Rose Dionne, Etc. v. Gerard Bouley, Etc., Rose Dionne, Etc. v. Gerard Bouley, Etc.

This ease concerns the constitutionality of the post-judgment garnishment procedure of Rhode Island. It raises the question whether Rhode Island law provides adequate notice to a judgment debtor whose property is attached of any right he may have under state or federal law to have his property exempted from attachment, and of the means for claiming such exemption, and whether Rhode Island affords an adequate opportunity for a prompt hearing at which the question of exemption can be determined. The United States District Court for the District of Rhode Island, in a comprehensive opinion, Dionne v. Bouley, 583 F.Supp. 307 (1984), held that current procedures were constitutionally insufficient. It enjoined defendant Gerard Bouley, Chief Clerk of the District Courts of the State of Rhode Island, from issuing writs of attachment thereunder. We modify and affirm.

I. FACTS

On July 26, 1982, plaintiff Rose Dionne was the losing party in an action of eviction brought against her by her landlord in the *1346 Second Division District Court of Rhode Island. The judgment included an order that she pay one month’s rent, a sum of $550. Pursuant to the judgment, an execution was issued against Dionne, which was returned to the state court marked “unsatisfied.” Thereafter, the judgment creditor obtained a writ of attachment from the clerk of the state court under R.I.Gen. Laws § 10-5-2 1 (1969 Reenactment) (Supp. 1983) and Rule 4(j)(2) 2 of the state district court, and served the writ on Dionne’s bank. As a result, the bank “froze” her bank account on August 13, 1982.

At the time this occurred, Rhode Island law permitted any creditor who was unable to execute his judgment to file a second “debt on judgment” action against the debtor and to attach the debtor’s property as security for this second suit. 3 Dionne’s bank account was attached 4 pursuant to a suit of this nature filed by the creditor under R.I.Gen.Laws § 9-28-1 5 (1969 Reenactment), in which the creditor sought another money judgment in the amount of $551.80 plus costs of $50. Dionne was served with process in this second action on August 17, 1982. 6 That same day, she received notice from her bank that one of her checks had been returned for insufficient funds and that the bank was imposing a $5 service charge for the check’s return. On calling the bank to inquire about this, Dionne was told that her funds had been attached.

Dionne’s checking account contained $601 when it was attached, most of which consisted of social security benefits paid to her and her four minor children, with a small portion of the account being attributable to her wages. 7 Under federal law,8 *1347 social security benefits are not subject to “attachment, garnishment, or other legal process____” Other exemptions, federal and state, also exist which might have pertained to some or all Dionne’s monies in this account. See, e.g., 15 U.S.C. § 1673 (1982); R.I.Gen.Laws § 9-26-4(12)(a) (1969 Reenactment) (Supp.1984). Dionne, who was solely responsible for the support of herself and her children, was unaware of, and was not provided with notice of, any procedures through which she could challenge the attachment or raise a claim that some or all of the property was exempt.

According to the parties’ stipulations it was the practice of the state district court to issue blank writs of attachment upon request, with the name of the clerk and the seal already affixed, to creditors or their attorneys. No motion to attach was required with these, the writ being simply served directly on the trustee (i.e., bank, employer). The parties also stipulated that there was no required hearing or notice of any possible hearing, either before or after the writ of attachment was issued and served, and that there was no notice to the judgment debtor of any possible defenses or exemption claims.

A short time after learning of the attachment, on September 14, 1982, Dionne brought this action in the federal district court challenging the constitutionality of the postjudgment garnishment procedure in the state district court system. She asserted causes of action under 42 U.S.C. § 1983 for alleged violation of the due process and supremacy clauses of the federal Constitution. Dionne criticized the state’s failure to have provided her with a prompt notice of the attachment that would have informed her of the existence of the state and federal exemptions and the means for her to claim them. She further criticized the lack of any specific provision in Rhode Island law for a hearing, either prior to the attachment or immediately following the issuance and service of the writ, at which any exemptions could be claimed. She requested declaratory and injunctive relief, and class certification.

On or before the filing of this suit, the judgment debtor released the attachment of Dionne’s bank account, leaving her once more in control of her funds.

In November 1982, Dionne moved to certify a class of all judgment debtors in Rhode Island who might have been subject in the future to post-judgment attachment procedures and whose funds might have been exempt in whole or in part under state or federal statutory exemptions. Defendant opposed this motion. On March 18, 1983, the district court denied certification on the ground that any injunctive relief awarded “would inure to the benefit of all those similarly situated, and would be identical regardless of whether or not the action is maintained as a class action.”

