Midland Funding, LLC and Pressler & Pressler, LLP ignored procedure to oppose debtor's claim of exempt money in his frozen bank account; Bank account restraint vacated.

The lessons of this case: In opposition to your lawful claim of exemption to a bank seizure, a judgment creditor must:

  1. Serve you with its opposition papers at the current address listed on your claim exemption form; and it must also
  2. Serve the bank with the same set of papers. (See CPLR § 5222a(d)).

The case discussed in this blog entry (Midland Funding LLC v Digonis, 25 Misc 3d 935 [NY Dist Ct 2009]), Nassau District Court Judge Fred Hirsh found that Pressler's failure to follow the above-cited, statutorily required steps amounted to defects that deprived the court of "subject matter jurisdiction" (authority to hear and rule in the case).

Pressler & Pressler, LLP represented Midland Funding, LLC. At issue was the enforcement of a $7,344 default judgment against a bank account that contained exempt social security payments. For a list of exempt monies, see this blog.

For some reason, Pressler & Pressler ignored the fact that the defendant had been living in Athens, Greece since 2006. Pressler was put on notice of the defendant's current address by letter and by exemption claim form. But nevertheless, Pressler elected to proceed using the defendant's outdated, incorrect address.

When a defendant's property rights are in imminent jeopardy, New York has imposed strict requirements to safeguard a defendant's right to due process. For example, CPLR § 5222-a requires the following statements in exemption claim forms: "I request that any correspondence to me regarding my claim be sent to the following address."

The Exemption Claim Form must also have a line on which the judgment debtor can write the address to which correspondence should be sent. The following legend must be under the line for the judgment debtor's address: "(FILL IN YOUR COMPLETE ADDRESS)".

These requirements were enacted to prevent creditor attorneys like Pressler from depriving a defendant of due process when attempting to seize exempt, social security benefits. Pressler further failed to serve the bank with a copy of the opposition papers without explanation.

Midland's and Pressler's failure to follow these rules left the court with no choice but to deny its oppositional claim and to remove the debtor's bank restraint.

Conclusion: Be familiar with New York's exemption statute, CPLR § 5222-a! Read this prior blog for starters!

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