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Civil Litigation:Process and Procedures
Chapter TwentyEnforcement of Judgments
2Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Enforcement of Judgments The legal team’s litigation
responsibilities do not end until the judgment is collected & distributed
Plaintiff & Defendant become judgment creditor (to whom the money is owed) and judgment debtor (who owes the money)
Because of counterclaims, etc., either party can be owed damages
3Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Enforcement Federal and many state rules
require waiting 10 days after the entry of judgment before beginning enforcement
The judgment may be further stayed, however, for posttrial motions & appeals, around 30 days after the judgment entry
4Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Collection Methods Non-adversarial
Collection letter with verification information is sent to the judgment debtor
May contain a satisfaction piece, to be filed once the debt is paid
May result in the debtor (e.g., an insurance company or corporation) processing the demand and issuing a check
5Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Authorization for Distribution The paralegal may prepare a
statement for the client, an Authorization for Distribution Based upon the initial fee agreement Anticipated amount to be collected Deductions for expenses of litigation
& attorneys’ fees
6Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Typical Schedule of Distribution
7Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Adversarial Proceedings If the judgment debtor fails to
respond to the collection letter, the judgment creditor may Use the state court system to enforce
a state court judgment Use the state court system to enforce
a federal court judgment, since the state has jurisdiction over the assets needed to satisfy the judgment
8Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Full Faith and Credit The state court will recognize the
validity of a federal decision (within its geographical boundaries)
9Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
The Collection Process The state system will apply its own
laws to the collection process Execution Levy Garnishment Replevin
10Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Replevin A court process that permits the
judgment holder to actually take back a specific item
Sometimes referred to as a court-ordered repossession
11Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Garnishment Usually against wages Permits judgment creditor to serve
a debtor’s employer and the employer must usually deliver a portion of the debtor’s wages
States have many forms of garnishment rules and some states do not permit it at all
12Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Levy Process of identifying property
which may be the subject of an execution sale
Levying is method of identifying the debtor’s claim against certain of the debtor’s property
Preliminary step leading to a sale of such property
13Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Execution Sale, usually at auction, of debtor’s
goods to satisfy judgment States have specific rules about
how this process is conducted Process is carried out by judicial
officer, often a sheriff or constable
14Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Uniform Enforcement of Foreign Judgments Act Simple, uniform process of lodging
foreign judgments for collection by a state court
A foreign judgment is Any judgment, decree or order From any court of the U.S. or other
court entitled to full faith & credit (sister state court)
15Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
UEFJA Requires
An authenticated or certified copy of the judgment
Usually docket entries An affidavit stating the name & last
known address of the judgment debtor A filing fee
The foreign judgment becomes a judgment of that court
16Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Registering a Foreign Judgment
17Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Execution on the Judgment The registered judgment can be
collected by execution In order to satisfy the judgment, a law
enforcement officer can proceed against property of the judgment debtor by Taking possession of it (seizing it) Attachment Sequestering Levying against it
18Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Exempt Property Generally, execution can proceed
against real or personal property Some property is exempt, in order
to afford the judgment debtor the means of continuing a trade, or for necessaries Tools of the trade A percentage of income exempt from
garnishment
19Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Satisfying the Judgment The debtor can pay the debt or the
property may be sold Costs of the sale are deducted from
the gross proceeds – schedule of distribution
The remainder is given to the creditor Sale nets more than the judgment –
debtor is refunded the overage Sale nets less than the judgment – creditor
can proceed against additional property (deficiency)
20Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Locating Assets Interrogatories in aid of execution
Questions concerning location of the debtor’s assets
Addressed to banks, brokerage houses, other financial institutions
Paralegals can research Public records for land transactions Internet for stories of windfalls Internet for employment information
21Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Judgment Proof Debtors Usually researched as part of
intake, the defendant’s assets are a factor in evaluating a case (cost/benefit analysis)
A debtor may ultimately prove to be “judgment proof”, perhaps because of a change in circumstances, and immediate collection is impossible due to lack of assets
22Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Post-Judgment Interest Varies by jurisdiction, e.g.,
Not available Tied to the market rate of interest Set statutory amount
Justifies “waiting out” a judgment proof debtor
Must renew or revive the judgment according to the rules of the jurisdiction
23Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Fair Debt Collection Practices Act Protects the the debtor in
collection of consumer debt Personal, family, household purposes Not a business debt
24Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Interpretation of FDCPA and Law Firms
Sayyed v. Wolpoff & Abramson, 485 F.3d 226 (4thCir. 2007)
“[T]he FDCPA clearly defines the parties and activities it regulates. The Act applies to law firms that constitute debt collectors, even where their debt-collecting activity is litigation.”
25Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Bankruptcy Ability to collect from a debtor filing
bankruptcy depends on the circumstances Type of bankruptcy
Chapt. 7, liquidation – the debt may be settled under liquidation, according to the ratio of assets/debt
Chapt. 11, business reorganization Chapt. 13, individual reorganization – the
debt may remain valid under reorganization, although it might take longer to collect
26Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Other Bankruptcy Outcomes The petition could be dismissed Can request a relief from the
automatic stay Once a petition is filed, no debts can be paid
except through the court Some debts are non-dischargeable (exempt) If a stay is granted, collection efforts could
continue despite the bankruptcy
27Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Satisfaction Once the debt is settled, it is
important to file a notice of debt satisfaction On the docket of the court of original
jurisdiction On the docket of each state court
where judgment was lodged
28Civil Litigation: Process and Procedures Goldman/Hughes
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Satisfaction of Judgment Form