Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_03-cv-02390/USCOURTS-azd-2_03-cv-02390-10/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:77 Securities Fraud

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WO

UNITED STATES DISTRICT COURT 

DISTRICT OF ARIZONA 

Lawrence J. Warfield, as Receiver,

Judgment Creditor,

vs.

Michael Alaniz; Robert Carroll; et al.,

Judgment Debtors,

No. CV-03-2390-PHX-JAT (LOA)

ORDER TO SHOW CAUSE

Penn Treaty Network America Insurance

Co.,

Garnishee.

This matter arises on Judgment-Creditor Lawrence J. Warfield's

Application for Judgment on Garnishment and Notice of Lodging Proposed Judgment on

Garnishment, filed on December 26, 2007. (docket # 827) Judgment-Creditor Warfield

seeks entry of Judgment against Garnishee Penn Treaty Network America Insurance Co.

(“Penn Insurance”), in the sum of $350.25 which purportedly represents non-earnings

belonging to Judgment-Debtor Robert Carroll held by Penn Insurance. Plaintiff Warfield

and Garnishee Penn Insurance also stipulate and agree that because “Garnishee

anticipates additional monies may be paid to Judgment Debtor [Robert Carroll],” that a

Case 2:03-cv-02390-JAT Document 829 Filed 02/04/08 Page 1 of 4
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1

 A.R.S. § 33-1131(B) provides:

B. Except as provided in subsection C, the maximum part of the disposable earnings of a

debtor for any workweek which is subject to process may not exceed twenty-five per cent

of disposable earnings for that week or the amount by which disposable earnings for that

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form of Garnishment Judgment be entered that provides that Garnishee Penn Insurance

shall pay to Plaintiff Warfield “any money due Robert Carroll payable by the Garnishee.”

Id. at 2-3. Judgment-Debtor Robert Carroll has neither filed an objection to the

Application or proposed order nor stipulated in writing to the subject garnishment and

request for a continuing lien.

On August 24, 2007, Plaintiff Warfield served Garnishee Penn Insurance

with writs of garnishment for both earnings and non-earnings of Judgment-Debtor Robert

Carroll. (docket # 774; Exhibit (“Exh”) 4) Answering only the Writ of Garnishment for

Non-Earnings, Garnishee Penn Insurance indicates that the money it currently owes

Judgment-Debtor Robert Carroll are “Non-Earnings” and represents “two commission

checks (totaling $341.28),” presumably earned by Judgment-Debtor Robert Carroll

selling Garnishee’s insurance product. (docket # 798 at 1, 3) Plaintiff Warfield’s

Application contends that “Garnishee does not consider the Judgment Debtor an

employee, but rather an independent contractor.” (docket # 827 at 2) No such

representation, however, is made in Garnishee’s verified Answer nor does Garnishee’s

Answer state “[w]hether the judgment debtor was employed by the garnishee on the date

the writ was served” as required by A.R.S. § 12-1598.08(B)(1). The significance of

whether Garnishee Penn Insurance is holding earnings owed or belonging to JudgmentDebtor Robert Carroll is that A.R.S. § 33-1131(B)1

 exempts 75% of his “disposable

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week exceed thirty times the minimum hourly wage prescribed by federal law in effect at the

time the earnings are payable, whichever is less.

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earnings” from a judgment-creditor’s garnishment. In Arizona, “disposable earnings”

include “a debtor’s wages, salary or compensation for his personal services, including

bonuses and commissions . . . .” A.R.S. § 33-1131(A) (emphasis added).

Arizona’s statutes distinguish garnishment of “earnings” from garnishment

of “monies which are not earnings.” Frazer, Ryan, Goldberg, Keyt & Lawless v. Smith,

184 Ariz. 181, 183, 907 P.2d 1384, 1386 (Ariz. Ct. App.1995). A.R.S. § 12-1598.01

provides that its provisions apply “to indebtedness owed to a judgment debtor by a

garnishee for monies which are earnings as defined in § 12-1598, paragraph 4.” A.R.S. §

12-1598 (4) defines “Earnings” as:

compensation paid or payable for personal services, whether these

payments are called wages, salary, commission, bonus or otherwise.

Earnings include periodic payments pursuant to a pension or retirement

program.

A.R.S. § 12-1598(4) (emphasis added). Moreover, A.R.S. § 12-1598.01(B) does not

expressly exclude the garnishment of an independent contractor’s earnings (commissions)

from Arizona’s statutory scheme which seeks to protect a portion of a worker’s earnings.

As to a request for a continuing lien which eliminates a writ every time a worker or

commission is paid, Arizona law sets for the requirements, procedure and limitations on a

continuing garnishment lien. A.R.S. §§ 1598.10-12. Plaintiff Warfield’s Application

makes no reference to this authority and how it complies with Arizona law.

Generally, a federal writ of garnishment is governed by the law of the state

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2 Rule 69(a), FED.R.CIV.P., provides in relevant part: 

 In General. Process to enforce a judgment for the payment of money shall

be a writ of execution, unless the court directs otherwise. The procedure on

execution, in proceedings supplementary to and in aid of a judgment, and in

proceedings on and in aid of execution shall be in accordance with the

practice and procedure of the state in which the district court is held,

existing at the time the remedy is sought,. . . . (emphasis added).

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in which the district court sits. Fed.Rule Civ.P. 69(a)2; Hilao v. Estate of Marcos, 95 F.3d

848 (9th Cir. 1996). It appearing that Plaintiff Warfield’s Application and proposed

order may not comply with Arizona law,

IT IS ORDERED that Judgment-Creditor Warfield show cause is writing

with citation to controlling case law and statutory authority on or before Tuesday,

February 19, 2008 why this Court should not recommend to the assigned District Judge

that Judgment-Creditor Lawrence J. Warfield's Application for Judgment on

Garnishment, docket # 827, be denied.

Dated this 4th day of February, 2008.

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