Title: PS Bus. Parks, L.P. v. Deutsch & Gilden, Inc.

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  Kinser, C.J., Lemons, Millette, Mims, McClanahan, and 
Powell, JJ., and Lacy, S.J. 
 
PS BUSINESS PARKS, L.P. 
 
    
    OPINION BY 
v. 
Record No. 131282 
    JUSTICE LEROY F. MILLETTE, JR. 
 
 
 
   APRIL 17, 2014 
DEUTSCH & GILDEN, INC., ET AL. 
 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Robert J. Smith, Judge 
 
 
In this appeal we consider two issues related to the 
garnishment of bank accounts.  First, we consider whether a 
judgment creditor is entitled to funds held in an account not 
titled to the judgment debtor when that account is a master 
account participating in a "treasury management service" which, 
in a "zero balance account arrangement," draws money each day 
from the judgment debtor's account into the master account at 
issue, and moves funds from that master account to the judgment 
debtor's account on an as-needed basis to accomplish desired 
transactions.  Second, we determine whether the circuit court 
erred in not considering evidence of funds in the judgment 
debtor's account during the period of time between service on 
the garnishee of the garnishment summons and its return date. 
I. 
Facts and Proceedings 
PS Business Parks, LP, ("PS Business") rented a storefront 
to Family Furniture Centers, Inc.  Deutsch & Gilden, Inc. 
("Deutsch") guaranteed the lease.  When Family Furniture 
2 
Centers, Inc. and Deutsch stopped paying the lease, PS Business 
obtained a judgment against the companies in the amount of 
$664,923.34 plus interest and attorneys' fees. 
PS Business, naming Deutsch as debtor, filed a garnishment 
summons naming SunTrust Bank as garnishee against "some other 
debt due or property of the judgment debtor, specifically all 
accounts, including account ending 61663."  The garnishment was 
served on SunTrust on March 5, 2013, and the return date on the 
garnishment summons was April 12, 2013.  SunTrust, in response 
to the garnishment summons, filed two separate checks with the 
Circuit Court of Fairfax County.  SunTrust filed the first check 
on April 10, 2013.  The check was in the amount of $15,050.11, 
and was drawn from an account ending in 95497, which was titled 
to Deutsch.  On April 12, 2013, SunTrust filed a check in the 
amount of $133,656.69, drawn from an account ending in 61663, 
which was titled to G&D Furniture Holdings, Inc. ("G&D"). 
G&D filed a motion to quash the garnishment of G&D account 
61663, arguing that the account was in its name, that it is a 
separate and distinct entity from Deutsch, and that it is not a 
party to the underlying action.  G&D also submitted to the court 
a letter from SunTrust which indicated that G&D account 61663 
belonged solely to G&D, and that Deutsch had two other separate 
accounts, one ending in 95497 and the other ending in 13869.  In 
response to G&D's motion to quash, PS Business opposed that 
3 
motion and filed a cross-motion for further proceedings to 
ascertain the funds held by SunTrust in G&D account 61663 and 
the accounts titled in Deutsch's name.  SunTrust subsequently 
filed an amended answer stating that the amount submitted to the 
court from account 61663 was erroneous and asserted that once 
the correct figure was determined its answer would be amended 
again. 
At a hearing on the motion to quash, which was joined with 
PS Business's cross-motion for further proceedings, Andrew 
Dolson, vice president and assistant general counsel for 
SunTrust, testified on behalf of PS Business and confirmed that 
G&D is the title holder of the 61663 account.  Dolson testified 
that the 61663 account was the "master account" in a "treasury 
management service" with a "zero balance account arrangement" 
with several associated subsidiary accounts, two of which were 
held by Deutsch.  He further stated that as a part of the 
"treasury management service," the balance in the subsidiary 
accounts was drawn into the master account on a daily basis "to 
put the cash to some good[,] effective use."  According to 
Dolson, "funds are brought back out of the master to the 
subsidiary accounts, . . . to answer for needs; to pay checks 
that are presented on that subsidiary account, to honor 
automated clearing house debits, to perform wire transfers, 
4 
[and] other sorts of desired transactions in the subsidiary 
accounts." 
On cross-examination, Dolson indicated that he had no 
knowledge of any contractual arrangements between G&D and 
Deutsch.  Dolson then explained that while the bank typically 
severs all ties between master and subsidiary accounts when it 
is served with a garnishment summons, SunTrust had not done so 
to all of the accounts in the present case.  As a result, Dolson 
testified, the garnishment caused "the subsidiary accounts to be 
overdrawn or to have negative posted balances which caused funds 
to flow into them from the master [account]."  Dolson indicated 
