Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

CNA National Warranty Corp. v. RHN Inc.

United States District Court, D. Arizona

October 10, 2019

CNA National Warranty Corporation, Plaintiff,
v.
RHN Incorporated, et al., Defendants.

          ORDER

          G-. MURRAY ENOW CHIEF UNITED STATES DISTRICT JUDGE

         Pending before the Court are Defendants RHN, Inc. et al.'s (“Defendants”) Motion to Quash Prejudgment Writ of Garnishment (Doc. 41) and Motion to Seal (Doc. 42). For the following reasons, the Court grants both motions.

         BACKGROUND

         On June 20, 2019, Plaintiff CNA National Warranty Corporation (“CNA”) filed a Complaint (Doc. 1) and Application for Provisional Remedy of Garnishment with Notice (“Application”) (Doc. 4) in this Court. CNA sought to garnish up to $6, 046, 092.00 from Defendants' accounts held at Banc of California located in Los Angeles, California. Defendants objected to CNA's Application for Provisional Remedy on the following grounds: (1) prejudgment remedies can only be awarded in state court, not federal court (2) this Court did not have jurisdiction to hear CNA's Application because CNA's Complaint and Application should have been brought as compulsory counterclaims in a separate action pending in this Court;[1] (3) CNA would not be able to demonstrate that its claims against Defendants were probably valid; and (4) CNA did not fulfill the statutory requirements for provisional remedies codified in A.R.S. §§ 12-2402 (Provisional Remedies Without Notice; Grounds for Issuance), 12-2403 (Provisional Remedies with Notice; Grounds), and 12-2404 (Application for Provisional Remedy with Notice).

         On July 17, 2019, after the parties fully briefed Defendants' Objection to Application for Provisional Remedy, both parties participated in an evidentiary hearing regarding CNA's Application. This Court granted CNA's Application contingent on CNA posting a surety bond-CNA complied. The Clerk of the Court promptly issued the Writ of Garnishment (“Writ”) naming Banc of California as the Garnishee on July 19, 2019. Defendants filed the present motion to quash the Writ on July 22, 2019. In a separate motion, Defendants also move for an exhibit admitted during the evidentiary hearing on CNA's Application for Provisional Remedy of Garnishment to remain under seal.

         DISCUSSION

         I. Motion to Quash Prejudgment Writ of Garnishment

         Defendants assert that Arizona courts do not have jurisdiction to issue a writ of garnishment for a bank account in an out-of-state bank. Because the Writ is directed to an out-of-state bank, Defendants argue that the Writ must be quashed for lack of jurisdiction. CNA argues (1) that Defendants waived any objection to personal jurisdiction over the garnishee by not raising that objection before or during the evidentiary hearing; and (2) that Defendants' argument is irrelevant because it assumes that CNA intends to serve the Arizona Writ without first domesticating it in California.

         A. Waiver

         CNA contends that “the appropriate time to adjudicate the [jurisdictional] issues raised in Defendants' Motion was at or before the evidentiary hearing on [CNA's] Application.” (Doc. 48 at 6.) Because Defendants failed to do so, CNA argues that Defendants' objection is waived and Defendants' Motion to Quash is improper. CNA, however, fails to cite any authority suggesting that a jurisdictional objection is waived if not raised at the first hearing addressing the application.

         To the contrary, CNA explains that Defendants are afforded an opportunity to raise objections “not later than ten days after the receipt of the [Garnishee's] answer.” (Doc. 48 at 6) (citing A.R.S. § 12-1580). The governing statute, A.R.S. § 12-1580, provides, “[a] party who has an objection to the writ of garnishment, the answer of the garnishee or the amount held by the garnishee or a party claiming an exemption from garnishment may, not later than ten days after the receipt of the answer, file a written objection and request for hearing.” Id. (emphasis added). CNA advances a narrow interpretation of this statute by suggesting that any meritorious objections may only be made after Banc of California is served with the writ. The plain language of the statute, however, does not impose such a restriction. Id. The statute imposes a deadline, but it does not prevent an objection from being raised before the writ is served.

         In the absence of authority to the contrary, Defendants did not waive their objection by failing to raise it in the application hearing.

         B. Jurisdiction

         Provisional remedies are available in federal court in accordance with the law of the forum state. Fed.R.Civ.P. 64. Arizona courts apply the Restatement (Second) of Conflict of Laws (“Restatement”) with respect to extraterritorial garnishment. See Ellsworth Land Livestock Inc. v. Bush, 224 Ariz. 542, 544, 233 P.3d 655, 657 (Ct. App. 2010) (applying Restatement § 68 to determine whether an Arizona Court has jurisdiction to issue a writ of garnishment to garnish a debt owed by an out of state garnishee); Desert Wide Cabling & Installation, Inc. v. Wells Fargo & Co., 191 Ariz. 516, 518, 958 P.2d 457, 459 (Ct. App. 1998) (applying Restatement ยง 67(b) to determine whether an Arizona Court has jurisdiction to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.