By Alicia L. Gutierrez and Victor E. Carlin
On April 22, 2011 the New Mexico Court of Appeals issued an important opinion on garnishments of joint bank accounts. Alcantar and Sanchez v. Wells Fargo Bank, NA, Case No. 28,436.
The case deals with the garnishment of a bank account with several joint owners by a judgment creditor of only one of the joint owners. The Court of Appeals opinion requires significant changes in bank procedure. As a result, every bank in New Mexico needs to look at their policy and procedures regarding garnishments and adjust them accordingly.
When a bank receives a Writ of Garnishment, in addition to taking the action it always has taken [(1) promptly freezing the relevant account or accounts, or at least freezing an amount sufficient to satisfy the judgment, plus costs and attorney fees, (2) sending copies of the Writ, the Notice of Right to Claim Exemptions, and Claim of Exemption form to the judgment debtor, and (3) filing an answer in a timely fashion]; it is recommended that banks now take the following additional action without delay:
(a) look at the relevant account or accounts and determine if there are any joint account owners,
(b) give notice of the Writ in writing to all joint account owners (not just the judgment debtor), and
(c) consider filing an interpleader action (which the Court of Appeals is “recommending” in order to avoid claims for conversion and negligence).
Finally, if banks are not already doing so, in order to give appropriate notice they need to get mailing addresses for each person on a joint account, not just the primary account owner.
