1998 Minnesota Statutes

CHAPTER 552. Support judgment debts summary execution

     552.01 Definitions. 

    Subdivision 1.    Scope.  For the purposes of this 
 chapter, the terms defined in this section have the meanings 
 given them. 

    Subd. 2.    Public authority.  "Public authority" means 
 the public authority responsible for child support enforcement.  

    Subd. 3.    Judgment debtor.  "Judgment debtor" means a 
 party against whom the public authority has a judgment for the 
 recovery of money owed pursuant to a support order as defined in 
 section 518.54.  

    Subd. 4.    Third party.  "Third party" means the person 
 or entity upon whom the execution levy is served.  

    Subd. 5.    Claim.  "Claim" means the unpaid balance of 
 the public authority's judgment against the judgment debtor, 
 including all lawful interest and costs incurred. 

    Subd. 6.    Financial institution.  "Financial 
 institution" means all entities identified in section 13B.06. 

    HIST: 1997 c 203 art 6 s 85 

     552.02 Public authority's summary execution of support 
  judgment debts; when authorized. 

    The public authority may execute on a money judgment 
 resulting from money owed pursuant to a support order by levying 
 under this chapter on indebtedness owed to the judgment debtor 
 by a third party.  The public authority may execute under this 
 chapter upon service of a notice of support judgment levy for 
 which the seal of the court is not required. 

    HIST: 1997 c 203 art 6 s 86 

     552.03 Scope of general and specific provisions. 

    General provisions relating to the public authority's 
 summary execution as authorized in this chapter are set forth in 
 section 552.04.  Specific provisions relating to summary 
 execution on funds at a financial institution are set forth in 
 section 552.05.  When the public authority levies against funds 
 at a financial institution, the specific provisions of section 
 552.05 must be complied with in addition to the general 
 provisions of section 552.04.  Provisions contained in the 
 statutory forms are incorporated in this chapter and have the 
 same force of law as any other provisions in this chapter.  

    HIST: 1997 c 203 art 6 s 87 

     552.04 General provisions. 

    Subdivision 1.    Rules of civil procedure.  Unless this 
 chapter specifically provides otherwise, the Minnesota Rules of 
 Civil Procedure for the district courts and section 518.551 
 apply in all proceedings under this chapter. 

    Subd. 2.    Property attachable by service of levy.  
 Subject to the exemptions provided by subdivision 3 and section 
 550.37, and any other applicable statute, to the extent the 
 exemptions apply in cases of child support enforcement, the 
 service by the public authority of a notice of support judgment 
 levy under this chapter attaches all nonexempt indebtedness or 
 money due or belonging to the judgment debtor and owing by the 
 third party or in the possession or under the control of the 
 third party at the time of service of the notice of support 
 judgment levy, whether or not the indebtedness or money has 
 become payable.  The third party shall not be compelled to pay 
 or deliver the same before the time specified by any agreement 
 unless the agreement was fraudulently contracted to defeat an 
 execution levy or other collection remedy. 

    Subd. 3.    Property not attachable.  The following 
 property is not subject to attachment by a notice of support 
 judgment levy served under this chapter:  

    (1) any indebtedness or money due to the judgment debtor, 
 unless at the time of the service of the notice of support 
 judgment levy the same is due absolutely or does not depend upon 
 any contingency; 

    (2) any judgment owing by the third party to the judgment 
 debtor, if the third party or the third party's property is 
 liable on an execution levy upon the judgment; 

    (3) any debt owing by the third party to the judgment 
 debtor for which any negotiable instrument has been issued or 
 endorsed by the third party; 

    (4) any indebtedness or money due to the judgment debtor 
 with a cumulative value of less than $10; and 

    (5) any disposable earnings, indebtedness, or money that is 
 exempt under state or federal law to the extent the exemptions 
 apply in cases of child support enforcement.  

    Subd. 4.    Service of third party levy; notice and 
 disclosure forms.  When levying upon money owed to the 
 judgment debtor by a third party, the public authority shall 
 serve a copy of the notice of support judgment levy upon the 
 third party either by registered or certified mail, by personal 
 service, or by electronic transmission.  Along with a copy of 
 the notice of support judgment levy, the public authority shall 
 serve upon the third party a notice of support judgment levy and 
 disclosure form that must be substantially in the form set forth 
 below. 

