WLR44-2_Watson_12_17_0710/05/2018 6:11:47 PM
2007]judgments, garnishments, and judicial sales1
\Judgments, Garnishments and Judicial Sales: A Case Study of the Law Commission Approach to Law Reform
Gerald G. Watson, Ph.D., J.D.
Nearly a decade ago, the Oregon Legislative Assembly embarked upon an experiment in law reform by establishing the Oregon Law Commission (Commission). The Commission is a public-private partnership, partially funded by the Legislative Assembly. Its goal is to improve Oregon law by utilizing the expertise of legal scholars and a wide array of interested parties in a continuing effort to revise, clarify, and eliminate ambiguities in existing law.[1]
Over the past four legislative sessions, one important arena in which the Commission successfully proposed legislative changes involved the interrelated topics of judgments, garnishments, and judicial sales. The purpose of this article is to examine in some detail the process used by the Commission in dealing with these matters, the major issues thatwere addressed, the Commission’s recommendations for statutory reform, and the changes ultimately enacted into law.[2]
I. Overview of The Law Commission Approach
The Commission is a 13-member body whose membership is established by statute.[3] By law, the members include the Deans of the three Oregon law schools or their designees, the Chief Justice of the Oregon Supreme Court and the Attorney General or their designees, a governor’s appointee, and four appointments (one apiece) made by the majority and minority leaders of the House and Senate.[4]
The Commission meets quarterly, or more often at its discretion. Most of its work, however, is done through a network of substantively specific “work groups.” Over 200 volunteers currently serve on the Commission’s work groups.[5] It is those work groups that take on a particular reform issue, analyze the problems, conduct needed research, discuss alternatives, suggest statutory remedies, and evaluate possible draft statutory language.
Work groups are created once “an issue has been selected by the Commission for study and development.”[6] Typically one or two Commissioners serve on each work group, one of whom will serve as Chair. Other work group members will be selected from interested constituencies, with an eye toward ensuring that the broadest range of interests and expertise is included. Work group members are specifically charged to bring their expertise to the group, but to check their interest affiliations at the door, keeping the public interest in the forefront of their deliberations.[7] For the most part, that aspect of the process works well. Work group meetings are open to the public and, in fact, it is not uncommon for a significant number of other “interested” persons to be invited to attend and participate (but not vote) in the deliberations of the work group. The active participation of these other “interested” persons brings a more traditional interest group perspective to a work group’s deliberations without overwhelming the process.
The Commission and its work groups are assisted by the professional staff of the Commission, as well as staff from the Office of Legislative Counsel.[8] Among other responsibilities, the Commission staff organizes work group meetings, takes minutes, conducts research requested by a work group, and drafts memoranda and policy position papers on topics under discussion. The Office of Legislative Counsel is the Legislative Assembly’s drafting arm. Legislative Counsel, in conjunction with the work group and Commission staff, prepares statutory drafts of possible legislation for review and consideration by the work group and the Commission.
If a work group comes to a sufficient consensus, it presents a report to the Commission outlining its work, the issues, its conclusions, and its recommendations.[9] The report is accompanied by a statutory draft prepared by Legislative Counsel consistent with the recommendations in the report. Typically, the report includes a recommendation that the Commission adopt the work group’s report and forward the report and the draft statute to the Legislative Assembly for its consideration. If the Commission concurs, the legislative proposal is introduced into the Legislative Assembly through an appropriate committee.[10] It is then subject to the myriad and complex steps in the legislative dance that may lead to the enactment of new legislation. As a result of the Commission’s expertise and thorough evaluation process, its record of success, measured by the percentage of bills it recommends that are ultimately enacted into law, is extremely high.[11]
This brief description of the process does not do full justice to the nuances of public policy formation. Suffice it to say that there are numerous opportunities for members of the work group, other “interested” persons, and Commissioners to propose alternative policies and advance different statutory language.
II. First Steps: Clarifying and Simplifying the Law of Garnishments
The Law Commission began its work on judgments, garnishments, and judicial sales by establishing the Judgments/Garnishment Work Group (Garnishments Work Group) at the March 19, 1999 meeting of the Commission.[12] The charge to the group was broad: to prepare a comprehensive statutory draft for the 2001 legislative session addressing all aspects of the effect and enforcement of civil judgments. Due to the complexity of the task and the limited time available, the Work Group instead decided to address only the issue of garnishments in the 2001 session.[13] Its stated goal became “clarify[ing] and simplify[ing] the garnishment process.”[14] While significant, this was a modest step in the larger picture of judgments reform—reform that ultimately took four legislative sessions to substantially complete.
