Mainland Investment Group v. Smith
116921
| Kan. Ct. App. | Aug 4, 2017Background
- Mainland obtained a default judgment against Tonya Smith in 2006 for a worthless check and later sought collection nearly a decade later.
- In 2015 Mainland obtained and served an order of garnishment on Diversicare (alleged employer of Smith) by first-class mail; Diversicare did not timely file the required garnishment answer.
- Mainland moved for judgment against Diversicare under K.S.A. 61-3514 for failure to answer; a hearing was scheduled and noticed.
- Before the default judgment hearing, Diversicare filed a motion for leave to answer out of time and informed the court it had never employed Smith; Mainland filed a release of garnishment as to Diversicare under K.S.A. 61-3507(a).
- Despite the release, the district court entered default judgment and assessed statutory costs and attorney fees against Diversicare under K.S.A. 61-3514; on reconsideration the court vacated the entry of default but nonetheless denied Diversicare leave to answer and imposed sanctions. Diversicare appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a court may enter a default judgment under K.S.A. 61-3514 after the judgment creditor has released the garnishment under K.S.A. 61-3507(a) | Mainland: Release does not excuse garnishee from statutory duty to answer; creditor may still seek judgment for failure to answer | Diversicare: Release terminates the garnishment and discharges garnishee from further liability; no live order remains to support default | Court: Release of garnishment removes the operative order and discharges garnishee; default judgment and fees could not be entered after release |
| Whether garnishee can be held liable for wages when it swears it never employed the judgment debtor | Mainland: Garnishee's failure to timely answer supports liability despite its statement | Diversicare: Sworn statement that it never employed debtor triggers statutory duty to release and prevents liability | Court: Statute requires release if garnishee states debtor not employed; allowing liability would be inconsistent and unfair |
| Whether a garnishee's failure to answer can be remedied by district court after release | Mainland: Hearing notice and motion for judgment cure noncompliance | Diversicare: Once released, court lacks jurisdiction to assess liability under K.S.A. 61-3514 | Court: Court lacked jurisdiction to enter default after release; garnishee freed from further liability |
| Award of appellate attorney fees under K.S.A. 61-3514/Rule 7.07(b)(1) | Mainland: Sought appellate fees after prevailing below | Diversicare: Opposed; Mainland did not prevail on appeal | Court: Denied Mainland's request for appellate fees |
Key Cases Cited
- Southwestern Bell Yellow Pages, Inc. v. Beadle, 40 Kan. App. 2d 989, 197 P.3d 896 (Kan. Ct. App. 2008) (a judgment against a garnishee for failure to answer is a default judgment)
- Curiel v. Quinn, 17 Kan. App. 2d 125, 832 P.2d 1206 (Kan. Ct. App. 1992) (creditor stands in debtor's shoes and cannot be placed in a better position against a garnishee)
- Grant v. Reed, 167 Kan. 289, 205 P.2d 955 (Kan. 1949) (a garnishee previously released from garnishment is discharged from further liability)
- Garcia v. Ball, 303 Kan. 560, 363 P.3d 399 (Kan. 2015) (courts disfavour default judgments)