Court Opinion

ID: 4193385
Source: CourtListenerOpinion
Date Created: 2017-08-04 15:08:15.74111+00
Date Added: 2024-06-11T09:36:39.637473
License: Public Domain

No. 116,921

               IN THE COURT OF APPEALS OF THE STATE OF KANSAS

                            MAINLAND INVESTMENT GROUP, LLC,
                                d/b/a TEXACO FOOD MART,
                                         Appellee,

                                                 v.

                             TONYA SMITH a/k/a TONYA M. SMITH,
                                        Defendant,

                                                and

                                  DIVERSICARE OF SEDGWICK,
                                          Appellant.

                                 SYLLABUS BY THE COURT

        A default judgment obtained pursuant to K.S.A. 61-3514 requires that at the time
the default judgment is entered, a valid order of garnishment is in effect and the garnishee
against whom the default judgment is directed has not been released pursuant to K.S.A.
2016 Supp. 61-3507(a).

        Appeal from Lyon District Court; DOUGLAS P. JONES, judge. Opinion filed August 4, 2017.
Reversed and judgment vacated.

        Jeffrey T. Donoho and Roger W. Slead, of Horn Aylward & Bandy, LLC, of Kansas City,
Missouri, for appellant.

        Wm. Scott Hesse, of Newman, Hesse & Associates, P.A., of Topeka, for appellee.

Before ARNOLD-BURGER, C.J., STANDRIDGE and SCHROEDER, JJ.

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       ARNOLD-BURGER, C.J.: Mainland Investment Group (Mainland) obtained a
default judgment against Tonya Smith. After failing to collect on its judgment, Mainland
obtained an order of garnishment. Mainland then served this order on Smith's alleged
employer, Diversicare of Sedgwick (Diversicare)—the garnishee. Diversicare failed to
timely answer the order of garnishment, and Mainland filed a motion for judgment
against Diversicare as provided under K.S.A. 61-3514. But before a final decision was
made on the motion, Mainland released Diversicare from the order of garnishment.
Despite this, the district court imposed the penalties provided in K.S.A. 61-3514 for
failing to answer, including costs and attorney fees. Because we find that the district court
lacked jurisdiction to enter default judgment and assess fees when the order of
garnishment had been released, we reverse and vacate the judgment against Diversicare.

                            FACTUAL AND PROCEDURAL HISTORY

       In 2005, Mainland filed a petition against Smith regarding a worthless check in the
amount of $51.13 that Smith wrote to Texaco Food Mart in 2002. Smith did not respond
to this petition, and in 2006, Mainland obtained a default judgment from the district court
in the amount of $490.52.

       For nearly 10 years, Mainland failed to collect the judgment amount from Smith
and, apparently, could not locate her. Finally, in late 2015, Mainland requested—and the
district court issued—an order of garnishment for the unpaid judgment amount of $1,159.
Mainland served Smith's alleged employer, Diversicare, with the garnishment order via
first class mail on December 16, 2015. Diversicare failed to answer the order of
garnishment, and, on May 25, 2016, Mainland filed a motion for judgment against
Diversicare for failure to comply with K.S.A. 2015 Supp. 61-3510. Mainland served
Diversicare with notice of the motion hearing scheduled for July 11, 2016.

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       Diversicare filed a response to Mainland's motion for judgment against garnishee
and appeared at the hearing. In its response, Diversicare asserted that it had never
received the order of garnishment and stated that Smith never worked for the company.
The district court continued the motion hearing to August 15, 2016.

       Later, on August 1, 2016, Diversicare filed a motion to file an out-of-time answer
to the order of garnishment. In that motion, Diversicare argued it had excusably neglected
to timely answer the order of garnishment and reiterated that it never employed Smith.

       On August 8, 2016, Mainland filed a release of garnishment with the district court
in which it released Diversicare from the order of garnishment. Importantly, the register
of actions for August 8, 2016, indicated the hearing scheduled for August 15 was
cancelled. Counsel for Diversicare sent a letter to the district magistrate judge advising
him of the release of the garnishment and stating Diversicare's position that all motions
were moot. Diversicare also indicated, apparently because of the release, that Diversicare
would not appear on August 15. A copy was sent to counsel for Mainland. However,
counsel for Mainland appeared before the district court on August 15 and, citing
Diversicare's absence from the hearing, moved for a default judgment against
Diversicare. The district court initially noted the case "wasn't on the docket" but granted
Mainland's motion for default judgment. Curiously, the district magistrate judge also
signed a journal entry prepared by Mainland's counsel, finding that on April 15
Diversicare's motion to file an answer out of time was moot because Mainland had
"released the garnishment pursuant to K.S.A. 61-3507(a)."

       Thereafter, Diversicare filed a motion to set aside the district court's entry of
default judgment and renewed its motion for leave to file its answer out of time. The
district court set a hearing on both motions.

