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Blach v. Aflac, Inc.

United States District Court, M.D. Georgia, Columbus Division

April 18, 2017

HAROLD BLACH, Plaintiff, ROBERT FREY, Third Party Claimant,
v.
AFLAC, INC., Garnishee, SAL DIAZ-VERSON, Defendant.

          CERTIFIED QUESTION TO THE SUPREME COURT OF GEORGIA

          CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE MIDDLE DISTRICT OF GEORGIA

         The Georgia garnishment statute was amended during the 2016 session of the General Assembly, apparently in response to a ruling by United States District Judge Marvin Shoob who held the Georgia post-judgment garnishment statute, O.C.G.A. § 18-4-60 et seq., unconstitutional on due process grounds. Judge Shoob found that the statute violated due process because it (1) failed to require notice of exemptions, (2) failed to inform debtors of procedures for claiming an exemption, and (3) failed to provide a prompt procedure for resolving exemption claims. Strickland v. Alexander (“Strickland I”), 153 F.Supp.3d 1397, 1416 (N.D.Ga. Sept. 8, 2015). Shortly after entering this order, Judge Shoob limited his holding “to garnishment actions filed against a financial institution holding a judgment debtor's property under a deposit agreement or account.” Strickland v. Alexander (“Strickland II”), 154 F.Supp.3d 1347, 1351 (N.D Ga. Oct. 5, 2015) (emphasis omitted). Then, the State of Georgia asked Judge Shoob to alter his previous rulings and declare that Georgia law provides timely procedures for debtors to claim exemptions in post-judgment garnishment actions. He refused. Strickland v. Alexander (“Strickland III”), 162 F.Supp.3d 1302, 1303 (N.D.Ga. Nov. 10, 2015).

         At the next session of the General Assembly, the Georgia legislature enacted the new garnishment statute “to modernize, reorganize, and provide constitutional protections in garnishment proceedings, ” and “to provide for procedures only applicable to financial institutions.” Act of April 12, 2016, 2016 Ga. Laws 8, 8 (codified at O.C.G.A. § 18-4-1 et seq.) Relevant here, the Georgia legislature substantially shortened the garnishment period for garnishments against a “financial institution.” The former statute provided for a thirty to forty-five day garnishment period for all garnishments.[1] The new statute provides that garnishments against “financial institutions” shall only last for a five day garnishment period. O.C.G.A. § 18-4-4(c)(2). All other regular garnishments against nonfinancial institutions have a twenty-nine day garnishment period. O.C.G.A. § 18-4-4(c)(4). The new statute provides separate forms for summonses of garnishment against “financial institutions, ” see O.C.G.A. § 18-4-76, and “nonfinancial institutions, ” see O.C.G.A. § 18-4-74, listing the respective garnishment periods. The statute became effective May 12, 2016.

         The shortened financial institution garnishment period addresses the issue raised by Judge Shoob's ruling; it limits the garnishment period for an account holder's deposit account at a financial institution. Thus, the account holder does not have to wait thirty to forty-five days to raise an exemption. But the statute arguably does more than shorten the garnishment period for financial institution account holders. Although Judge Shoob's final order did not apply to the garnishment of employee wages and earnings, one interpretation of the amended statute is that the shortened garnishment period applies to any garnishment action against a financial institution regardless of whether the garnishment action is filed to recover from a financial institution's account holder or a financial institution's employee.

         The issue of whether the amendments to the Georgia garnishment statute apply to earnings that a financial institution owes to an employee or retiree is presented by motions to dismiss several garnishments pending in this Court. Those motions maintain that an insurance company is a financial institution under the new garnishment statute and that the shortened garnishment period applies to the garnishment of earnings that a financial institution/insurance company owes to its employees and retirees, thus prohibiting the garnishment of such funds for a period beyond five days. Under this interpretation of the statute, a judgment creditor who seeks to garnish the earnings of the employee of a financial institution, including an insurance company, would be required to file a garnishment action against the employer every five days.

         The Georgia courts have not had an opportunity to interpret these provisions of the new Georgia garnishment statute. Thus, there is no clear controlling precedent from the Supreme Court of Georgia on this determinative issue. Because the resolution of these pending motions to dismiss involves an issue of first impression under Georgia law, the Court certifies the following issue to the Supreme Court of Georgia pursuant to O.C.G.A. § 15-2-9:

Whether an insurance company is a “financial institution” under the Georgia garnishment statute when the insurance company is garnished based on earnings that it owes the defendant as the defendant's former employer.

         BACKGROUND

         Plaintiff Harold Blach filed this garnishment action against Garnishee AFLAC to collect a $158, 343.40 judgment that Blach obtained against Defendant Sal Diaz-Verson and registered in this Court. AFLAC is Diaz-Verson's former employer. Based on this former employment, AFLAC makes bi-monthly payments to Diaz-Verson. The Court has held that twenty-five percent of these payments is subject to garnishment. See AFLAC, Inc. v. Diaz-Verson, No. 4:11-CV-81 (CDL), 2012 WL 1903904, *7 (M.D. Ga. May 25, 2012). Since December 2015, Blach has regularly filed summonses of garnishment against AFLAC, and AFLAC has deposited over $140, 000.00 into the Court's registry pursuant to the garnishments.[2]

         Following May 12, 2016, the effective date of the new Georgia garnishment statute, separate forms were available for garnishments that involved financial institutions and garnishments that involved nonfinancial institutions. The non-financial institution forms provided for a twenty-nine day garnishment period while the financial institution forms provided for the shortened five day period. After the effective date for the new statute, Blach used the “nonfinancial institution” garnishment form. AFLAC followed the instructions on the form and garnished payments to Diaz-Verson for twenty-nine, not five, days after receiving each summons of garnishment.

         Diaz-Verson filed supplemental motions to dismiss all garnishments filed after May 12, 2016 (ECF Nos. 127, 128, 161, & 165). Diaz-Verson argues that after this date Blach used the wrong form for his summonses of garnishment against AFLAC, and AFLAC garnished payments that it owes Diaz-Verson for a period that extended beyond the five day garnishment period authorized under the amendments to the statute. If Diaz-Verson is correct, a portion of the funds in the Court's registry must be released to Diaz-Verson. See O.C.G.A. § 18-4-7(d) (“When a plaintiff uses the incorrect form for a summons of garnishment of any type, the garnishment shall not be valid . . . .”).

         If Diaz-Verson is not entitled to the funds, Third Party Claimant Robert Frey claims that he holds a judgment against Diaz-Verson that is superior to Blach's judgment. He therefore maintains that he is entitled to the garnished funds in the Court's registry. But before the Court decides Blach's and Frey's dueling motions for disbursement of the funds (ECF Nos. 34, 37, 75, 76, 77, 78, 82, 103, 120, 134, 135, 136, & 154), the Court must determine whether all garnishments filed after May 12, 2016 must be dismissed and the funds returned to Diaz-Verson.[3] This determination turns on an issue of first impression under Georgia law.

         DISCUSSION

         Diaz-Verson argues that all of Blach's garnishments filed after May 12, 2016 must be dismissed and the funds returned to him because Blach should have used the “financial institution” garnishment form, providing only a five day garnishment period. Diaz-Verson's argument depends ...


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