United States District Court, D. Arizona
MURRAY ENOW CHIEF UNITED STATES DISTRICT JUDGE
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.
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; (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).
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.
Motion to Quash Prejudgment Writ of Garnishment
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.
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.
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.
absence of authority to the contrary, Defendants did not
waive their objection by failing to raise it in the
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 § 67(b) to
determine whether an Arizona Court has jurisdiction to ...