Is a Garnishment Considered a Legal Action Against The Debtor or The Garnishee for Purposes of FDCPA Liability?

The Fair Debt Collection Practices Act (FDCPA) restricts the location ("venue") where a debtor may be sued for a debt:

Legal actions by debt collectors FDCPA § 1692i

(a) Any debt collector who brings any legal action on a debt against any consumer shall:

(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity --

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

(b) Nothing in this title shall be construed to authorize the bringing of legal actions by debt collectors.

How about the scenario where the judgment debtor moves outside of the court's jurisdiction and then serves the debtor's employer with garnishment papers? Does the garnishment process amount to a "legal action" in an improper county?

The District Courts are split as to whether a garnishment is an action against the judgment debtor versus an action is against the garnishee (judgment debtor's employer). Some courts rule that the action against the judgment debtor. For example, the Adkins[1] case held that a garnishment proceeding is against the judgment debtor and not solely against the garnishee. The Court reasoned that the judgment debtor owed the debt, and if there was no debt owed, there could be no garnishment.

Other courts have held that a garnishment is an action against the garnishee-employer — not the consumer — and therefore falls outside of the FDCPA, which protects consumers only. The Smith[2] court held that the Adkins case was distinguishable as it arose in the context of a different state statutory scheme and was thus not an established rule. Similarly, the court in the Pickens,[3] after examining Georgia's statutory scheme, held that a garnishment is against the garnishee — not the consumer.

The court in Cole[4] distinguishing Smith and Pickens based on the fact that the suits in those cases were initially brought in the proper venue and thus enforcement of the judgment in a different venue was proper because the judgment debtor had a "legitimate opportunity to defend itself under the law." In Cole, the initial debt collection case was filed in the wrong venue so the resulting judgment and the resulting collection activity were all premised on an inconvenient forum. The court had no problem granting the plaintiff legal recourse under FDCPA under these facts.

The Second Circuit (includes New York) as of yet has not seemed to address the issue of whether the garnishment is a legal action against the judgment debtor or against the garnishee. We will closely monitor the development of this jurisprudence. If you have received a Notice of Garnishment, contact us right away.