Wage Garnishment and the Head of Household Exemption

When a creditor has obtained a judgment against a debtor, the creditor  may proceed to collect that judgment by garnishing the debtor’s wages.   During this process the creditor will be served with the motion for writ of garnisment and the Answer of the garnishee (debtor’s employer).  it is at this time that the debtor must assert any exemption he plans to claim.

The documents served on the debtor will include a list of the standard exemptions that are most commonly asserted.  This list includes the exemption for head of household pursuant to section 222.11, Florida Statute.  In order to assert an exemption from wage garnishment as head of household the affidavit must assert facts showing that the debtor provides more than 1/2 the support for a child or other dependent.  The dependent being supported need not be a minor, or the debtor’s child.

The two factors that need to be addressed in the affidavit is the percentage of support and facts tending to show dependence, such as the dependent being in college, involuntarily unemployed, disabled, etc.  However, this second factor often is satisfied by the assertion of the fact of dependence without a showing as to why.

The court has found the existence of facts sufficient to support a head of household exemption in the following circumstances:

Killian v. Lawson, 387 So. 2d 960 (Fla. 1980)–the Court held that a divorced debtor with no minor children who pays alimony to ex-wife is entitled to head of family exemption because alimony is the ex-wife’s sole support.

Beck v. Wylie, 60 So. 2d 190 (Fla. 1952)–Mother who lived with adult daughter was entitled to head of household exemption where the mother contributed more to the daughter’s support than the daughter earned through employment.

Moore v. Rote, 552 So. 2d 1150 (Fla. 3rd DCA 1989)–Divorced mother testified that her adult children continued to live with her and were dependent upon her.

DeCottes v. Clarkson, 29 So. 442 (Fla. 1907)–Court found a “family in fact” where mother supported adult daughter who assited her mother in family affairs.

Caro v. Caro, 34 So. 309 (Fla. 1903)–Mother found to be head of family where two grown, unmarried daughters lived with the mother and earned sufficient money for their own support, except food that the mother purchased.

Hillsborough Inv. Co. v. Wilcox, 13 So. 2d 448 (Fla. 1943)–Widow who occupied residence and contributed to the support of a disabled adult son who was employed was head of household.

Beensen v. Burgess, 218 So. 2d 517 (Fla. 4th DCA 1969)–Father living with married daughter whose husband was on active military duty was head of household.

What these cases show is that if a creditor is seeking to garnish wages, and the debtor supports any other individual financially, even if it is not the spouse and minor children in the same household, the courts will tend to view the relationship as the basis for an exemption.

Wrongful Garnishment of Wages & the Florida Consumer Credit Protection Act

One of the ways a creditor can collect on a judgment it has obtained against a debtor is by garnishing the debtors wages.  This process involves moving the court for entry of a judgment of garnishment directing the debtors employer to pay directly to the creditor a portion of the debtor’s pay for each pay period.  The debtor has various bases on which to avoid this garnishment of wages.  The most common is asserting that the Debtor is the head of household.

As will be discussed below, it is important that if a person is served with notice that a motion for a writ of garnishment has been filed against them that they respond promptly and assert their exemption.  Failure to do so will result in the court approving garnishment of the debtor’s wages.  And, while the exemption can be asserted at a later time, it will only exempt the debtor from future garnishment.  The funds already garnished will not be able to be recovered.

In LAMB v. HOUSEHOLD FINANCE CORPORATION III, 409 B.R. 534 (N.D. Fla. 2009), the debtor’s wages were garnished eventhough she was head of household because she did not timely assert her right to the exemption as head of household.  She attempted to recover the amounts previously garnished by suing the Creditor and Debt Collector for Wrongful Garnishment and violation of the Florida Consumer Credit Protection Act (FCCPA).  The basis for both the allegation of Wrongful Granishment and violation of the FCCPA for attempting to collect a debt known not to be due was that as part of the original action, resulting in the judgment that is now the basis of the garnishment, the Debtor filed a document indicating that she was a single mother with kids.  It was the Debtors position that this put the Creditor on notice that the debtor was head of household.

