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AB-1321 Money judgments: earnings withholdings.(2011-2012)

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Amended  IN  Assembly  January 12, 2012
Amended  IN  Assembly  January 04, 2012

CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 1321


Introduced  by  Assembly Member Wieckowski

February 18, 2011


An act to amend Section 706.105 of the Code of Civil Procedure, relating to money judgments.


LEGISLATIVE COUNSEL'S DIGEST


AB 1321, as amended, Wieckowski. Money judgments: earnings withholdings.
Under existing law, an employer is required to withhold the amounts provided by an earnings withholding order from all earnings of the employee payable for any pay period that ends during the withholding period. Existing law permits a judgment debtor to claim an exemption from earnings withholding if no prior hearing has been held concerning the earnings withholding order, or if there has been a material change in circumstances since the last hearing concerning the earnings withholding order. A creditor is entitled to a hearing on a judgment debtor’s claim of exemption from earnings withholding to satisfy a money judgment if the creditor files a notice of opposition to the claim of exemption.
This bill would require, after a judgment debtor files the claim of exemption and financial statement with the levying officer, the levying officer to serve the judgment debtor’s employer with a copy of the original earnings withholding order, a copy of the claim of exemption unaccompanied by the financial statement, and a signed instruction ordering the employer to adjust the amount of earnings withheld to reflect the amount of additional earnings that the judgment debtor asserts are exempt. If the judgment debtor’s claim of exemption asserts that all of his or her earnings are exempt, the instruction would order the employer to reduce the amount of earnings withheld to zero. The bill would further require the employer to comply with the provisions of the signed instruction. Under this bill, if the judgment debtor creditor does not file a timely notice of opposition to the claim of exemption, the levying officer would be required to serve notice upon the employer to continue withholding earnings in compliance with the claim of exemption. This bill would also provide that if, after a hearing, the court denies the judgment debtor’s claim in whole or in part, the clerk is required to transmit a certified, or provide by mail, facsimile, e-mail, or other electronic means, a copy of the court’s order to the levying officer, who must promptly serve a notice to the judgment debtor’s employer detailing the court’s order concerning the earnings withholdings. Additionally, this bill would provide that these provisions would become operative on July 1, 2013, and would require the Judicial Council to adopt any necessary revisions to notices, claims of exemptions, orders, or other specified documents on or before that date.
By increasing the duties of local ministerial officers relating to the service of process and notice, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 706.105 of the Code of Civil Procedure is amended to read:

