, or sale of perishable property, until the hearing on the motion to dissolve or modify can be heard.
• The judge may dissolve the writ or modify the writ after hearing evidence by the parties.
Turnover Orders & Receivers
61
62
63
5/5/2021
22
What is the Turnover Statute?
• CPRC 31.002: A court may “aid” a judgment creditor by:
• Ordering a judgment debtor to “turn over” non‐exempt property to a Constable or Sheriff to satisfy a judgment; or
• Appoint a receiver with authority to take possession of non‐exempt property, sell it, and pay the proceeds to the judgment creditor. – More on receivers coming up!
What Needs to be Shown for a Turnover Order?
1. The judgment debtor has non‐exempt property that may be used to satisfy the judgment.
2. The court that the application was filed in is a court of jurisdiction, which means either:
• The court that issued the judgment, or
• A court where a foreign judgment has been domesticated
Turnover Order ‐What Happens Next?
Up to the court whether to hold a hearing or notify the judgment debtor of the application.
•Why might you notify them?
•Why might you not notify them?
Court can order the defendant to turnover any non‐exempt assets to the judgment creditor.
• Can also appoint a receiver to pursue collection of the judgment.
64
65
66
5/5/2021
23
Appointing a Receiver ‐What Happens Next?
Up to the court what duties and obligations the receiver has
• Some proposed orders are VERY broad! Others just tell the receiver to take property and sell it to satisfy the judgment.
Cannot order receiver fees up front
• Could conditionally grant the fees, with a requirement to show they “earned” them afterward
Poll:• Is the court required to appoint a receiver?
• A. Yes
• B. No
What Must the Judgment Creditor Prove?
• Before a court may grant an order appointing a receiver, a judgment creditor must prove that:
• The judgment debtor owns property, including present or future rights to property; and
• The property is not exempt from attachment, execution, or seizure.
67
68
69
5/5/2021
24
What Can the Court Require of the Receiver?
• If the court appoints a receiver, the court may require the receiver:
• To be a resident of Texas,
• To take an oath to faithfully execute their duties, and
• To post a bond in an amount within the court’s discretion.
• The court has discretion concerning the duties of the receiver and may limit or expand the duties as the court sees fit. For example, the court may:
• Restrict the receiver’s authority to take “cash on hand,” and
• Require the receiver to provide an inventory of all property taken.
How Long Does a Receivership Last?
• There is also no set time‐period for a receivership under Section 31.002 to be in place. It is a best practice to set some end point. Many judges set the order appointing a receiver to last 120 days, and others set it for a shorter amount of time and require the receiver to check in with the court if an extension is necessary.
Orders Appointing a Receiver
• An order must be definite, clear, and precise so that the person to whom it is directed has sufficient information about what their duties are and does not have to interpret it or draw inferences or conclusions.
• The court must read any proposed order provided prior to signing it.
• The judge must ensure that the order only gives the receiver the powers that the judge intends to.
70
71
72
5/5/2021
25
Broad vs. Limited Receiverships
POP QUIZ TIME! Fill out the blanks with the correct answer.
1) Lincoln gets a judgment against Tom. He knows Tom has a lakehouse on Lake Travis. In order to be able to get money from the sale of the lakehouse to pay the judgment, Lincoln needs a __________________________________.
2) Jalen is suing Sam for a trophy that Jalen says belongs to him. If Jalen wants to make sure Sam doesn’t hide the trophy or smash it into pieces, Jalen could get a _______________________________________.
3) Seth wins a judgment against Braun, and finds out in post‐judgment discovery that Braun has money in the bank. If Seth wants to get that money, he needs a _________________________________________.
4) Kevin wins a judgment against Daniel. Daniel owns valuable pieces of hemp art. In order for that art to be seized and sold, and the money given to Kevin, he should get a __________________________________.
5) George wins a judgment against Al. Al has some property in a lockbox, and won’t allow the constable to look inside during execution. What kind of order could George get to force Al to let the constable take the property? _______________________________________.
73
74
75
5/5/2021
26
How Long Can Judgments Be Enforced?
• A judgment is good for 10 years after it is issued.
• If the 10‐year clock gets down to zero without a writ of execution being issued, the judgment cannot be enforced, and is called a “dormant judgment.”
How Long Can Judgments Be Enforced?
