Examinations of Debtors and Third Parties
“My debtor owns a vacation home, he brags about it, and I know his friend has been to the vacation home many times. I can’t find the vacation home with the debtor’s name. How can I drag the debtor’s friend to the vacation home?” short debtor to reveal what he knows about the debtor’s property?”
Sometimes, in order to try to get a judgment paid, it is necessary to bring the debtor in for a debtor’s examination. Other times, you may want to bring in your debtor’s spouse, business partner, or employer as a third party, to gather information about the debtor that could lead to your judgment being paid. I am a trial broker, not an attorney, and this article covers what I have done in California for the trials I owned. The methods are similar in other states.
To bring a third party to court, you must have a hearing scheduled by the court. You must obtain a sealed summons from the court (or attorney), personally delivered to both the debtor and the third party. You may also need to have a consumer notice served on the debtor at the same time.
You must pay the court for a hearing and then pay a process server to serve all parties. You must also complete the correct court forms (EJ-125) and provide the correct terms. That’s what the rest of this article is about. There are two ways to go, when you fill out the paperwork, to comply with CPC 708.120.
One way is to use only page two of the EJ-125 form. Where it says (2) NOTICE TO JUDGMENT DEBTOR, type or better use a fillable PDF on your computer and print, the reason for bringing the third party in this area, in CAPITAL LETTERS, as it says, because you don’t want them to have any reason to try to void your citation.
Write something like “JANE SMITH IS THE SPOUSE OF THE JUDGMENT DEBTOR AND HAS KNOWLEDGE OF THE WHEREABOUT OF THE ASSETS AND OTHER INFORMATION NEEDED REGARDING THE JUDGMENT DEBTOR TO ASSIST IN ENFORCEMENT OF THIS JUDGMENT” or “JOHN SMITH IS THE EMPLOYER OF THE JUDGMENT DEBTOR” DEBTOR OF JUDGMENT AND HAS NOT COMPLIED WITH THE PROFITS WITHHOLDING ORDER LAWFULLY NOTIFIED TO THE COMPANY.” All you really need is something to indicate why you need to ask the third party questions regarding the judgment debtor.
If the reasons for bringing in a third party require further explanation, you will need to file a separate affidavit stating who this person is, their relationship to the judgment debtor, and whether
1) You owe a debt of $250 or more to the judgment debtor, or
2) You probably have knowledge of the judgment debtor’s assets.
On the back of the EJ-125, you list the judgment debtor’s property under the witness’s control, so you can effectively identify and seize the property, because a properly served summons creates a one-year silent lien on any identified property .
On a separate affidavit, on regular briefing paper, using a standard format, write “Third Party Judgment Debtor Examination Affidavit.” For example, SWORN STATEMENT BY YOUR NAME, IN SUPPORT OF THE THIRD PARTY EXAMINATION OF MR. DEAD DEBTOR. (o) SWORN STATEMENT OF YOUR NAME, ASSIGNEE OF THE REGISTRY, IN SUPPORT OF THE THIRD PARTY EXAMINATION OF MR. DEAD DEBTOR.
In the body of your affidavit, you say something based on your “belief and information”:
I, the undersigned, declare the following:
1. I am the (judgment creditor/assignee of record) in this case. I am over 18 years old. I have personal knowledge of the facts in this document, except as to those facts which are stated to be known by information and belief, and as to those facts, I believe to be true. If I were called to testify, I could and would do so competently.
2. On May 1, 2010, a judgment was issued in favor of the plaintiff in the aforementioned matter for a total amount of $XX,XXX.00 against MR. DEAD DEBTOR. The full amount plus interest and costs remain due.
3. I wish to question MORTIMER SNERD, a third party who is (spouse, employer, etc.) of the judicial debtor.
4. I am informed and believe that MORTIMER SNERD has in his possession property of the Judgment Debtor, and that MORTIMER SNERD is indebted to the Debtors in an amount greater than $250. (Or that MORTIMER SNERD has knowledge of the judgment debtor’s assets, based on his information and belief).
