The company that an individual is employed with matters a lot when seeking to apply a garnishment order after the individual moves to other states, the Ninth Circuit Court of Appeals has ruled in affirming a lower court’s summary judgment ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act because it applied a California garnishment order when the plaintiff moved to Indiana and Texas.
A copy of the ruling in the case of Farrell v. Boeing Employees Credit Union and Moore Brewer & Wolfe can be accessed by clicking here.
The plaintiff defaulted on a car loan, for which BECU obtained a default judgment on in a California State Court. The plaintiff, who was employed by the Department of Defense for the duration of this action, subsequently moved to Indiana and then Texas. While the plaintiff was living in Indiana, the defendant obtained a California earnings withholding order allowing it to garnish the plaintiff’s wages, and served it on the plaintiff’s employer. The employer garnished the plaintiff’s wages for three years until the debt was default judgment was satisfied.
The plaintiff filed suit, alleging the defendants had violated the FDCPA and California state law because they did not obtain domestication, or permission to garnish, in Indiana and Texas while the plaintiff was living there. A District Court granted summary judgment in favor of the defendant, which the plaintiff appealed to the Ninth Circuit. The Ninth Circuit partially upheld and partially overturned the lower court’s ruling, sending the case back to the District Court to answer a number of questions related to domestication.
The District Court again granted summary judgment in favor of the defendant, given that the plaintiff worked for the federal government and the order was properly served, even though the plaintiff was living in other states.
Using the Hatch Act, which waived the federal government’s sovereign immunity and subjected the pay of federal employees in the same manner as if they were employed by private companies and remove their immunity from garnishment, the Ninth Circuit ruled that the California court needed only to have jurisdiction over the garnishee, not the debtor. Because the federal government has agreed to comply with state garnishment orders, BECU was not required to domesticate the garnishment order in Indiana or Texas, the Appeals Court ruled.
