Update #4 (August 18, 2011) on the Billiar case: If you have to lose a lawsuit, you want to do it along the lines that consumer rights lawyer and advocate, Nick Slade, did in the Billiar case, according to his partner, Peter Barry of Barry Slade & Wheaton. That is, when recently asked about the Billiar decision by Minnesota Litigator, which Slade lost on summary judgment, Barry declared that the decision is a huge victory for Minnesota consumers.
In summary, on behalf of his client, Billiar, Slade challenged debt collection law firm Gurstel Chargo‘s garnishment of money from his client’s jointly held bank account when the firm was seeking funds of only one of the two account holders (that is, not Slade’s client, Billiar). U.S. District Court Judge Patrick J. Schiltz (D. Minn.) nominally ruled in favor of the law firm, holding that the firm’s garnishment correspondence to the bank shifted the burden onto the bank to take responsibility for segregating garnishable funds from non-garnishable funds from the law firm to the bank, constituting a valid defense for Gurstel Chargo in Billiar’s case against Gurstel Chargo.
But where does that leave the banks? And what bank wants to assume the risk of dipping into jointly held bank accounts to help out debt collectors like Gurstel Chargo? (And who hires Gurstel Chargo? Banks?)
From Barry’s perspective, Judge Schiltz’s ruling in Billiar puts debt collectors and banks in Minnesota on notice. The debt collectors need to include certain exculpatory disclaimer language in their garnishment communications to banks and banks will be responsible if they misappropriate the money of their “innocent account holders” to satisfy judgments against other people. At least, that is how Peter Barry sees it. Gurstel Chargo counsel did not respond to a voice-mail for comment.
Update #4 (August 9, 2011): U.S. District Court Judge Patrick J. Schiltz (D. Minn.) seemed at oral argument in the Billiar v. Gurstel Chargo garnishment case to be wrestling with the questions raised by plaintiffs in Billiar (described below and here). His decision has came down last week and his analysis seems straightforward, however. Aside from one ancillary issue in the case, Judge Schiltz ruled decisively in Defendant Gurstel Chargo’s favor.
Update #3 (May 17, 2011): Plaintiff’s counsel has brought a similar complaint for different plaintiffs, in a case now assigned to U.S. District Court Judge John R. Tunheim.
Update #2 (February 25, 2011): Defendant’s reply brief is here. The constitutional challenge is “teed up” for U.S. District Court Judge Patrick J. Schiltz (D. Minn.) on cross-motions for summary judgment.
Update #1 (December 21, 2010): (The hearing scheduled for early January before U.S. Mag. Judge Nelson (D. Minn.) has been cancelled, presumably due to her appointment to the District Court. The summary judgment motion is now set for 3/4/11, 8:30 a.m. before Judge Patrick J. Schiltz (D. Minn.) in Minneapolis (Courtroom 14E)).
You probably would not like it if your money vanished from your joint bank account without notice because you had the misfortune of having opened the account with a deadbeat who did not bother to inform you of the debt collection action brought against him or her and/or the deadbeat failed to let you know of the garnishment proceeding against the account.
But if that were your unfortunate circumstance, would the Minnesota law that enabled the debt collector to scoop up your cash without giving you any notice violate the United States Constitution?
Cross-motions for summary judgment are pending (briefs: here and here) before U.S. District Court Judge Patrick J. Schiltz (D. Minn.). United States Mag. Judge Susan R. Nelson will get the first crack at it. Judge Schiltz referred the case to her and hearing is set for 1/6/2011 at 9:30 a.m.