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Credit Bureau of Eastern Idaho, Inc. v. Acedo

Court of Appeals of Idaho

November 26, 2018

CREDIT BUREAU OF EASTERN IDAHO, Inc., an Idaho corporation, Plaintiff-Appellant,
v.
JESSE ACEDO, Party Aggrieved-Respondent, and CHARLEANE A. HERMOSILLO and JESSE HERMOSILLO, husband and wife, Defendants.

          Appeal from the District Court of the Seventh Judicial District, State of Idaho, Madison County. Hon. Gregory W. Moeller, District Judge. Hon. Mark Rammell, Magistrate.

         Order of the district court, on intermediate appeal from the magistrate, affirming orders granting third-party claim of exemption and awarding attorney fees on intermediate appeal, affirmed.

          Smith, Driscoll & Assoc., PLLC, Idaho Falls, for appellant. Bryan N. Zollinger argued.

          Larren Covert, Idaho Falls, for respondent.

          LORELLO, Judge

         In these consolidated appeals, Credit Bureau of Eastern Idaho, Inc. (CBEI) appeals from the orders of the district court, on intermediate appeal from the magistrate, granting Jesse Acedo's third-party claim of exemption and the district court's order awarding attorney fees on intermediate appeal. For the reasons set forth below, we affirm.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Charleane A. Hermosillo and her child incurred medical expenses that were unpaid. The unpaid debt was assigned to CBEI. In an effort to collect on that debt, CBEI filed a complaint in April 2009. The complaint named the defendants as "Charleane A. Hermosillo and John Doe, wife and husband." When the complaint was served at Charleane's address, it was delivered to Jesse Acedo. The process server submitted an affidavit of service indicating that the complaint was served on "Jesse Hermosillo - Husband - (John Doe)." CBEI, therefore, moved to amend the complaint to reflect the defendants' names as "Charleane Hermosillo and Jesse Hermosillo, wife and husband." After neither defendant answered the complaint, CBEI sought and obtained a default judgment against "Charleane A. Hermosillo and Jesse Hermosillo, wife and husband" in the amount of $6, 291.78. Of the $6, 291.78, $3, 381.57 was for the principal on the debt, $1, 147.16 was for interest, $1, 585.05 was for attorney fees, and $178.00 was for fees.

         Within a week of obtaining the judgment, CBEI filed an application for order of continuing garnishment and an affidavit in support of writ of execution. The magistrate entered an order "against the employer of Charleane Hermosillo" for garnishment of "Charleane Hermosillo's disposable earnings from H-K Contractors." Because CBEI did not receive any money from its writ of execution, [1] it filed an application for an order of examination. The magistrate entered an order of examination directed to Charleane Hermosillo and a separate order of examination directed to Jesse Hermosillo. The examinations were scheduled for August 5, 2009.

         According to an affidavit filed by CBEI's counsel, Jesse Acedo met with counsel on August 5, 2009, and Jesse informed counsel that his surname was Acedo, not Hermosillo, "that he and Charleane Hermosillo had a child together" and that "a majority of the bills that were a cause of this action were for the child of Jesse and Charleane Hermosillo." Two weeks later, on August 19, 2009, CBEI filed an application for order of continuing garnishment requesting an order of garnishment against "Jesse Hermosillo a.k.a. Jesse Acedo." The affidavit in support of writ of execution filed with the application was for $6, 489.41, reflecting $197.63 in additional fees and interest added since the original judgment was entered. The magistrate entered an order for continuing garnishment in that amount against "Jesse Hermosillo a.k.a. Jesse Acedo's disposable earnings from H-K Contractors."

         In September 2009, Acedo's attorney sent CBEI a letter advising CBEI that it was improperly garnishing Acedo's wages for a judgment that was not entered against him. In response, CBEI sent a letter to Acedo's attorney stating that the amount attributable to "Jesse's child" was $1, 400.42 plus $214.86 in prejudgment interest plus "prorated" fees and costs, including $565.39 in attorney fees, $112.36 in costs, and $46.41 in post-judgment interest for a "total amount" of $2, 339.44.