The important but modest goal of the Garnishments Work Group in 1999-2000 was clarification and simplification of the garnishment process found in Chapter 29 of the Oregon Revised Statutes.[15] Garnishments are an important part of the legal process and existing law was complicated and confusing. The Work Group’s report pointed out that there was a “glaring need” for a rewrite of the law of garnishment, going on to emphasize that the existing statutes “follow no recognizable sequence” and that “many of the individual statutes contain a hodge-podge of unrelated provision.”[16] Indicative of the need for revision was the fact that four separate forms for writs of garnishment existed at the time.[17]
Although it took time and numerous work group meetings to reach consensus, the prospects for doing so were substantially helped by two facts. First, there was widespread agreement that the existing laws were confusing and overly complex.[18] Second, there was agreement that, for the most part, the Work Group should focus its attention on making changes to procedures and forms rather than making any major substantive changes to the rights of debtors, creditors, or “garnishees,” the people who have to attempt to follow the law when dealing with property in their possession that is claimed by a creditor or contested by a debtor.[19] The Work Group, under the able leadership of Commissioner Representative Max Williams,[20] clearly operated from the view that clarification and simplification of garnishment laws would substantially benefit all parties, including debtors.[21]
The key decision made by the work group was the decision to consolidate all writs of garnishment into a single form.[22] This meant that the separate forms for “continuing” writs of garnishment would disappear.[23] However, the proposed change was accompanied by a change in the substantive law declaring “that the new writ had the effect of garnishing wages for a 90-day period if the debtor was the employee of the garnishee.”[24] Together, these changes effectively retained “continuing” wage garnishment while greatly simplifying garnishment procedures and forms. Those changes, and others of lesser significance, were embodied in House Bill 2386.[25]
III. 2003: The Omnibus Bill on Judgments and Garnishments Clean-up
A. House Bill 2646
Following the 2001 legislative session, the Oregon Law Commission turned its attention to the larger topic of judgments reform. A new work group, the Judgments/Enforcement of Judgments Work Group (Judgments Work Group), held numerous meetings and worked diligently on judgments reform between legislative sessions.[26] The bill it produced was introduced into the Legislative Assembly in 2003 as House Bill 2646 and, after modest amendment, was passed into law.[27] Reform was necessitated, at least in part, by the confusion resulting from the overlay of the existing Oregon Rules of Civil Procedure and the multiplicity of statutes based upon the long-standing distinction between law and equity. Those procedural distinctions were abolished when the first set of Oregon Rules of Civil Procedure, notably ORCP 2, became effective on January 1, 1980.[28] Unfortunately, the text of numerous provisions of existing law, including the law of judgments, was never modified to reflect that change.[29]
The Judgments Work Group identified seven issues that needed to be addressed:[30] (1) obsolete terminology, including use of the term “decree,” a holdover from the time when Oregon maintained separate and distinct procedures for dealing with matters “in equity” and matters “at law”[31]; (2) “lack of statutory organization”[32]; (3) “lack of clarity on what is an ‘appealable’ judgment”[33]; (4) “judgments labeled as judgments that are not really judgments”;[34] (5) “inaccurate statutory language on ‘expiration’ of judgments”[35]; (6) “obsolete writ of execution procedure”[36]; and (7) “confusion in statutes between ‘execution’ and ‘writs of execution.’”[37]
It is important to note that statutes governing sheriff sales under writ of execution contained some of the most archaic language in the Oregon Revised Statutes, and were in serious need of rewriting.[38] However, the Judgments Work Group soon found that the revision of these statutes was complicated by the fact that they performed multiple functions.[39] It decided to defer work on these laws until a broader representation of real property practitioners was available.[40]
The remaining issues provided the Judgments Work Group with plenty to accomplish, as demonstrated by House Bill 2646, which was a massive piece of legislation, running to well over three hundred pages. It contains some 582 separate sections, amending numerous provisions of existing law, moving provisions from one statutory chapter to another, and deleting obsolete text.
First, House Bill 2646 clarified and modified definitions of key terms, including “judgments,” “money award,” “execution”, “judgment remedies” and “judgment liens.” “Judgment” was explicitly and narrowly defined as a “concluding decision of a court on one or more claims in one or more actions” that must be “reflected in a judgment document.”[41] As defined, all judgments must either be “general” judgments, “limited” judgments, or “supplemental” judgments.[42] Furthermore, the judgment must set forth the type of judgment in the document itself.[43] All judgments were declared to be enforceable (subject to any stay) and appealable.[44] The bill clarified that other actions of a court, however denominated (e.g., “Order,” “Decision,” “Award,” or “Decree”), are not “judgments.”[45]
House Bill 2646 also replaced the term “money judgment” with “money award” to avoid confusion where the “money judgment” is only part of a more comprehensive judgment that also contains provisions that do not relate to awards of money.[46]
It defined other key terms including “judgment remedies,” and “judgment liens.” “Judgment remedies” include execution and judgment liens.[47] “Judgment liens” are defined as the effect of a judgment on real property in the county in which the judgment is entered and in any county in which the judgment is recorded.[48]
By defining “judgment lien” to mean the effect of a judgment on real property as described in sections 14 and 15 of the bill, the bill clarified that the judgment lien for a judgment without a support award and a judgment with a support award have markedly different natures. The lien for a support award creates a “cloud” on any property owned by the judgment debtor, but only makes a conveyance or encumbrance subject to support arrearage liens that have already attached to the property, not for any such lien that might arise after the property is conveyed or encumbered.[49] This approach reflected the understanding of courts and practitioners, but represented the first attempt to accurately reflect in the statutes the effect of the lien created by a support award.