Thereafter, Dionne moved for summary judgment, most of the above facts having been previously stipulated by the parties. On March 23, 1984, the district court issued its opinion and order, 583 F.Supp. 307, declaring the challenged procedure unconstitutional and issuing the requested injunction. Defendant appeals from the judgment below asserting that the case was moot, that the district court should have abstained, and that the challenged procedures are not unconstitutional. Dionne cross-appeals claiming that the district court erred in denying class certification. *1348 An amicus curiae brief favoring the constitutionality of the Rhode Island procedure has been submitted by Rhode Island attorneys practicing in the field of collection law.

II. MOOTNESS

While the attachment of Dionne’s bank account was released at or before the time she filed this action, the district court ruled that the case was not moot because the underlying dispute was “capable of repetition, yet evading review.” 583 F.Supp. at 312. See Roe v. Wade, 410 U.S. 113, 125, 93 S.Ct. 705, 712, 35 L.Ed.2d 147 (1973); Southern Pacific Terminal Co. v. ICC, 219 U.S. 498, 515, 31 S.Ct. 279, 283, 55 L.Ed. 310 (1911). To come within this exception, there had to be present two elements: (1) the activity being challenged must, by its nature, be of such short duration that it is unlikely to be fully litigated before its cessation or expiration, and (2) there must be a reasonable expectation that the same complaining party will be subjected to the same acts again. Weinstein v. Bradford, 423 U.S. 147, 149, 96 S.Ct. 347, 348, 46 L.Ed.2d 350 (1975); Loeterman v. Town of Brookline, 709 F.2d 116, 118 (1st Cir.1983). We agree with the district court that this case meets these requirements.

The Third Circuit faced a similar situation in Finberg v. Sullivan, 634 F.2d 50 (1980) (en banc). In Finberg a social security recipient’s cheeking and savings accounts were garnished under Pennsylvania post-judgment attachment procedures. The recipient brought a state court action to set aside the attachment and also sued in the federal district court attacking the constitutionality of the Pennsylvania procedures. Within five months after commencement of the state action, and before plaintiff’s constitutional claim was adjudicated by the federal court, the state court released the attachment. Thereafter, the district court held against plaintiff on the merits of her constitutional claim. The court of appeals reversed. Addressing the contention that the federal action was moot, the Third Circuit wrote,

In the present case, Mrs. Finberg does have some reason to fear that she will suffer another attachment of her bank accounts. She remains a judgment debt- or. As the record indicates that she is an elderly widow with a modest income, this judgment could remain unsatisfied for some time. Future efforts to execute the judgment are therefore likely. Sterling [the creditor] might repeat its attempt to garnish the accounts. For example, when new funds accumulate in the accounts, Sterling might find that the garnishment process is the most efficient way of determining whether any of the new funds are exempt. We also cannot disregard the possibility that a successor to Sterling’s interest, such as a collection agency could make such an attempt.

Furthermore, Mrs. Finberg’s modest income and the difficulties that she has demonstrated in this case in meeting the demands of a creditor indicate that she may incur another money judgment and suffer an attempted garnishment to execute it____

Mrs. Finberg also can show that any recurrence probably would evade review in this court. Any lawsuit challenging the constitutionality of the attachment would require, at the very least, one year to proceed from the filing of a complaint in the district court to the entry of judgment in this court. The attachment probably would end within that time with the occurrence of either of two events: the release of the accounts from attachment pursuant to claims of exemptions, as occurred here, or the entry of a final judgment in the state court garnishment action. Neither event should take as long as one year to occur because the issues and procedures in a garnishment are relatively simple. An exceptional instance of a long and protracted garnishment is most unlikely, given the small amounts of money that Mrs. Finberg reasonably might accumulate in her bank account. In the present case, for example, the *1349 process reached completion within six months.

We conclude that the attachment of Mrs. Finberg’s bank accounts during an attempt to garnish them was short-term activity, “capable of repetition yet evading review.”

Finberg, 634 F.2d at 55-56 (citations omitted).

This analysis is pertinent here. The parties have stipulated that Mrs. Dionne “is a person of very low income who will continue to be subject to the procedures and form [presumably the attachment form] challenged in this action.” This likelihood is enhanced by the fact that some of her income (more than 25 percent) comes from wages, and is thus not exempt, a fact which could encourage the present judgment creditor not to give up altogether. Moreover, the fact that Dionne’s funds were released before any court had the opportunity to declare their exempt status weakens the argument relied on by the dissent in Finberg that, because their exempt status had already been declared, no further attachment was likely. 9 We therefore accept the district court’s finding that there was a “reasonable expectation” that Mrs. Dionne would be subject to another post-judgment attachment. See also Harris v. Bailey, 675 F.2d 614, 616 (4th Cir. 1982).

