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Third Party Examinations
"My debtor owns a vacation home, and he brags about it, and I know his buddy has been to the vacation home many times. The vacation home is not findable by me under the debtor's name. How can I drag the buddy of the debtor into court to disclose what he knows about my debtor's property?"
Sometimes, to attempt to get your judgment paid, you need to bring in your judgment debtor for a debtor's examination. Other times, you may want to bring in the spouse, business partner, or employer of your debtor as third parties, to gather information about the debtor that might lead to getting your judgment paid. I am a Judgment Broker, not a lawyer, and this article covers what I have done in California for judgments that I owned. The methods are similar in other states.
To bring a third party to court, you need to schedule a court hearing. You need to get a court (or lawyer) stamped subpoena, personally served on both the debtor and also the third party. You may have to also at the same time, have a consumer notice served on your judgment debtor. In California, see forms SUBP-025, and review California laws: CCP 1985.3 and CCP 1985.6. Remember to include the witness fees if required in your state.
You must pay the court for a hearing, and then pay a process server to serve all the parties. You also need to fill out the right court forms (EJ-125), and supply the correct wordings. That is what the rest of this article is about. There are two ways to go, when you fill out the paperwork, to comply with CCP 708.120. Note that CCP 708.130 may provide a broader scope of discovery, but not all judges will allow CCP 708.130 as a valid reason to bring someone in.
One way is to use only page two of the EJ-125 form. Where it says (2) NOTICE TO JUDGMENT DEBTOR, type or better yet, use a fillable PDF on your computer and print, the reason to bring in the third party in this area, in CAPITAL LETTERS, as it states, because you do not want the debtor or third-party to have any reason to try to quash your subpoena.
Write something like "JANE SMITH IS THE SPOUSE OF THE JUDGMENT DEBTOR AND HAS KNOWLEDGE OF THE WHEREABOUTS OF THE ASSETS AND OTHER NECESSARY INFORMATION REGARDING THE JUDGMENT DEBTOR TO AID IN THE ENFORCEMENT OF THIS JUDGMENT" AND "JOHN SMITH IS THE EMPLOYER OF THE JUDGMENT DEBTOR AND HAS FAILED TO COMPLY WITH THE EARNINGS WITHHOLDING ORDER LAWFULLY SERVED UPON THE COMPANY". All you really need is something stating why you need to ask the third-party questions under oath regarding the judgment debtor.
If the reasons to bring in the third-party require more explanation, you will need to file a separate affidavit, stating who this person is, the relationship to the judgment debtor, and whether they are either/or:
1) Are indebted $250 or more to the judgment debtor, or
2) Likely to have knowledge about the judgment debtor's assets. On the back of the EJ-125 form, you list the judgment debtor's property under control of the witness, so you can effectively identify and lien that property, because (at least in California) a properly served subpoena creates a silent one-year lien on any identified property. This type of lien may need 90 days to "cure" and firmly attach.
On a separate affidavit, on regular pleading paper, using a standard format, write "Affidavit for 3rd Party Judgment Debtor Examination." For example, AFFIDAVIT OF YOURNAME, IN SUPPORT OF THIRD PARTY EXAMINATION OF MR. DEADBEAT DEBTOR. (or) AFFIDAVIT OF YOURNAME, ASSIGNEE OF RECORD, IN SUPPORT OF THIRD PARTY EXAMINATION OF MR. DEADBEAT DEBTOR. In the body of your affidavit, you say something based on your "belief and information":
I, the undersigned, declare as follows:
1. I am the (judgment creditor/assignee of record) in this case. I am over 18 years of age. I have personal knowledge of the facts herein, except as to those facts stated to be known upon information and belief, and as to those facts, I believe them to be true. If called upon to testify, I could and would competently testify thereto.
2. Judgment for the plaintiff in the above-entitled matter was entered on May 1, 2013 in the total amount of $XX,XXX.00 awarded against MR. DEADBEAT DEBTOR. The total amount plus interest and costs remain due.
3. I wish to examine MORTIMER SNERD, third party who is the (spouse, employer, etc.) of the judgment debtor.
4. I am informed and believe that MORTIMER SNERD has in his/her possession property of the judgment debtor, and that MORTIMER SNERD is indebted to the debtors in an amount exceeding $250. (Or that MORTIMER SNERD has knowledge of judgment debtor's assets - based on your information and belief.)
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Then, you should list your Points and Authorities to back up your request. What I have done (only in California) to bring in third-parties to court when enforcing judgments I own, is to include points and authorities along with my declaration for a third-party examination try to find debtor's assets. Here are points and authorities I have used, on the second page of my affidavit, and also placed in the third party request itself:
POINTS AND AUTHORITIES IN SUPPORT OF ISSUANCE OF APPLICATION AND ORDER FOR APPEARANCE AND EXAMINATION OF THIRD PERSON CCP 708.120. (a) Upon ex parte application by a judgment creditor who has a money judgment and proof by the judgment creditor by affidavit or otherwise to the satisfaction of the proper court that a third person has the possession or control of property in which the judgment debtor has an interest or is indebted to the judgment debtor in an amount exceeding two hundred fifty dollars ($250), the court shall make an order directing the third person to appear before the court, or before a referee appointed by the court, at a time and place specified in the order, to answer concerning such property or debt. The affidavit in support of the judgment creditor's application may be based on the affiant's information and belief.
