Marcus Labertew v. Loral Langemeier, 846 F.3d 1028

Background

Plaintiffs (Labertew and McDermott) obtained a $1.5 million stipulated judgment against defendant Langemeier in Arizona state court; Langemeier assigned her rights against her liability insurers (Chartis and 21st Century) to the plaintiffs and obtained a covenant not to execute against her personally.
Instead of suing the insurers directly, plaintiffs sought writs of garnishment in state court to collect from the insurers on the judgment.
The insurers removed the garnishment proceedings to federal district court. After removal they answered denying any liability; plaintiffs did not file a written objection to those answers.
The district court applied Fed. R. Civ. P. 69 and Arizona garnishment law and held that plaintiffs’ failure to timely object under Arizona law discharged the insurers.
Plaintiffs appealed, arguing (1) the garnishment was not removable so the district court lacked jurisdiction, and (2) even if removable, federal procedure should not permit discharge for failure to object.
The Ninth Circuit reversed, holding the garnishment was removable and that Rule 69’s state-procedure incorporation did not operate to discharge the insurers because there was no federal judgment in the federal court to which Rule 69 could apply after removal.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Removability of garnishment proceedings	Garnishment is a supplementary collection device nonseparable from the underlying state action and thus not removable	Garnishment against insurers is a separate, independent action and therefore removable	Court: removable; garnishment treated as separable independent civil action (Swanson governs)
Applicability of Fed. R. Civ. P. 69 after removal	Rule 69 should not allow insurers’ discharge because federal procedure governs post-removal and plaintiffs’ failure to object was immaterial	Rule 69 incorporates state garnishment procedure, so failure to object under Arizona law discharges garnishee	Court: Rule 69 applies only to judgments of the federal court in which execution is sought; no federal judgment existed, so Arizona discharge rule could not be applied via Rule 69
Importing state garnishment rules via Fed. R. Civ. P. 64	Plaintiffs: Rule 64 is inapplicable because it secures property for a potential judgment, not to govern post-removal proceedings	Insurers: Rule 64 imports state garnishment remedies and supports applying state garnishment procedure	Court: Rule 64 concerns remedies to secure potential judgments and is irrelevant here; removal invokes federal rules under Rule 81(c)
Effect of removal on pleading/procedure	Plaintiffs: state garnishment procedure should control and plaintiffs’ failure to object is fatal	Insurers: state procedure governs execution and discharge; federal court should apply Arizona law under Rule 69	Court: After removal federal rules supplant state garnishment procedure; district court may in its discretion order repleading under Rule 81(c)(2) and proceed as a new federal action against insurers

Key Cases Cited

Swanson v. Liberty Nat’l Ins. Co., 353 F.2d 12 (9th Cir. 1965) (garnishment against insurer treated as separable independent action for removal)
Randolph v. Emp’rs Mut. Liab. Ins. Co. of Wis., 260 F.2d 461 (8th Cir. 1958) (treating separability as federal question relevant to removability)
Jackson-Platts v. Gen. Elec. Capital Corp., 727 F.3d 1127 (11th Cir. 2013) (recognizing garnishment/remedy separability for removal purposes)
Travelers Prop. Cas. Co. v. Good, 689 F.3d 714 (7th Cir. 2012) (same: garnishment/remedial proceedings may be removable as independent actions)