Arrowhead Acceptance Corporation v. Missouri Department of Social Services

IN THE MISSOURI COURT OF APPEALS
WESTERN DISTRICT
ARROWHEAD ACCEPTANCE )
CORPORATION, )
)
Respondent, )
)
v. ) WD77203
)
MISSOURI DEPARTMENT OF ) Opinion filed: September 30, 2014
SOCIAL SERVICES, )
)
Appellant. )
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI
The Honorable Marco A. Roldan, Judge
Before Division One: Gary D. Witt, Presiding, Judge,
Joseph M. Ellis, Judge and Thomas H. Newton, Judge
The Department of Social Services ("the Department") appeals from a judgment
entered by the Circuit Court of Jackson County ordering the Department to pay
garnished funds in the amount of $5,769.92 into the court registry. The judgment
further orders that such funds be paid to Respondent Arrowhead Acceptance
Corporation. For the following reasons, the judgment is reversed, and the case is
remanded for further proceedings consistent with this opinion.
In 2009, Respondent filed a petition against Lavinia Bryer ("Defendant") in the
Circuit Court of Jackson County. The trial court subsequently entered a default
judgment in favor of Respondent for $4,014.02 plus costs and interest. In order to
satisfy the judgment, Respondent sought to garnish Defendant's wages. Thus,
Respondent applied for and obtained a writ of garnishment against Defendant's
employer, Rean Johnson d/b/a Granny's Pray and Play Child Care Center.
After Johnson failed to garnish Defendant's wages, Respondent sought a
judgment against Johnson. On July 22, 2010, the trial court entered a default judgment
against Johnson for $4,105.02 plus court costs.
In 2013, Respondent sought to satisfy the judgment against Johnson by applying
for a writ of garnishment against the Department. At the time, the Department had
entered into an agreement with Johnson d/b/a Granny's Pray and Play Child Care
Center in which the Department agreed to pay Johnson for providing child care services
to children eligible for state assistance. The garnishment application/order indicates
that Respondent requested garnishment of Johnson's "wages" and that the Department
should attach all "payments" due to Johnson.
On July 15, 2013, the Department filed a motion to quash the writ of
garnishment. In its motion, the Department asserted that the writ must be quashed
because garnishment against the State is barred by sovereign immunity. Respondent
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opposed the motion, averring that the Department waived its sovereign immunity to
garnishment pursuant to § 525.310.1
On September 3, 2013, the trial court entered an order overruling the
Department's motion to quash garnishment. In doing so, the trial court found that "the
interests of justice would best be served by denying the motion" because Johnson "is in
essence an employee of the state whose salary, earnings, fees and wages are subject
to garnishment pursuant to Mo. Rev. Stat. § 525.310."
In November 2013, the Department answered the garnishee interrogatories
attached to the writ of garnishment. In doing so, the Department maintained that it was
immune from garnishment and that Johnson had never been an employee of the
Department. Respondent then filed a motion to compel payment of the garnished funds
into the court registry. The Department did not oppose the court ordering the funds be
paid into the court registry; however, it requested that the court stay distribution of those
funds to Respondent until the matter could be reviewed by this Court.
On December 5, 2013, the trial court sustained Respondent's motion to compel
payment of the funds into the court registry and ordered those funds be paid to
Respondent. The Department filed a motion to reconsider in which it contended that,
pursuant to Rule 90.10(b) and § 525.190, it was entitled to a trial on the matter of
whether Johnson is an employee of the Department. Alternatively, the Department
requested that the trial court denote its December 5, 2013 order as a judgment.
1
Unless otherwise noted, all statutory citations are to RSMo 2000.
3
On December 13, 2013, the trial court denied the Department's request for a
hearing; however, the trial court did order that its December 5, 2013 order be denoted
as a judgment. It further noted that, pursuant to said judgment, the Department "shall
pay into the Court Registry the sum of $5,769.92 as funds due on the garnishment and
that such funds are to be paid to [Respondent]."2
The Department now raises four points on appeal from the trial court's judgment.
Our review of this case is governed by the standard enunciated in Murphy v. Carron,
536 S.W.2d 30, 32 (Mo. banc 1976). Ohio v. Mo. State Treasurer, 130 S.W.3d 742,
743 (Mo. App. E.D. 2004). Thus, "[w]e will uphold the judgment or decree of the trial
court unless there is no substantial evidence to support it, it is against the weight of the
evidence, it erroneously declares the law, or it erroneously applies the law." Id. at 744.
In its second and third points, the Department challenges the trial court's finding
that Johnson is "in essence" an employee of the State. Our review of the record
establishes that there is insufficient evidence to support the trial court's finding.
First, "the garnishor has the burden of proving facts essential to the garnishee's
liability." M.A.B. v. Nicely, 911 S.W.2d 313, 315 (Mo. App. W.D. 1995). Respondent
contends that the Department's liability is established by § 525.310 in that Johnson is an
employee of the Department and, therefore, her wages are subject to garnishment.