The district court could also justifiably find that under the post-judgment garnishment procedure of Rhode Island an “instance of a long and protracted garnishment is most unlikely.” A post-judgment attachment is merely an ancillary device which, in Rhode Island as in many other states, can be unilaterally effected and, just as quickly, dropped. The debt on judgment action, now no longer required, did not lengthen matters, as this was also a simple and short proceeding normally lacking in controverted issues. By the time a case can be heard and decided in the federal court, the attached funds will usually have been obtained by the creditor or else released.

Defendant urges us to remand for a finding whether the attachment was released before the present suit was brought. However, we do not believe mootness hinges on whether or not this was so. Mrs. Dionne remained a judgment debtor even if the attachment was released before she sued. The creditor could attach her account again, and, in any event, he should not be permitted, nor should the state be permitted, to evade review of the adequacy of the attachment procedures merely by the expedient of dropping the case after the attachment had been in effect for some time. The harm done by the attachment — the freezing of the account, the dishonoring of the check — has occurred; dropping the attachment did not moot the judgment debt- or’s concern that she would again be subjected to such practices nor her dispute over their legality. We hold the case is not moot.

III. ABSTENTION

Citing to Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), defendant argues that the district court should have abstained so as to allow the Rhode Island courts to construe its own laws, in particular those granting exemptions from attachments and garnishments. Defendant expresses confidence that, properly construed, these “do protect plaintiff’s legitimate concerns.”

However, we perceive no difficult and unsettled questions of state law that need to be resolved before the procedural due process claim brought by Dionne can properly be addressed. Id. at 500, 61 S.Ct. at *1350 645. Defendant alleges various ambiguities in the Rhode Island substantive exemptions, but these are irrelevant to Dionne’s procedural due process claim. Her attack is not upon the adequacy of the state exemptions but upon the absence of specific notice and hearing procedures directly following an attachment that will permit meaningful invocation of whatever federal or state exemptions there are.

The district court characterized present Rhode Island procedures as “admirably free of ambiguity.” 583 F.Supp. at 311. Certainly it is clear that Rhode Island law contains no express provision whatever for a hearing relative to a post-judgment attachment or notice thereof. To be sure, a Rhode Island court might fashion timely procedures to meet plaintiff’s complaints relying in part upon its general powers to correct mistakes. See note 12, infra. Fin-berg, 634 F.2d at 59-60. But we do not think this mere possibility is a sufficient basis to require abstention given the complete absence of express procedures addressing the issue raised by Dionne.

This is not a case where a state court has already commenced a proceeding that is likely to result in clarifying or expanding the state’s post-judgment process. See Romany v. Colegio de Abogados de Puerto Rico, 742 F.2d 32 (1st Cir.1984). There is no present state case in which plaintiff’s claim might be remedied. And while, assuming a state case were to be instituted, it is not inconceivable that a state court could, without legislative action, take steps to create appropriate procedures, a federal court is not required to abstain in the vague hope that state courts will reconstruct procedures that are presently deficient. The Supreme Court has rejected abstention when a state statute was not fairly subject to an interpretation which would render unnecessary the federal constitutional question. Hawaii Housing Authority v. Midkiff — U.S. -, -, 104 S.Ct. 2321, 2327-28, 81 L.Ed.2d 186 (1984). “[I]f the naked question, uncomplicated by ambiguous language is whether the act on its face is unconstitutional, abstention from federal jurisdiction is not. required.” Id. at 2327-28 (citing Wisconsin v. Constantineau, 400 U.S. 433, 439, 91 S.Ct. 507, 511, 27 L.Ed.2d 515 (1971)).

We hold that the district court properly considered the merits of the constitutional claim. See Brown v. Liberty Loan Corporation of Duval, 539 F.2d 1355, 1362 (5th Cir.1976); Fuller v. Hurley, 559 F.Supp. 313, 319 (W.D.Va.1983).