that he could not "represent that the bank's been able to make 
proper sense of [the account statements during the garnishment 
period, and] there are echoes and echoes upon echoes that 
happened of transactions."  He explained, "transactions piled on 
transactions and resulted in . . . what the bank believes are 
not just faulty balance amounts or unreliable ones, but 
preposterously oversized amounts." 
During the hearing, PS Business entered into evidence 
account statements for Deutsch account 95497 and a document 
showing the balance in G&D account 61663 on the April 2013 date 
when SunTrust filed its answer.  The March 2013 bank statement 
for Deutsch account 95497 lists deposits in excess of $1.3 
million, and withdrawals in excess of $1.2 million.  The April 
5 
2013 bank statement for Deutsch account 95497 lists deposits in 
excess of $1.4 million, and withdrawals in excess of $1.5 
million.  A majority, but not all, of the deposits into Deutsch 
account 95497 in both monthly statements are listed as "zero 
balance credit[s] from [G&D] acct . . . 61663," and a majority, 
but not all, of the withdrawals from Deutsch account 95497 are 
listed as "paid item[s]" to G&D account 61663. 
At the conclusion of the hearing on the motion to quash, 
the circuit court granted G&D's motion to quash the garnishment 
of G&D account 61663.  The court ordered payment to PS Business 
of $15,050.11, the amount from Deutsch account 95497 which was 
unchallenged.  The court further ordered that the balance of the 
funds withheld by SunTrust and submitted to the court, "be 
returned as if the garnishment had not been filed."  We granted 
PS Business this appeal. 
II. 
Discussion 
A. 
Standard of Review 
Whether a judgment debtor is entitled to funds in a bank 
account during a garnishment period is a mixed question of law 
and fact.  See Smyth County Comm. Hosp. v. Town of Marion, 259 
Va. 328, 336, 527 S.E.2d 401, 405 (2000) (indicating that the 
application of a statutory requirement "is a mixed question of 
fact and law and we are not bound by the trial court's 
determination in this regard").  Therefore, while "'[w]e give 
6 
deference to the trial court's factual findings and view the 
facts in the light most favorable to the prevailing part[y,]' 
. . . we review the trial court's application of the law to 
those facts de novo."  Tuttle v. Webb, 284 Va. 319, 324, 731 
S.E.2d 909, 911 (2012) (quoting Caplan v. Bogard, 264 Va. 219, 
225, 563 S.E.2d 719, 722 (2002)). 
B. 
Garnishment of G&D Account 61663 
PS Business argues that it is entitled to funds held in G&D 
account 61663 because Deutsch, the judgment debtor, has an 
interest in the account.  PS Business contends that Deutsch's 
interest is a "liability" subject to garnishment under the terms 
of Code § 8.01-511.  We disagree. 
Under Code § 8.01-511, "a judgment creditor can institute 
garnishment proceedings if 'there is liability' on a third 
person to the judgment debtor."  Network Solutions, Inc. v. 
Umbro Int'l, Inc., 259 Va. 759, 768, 529 S.E.2d 80, 85 (2000).  
We have held that "'[l]iability' in this context means a 'legal 
obligation', 'enforceable by civil remedy,' 'a financial or 
pecuniary obligation,' or a 'debt.'"  Id.  Thus, because 
garnishment proceedings are "substantially . . . action[s] at 
law by the judgment debtor in the name of the judgment creditor 
against the garnishee, . . . the judgment creditor stands upon 
no higher ground than the judgment debtor and can acquire no 
7 
greater right than such debtor . . . possesses."  Id. (quoting 
Lynch v. Johnson, 196 Va. 516, 521, 84 S.E.2d 419, 422 (1954)). 
The relationship between a general depositor and the bank 
in which its deposit is made is simply that of creditor and 
debtor.  The monies deposited become the property of the bank 
and the bank becomes a debtor to that depositor.  Bernardini v. 
Central Nat'l Bank, 223 Va. 519, 521, 290 S.E.2d 863, 864 
(1982).  Deutsch is not the title owner of account 61663, G&D 
is.  As the account is not in Deutsch's name, SunTrust does not 
stand in a relationship of debtor to Deutsch as to any funds in 
account 61663.  In the absence of evidence regarding the 
contractual relationship between the Deutsch and G&D accounts, 
the periodic transfer of funds between those accounts does not 
establish a debtor relationship between SunTrust and Deutsch to 
the funds in G&D account 61663 that would subject those funds to 
a claim by a creditor with a judgment against Deutsch.  As we 
have said, 
the judgment creditor[, PS Business,] stands 
upon no higher ground than the judgment 
debtor[, Deutsch,] and can acquire no 
greater right than such debtor himself 
possesses.  In such a proceeding the claim 
of the judgment debtor[, Deutsch,] against 
the garnishee[, SunTrust,] must be certain 
and absolute, because our statutes do not 
authorize a court of law, in a mere side 
issue growing out of a garnishment 
proceeding, to exercise the intricate and 
complicated duties of a chancellor. 
 