Wrongful Garnishment

The element of a cause of action for Wrongful Garnishment are (1) commencement or continuance of a garnishment proceeding, (2) the commencement of the garnishment action by the defendant in the subject action, (3) the bona fide termination of the garnishment action in favor of the debtor, (4) the absence of probable cause for a writ of garnishment, (5) presence of legal malice, and (6) injury to the debtor. LAMB, 409 B.R. 534, 539 (N.D. Fla. 2009).  All of these factors must be shown to prevent the dismissal of a complaint for Wrongful Garnishment.

The LAMB court discusses the effect of the debtor filing a response in the original action indicating that she is a “single mother with kids”, and the debtors assertion that this filing resulted in the creditor not having propable cause to institute the garnishment action (element no. 4 above).  Section 77.01, Florida Statutues, entitles, “[e]very person who has…recovered a judgment in any court against any person or entity has a right to a writ of garnishment…”, and the statute does not require the party seeking garnishment to affirmatively negate the debtor’s entitlement to claim an exemption.  Thus, the fact that the debtor filed a letter in response to the original complaint indicating she was a “single mother with kids” did not prevent the creditor from seeking garnishment.

Florida Consumer Credit Protection Act

The debtor also claims that the garnishment action violated the FCCPA by attmepting to enforce a debt when the creditor knew the debt was not legitimate.  The debtor asserted that the creditor seeking the garnishment knew that the garnishment was not legitimate because of the response letter filed indicating that the debtor was a single mother with kids.

The LAMB court rejects this assertion on two grounds.  First, the assertion of being a single mother with kids does not establish all requirements of the head of household exemption, namely that she also provides more than half of the financial support for the kids.  Second, the court returns to its discussion of Chapter 77, Florida Statutes, which does not require the creditor to affirmatively negate the debtors right to a claim of exemption.  The Court notes, “[Chapter 77] provides no procedure for the prior determination of head of family before the issuance of a writ of garnishment”.  The court continues, “…the responsibility of claiming an exemption from garnishment is on the Defendant, and a garnishment plaintiff’s mere knowledge of the garnishment defendant’s potential ability to claim an exemption, does not make its pursuit of the garnishment the knowing pursuit of an illigitimate debt or the knowing assertion of a right that does not exist”.

The result reached in this case demonstrates the court’s position that eventhough the debtor had previously informed the creditor and the court of her status as head of household, it was still her burden to properly assert this exemption at the proper time in the garnishment procedings, and failure to do so resulted in her wages being garnished.

Collection Phone Call Frequency / Florida Consumer Credit Protection Act

Florida’s Consumer Credit Protection Act (FCCPA), like the Federal Fair Debt Collection Practices Act (FDCPA), protects consumers from abusive conduct by creditors attempting to collect a debt.  This post discusses the frequency of telephone calls from creditors, and how many is too many.  This discussion focuses on frequency of phone calls and not abusive conduct during a phone call.  Abusive language or threats during a phone call is governed by a separate section of the FCCPA and can result in one call violating the law.

An important distinction between the FDCPA and the FCCPA is that the FDCPA does not apply to creditors seeking to collect their own debts but the FCCPA does.  Therefore, if a creditor subjects a consumer to harrasing conduct the consumers avenue for redress is through the FCCPA not the FDCPA.

Section 559.72(7) Florida Statutes, the FCCPA, states as follows:

In collecting consumer debts, no person shall:

(7) Willfully communicate with the debtor or any member of the her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family[.]

In Story v. J.M. Fields, Inc., 343 So. 2d 675 (Fla. 1st DCA 1977), the Court discussed the standard to be applied in determining if telephone calls have been abusive.  In addressing the statute, the Court stated that proof of numerous calls does not necessarily show harassment.  The court acknowledged legitimate reasons for a creditor or debt collector  to make contact with a consumer, which are to inform or remind the consumer of the existence of the debt, to determine the reasons for non-payment, or to negotiate or persuade the debtor to pay.  Phone calls are considered harassment if they continue after the above legitmate purpose for contact have been exhausted, because the only purpose for continued contact would be to “exhaust the resisting debtor’s will”.