IV. DUE PROCESS

There is no dispute that Dionne was entitled to the exemption created by Congress in 42 U.S.C. § 407 with respect to the social security funds she had deposited in her attached bank account. See Philpott v. Essex County Welfare Board, 409 U.S. 413, 416, 93 S.Ct. 590, 592, 34 L.Ed.2d 608 (1973). It is also clear that Dionne’s interest in retaining her exempt social security funds free from attachment was the kind of property interest that is entitled to due process protection. See Goldberg v. Kelly, 397 U.S. 254, 262, 90 S.Ct. 1011, 1017, 25 L.Ed.2d 287 (1970). The question is simply whether Rhode Island post-judgment garnishment procedure, as currently set out in state law, affords Dionne appropriate notice and a sufficient opportunity to assert her exemption claim. We agree with the district court that it does not.

In Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), the Court said that,

identification of the specific dictates of due process generally requires consideration of three factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.

424 U.S. at 335, 96 S.Ct. at 903.

.Applying this standard, the district court found that the process afforded by Rhode *1351 Island was inadequate since it failed to provide the judgment debtor with prompt and adequately informative notice, advising her not only that her property had been attached but of the relevant exemptions and of the means available for asserting them. Current state procedure also lacks express provision for a prompt post-attachment hearing at which to assert any exemption. The district court concluded that any burden imposed on creditors and on the state courts by procedures of this type was outweighed by the interest of a judgment debtor, like Dionne, in avoiding or, at least, minimizing, the serious consequences of an erroneous deprivation of her property. 583 F.Supp. at 315-19.

The district court did not, as it made clear in an addendum to its opinion, require that notice and hearing be provided before an attachment take place. 583 F.Supp. at 319-20. Like the Third Circuit in Finberg, it conceded that the process due a debtor after judgment was less than that due before judgment. To that degree, the lower court’s opinion was not inconsistent with the result in Endicott Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 45 S.Ct. 61, 69 L.Ed. 288 (1924), a 60-year-old case in which the Court held that the Constitution did not require that a judgment debtor be afforded notice and hearing before the issuance of an execution against his property. Endicott Johnson, of course, predated more recent due process cases dealing with garnishment in other contexts. Compare North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975) (notice and hearing required before pre-judgment garnishment of bank account); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) (before pre-judgment replevin of goods); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) (before pre-judgment garnishment of wages). But see Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974) (prior notice and hearing not required before pre-judgment sequestration of goods when procedure contains other safeguards — writ was issued by a judge, creditor was required to post bond, notice was received after the seizure and immediate opportunity to challenge the writ was afforded).

Relying on Endicott Johnson, defendant insists that not only is a judgment debtor not entitled to notice and hearing prior to an attachment, he is entitled to no further process thereafter. Defendant points to sweeping language in Endicott Johnson to the effect that,

the established rules of our system of jurisprudence do not require that a defendant who has been granted an opportunity to be heard and has had his day in court, should, after a judgment has been rendered against him, have a further notice and hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment. Thus, in the absence of a statutory requirement, it is not essential that he be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment he must take “notice of what will follow,” no further notice being “necessary to advance justice.”

266 U.S. at 288, 45 S.Ct. at 62.

But we believe this expansive language is no longer the law given the more recent Supreme Court precedent in the area of property sequestrations and due process. 10 As respects the judgment debtor’s rights in *1352 property which the law specifically exempts from the judgment creditor’s grasp, the district court correctly looked to the balancing approach of Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18. The exemption under 42 U.S.C. § 407, and other statutory exemptions, establish a congressionally mandated property right with respect to which a judgment debtor is entitled to such procedural protections as are reasonable and appropriate. As the Third Circuit observed in Finberg, the “judgment represents only an adjudication of [the debtor’s] liability on a monetary debt, not a transfer to [the creditor] of title to any particular item of [the debtor’s] property.” 634 F.2d at 58.

We add that it is perfectly consistent with Mathews not to require notice or hearing before a post-judgment attachment. See Brown v. Liberty Corporation of Duval, 539 F.2d at 1366. Cf. Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406. Where the creditor’s interest has been adjudicated, and a favorable judgment entered, it is reasonable that the creditor’s right to collect in the most effective way should be given great weight. The Endicott Johnson Court’s comment continues to have validity: “if notice were given the judgment debtor before issuing the garnishment, ‘the very advantage sought by the writ would possibly be of no avail, as a disposition could be made of the funds or property before service could be had.’ ” 266 U.S. at 290, 45 S.Ct. at 63.

