IN THE COURT OF APPEALS OF IOWA
No. 21-1226 Filed August 31, 2022
L.F. NOLL, INC., Plaintiff-Appellee,
vs.
PREMIERE BUSINESS SOLUTIONS, LLC, Garnishee-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Samantha Gronewald,
Judge.
A garnishee appeals entry of judgment against it for funds owed to a creditor
by a defendant. REVERSED AND REMANDED.
Daniel P. Kresowik of Brick Gentry P.C., West Des Moines, for appellant.
Kolby P. Warren of McCormally & Cosgrove, P.L.L.C., Des Moines, for
appellee.
Heard by Vaitheswaran, P.J., and Tabor and Badding, JJ. 2
BADDING, Judge.
Should an employer who mistakenly withholds the wrong amount from a
debtor’s wages be liable for the entire balance on a judgment owed by the debtor
to a creditor? This was the question put to the district court after a creditor sought
to satisfy its judgment against a debtor by serving a notice of garnishment on her
employer. Upon discovering that the employer made a withholding mistake, the
creditor sought entry of judgment against the employer for the balance owed by
the debtor. Due to the employer’s failure to withhold the proper amount, the court
entered judgment against it “for the full amount of the unpaid judgment,” plus
interest and costs. Because we conclude the employer was not liable to the
creditor for the entire unpaid judgment against the debtor, we reverse and remand.
I. Background Facts and Proceedings
L.F. Noll, Inc. initiated a debt-collection suit against Amanda Zahnd in 2012.
The parties entered into a “stipulation and agreement for judgment payable in
installments,” under which Zahnd would pay the principal amount of $6025.28 with
interest and court costs in monthly installments of $40.00. The agreement
provided that if Zahnd failed to make payments, L.F. Noll could file an affidavit of
default and request issuance of execution for the remaining balance, plus interest
and costs. The court entered judgment in accordance with the agreement.
In 2016, L.F. Noll filed an affidavit of default. It then made several attempts
to collect the judgment through general executions. The most recent was issued
in October 2020. A notice of garnishment and interrogatories was served on
Zahnd’s employer, Premiere Business Solutions, LLC (Premiere) the next month.
See Iowa Code § 642.5(1) (2020). In its answer, Premiere admitted it 3
compensates Zahnd for personal services but denied it was indebted to her or
possessed any of her property. See id.; Iowa R. Civ. P. 1.304. The writ of
execution expired on February 17, 2021.1 In March, the sheriff filed its return of
service, which disclosed $221.50 was collected from Premiere with $125.00 issued
to the court and $96.50 retained by the sheriff as fees. Following the clerk’s notice
of receipt of the funds, L.F. Noll sought and obtained an order condemning the
funds.
In April, L.F. Noll applied for an order for the appearance of Premiere as the
garnishee. The application alleged Premiere “failed to fully surrender garnished
funds to the Sheriff.” L.F. Noll sought an order for Premiere to “appear before this
court and bring all books and records relating to the employment and payment of
salaries, wages, or other compensation to [Zahnd], and then and there, to answer
all interrogatories that may be propounded to it, as provided by law.” In the event
Premiere “fail[ed] to appear and fully answer the interrogatories,” L.F. Noll asked
that judgment be entered against Premiere. The court entered an order directing
Premiere’s representative to appear and be examined.
At the hearing, Premiere’s co-owner, Brent Hood, testified the company was
not indebted to Zahnd or in the possession of her property. But he confirmed
Premiere compensates Zahnd as a full-time, hourly employee. She is paid
biweekly and earns “[r]oughly $28,000 per year.” Hood testified Premiere’s payroll
department implemented a garnishment on Zahnd’s wages, but he agreed the
1 The writ of execution issued on October 20, 2020 and expired 120 days later, on February 17, 2021. See Iowa Code § 626.16; see also Barry A. Lindahl, Iowa Practice Series: Civil & Appellate Procedure § 42:2 (May 2022 update) (“Once issued, the execution is good for a period of 120 days from the date of issuance.”). 4
amount withheld was incorrect. Hood explained that instead of withholding 25%
of Zahnd’s wages—which he testified was the correct amount2—Premiere only
withheld $25 from each paycheck. Hood said that in early February 2021, one of
L.F. Noll’s representatives told him the right amount hadn’t been withheld but,
because the writ of execution would be expiring, another notice of garnishment
would need to be issued and served. See Iowa Code § 642.22(1)(b) (noting a
notice of garnishment remains effective without serving another notice until the writ
of execution expires).
