OPINION
The sole issue presented in this case is the constitutionality of Rule 4.1
of the Vermont Rules of Civil Procedure (Vt.R.Civ.P.) and its companion statutes, 12 Vt.Stat.Ann. §§ 3291-92,
which allow a plaintiff, upon commencement of a suit, to attach the defendant’s real es
tate without notice or a prior hearing and with no participation by a court or judge. Plaintiffs, on behalf of themselves and all those similarly situated, claim that these statutes violate the due process clause of the Fourteenth Amendment to the United States Constitution; they therefore request declaratory and injunctive relief against the enforcement of the attachment procedures pursuant to 28 U.S.C. §§ 2201-02 and 42 U.S.C. § 1983. Jurisdiction is based upon 28 U. S.C. § 1343(3) and 1331(a). Because the suit seeks to enjoin a state statute of state wide application, a three-judge court was convened pursuant to 28 U.S. C. §§ 2281, 2284.
The facts as stipulated by the parties are as follows:
Plaintiffs, Robert C. and Laurie Terranova, are residents of Ferrisburg, Addison County, Vermont, and are owners of certain real property there. The property in question has at the present time a market value of $13,000, and apart from the writ of attachment at issue here the property is encumbered by a first mortgage having a balance payable of approximately $7,800.
On or about October 24, 1974, defendant AVCO Financial Services of Barre, Inc. (AVCO), prepared and signed a writ of attachment directed to plaintiffs’ real estate in accordance with Vt.R.Civ. P. 4.1(a), (b)(1) and (c). AVCO then filed an unverified complaint and summons together with the writ of attachment in Vermont District Court on October 28, 1974, alleging money due and owing by plaintiffs in the amount of $1,629 on a promissory note dated November 5, 1973.
On October 31, 1974, the writ of attachment was delivered by AVCO to defendant Chandler, the sheriff of Addison County, and then to defendant DeWitt, a deputy sheriff who delivered the writ to the town clerk of Ferrisburg. A copy of the writ was then formally recorded, as required by statute, note 2
supra.
At no time were the plaintiffs provided with notice or an opportunity to be heard with respect to the attachment, and at no time prior to the attachment was the probable validity of AVCO’s underlying claim reviewed by any judicial officer of the State of Vermont.
On the basis of the Supreme Court’s decisions in
North Georgia Finishing, Inc. v. Di-Chem, Inc.,
419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975);
Mitchell v. W. T. Grant Co.,
416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974);
Fuentes v. Shevin,
407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); and
Sniadach v. Family Finance Gorp.,
395 U.S. 337 (1969), all of which emphasized the necessity of judicial participation in connection with the granting of such prejudgment remedies, and with reliance upon a number of cases which have invalidated similar statutory schemes,
Bay State Harness Horse Racing and Breeding Association, Inc. v. PPG Industries, Inc.,
365 F.Supp. 1299 (D.Mass.1973) (three-judge court) ;
Gunter v. Merchants Warren National Bank,
860 F.Supp. 1085 (D.Me.l97S) (three-judge court);
Clement v. Four North State Street Corp.,
360 F.Supp. 933 (D.N.H.1973) (three-judge court),
we conclude that the procedures here in issue are violative of the due process clause of the Fourteenth Amendment and that their continued enforcement should therefore be enjoined.
Rule 4.1 of the Vermont Rules of Civil Procedure was amended in direct response to the Supreme Court’s decision in
Fuentes v. Shevin, supra,
which invalidated Florida’s replevin procedures. The new rule provides
inter alia
that prior to virtually all
possessory
attachments,
i. e.,
attachments requesting that property “be removed or taken into possession,” there be notice to the parties to be affected by the seizure and a limited hearing before a judge.
At the hearing, the party seeking the attachment is required to establish “that there is a reasonable likelihood that plaintiff will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the attachment over and above any liability insurance or bond shown by the defendant to be available to satisfy the judgment.”
Real estate attachments and other “non-possessory attachments” were conspicuously excluded from the notice and hearing requirements of Vt.R.Civ.P. 4.1. The Reporter’s Notes to the 1973 Amendments to the Rules provide an explanation for distinguishing possessory and non-possessory attachments:
The Fuentes decision invalidated Florida and Pennsylvania replevin procedures which provided for the taking of personal property at the commencement of the action without notice to the defendant or hearing on the probable validity of plaintiff’s claim. While Fuentes in terms applies only to replevin, its principles clearly govern possessory attachment of personal property, attachment on trustee process, and a range of other provisions for summary taking of personal property, as subsequent decisions of the lower federal courts have held. .
The application of Fuentes to attachments where tangible property is not taken into possession is less clear. While the opinion emphasizes protection of “the interest in continued possession and use” of property . it also points out that the due process clause of the 14th Amendment protects “any significant property interest” . . . which could arguably include the right to hold property with unencumbered title. .