In Scott v. Florida Health Siences Center, Inc., 8:08-cv-1270-T-24-EAJ (M.D. Fla. 2008), the Court further expounded on what consititutes harassment under the FCCPA.  The Court said:

Whether collection behavior is abusive or harassing is not a formulaic determination, but demands consideration of the frequency and tone of the contacts, “the legitimacy of the creditor’s claim, the plausibility of the debtor’s excuse…and all other circumstances that color the transaction.”  Story, 343 So. 2d at 676-77.  Where the nature of the collection attempts is ambiguous, evaluating the factual circumstances and determining whether they consitutue harassment or abuse becomes a question of fact…

In Story the consumer alleged that he received at least 100 calls over a period of five months.  None of the calls were threatening.  No phone calls were received after the consumer informed the creditor that he had a lawyer.  However, in spite of the lack of overt abuse or harassment (the Court did not consider 100 calls by itself to be harassment) the Court determined that the creditor lacked a legitimate purpose to make this many phone calls and, therefore, decided that the facts alleged could show harassment under the FCCPA.  The case was remanded to the trial court for this factual determination to be submitted to the jury.

In Scott the creditor contacted the consumer by phone seventeen times over eight months attempting to collect a debt.  The telephone calls were made inspite of prior settlement of the debt by the consumers health insurance provider, and continued in spite of the fact that the consumer and the insurer repeatedly informing the creditor of the prior settlement.  Several of the final communications threatened to report the failure to pay to credit bureaus.  In this case it was determined that ninteen telephone calls over eight months (2-3 calls per month)  states a legal claim for harassment, because the consumer clearly informed the creditor that the debt has been settled and to contact her insurer regarding the dispute.  The lower Court’s Order dismissing the claim was reversed.

Story demonstrates that while the numer of calls made by a creditor in and of itself will not show harassment (100 in that case), continuing to call when there is no legitmate purpose for the calls tends to  show the purpose of the calls was to harass the consumer.  Along the same line Scott shows that as little as nineteen calls over eight months can constitute harassment when the consumer clearly indicates her position that debt has been paid and directs the creditor to take the issue up with her insurer.  Following the reasoning in Story, once it was determined that the consumer believed that she paid and did not owe the claimed debt, the only reason for the creditor to continue to call was to harass in hopes of compelling payment.

If you believe you are being harassed by a creditor seeking to collect a debt, it may not be adequate to merely maintaion a log of call frequency (unless you are receiving numerous calls in the same day).  It is important to document the content of the conservations to demonstrate that there is no purpose for the creditor to contact you other than to “exhaust your will”.  When speaking to a creditor, once you have explained your reasons for non-payment, indicated that you do not intend to negotiate the debt, and that you do not intend to pay the debt, any future phone calls may be found by the Court to be harassment no matter how polite the caller is or how often he has called.

Election of Remedies in Mortgage Foreclosure

In an action to collect delinquent assessments, a community association is permitted by law to the entry of a judgment of foreclosure and a money judgment simultaneously.  The principal of the election of remedies only requires that only one of the alternate remedies be satisfied.

In contrast to what the law allows, community association attorneys are in the habit of bringing a two count lawsuit, one count for foreclosure and one count for damages, but electing a remedy at the time of judgment.  This process is viewed as necessary by the Courts under the doctrine of election of remedied. However, election at this time is not required by law.

Seeking judgment for both damages and foreclosure will preserve the association’s options to have the property sold or to collect from the owner personally.  This is significant because most properties are underwater in their first mortgages, limiting interest at sale, and making it probable the association will be the purchaser at sale.  In effect the association’s only collection option in foreclosure is to beome a landlord and rent the unit that it cannot sell due to the remaining first mortgage. 

In BARBE v. VILLANEUVE, 505 So.2d 1331 (1987), the Supreme Court discusses the doctrine of election of remedies, and the distinction between application of the doctrine to consistent and inconsistent remedies.  In BARBE the Plaintiff brought suit for damages and replevin of a yacht.  The Court ruled that entry of judgment for both prayed for remedies was improper because the factual scenarios giving rise to each were inconsistent.

