Opinion ID: 383805
Heading Depth: 2
Heading Rank: 2

Heading: Review of the Pennsylvania Procedures

Text: 48 The Pennsylvania postjudgment garnishment procedures do not provide for notice and an opportunity to be heard before attachment of bank accounts. Mrs. Finberg concedes that due process does not require these procedures, since their absence serves the creditor's interest in preventing a waste or concealment of assets. See Mitchell v. W. T. Grant Co., 416 U.S. 600, 608-09, 94 S.Ct. 1895, 1900, 40 L.Ed.2d 406 (1974). She contends, however, that the procedures are inadequate because they do not contain certain measures for the protection of property subject to her exemptions: an opportunity for a hearing and adjudication of claims of exemption promptly after the attachment, adequate postseizure notice to the judgment debtor, a creditor's affidavit stating that the writ of execution will not cause the attachment of exempt property, issuance of a writ only by a judicial officer, and a bond posted by the creditor for use in compensating the debtor for an attachment of exempt property. 49 (1) Prompt postseizure hearing 50 A fundamental requirement of due process is an opportunity to be heard at a meaningful time. Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965). When the opportunity is deferred until after a provisional seizure of property, it must not be unnecessarily deferred much beyond that time. See Barry v. Barchi, 443 U.S. 55, 66, 99 S.Ct. 2642, 2650, 61 L.Ed.2d 365 (1979). 51 In the circumstances of the present case, the debtor's interests demand an especially prompt hearing. Her purpose in asserting exemptions is to regain money required for the basic expenditures of living. The creditor, on the other hand, has an interest in delaying a hearing and adjudication on claims of exemptions only to the extent that delay is necessary to prepare a response to the debtor's claims. At the very minimum, then, a judgment debtor in Mrs. Finberg's position must have an opportunity to assert and adjudicate claims of exemption promptly after the imposition of a freeze. 52 The appellees argue that a prompt hearing and adjudication is available on a petition to the Court of Common Pleas under Pa.R.Civ.P. 3121(d). This rule allows the court to set aside the writ, service or levy ... (2) Upon a showing of exemption or immunity of property from execution. Proceedings on a rule 3121(d) petition are governed by general rules of motion practice, which are Pa.R.Civ.P. 206-209 and also Philadelphia General Civil Rule 140 for Philadelphia County. Misco International Chemicals, Inc. v. Spritz, 5 Pa. D.& C.3d 779, 782-83 (Phil.Cty.C.P.1977); Hollinger v. Penn Harris Real Estate, Inc., 39 Pa. D.&C.2d 201, 205-06, 84 Dauph. 378 (1966). We find that the rules governing motion practice fail to provide a sufficient measure of promptness. 53 Under the Philadelphia rule, the creditor may take fifteen days to respond to a petition before the debtor may request a ruling from the court. Philadelphia General Civil Rule 140(B)(4). Even if the court then gives an immediate ruling, fifteen days is too long a period to deprive a person of money needed for food, shelter, health care, and other basic needs. The creditor has little need for this much time in preparing a response, since complicated issues seldom arise concerning the Pennsylvania $300 exemption, the Social Security Act exemption, and other exemptions designed to protect funds for basic necessities. 54 An exception to the fifteen-day rule is available for a petition of an emergency nature. Id. 140(H). 4 However, nothing in the local rules, published court decisions, or the record of this case indicates the likelihood of a judgment debtor obtaining an exception for a rule 3121(d) petition. Nor does any authority indicate the probable length of the response period for any exception. With this much uncertainty, we cannot accept this provision as providing the necessary promptness. 55 Even after the period allowed for the creditor to respond, further delay is likely before the court rules on the debtor's petition. If the creditor demands proof on any of the allegations in the debtor's petition, which it may do by simply asserting a lack of knowledge, Pa.R.Civ.P. 1029(c), the parties must proceed to take depositions on disputed issues of fact. Id. 209(a). The motions court has no authority to dispense with the deposition process when a petition and response raise disputed issues of fact. Instapak Corp. v. S. Weisbrod Lamp & Shade Co., 248 Pa.Super. 176, 374 A.2d 1376 (1977). The rules impose no time limits on the deposition process, and it is not by nature swift. See generally Pa.R.Civ.P. 4007.1, 4007.3. Therefore, when the creditor demands proof on claims of exemption, the rules provide absolutely no assurance of a prompt ruling on a rule 3121(d) petition. 56 The district court held that a debtor can obtain a prompt release of exempt property from an attachment with a request to the sheriff under Pa.R.Civ.P. 3123. The rule is quoted in the margin. 5 The district court read it to mean that the sheriff, upon receipt of a verified affidavit, must promptly order the release of exempt funds to the use of the debtor. 461 F.Supp. at 262. 57 We do not read rule 3123 to apply to a judgment debtor in Mrs. Finberg's position. A fair reading of the rule indicates that it applies to property held by the sheriff in preparation for a judicial sale. In a garnishment action against intangible property, the property stays in the hands of the garnishee until the court enters judgment against the garnishee. See Pa.R.Civ.P. 3109(a), 3111(c), 3148. The judgment then is in the form of a money judgment against the garnishee. Id. 3148(a)(1). The sheriff never holds the property in preparation for a judicial sale or for any other purpose. 58 We cannot find any evidence of the use of rule 3123 to claim exemptions for property held by garnishees or for executions against intangible property. 6 The parties, one of whom is the Sheriff of Philadelphia County, state that they also are unaware of such uses. Indeed, neither appellee has offered any argument in this court in support of the district court's assumption that Mrs. Finberg could have invoked this rule. We conclude that this assumption is incorrect. 