8 
Lynch, 196 Va. at 521, 84 S.E.2d at 422.  Consequently, PS 
Business, standing on no higher ground than Deutsch, the 
judgment debtor, has no right to possession of the funds in G&D 
account 61663, and cannot subject those funds to garnishment.  
The circuit court did not err in ordering the return to G&D of 
$133,656.69 drawn from account 61663. 
C. 
Garnishment of Deutsch Account 95497 
PS Business argues that the total sum of deposits made to 
Deutsch account 95497 during the garnishment period are subject 
to the garnishment summons.  PS Business contends that the 
circuit court erred in not entering an order of payment in favor 
of PS Business in the amount of $726,049.43, the entire amount 
of its judgment, because more than $1.2 million in deposits 
primarily, but not exclusively, from G&D account 61663 were made 
into Deutsch account 95497 during the garnishment period. 
 
We agree with PS Business that the circuit court erred in 
ordering payment of only $15,050.11 from Deutsch account 95497, 
the amount remaining in that account on the date that SunTrust 
answered the garnishment summons. 
 
Code § 8.01-501 provides, in relevant part, 
Every writ of fieri facias shall, . . . be a 
lien from the time it is delivered to a 
sheriff or other officer, or any person 
authorized to serve process pursuant to 
§ 8.01-293, to be executed, on all the 
personal estate of or to which the debtor 
is, or may afterwards and on or before the 
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return day of such writ or before the return 
day of any wage garnishment to enforce the 
same, become, possessed or entitled, in 
which, from its nature is not capable of 
being levied on under such sections. 
 
(Emphasis added.)  Thus, a lien is created on the property held 
by a third party debtor on the date the writ of fieri facias is 
delivered to the officer or authorized individual.  In re Lamm, 
47 B.R. 364, 368 (E.D. Va. 1984). 
 
However, the lien is not enforceable against a third party 
indebted to the judgment debtor until a garnishment summons is 
issued and served on the third party "garnishee."  Under Code 
§ 8.01-511, the garnishment summons must "direct the garnishee 
to withhold from the judgment debtor any sums of money to which 
the judgment debtor 'is or may be entitled' during the period 
between the date of service of the summons and the date of the 
garnishee's appearance in court to answer the summons."  
Virginia Nat'l Bank v. Blofeld, 234 Va. 395, 400, 362 S.E.2d 
692, 695 (1987).  Thus, upon service of the summons on the 
garnishee, the "debts already due to the judgment debtor when 
the summons in garnishment is served upon the garnishee [and] 
any indebtedness of the garnishee to the judgment debtor which 
arises between the date of service of such summons on the 
garnishee and the return date of the summons" is subject to 
garnishment.  Id. 
10 
 
