Court Opinion

ID: 9353924
Source: CourtListenerOpinion
Date Created: 2023-01-13 05:10:06.245629+00
Date Added: 2024-06-11T17:10:05.050972
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                            STATE OF MICHIGAN

                            COURT OF APPEALS

ADVANCE STEEL CORPORATION,                                           UNPUBLISHED
ALEXANDER L. STEWART, and ROBERT A.                                  January 12, 2023
STEWART,

               Plaintiffs-Appellees,

v                                                                    No. 357687
                                                                     Oakland Circuit Court
THEODORE JOHN ELIA,                                                  LC No. 2015-145471-CK

               Defendant-Appellee,

and

COMERICA BANK,

               Appellant.

                                        AFTER REMAND

Before: JANSEN, P.J., and O’BRIEN and HOOD, JJ.

PER CURIAM.

       In a previous opinion, we determined that the trial court erred by entering a stipulated order
regarding disbursement of the interpleaded funds in violation of Comerica’s right to due process,
and remanded to the trial court to adjudicate Comerica’s and Advance’s competing claims to the
settlement funds under the appropriate court rules in the first instance. Advance Steel Corp v Elia,
unpublished per curiam opinion of the Court of Appeals, entered July 21, 2022 (Docket
No. 357687); slip op at 1.

        Upon remand, Comerica moved for the proper adjudication of the competing claims,
arguing that its claim for garnishment of the assets of defendant Theodore John Elia is superior to
Advance’s claim because Comerica’s garnishment was served on the garnishee Lieff Cabraser
Heimann & Bernstein, LLP (LCHB) before the trial court entered an order declaring Advance was
the sole judgment creditor of the $401,000 held by LCHB for Elia. Advance moved for stay and

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to adjourn the hearing on Comerica’s motion because it was filed before the statutory period to
apply for leave to appeal in the Michigan Supreme Court expired, and filed its application on
August 23, 2022. The next day, a short hearing was held, and the trial court denied Advance’s
motion for stay and ordered Advance to file a response to Comerica’s motion to decide the issue
on the merits. On August 26, 2022, the trial court entered an order declaring that Comerica’s writ
of garnishment was proper and had priority over the trial court’s order declaring Advance as the
sole judgment creditor, and ordering the amount to be paid to Comerica within 28 days. This Court
held this matter in abeyance pending resolution of Advance’s application for leave to appeal in the
Supreme Court, Advance Steel Corp v Elia, unpublished order of the Court of Appeals, entered
October 24, 2022 (Docket No. 357687), which the Supreme Court denied on November 30, 2022,
Advance Steel Corp v Elia, ___ Mich ___ (2022) (Docket No. 164721).

       We now review the trial court’s adjudication of Advance’s and Comerica’s competing
claims for disbursement of Elia’s settlement proceeds. The interpretation of statutes, court rules,
and legal doctrines is reviewed de novo. Glasker-Davis v Auvenshine, 333 Mich App 222, 229;
964 NW2d 809 (2020).

        The trial court found that after Elia received a settlement from a lawsuit in Florida,
Comerica obtained a garnishment on May 18, 2020, and served the garnishment on LCHB on
May 27, 2020. Advance moved to obtain a garnishment on May 20, 2020, and the order declaring
Advance the sole judgment creditor was entered on May 29, 2020. The trial court ruled that LCHB
was properly served with notice of Comerica’s garnishment on May 27, 2020, LCHB was subject
to the jurisdiction of the trial court because it was conducting business with Elia within this state,
and although not addressed by the parties, the funds were subject to garnishment by a Michigan
court because although they were held out of state by LCHB, they were owned by Elia. Thus,
because Comerica’s garnishment was served before the May 29, 2020 order was entered, Comerica
had priority.1

        The trial court properly determined that Comerica’s writ of garnishment was superior to
the May 29, 2020 order. MCR 3.101(L)(2) contemplates the existence of competing claims to
property subject to one or more garnishments. With respect to periodic garnishments, MCL
600.4012(2) dictates that “garnishments have priority in the order in which they are received,” but
there is no similar provision in MCL 600.4011, the statute governing nonperiodic garnishments
like those at issue here. Nonetheless, we may infer that the same priority scheme was intended.

       MCR 3.101(G)(1)(a) provides:

              (1) Subject to the provisions of the garnishment statute and any setoff
       permitted by law or these rules, the garnishee is liable for

              (a) all tangible or intangible property belonging to the defendant in the
       garnishee’s possession or control when the writ is served on the garnishee, unless

1
 The trial court declined to address Comerica’s request for sanctions against Advance Steel and
Elia or Advance’s argument that the debt owed to Comerica was discharged in bankruptcy
proceedings in California because these issues were outside the scope of the remand.

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       the property is represented by a negotiable document of title held by a bona fide
       purchaser for value other than the defendant; . . . . [Emphasis added.]

The language “when the writ is served on the garnishee” is repeated throughout this subsection,
see MCL 3.101(G)(1)(b), (c), (d), (g), (h), emphasizing the importance of that point in time as the
time to assess the extent of the garnishee’s liability under the garnishment. If more than one
garnishment is entered against the same property, the property in the garnishee’s possession or
control at the time the later-served garnishment is received would already be encumbered by the
earlier-served garnishment. This “first in time” priority rule is consistent with the statutory rule
for periodic garnishments, MCL 600.4012(2), as well as other priority rules applied in this state.
See, e.g., Farmland Capital Solutions, LLC v Mich Valley Irrigation Co, 335 Mich App 370, 379;
966 NW2d 709 (2021) (recognizing that first secured creditor to perfect security interest generally
has priority over later perfected security interests); In re Receivership of 11910 South Francis Rd
(Price v Kosmalski), 492 Mich 208, 225 n 38; 821 NW2d 503 (2012) (describing priority of
recorded mortgage loan over subsequently recorded liens, subject to statutory exceptions).

       Advance obtained a writ of garnishment against the Florida court on April 27, 2020. It is
unclear when the writ was served, but, in any event, LCHB was not the named garnishee.
Comerica then obtained a writ of garnishment against LCHB on May 18, 2020, and served the writ
on LCHB on May 27, 2020. Two days later, the trial court entered its “order garnishing funds”
and declaring Advance the sole judgment creditor entitled to the settlement proceeds. Because
Comerica had already served its writ before the trial court entered the May 29, 2020 garnishing
order and before Advance served said order upon LCHB, Comerica had a superior claim to the
settlement proceeds. Therefore, the August 26, 2022 trial court order on remand properly declared
Comerica’s priority and properly ordered Advance Steel to pay Comerica the amount of the writ.

       Affirmed.

                                                             /s/ Kathleen Jansen
                                                             /s/ Colleen A. O’Brien
                                                             /s/ Noah P. Hood

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