                OFFICE OF ADMINISTRATIVE HEARINGS

                              File No. ...........
 ........ (Public authority)
 against                        NOTICE OF SUPPORT JUDGMENT
 ........ (Judgment Debtor)     LEVY AND DISCLOSURE
 and                            (OTHER THAN EARNINGS)
 ........ (Third Party)

    PLEASE TAKE NOTICE that pursuant to Minnesota Statutes, 
 chapters 518 and 522, the undersigned, as representative of the 
 public authority responsible for child support enforcement, 
 makes demand and levies execution upon all money due and owing 
 by you to the judgment debtor for the amount of the judgment 
 specified below.  A copy of the notice of support judgment levy 
 is enclosed.  The unpaid judgment balance is $...... 

    In responding to this levy, you are to complete the 
 attached disclosure form and mail it to the public authority, 
 together with your check payable to the public authority, for 
 the nonexempt amount owed by you to the judgment debtor or for 
 which you are obligated to the judgment debtor, within the time 
 limits in chapter 552. 

                      Public Authority
                       Address
                       (........)
                       Phone number

    

                            DISCLOSURE

    On the ... day of ......, ......., the time of service of 
 the execution levy herein, there was due and owing the judgment 
 debtor from the third party the following: 

    (1) Money.  Enter on the line below any amounts due and 
 owing the judgment debtor, except earnings, from the third party.

    ......................... 

    (2) Setoff.  Enter on the line below the amount of any 
 setoff, defense, lien, or claim which the third party claims 
 against the amount set forth on line (1).  State the facts by 
 which the setoff, defense, lien, or claim is claimed.  (Any 
 indebtedness to you incurred by the judgment debtor within ten 
 days prior to the receipt of the first execution levy on a debt 
 may not be claimed as a setoff, defense, lien, or claim against 
 the amount set forth on line (1).) 

    ......................... 

    (3) Exemption.  Enter on the line below any amounts or 
 property claimed by the judgment debtor to be exempt from 
 execution. 

    ......................... 

    (4) Adverse Interest.  Enter on the line below any amounts 
 claimed by other persons by reason of ownership or interest in 
 the judgment debtor's property. 

    ......................... 

    (5) Enter on the line below the total of lines (2), (3), 
 and (4). 

    .........................  

    (6) Enter on the line below the difference obtained (never 
 less than zero when line (5) is subtracted from the amount on 
 line (1)).  

    ......................... 

    (7) Enter on the line below 100 percent of the amount of 
 the public authority's claim which remains unpaid.  

    ......................... 

    (8) Enter on the line below the lesser of line (6) and line 
 (7).  You are instructed to remit this amount only if it is $10 
 or more.  

    ......................... 

                           AFFIRMATION

    I, .......... (person signing Affirmation), am the third 
 party or I am authorized by the third party to complete this 
 nonearnings disclosure, and have done so truthfully and to the 
 best of my knowledge. 

 Dated:..........                Signature
                                  ..........
                                  Title
                                  ..........
                                  Telephone Number

    Subd. 5.    Third party disclosure and remittance.  
 Within 15 days after receipt of the notice of support judgment 
 levy, unless governed by section 552.05, the third party shall 
 disclose and remit to the public authority as much of the amount 
 due as the third party's own debt equals to the judgment debtor. 

    Subd. 6.    Oral disclosure.  Before or after the 
 service of a written disclosure by a third party under 
 subdivision 5, upon a showing by affidavit upon information and 
 belief that an oral examination of the third party would provide 
 a complete disclosure of relevant facts, any party to the 
 execution proceedings may obtain an ex parte order requiring the 
 third party, or a representative of the third party designated 
 by name or by title, to appear for oral examination before the 
 court or a referee appointed by the court.  Notice of the 
 examination must be given to all parties. 

    Subd. 7.    Supplemental complaint.  If a third party 
 holds property, money, earnings, or other indebtedness by a 
 title that is void as to the judgment debtor's creditors, the 
 property may be levied on although the judgment debtor would be 
 barred from maintaining an action to recover the property, 
 money, earnings, or other indebtedness.  In this and all other 
 cases where the third party denies liability, the public 
 authority may move the court at any time before the third party 
 is discharged, on notice to both the judgment debtor and the 
 third party for an order making the third party a party to 
 supplemental action and granting the public authority leave to 
 file a supplemental complaint against the third party and the 
 judgment debtor.  The supplemental complaint shall set forth the 
 facts upon which the public authority claims to charge the third 
 party.  If probable cause is shown, the motion shall be 
 granted.  The supplemental complaint shall be served upon the 
 third party and the judgment debtor and any other parties.  The 
 parties served shall answer or respond pursuant to the Minnesota 
 Rules of Civil Procedure for the district courts, and if they 
 fail to do so, judgment by default may be entered against them.  

