United States District Court, E.D. Michigan, Southern Division
MEMORANDUM AND ORDER OVERRULING
LEGALCOLLECTION.COM'S OBJECTION TO GARNISHMENT (Doc. 166)
AND GRANTING PLAINTIFF'S MOTION TO OVERRULE OBJECTIONS
AND TO DISBURSE GARNISHED FUNDS (Doc. 215)
COHN UNITED STATES DISTRICT JUDGE .
a case under the Fair Debt Collection Practices Act and
corresponding state debt collection statutes. Plaintiff Terry
Bryant sued defendants Meade & Associates (Meade), the
Law Offices of Donald R. Conrad, PLC, Donald R. Conrad, and
LegalCollections.com, LLC. Bryant settled with Meade. (Doc.
5). The case then proceeded against the Law Offices of Donald
R. Conrad, PLC, Donald R. Conrad, and LegalCollections.com
(collectively, where appropriate, the Conrad defendants).
the Court entered a default judgment against the Conrad
defendants for failure to comply with discovery and Court
orders relating to discovery. (Doc. 28). The Court later
granted plaintiff's motion for damages in the amount of
$101, 000.00 against the Conrad defendants, jointly and
severally. (Doc. 30). Plaintiff then began collection efforts
which have included issuing and serving writs of garnishment.
Before the Court is LegalCollection.com's objection to a
writ of garnishment issued by the Clerk and served on Wells
Fargo Bank (Doc. 166) and plaintiff's motion to overrule
the objections and disburse the garnished funds. For the
reasons that follow, LegalCollection.com's objection will
be overruled and plaintiff's motion will be granted.
January 7, 2017, a Writ of Garnishment was issued by the
Clerk; plaintiff served that Writ on Wells Fargo Bank.
Fargo Bank answered the Writ of Garnishment and stated that
it held funds of the judgment debtor as follows: $11, 029.51
February 14, 2017, LegalCollections.com filed an objection to
garnishment, asserting that these funds are “earmarked
for its clients” and therefore should not be released.
initial matter, LegalCollections.com did not provide any
authority for its position that because funds are
“earmarked for clients” they are exempt from
garnishment. Further, no client or other third party has
intervened to claim any funds.
as it may, Under Fed. Civ. P. Rule 64, “every remedy is
available that under the law of the state where the Court is
located, provides for seizing...property to secure
satisfaction of the potential judgment.” Fed. Civ. P.
Rule 64(a). Michigan garnishment law is governed by the
Michigan Court Rules. M.C.R. 3.101. Garnishment mechanism
allows judgment creditors the right to collect on the
judgment. When seeking a garnishment, a plaintiff as the
judgment creditor files a request and writ for garnishment
with the Court Clerk. The Clerk issues a writ of garnishment
if the writ appears to be correct and complies with the
Michigan Court Rules and Michigan statutes. M.C.R. 3.101(D).
Once issued, plaintiff then serves the writ on the garnishee,
who then must provide a copy to the defendant as the judgment
debtor. M.C.R. 3.101(F). This allows a defendants an
opportunity to object based on defects, such as improper
issue or validity. M.C.R. 3.101(K)(2)(f).
3.101(K) covers objections to garnishment and provides that
objections must be based on one or more of the following: (a)
your income is exempt from garnishment by law, (b) you have a
pending bankruptcy proceeding, (c) the maximum withheld
exceeds the amount allowed by law, (d) you have paid the
judgment in full, (e) the garnishment was not properly issued
or is otherwise invalid. The rule goes on to state that
objections to garnishment “may only be based on defects
in or the invalidity of the garnishment proceeding itself,
and may not be used to challenge the validity of the
underlying judgment.” A judgment debtor that claims
exemption from a writ of garnishment bears the burden of
proving that they are entitled to that exemption. United
States v. Sawaf, 74 F.3d 119, 122 (6th Cir. 1996).
noted above, LegalCollections.com objects to the garnishment
on grounds that the funds garnished are “earmarked for
clients.” Assuming that LegalCollections.com is
proceeding under (a), “client funds” is not among
the examples for exempt income.
LegalCollection.com's objection was recognized under the
law, it does not provide any proof or support of their
position. If the funds are earmarked client monies,
presumably it can produce a client ledger, statement of
account, agreement, affidavit of third parties with an
interest in these funds or some other financial records to
support its position. While LegalCollections.com says that it
there would be irreparable harm and the public interest
requires that funds belonging to non-parties not be released,
it offers no accounting to support its position. ...