At the end of the hearing, L.F. Noll asked the court to enter judgment against
Premiere for $6151.703—the balance of the judgment Zahnd owed L.F. Noll—
because of Premiere’s failure to comply with the notice of garnishment. L.F. Noll
acknowledged the garnishment expired on February 17, but it asserted there were
outstanding funds that were not withheld under the garnishment when it expired.
Hood responded that the total judgment requested by L.F. Noll would not have
been satisfied before expiration. In its post-hearing brief, L.F. Noll simply argued
“the garnishment was only partially satisfied” when the garnishment expired so,
under Iowa Code section 642.13, judgment should be entered against Premiere in
full.
In its ruling, the court found the garnishment was not satisfied when the writ
of execution expired and entered judgment against Premiere “for the full amount
2 See 15 U.S.C. §§ 1673(a)(1) (providing “maximum allowable garnishment”), 1677 (noting federal law does not affect greater limitations on garnishment provided by state law); Iowa Code § 642.21(1) (providing limitations on garnishment from net earnings per calendar year). 3 This figure consisted of $5063.84 in principal, $1050.24 in interest, and $37.62
in court costs. 5
of the unpaid judgment, for interest at the legal rate, and the costs of this matter.”
Premiere appeals.
II. Standard of Review
Appellate review of garnishment proceedings is for legal error. Ellefson v.
Centech Corp., 606 N.W.2d 324, 330 (Iowa 2000). “The district court’s findings of
fact are binding upon us if those findings are supported by substantial evidence.
However, we are not bound by the district court’s legal conclusions, and we may
inquire into whether the district court’s ultimate conclusions were materially
affected by improper conclusions of law.” Id. (internal citation omitted).
III. Analysis
Premiere claims the court erred in entering judgment against it for the full
amount due from Zahnd to L.F. Noll, arguing (1) it “was never provided with prior
notice that judgment could be entered . . . for the full amount”; (2) no judgment
should have been entered against it under Iowa Code section 642.13 because it
was neither indebted to Zahnd nor in the possession of her property when the
notice of garnishment was served; and (3) if judgment in some form was proper, it
should have been limited to the amount owed by Premiere to Zahnd. Because we
find this last argument to be dispositive, we do not reach Premiere’s final
contention that the amount L.F. Noll claimed was due on its judgment against
Zahnd is not accurate.
A. Notice
The last paragraph of L.F. Noll’s application for Premiere to appear provided
that “[i]n the event that [Premiere] fails to appear and fully answer the
interrogatories, the Plaintiff requests that the Court enter judgment against 6
[Premiere] for the amount of the judgment plus court costs and interest at the legal
rate.” Premiere argues that nothing in this application, or the district court’s order
requiring it to appear, advised Premiere that it could be held liable for the entire
amount of the underlying judgment even “if Premiere appeared for the . . . hearing
and fully answered the interrogatories.”
L.F. Noll contests error preservation on this issue, pointing out the argument
was not raised or decided in the district court. See Woods v. Charles Gabus Ford,
Inc., 962 N.W.2d 1, 5 (Iowa 2021) (“It is a fundamental doctrine of appellate review
that issues must ordinarily be both raised and decided by the district court before
we will decide them on appeal.” (citation omitted)). In its reply brief, Premiere
argues “there was no reason nor opportunity for Premiere to raise the issue.”