As a bank is a third party debtor to its account holders, 
any money that an individual or corporation deposits into an 
account held by the bank, unless otherwise specified, becomes 
the property of the bank and the bank is indebted to the holder 
of the account for the amount of the deposit until it is 
withdrawn.  Bernardini, 223 Va. at 521, 290 S.E.2d at 864 
(holding that the sum of any deposits made to the judgment 
debtor's account "immediately become[s] property of the bank, 
and the latter becomes [a] debtor of the depositor.").  
Therefore, a bank may be a third party debtor subject to 
garnishment of the funds in its possession that are owed to the 
judgment debtor. 
 
In the present case, SunTrust is a bank and third party 
debtor because it holds funds to which Deutsch is entitled in 
its account 95497.  The lien on the funds within Deutsch account 
95497 became enforceable against SunTrust on March 5, 2013, when 
service of the garnishment summons was completed.  The return 
date on the garnishment summons was April 12, 2013.  Thus, any 
funds that reached the account between March 5, 2013 and April 
12, 2013, the garnishment period, were funds that Deutsch was 
entitled to and, consequently, were funds subject to 
garnishment. 
 
The bank statement for Deutsch account 95497 indicates that 
more than $1.2 million in deposits reached that account during 
11 
the garnishment period.  Moreover, Dolson testified during the 
hearing on the motion to quash that "beginning with the service 
date . . . and continuing through the closing of the garnishment 
window in April, the[] zero balance arrangement ties were left 
in place[, thus] causing the subsidiary accounts to be overdrawn 
or to have negative posted balances which caused funds to flow 
into them from the master."  While the large majority of these 
funds flowed from and to G&D account 61663, the bank statements 
in evidence also reveal credits from and debits to accounts 
other than G&D account 61663 during the garnishment period.  
When the sums were credited to Deutsch's account, they became 
subject to SunTrust's obligation as debtor to the depositor, 
Deutsch, and thus subject to garnishment by Deutsch's judgment 
creditors, including PS Business.  Bernardini, 223 Va. at 521, 
290 S.E.2d at 864.  Thus, based upon the bank statements for 
Deutsch account 95497 and the testimony of Dolson, the amount of 
indebtedness of SunTrust to Deutsch during the period of the 
garnishment clearly exceeded the $15,050.11 that SunTrust paid 
to the court, which SunTrust represented to be the amount 
remaining in the account when it answered the garnishment.  
Therefore, the circuit court erred in ordering payment to PS 
Business of only $15,050.11 from Deutsch account 95497. 
 
However, the extent to which the deposits exceeded 
$15,050.11 is not clear from the record before us because the 
12 
circuit court did not make any factual determination to 
ascertain funds held by SunTrust in Deutsch account 95497 during 
the garnishment period as requested by PS Business in its cross-
motion.  Absent this requisite inquiry, the record is silent as 
to which deposits were funds circulating between G&D account 
61663 and Deutsch account 95497 during the garnishment period, 
and which deposits contained new funds. 
 
Code §§ 8.01-519 and 8.01-565 provide the requisite steps 
for initiating a challenge to the garnishee's stated liability 
to the judgment debtor over the garnishment period in a 
garnishment proceeding.  Code § 8.01-519 provides, in relevant 
part, "if it be suggested that [the garnishee] has not fully 
disclosed his liability, the proceedings shall be according to 
§§ 8.01-564 and 8.01-565, mutatis mutandis."  Code § 8.01-565 
provides that the plaintiff must raise a challenge to whether 
the codefendant, the garnishee, has fully disclosed "the debts 
owing by him, or effects in his hands belonging to the principal 
defendant in such attachment."  Upon a plaintiff's challenge to 
the garnishee's disclosure, "the court, without any formal 
pleading, shall inquire as to such debts and effects, or, if 
either party demand, it shall cause a jury to be impaneled for 
that purpose."  Code § 8.01-565 (emphasis added). 
 