    Subd. 8.    Judgment against third party upon failure to 
 disclose or remit.  Judgment may be entered against a third 
 party who has been served with a notice of support judgment levy 
 and fails to disclose or remit the levied funds as required in 
 this chapter.  Upon order to show cause served on the third 
 party and notice of motion supported by affidavit of facts and 
 affidavit of service upon both the judgment debtor and third 
 party, the court may render judgment against the third party for 
 an amount not exceeding 100 percent of the amount claimed in the 
 execution.  Judgment against the third party under this section 
 shall not bar the public authority from further remedies under 
 this chapter as a result of any subsequent defaults by the third 
 party.  The court upon good cause shown may remove the default 
 and permit the third party to disclose or remit on just terms.  

    Subd. 9.    Satisfaction.  Upon expiration, the public 
 authority making the execution may file a partial satisfaction 
 by amount or, if applicable, shall file the total satisfaction 
 with the court administrator without charge.  

    Subd. 10.    Third party good faith requirement.  The 
 third party is not liable to the judgment debtor, public 
 authority, or other person for wrongful retention if the third 
 party retains or remits disposable earnings, indebtedness, or 
 money of the judgment debtor or any other person, pending the 
 third party's disclosure or consistent with the disclosure the 
 third party makes, if the third party has a good faith belief 
 that the property retained or remitted is subject to the 
 execution.  In addition, the third party may, at any time before 
 or after disclosure, proceed under Rule 67 of the Minnesota 
 Rules of Civil Procedure to make deposit into court.  No third 
 party is liable for damages if the third party complies with the 
 provisions of this chapter.  

    Subd. 11.    Bad faith claim.  If, in a proceeding 
 brought under section 552.05, subdivision 9, or a similar 
 proceeding under this chapter to determine a claim of exemption, 
 the claim of exemption is not upheld, and the court finds that 
 it was asserted in bad faith, the public authority shall be 
 awarded actual damages, costs, reasonable attorney's fees 
 resulting from the additional proceedings, and an amount not to 
 exceed $100.  If the claim of exemption is upheld, and the court 
 finds that the public authority disregarded the claim of 
 exemption in bad faith, the judgment debtor shall be awarded 
 actual damages, costs, reasonable attorney's fees resulting from 
 the additional proceedings, and an amount not to exceed $100.  
 The underlying judgment shall be modified to reflect assessment 
 of damages, costs, and attorney's fees.  However, if the party 
 in whose favor a penalty assessment is made is not actually 
 indebted to that party's attorney for fees, the attorney's fee 
 award shall be made directly to the attorney, and if not paid, 
 an appropriate judgment in favor of the attorney shall be 
 entered.  Any action by a public authority made in bad faith and 
 in violation of this chapter renders the execution levy void and 
 the public authority liable to the judgment debtor named in the 
 execution levy in the amount of $100, actual damages, and 
 reasonable attorney's fees and costs.  

    Subd. 12.    Discharge of a third party.  Subject to 
 subdivisions 6 and 13, the third party, after disclosure, shall 
 be discharged of any further obligation to the public authority 
 when one of the following conditions is met:  

    (a) The third party discloses that the third party is not 
 indebted to the judgment debtor or does not possess any 
 earnings, property, money, or indebtedness belonging to the 
 judgment debtor that is attachable as defined in subdivision 2.  
 The disclosure is conclusive against the public authority and 
 discharges the third party from any further obligation to the 
 public authority other than to retain and remit all nonexempt 
 disposable earnings, property, indebtedness, or money of the 
 judgment debtor which was disclosed.  

    (b) The third party discloses that the third party is 
 indebted to the judgment debtor as indicated on the execution 
 disclosure form.  The disclosure is conclusive against the 
 public authority and discharges the third party from any further 
 obligation to the public authority other than to retain and 
 remit all nonexempt disposable earnings, property, indebtedness, 
 or money of the judgment debtor that was disclosed. 

    (c) The court may, upon motion of an interested person, 
 discharge the third party as to any disposable earnings, money, 
 property, or indebtedness in excess of the amount that may be 
 required to satisfy the public authority's claim.  

    Subd. 13.    Exceptions to discharge of a third party.  
 The third party is not discharged if:  

    (a) Within 20 days of the service of the third party's 
 disclosure, an interested person serves a motion relating to the 
 execution levy.  The hearing on the motion must be scheduled to 
 be heard within 30 days of the service of the motion.  

    (b) The public authority moves the court for leave to file 
 a supplemental complaint against the third party, as provided 
 for in subdivision 7, and the court upon proper showing vacates 
 the discharge of the third party.  

