Consumer Finance Litigation

On September 8, 2015, United States District Judge Marvin H. Shoob declared Georgia's statutory garnishment process unconstitutional in Strickland v. Alexander, No. 1:12-CV-02735-MHS (N.D. Ga. Sept. 8, 2015) (granting summary judgment for plaintiff). In what is sure to be the first of many county-level responses, Gwinnett County officials announced on September 9, 2015 that they will stop issuing garnishment summonses and disbursements pending further judicial instruction. The opinion will potentially affect the debt collection industry (for an unknown duration) throughout Georgia. Plaintiff Strickland and his wife had modest income and assets, consisting primarily of Social Security disability payments and workers' compensation settlement funds. Mr. Strickland kept and drew the funds for household and medical expenses from an account at JP Morgan Chase ("Chase") and another financial institution. Discover Bank (Discover) obtained a roughly $20,000 default judgment against Mr. Strickland for unpaid credit card debt. Discover thereafter filed a garnishment action in Gwinnett County Superior Court, naming Chase as the garnishee. Gwinnett County Clerk of Court Richard T. Alexander generated a garnishment summons advising Chase to "hold all property, money, and wages, except what is exempt…belonging to [Mr. Strickland]." After service of the summons, Chase immediately froze Mr. Strickland's entire account. Mr. Strickland received notices of the garnishment action from Discover's attorneys and Chase. Though the notices apparently complied with Georgia law, they did not adequately inform Mr. Strickland that some forms of his property were exempt from garnishment, or how Mr. Strickland could claim an exemption. Chase filed an answer and paid the entire balance of Mr. Strickland's account into the court registry. All of the money turned out to be exempt workers' compensation settlement funds. Though Mr. Strickland eventually hired a Legal Aid attorney and filed a claim to the funds, the garnishment procedures deprived him from accessing his Chase account money and paying for necessary medication and surgery for 115 days. Mr. Strickland consequently sued Court Clerk Alexander and other defendants in the United States District Court for the Northern District of Georgia. Mr. Strickland challenged the constitutionality of Georgia's post-judgment garnishment statute, O.C.G.A. § 18-4-60 et seq., under the Due Process Clauses of the United States and Georgia Constitutions. Mr. Strickland ultimately moved for summary judgment that Georgia's post-judgment garnishment statute violates constitutional due process requirements because it (1) does not provide judgment debtors with adequate notice that their property may be exempt from garnishment; (2) fails to inform debtors of the process to claim such exemptions; and (3) establishes a process that deprives debtors of their exempt property for an unconstitutionally long period of time. Defendant Alexander, supported by the State, filed a competing motion for summary judgment on all claims. The District Court found for Mr. Strickland on all three claims, declared Georgia's garnishment statute unconstitutional, and enjoined Alexander from issuing any summons of garnishment pursuant to Gwinnett County's existing forms and procedures insofar as they are inconsistent with the Court's decision. Defendants have until Wednesday, October 7 to file an appeal.