The record establishes that PS Business made a challenge 
before the circuit court to SunTrust's answer to the garnishment 
13 
summons on Deutsch account 95497 in the amount of $15,050.11.  
PS Business stated, 
[Y]ou can see from the statements that are 
in evidence . . . there was more money that 
was drawn down from the 61663 account.  In 
fact, 1.2 million during just the March 
portion of the garnishment period, from 
March 5 to April 12.  Just during the March 
portion of that, there's 1.2 million drawn 
down from the 61663 account.  And so I'd 
submit to the court that is the amount of 
money that Deutsch[] had available to it.  
That is the amount of money that is subject 
to garnishment, and that is the amount of 
money this court should enter an order for 
payment for to enforce the judgment that 
this Court itself has entered. 
 
Once PS Business challenged SunTrust's answer to the garnishment 
summons, the circuit court was required by Code § 8.01-565 to 
initiate an inquiry into SunTrust's indebtedness to Deutsch over 
the garnishment period.  The circuit court failed to do so.  At 
the same time that the circuit court denied PS Business's 
garnishment against the funds in G&D account 61663 because 
Deutsch's name was not on that account, the court summarily 
denied any claim by PS Business to funds from the Deutsch 
account beyond the unchallenged $15,050.11 based upon "what the 
bank has testified to." 
 
The alleged unreliability of the account statement does not 
exempt the account from review, as the plain language of Code 
§ 8.01-565 necessitates a detailed inquiry into the "debts and 
effects" of the judgment debtor's account during the garnishment 
14 
period, irrespective of the surrounding circumstances.  Because 
the circuit court failed to conduct this requisite inquiry into 
the total sum of the funds deposited into Deutsch account 95497 
during the garnishment period, the record is insufficient for 
this Court on appeal to resolve the amount of indebtedness in 
excess of $15,050.11 of SunTrust to Deutsch, and therefore PS 
Business, during the garnishment period.  When we determine that 
a circuit court has erred and that error has been challenged by 
the appellant, it is our responsibility to direct the circuit 
court to take appropriate action to correct the error in order 
to afford the appellant the relief to which it is entitled. 
III. Conclusion 
 
For the reasons stated herein, we will reverse and remand 
this case to the circuit court to conduct a detailed inquiry 
into SunTrust's indebtedness to Deutsch for funds in account 
95497 over the garnishment period which would create an 
obligation to PS Business through its garnishment summons.  
During the course of this inquiry, G&D and SunTrust will have 
the opportunity to assert defenses raised below that the funds 
belonged to G&D and not Deutsch, and that any funds deposited 
were revolving funds, the same funds repeatedly passing between 
G&D account 61663 and Deutsch account 95497, or any other 
relevant defense to liability for the amount of the judgment 
15 
based upon SunTrust's indebtedness to Deutsch for the sums in 
Deutsch account 95497 during the garnishment period. 
 
We will affirm the circuit court's decision to grant the 
motion to quash garnishment of G&D account 61663. 
Affirmed in part, 
reversed in part, 
                                            and remanded. 
 
 
JUSTICE McCLANAHAN, concurring in part and dissenting in part. 
 
The majority reverses the circuit court and remands for an 
evidentiary hearing that was never requested, based on statutes 
(Code §§ 8.01-519 and 8.01-565) that were never argued nor cited 
by PS Business below nor on appeal.  I am therefore compelled to 
dissent from the majority opinion adjudicating the circuit 
court's disposition of account 95497.1 
We have recognized that "[a] garnishment action 
'effectively is a proceeding by the judgment debtor in the name 
of the judgment creditor against the garnishee.  The judgment 
creditor stands on no higher ground than the judgment debtor and 
can have no right greater than the judgment debtor possesses.'"  
Raley v. Haider, 286 Va. 164, 170, 747 S.E.2d 812, 815 (2013).  
Therefore, like any plaintiff, a judgment creditor bears the 
burden of proving damages.  See Sunrise Continuing Care, LLC v. 
                     
1 I join, however, in the portion of the majority's opinion 
holding that PS Business cannot garnish funds held in account 
61663. 
 