The amendments to Rules 4.1, 4.2 and 64 are intended to provide the notice and hearing for possessory attachment of personal property, attachment on trustee process, and replevin that are now constitutionally required. These changes are simply in implementation of the mandate of Fuentes. The amendments do not, however, go beyond a narrow reading of that decision. Accordingly, under Rule 4.1 real property attachments and attachments of personal property by copy under 12 V.S.A.
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OPINION
The sole issue presented in this case is the constitutionality of Rule 4.1
of the Vermont Rules of Civil Procedure (Vt.R.Civ.P.) and its companion statutes, 12 Vt.Stat.Ann. §§ 3291-92,
which allow a plaintiff, upon commencement of a suit, to attach the defendant’s real es
tate without notice or a prior hearing and with no participation by a court or judge. Plaintiffs, on behalf of themselves and all those similarly situated, claim that these statutes violate the due process clause of the Fourteenth Amendment to the United States Constitution; they therefore request declaratory and injunctive relief against the enforcement of the attachment procedures pursuant to 28 U.S.C. §§ 2201-02 and 42 U.S.C. § 1983. Jurisdiction is based upon 28 U. S.C. § 1343(3) and 1331(a). Because the suit seeks to enjoin a state statute of state wide application, a three-judge court was convened pursuant to 28 U.S. C. §§ 2281, 2284.
The facts as stipulated by the parties are as follows:
Plaintiffs, Robert C. and Laurie Terranova, are residents of Ferrisburg, Addison County, Vermont, and are owners of certain real property there. The property in question has at the present time a market value of $13,000, and apart from the writ of attachment at issue here the property is encumbered by a first mortgage having a balance payable of approximately $7,800.
On or about October 24, 1974, defendant AVCO Financial Services of Barre, Inc. (AVCO), prepared and signed a writ of attachment directed to plaintiffs’ real estate in accordance with Vt.R.Civ. P. 4.1(a), (b)(1) and (c). AVCO then filed an unverified complaint and summons together with the writ of attachment in Vermont District Court on October 28, 1974, alleging money due and owing by plaintiffs in the amount of $1,629 on a promissory note dated November 5, 1973.
On October 31, 1974, the writ of attachment was delivered by AVCO to defendant Chandler, the sheriff of Addison County, and then to defendant DeWitt, a deputy sheriff who delivered the writ to the town clerk of Ferrisburg. A copy of the writ was then formally recorded, as required by statute, note 2
supra.
At no time were the plaintiffs provided with notice or an opportunity to be heard with respect to the attachment, and at no time prior to the attachment was the probable validity of AVCO’s underlying claim reviewed by any judicial officer of the State of Vermont.
On the basis of the Supreme Court’s decisions in
North Georgia Finishing, Inc. v. Di-Chem, Inc.,
419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975);
Mitchell v. W. T. Grant Co.,
416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974);
Fuentes v. Shevin,
407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); and
Sniadach v. Family Finance Gorp.,
395 U.S. 337 (1969), all of which emphasized the necessity of judicial participation in connection with the granting of such prejudgment remedies, and with reliance upon a number of cases which have invalidated similar statutory schemes,
Bay State Harness Horse Racing and Breeding Association, Inc. v. PPG Industries, Inc.,
365 F.Supp. 1299 (D.Mass.1973) (three-judge court) ;
Gunter v. Merchants Warren National Bank,
860 F.Supp. 1085 (D.Me.l97S) (three-judge court);
Clement v. Four North State Street Corp.,
360 F.Supp. 933 (D.N.H.1973) (three-judge court),
we conclude that the procedures here in issue are violative of the due process clause of the Fourteenth Amendment and that their continued enforcement should therefore be enjoined.
Rule 4.1 of the Vermont Rules of Civil Procedure was amended in direct response to the Supreme Court’s decision in
Fuentes v. Shevin, supra,
which invalidated Florida’s replevin procedures. The new rule provides
inter alia
that prior to virtually all
possessory
attachments,
i. e.,
attachments requesting that property “be removed or taken into possession,” there be notice to the parties to be affected by the seizure and a limited hearing before a judge.
At the hearing, the party seeking the attachment is required to establish “that there is a reasonable likelihood that plaintiff will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the attachment over and above any liability insurance or bond shown by the defendant to be available to satisfy the judgment.”
Real estate attachments and other “non-possessory attachments” were conspicuously excluded from the notice and hearing requirements of Vt.R.Civ.P. 4.1. The Reporter’s Notes to the 1973 Amendments to the Rules provide an explanation for distinguishing possessory and non-possessory attachments:
The Fuentes decision invalidated Florida and Pennsylvania replevin procedures which provided for the taking of personal property at the commencement of the action without notice to the defendant or hearing on the probable validity of plaintiff’s claim. While Fuentes in terms applies only to replevin, its principles clearly govern possessory attachment of personal property, attachment on trustee process, and a range of other provisions for summary taking of personal property, as subsequent decisions of the lower federal courts have held. .
