Many of our financial institution clients are served with writs of execution (each a Writ) and named as a garnishee (Garnishee Bank) by a plaintiff seeking to enforce a money judgment (Judgment Creditor) with respect to a defendant against who the money judgment was entered (Judgment Debtor).
Service of a Writ on the Garnishment Bank creates a symbolic seizure of the Judgment Debtor's property in the Garnishee Bank's possession for the benefit of the Judgment Creditor.
Service of the Writ upon the Garnishee Bank also subjects the Garnishee Bank to the mandate and injunctive orders of the Writ restraining the Garnishee Bank from releasing any property of the Judgment Debtor in the Garnishee Bank's possession at the time of the service of the Writ, or property of the Judgment Debtor which comes into possession of the Garnishee Bank thereafter, but prior to entry of judgment against the Garnishee Bank, until further order of the court or discontinuance or termination of the garnishment. See, Pa.R.Civ.P. 3111(b) and (d). Violation of the mandate and injunctive orders of the Writ may be punished as a contempt. See, Pa.R.Civ.P. 3111(e). Also, the Garnishee Bank may be held liable to the Judgment Creditor for the improperly released funds.
Typically, written questions (Interrogatories) are served with the Writ that allow the Judgment Creditor to determine if a Garnishee Bank has in its possession property owned by the Judgment Debtor (e.g., money on deposit, certificates of deposit or the contents of a safe deposit box).
The procedure between the Judgment Creditor and the Garnishee Bank is the same as though the Interrogatories were a complaint. See, Pa.R.Civ.P. 3145(a). The Interrogatories shall contain a notice to answer within twenty days after service (Notice to Defend). See, Pa.R.Civ.P. 3144(b).
By rule, if the Interrogatories contain a Notice to Defend, the Garnishee Bank must (i) prepare written answers (Answers) to the Interrogatories served on them, (ii) include a signed verification with the Answers, and (iii) have the Answers signed by a PA admitted attorney who then will file the Answers in the underlying civil action and serve the Answers within the time allowed by the rules. If the Garnishee Bank fails to timely file, or opts not to file, its Answers to the Interrogatories, the Judgment Creditor may enter judgment in an unliquidated amount against the Garnishee Bank. The amount of that judgment will be assessed later by the court. See, Pa.R.Civ.P. 3146(a)(1). Failing to follow the foregoing critical procedure exposes a Garnishee Bank to default judgments and the costs to strike those judgments if they were improperly entered.
When the Garnishee Bank's Answers admit that the Judgment Debtor owns an account, or otherwise has a banking relationship with, the Garnishee Bank, but the Judgment Debtor has little or no money deposited with the Garnishee Bank, we see that Judgment Creditors lack incentive to either enter judgment for the amount admitted to be due or dissolve the Writ, which therefore remains active.
The failure by a Judgment Creditor to enter judgment or dissolve any Writ served on a Garnishee Bank exposes the Garnishee Bank to liability or contempt should funds be deposited into a Judgment Debtor's account(s) with the Garnishee Bank while a Writ is still active, and the Garnishee Bank fails to restrain or capture those funds. This is because the active Writ attaches all property of the Judgment Debtor which comes into the Garnishee Bank's possession after service of the Writ on the Garnishee Bank until judgment against the Garnishee Bank is entered. See, Pa.R.Civ.P. 3111(b).
In practice, the Garnishee Bank is tasked with "monitoring" all accounts subject to an active Writ to capture any funds deposited into those accounts until a judgment is entered against the Garnishee Bank, or until further order of the court or discontinuance or termination of the garnishment.
The requirement of "monitoring" accounts subject to an active Writ is time consuming and burdensome on the Garnishee Bank. This task is necessary, however, to avoid a situation where funds are deposited in a Judgment Debtor's account(s) which is subject to an active Writ and these funds are subsequently withdrawn before the Garnishee Bank can capture them for the benefit of the Judgment Creditor. In this case, the Garnishment Bank will be liable to the Judgment Creditor for funds not captured. Such liability, however, is typically limited to the amount of the money judgment held by the Judgment Creditor against the bank's customer.
To relieve itself of the obligation to "monitor" accounts subject to an active Writ, the Garnishee Bank may file a petition to terminate the garnishment with respect to those accounts if the related garnishment has not been acted upon within one year of the filing of such garnishment. A Judgment Creditor will have twenty days to respond to that petition. If no response is filed, the garnishment may be terminated upon the filing of a praecipe. Any response to the petition must set forth the reasons not to terminate the garnishment. If a response is filed a hearing will be scheduled to determine if the garnishment should, or should not, be terminated (Garnishment Termination Rule). See, Pa.R.Civ.P. 3111(c).
The petition to terminate the garnishment allows a Garnishee Bank to rid itself of the obligation, and related exposure, to "monitor" stale Writs.
Buchanan has filed multiple petitions to terminate garnishments under the Garnishment Termination Rule to relieve our garnishee clients of the burdensome obligation to "monitor" stale Writs. To date, we have not received an objection to these petitions.
Buchanan can propose a price and plan to our financial institution clients to remove the burden of "monitoring" stale, but active, Writs. Over time, Writs which have not been dissolved by the Judgment Creditor, and as a result remain active, accumulate which invites exposure to the Garnishee Banks who are obligated to "monitor" them.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.