But while, for purposes of due process calculus, the judgment greatly strengthens the creditor’s position, it does not erase all consideration for the debtor with respect to property which the law forbids the creditor to attach in satisfaction of the debt. The debtor is surely entitled to those procedural safeguards which can be afforded without undermining the creditor’s adjudicated rights. Once the attachment is made, removing the possibility that the debtor will secrete his assets, the debt- or must receive and be notified of a timely opportunity to challenge any sequestration of his property which the law makes unattachable. See Finberg, 634 F.2d at 59-62; Harris v. Bailey, 574 F.Supp. 966, 970-71 (W.D.Va.1983); Deary v. Guardian Loan Co., Inc., 534 F.Supp. 1178, 1186 (S.D.N.Y.1982). This is required because an unlawful attachment of the debtor’s exempt property affects the debtor’s rights in a way in which the judgment does not. See Griffin v. Griffin, 327 U.S. 220, 229, 66 S.Ct. 556, 560, 90 L.Ed. 635 (1945).

We thus turn to the question of the adequacy of present Rhode Island procedures in protecting the debtor against the risk of wrongful attachment of otherwise exempt property.

As we have seen, Rhode Island law is silent as to any right of a judgment debtor to be heard after an attachment is made. It is even unclear if the debtor must be notified of the bare fact of the attachment, 11 and even if he is so notified (as occurred here) any notice would be limited to that fact alone, and would not enlighten the debtor as to his rights and remedies. While it is not unusual for people to need a lawyer's help to understand their situation and any available remedies, we think that due process in this context — which involves destitute people whose property has suddenly been seized as well as exemptions pertaining to life’s basic necessities — requires that Rhode Island provide and spell out procedural rights and remedies more clearly than it has yet done.

Defendant argues that the absence of a specific notice and hearing provision is offset by the existence of R.I.Gen.Laws § 9-21-2 12 and R.I. District Court Rule *1353 60(b)., 13 These general enactments, supplemented by the advice of counsel, are said to be adequate substitutes for more specific provisions. The district court conceded that an attachment of federally exempt property “would qualify as a reason for relief under § 9-21-2(6).” 583 F.Supp. at 317.

But the district court also concluded that the opportunity for hearing afforded by such a statute would be of little avail without adequate notice. 583 F.Supp. at 318. Moreover, in the case of judgment debtors such as these, who are poor and have minor dependents, Finberg, 634 F.2d at 62, for their right to a hearing to be meaningful, the hearing opportunity must be afforded shortly after the attachment — indeed, it should be a priority matter. As the Supreme Court has said, it is not enough to provide a party with an opportunity to be heard: the hearing must be provided “at a meaningful time and in a meaningful manner.” Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965). The interest of a welfare recipient not to be deprived of his benefits is an important one. See Goldberg v. Kelly, 397 U.S. at 264, 90 S.Ct. at 1018. See also Sniadach v. Family Finance Corp., 395 U.S. at 337-38, 89 S.Ct. at 1821. To the needy heads of families and children dependent upon social security or other benefit programs, even the short-term deprivation of their main or only source of support can have disastrous consequences. Nothing we have been shown indicates that the general hearing rights under section 9-21-2(6) can be counted upon to produce an immediate hearing. Even assuming the debtor is actively represented by an able attorney, one might expect that it would be fortuitous whether the state judge before whom a hearing is sought treated the matter as requiring immediate attention, absent any provision of law specifying the debtor’s procedural rights or, indeed, that he had any such rights.

In its brief, amicus argues that judgment debtors are not wholly devoid of protection, *1354 in light of the other features of the post-judgment garnishment process. Amicus points out that the trustee is itself liable for any exempt funds withheld from the debtor on account of the attachment. But the fact that the trustee may be responsible to the debtor for any exempt funds wrongfully attached does not seem to us to meet the problem. In this case the bank did, in fact, withhold the funds even though most or all of them were exempt. In order to seek redress from the trustee, the debt- or would have to initiate a legal proceeding, a rather impractical expedient for an insolvent person seeking to recover a relatively small amount of money.

In sum, we are in general agreement with the district court’s conclusion that Rhode Island has not provided judgment debtors whose property it permits creditors to seize unilaterally by writ of attachment with sufficient, defined procedural process to meet the requirements of the due process clause of the fourteenth amendment.

We disagree with one aspect of the district court’s opinion. We do not agree that, to be constitutional, the notice provided to a judgment debtor after attachment must inform him of all, or even close to all, of the available exemptions. In a somewhat analogous situation, the Court has said that due process requires notice to be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Central Hanover Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). In the present situation we think the debtor must be informed of the attachment and of the availability of a prompt procedure to challenge the attachment, see Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1, 14-15, 98 S.Ct. 1554, 1562-63, 56 L.Ed.2d 30 (1978), together with the fact, generally stated, that there are certain exemptions under state and federal law which the debtor may be entitled to claim with respect to the attached property. The state, however, is not required to supply the debtor w