    Subd. 14.    Joinder and intervention by persons in 
 interest.  If it appears that a person, who is not a party to 
 the action, has or claims an interest in any of the disposable 
 earnings, other indebtedness, or money, the court shall permit 
 that person to intervene or join in the execution proceeding 
 under this chapter.  If that person does not appear, the court 
 may summon that person to appear or order the claim barred.  The 
 person so appearing or summoned shall be joined as a party and 
 be bound by the judgment.  

    Subd. 15.    Appeal.  A party to an execution proceeding 
 aggrieved by an order or final judgment may appeal as allowed by 
 law.  

    Subd. 16.    Priority of levy.  Notwithstanding section 
 52.12, a levy by the public authority made under this section on 
 an obligor's funds on deposit in a financial institution located 
 in this state has priority over any unexercised right of setoff 
 of the financial institution to apply the levied funds toward 
 the balance of an outstanding loan or loans owed by the obligor 
 to the financial institution.  A claim by the financial 
 institution that it exercised its right to setoff prior to the 
 levy by the public authority must be substantiated by evidence 
 of the date of the setoff and must be verified by the sworn 
 statement of a responsible corporate officer of the financial 
 institution.  For purposes of determining the priority of a levy 
 made under this section, the levy must be treated as if it were 
 an execution made under chapter 550. 

    HIST: 1997 c 203 art 6 s 88; 1998 c 254 art 1 s 100,107; 1998 
 c 382 art 1 s 22 

     552.05 Summary execution upon funds at a financial 
  institution. 

    Subdivision 1.    Procedure.  In addition to the 
 provisions of section 552.04, when levying upon funds at a 
 financial institution, the public authority must comply with 
 this section.  If the notice of support judgment levy is being 
 used by the public authority to levy funds of a judgment debtor 
 who is a natural person and if the funds to be levied are held 
 on deposit at any financial institution, in lieu of service the 
 public authority shall send with the notice of support judgment 
 levy and disclosure required by section 552.04, subdivision 4, 
 one copy of an exemption and right to hearing notice.  The 
 notice must be substantially in the form determined by the 
 commissioner in accordance with section 552.05, subdivision 10.  
 Failure of the public authority to send the notice renders the 
 execution levy void, and the financial institution shall take no 
 action.  Upon receipt of the notice of support judgment levy and 
 exemption and right to hearing notice, the financial institution 
 shall retain as much of the amount due as the financial 
 institution has on deposit owing to the judgment debtor, but not 
 more than 100 percent of the amount remaining due on the 
 judgment until directed by the public authority or the court to 
 release the funds to the public authority or the judgment debtor 
 in accordance with this chapter. 

    Subd. 2.    Duties of financial institution.  Within two 
 business days after receipt of the execution levy and exemption 
 and right to hearing notice, the financial institution shall 
 serve upon the judgment debtor the exemption and right to 
 hearing notice.  The financial institution shall serve the 
 notice by first class mail to the last known address of the 
 judgment debtor.  If no claim of exemption or request for 
 hearing is received by the public authority within 14 days after 
 the notice is mailed to the judgment debtor, the public 
 authority shall notify the financial institution within seven 
 days that the funds remain subject to the execution levy and 
 shall be remitted to the public authority.  If a claim of 
 exemption or a request for hearing is received by the public 
 authority within 14 days after the exemption notice is mailed to 
 the judgment debtor, the public authority shall within seven 
 days notify the financial institution either to release the 
 funds to the judgment debtor or that the funds remain subject to 
 the execution levy pending the determination of an 
 administrative law judge at a requested contested case 
 proceeding.  When notified by the public authority to release 
 the funds, the financial institution shall release the funds to 
 the public authority or to the judgment debtor, as directed by 
 the public authority, within two business days. 

    Subd. 3.    Process to claim exemption.  If the judgment 
 debtor elects to claim an exemption, the judgment debtor shall 
 complete the applicable portion of the exemption and right to 
 hearing notice, sign it under penalty of perjury, and deliver 
 one copy to the public authority within 14 days of the date 
 postmarked on the correspondence mailed to the judgment debtor 
 containing the exemption and right to hearing notice.  Failure 
 of the judgment debtor to deliver the executed exemption and 
 right to hearing notice does not constitute a waiver of any 
 claimed right to an exemption.  Upon timely receipt of a claim 
 of exemption, funds not claimed to be exempt by the judgment 
 debtor remain subject to the execution levy.  Within seven days 
 after the date postmarked on the envelope containing the 
 executed exemption and right to hearing notice mailed to the 
 public authority, or the date of personal delivery of the 
 executed exemption and right to hearing notice to the public 
 authority, the public authority shall either notify the 
 financial institution to release the exempt portion of the funds 
 to the judgment debtor or schedule a contested administrative 
 proceeding pursuant to subdivision 5. 

