DEBTOR -CREDITOR LAW

Tom Hoffman

Spring, 1996 Exam

1. Darrin is a new associate in a small collection law firm in Stevens, Minnesota. His boss Larry asks Darrin to handle a new collection matter for the firm's new client Which Witch, Inc. ("WW") Larry tells Darrin that WW obtained a judgment against Tabatha Tate in the state district court in St. Louis County, Minnesota on March 21, 1987. Darrin comes to you for advice. He tells you that he needs answers to the following questions:

a. Darrin has no idea how to locate assets of Ms. Tate and asks you what he sh ould do to locate Ms. Tate's real and personal property. Briefly describe your advice to Darrin. (10 points)

b. Darrin tells you that Larry is convinced that Ms. Tate transferred nonexempt abstract real estate located in St. Louis County, Minnesota to his wife Samantha for no consideration in the "early 1990s". Briefly describe your advice to Darrin regarding his strategy to pursue collection of this asset. (10 points)

c. Darrin asks you what he should do if he does locate Ms. Tate's assets. Briefly describe your advice to Darrin regarding how you would proceed to levy against Ms. Tate's non-exempt assets in her possession. (5 points)

d. Darrin tells you that he has a writ of execution in his file dated August 29, 1992 and he wonders if it is still "good." He also wants to know if the Judgment against Ms Tate has lapsed. Briefly describe your advice to Darrin. (5 points)

2. Lucy never paid her secured car loan to the Copacabanna Car Company ("CCC") on time. By the early part of March 1995 the credit manager at CCC, Ricky, became fed up with these continually late payments. Consequently he sent a demand letter to Lucy on March 29, 1995. This letter demanded that Lucy deliver to CCC three delinquent monthly payments on or before April 15, 1995. On April 11, 1995 Lucy tendered and Ricky accepted a partial payment of the delinquent amount. On May 12, 1995, and without further notice to Lucy, Ricky hired Fred as an independent contractor to perform a voluntary repossession of Lucy's car. Fred does not like Lucy because of her scheming personality and because she is rude to Fred's wife Ethel. Therefore, Fred decided to perform this voluntary repossession by pulling Lucy out of the car at the Ricardodale Mall in front of a large crowd and throwing her to the ground. Discuss Lucy's remedies against CCC, Ricky and Fred arising out of these facts in the state of Minnesota. Does your answer change if the partial payment was made on April 23, 1995 rather than April 11, 1995? (10 points)

3. Bill's client, Gannon's Cuffs, Inc., obtained a judgment in Hennepin County District Court against Joe Monday. Bill has a list of Joe's assets which he gave to the Hennepin County Sheriff s office to be used during the execution process to enforce the judgment against Joe. On this list are the following assets: an automobile, computer, Joe's wedding ring, an expensive player piano, a $75,000.00 IRA, and Joe's homestead (with a fair market value of $300,000.00 and is on an acre lot in the city). Bill receives a telephone call from a Sargent at the Hennepin County Sheriff s office who tells Bill that he needs more information about these assets before he will levy on them. The Sargent also tells Bill that some of these assets may be exempt from execution and he also does not want to violate certain provisions of the Minnesota constitution. Describe the concerns the Hennepin County Sargent has with regard to levying on Joe's assets which are contained in this list. (10 points)

4. Kotter is an attorney in North Oaks, Minnesota. As a regular part of his practice Kotter collects debts for the Welcome Back Corporation. Kotter tells his newest associate, Epstein, to "do everything possible" to collect a $5,000.00 consumer debt that Barbarino owes to Welcome Back Corporation. Epstein decides he will pressure this "sweathog" into paying by calling him late at night and "twisting his arm with a lot of tough talk". Epstein also sends a demand letter to Barbarino that demands payment within 10 days of the date of the demand letter, Finally, Epstein decides to call Barbarino's boss to inform him that Epstein is slovenly and a deadbeat. Barbarino contacts you to represent him. Barbarino wants all contact from Epstein to cease and he wants to know if you can help him. Discuss ways in which you can stop Epstein's contact with Barbarino and all other parties. Further, describe all claims that Barbarino may have against Kotter and Epstein arising, out of these facts. Assume that the demand notice said the following: "Pay up or suffer the consequences within 10 days, deadbeat. Signed Epstein". (10 points)

5. Dick is the bookkeeper of your newest client Van Dyke Hair Designs, Inc. He schedules an appointment with you because he received the following documents: (a) an Earnings Garnishment Summons and Disclosure form and $15 from the Buddy Corporation for an employee of Van Dyke Hair Designs, and (b) a Summary Execution notice relating to the same employee from Sally Corporation (no disclosure form was enclosed and the $15 fee was not included). Dick asks you what should he do with the garnishment documents from Buddy Corporation. He also wants to know whether he should respond by filing out the disclosure form (and if so when) and whether he should send the money directly to the Buddy Corporation. Also, he wants to know what he should do with the Summary Execution documents from Sally Corporation. Finally, Dick claims to have heard something about a "bank ping pong" and he wants to know what that is all about. Briefly discuss your advice to Dick. (10 points)

6. Herman comes to you for advice about a $25,000.00 unsecured debt Eddie owes to him. Herman tells you that Marilyn told him that Eddie was loading up a truck with all of his assets to move to Iowa to avoid paying Herman because he thinks Herman is a monster. Herman says that if you could put Eddie in jail then Eddie would not be able to take his assets out of the state of Minnesota. Advise Herman of his alternatives to collect the obligation. Include a brief discussion of any constitutional issues which are involved in prejudgment seizure situations. (10 points)

7. A new church client visits you to discuss a Summons and Complaint they received in the mail from the Maxwell Corporation. The Complaint sets forth a cause of action based on the tithing of one of their members. The Complaint alleges that the Church received $30,000.00 from this member during the six months prior to the Maxwell Corporation's entry of its judgment against the church member. Discuss all issues which would probably be raised by the Maxwell Corporation based on these facts and discuss whether or not such a tithing should be subject to a levy to satisfy the Maxwell Corporation's judgment against the church member. (10 points)

8. You represent Lou, a newspaper editor, who makes $2,000.00 in disposable earnings per week. Lou has had his wages garnished in Minneapolis, Minnesota. How much should Lou's employer withhold on an earnings garnishment? Show all relevant calculations. (10 points)