• March 8, 2011

This past Friday, Minnesota Litigator had the pleasure of watching two gifted civil litigators go toe-to-toe before U.S. District Court Judge Patrick J. Schiltz (D. Minn.) in a constitutional challenge to the procedures set out in Minnesota’s garnishment statute, focussing specifically on the question of the rights of a non-debtor joint bank account holder to “due process” when a judgment creditor freezes her bank account, jointly held with the judgment debtor.  (ML has covered Billiar v. Gurstel Chargo several times over the past year.)  Under current Minnesota law, the non-debtor joint bank account holder is legally entitled to no notice of any kind before her funds are frozen, no notice after her funds in a joint account are frozen, and no notice after her funds are withdrawn and transferred to the judgment creditor (though, as a practical matter, most people would probably figure out, one way or another, that their bank account has been frozen and, two weeks later, the money taken).

What does this have to do with “judicial activism”?  Nothing, in the common sense of the expression.  But, consistent with ML’s theme at the start of this week, the case is another example of Minnesota’s federal bench actively grappling with difficult problems rather than treating the law as the straight-forward mechanistic application of the plain meaning of a rule-book (that is, in this case, the U.S. Constitution and the case law over the years interpreting it).  

Judge Schiltz had plaintiffs’ counsel, Nick Slade, and defense counsel, Bridget Sullivan, argued the case this past Friday for two-and-a-half hours.   The three tag-teamed what the Court called “a very very very hard case” (from a constitutional point of view).

As a threshold matter, the procedure set out in Minnesota’s garnishment statute is somewhat abstruse.  Judge Schiltz had the lawyers walk the Court through this labyrinth.  Then, don’t forget the “trapdoors and ladders” of “the real world” as one maps the labyrinth.  That is, there is what the statute says creditors should do and then there is the practice, what creditors actually do.  “Policy” and “practice” diverge somewhat.  How is a Court to handle that when analyzing the constitutionality of a statute and/or the widespread arguably “state-sanctioned” application of the statute?

Speaking of “state-sanctioned,” the U.S. Constitution regulates state actors, not private parties.  Defendant Gurstel Chargo is not a state or a public entity of any kind, but is, arguably acting “under color of state law” when, using a Minnesota state court judgment and a “self-executing” Minnesota state court “writ of execution,” it freezes, then empties, a jointly held bank account.  Or is it?

And what is the remedy here?  If Ms. Billiar does not get the “due process” she is entitled to under Minnesota’s garnishment statute, what “process” exactly is she entitled to?  Notice before freezing the account that her account is to be frozen?  As Judge Schiltz pointed out at Friday’s hearing, how long do you think the debtor or other joint account holder will dilly-dally once told “pre-freeze” that a creditor had its eye on money in the account?  Talk about anti-freeze…As a practical matter, such “process” would put the all of the funds beyond reach. (And keep in mind, while the judgment creditor has no claim to the non-debtor joint account holder’s money, by definition, it has entered into a loan agreement and has not gotten money owed it.  Unless one is an adherent to the Koranic prohibition on riba, money-lending at interest (or some other per se rejection of this core capitalist concept), one has to give creditors some legal recourse in the event of default.)

Minnesota Litigator cannot do justice on this blog to the rigor of Friday’s court hearing  (whose goal, clearly to all, was to do Justice).  Suffice it to say, it was the American justice system at its best, where citizens were able to have talented counsel thoroughly articulate important and complicated legal issues before a Court that is actively grappling and deeply analyzing the parties’ claims and interests through the ornate scrim of American law (tantalizingly oscillating between opacity and transparency).

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