Specifically, Premiere questions how it was expected “to somehow have the
foresight to preemptively object” to the court impermissibly granting L.F. Noll relief
that was not requested—the entry of judgment in its favor in full under section
642.13.
But L.F. Noll did request the challenged relief at hearing after Premiere
acknowledged it erred in implementing the garnishment, and Premiere was given
a chance to respond, both at the hearing and in a post-hearing brief. After the
court granted L.F. Noll the relief it requested at hearing, Premiere had yet another
opportunity to respond by filing a motion under Iowa Rule of Civil Procedure
1.904(2). See Thomas Mayes & Anuradha Vaitheswaran, Error Preservation in
Civil Appeals in Iowa: Perspectives on Present Practice, 55 Drake L. Rev. 39, 69
(2006) (“If a litigant seeks reversal based on an issue not addressed by the district
court, he or she has an obligation to seek a ruling on that issue. . . . A written 7
motion under rule 1.904 is one way to do so; however, any act requesting a district
court’s ruling should be sufficient.”). It did not do so.
In a last-ditch effort to save the notice issue, Premiere asserted for the first
time at oral arguments before this court that the claimed deficient notice deprived
the district court of subject matter jurisdiction. See In re Est. of Falck, 672 N.W.2d
785, 789 (Iowa 2003) (“A party can raise subject matter jurisdiction at any time in
the proceeding.”). “If the trial court entered judgment on defective notice, [a party]
cannot attack it collaterally unless there was what in law amounts to no notice.” Id.
at 791. We cannot say there was no notice here, considering that L.F. Noll’s
application expressly requested “judgment against the Garnishee Defendant for
the amount of the judgment.” While that was conditioned on Premiere’s failure to
appear and fully answer the interrogatories, Premiere was still on notice of the
possibility.
More importantly, Premiere appeared at the hearing.
It is well-settled law when a party appears at trial in person or by counsel with actual notice of the trial, this is sufficient notice for judgment to be entered against that party. This rule applies even if a claim had not been served on the party and a prayer for relief had not been made in any application.
Id. at 792. In line with this rule, the Iowa Supreme Court held in Farmers’ Union
Exchange of Riverside v. Iowa Adjustment Company, 203 N.W. 283, 284 (Iowa
1925) that even where no notice was served on a garnishee, the court had subject
matter jurisdiction of the dispute since the garnishee appeared at the hearing “in
resistance to the issues tendered by the pleading controverting its answers.” See
Iowa Code § 642.11. We accordingly find the district court had subject matter
jurisdiction of the dispute before it. 8
B. Judgment Under Section 642.13
Before getting into the merits of Premiere’s next two arguments, which we
consider together, we start with a refresher on the relevant statutes. Section
642.5(1) requires that “[w]hen the plaintiff, in writing, directs the sheriff to take the
answer of the garnishee,” as L.F. Noll did here, the sheriff must ask the following
questions of the garnishee:
[1] Are you in any manner indebted to the defendant in this suit, or do you owe the defendant money or property which is not yet due? If so, state the particulars. [2] Have you in your possession or under your control any property, rights, or credits of the said defendants? If so, what is the value of the same? State all particulars. [3] Do you know of any debts owing the said defendant, whether due or not due, or any property, rights, or credits belonging to the defendant and now in the possession or under the control of others? If so, state the particulars. [4] Do you compensate the defendant in this suit for any personal services whether denominated as wages, salary, commission, bonus or otherwise, including periodic payments pursuant to a pension or retirement program? If so, state the amount of the compensation reasonably anticipated to be paid defendant during the calendar year.
