Opinion ID: 2406015
Heading Depth: 1
Heading Rank: 2

Heading: constitutionality of our prejudgment attachment code provisions.

Text: The McCrorys contend that our prejudgment attachment code provisions [Ark. Code Ann. §§ 16-110-101-16-110-309 (1987)] violate the due process clause of the fourteenth amendment because they do not require that prompt notice be given to the debtor of the attachment or of possible state and federal exemptions and do not make available a prompt hearing at which the debtor can claim exemptions. In addition, they challenge our code provisions on the grounds that they create a risk of erroneous deprivation by allowing writs of attachment to be issued by a circuit clerk instead of a judge. All of their contentions have merit. Before we scrutinize the appellants' claims, we note that they served the office of the Attorney General with copies of their amended complaint and counterclaim in accordance with Ark.Stat.Ann. § 34-2510 (Repl.1962) [Ark.Code Ann. § 16-111-106 (1987)], which gives the Attorney General the discretionary right to appear in any case where an Arkansas statute is challenged as unconstitutional. The office of the Attorney General declined the invitation by letter to the trial court and did not participate as a party litigant. In Springdale Farms, Inc., supra , we held that our prejudgment attachment scheme was constitutional in that it sufficiently met six procedural due process safeguards necessary for a valid prejudgment attachment. These safeguards, which emanate from North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct 719, 42 L.Ed.2d 751 (1975); Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct 1895, 40 L.Ed.2d 406 (1974); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); and Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), are as follows: (1) the affidavit for the writ of attachment must allege specific facts which justify attachment [Ark.Code Ann. § 16-110-106 (1987)]; (2) the petitioner must post a bond guaranteeing the defendant damages if the writ is dissolved [Ark.Code Ann. § 16-110-107 (1987)]; (3) the respondent or defendant must be allowed to regain possession by posting bond [Ark.Code Ann. § 16-110-117 (1987)]; (4) requisite proof of the need for a writ must be made before a judge; (5) an immediate hearing must be allowed, and at the hearing, the burden of proof is with the petitioner to justify the attachment; and (6) if the writ is dissolved, damages and attorney's fees must be awarded to the debtor [Ark.Code Ann. § 16-110-131 (1987)]. In so holding, we acknowledged that our statutory scheme did not exactly meet the fourth requirement because it permits writs to be granted by a circuit clerk instead of a judge. Ark.Code Ann. § 16-110-106 (1987). Notwithstanding, we found that our scheme met the safeguards test and satisfied due process for the following reason: Because our statute requires a recital [by the creditor in an affidavit] of specific facts [of the grounds for the attachment] by one with personal knowledge, the Clerk's role rises above that of a mere court functionary. See Ark.Code Ann. § 16-110-106 (1987); Ark. Code Ann. § 16-110-101 (1987). In addition, we found that the fifth safeguard was adequately met because a debtor (1) can retain possession of his attached property by posting a bond under Ark.Stat. Ann. § 31-124 (Repl.1962) [Ark.Code Ann. § 16-110-117 (1987)]; (2) can, upon reasonable notice to the plaintiff, move at any time to discharge the attachment under Ark.Stat.Ann. § 31-128 [Ark.Code Ann. § 16-110-118 (1987)]; and (3) can move to discharge the attachment at any time before the attachment is sustained under Ark.Stat.Ann. § 31-149 (Repl.1962) [Ark. Code Ann. § 16-110-130 (1987)]. After Springdale Farms, Inc ., we decided In the Matter of Evatt, 291 Ark. 153, 722 S.W.2d 851 (1987), in which we held that our temporary guardianship statute was unconstitutional. In this decision, we analyzed the issue of whether the state procedures met procedural due process by utilizing the balancing of interests test enunciated in Matthews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976): [I]dentification of the specific dictates of due process generally requires consideration of three distinct factors. First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Although Matthews predated Springdale Farms, Inc ., we did not explicitly use the Matthews analysis in Springdale Farms, Inc . Other courts utilizing the Matthews