The Court went on to discuss the election of remedies doctrine.  “The election of remedies doctrine is an application of the doctrine of estoppel and operates on the theory that a party electing one course of action should not later be allowed to avail himself of an incompatible course”.  BARBE, at 1332.  “The purpose of the doctrine is to prevent double recovery for the same wrong.”  Id.  “However, the election of remedies doctrine applies only where the remedies in question are coexistent and inconsistent.”  Id.

The BARBE Court cites the explanation given in AMERICAN PROCESS CO. v. FLORIDA WHITE PRESSED BRICK CO., 56 Fla. 116 (1908) to explain the election of remedies doctrine.  “If the allegations of fact necessary to support one remedy are substantially inconsistent with those necessary to support the other, then adoption of one remedy waives the right to the other… Where the law affords several distinct, but not inconsistent, remedies for the enforcement of a right, the mere election or choice to pursue one of such remedies does not operate as a waiver of the right to pursue the other remedies….If more than one remedy exists, but they are not inconsistent, only a full satisfaction of the right asserted will estop the plaintiff from pursuing other consistent remedies.  All consistent remedies may in general be pursued concurrently even to final adjudication; but the satisfaction of the claim by one remedy puts an end to the other remedies.”  BARBE at 1333.

For one remedy to bar another on grounds of inconsistency they must proceed from opposite and irreconcilable claims of right and must be so inconsistent that a party could not follow one without renouncing the other.  BARBE at 1333.

The Court in BARBE finds that a suit for damages due to theft and replevin are inconsistent, but discusses a case cited by the parties in which the court found a suit for damages and a foreclosure action to be consistent.  “Unlike the situation at bar…a suit on note and a foreclosure action on the collateral securing that note are consistent remedies.”  BARBE citing JUNCTION BIT & TOOL CO., 262 So.2d 660.

The Third DCA addressed the issue of whether foreclosure and suit on the note are inconsistent remedies in LISBON HOLDING AND INVESTMENT, CO. v. VILLAGE APARTMENTS, INC., 237 So.2d 197 (Fla. 3rd DCA 1970).  In LISBON the Court notes that, “…the great weight of authority seems to be that the remedies available to a mortgagee, i.e. suit on the note or foreclosure of the mortgage, are not inconsistent remedies, and pursuit of one without satisfaction is not a bar to the other.”  LISBON at 198.

A party is only held to have elected a remedy so as to bar other or different courses of action when the remedy elected and the alternate remedy sought are inconsistent.  KLONDIKE, INC. v. BLAIR, 211 So.2d 41 (1968).  When the remedies pursued are consistent, only satisfaction of the claim results in a bar to other remedies.  Id. At 42.

The test of inconsistency of remedies: “It has been said that the so-called ‘inconsistency of remedies’ is not in reality an inconsistency between the remedies themselves, but must be taken to mean that a certain state of facts relied on as the basis of certain remedy is inconsistent with, and repugnant to, another certain state of facts relied as the basis of another remedy.”  KLONDIKE, INC. v BLAIR, 211 So.2d 41(Fla. 4th DCA 1968) citing Am.Jur.2d Sec. 11.

“…[A] remedy is not inconsistent where it merely seeks further relief which the court may grant consistent with that already given…”  Id.

“Thus, remedies are merely cumulative and not inconsistent where the party in the one expresses upon the record reliance upon the same facts upon which he relies in the other, as where both remedies recognize the existence and validity of a contract and proceed in affirmance thereof, or are predicated on a breach of the contract and seek redress for such breach,…”  Id. Citing Am.Jur.2d Sec. 12.

The KLONDIKE court gives an example of an inconsistent remedy as follows: the relief sought in WEEKE v. REEVE, 65 Fla. 374 (1913), is inconsistent where the Plaintiff had previously brought suit for damages on breach of contract, then brought suit to rescind the same contract when the first action was unsuccessful.

