Mensah v. MCT Federal Credit Union

BATTAGLIA, J. Daniel M. Mensah, Petitioner, while living in Maryland, in 2006, opened a personal line of credit as well as a credit card account with MCT Federal Credit Union (“MCT”), Respondent. Mr. Mensah, over the next several years, accumulated $19,657.66 in credit card debt and amassed $14,951.55 on the line of credit. MCT filed two complaints in 2010 against Mr. Mensah in the District Court of Maryland for Montgomery County, one for the outstanding balance on the credit card account and another for the money owed on the line of credit. Mr. Mensah, by the time of the filings, had moved to Texas.

After several failed attempts at service of Mr. Mensah, substitute service was achieved. Mr. Mensah failed to answer either complaint, and MCT was awarded default judgments in ⁵²⁷ the amount of $21,270.12 on the credit card claim and $15,848.64 on the line of credit. Mr. Mensah failed to note any appeal. MCT, in 2013, secured two writs of garnishment in the same actions from the District Court pursuant to Sections 15-601 through 15-606 of the Commercial Law Article, Maryland Code (1978, 2013 Repl.Vol.), as implemented by Rule 3-646. 1 The writs were served on the resident agent 2 of Mr. Mensah’s employer, BASF, 3 as well as on its payroll department in New Jersey.

Although BASF answered and did not contest the garnishment, Mr. Mensah filed motions to quash the writs, arguing that his wages, earned solely for work he performed in Texas, were not subject to garnishment in Maryland. The District Court denied both motions to quash, and Mr. Mensah ⁵²⁸ appealed to the Circuit Court for Montgomery County, which affirmed. Mr. Mensah petitioned this Court for certiorari, which was granted in Mensah v. MCT Federal Credit Union, 444 Md. 638 , 120 A.3d 766 (2015), to answer the following questions: I. Does Maryland law allow a judgment creditor (MCT) to garnish wages earned by a judgment-debtor employee (Mensah) exclusively for services/work performed in Texas pursuant to a Writ issued by a Maryland Court?

II

Does Maryland law allow a judgment creditor (MCT) to garnish wages earned by a judgment-debtor employee (Mensah) exclusively for services/work performed in Texas pursuant to a Writ issued by a Maryland Court and served on an employer in New Jersey?[ 4 ] The underlying judgments for $21,270.12 and $15,848.64 secured by MCT against Mr. Mensah are not in issue, because no appeal was taken by Mr. Mensah to challenge them. The sole issue before us involves judgment enforcement, i.e. whether the District Court in its continuing and ancillary jurisdiction could order wages earned outside of Maryland by a non-resident judgment debtor to be subject to garnishment served upon an employer with continuous and systematic business in Maryland. 5 We shall answer yes to this question. One opportunity to garnish wages outside of the jurisdiction in which a money judgment has been entered is to enroll the judgment in the “foreign” jurisdiction, pursuant to the Uniform Enforcement of Foreign Judgments Act (“UEFJA”), ⁵²⁹ which was approved by the National Conference of Commissioners on Uniform State Laws in 1948 and revised in 1964. See Unif.

Enforcement of Foreign Judgment Act (revised 1964) 13 U.L.A. 156 (2002). The UEFJA enables a party awarded a judgment in one state to enforce that judgment in another state by recording or “enrolling” the judgment in the latter state. 6 The enrolled “foreign” judgment is then treated as though it were a judgment of the receiving state. 7 Maryland adopted the 1964 revision of the UEFJA with modification in Chapter 497 of the Maryland Laws of 1987. Codified in Sections 11-801 through 11-807 of the Courts and Judicial Proceedings Article, Maryland Code (1987, 2013 Repl. Vol.), the UEFJA offers a judgment creditor holding a valid judgment from another state or jurisdiction a way to enforce that judgment in Maryland. 8 The judgment creditor may file, ⁵³⁰ or enroll, the judgment in a court in Maryland, where the judgment will then be treated as though it were a judgment of the Maryland court and may, among other things, seek its enforcement. 9 Notice of the enrollment of the judgment must be provided to the judgment debtor. 10 The State of Texas also has adopted the 1964 revision of the UEFJA, codified in 1985 in Sections 35.001 through 35.008 of the Texas Civil Practices and Remedies Code.