House Bill 2646 clarified the effect of entry of judgment. Section 11 of the bill made “substantial changes to existing law regarding the entry of judgments.”[50] The Work Group determined that all judgments (as defined in the Bill) should be appealable and enforceable upon entry.[51] The bill also provided that a general judgment incorporates prior written decisions of the court, such as orders granting ORCP 21 motions that were not previously designated as a limited judgment.[52] Those decisions are thus appealable at the time the general judgment is entered.[53] A significant provision concerning entry of judgment effectively reversed a longstanding judicial rule by providing that any claim not mentioned in the judgment document is dismissed with prejudice unless one of several narrow exceptions applies.[54]
The bill also specified that the lien effect of a judgment is different for judgments that do not include support awards and for those that do.[55] Under then-existing law, each past due support obligation was regarded as a separate judgment that attached as a lien to real property when it became past due. This was deemed to be unnecessarily complex and inconsistent with the notion of a “judgment” as an appealable action by a court. It also created problems relating to accounting for payments subsequently made on past-due support obligations.
House Bill 2646 also prohibited the Clerk of the Court from entering a judgment unless designated as a general, limited, or supplemental judgment.[56] This was a particularly important decision because it placed primary responsibility on the Clerk of the Court for ensuring that a document entered in the register of court met the form requirements imposed by the bill for an enforceable and appealable judgment.
The bill also allowed judgment remedies to be extended by the filing of a “certificate of extension” rather than requiring entry of an order granting extension.[57] Another provision established specific statutory authorization for lien releases, setting form requirements for release documents, and describing the effect of a lien release.[58]
Finally, the bill clarified the distinction between “execution” and “writs of execution” through a revised definition of “execution,”[59] specific authorization to enforce judgments by “execution upon entry of the judgment,”[60] and “providing that a writ of execution may only be issued for a judgment that includes a money award or calls for the delivery of specific real or personal property.”[61]
B. House Bill 2274
The Oregon Law Commission, through its Judgments Work Group, also submitted a second bill in 2003, House Bill 2274.[62] The purpose of this bill was to further clarify and simplify the garnishment process that the Commission worked on in the previous legislative session.[63]
House Bill 2274 dealt with approximately twenty distinct modifications to existing garnishment law. As noted in the Commission’s report on the bill, “[t]he primary changes are technical corrections and procedural changes to further simplify the garnishment process.”[64] Among the changes that were proposed and ultimately passed into law were provisions (1) to harmonize the one year statute of limitations for garnishees generally with probate law,[65] (2) to clarify “that a single garnishment can be directed against the assets of more than one joint debtor,”[66] (3) to require that a garnishor must “add the names and addresses of the garnishor and garnishee to the challenge of garnishment form provided to each debtor,”[67] and (4) to amend the wage exemption calculation form to enhance clarity.[68]
IV. 2005: Judicial Sales and Judgments Clean-Up[69]
Between the 2003 and 2005 legislative sessions, the Oregon Law Commission, through its work group process, turned its attention to the key remaining set of issues involving judgments: the law dealing with judicial sales. It also performed important clean-up work on the judgment legislation in light of practical experience with the omnibus judgment law enacted in 2003. The Judgments Work Group, chaired by Commissioner Sandra Hansberger of the Lewis & Clark Legal Clinic, met eight times in person and corresponded throughout the process.[70] In all, the Oregon Law Commission, upon the recommendation of its Judgments Work Group, advanced two legislative proposals: Senate Bill 920 on judicial sales and House Bill 2359, the judgments clean-up bill.[71]
A. Senate Bill 920
Senate Bill 920 was a substantial revision of execution sales law, and “[t]he purpose [of the revision was] primarily to update and clarify legal procedures dealing with judicial sales under writs of execution. Writs of execution [were] set forth at ORS 18.465-18.598 of the then-current statute.”[72] In pursuit of its goals, the Work Group focused on two main issues: the purposes of and procedure for obtaining writs of execution and the procedures for judicial sales of levied-upon property.