706.105.
 (a) A judgment debtor may claim an exemption under Section 706.051 under either of the following circumstances:
(1) No prior hearing has been held with respect to the earnings withholding order.
(2) There has been a material change in circumstances since the time of the last prior hearing on the earnings withholding order.
(b) A claim of exemption shall be made by filing with the levying officer an original and one copy of (1) the judgment debtor’s claim of exemption and (2) the judgment debtor’s financial statement.
(c) Promptly after the judgment debtor files the claim of exemption and financial statement with the levying officer, the levying officer shall serve on the employer all of the following:
(1) A copy of the original earnings withholding order.
(2) A copy of the claim of exemption filed by the judgment debtor, unaccompanied by the financial statement.
(3) An instruction, signed by the levying officer, that the employer must, until further notice, immediately reduce the amount of earnings to be withheld under the original earnings withholding order to reflect the amount of additional earnings claimed to be exempt in the judgment debtor’s claim of exemption, and that the amount to be withheld shall be reduced to zero if the judgment debtor’s claim of exemption asserts that all of the judgment debtor’s earnings are exempt.
(d) An employer who is served by the levying officer with the documents identified in subdivision (c) shall, until further notice, immediately reduce the amount of additional earnings claimed to be exempt in the judgment debtor’s claim of exemption. If the judgment debtor’s claim of exemption asserts that all of the judgment debtor’s earnings are exempt, the employer shall, until further notice, immediately cease withholding any earnings whatsoever.
(e) Upon filing of the claim of exemption, the levying officer shall promptly send to the judgment creditor, at the address stated in the application for the earnings withholding order, by first-class mail, postage prepaid, all of the following:
(1) A copy of the claim of exemption.
(2) A copy of the financial statement.
(3) A notice of claim of exemption. The notice shall state that the claim of exemption has been filed and that the earnings withholding order will be terminated, or modified to reflect the amount of earnings claimed to be exempt in the claim of exemption, unless a notice of opposition to the claim of exemption is filed with the levying officer by the judgment creditor within 10 days after the date of the mailing of the notice of claim of exemption.
(f) A judgment creditor who desires to contest a claim of exemption shall, within 10 days after the date of the mailing of the notice of claim of exemption, file with the levying officer a notice of opposition to the claim of exemption.
(g) If a notice of opposition to the claim of exemption is filed with the levying officer within the 10-day period, the judgment creditor is entitled to a hearing on the claim of exemption. If the judgment creditor desires a hearing on the claim of exemption, the judgment creditor shall file a notice of motion for an order determining the claim of exemption with the court within 10 days after the date the levying officer mailed the notice of claim of exemption. If the notice of motion is so filed, the hearing on the motion shall be held not later than 30 days from the date the notice of motion was filed unless continued by the court for good cause. At the time prescribed by subdivision (b) of Section 1005, the judgment creditor shall give written notice of the hearing to the levying officer and shall serve a notice of the hearing and a copy of the notice of opposition to the claim of exemption on the judgment debtor and, if the claim of exemption so requested, on the attorney for the judgment debtor. Service is deemed made when the notice of the hearing and a copy of the notice of opposition to the claim of exemption are deposited in the mail, postage prepaid, addressed to the judgment debtor at the address stated in the claim of exemption and, if service on the attorney for the judgment debtor was requested in the claim of exemption, to the attorney at the address stated in the claim of exemption. The judgment creditor shall file proof of the service with the court. After receiving the notice of the hearing and before the date set for the hearing, the levying officer shall file the claim of exemption and the notice of opposition to the claim of exemption with the court.
(h) If the levying officer does not receive a notice of opposition to the claim of exemption within the 10-day period after the date of mailing of the notice of claim of exemption and a notice of the hearing not later than 10 days after the filing of the notice of opposition to the claim of exemption, the levying officer shall serve upon the employer a notice that the employer shall continue withholding earnings only to the extent, if any, that the employer has been withholding earnings pursuant to subdivision (d).
(i) If, after hearing, the court orders that the earnings withholding order be modified or terminated, the clerk shall promptly transmit a certified copy of the order to the levying officer who shall promptly serve on the employer of the judgment debtor (1) a copy of the modified earnings withholding order or (2) a notice that the earnings withholding order has been terminated. The court may order that the earnings withholding order be terminated as of a date that precedes the date of hearing. If the court determines that any amount withheld pursuant to the earnings withholding order shall be paid to the judgment debtor, the court shall make an order directing the person who holds that amount to pay it promptly to the judgment debtor.
(j) If, after hearing, the court denies the judgment debtor’s claim of exemption in whole or in part, the clerk shall promptly transmit a certified, or provide by mail, facsimile, e-mail, or other electronic means, a copy of the court’s order to the levying officer, who shall promptly serve on the employer a notice that the employer shall withhold earnings pursuant to the court’s order.
(k) If the earnings withholding order is terminated by the court, unless the court otherwise orders or unless there is a material change of circumstances since the time of the last prior hearing on the earnings withholding order, the judgment creditor may not apply for another earnings withholding order directed to the same employer with respect to the same judgment debtor for a period of 100 days following the date of service of the earnings withholding order or 60 days after the date of the termination of the order, whichever is later.
(l) If an employer has withheld and paid over amounts pursuant to an earnings withholding order after the date of termination of the order but prior to the receipt of notice of its termination, the judgment debtor may recover those amounts only from the levying officer if the levying officer still holds those amounts or, if those amounts have been paid over to the judgment creditor, from the judgment creditor. If the employer has withheld amounts pursuant to an earnings withholding order after termination of the order but has not paid over those amounts to the levying officer, the employer shall promptly pay those amounts to the judgment debtor.
(m) An appeal lies from any court order under this section denying a claim of exemption or modifying or terminating an earnings withholding order. An appeal by gin:0 0 1em 0;">

SEC. 2.SEC. 4.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.