Thus, Respondent bore the burden of proving that Johnson is an employee of the State.
2
"The final judgment for purposes of appeal in a garnishment case is the order directing the court clerk to
pay out the garnished funds or property to the judgment creditor." In re Estate of Keathley, 934 S.W.2d
611, 614 (Mo. App. E.D. 1996); see also Derleth v. Derleth, 432 S.W.3d 771, 776 n.4 (Mo. App. W.D.
2014).
4
Respondent, however, presented no evidence to the trial court establishing that
Johnson is a state employee. At the hearing on the Department's motion to quash,
Respondent simply argued that Johnson is an employee of the State because she
entered into a contract with the Department to provide child care services. Respondent
offered no evidence in support of its argument at the hearing; nor did it attach any
exhibits establishing Johnson's status as a state employee to its suggestions in
opposition to the Department's motion to quash. In fact, Respondent never introduced
into evidence the child care provider agreement between Johnson and the Department.
Thus, the very agreement upon which Respondent relied to establish that Johnson is a
state employee was not before the trial court prior to the court's finding that Johnson is
"in essence" a state employee.
It was not until the Department attached the agreement to one of its motions to
reconsider that the child care provider agreement was before the trial court. The
agreement constitutes the only evidence in the record as to the relationship between
Johnson and the Department. Nowhere in the agreement, however, is Johnson
deemed an employee of the Department. Rather, the agreement states that "[t]his
document is an offer to contract with the State of Missouri as a Child Care Provider to
offer services to authorized clients of the Department of Social Services[.]" Therefore,
the agreement, in and of itself, is insufficient to establish Johnson as an employee of the
State.
Accordingly, Respondent presented no evidence to the trial court regarding
Johnson's status as a state employee. And aside from the child care provider
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agreement, the record is devoid of any evidence to support the trial court's finding that
Johnson is "in essence" a state employee. Thus, it follows that Respondent failed to
present substantial evidence that Johnson is a state employee and, thereby, failed to
carry its burden of establishing the Department's liability as the garnishee.3 See Edgar
v. Ruma, 823 S.W.2d 59, 61 (Mo. App. E.D. 1991) (finding that because the garnishor
failed to meet its burden of establishing the garnishee's liability on the basis that a
fraudulent transfer occurred, there was no substantial evidence to support the
garnishment judgment).
Secondly, despite Respondent's reliance on § 525.310, Respondent did not seek
relief under the statute. In 2013, Respondent filed an application for a writ of
garnishment against the Department. At that time, § 525.310.1 provided:
When a judgment has been rendered against an officer, appointee or
employee of the state of Missouri, or any municipal corporation or other
political subdivision of the state, the judgment creditor, or his attorney or
agent, may file in the office of the clerk of the court before whom the
judgment was rendered, an application setting forth such facts, and that
the judgment debtor is employed by the state, or a municipal corporation
or other political subdivision of the state, with the name of the department
of state or the municipal corporation or other political subdivision of the
state which employs the judgment debtor, and the name of the treasurer,
or the name and title of the paying, disbursing or auditing officer of the
state, municipal corporation or other political subdivision of the state,
charged with the duty of payment or audit of such salary, wages, fees or
earnings of such employee, and upon the filing of such application the
clerk shall issue a writ of sequestration directed to the sheriff or other
officer authorized to execute writs in the county in which such paying,
disbursing or auditing officer may be found and the sheriff or other officer
to whom the writ is directed shall serve a true copy thereof upon such
3
It should be noted that Respondent opposed the trial court conducting a hearing about whether Johnson
is a state employee based upon its belief that the issue had already been sufficiently addressed in the
hearing on the Department's motion to quash.
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paying, disbursing or auditing officer named therein, which shall have the
effect of attaching any and all salary, wages, fees or earnings of the
judgment debtor, which are not made exempt by virtue of the exemption
statutes of this state and are not in excess of the amount due on the
judgment and costs, then due and payable, from the date of the writ to the
return day thereof.
(Emphasis added). Thus, § 525.310, as in effect in 2013, subjected the compensation
of state employees to writs of sequestration, not garnishment.4 Respondent's reliance
on § 525.310, therefore, is misplaced.
Accordingly, because there is no substantial evidence to support it, we must
reverse the trial court's judgment ordering the Department to pay $5,769.92 in
garnished funds to the court registry, and we remand the case with instructions to the
trial court to enter judgment in favor of the Department.5
________________________________
Joseph M. Ellis, Judge
All concur.
4
As noted by the parties at oral argument, the legislature amended § 525.310 in July of 2014 to permit
garnishment of state employees' wages, salaries, and earnings. H.B. 1231 (2014) ("Pay of any officer,
appointee, or employee of the state of Missouri, or any municipal corporation or other political subdivision
of the state, shall be subject to garnishment to the same extent as in any other garnishment. All
garnishments against such employee shall proceed in the same manner as any other garnishment.").
H.B. 1231 does not become effective until January 15, 2015.
5
Due to our disposition of points II and III, we need not address the Department's remaining two points
on appeal.
7