procedural due process analysis have declared certain postjudgment garnishment or attachment statutes unconstitutional because they did not require notice of possible state or federal exemptions and did not require a prompt hearing at which to claim these exemptions. Davis v. Paschall, 640 F.Supp. 198 (E.D.Ark.1986); Dionne v. Bouley, 757 F.2d 1344 (1st.Cir.1985); Finberg v. Sullivan, 634 F.2d 50 (3rd.Cir.1980). See also Clay v. Fisher, Inc., 584 F.Supp. 730 (S.D.Ohio 1984); Harris v. Bailey, 574 F.Supp. 966 (W.D.Va.1983); Deary v. Guardian Loan Co., Inc., 534 F.Supp. 1178 (S.D.N.Y.1982); Betts v. Tom, 431 F.Supp. 1369 (D.Hawaii 1977). In Dionne, supra , the court held that in order for a postjudgment attachment statute to pass constitutional muster, it must require that the debtor be informed of the attachment, of the availability of a prompt procedure to challenge the attachment, and of the fact, generally stated, that there are certain exemptions under state and federal law which he or she may be entitled to claim with respect to the attached property. In Davis, supra , the court held that the Arkansas postjudgment garnishment statutes were unconstitutional because they did not: require notice to the judgment debtor informing him of the garnishment, notice of possible state and federal exemptions, a prompt hearing to permit the judgment debtor to claim exemptions, an affidavit from the creditor stating that the writ would not cause the attachment of exempt funds, or the posting of bond to compensate the judgment debtor for injury in case of a wrongful garnishment. The facts of the case before us, coupled with the rationale expressed in the recent federal decisions and the explicit use of the Matthews balancing test in those cases and in Evatt, supra , convinces us that we must reexamine our position in Springdale Farms. Under Matthews, supra , a balancing of the interests involved is necessary. The private interest affected in this case by the Arkansas prejudgment attachment procedure is Barbara McCrory's interest in her personal property. This interest is clearly sufficient to require procedural due process. The risk of erroneous deprivation of a debtor's property interests through the use of the current Arkansas prejudgment attachment code provisions is substantial. First, there is no requirement that the debtor be given immediate notice of the attachment. Ark.Code Ann. § 16-110-111 (1987) merely provides that the order of attachment shall be executed by the sheriff or other officer without delay.... The facts of the instant case illustrate the inherent deficiency in our procedure. The circuit court issued the writ on April 10, 1987. However, Barbara McCrory was not served until April 30, 1987. Timely notice in this case may well have shortened the length of time in which Barbara McCrory was deprived of her property. Thus, the probable value of this additional procedure in decreasing the risk of an erroneous deprivation is considerable. See Matthews, supra . Secondly, the absence in our prejudgment attachment code provisions of a requirement that prompt notice of possible state or federal exemptions be given to the debtor subjects him or her to an enhanced risk of erroneous deprivation. As in the instant case, a debtor may have property which may be exempt from attachment under state [Ark. Const. art. 9] or federal law. If a debtor fails to receive notice of possible exemptions, the likelihood that he or she will suffer an unwarranted property loss is markedly heightened. Our postjudgment garnishment code provisions now require that a debtor be given notice of possible state or federal exemptions. See Ark.Code Ann. § 16-110-402(1)(A) (Supp.1988). Our prejudgment attachment scheme should contain the same safeguard since the process due a debtor before judgment is greater than that due after judgment. See Dionne, supra . See also, Finberg, supra . Thirdly, our prejudgment code provisions do not provide a mechanism, as our postgarnishment code provisions do [Ark.Code Ann. § 16-110-402(5) (Supp.1988)], by which a debtor can receive a prompt hearing to claim exemptions. As noted above, in Springdale Farms, Inc., supra , we held that our procedure satisfied the immediate hearing requirement because a debtor (1) can retain possession of his attached property by posting a bond under Ark.Stat.Ann. § 31-124 (Repl.1962) [Ark.Code Ann. § 16-110-117 (1987)]; (2) can, upon reasonable notice to the plaintiff, move at any time to