SunTrust Bank v. PS Bus. Parks, L.P.
791 S.E.2d 571
| Va. | 2016Background
- PS Business Parks obtained judgment against Family Furniture Centers and guarantor Deutsch & Gilden (Deutsch) for unpaid rent and served a garnishment summons on SunTrust for Deutsch’s accounts, including account ending 95497 (a subsidiary in a zero-balance sweep with master account 61663 owned by G&D).
- SunTrust initially paid $15,050.11 from account 95497 into court and also tendered $133,656.69 from G&D’s master account 61663; G&D successfully quashed garnishment of 61663.
- The Supreme Court remanded for a detailed inquiry into funds that actually reached Deutsch’s account 95497 during the garnishment period (Mar 5–Apr 12, 2013), distinguishing outside deposits from intrabank zero-balance sweeps.
- On remand PS Business introduced account statements showing over $1.2 million of credits to 95497 during the period and rested; SunTrust produced testimony explaining the zero-balance sweep mechanics, administrative error (failing to sever sweep), and identified roughly $2,142.42 of outside deposits plus the previously admitted $15,050.11.
- The circuit court concluded neither G&D nor SunTrust met the asserted burden of proof, ordered payment to PS Business of $706,755.17, and found SunTrust indebted to Deutsch for $1.2 million; judgment was entered against SunTrust after nonpayment.
- The Supreme Court reviewed whether the circuit court wrongly shifted the burden of persuasion to SunTrust and whether the $1.2 million indebtedness finding had evidentiary support.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which party bears burden of persuasion to prove extent of garnishee's liability to judgment debtor? | PS Business: SunTrust must prove which deposits were revolving/illusive; account statements suffice to shift burden. | SunTrust: PS Business, as plaintiff, bears burden to prove amount of garnishee indebtedness; garnishee only has burden to rebut. | Court: The extent of SunTrust’s liability is an element of PS Business’s claim; PS Business bears burden of persuasion; circuit court erred in shifting burden to SunTrust. |
| Whether zero-balance sweep credits created enforceable indebtedness from SunTrust to Deutsch for garnishment reach | PS Business: All funds credited to 95497 during period (including sweep credits) were Deutsch’s and subject to garnishment. | SunTrust: Most credits were intrabank sweep entries caused by bank’s failure to sever accounts and did not create ownership or indebtedness to Deutsch. | Court: Sweep credits resulted from bank error and did not create debtor-creditor relationship; only outside deposits are subject to garnishment. |
| Whether circuit court’s finding that SunTrust owed Deutsch $1.2 million is supported by evidence | PS Business: Account records show >$1.2M credits; court should award that sum. | SunTrust: No evidentiary showing that sweep credits were Deutsch’s funds; court’s $1.2M finding is unsupported. | Court: The $1.2M finding is plainly wrong and without evidentiary support; remand to calculate outside deposits beyond $15,050.11. |
| Remedy on remand | PS Business: Recover all outside-deposit amounts that actually reached 95497 in garnishment period. | SunTrust: Court must exclude sweep credits and require PS Business to prove amounts subject to garnishment. | Court: Reverse and remand; circuit court must calculate sum of outside deposits (in addition to $15,050.11) and order payment; PS Business retains burden of persuasion. |
Key Cases Cited
- Smith v. McLaughlin, 289 Va. 241 (discussing de novo review on whether an issue is prima facie element or affirmative defense)
- Wetlands America Trust, Inc. v. White Cloud Nine Ventures, L.P., 291 Va. 153 (explaining burden of persuasion and consequences of nonpersuasion)
- PS Business L.P. v. Deutsch & Gilden, Inc., 287 Va. 410 (prior opinion remanding for evidentiary inquiry into funds that reached account 95497)
- Lynch v. Johnson, 196 Va. 516 (garnishment exists only by statute and outlines objective of garnishment to ascertain garnishee liability)
- Fentress v. Rutledge, 140 Va. 685 (describing party bearing affirmative and negative on garnishment liability issues)
- Bernardini v. Central Nat’l Bank, 223 Va. 519 (bank-depositor relationship is debtor-creditor; deposits become bank property)
- Network Solutions, Inc. v. Umbro Int’l, Inc., 259 Va. 759 (garnishment requires a liability of a third person to the judgment debtor)