CCP 708.130(a) provides that witnesses may be required to appear and testify before the court or referee in an examination proceeding under this article in the same manner as upon the trial of an issue. This includes the examination of any third person who has, or may have, knowledge of the judgment debtor's assets and liabilities. This includes the spouse of the debtor who, it can be reasonably calculated, possesses special knowledge regarding the income and assets of the debtor.
This understanding of the meaning of CCP 708.130 is corroborated by case law. While there is no case specifically dealing with third-parties, the language of case law leaves little doubt that the scope of a debtor's examination is not to be unnecessarily narrowed. In the case of Kyne v. Eustice the court found:
The object of the proceeding is to compel the judgment debtor to give information concerning his property; and such judgment-debtor examination is intended to be summary and factual, according the widest scope for inquiry concerning the property and business affairs of the judgment debtor. (Coleman v. Galvin, 78 Cal.App.2d 313, 318 [177 P.2d 606]; McCullough v. Clark, 41 Cal. 298, 302.)
The purpose of such supplementary proceedings are to discover and reach assets of a judgment debtor so as to apply them to the satisfaction of the judgment. (Smith v. Smith, 51 Cal.App.2d 29, 31-32 [124 P.2d 117]; Coleman v. Galvin, supra,; In re Finn, 155 Cal.App.2d 705, 709 [318 P.2d 816].) [page 633]
Accordingly, a third person or corporation alleged to have property of a judgment debtor or to be indebted to him may be examined concerning the same (Code Civ. Proc., 717 [now 708.120]; Coleman v. Galvin, supra), and such proceedings may be properly used to obtain the possession of third-party debts after such examination. (Thomas v. Thomas, 192 Cal.App.2d 771,778 [13 Cal.Rptr.872]; Hathaway v. Brady, 26 Cal. 581, 589.) Kyne v. Eustice, (1963) 215 CA2d 627, 632, 30 CR 391
Further, in Young v. Keele, and cited in numerous subsequent cases, the courts asserted the wide scope of inquiry permissible in judgment debtor's examination, to the extent that its purpose is "to leave no stone unturned in the search for assets which might be used to satisfy the judgment." Young v. Keele (1987) 188 Cal.App.3d 1090, 1093 [233 Cal.Rptr. 850]; see also Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1014 [231 Cal.Rptr. 108]
Given the above, you, as the Assignee, requests that the court order the issuance of an Application and Order for Appearance and Examination directed to the above Third Party.
A Sheriff or Process Server will serve your papers, along with a copy of your Points and Authorities, so that it is clear that the witness is being served in the capacity as a person with knowledge of the judgment debtor' assets.
Especially if the third party is a business, the link below is useful: http://www.saclaw.lib.ca.us/pages/business-records-subpoena.aspx.
In California (in most courts and with most judges), you are not limited by the "$250 or possession and control of debtor's property" in CCP 708.120, just because it is one of the CCPs that are named on the AT-138/EJ-125 form. Instead, in the Notice to Judgment Debtor affidavit on the form, cite CCP 708.130(a): "Witnesses may be required to appear and testify before the court or referee in an examination proceeding under this article in the same manner as upon the trial of an issue."
In California, several judgment enforcers use form SUBP-002. They say the laws regarding whom we can examine or from whom we can demand production of documents in connection with a debtor's examination are tricky. You can examine a third-party holding $250 or more of the debtor's property, or owing $250 or more to the debtor, under CCP 708.120.
However, that statute seems superfluous, because you have the right to subpoena documents from ANY witness in connection with any trial or hearing, using SUBP-002. You can require the witness to appear by checking one checkbox, or exempt the witness from appearing as long as they sign a form attesting to the completeness and correctness of the copies of the documents they are sending to the court. Read the form for details about that. A debtor's examination is considered a hearing. Or maybe the proper term is "proceeding." A debtor's exam is certainly a proceeding.
I cannot imagine a situation where I would want to restrict myself to examining a witness under the authority of the first statute, where you have to prove the issue about them holding or owing money or property to the debtor. Sure, you get a lien on the property that they are holding or owing to the debtor that way, but how do you enforce such a lien? I would think that it would be more efficient and effective to simply levy on any such property. You can do that even when there's no lien on it. And if it is property that belongs to the debtor, and it is not exempt of course, then you already have a lien on it by virtue of service of the OEX debtor examination.
See www.leginfo.ca.gov/cgi-bin/displaycode?section=ccp&group=01001- 02000&file=1985-1997 for more, including questions regarding Notices to Consumer. If you are requiring documents only from a witness, I recommend having the place of production at the date and time of the scheduled hearing. But also have your process server deliver a note saying they have the option of mailing you the documents with a self addressed stamped envelope so that the documents can be mailed directly to you. This sometimes works.
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