A District Court judge in Arizona has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling that it is entitled to the statute’s bona fide error defense after garnishing a bank account where Social Security payments were deposited to satisfy a judgment.
The Background: This suit was initiated after the plaintiff’s bank account, which primarily received Social Security benefits, was garnished by the defendant, a law firm representing a homeowners association. The homeowners association had previously obtained a judgment against the plaintiff and sought to collect on this judgment through garnishment. The garnishment action led to more than $60,000 in the plaintiff’s account being frozen, with the bank releasing only $6,500 that it deemed as statutorily exempt funds.
- The plaintiff contested the garnishment by arguing that all the funds in the account were Social Security benefits and should be exempt from garnishment. However, the court initially sided with the defendant, agreeing that the garnishment was valid based on a “lookback period” that the bank used to determine exempt funds. After the plaintiff corrected a legal miscitation and filed a motion for reconsideration, the court quashed the writ of garnishment.
- The plaintiff filed suit, alleging several violations of the FDCPA, among other claims.
- In filing its motion for summary judgment, the defendant argued it was entitled to the FDCPA’s bona fide error defense.
The Ruling: The defendant argued that it had systems in place to prevent the garnishment of exempt funds and that the error was inadvertent.
- Judge John J. Tuchi of the District Court for the District of Arizona found that the defendant had indeed established procedures to prevent such errors and that the garnishment of the Social Security payments was an unintentional mistake.
- Even though the defendant continued to move forward with the garnishment after being told by the plaintiff the funds were exempt, it was acting on the approval of the state court judge, Judge Tuchi noted.
- The defendant had an expert interview four attorneys at its firm who detailed the policies and procedures it had in place to try and avoid this type of error.
