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Medical Recovery Services, LLC v. Carnes

March 25, 2010

MEDICAL RECOVERY SERVICES, LLC, AN IDAHO LIMITED LIABILITY COMPANY, PLAINTIFF-APPELLANT,
v.
BILLY M. CARNES, DEFENDANT-RESPONDENT.



Appeal from the District Court of the Seventh Judicial District, State of Idaho, Bannock County. Hon. Peter D. McDermott, District Judge; Hon. Steven A. Thomsen, Magistrate.

The opinion of the court was delivered by: Lansing, Chief Judge

2010 Opinion No. 20

District court's appellate decision reversing magistrate ourt's order denying motion for return of money, reversed, and case remanded.

This appeal arises from Billy M. Carnes's motion to return the money that he gave, during a judgment debtor examination, to Medical Recovery Services, LLC (MRS). The magistrate denied Carnes's motion, but the district court reversed and remanded for further factual determinations and awarded Carnes attorney fees. On appeal, MRS argues that the district court erred in reversing the decision of the magistrate court because substantial and competent evidence supports the magistrate's findings and the district court misapplied the law.

I. BACKGROUND

MRS brought an action against Carnes to collect an unpaid bill for medical services. After Carnes filed an answer pro se, MRS moved for summary judgment. Carnes did not respond to the motion and, after a hearing at which Carnes did not appear, the magistrate court granted MRS's motion and awarded it attorney fees and costs. In MRS's subsequent attempt to collect on this judgment, it obtained an order for a judgment debtor examination. Carnes appeared for the examination, and at the outset of that proceeding the magistrate made the following comments:

Mr. Carnes, apparently there's been a writ of execution served that came back unsatisfied. And pursuant to the statute and rule, counsel for the plaintiff has the opportunity today to examine you concerning your assets and that means everything even the mint in your pockets. Okay? So he will ask you questions.

I'm going to leave the courtroom and we'll leave the record running, so he will be able to examine you; ask you about what you own; ask you about what you have and if he wants to see what's in your wallet, you're going to show him. Okay?

In the course of the examination that followed, upon discovering that Carnes had money in his wallet, MRS's attorney told Carnes:

I need to have you turn that over to me and we'll apply it to your judgment. If you don't want to do that we can wait. The judge is in a hearing right now and we'll ask him to order you to do it, so, the choice is yours.

After some discussion, Carnes gave the money to MRS's attorney.

Thereafter, MRS made a motion for supplemental attorney fees. Carnes, through a newly acquired attorney, filed an "Objection to Application for Award of Supplemental Attorney Fees, Motion for Trial, and Motion to Return Money Wrongfully Taken by Plaintiff's Attorney from the Defendant." Carnes subsequently withdrew the objection to the attorney fees and the motion for trial, but pursued his motion to return the money given to MRS's attorney at the debtor examination. Although Carnes did not dispute the validity of the underlying judgment, he argued that because MRS's attorney knew or should have known that the money taken was exempt from execution under several Idaho statutes, the attorney's instruction to Carnes to turn over the money was wrongful. The magistrate court denied the motion for return of the funds, holding that Carnes voluntarily gave the money to MRS's attorney.

Carnes appealed to the district court, which held that the magistrate's finding of voluntary payment was not supported by substantial and competent evidence. The district court reasoned that because neither the judge nor MRS's attorney had informed Carnes of his potential exemption rights, Carnes's payment could not have been voluntary because he did not have "knowledge of all the facts." Additionally, the district court found that both the magistrate judge and MRS's attorney intimidated and unduly influenced Carnes at the examination. Because of this, the district court vacated the magistrate's order and remanded the case to the magistrate court to determine whether the money had been exempt from execution. The district court also awarded attorney fees to Carnes as the prevailing party pursuant to Idaho Code § 12-120(3).

MRS appeals from the district court's decision. MRS argues that the district court erred in reversing the magistrate's decision because substantial and competent evidence supports the finding that Carnes's payment was voluntary. MRS also argues that the district court erred in applying Idaho's exemption laws because they were not applicable where there had been no court order to pay the money. MRS also seeks a reversal of the district court's award of attorney ...


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