discharge the attachment under Ark.Stat.Ann. § 31-128 [Ark.Code Ann. § 16-110-118 (1987)]; and (3) can move to discharge the attachment at any time before the attachment is sustained under Ark.Stat.Ann. § 31-149 (Repl.1962) [Ark. Code Ann. § 16-110-130 (1987)]. These procedures are inadequate to prevent an erroneous deprivation. The availability of a prompt hearing, where the burden of proof is with the petitioner to justify the attachment, is fatally absent. Although Ark.Code Ann. § 16-110-130 allows the debtor, before the attachment is sustained, to move to discharge the attachment, it also provides that the hearing ... may be postponed by the court, upon sufficient cause, from time to time. The fact that a debtor can retain possession of his attached property by posting a bond, although helpful to some debtors, is wholly inadequate as a substitute for an immediate hearing, especially for an indigent debtor, who cannot avail herself of this procedure. Finally, our prejudgment code provisions are deficient because they permit writs of attachment to be issued by a court clerk instead of a judge. As noted above, in Springdale Farms, Inc., supra , we held that this procedure met the safeguards test and satisfied due process for the following reason: Because our statute requires a recital [by the creditor in an affidavit] of specific facts [of the grounds for the attachment] by one with personal knowledge, the Clerk's role rises above that of a mere functionary. See Ark.Code Ann. § 16-110-106 (1987); Ark.Code Ann. § 16-110-101 (1987). Ark.Code Ann. § 16-110-106 provides in pertinent part as follows: (a)(1) An order of attachment shall be made by the clerk of the court in which the action is brought in any case mentioned in subdivision (1) of § 16-110-101, where there is filed in his office an affidavit of the plaintiff or of someone in his behalf, showing: (A) The nature of the plaintiff's claim; (B) That it is just; (C) The amount which the affiant believes the plaintiff ought to recover; and (D) The existence in the action of one (1) of the grounds for an attachment enumerated in subdivision (1) of § 16-110-101. In the case mentioned in subdivision two (2) of § 16-110-101, where it is shown by affidavit or by the return of the sheriff or other officer upon the order for delivery of the property claimed, the facts mentioned in that subdivision must exist. It is true that this code provision requires more than mere conclusory allegations in the creditor's affidavit, North Georgia Finishing, Inc., supra , before a clerk may execute an order of attachment. However, this fact does not alleviate the risk of erroneous deprivation caused by the issuance of a writ without examination by a judge. A judge has the superior ability to determine if the affidavit sufficiently shows (1) the nature of the plaintiff's claim, (2) that it is just, (3) the amount which the affiant believes the plaintiff ought to recover, and (4) the existence in the action of one of the grounds for attachment as enumerated in subdivision (1) of § 16-110-101. Absent a judge's participation or supervision, there is a significant risk that a writ will be issued even though the requirements of the statute have not been met. This danger explains the rationale of North Georgia Finishing, Inc., supra , which recognized that the issuance of prejudgment writs of attachment by a judge was an important procedural safeguard necessary to satisfy due process. The foregoing defects in our code provisions must be balanced against the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. See Matthews, supra . The state has a strong interest in providing equitable procedural safeguards which protect the interests of both creditor and debtor. It is clear that requiring notice of attachment and of possible exemptions would not place a great burden on the state. Dionne, supra . However, a significant burden would be placed on the state judicial machinery by requiring a prompt hearing and the issuance of writs of attachment by a judge. Notwithstanding, the risk of erroneous deprivation of property interests through the use of the current prejudgment attachment procedure and the benefit of the additional safeguards substantially outweigh the burden incurred due to the additional or substitute procedures. Accordingly, the Arkansas prejudgment attachment code provisions are struck down. Springdale Farms, Inc., supra , is overruled to the extent it is inconsistent with this opinion.