16 
Wright, 277 Va. 148, 156, 671 S.E.2d 132, 136 (2009).  The 
majority recognizes that PS Business has failed to satisfy its 
burden.  For this reason, the majority will not direct the 
circuit court, upon the record before us, to issue a payment 
order for the amount requested under account 95497.  There is 
simply insufficient evidence upon which to do so.  Nevertheless, 
the majority reverses the circuit court's decision and remands 
the case for an evidentiary hearing pursuant to Code §§ 8.01-519 
and 8.01-565. 
PS Business has never argued, however, that the circuit 
court erred by failing to consider additional evidence, nor does 
it seek remand for that purpose.2  To the contrary, PS Business' 
arguments have consistently been predicated on the notion that 
it was entitled to receive a larger payment order based on the 
evidence introduced during the hearing on G&D Furniture 
Holdings' motion to quash the garnishment.  Indeed, PS Business 
requests that we hold it is entitled to such payment in the 
amount of $726,049.43 upon the record before us. 
The relief granted by the majority pertaining to account 
95497 is based entirely on the ground that PS Business is 
entitled to have the circuit court hear additional evidence 
                     
2 In fact, an examination of the record and briefs in this 
case reveals that the two statutes relied upon by the majority 
in its analysis, Code §§ 8.01-519 and 8.01-565, have not been 
cited by PS Business at any stage of this litigation. 
 
17 
pertaining to SunTrust’s liability to Deutsch & Gilden.  This 
argument was neither raised by PS Business in an objection in 
the circuit court, as required by Rule 5:25, nor was it 
addressed in PS Business' Assignments of Error, as required by 
Rule 5:17(c)(1)(i).3  Consequently, it has been waived under both 
Rules.  For the majority to nonetheless raise the issue sua 
sponte and rely on it as the basis for reversal renders 
completely arbitrary this Court's application of Rules 5:25 and 
5:17. 
We are not a court of equity, and as such, “[w]e can 
consider only such errors as are properly saved in the record 
                     
3 Rule 5:25 establishes that "[n]o ruling of the trial 
court. . . will be considered as a basis for reversal unless an 
objection was stated with reasonable certainty at the time of 
the ruling."  Applying this contemporaneous objection 
requirement, we have long held that "an objection to a ruling of 
the trial court must be made and an exception taken at the time 
the occasion arises, otherwise the objection is waived" and will 
not be considered on appeal.  Witt v. Merricks, 210 Va. 70, 73, 
168 S.E.2d 517, 519 (1969). 
 
Rule 5:17(c)(1)(i) states that "[o]nly assignments of error 
assigned in the petition for appeal will be noticed by this 
Court."  We have repeatedly interpreted this Rule, along with 
its Court of Appeals counterpart, Rule 5A:12(c)(1)(i), to stand 
for the proposition that "we will not consider . . . arguments 
[that] were not made in the petition for appeal."  West v. 
Commonwealth, 249 Va. 241, 243 n.1, 455 S.E.2d 1, 2 n.1 (1995); 
see also Commonwealth v. Brown, 279 Va. 235, 241, 687 S.E.2d 
742, 745 (2010) ("The Court of Appeals can only consider issues 
properly brought before it by the litigants."); Clifford v. 
Commonwealth, 274 Va. 23, 25, 645 S.E.2d 295, 297 (2007) (same); 
accord Robinson-Huntley v. George Washington Carver Mut. Homes 
Assn., 287 Va. ___, ___ S.E.2d ___, ___ (2014) (this day 
decided) (refusing to reverse a trial court's denial of 
attorney's fees based on an error not assigned by Appellant). 
 
18 
and presented to us by appropriate assignments of error.”  Wash 
v. Holland, 166 Va. 45, 54, 183 S.E. 236, 240 (1936); see 
Harriss, Magill & Co. v. John H. Rodgers & Co., 143 Va. 815, 
854, 129 S.E. 513, 525 (1925) (Christian, J., dissenting) 
(noting we are not permitted to "make a case different from the 
plaintiffs' pleadings, and then try and decide the same upon an 
issue never suggested or considered by the trial court.").  Upon 
consideration of the evidence in the record and the errors 
assigned by PS Business, I can find no basis for reversal, and I 
would affirm the circuit court's decision.