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       At the hearing, the district court agreed to set aside its August 15 entry of default
judgment and focus exclusively on whether Diversicare could file its answer out of time.
Ultimately, the district court ruled Diversicare could not file its answer out of time and
thus had violated K.S.A. 61-3514. As a consequence, the court ordered Diversicare to pay
$1,189.40, plus postjudgment interest, costs of the motion, and attorney fees to Mainland.

       Diversicare timely filed this appeal.

                                         ANALYSIS

       Before we begin our analysis of the issues presented in this case, a general
overview of the statutory garnishment procedure is in order.

We review the garnishment statutes, generally.

       When a judgment is obtained, a judgment creditor may seek an order of
garnishment to aid in collection of the judgment. K.S.A. 2016 Supp. 61-3504(a). As it
applies to this case, such an order allows the judgment creditor to seize wages of the
judgment debtor from his or her employer—the garnishee—to satisfy the judgment.
K.S.A. 61-3502. Garnishment is an entirely statutory remedy. To initiate the process, the
judgment creditor files a request with the court to issue an order of garnishment. K.S.A.
2016 Supp. 61-3504(b). The order of garnishment is then served on the garnishee along
with a form for the garnishee's answer. K.S.A. 2016 Supp. 61-3507(a). Service of the
order of garnishment on garnishees within this state may be by regular first class mail,
fax, or electronic mail. K.S.A. 2016 Supp. 61-3003(g). If by first class mail, it is deemed
complete when properly addressed and placed in the mail with proper postage. Service is
considered obtained if it is not returned as undeliverable. K.S.A. 2016 Supp. 61-
3003(g)(1). The judgment creditor is also required to notify the judgment debtor of the
order of garnishment so that the judgment debtor may assert any claims of exemption to

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which he or she is entitled. K.S.A. 2016 Supp. 61-3508. If the judgment creditor is
notified by the garnishee that the judgment debtor has never been employed by the
garnishee or has been terminated, the judgment creditor is required to "forthwith" file a
release of the garnishment. K.S.A. 2016 Supp. 61-3507(a). The order of garnishment
remains in effect until the judgment is paid or the garnishment is released, whichever is
sooner. K.S.A. 2016 Supp. 61-3507(b).

       The garnishee has 14 days to send its completed answer to the judgment creditor
and the judgment debtor. K.S.A. 2016 Supp. 61-3510(a). If the garnishee fails to answer
the order of garnishment within the time and manner specified in the initial order of
garnishment, the judgment creditor may file "a motion." K.S.A. 61-3514. "At the hearing
on the motion, the court may grant judgment against the garnishee for the amount of the
judgment creditor's judgment . . . and for the expenses and attorney fees of the judgment
creditor." K.S.A. 61-3514. Notably, Kansas courts have found "a judgment against a
garnishee for failure to answer a garnishment order is a default judgment." Southwestern
Bell Yellow Pages, Inc. v. Beadle, 40 Kan. App. 2d 989, 994, 197 P.3d 896 (2008).

We examine our standard of review and rules of statutory construction.

       On appeal, Diversicare contends the district court erred "in its interpretation of the
Kansas garnishment statutes in finding that the release of the Order of Garnishment
pertaining to Diversicare did not absolve Diversicare of any further liability." Resolution
of this dispute requires this court to interpret K.S.A. 61-3514 (provision allowing default
judgment against nonanswering garnishee) as it relates to K.S.A. 2016 Supp. 61-3507(a)
(requiring release of order of garnishment if garnishee notifies judgment creditor that
judgment debtor is not employed by garnishee). Interpretation of a statute is a question of
law over which appellate courts exercise unlimited review. Neighbor v. Westar Energy,
Inc., 301 Kan. 916, 918, 349 P.3d 469 (2015).

                                              5
        The most fundamental rule of statutory construction is that the intent of the
legislature governs. State ex rel. Schmidt v. City of Wichita, 303 Kan. 650, 659, 367 P.3d
282 (2016). When construing a statute, an appellate court must first attempt to ascertain
legislative intent through the statutory language enacted, giving common words their
ordinary meanings. Ullery v. Othick, 304 Kan. 405, 409, 372 P.3d 1135 (2016). When a
statute is plain and unambiguous, an appellate court should not speculate about the
legislative intent behind that clear language and should refrain from reading something
into the statute that is not readily found in its words. Where there is no ambiguity, the
court need not resort to statutory construction. 304 Kan. at 409.

        When construing statutes to determine legislative intent, appellate courts must
consider various provisions of an act in pari materia with a view of reconciling and
bringing the provisions into workable harmony if possible. Friends of Bethany Place v.
City of Topeka, 297 Kan. 1112, 1123, 307 P.3d 1255 (2013). Moreover, we must construe
statutes to avoid unreasonable or absurd results. In re Marriage of Traster, 301 Kan. 88,
98, 339 P.3d 778 (2014).