The KLONDIKE Court then finds that the relief sought in that case, which is to foreclose a mortgage following judgment on the accompanying note, is not inconsistent.  Suit on the note and foreclosure of a mortgage, are not inconsistent remedies, and pursuit of one without satisfaction is not a bar to the other.  KLONDIKE at 43.

Community association liens are foreclosed in the manner of a mortgage, causing the above analysis to be applicable to association foreclosures, and allowing the association to request a judgment for damages and foreclosure simultaneously.  Doing so keeps the association’s option for collection open, which is important in the current real estate climate where owner are ready to surrender their under water properties and collection through foreclosure sale is unlikely.

Community Association Collections and the FDCPA

After initial opinions finding that the Fair Debt Collections Practices Act did not apply to collection of Community Association Assessments, the Courts reversed their position in those initial opinions and have expressed a strong and generally accepted position that homeowners and unit owners are protected by the FDCPA in efforts to collect unpaid assessments.

In NEWMAN v. BOEHM, PEARLSTEIN, & BRIGHT, LIMITED, 119 F.3d 477 (7th Cir. 1997), the court stated the issue up for its consideration as follows: “The question presented by these appeals…is whether an assessment owed to a homeowners or condominium association qualifies as a ‘debt’ under the Fair Debt Collections Practices Act…”

In NEWMAN the Court discussed the lower court’s finding that community association assessments did not meet the definition of “debt” under the FDCPA.  The lower court based its ruling on the fact that the definition of debt under the FDCPA had been interpreted to require an, “offer or extension of credit to a consumer”.  See RITER v. MOSS & BLOOMBERG, LTD., 932 F.Supp. 210 (N.D.Ill. 1996) and ZIMMERMAN v. HBO AFFILIATE GROUP, 834 F.2d 1163 (3d Cir. 1987).  The NEWMAN Court noted that between the lower court ruling and its consideration of the current appeal the 7th Circuit in BASS v. STOLPER, KORITZINSKY, BREWSTER & NEIDER, S.C., 111 F.3d 1322 (7th Cir. 1997), rejected the credit requirement under the definition of “debt” in the Act.  “All that is required…is a transaction creating an obligation to pay.”  Id.

The NEWMAN Court went on to note that all Federal Court decisions finding that an association assessment is not a “debt” under the Act relied on the reasoning in ZIMMERMAN.  And, concluding that all said decisions are now rejected allowing the NEWMAN Court to, “write on a clean slate”.

The NEWMAN Court considers whether the requirement of a transaction establishing the debt, and whether the debt incurred was primarily for personal, family, or household purposes is met under the circumstances of association assessments.  The Court reasons that, “[b]y paying the purchase price and accepting title to their home, the [Owners] became bound by the Declaration…, which required the payment of regular and special assessments imposed by the association.  The purchase of the home or unit constitutes the transaction whereby the Consumer voluntarily takes upon themselves the debt obligation, which is payment of assessments as imposed by the Association.  Further, because the subject of the transaction is the purchase of a family home, the court concludes that, “there can be little doubt that the subject of those ‘transactions’ had a personal, family, or household purpose”.  But, beyond consideration of the nature of the “transaction”, which is the purchase of the home, the Court finds that the assessments themselves meet the requirement of being for personal, family, or household purposes, because they directly benefit the household through such activities as repair of common roofs, or maintenance of common walkways, yards, or landscaping.  NEWMAN, 119 F.3d 477.

The Tenth Circuit specifically cited the NEWMAN Court’s reasoning in reachin the same conclusion in LADICK v. VAN GEMERT, 146 F.3d 1205 (10th Cir. 1998).  See Also SNOW v. RIDDLE, 143 F.3d 1350 (10th Cir. 1998).  “The assessment at issue in this case therefore qualifies as an ‘obligation of a consumer to pay money arising out of a transaction'”.  LADICK. Citing 15 U.S.C. Sec. 1692a(5).

