Obtaining a civil judgment for money is often only the first step in a creditor’s efforts to recover its damages. As some unfortunate creditors have experienced firsthand, judgment debtors sometimes conceal their assets or transfer them outright to third parties to hinder collection. California’s Enforcement of Judgment Law (EJL) lets judgment creditors serve subpoenas issued by their counsel for records to third parties, like financial institutions, to trace and locate assets upon which to levy.
Historically, many California courts have required that the judgment creditor also undertake the expense of obtaining and serving a separate court order for examination of the third party before the judgment creditor may serve its subpoena. However, the recent California case of Shrewsbury Mgmt., Inc. v. Sup. Ct. holds that a third party must comply with a creditor’s document subpoena irrespective of whether the creditor has obtained a third party examination order and therefore greatly simplifies this important investigative tool.
In Shrewsbury, the judgment creditor held a judgment against an individual. Judgment creditor obtained orders for the judgment debtor’s judgment examination, but sought additional information from other sources. Accordingly, creditor’s counsel issued a subpoena duces tecum to a bank to produce certain records related to the judgment debtor. After third party affiliates to the debtor objected on the grounds of financial privacy, creditor filed a motion to compel the bank to comply. After the trial court denied creditor’s motion, creditor appealed.
Examining the enforcement statutes, the appellate court determined that under the plain meaning of the law, a judgment creditor may seek evidence from a third party via subpoena in a post-judgment examination proceeding in the same manner as at trial. In reaching this conclusion, the court opined that a judgment creditor should be able to obtain information about the judgment debtor from third parties without first meeting the stringent criteria for obtaining a third party examination order which include showing that (1) the third party has possession or control of property in which the judgment debtor has an interest, or (2) the third party owes $250 or more to the judgment debtor.
This decision is a win for judgment creditors but is by no means a guarantee that judgment debtors will not object to a judgment creditor’s attempts to obtain information from third parties (like banks) to aid in the collection of a money judgment. Please contact our experienced team of creditors’ rights attorneys if you suspect that your judgment debtor is trying to stop you from lawfully collecting on your money judgment.
Ross Adler
Andrew Ditlevsen
Erika Gasaway
Sepi Ghiasvand
Marie Gribble
Mark Heyl
Monique Jewett-Brewster
Steve Kottmeier
Breck Milde
Liam O'Connor
Chuck Reed
Jay Ross