        With the statute and the rules of statutory construction in mind, we turn next to the
interpretation of and the application of the garnishment statutes to the issues raised in this
case.

A garnishee is subject to K.S.A. 61-3514 only if it has not been released from the
garnishment order.

        There is no dispute that Diversicare failed to answer the order of garnishment.
There is also no dispute that prior to the entry of a default judgment against Diversicare
for such failure, Mainland released it from the order of garnishment.

                                              6
       In asserting that the district court could still order a default judgment under the
provisions of K.S.A. 61-3514 Mainland argued:

       "[The] motion was for a judgment against the garnishee, who never answered our
       garnishment, and they have 14 days to answer. They didn't do it. They did file a motion
       to answer out of time. I looked at the document and they said that [Smith] didn't work
       there, so I have an obligation as well to release a garnishment, but still, that does not
       forgive the underlying motion that I have for judgment because they didn't answer [the
       order] within 14 days . . . ."

The district court agreed with this logic and ruled:

               "I will grant the plaintiff's motion for judgment against the garnishee,
       [Diversicare]. I would agree with [Mainland] that simply the release of garnishment does
       not excuse the garnishee from answering . . . the motion as to why the judgment should
       [not be] granted against them pursuant to [K.S.A. 61-3514.]"

       But the only document connecting Diversicare to the case, the order of
garnishment, had been released. Accordingly, there was no order of garnishment related
to Diversicare anymore. There was nothing upon which to enter default judgment against
Diversicare.

       We agree with Diversicare that the clear intent—as evidenced by its language—
behind the requirement in K.S.A. 2016 Supp. 61-3507(a) requiring release of a
garnishment upon a sworn statement from the garnishee is to absolve the garnishee from
liability related to a judgment debtor it does not employ. In fact, the next section makes
clear that the order of garnishment remains in effect until the judgment is paid or the
garnishment is released, whichever is sooner. K.S.A. 2016 Supp. 61-3507(b). To allow a
default judgment to be entered would make the garnishee liable for payment of a
judgment entered against a person that it has sworn it does not employ, and perhaps has

                                                     7
never employed. This would place the judgment creditor in a better position than the
judgment debtor, entitled to wages from the garnishee that he or she never earned. See
Curiel v. Quinn, 17 Kan. App. 2d 125, 129, 832 P.2d 1206 (1992) (creditor stands in
shoes of debtor and is not to be placed in more favorable position than debtor would have
been for the enforcement of a claim against garnishee). We find the clear language of the
garnishment statutes, when read in pari materia, support an interpretation that once a
garnishee is released, the garnishee is discharged from any further liability in the action.
See Grant v. Reed, 167 Kan. 289, 296, 205 P.2d 955 (1949) (garnishee previously
released from a garnishment order discharged from further liability to creditor). In other
words, a default judgment obtained pursuant to K.S.A. 61-3514 requires that at the time
the default judgment is entered, a valid order of garnishment is in effect and the garnishee
against whom the default judgment is directed has not been released pursuant to K.S.A.
2016 Supp. 61-3507.

       Mainland argues that this interpretation "would emasculate the statutory scheme
by allowing a garnishee to answer the Order of Garnishment at any time without any
repercussions for failing to timely answer the garnishment." This is an overstatement. If
the case has reached the point where a default judgment has already been properly
entered against a garnishee, the garnishee would still be required to move to set aside the
default judgment in any attempt to avoid liability. But under our statutory scheme, before
a default is entered, the garnishee must be given notice of a hearing regarding its failure
to comply with K.S.A. 61-3514. Defaults are not favored under the law, and this is yet
another opportunity to notify the garnishee that liability may be forthcoming. See Garcia
v. Ball, 303 Kan. 560, 568, 363 P.3d 399 (2015) (law dislikes default judgments). That
second notice contemplated by the statute certainly had its intended effect here—giving
the garnishee an opportunity to argue against a default, request to file an answer out of
time and, more importantly, file a sworn statement that it did not employ the judgment
debtor.

                                              8
       Accordingly, we find the district court erred in entering a default judgment and
costs against Diversicare pursuant to K.S.A. 61-3514.

Mainland's request for attorney fees is denied.

       After oral argument, Mainland filed a motion with this court for attorney fees on
appeal pursuant to K.S.A. 61-3514 and Supreme Court Rule 7.07(b)(1) (2017 Kan. S. Ct.
R. 50). Counsel for Mainland requests $41,000 in appellate attorney fees related to this
Chapter 61 garnishment action over what was initially a $51 bad check written by Smith
to Texaco Food Mart. Mainland was awarded $350 in attorney fees by the district court
on the underlying case. Given that Mainland did not prevail in whole or in part on appeal,
we deny Mainland's motion.

       Reversed and judgment against Diversicare vacated.

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