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November 28, 2007

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Notice of Levy - Judicial Council Form EJ-150
Is your Notice of Levy worth the paper it is printed on?
By Richard L.  Enkelis

To most of the attorneys I speak with, doing a levy with a Writ of Execution means having a Writ of Execution issued by the court, preparing the Levying Officer (LO) instructions and preparing the instructions for a Registered Process Server (RPS), if one is being used. Very few of the offices I have polled fill out their own Notice of Levy. They seem to leave it to the LO or the RPS.

In the days before the Enforcement of Judgments Law (EJL), that is, prior to July 1, 1983, that was not a problem. In California, under the old law, all levies of a Writ of Execution were a “snapshot”, you got what was due at the instant of the levy and nothing which came due after the levy. Perhaps the classic case in the area was Hustead v Superior Court (1969) 2 Cal. App. 3d 780; 83 Cal. Rptr. 26, in which a judgment creditor unsuccessfully attempted to garnish future rent due from a tenant to the judgment debtor. The Hustead case contains a very good discussion of the law of garnishment as it existed in the days before the EJL became effective.

What is generally overlooked is the fact that the law of garnishments was completely changed by the EJL. In its summary report to the legislature, the California Law Revision Commission (the drafters of the EJL) said: 

“The proposed law requires the garnishee to furnish a memorandum of garnishee describing the property of the judgment debtor in the garnishee’s possession and the debts owed to the judgment debtor. A garnishee who fails to comply may be liable for the cost of obtaining the required information.

The proposed law requires that the garnishee make prompt payment to the levying officer of debts that are due, and any payments falling due on the obligation levied on during the two year lien of execution must be similarly paid. Existing law does not provide for a continuing levy on payments as they fall due.”

16 California Law Revision Commission Reports, 1001, 1013-14 (1982) [Italics in original, bold emphasis added]

Later, in the same report the Law Revision Commission has a complete and full recommendation. In addition to the language quoted above from the Summary Report, in the full report the Commission says:

 “If an account receivable or general intangible is levied upon, the third person is required to pay over the amount due at the time of levy and any amounts falling due during the period of the execution lien. The new law makes clear that the execution lien on a deposit account terminates when the amount levied upon is paid to the levying officer. Unless there is good cause for failure to pay over these amounts, the third person is liable in proceedings taken for the enforcement of the lien.”

16 California Law Revision Commission Reports, 1001, 1077 (1982)

Thus, prior to the EJL the only levy which was a continuing levy was an Earnings Withholding Order, all other levies were “snapshots”. Under the EJL, only bank levies are a “snapshot”, all other levies are continuing for at least some period of time. This is embodied in CCP §701.010 (b) (2) (A) and (B). 1

That is where the Notice of Levy may become a critical document. If the Notice of Levy does not accurately describe “the obligation levied upon” a court might find that the garnishee was not on sufficient notice to be held liable.

The LOs and RPSs tend to use boilerplate language on the Notice of Levy form. If you are intending to levy on an ongoing obligation, be sure to accurately describe what is being levied upon in the Notice of Levy. I have found, that even when I tell the LO what I want put in Box 1b in the Notice of Levy, what often comes out is the LO’s boilerplate.

If you specifically instruct the LO what to put in the necessary box, and the LO does something else, and a court holds you did not have an ongoing levy because of that, you may have recourse against the LO if the LO is shown to have acted contrary to the signed instructions of the levying creditor (CCP §687.040).
________ 
1§ 701.010.  Duty of garnishee

(a)
 Except as otherwise provided by statute, when a levy is made by service of a copy of the writ of execution and a notice of levy on a third person, the third person at the time of levy or promptly thereafter shall comply with this section.

(b) Unless the third person has good cause for failure or refusal to do so:

 (1) The third person shall deliver to the levying officer any of the property levied upon that is in the possession or under the control of the third person at the time of levy unless the third person claims the right to possession of the property.

 (2) To the extent that the third person does not deny an obligation levied upon, or claim a priority over the judgment creditor's lien, the third person shall pay to the levying officer both of the following:

   (A) The amount of the obligation levied upon that is due and payable to the judgment debtor at the time of levy.

   (B) Amounts that become due and payable to the judgment debtor on the obligation levied upon during the period of the execution lien.

 (3) If the third person makes a delivery or payment to the levying officer pursuant to this section, the third person shall execute and deliver any documents necessary to effect the transfer of the property.

(c) For the purposes of this section, "good cause" includes, but is not limited to, a showing that the third person did not know or have reason to know of the levy from all the facts and circumstances known to the third person.



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