• When a writ of execution is issued, it resets the clock, and the judgment is now good for 10 years from that date.
• This can happen over and over again!
• Only writs of execution reset the clock, not garnishments, abstracts, or anything else!
How Long Can Judgments Be Enforced?
A dormant judgment can be revived within 2 years of going dormant. The process to revive the dormant judgment is called a scire facias.
If the judgment remains dormant for 2 years, it is now dead and may not be revived.
76
77
78
5/5/2021
27
Writ of Scire Facias
• A writ of scire facias, sometimes called scary faces, is an order by the court for the judgment debtor to come in and show good cause why the judgment should not be revived.
• The court doesn’t issue this on its own, only on request by the judgment creditor.
“Good Cause”
• After the hearing, the judgment will basically always be revived. “Good cause” to not revive it would not include things like “I can’t afford to pay” or “Wow, this is pretty old!”
• The only acceptable reasons to not revive the judgment would be if you determined the judgment was actually dead rather than dormant, if the court didn’t have jurisdiction over the judgment, or if the judgment debtor provided proof that they have already paid the judgment in full.
Judgment Deadline Calculation Discussion
• A judgment is issued on October 29, 2015. If no writ of execution is ever issued, when would it go dormant? When would it die?
• Now, say instead the judgment creditor gets a writ of execution on September 1, 2019 and an abstract of judgment on January 15, 2020. Assuming nothing else happens, when would it go dormant? When would it die?
79
80
81
5/5/2021
28
Payment of Unclaimed JudgmentsCivil Practice & Remedies Code Sec. 31.008
Payment of Unclaimed Judgments
• There is a process available for judgment debtors who either cannot locate the judgment creditor to pay the judgment, or for situations where the judgment creditor refuses to give a release of judgment.
• Maybe they sued for $10,000 and got $2,000 and won’t sign off unless they are paid $10,000.
Unclaimed Judgments –Notification of the Judgment Creditor
The debtor must first attempt to notify the judgment creditor by sending a letter by registered or certified mail to all last known addresses.
If the judgment creditor does not respond by the 15th day after letter was sent, the debtor may file an affidavit with the court describing when and how the notice was sent.
82
83
84
5/5/2021
29
Unclaimed Judgments –Judgment Creditor Doesn’t Respond
• If the judgment creditor doesn’t respond, the judgment debtor may pay the amount owed into the registry of the court that rendered the judgment. Funds deposited with the court must be held in the clerk’s trust fund account.
• Payment must be in full.
• Debtor must prepare a recordable release of judgment to be executed by the judge or clerk.
• A release of judgment is a document, usually issued by the judgment creditor upon payment, that says the judgment debtor is “released” from the judgment debt.
Unclaimed Judgments – Judgment Creditor Refuses to Issue Release
• If the judgment creditor refuses to issue a release of judgment, the court has to hold a hearing to determine if a release of judgment should be allowed.
• At the hearing, the court should have the debtor prepare a release for the court to sign if the court finds that the creditor accepted payment but refused to issue a release.
• The court should allow the judgment to be paid into the registry if the creditor refused payment. Once the judgment is paid into the registry, the court should sign a release of judgment prepared by the debtor.
Post‐Judgment Discovery
• If the plaintiff doesn’t know what assets the defendant has that might satisfy the judgment, the plaintiff can request post‐judgment discovery.
85
86
87
5/5/2021
30
Requesting Post‐Judgment Discovery
Unlike pre‐judgment discovery, which the court must approve in advance, postjudgment discovery may be conducted without the court’s prior approval.
The party requesting the discovery must give the responding party at least 30 days to respond to the discovery request.
The responding party may file written objections with the court within 30 days of receiving the request
Objections to Post‐Judgment Discovery
• If an objection is filed, the judge must hold a hearing to determine if the request is valid.
• If the objection is denied, the judge must order the party to respond to the request.
• If the objection is upheld, the judge may reform the request or dismiss it entirely.
Discovery Sanctions
• Sometimes a defendant upon whom a post‐judgment discovery request has been served fails to respond at all to the request.
• In that case, the plaintiff may file a motion for sanctions with the court, including ultimately the possibility of holding the defendant in contempt for refusing to respond to the discovery requests.
88
89
90
5/5/2021
31
Thank you!
91