    Subd. 4.    Process to request hearing.  If the judgment 
 debtor elects to request a hearing on any issue specified in 
 subdivision 6, the judgment debtor shall complete the applicable 
 portion of the exemption and right to hearing notice, sign it 
 under penalty of perjury, and deliver one copy to the public 
 authority within 14 days of the date postmarked on the 
 correspondence mailed to the judgment debtor containing the 
 exemption and right to hearing notice.  Upon timely receipt of a 
 request for hearing, funds not claimed to be exempt by the 
 judgment debtor remain subject to the execution levy.  Within 
 seven days after the date postmarked on the envelope containing 
 the executed request for hearing mailed to the public authority, 
 or the date of personal delivery of the executed request for 
 hearing to the public authority, the public authority shall 
 either notify the financial institution to release the exempt 
 portion of the funds to the judgment debtor or schedule a 
 contested administrative proceeding under section 518.5511 and 
 notify the judgment debtor of the time and place of the 
 scheduled hearing. 

    Subd. 5.    Duties of public authority if hearing is 
 requested.  Within seven days of the receipt of a request for 
 hearing or a claim of exemption to which the public authority 
 does not consent, the public authority shall schedule a 
 contested administrative proceeding under section 518.5511.  The 
 hearing must be scheduled to occur within five business days.  
 The public authority shall send written notice of the hearing 
 date, time, and place to the judgment debtor by first class 
 mail.  The hearing may be conducted by telephone, audiovisual 
 means or other electronic means, at the discretion of the 
 administrative law judge.  If the hearing is to be conducted by 
 telephone, audiovisual means, or other electronic means, the 
 public authority shall provide reasonable assistance to the 
 judgment debtor to facilitate the submission of all necessary 
 documentary evidence to the administrative law judge, including 
 access to the public authority's facsimile transmission machine. 

    Subd. 6.    Issues relevant at hearing.  At any hearing 
 requested by the judgment debtor under this chapter, the only 
 issues to be determined are whether: 

    (1) the public authority complied with the process required 
 by this chapter; 

    (2) the amount stated in the notice of support judgment 
 levy is owed by the judgment debtor; 

    (3) the amount stated in the notice of support judgment 
 levy is correct; or 

    (4) any of the funds levied upon are exempt. 

    Subd. 7.    Notice of order.  Within one business day of 
 receipt of the order of the administrative law judge, the public 
 authority shall send a copy of the order to the judgment debtor 
 at the judgment debtor's last known address and to the financial 
 institution. 

    Subd. 8.    Release of funds.  At any time during the 
 procedure specified in this section, the judgment debtor or the 
 public authority may direct the financial institution to release 
 the funds in question to the other party.  Upon receipt of a 
 release, the financial institution shall release the funds as 
 directed. 

    Subd. 9.    Subsequent proceedings; bad faith claim.  If 
 in subsequent proceedings brought by the judgment debtor or the 
 public authority, the claim of exemption is not upheld, and the 
 office of administrative hearings finds that it was asserted in 
 bad faith, the public authority shall be awarded actual damages, 
 costs, and reasonable attorney fees resulting from the 
 additional proceedings, and an amount not to exceed $100.  The 
 underlying judgment must be modified to reflect assessment of 
 damages, costs, and attorney fees.  However, if the party in 
 whose favor a penalty assessment is made is not actually 
 indebted to the party's attorney for fees, the attorney's fee 
 award shall be made directly to the attorney and if not paid, an 
 appropriate judgment in favor of the attorney shall be entered.  
 Upon motion of any party in interest, on notice, the office of 
 administrative hearings shall determine the validity of any 
 claim of exemption, and may make any order necessary to protect 
 the rights of those interested.  No financial institution is 
 liable for damages for complying with this section.  The 
 financial institution may rely on the date of mailing or 
 delivery of a notice to it in computing any time periods in this 
 section. 

    Subd. 10.    Forms.  The commissioner of human services 
 shall develop statutory forms for use as required under this 
 chapter.  In developing these forms, the commissioner shall 
 consult with the attorney general, representatives of financial 
 institutions, and legal services.  The commissioner shall report 
 back to the legislature by February 1, 1998, with recommended 
 forms to be included in this chapter. 

    HIST: 1997 c 203 art 6 s 89