Eleventh Circuit Holds Garnishment Proceeding Not Subject to FDCPA Venue Clause

The Eleventh Circuit recently joined the First and Eighth Circuits in concluding that the FDCPA’s venue provision does not apply to post-judgment garnishment proceedings.  In Ray v. McCullough Payne & Haan, LLC, the defendant law firm obtained a judgment against the plaintiff in the Fulton County, Georgia, the judicial district in which the consumer lived.  Post judgment, the law firm filed a garnishment proceeding against the consumer’s bank seeking to collect on the judgment.  The garnishment proceeding was filed in Cobb County, Georgia, where the bank was located.  The consumer filed suit against the law firm, alleging that the law firm’s garnishment action violated the FDCPA’s venue provision which requires that:

[a]ny debt collector who brings any legal action on a debt against any consumer shall…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.

15 U.S.C. §1692i(a)(2).         

The issue, as stated by the court, was “whether the FDCPA’s venue provision applies to post-judgment garnishment proceedings under Georgia law.” Ray, CITE.  “[A]s a result, whether the provision applies to Georgia garnishment proceedings depends on whether those proceedings are legal actions “against any consumer.” CITE.  Turning its attention to the Georgia garnishment statute, the court noted that the garnishment process in Georgia requires a summons be directed to the garnishee (in this case, the bank) and not to the consumer.  Moreover, the Georgia statute expressly provides that garnishment proceedings are actions between the judgment-creditor and the garnishee.  The court therefore concluded that the FDCPA’s venue provision does not apply to post-judgment garnishment proceedings under Georgia law and affirmed the district court’s dismissal of the FDCPA action.

The opinion provides a couple of key takeaways for debt collectors:

• First, it should be noted that the court’s analysis looks specifically to the state statute governing post judgment proceedings and more importantly, to the nature of the post-judgment proceedings and the proper parties to those post-judgment proceedings.  The dispositive issue for the Eleventh Circuit was whether the post-judgment proceedings were against the consumer or some third party.  Practitioners should note that the answer to this question is state-centric and should be examined on a state-by-state basis.
   
• The second key takeaway is the court’s use of the FTC’s Staff Commentary as further support for its conclusion.  The Staff Commentary provides that if a judgment is obtained from a forum that satisfies the venue requirements of section 1692i, then a debt collector may bring suit to enforce it in another jurisdiction.  Statements of General Policy or General Interpretation Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg. 50,097, 50,101 (Dec. 13, 1988).   The rationale, which was cited favorably by the court, is that the consumer has been provided with his day in court and opportunity to defend the original action in a convenient forum.  This particular point may be helpful to practitioners renewing judgments with multiple consumers where one consumer has moved to a judicial district aside from where the contract was entered or the original judgment was obtained.  Many practitioners debate whether they have to file suit to renew the judgment in multiple venues or whether they can renew the judgment in the original venue.  The Staff Commentary may support the position that a single action to renew the judgment may be brought.