In This Issue: I Have a Judgment, Now What?: Collecting and Enforcing a Money Judgment Through the Garnishment Process l Responsibilities to Preserve Data for Litigation
As a plaintiff, you often roam a long and weary road before you achieve your ultimate litigation goal: a judgment against a defendant. Now that you have your prize, what do you do with it? With any luck, the defendant recognizes the error of his or her ways and willingly pays you the full amount that the court has awarded you. Many times, however, the opposing party is not willing to voluntarily pay up. Now what?
Pennsylvania law provides various means to assist a plaintiff in collecting and enforcing a money judgment. One common way of obtaining money from a recalcitrant judgment debtor is through a garnishment action. Garnishment is essentially the process of retrieving a judgment debtor’s assets from a third party. Often times, as many of our financial institution clients know all too well, this means requiring the defendant’s bank to put a hold on their account and for the financial institution to subsequently turn over all non-exempt funds to the plaintiff. This is usually a quick, easy, and fairly inexpensive way to collect on a judgment.
While garnishments are primarily something that financial institutions must deal with, many other clients may be subject to such actions as well. The garnishment rules clearly apply to any party holding an asset for the benefit of a judgment debtor. Such assets are not always bank account funds, but rather could also include collateral such as cars, trucks, heavy equipment, or other tangible assets. For example, we recently assisted a client with a garnishment action where the plaintiff sought to obtain gambling winnings which the client held for a defendant.
If you are not a banking institution, it is unlikely that you have had to navigate the garnishment process. An understanding of that process, however, could prevent major headaches and consequences down the road.
A properly garnished account entails several steps, some mandatory, others optional. First, a writ of execution in garnishment must be filed with the court and served by a sheriff on the party holding the defendant’s assets. Once the writ is received, the garnishee must be very careful to prevent the dissipation of the assets listed in the writ. At this point, we would advise seeking advice from counsel about how to proceed. Many times, the proper response is to turn over the named assets to the plaintiff. That is not always the case, however, as certain types of assets are exempt from execution.
In addition to the writ of execution in a garnishment, you may also receive garnishment interrogatories. Although not mandatory, garnishment interrogatories more often than not accompany the writ of execution. A strong word of caution here: garnishment interrogatories are in essence the start of a complaint, just as if you were being sued in court by the plaintiff. If the interrogatories are not answered within a certain timeframe, the plaintiff is permitted to enter a judgment against you, as the garnishee, for the same amount that the judgment debtor owes the plaintiff. Having an appreciation and understanding of what to do when you are served with these type of documents is essential to preventing the judgment debtor’s woes becoming your own.
Navigating your way through a garnishment action can be tricky, whether you’re a plaintiff or the garnishee. The litigation group at McNees Wallace & Nurick can aid clients in understanding the garnishment process and avoiding any associated pitfalls.
If you are involved in litigation, you have a duty to preserve all documents and data that could be relevant to the litigation. The duty to preserve evidence begins as soon as litigation is “reasonably anticipated.” That means you must begin preserving evidence even if a court has not issued a specific preservation order, and even if a formal complaint has not been filed. This is referred to as a “litigation hold” and applies to all parties involved in the litigation. It may also be appropriate to issue a litigation hold notice to related third parties. A pre-litigation demand letter, an oral threat of litigation, or even knowledge of an industry-wide problem or a problem within an organization may trigger the duty to preserve evidence.
Technological advances continue to increase the capacity for efficiency, mobility, and enhanced communication. The ability to create and store information electronically can allow for better organization, easier access to information, and faster communication between employees and customers. Along with these benefits come responsibilities of maintaining that information in the event of litigation. Like many states, Pennsylvania has recently amended its rules of discovery to specifically include electronically stored information (ESI). ESI includes all electronic information such as emails, voicemails, and documents stored on computers, servers, or other electronic devices. Information available through social media sites maintained by an organization is also considered discoverable ESI.
The comment to the amended rule expressed that there was “no intent to incorporate the federal jurisprudence surrounding the discovery of electronically stored information,” and that a proportionality standard would be followed to ensure that discovery of ESI is “consistent with the just, speedy and inexpensive determination and resolution of litigation disputes.” The proportionality standard requires the court to consider: (i) the nature and scope of the litigation, including the importance and complexity of the issues and the amounts at stake; (ii) the relevance of electronically stored information and its importance to the court’s adjudication in the given case; (iii) the cost, burden, and delay that may be imposed on the parties to deal with electronically stored information; (iv) the ease of producing electronically stored information and whether substantially similar information is available with less burden; and (v) any other factors relevant under the circumstances. The comment also noted that parties and courts may consider tools such as electronic searching, sampling, cost sharing, and non-waiver agreements to fairly allocate discovery burdens and costs. Pennsylvania is taking the proportional approach used in general discovery requests to prevent discovery of ESI from becoming unduly burdensome.
During a litigation hold, it is important to communicate to all information custodians the importance of preserving all documents and data, including ESI, and it can be helpful to appoint one person in the organization to coordinate these efforts. All key players – employees who are likely to have access to information relevant to the litigation – should be notified and instructed about how to preserve information. Former employees who may possess, or have access to, relevant information should also be notified. Information such as emails attached to a former employee’s account may need to be obtained. Failure to properly preserve information can result in adverse court directives, including default judgment or monetary sanctions.
You should have a document retention policy in place which includes electronic data and remote devices. If you have a standard policy for deleting ESI or recycling or shredding paper, these policies will need to be suspended throughout the litigation hold. You should periodically review policies and procedures for preservation and retention of data, including ESI. Be sure to add any new technology to your preservation policy. A litigation hold is a continuing obligation to preserve data, and it is much easier to comply if you have clear policies and procedures which can be monitored. Learn your organization’s potential for recovering recently deleted information. Be sure there is someone in the organization who fully understands the data storage systems used, including any information that may be hosted by third-party servers. It is helpful to identify in advance where all potentially relevant data is stored, including portable devices and servers.
The benefits of technology also bring added responsibilities and obligations in the event of litigation. Be sure your organization is prepared by reviewing your policies and understanding your data storage systems and procedures.