Tex. Civ. Prac. & Rem.Code §§ 35.001-35.008. Despite the ability to enroll the Maryland judgment in Texas, however, MCT did not do so.

Apparently, Section 28 of Article 16 of the Texas Constitution prohibits a wage garnishment for any purpose other than the enforcement of child support or spousal mainte ⁵³¹ nance. 11 Tex. Const. Art. 16 § 28. To that end, Section 42.001 of the Texas Property Code exempts “current wages for personal services, except for the enforcement of court-ordered child support payments[.]” 12 Tex.

Prop.Code § 42.001(b)(1). An alternative garnishment method that MCT sought to utilize involved the satisfaction of the money judgment through wage attachment served on the employer’s, BASF, Maryland resident agent, pursuant to Sections 15-601 et seq. of the Commercial Law Article, Maryland Code (1978, 2013 RepLVol.). “Wages,” for the purpose of attachment, is defined as “all monetary remuneration paid to any employee for his employment” in Section 15-601(c) of the Commercial Law Article, without any indication as to where the remuneration must be earned. The term “employee”, referenced in Section 15-601(c), “includes an employee whether he is a resident or nonresident of the State.” (emphasis added). All wages of an employee that are and become payable are subject to a lien to satisfy the judgment: (a) When an attachment is levied against the wages of a judgment debtor, it shall constitute a lien on all attachable ⁵³² wages that are payable at the time the attachment is served or which become payable until the judgment, interest, and costs, as specified in the attachment, are satisfied.

(b) Any waiver of the limitations contained in § 15-601.1(b)(1) and (2) of this subtitle is void. Section 15-602 of the Commercial Law Article. Maryland Rule 3-646 “governs garnishment of wages under Code, Commercial Law Article, §§ 15-601 through 15-606.” Rule 3-646(a). The Rule, under subsection (b), permits a judgment creditor, by “filing in the same action in which the judgment was obtained” a request, including the caption of the action, the money owed under the judgment, the name and address of the judgment debtor and the name and address of the garnishee — a third party who possesses property of the debtor, generally the debtor’s employer in a situation involving wage garnishment — to obtain a writ of garnishment.

The writ, when issued, must contain the information from the judgment creditor’s request and inform the garnishee regarding its need to answer, as well as inform the judgment debtor of his right to contest the garnishment. Rule 3-646(c). Upon issuance, the writ of garnishment and an answer form are served upon the garnishee, and a copy is mailed to the judgment debtor. Rule 3-646(d).

Subsection (e) of 3-646 pertains to the response by the garnishee, and requires an answer within 30 days indicating whether the debtor is an employee, and, if so, the current pay rate and any existing wage liens. The garnishee is also permitted, under subsection (e), to assert any defenses it may have or any that might be available to the debtor, and the judgment debtor may, at any time, assert a defense or an objection to the garnishment. In the event that the garnishee does not timely answer, the judgment creditor may move for a contempt order under subsection (f). The garnishee may deny that the debtor is an employee.

If either the garnishee or the debtor asserts a defense or objection, a hearing is required. Rule 3-646(g). Subsection (i) sets forth the procedure for the garnishee’s withholding and remittance of the wages to the judgment ⁵³³ creditor, who must account for the payments received in accordance with subsection (j). Should the debtor’s employment cease, the garnishment terminates 90 days thereafter.

Rule 3-646(k). A wage garnishment obviously, thus, continues from, and is ancillary to, the original judgment entered by a court and is not itself an original action. See Medical Mut. Liability Ins.

Soc. of Maryland v. Davis, 389 Md. 95 , 883 A.2d 158 (2005) (discussing garnishment of property, other than wages, in the Circuit Court under Rule 2-645). 13 In Davis , we stated: Although once the issue is joined between the judgment creditor and the garnishee, the garnishment proceeding proceeds as any original action, with the judgment creditor as plaintiff and the garnishee as defendant and is governed by the rules applicable to civil actions, such actions are not original actions, independent of the actions out of which the judgments sought to be enforced emanate. Garnishment proceedings, rather, are certainly related to, and, indeed are ancillary to such actions. Thus, the amount of the judgments obtained in the underlying action, to which the garnishment action relates and, indeed, depends, is information necessary for the issuance of a writ of garnishment. Also, the judgment itself conclusively establishes the judgment debtor’s obligation to the judgment creditor.

