February 15, 2012
Authored by: Bill Custer and Julia Fenwick Ost
Georgia Governor Nathan Deal recently signed into law HB 683, a bill that reforms the way in which banks and other corporations may respond to a garnishment summons. Under the new law, banks may now use their own employees to respond to a garnishment summons and are no longer required to hire an attorney for this task.
This statute seeks to overrule a 2011 Georgia Supreme Court decision which held that corporations must use a Georgia-licensed attorney to answer garnishments, and that non-lawyer employees who responded to garnishments on behalf of their employers were engaging in the unauthorized practice of law.
If you decide to utilize non-attorney personnel to answer garnishments, as permitted by the new statute, you should keep in mind the following issues:
- The new law only permits non-lawyers to file answers to garnishment summons. If a traverse is filed in response to the answer, an attorney is then required to represent the bank. A traverse is a statement filed by a plaintiff in response to the answer, claiming that the answer is untrue or insufficient. Once a traverse is filed, the bank then must then hire an attorney to represent it further in the case.
- It is imperative that only competent and trained personnel be assigned to answer garnishments. There are potential perils that come with answering garnishments. If the garnishment is not correctly answered, the bank may find itself in default and liable to the creditor for its customer’s debt. Further, if the bank does not exclude funds exempted from garnishment under the relevant laws and Treasury regulations, it may find itself liable to its customer for sums wrongfully paid out.
- Finally, this statute is likely to be challenged in the courts on the grounds that it allegedly violates the Georgia Supreme Court’s authority to regulate the legal profession. We anticipate such a challenge being filed. Should the statute ultimately be declared unconstitutional, any answers that have been prepared and filed over the signature of a non-lawyer will need to be amended to avoid the possibility of a default. See Peachtree Plastics, Inc. v. Verhine, 242 Ga. App. 21 (2000)(the filing of an answer by a non-attorney is an amendable defect that can be cured when, prior to entry of a pretrial order, an attorney representing the party files an amended answer).
All banks should continue to be alert as to future developments on these issues.