         By March 2010, $3, 543.68 of Acedo's wages from H-K Contractors had been garnished for payment on the judgment. That same month, CBEI filed an application for order of continuing garnishment in relation to Charleane Hermosillo. Additional payments of $1, 012.97 were made on the judgment from subsequent garnishments from Acedo's wages, voluntary payments from Acedo, [2] and $196.10 garnished from Charleane Hermosillo's wages. By February 2012, a total of $4, 556.65 was paid on the judgment.[3] Due to accruing interest and fees associated with CBEI's collection efforts, the balance due in February 2012 was $2, 862.41.

         In March 2012, Acedo filed a third-party claim of exemption after he received a notice of garnishment from his credit union advising him that $2, 378.00 from his checking and savings accounts was being held subject to the writ of execution and garnishment filed by CBEI on the judgment entered against "Charleane Hermosillo and Jesse Hermosillo, wife and husband." The accompanying documents prepared by CBEI and submitted by the sheriff to the credit union represented that Jesse Acedo was an alias for Jesse Hermosillo, that the court had entered judgment against "Charleane Hermosillo and Jesse Acedo," and that the clerk of court issued a writ of execution against "Charleane Hermosillo and Jesse Acedo" on August 24, 2011.[4] CBEI objected to Acedo's claim of exemption. In a supporting affidavit, counsel for CBEI averred that the credit union contacted him in March 2012 "to confirm that they had attached the correct account" to the garnishment because "[n]either the names Charleane and Jesse Hermosillo nor Jesse Acedo was the correct name of the account holder for the account number listed on the notice of garnishment, which was taken from the checks remitted to [counsel's] office." Counsel's "assistant confirmed Jesse's social security number with the social security number of the account holder and it matched." The credit union thereafter "attached the accounts based on his social security number[, ] not his name."

         The magistrate held a hearing on Acedo's third-party exemption claim. The minutes of that hearing reflect that the magistrate ordered "the money be held in trust - until this gets figured out" and stayed continuing garnishment. The minutes also indicate the motion for exemption was "denied" and the matter was "set aside" for lack of service. CBEI subsequently submitted an order stating Acedo's claim of exemption was denied and requiring that "the funds attached by the writ of execution" be retained in a trust account for twenty-one days after the date of the hearing "to allow defendant sufficient time to file any motions desired"; the magistrate signed that order on April 24, 2012. Two days later, $2, 378.00 was garnished from Acedo's credit union accounts, and one day after the garnishment, CBEI recorded a satisfaction of judgment.

         Acedo moved to set aside the April 24, 2012 order, asserting it did not accurately reflect the magistrate's ruling at the exemption hearing and that the order was submitted to the court without notice to Acedo. The magistrate set the April 24, 2012 order aside. Acedo subsequently filed a motion to set aside the judgment, which the magistrate granted. The magistrate concluded that the judgment was void as to Acedo because he was not properly served. The magistrate directed CBEI to return all funds obtained from Acedo as part of the judgment. CBEI appealed to the district court. On intermediate appeal, the district court held that the magistrate "correctly concluded the default judgment was void due to defects in the pleadings served," but the magistrate erred in failing to make a finding that the motion to set aside was timely under I.R.C.P. 60(b)(4). The district court, therefore, remanded to the magistrate for further proceedings consistent with the district court's appellate decision. The district court also awarded CBEI costs, pursuant to I.A.R. 40, but not attorney fees.

         Following remand, Acedo filed a renewed third-party claim of exemption rather than pursuing his previous motion to set aside the judgment. The magistrate granted Acedo's request for a third-party exemption and ordered "the funds attached and obtained from Jesse Acedo be returned immediately," excluding previous garnishments and voluntarily payments. The magistrate stated: "The returned funds are in the amount of $2, 378.00."[5] The magistrate denied the parties' requests for attorney fees on the third-party claim of exemption. CBEI again appealed to the district court. The district court affirmed the magistrate, concluding that Acedo, as a third-party, had no standing to set aside the judgment and was exempt from the judgment.[6]Thereafter, the district court awarded costs and attorney fees to Acedo pursuant to I.A.R. 40 and I.C. ยง 12-120. CBEI appeals the district court's decision affirming ...


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