The Middle District of Florida addressed this issue in FULLER v. BECKER & POLIAKOFF, P.A., 192 F.Supp.2d 1361 (M.D. Fla. 2002).  The Collector argued for the Court to follow the Northern District of Florida’s decision in AZAR v. HAYTER (citiation omitted in FULLER), which relied on the previously overruled decision in ZIMMERMAN v. HBO AFFILIATE GROUP, 834 F.2d 1163 (3d Cir. 1987), in finding that an assessment is not a debt.  The Court in FULLER notes, “…Defendants urge this Court to accept the reasoning that maintenance assessments are not debts. However, Defendants fail to acknowledge that…in subsequent decisions the Eleventh Circuit expressly rejected the notion that a debt under the FDCPA must involve an extension of credit”.  See BROWN v. BUDGET RENT-A-CAR, 119 F.3d at 924.

The FULLER Court goes on to rely on the reasoning in the line of cases from the Seventh Circuit discussed above in finding that, “the maintenance assessments that the Association sought to collect…are debts subject to the FDCPA.

The generally accepted principal, based on the NEWMAN and BASS line of cases, is now that community association regular and special assessments are debts, the collection of which is subject to the FDCPA.  The attorney or collector seeking to collect these past due assessments must ensure its compliance with the FDCPA to avoid liability for damages pursuant to the Act.

FDCPA Applied to Foreclosure Actions

The Courts have ruled that the Fair Debt Collection Practices Act (FDCPA) does not apply to actions that merely seek to foreclose a lien on a security interest.  But, when the analysis of when the foreclosure of a lien becomes an effort to collect a debt is looked at, it becomes apparent that most foreclosure efforts will actually be viewed as debt collection, thereby invoking the requirements and formalities of the FDCPA.

The issue was addressed in PETTWAY v. HARMON LAW OFFICES, P.C., 2005 WL 2365331 (D. Mass.). In PETTWAY the consumer alleged that, “the form letter that [the debt collector] uses to transmit payoff and reinstatement terms to homeowners…systematically overstates the amount [due].”  In the action the debt collector moved for summary judgment contending that the FDCPA did not apply to his actions because, “its business is not collecting debts, but rather perfecting client security interests.”

In its analysis the court in PETTWAY reconciled two lines of cases that disagreed as to whether the FDCPA applies to foreclosure actions.  In BEADLE v. HAUGHEY, 2005 WL 300060 (D.N.H. Feb. 9, 2005), relied on by the debt collector, the Court held that, “a mortgage forclosure is not governed by the FDCPA because a foreclosure is not a debt collection practice, but instead a legal action undertaken to return property to its rightful owner.  Security enforcement activities fall outside the scope of the FDCPA because they aren’t debt collection practices.”  BEADLE quoting ROSARIO v. TAYLOR, 324 F. Supp. 2d 917, 924 (N.D.Ind. 2004).

The consumer relied on SHAPIRO AND MEINHOLD v. ZARTMAN, 823 P. 2d 120 (Colo. 1992).  SHAPIRO held that, “[s]ince a foreclosure is a method of collecting a debt by acquiring and selling secured property to satisfy a debt, those engaged in such foreclosures are included within the definition of debt collectors…”

The PETTWAY Court decided that the BEADLE and SHAPIRO cases were not inconsistent with each other.  The Court ruled that in cases where the foreclosure action is only “tangentially” related to payment of the underlying debt that BEADLE did control and the FDCPA did not apply.  However, the Court continues,BEADLE and similar cases do not preclude the possibility that law firms whose foreclosure activities include efforts to compel the payment of the underlying debt might be liable under the FDCPA.

Seeking to foreclose a security interest in addition to seeking to collect moneys owed does not shield a collector from liability.  In fact the court reasoned that the FDCPA would be invoked if the firm merely sought to collect costs in connection with the foreclosure, including legal fees.  This ruling creates the circumstance alluded to above where the range of foreclosure actions to which the FDCPA does not apply is minimal.

In a footnote the PETTWAY Court provides the moral to this story.  “…law firms should stay out of the debt collection business and debt collection agencies should not attempt to hold themselves out as law firms.”