Indeed, the purpose of a garnishment proceeding is to satisfy money judgments with property of the judgment debtor that is in the hands of third persons. Pursuant to that purpose, garnishment proceedings necessarily must determine whether the garnishee has any funds, property or credits which belong to the judgment debtor. Id. at 117 , 883 A.2d at 171 (emphasis added). See also Goodyear Tire & Rubber Co. v. Ruby, 312 Md. 413, 418 , 540 A.2d 482, 484 (1988); Livingston v. Naylor, 173 Md.App. 488, 510 , 920 A.2d 34, 47 (2007). ⁵³⁴ Mr. Mensah and MCT differ as to the extent of the reach of the wage garnishments ordered by the District Court of Maryland in this case because of Mr. Mensah’s Texas residency, both relying on two cases involving wage garnishment, one decided by this Court, Goodyear Tire & Rubber Co., 312 Md. at 413 , 540 A.2d at 482 , and the other by the Court of Special Appeals, Livingston, 173 Md.App. at 488 , 920 A.2d at 34 .

In Goodyear, Patricia Ruby was awarded an absolute divorce from Robert Ruby, as well as custody of their children and child support. Mr. Ruby, who was a resident of Texas, was served in Maryland with the original complaint, but failed to appear for any of the proceedings. He subsequently failed to pay child support, and Mrs. Ruby requested a wage garnishment of her former husband’s earnings, pursuant to Sections 10-120 through 10-126 of the Family Law Article, Maryland Code (1984), in the Circuit Court for Prince George’s County, from which she had obtained the divorce and award of child support. The Circuit Court issued the writ, and Mr. Ruby’s employer’s, Goodyear, resident agent was served with the wage garnishment.

Goodyear, however, sought to quash the wage garnishment in the Circuit Court, arguing that the request for the garnishment was a new claim for relief that would have required personal jurisdiction over both Mr. Ruby and Goodyear. 14 The Circuit Court disagreed, as did we. We concluded that the wage garnishment did not constitute a new cause of action but was -within the exercise of the continuing, ancillary jurisdiction of the circuit court: The right to exercise personal jurisdiction over Mr. Ruby arose when he was served with the original complaint, and ⁵³⁵ extended to all the relief sought by that complaint. Moreover, the enforcement and modification of relief granted pursuant to that complaint remains within the continuing jurisdiction of the circuit court, subject to any due process requirement that the party against whom the modification or enforcement is sought be given reasonable notice and an opportunity to be heard. Id. at 418, 540 A.2d at 484 .

As a result, we determined that the relief entered in the case against Mr. Ruby remained ■within the continuing jurisdiction of the circuit court and that “service of the notice [of garnishment] by ordinary mail was sufficient” to meet the requirements of due process. Id. at 420 , 540 A.2d at 485 . We also addressed whether there were sufficient contacts between Goodyear and Maryland to warrant the exercise of personal jurisdiction over it. Although the record was inadequate to establish Goodyear’s Maryland contacts, we recognized “there may be contacts reflecting continuous and systematic general business conduct that will be sufficient to support the exercise of jurisdiction over a claim that neither arises out of nor is directly related to the conduct of the [garnishee] within the forum.” Id. at 422 , 540 A.2d at 486 .

We remanded the case to explore whether Goodyear’s contacts in Maryland reflected continuous and systematic general business conduct. In the second case, Livingston, 173 Md.App. at 488 , 920 A.2d at 34 , a money judgment obtained by Mr. Naylor from a North Carolina court for $50,000, resulting from injuries sustained when Livingston assaulted Mr. Naylor and robbed him, was enrolled in Maryland under the UEFJA. Id. at 490-91 , 920 A.2d at 35-36 . Although Mr. Naylor had begun garnishment proceedings in North Carolina, wages were exempt from garnishment in that state, which led him to enroll the judgment in Maryland.

Id. at 491-92 , 920 A.2d at 36 . Livingston, a resident of North Carolina, had worked several years for Marriott at its various locations in North Carolina, Virginia and, briefly, Maryland. Livingston had served as an ⁵³⁶ interim manager at several Marriott hotels in Maryland in 2004, for a short time, prompting Mr. Naylor to seek enforcement of his judgment in this state. Id. at 492 , 920 A.2d at 36 .