If the garnishee “refuses to answer fully and unequivocally all the foregoing
interrogatories,” section 642.6 provides that the garnishee “shall be notified to
appear and answer as provided above.” Should the garnishee fail to appear and
answer, “the garnishee shall be presumed to be indebted to the defendant to the
full amount of the plaintiff’s demand, but for a mere failure to appear no judgment
shall be rendered against the garnishee until the garnishee has had an opportunity
to show cause against the same.” Iowa Code § 642.9.4
4 Iowa Rule of Civil Procedure 1.304 similarly provides: Unless answers are required to be taken as provided by statute, the notice shall cite the garnishee to appear before the court at a time 9
L.F. Noll’s application for Premiere to appear seemed to be made under the
above section. But after a representative from Premiere appeared at the hearing
and answered questions under oath, see Iowa Code § 642.7, L.F. Noll pivoted and
sought judgment under section 642.13. That provision states:
If in any of the above methods it is made to appear that the garnishee was indebted to the defendant, or had any of the defendant’s property in the garnishee’s hands, at the time of being served with the notice of garnishment, the garnishee will be liable to the plaintiff, in case judgment is finally recovered by the plaintiff, to the full amount thereof, or to the amount of such indebtedness or property held by the garnishee, and the plaintiff may have a judgment against the garnishee for the amount of money due from the garnishee to the defendant in the main action, or for the delivery to the sheriff of any money or property in the garnishee’s hands belonging to the defendant in the main action within a time to be fixed by the court, and for the value of the same, as fixed in said judgment, if not delivered within the time thus fixed, unless before such judgment is entered the garnishee has delivered to the sheriff such money or property. Property so delivered shall thereafter be treated as if levied upon under the writ of attachment in the usual manner.
Premiere argues that since it was neither indebted to Zahnd nor had any of
her property in its hands when it was served with the notice of garnishment, the
district court “was not able to enter judgment against [it] under section 642.13.”
See Yoss v. Sampson, 269 N.W. 22, 26 (Iowa 1936) (“[A] garnishment covers only
such property of the principal defendant as is in the hands of the garnishee at the
time of the service of notice of garnishment.”).5 L.F. Noll responds that because
Zahnd “is employed at [Premiere’s] business and is earning a wage from
specified not less than ten days after service and answer such interrogatories as may be propounded, or the garnishee will be liable to pay any judgment which the plaintiff may obtain against the defendant. 5 This would encompass debts incurred but not yet due, although execution must
be suspended until the debt matures. See Iowa Code § 642.16. 10
[Premiere],” the company is indebted to Zahnd.6 In support of this argument, L.F.
Noll contends the opening phrase of the statute—“[i]f in any of the above methods
it is made to appear that the garnishee was indebted to the defendant”—refers to
the methods of indebtedness listed in section 642.5, one of which is “wages owed
from garnishee to a [d]efendant.” See Iowa Code § 642.5(1). After taking a trip
back in time, we find that Premiere has the better argument.
For most of the past two centuries, no meaningful substantive changes have
been made to section 642.13. Compare Iowa Code § 642.13 (2020), with id.
§ 1873 (1851). Our code has also long directed the sheriff to serve a notice to a
garnishee “forbidding his paying any debt owing such defendant, due or to become
due, and requiring him to retain possession of all property of the defendant in his
hands or under his control, to the end that the same may be dealt with according
to law.” Iowa Code § 12157 (1939). This requirement is now implemented by the
rules of civil procedure. See Iowa R. Civ. P. 1.304 (“The notice shall forbid the
garnishee from paying any debt owing such defendant, due or to become due, and
require the garnishee to retain possession of all property of the defendant in the
6 L.F. Noll also claims that error was not preserved on this issue because the only argument Premiere made in district court was “that it was an ‘honest mistake’ that the Garnishment was not satisfied.” We disagree. In its answer to the interrogatories and at the hearing, Premiere denied that it was indebted to Zahnd or in possession of her property. And at the hearing, when L.F. Noll asked for judgment in full, Premiere asserted the garnishment should simply be reissued. By granting L.F. Noll’s requested relief instead, the district court necessarily considered and ruled on the issue Premiere raises on appeal—whether judgment in any amount was proper because Premiere was neither indebted to Zahnd nor in possession of any of her property. See Lamasters v. State, 821 N.W.2d 856, 864 (Iowa 2012) (“If the court’s ruling indicates that the court considered the issue and necessarily ruled on it, . . . the issue has been preserved.”). We accordingly find error was preserved. 11
garnishee’s hands or under the garnishee’s control, to the end that the same may
be dealt with according to law.”). The requirement also remains hinted at by
another statute. See Iowa Code §§ 642.5(1) (2020) (directing the sheriff to take
answers on debts due and to become due), 12162 (1939) (same).