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Then you need to list your Points and Authorities to support your request. What I have done (in California only) to bring third parties to court when enforcing judgments I own, is include points and authorities along with my statement for a third party to dig and try to find the debtor’s assets. Here are points and authorities that I have used, on the second page of my affidavit, and also placed in the third party application:
POINTS AND AUTHORITIES IN SUPPORT OF THE ISSUANCE OF REQUEST AND ORDER TO APPEAR AND THIRD-PERSON EXAMINATION
CCP 708.120. (a) At the ex parte request of a judgment creditor who has a money judgment and proof by the judgment creditor by affidavit or otherwise to the satisfaction of the appropriate court that a third party has possession or control of the property in which that the judgment debtor has an interest in or is indebted to the judgment debtor in an amount greater than two hundred and fifty dollars ($250), the court shall enter an order ordering the third person to appear in court, or before an arbitrator appointed by the court, at a time and place specified in the order, to answer for such assets or debts. The affidavit in support of the judgment creditor’s application may be based on the declarant’s information and belief.
CCP 708.130(a) provides that witnesses may be required to appear and testify before the court or arbitrator in an interrogation proceeding under this article in the same manner as in the trial of a matter. This includes examination of any third party who has, or may have, knowledge of the judgment debtor’s assets and liabilities. This includes the debtor’s spouse who can reasonably be estimated to have special knowledge of the debtor’s income and assets.
This understanding of the meaning of CPC 708.130 is corroborated by case law. While there are no cases specifically dealing with third parties, the language of case law leaves little doubt that the scope of a debtor’s examination should not be unnecessarily narrowed. In the case of Kyne v. Eustice the court found:
The object of the procedure is to force the legal debtor to report on his assets; and such examination of the judgment debtor is intended to be summary and factual, consistent with the broader scope of inquiry into the judgment debtor’s property and business affairs. (Coleman v. Galvin, 78 Cal.App.2d 313, 318 [177 P.2d 606]; McCulloughv. Clark, 41 cal. 298, 302.)
The purpose of such complementary procedures is to discover and reach the assets of the debtor of a sentence to apply them to the satisfaction of the sentence. (Smith v. Smith, 51 Cal.App.2d 29, 31-32 [124 P.2d 117]; coleman v. Galvin, supra; In re Finn, 155 Cal.App.2d 705, 709 [318 P.2d 816].) [page 633]
Consequently, a third person or corporation that is alleged to have assets of a judgment debtor or to be indebted to him may be examined in relation thereto (CPC 717 [now CCP 708.120]; coleman v. Galvin, supra), and such procedures may be appropriately used to obtain possession of third party debts after such examination. (Thomas v. Thomas, 192 Cal.App.2d 771,778 [13 Cal.Rptr.872]; Hathaway v. Brady, 26 cal. 581, 589.) Kyne v. Eustice, (1963) 215 CA2d 627, 632, 30 CR 391
Furthermore, in Young v. Keele, and cited in numerous subsequent cases, the courts affirmed the broad scope of investigation permissible in the judgment debtor’s examination, insofar as its purpose is “to leave no stone unturned in the search for property that can be used to satisfy the sentence.” Young man v. Keele (1987) 188 Cal.App.3d 1090, 1093 [233 Cal.Rptr. 850]; see also Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1014 [231 Cal.Rptr. 108]
Given the foregoing, you, as the Transferee, request that the court order the issuance of a Request and Order for Appearance and Examination addressed to the aforementioned Third Party.
A bailiff or process server will serve your documents, along with a copy of your Points and Authorities, to make it clear that the witness is being served as a person with knowledge of the debtor’s assets.
Especially if the third party is a company, the following link is useful:
http://www.saclaw.lib.ca.us/pages/business-records-subpoena.aspx
