Are Out-of-State Bank Accounts Out of Reach for Florida Judgment Creditors?

Are Out-of-State Bank Accounts Out of Reach for Florida Judgment Creditors?

By: Eric Werrenrath, Esq.

A creditor has several tools to pursue collection from a judgment debtor. One of the most commonly used tools is garnishment

of a judgment debtor’s bank account because it can be done relatively quickly and cheaply. In fact, most courts will routinely grant a motion to issue a writ of garnishment on an ex-parte basis, meaning without notice to the judgment debtor.

However, a trend is developing in federal courts in Florida

disfavoring writs of garnishments against out-of-state bank accounts. Specifically, some courts are refusing to grant writs of garnishment, and have even dissolved existing writs of garnishment, against out-of-state bank accounts.

A minority of federal courts in Florida have determined that a judgment creditor cannot garnish an account at a national bank incorporated outside of Florida even if that bank has branch locations in Florida, because the national bank is outside of the Florida court’s jurisdiction.

The implications of these minority decisions are significant in light of the prevalence of mobile and online banking. Under that reasoning, a bank account at a national bank that is accessed and maintained online could essentially be protected from garnishment because no Florida court could obtain jurisdiction over such account. See Fed. Deposit Ins. Corp. for GulfSouth Private Bank v. Amos, 3:12CV548/MCR/ EMT, 2017 WL 9439161, at *7 (N.D. Fla. Jan. 10, 2017), report and recommendation adopted in part sub nom. Fed. Deposit Ins. Corp. v. Amos, 3:12CV548/MCR/EMT, 2017 WL 772340 (N.D. Fla. Feb. 28, 2017) (rejecting creditor’s argument that modern bank accounts are not actually located in any state and can be accessed in Florida or anywhere in the world).

What options does a judgment creditor have if it finds itself before a court that disfavors writs of garnishments against out-of-state bank accounts?

One option might be to prove that the judgment debtor accesses and maintains the account at a branch located in Florida; however, at this time, there does not appear to be any clear precedent to indicate how a court would rule on this strategy. Further, obtaining such proof could be difficult, if not impossible, as the banking industry shifts away from in-person banking.

Alternatively, a judgment creditor could obtain the necessary jurisdiction over an out- of-state garnishee bank by domesticating its judgment in a court located in the state where the garnishee bank is incorporated and then requesting that the new court enter a writ of garnishment against the garnishee bank. Clearly, that is a time-consuming endeavor that would be cost prohibitive in most circumstances.

Although only a handful of federal courts in Florida have adopted this reasoning disfavoring writs of garnishment, other courts in Florida could follow suit. Any judgment creditor or litigant seeking a judgment should be aware of this issue and the potential pitfalls in obtaining a writ of garnishment against an out-of-state bank account.

Eric F. Werrenrath practices in the areas of creditors’ rights, commercial real estate lending and commercial bankruptcy and commercial litigation. Eric is a member of The Florida Bar and earned his J.D. from Stetson University College of Law, and his B.A. from Wake Forest University.

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Lauren brings experience representing mortgage servicers, banks, credit unions, and other financial institutions in state and federal court litigation. Her experience also includes handling contested foreclosures, defending against claims brought under state and federal banking and consumer protection statutes, and assisting in federal court appeals.

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