Livingston and Marriott challenged Maryland’s exercise of jurisdiction regarding the enrolled judgment and moved to quash the writ. Id. at 492 , 920 A.2d at 36-37 . The primary issue before the Court of Special Appeals was whether, pursuant to the enrolled foreign judgment, Maryland could affect garnishment of wages of a non-resident extraterritorially in North Carolina. Our intermediate appellate court eventually determined that the Maryland courts, when enforcing an enrolled judgment, could not order the garnishment of wages earned in North Carolina.

An enrolled judgment, though valid, was subject to defenses in enforcement: The Court of Appeals recognized in Smith Pontiac that there is a “distinction between recognition and enforcement” of a foreign judgment. “While this Court must recognize this judgment [domesticated in Maryland pursuant to the UEFJA] as a valid Maryland judgment, this Court also may inquire into post-judgment defenses in order to determine the extent to which it is enforceable.” Id. at 500-01 , 920 A.2d at 42 (internal citation omitted) (alteration original), quoting Mike Smith Pontiac, GMC, Inc. v. Mercedes-Benz of North America, Inc., 356 Md. 542, 562 , 741 A.2d 462, 472-73 (1999). The Court of Special Appeals, however, recognized a distinction between a Maryland court’s jurisdiction when enforcing a judgment entered in a case originating in Maryland and a judgment enrolled in Maryland, taking into account two Supreme Court cases which had not been discussed in Goodyear, those being Shaffer v. Heitner, 433 U.S. 186 , 97 S.Ct. 2569 , 53 L.Ed.2d 683 (1977), and Rush v. Savchuk, 444 U.S. 320 , 100 S.Ct. 571 , 62 L.Ed.2d 516 (1980), both cases involving prejudgment garnishment. In Shaffer , Heitner, a non-resident shareholder had brought a derivative action in Delaware against Greyhound Corpora ⁵³⁷ tion, its wholly owned subsidiary and several officers and directors, none of whom was a resident of Delaware. Id. at 189-90 , 97 S.Ct. at 2572 , 53 L.Ed.2d at 688-89 .

Heitner alleged that, as a result of violating their duties to Greyhound, the officers and directors caused Greyhound to engage in activities that lead to its liability for damages in a private antitrust suit and a fine in a criminal contempt action. Id. In addition, Heitner moved for, and was granted, a sequestration order 15 on the defendant’s property located in Delaware, which consisted of Greyhound’s stock certificates which, under Delaware law, were deemed to be located in Delaware regardless of their actual physical location. Id. at 190-92 , 97 S.Ct. at 2572 - 73, 53 L.Ed.2d at 689-90 .

The defendants asserted that they lacked sufficient contacts with Delaware and, therefore, the court lacked jurisdiction over them and that the ex parte sequestration violated due process. Id. at 193 , 97 S.Ct. at 2573 - 74, 53 L.Ed.2d at 691 . The Supreme Court concluded that, where the personal jurisdiction asserted by the state is in rem, based upon the presence of property owned by the defendant within the state, the mere presence of the property alone is not sufficient to confer jurisdiction. Id. at 209 , 97 S.Ct. at 2582 , 53 L.Ed.2d at 701 (“Thus although the presence of the defendant’s property in a State might suggest the existence of other ties among the defendant, the State, and the litigation, the presence of the property alone would not support the State’s jurisdiction.”).

Due process, therefore, according to the Court, required an inquiry into “the relationship among the defendant, the forum, and the litigation”. Id. at 204 , 97 S.Ct. at 2580 , 53 L.Ed.2d at 698 . The primary issue in that case involved pre-judgment attachment, but the Court left open the question of whether an inquiry into personal jurisdiction is required for post-judgment enforcement, stating in footnote 36: ⁵³⁸ Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter. Id. at 210 n. 36, 97 S.Ct. at 2583 n. 36, 53 L.Ed.2d at 702 n. 36.

In the second case, Rush, 444 U.S. at 322 , 100 S.Ct. at 574 , 62 L.Ed.2d at 521 , the Supreme Court revisited the issue of a state’s exercise of jurisdiction over a nonresident defendant in a pre-judgment attachment context. In the case, Savchuk,