Applying the statutes in effect in 1939, our supreme court considered a
situation like that before us now, in which “the defendant-debtor was employed at
an agreed monthly wage. . . . At the time of the garnishment the employer owed
nothing to the employee. Thereafter the employment and collection of wages
continued as before.” Stowe v. Breen, 300 N.W. 518, 519 (Iowa 1941). The
garnishor-creditor moved for judgment against the garnishee, “[c]ontending the
garnishment rendered the garnishee liable for the wages thereafter earned by the
employee.” Id. Under what is now section 642.13 (2020) and rule 1.304, the court
concluded “it is clear judgment may not be secured against a garnishee unless at
the time of the service of notice of garnishment he owes the defendant a debt, due
or to become due.” No debt was due to the debtor as compensation, “[n]or was
there a debt ‘to become due’” because “[t]hat expression means there must be a
definite and fixed obligation to pay in any event and when time alone is wanting,
to fix its maturity.” Id. So the supreme court found the creditor was not entitled to
judgment against the garnishee for wages the defendant would earn in the future
because they were not due or to become due at the time the notice of garnishment
was served. Id.; see also Bump v. Augustine, 154 N.W. 782, 784 (Iowa 1915) (“It
is the holding of the courts generally that an attachment does not reach the
unearned salary of the debtor . . . .”). 12
Similar to Stowe, Iowa Code section 642.21(2)(d) provides that “[n]o
employer shall . . . [b]e held liable for an amount not earned at the time of the
service of notice of garnishment.” Taking the holding of Stowe together with
section 642.21(2)(d), it would seem that even though Zahnd was employed by
Premiere when the garnishment was served, Premiere was not “indebted” to her
under section 642.13 and so judgment in any amount was not proper. But the
current code includes something historic versions did not. In 1984, the legislature
added section 642.22, which addresses the scope of a garnishment notice. See
1984 Iowa Acts ch. 1239, § 12. As amended, the provision now provides:
(1) A notice of garnishment served upon a garnishee is effective without serving another notice until the earliest of the following: (a) The annual maximum permitted to be garnished under section 642.21 has been withheld. (b) The writ of execution expires. (c) The judgment is satisfied. (d) The garnishment is released by the sheriff at the request of the plaintiff or the plaintiff’s attorney.
Iowa Code § 642.22. This statute allows for the ongoing validity of the notice until
an event triggering ineffectiveness, thereby creating a continuing duty to withhold
between service and the earliest of those events.7 The existence of a durational
duty to withhold is bolstered by section 642.22(3), which states that expiration of
the execution does not affect the “garnishee’s duties and liabilities respecting
7 See 4 Emp. Coordinator, Compensation § 34:199 Iowa; Duration of the Duty to Withhold (May 2022 update); see also 38 C.J.S. Garnishment § 216 (May 2022 update) (noting some statutory schemes provide “that upon service of a garnishment summons on the garnishee, the debts already due to the judgment debtor when the summons in garnishment is served upon the garnishee and any indebtedness of the garnishee to the judgment debtor which arises between the date of service of such summons on the garnishee and the return date of the summons is subject to garnishment”). 13
property already withheld pursuant to the garnishment” before expiration. Such a
duty tracks how the parties interacted and how wage garnishment is handled in
Iowa generally. However, it would conflict with the express direction of other
statutes, namely sections 642.13, which measures indebtedness from the time
notice of garnishment is served, and 642.21(2)(d), which exempts liability “for an
amount not earned at the time of the service of notice of garnishment.” But, as
noted, the operative language of section 642.13 has been left unchanged for nearly
two centuries. And section 642.21(2)(d) was added in 1971 and has not been
changed since. See 1971 Iowa Acts ch. 270, § 1.8 Section 642.22, on the other
hand, was added in 1984. It is therefore the newest statute on the issue, which
means it prevails. See Schmett v. State Objections Panel, 973
N.W.2d 300, 304 (Iowa 2022) (“If statutes enacted at the same or different
sessions of the legislature are irreconcilable, the statute latest in date of enactment
by the general assembly prevails.” (quoting Iowa Code § 4.8)).