The application of Fuentes to attachments where tangible property is not taken into possession is less clear. While the opinion emphasizes protection of “the interest in continued possession and use” of property . it also points out that the due process clause of the 14th Amendment protects “any significant property interest” . . . which could arguably include the right to hold property with unencumbered title. .
The amendments to Rules 4.1, 4.2 and 64 are intended to provide the notice and hearing for possessory attachment of personal property, attachment on trustee process, and replevin that are now constitutionally required. These changes are simply in implementation of the mandate of Fuentes. The amendments do not, however, go beyond a narrow reading of that decision. Accordingly, under Rule 4.1 real property attachments and attachments of personal property by copy under 12 V.S.A. §§ 3251, 3255, are not subject to the notice and hearing requirements, because these attachments do not involve a deprivation of possession. If the subsequent course of decision in the federal courts indicates that Fuentes does extend to nonpossessory attachments, Rule 4.1 can be readily amended to reflect that position.
More drastic changes in the law, such as the elimination of attachment and trustee process, or their limitation to cases of proven necessity are apparently not required by Fuentes, whatever their desirability as a matter of policy. Such action is left to the legislature in light of the long history of these remedies in Vermont and the potential economic effect of major changes in them.
To be sure, there is both a quantitative and qualitative difference between a possessory attachment which deprives an individual of
all
use of his property, and a real estate attachment which limits only specific uses of the property. But the legal significance of these distinctions is less clear. And as the Supreme Court said in
North Georgia Finishing, Inc., supra
at 4194, “We are no more in-dined now than we have been in the past to distinguish among different kinds of property in applying the Due Process Clause.”
Defendants argue that the differences between possessory and non-possessory attachments are such that the present case is not necessarily governed by the principles set down by the Supreme Court in
North Georgia Finishing, Inc. v. Di-Chem, Inc., supra
(bank garnishment) ;
Fuentes v. Shevin, supra
(replevying of household goods); and
Sniadach v. Family Finance Corp., supra
(wage garnishment). Even
Mitchell v. W. T. Grant Co., supra,
which upheld a state sequestration statute, is not directly relied upon by defendants because it too involved an actual
seizure
and taking into possession of property. With a real estate attachment, defendants maintain, there is really no property deprivation at all, no “taking,” so to speak, because the landowner still has what is referred to as the “full use and occupancy of the property.” Plaintiffs maintain that there is a significant property interest involved in a real estate attachment since it may adversely affect the landowner’s credit rating, and in addition make it difficult or impossible for the landowner to sell or mortgage the property.
In deciding this threshold question, we cannot ignore the substantial economic effects which can result from the use of the real estate attachment in connection with the initiation of a suit. The attachment in question places a burden upon the real estate owner, a burden which is underscored by the fact that he must take affirmative action in court in order to dissolve the attachment. This, in addition to the fact that an attach
ment impairs the market value and marketability or mortgageability of the real estate cannot be viewed as “insignificant” deprivations in a constitutional sense. Notwithstanding the fact that such effects may be only temporary,
they are nevertheless real. While the ownership of property cannot be simply defined nor its rights easily compartmentalized, consisting as it does of a collection of benefits, uses and duties, an attachment involves the curtailment of economically important property uses.
. [2] The Supreme Court decisions in
North Georgia Finishing, Inc. v. Di-Chem, Inc., swpra; Mitchell v. W. T. Grant Co., supra; Fuentes v. Shevin, supra;
and
Sniadach v. Family Finance Corp., supra,
dictate that except in extraordinary situations
the pre judgment attachment of real estate belonging to an in-state resident
may be effected only after notice to the owner and a hearing, presided over by a judicial officer, at which hearing it must be determined that there is a reasonable likelihood that the plaintiff will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the attachment over and above any liability insurance or bond shown by the defendant to be available to satisfy the judgment. In effect, then, our decision treats real estate attachments as possessory attachments are already treated in Vermont.
To be sure, constitutional exegesis in the area of pre judgment remedies has run a somewhat uncertain course through the Supreme Court’s split decisions from
Sniadach v. Family Finance Corp., supra,
to its most recent decision in
North Georgia Finishing, Inc. v. Di-Chem, Inc., supra.
Thus we cannot be certain that our decision will be upheld, although it appears to us sound.
See Hutchinson v. Bank of North Carolina,
392 F.Supp. 888 (M.D.N.C.1975) (three-judge court). We therefore limit the effect of the judgment ordered today to the parties in the case at bar and to prospective enforcement of the real estate attachment procedures at issue here. We take this course in order that the validity of all prior Vermont real estate attachments not be put in question.
Cf. Clement v. Four North State Street Corp., supra; Gunter v. Merchants Warren National Bank, supra.
In view of the Vermont Supreme Court’s broad rule-amending power, 12 Vt.Stat.Ann. § 1, it should have no trouble amending Rule 4.1 well before this decision becomes final.
Parties to settle judgment order within 20 days.