59 Even in situations where rule 3123 applies, it does not provide for a prompt return of exempt property to the debtor. The rule imposes no time limit on the sheriff's determination of the validity of a claim of exemption. No authority that we can find requires the sheriff to return exempt property to the debtor at any time before the judicial sale. We find no basis for the district court's conclusion that rule 3123 enables a judgment debtor promptly to recover exempt property. 60 The only other process that might allow a judgment debtor to assert a claim of exemption is a preliminary objection to a writ of execution. Pa.R.Civ.P. 3142(a). However, proceedings on preliminary objections are subject to the same rules that govern proceedings on petitions under rule 3121(d). Pa.R.Civ.P. 1028(c); Philadelphia General Civil Rule 140(E). Hence, this process would afford no greater promptness. We conclude that the Pennsylvania postjudgment garnishment rules fail to provide the prompt postseizure hearing and adjudication of claims of exemption under the provisions of any act of Congress or under any Pennsylvania Act of Assembly that due process requires. 61 (2) Notice 62 Along with a hearing at a meaningful time, fundamental principles of due process required that Mrs. Finberg receive timely and adequate notice of the attempt to garnish her accounts. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). The Pennsylvania rules provide: Upon being served with the writ (of execution), the garnishee shall forward a copy to the defendant. Pa.R.Civ.P. 3140(a). The rules also require the garnishee to forward to the debtor a copy of its answers to any interrogatories of the creditor. Id. 3140(b). 7 Mrs. Finberg asserts two deficiencies in these procedures. 63 Her first contention is that notice in the foregoing manner might not reach the debtor. She argues that the rules do not contain sufficient safeguards against a garnishee's failure to forward copies of the writ and answers to interrogatories. 8 However, in the present case, the garnishee fully complied with the rules and gave Mrs. Finberg notice in the prescribed manner. The issue of this alleged constitutional defect, therefore, is not presented by the facts of this case. Accordingly, we shall refrain from considering the issue. See United States v. Rains, 362 U.S. 17, 80 S.Ct. 519, 4 L.Ed.2d 524 (1960). 64 The second defect that Mrs. Finberg alleges is that the notice prescribed by the rules, and received by her, did not inform her of exemptions that might apply to her property and of the process for claiming exemptions. The district court rejected this contention since due process simply does not require that the state inform individuals of their legal rights. 461 F.Supp. at 263. 65 The notice required by due process must be reasonably calculated, under all the circumstances, to ... afford (interested parties) an opportunity to present their objections. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). The Supreme Court held in Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 13-15, 98 S.Ct. 1554, 1562-1563, 56 L.Ed.2d 30 (1978), that a public utility's notice to customers that it was terminating gas and electric services failed to satisfy due process because the notices did not inform the customers of the process for contesting terminations. According to the Court, what due process requires for the content of the notice depends upon the circumstances of the particular case. Id. at 14 n.15, 98 S.Ct. at 1563. 66 In this case, Mrs. Finberg was not informed of either the exemption for social security benefits, or the $300 exemption under Pennsylvania law. As we noted earlier, both of these exemptions are designed to protect a debtor's means of purchasing basic necessities. In a case involving an attempt to garnish an individual debtor's bank accounts, notice that informs the debtor of the exemption under federal law for social security benefits, of the existence of the $300 exemption under Pennsylvania law, and of the procedure for claiming these exemptions would provide substantial protection to the debtor's interest in having funds available for basic necessities. Knowledge of these exemptions is not widespread, and a judgment debtor may not be able to consult a lawyer before the freeze on a bank account begins to cause serious hardships. These problems are probably most acute for those judgment debtors who have few immediate sources of necessary funds other than money held in a bank account. Notice of these matters can prevent serious, undue hardship for the judgment debtor whose lack of information otherwise would cause delay or neglect in filing a claim of exemption. Because Mrs. Finberg did not claim other exemptions under Pennsylvania law, we need not determine the effect of our decision on Pennsylvania exemptions not claimed by Mrs. Finberg. 67 The conveyance of this information would not place a great burden on the state. For example, the information might be provided on the copy of the writ of execution which the garnishee is required to promptly forward to the defendant. See Pa.R.Civ.P. 3140(a). The creditor would not have to incur any additional expense or delay. We hold that the failure to provide Mrs. Finberg with this information was a violation of due process. 68 (3) Preliminary affidavit, bond, and judicial issuance 69 The requirements of notice and an opportunity to be heard on claims of exemptions after the imposition of a freeze, as just discussed, serve to minimize the hardship caused the debtor by an attempt to garnish exempt funds. Mrs. Finberg argues that due process requires a number of additional procedures that arguably would reduce the number of such garnishments in the first instance. 70 The first of these procedures is a requirement that the judgment creditor file, along with the praecipe for a writ of execution, an affidavit stating that the writ would not cause the attachment of exempt funds. Mrs. Finberg next contends that two additional procedures are necessary to reduce the number of wrongful garnishments: the posting of a bond to compensate the judgment debtor for injury caused by attachment of exempt property and the requirement that a judge or magistrate issue a writ of execution. 71 We have considered these contentions and conclude that although the requirements might be desirable, we do not believe their absence constitutes a violation of due process. See Brown v. Liberty Loan Corp., 539 F.2d at 1369.