So applying that durational duty to withhold, Premiere was only liable to L.F.
Noll, and L.F. Noll could only have judgment for, the amount of money due from
Premiere to Zahnd that arose while the notice of garnishment was effective or for
delivery of the same within a time fixed by the court, subject to state and federal
statutory constraints on wage garnishment. See Iowa Code § 642.13; see also id.
§ 642.21. This conclusion fits with the well-settled principle that the “demand upon
the garnishee must be such that the principal defendant could have maintained an
8 Section 642.21 was amended in 1984, 1985, 2011, and 2018, but each amendment left subsection two untouched. See 2018 Iowa Acts ch. 1041, § 111; 2011 Iowa Acts ch. 25, § 77; 1985 Iowa Acts ch. 178, § 14; 1984 Iowa Acts ch. 1239, § 11. 14
action in his or her own right against the garnishee for it.” Van Maanen v. Van
Maanen, 360 N.W.2d 758, 761 (Iowa 1985); see also Huntington v. Risdon, 43
Iowa 517, 518–19 (1876) (stating that “in the absence of fraud,” a garnishee
“should not be placed in a worse position than he would be if the defendants were
prosecuting the claim against him”).
While L.F. Noll argues that a “simple web search of garnishment laws
across the country shows the ability of creditors to recover the full amount of
judgments against non-compliant employers is not unique to Iowa,” it cited no such
laws in its brief. And it appears from our research that many cases hold the
opposite. See, e.g., Devan Lowe, Inc. v. Stephens, 842 So. 2d 703, 708 (Ala. Civ.
App. 2002) (rejecting creditor’s argument that it was entitled to a judgment against
an employer for the full amount owed by the debtor); Deal v. First & Farmers Nat’l
Bank, Inc., 518 S.W.3d 159, 172 (Ky. Ct. App. 2017) (“[W]e do not accept as
correct the . . . blanket statement that Kentucky law makes a garnishee strictly
liable to the judgment creditor for the entire amount of the underlying judgment.”);
Bank One, La., N.A. v. Anioma Home Health Care Agencies, Inc., 950 So. 2d 866,
870 (La. Ct. App. 2007) (reversing trial court’s entry of judgment against the
garnishee for the full amount of the balance due from the defendant-debtor and
finding the court should have instead ordered “the garnishee to pay the amounts
that should have been withheld from the date of the original garnishment order”).
In summary, Premiere was not liable to the plaintiff for the full amount of the
judgment, but it was liable to L.F. Noll for amounts it failed to properly withhold
under the garnishment. We therefore reverse the district court’s entry of judgment,
and we remand for the court’s reconsideration of the plaintiff’s entitlement to 15
judgment consistent with this opinion.9 We reject L.F. Noll’s unsupported claim for
attorney fees and costs in the amount of $4350. See Iowa R. App.
P. 6.903(2)(g)(3) (“Failure to cite authority in support of an issue may be deemed
waiver of that issue.”); NCJC, Inc. v. WMG, L.C., 960 N.W.2d 58, 62 (Iowa 2021)
(“Generally, attorney fees are recoverable only by statute or under a contract.”
(citation omitted)).
REVERSED AND REMANDED.
9The district court issued no findings on what amounts should have been withheld or what annual maximum applies to Zahnd.