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Blach v. AFLAC, Inc.

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

May 8, 2017

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

          ORDER

          CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE.

         Plaintiff Harold Blach holds a $158, 343.40 Alabama judgment against Defendant Sal Diaz-Verson. Garnishee AFLAC is Diaz-Verson's former employer. AFLAC makes bimonthly payments to Diaz-Verson, twenty-five percent of which is subject to garnishment. On October 6, 2015, Blach registered his judgment in this Court and began filing garnishment actions against AFLAC to collect on the judgment. AFLAC has deposited over $150, 000.00 into the Court's registry pursuant to the garnishments. Third Party Claimant Robert Frey claims that he holds a $219, 982.78 judgment against Diaz-Verson that is superior to Blach's judgment. Blach and Frey filed dueling motions for disbursement of the garnished funds (ECF Nos. 34, 37, 75, 76, 77, 78, 82, 103, 120, 134, 135, 136, 154, & 175).[1]At the hearing on those motions, Diaz-Verson claimed that he is entitled to have all funds garnished pursuant to garnishments filed after May 12, 2016 returned to him because Blach failed to meet the requirements in the new Georgia garnishment statute for garnishments against a “financial institution.” See O.C.G.A. § 18-4-4. The Court certified that question to the Supreme Court of Georgia pursuant to O.C.G.A. § 15-2-9 (ECF No. 174). The Court cannot grant Blach's or Frey's motions for disbursement as to garnishments filed after May 12, 2016 until the Georgia Supreme Court responds to the certified question.

         The pendency of this certified question, however, does not affect the disbursement of funds garnished pursuant to garnishments filed before May 12, 2016. And the Court has previously rejected Diaz-Verson's objections to garnishments filed before May 12, 2016.[2] Thus, the issue of whether Frey or Blach is entitled to disbursement of the funds deposited into the registry of the Court pursuant to pre-May 12, 2016 garnishments is ripe for decision. Consequently, the Court grants Frey's motion asking the Court to make that determination now (ECF No. 177).

         The Court understands how the arrangement between Diaz-Verson and his former counsel, Frey, regarding the use of a partially satisfied judgment to secure a debt for attorney's fees could raise suspicion. But legal decisions cannot be based on suspicion. Based on the present record, the Court finds that Frey holds a legitimate, unsatisfied judgment against Diaz-Verson that is superior to Blach's judgment. Frey is therefore entitled to disbursement of the funds garnished pursuant to garnishments filed before May 12, 2016, and his motions are granted as to those funds. Frey's motions for disbursement remain pending as to garnishments filed after May 12, 2016 (ECF Nos. 37, 75, 76, 77, 78, 82, 134, 135, 136, 142, 154, & 175). As of the January 18, 2017 hearing in this case, the unpaid balance of Frey's judgment plus interest was $299, 354.69. Frey Aff. at 2 (Jan. 2, 2017), ECF No. 133.

         The funds in the Court's registry do not satisfy the full amount of Frey's judgment, and Blach cannot collect on his judgment until Frey's judgment is satisfied. Thus, regardless of the pendency of the certified question to the Supreme Court of Georgia, Blach is not entitled to any of the funds in the Court's registry at this time. Accordingly, the Court denies Blach's motions for disbursement in full (ECF Nos. 34, 120, & 138).

         Finally, the Court denies Diaz-Verson's motion to stay all garnishments until the Supreme Court of Georgia responds to the certified question (ECF No. 178). The Court may consider whether disbursement pursuant to today's Order should be stayed if any party files a notice of appeal challenging today's ruling.

         FACTUAL BACKGROUND

         The following facts are relevant to whether Frey holds a legitimate judgment against Diaz-Verson.

         Frey is Diaz-Verson's former attorney. He represented Diaz-Verson in various matters between 2009 and 2014, including Diaz-Verson's disputes with non-party Porter Bridge Loan Company (“Porter Bridge”). In 2009, Porter Bridge obtained a $397, 386.87 Florida judgment against Diaz-Verson. Frey's Third Party Claim ¶ 1, ECF No. 32. Porter Bridge domesticated the judgment in Georgia on June 23, 2010, id., and filed several state court garnishment actions against the same bimonthly AFLAC payments at issue in this case. Frey represented Diaz-Verson in the domestication and garnishment actions. Frey also unsuccessfully defended Diaz-Verson in a declaratory judgment/interpleader action in this Court. In that case, this Court held that twenty-five percent of each AFLAC payment is subject to garnishment. AFLAC v. Diaz-Verson, No. 4-11-CV-81 (CDL), 2012 WL 1903904, at *6-*7 (M.D. Ga. May 25, 2012).

         Diaz-Verson hired additional counsel and appealed. While the appeal was pending, Diaz-Verson and Porter Bridge mediated and settled the case in a Confidential Settlement Agreement. The Agreement provided that Diaz-Verson would pay Porter Bridge $275, 000.00 and dismiss his appeal. Confidential Settlement Agreement ¶ 4, ECF No. 59 (“Agreement”). It also provided that Porter Bridge would:

[F]orever discharge Diaz-Verson . . . of and from all manner of actions, causes of action, suits at law or equity, asserted or unasserted claims, future claims which may hereafter arise, judgments, costs, demands, damages, debts, attorneys' fees, liens, losses, injuries, or any liabilities or obligations whatsoever . . . that Porter Bridge ever had, are now existing or that Porter Bridge may hereafter have against Diaz-Verson . . . that arise, grow out of, relate to or are in any way whatsoever incident to or connected with the Florida Action, [and] the Florida Judgment . . . .

Id. ¶ 1. Porter Bridge also promised that:

Within five (5) business days of the receipt of the Settlement Amount, Porter Bridge shall transfer and assign Robert J. Frey, Esq. the Florida Judgment . . . .

Id. ¶ 5.

         Diaz-Verson paid Porter Bridge $275, 000.00, and Porter Bridge assigned the Florida judgment to Frey. Def.'s Mot. to Dismiss Ex. 16, Assignment of J., ECF No. 5-17. On February 11, 2013, Frey recorded the assignment. Id. At the time of the settlement, Diaz-Verson owed Frey $361, 433.93 in legal fees. Frey's Reply Ex. 1, Billing Records, ECF No. 35-1. The judgment was meant to secure Frey's right to collect $219, 982.78 of the unpaid legal fees-the balance of the judgment after Diaz-Verson paid $275, 000.00 to Porter Bridge.[3] Pl.'s Renewed Mot. for Disbursement Ex. 1, Frey Aff. at 2 (Feb. 19, 2016), ECF No. 34-2. This left $141, 451.15 of Frey's unpaid legal fees unsecured. Additionally, after the assignment, Diaz-Verson incurred another $20, 569.00 in unsecured debt to Frey. Id.

         Frey has never sued Diaz-Verson to recover the unsecured legal fees. Nor did Frey seek to garnish Diaz-Verson's payments to satisfy the Florida judgment until Blach filed a garnishment action against AFLAC. Prior to Blach's garnishments, Frey allowed Diaz-Verson to make “unstructured, ” voluntary payments “from time to time” to pay off his debt. Frey Aff. at 2 (Feb. 19, 2016). Frey applied the voluntary payments against the balance of unsecured legal fees before applying any payments against the Florida judgment. The payments have not satisfied the amount of unsecured legal fees, and therefore, the balance of the Florida judgment remains unsatisfied.

         When Blach began filing garnishment actions against AFLAC, Diaz-Verson's disposable earnings decreased, and he became unable to make voluntary payments to Frey. Id. In order to protect his right to collect his judgment, Frey intervened in this action, claiming that his judgment against Diaz-Verson is superior to ...


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