COVID-cautious courts misinterpret governor’s order

It goes without saying that COVID-19 has disrupted all facets of daily life. As any practicing attorney knows, the effect on the legal system in California is no exception and has been hit particularly hard by the closure of courts throughout the state. This has caused unprecedented and lengthy delays in case resolution, and ultimately the collection of judgments.

In response to the pandemic, which has left people unemployed and caused some businesses to suspend operations, Gov. Gavin Newsom issued Executive Order N-57-20. The stated goal of the order was to protect government financial aid which was issued in response to the COVID-19 pandemic from garnishment or collection. However, a disturbing and highly prejudicial overreaching development is occurring in which writs of execution are being rejected out of hand by at least all Los Angeles County courts. As the sole basis for the rejection, the Los Angeles court clerks have consistently, albeit erroneously, cited the governor's order in rejecting otherwise proper writs of execution submitted after April 23.

Based on the express language of the order, it is limited to prohibiting execution upon -- and mandates the return of -- funds that can be directly traced to federal, state or local government financial assistance provided in response to COVID 19. In effect, the order operates in the same manner as several long-existing exemptions under current law, such as the attachment of monies received from Social Security and Medicare benefits, and places the burden on the debtor to establish that any monies sought to be collected are "traceable" to some form of financial assistance. See Code of Civil Procedure Section 703.080 (a) and (b) (funds are exempt to the extent they can be traced to exempt sources by the exemption claimant); In re Gardiner, 333 BR 891, 895 (2005) (workers compensation award retained exempt status under Section 7030.080); 42 U.S.C. Section 407 (Section 207 of the Social Security Act; exempts Social Security payments from levy); CCP Section 704.080(d) (banks and financial institutions automatically place funds in excess of the exemption amount in suspense accounts and prohibit withdrawal); CCP Section 704.170 (welfare funds exempt from collection); CCP Section 704.170 (aid from charitable organization exempt); CCP Section 704.110 (county and state public retirement benefits exempt).

It is an absolute certainty that the plain language of the governor's executive order does not prohibit or automatically stay all collections. There is no language in the order remotely suggesting that creditors are prohibited from pursuing any and all collection efforts that do not attach COVID-19-related government assistance funds. There most certainly is nothing in the order, express or implied, barring the issuance of all writs of execution, and the current position of the Los Angeles County courts to universally reject all writs of execution is a dereliction of the court's duty and based upon an unsound reading of the order. The fact that courts outside of Los Angeles County are still issuing writs speaks volumes.

This one-size-fits-all wholesale rejection of all writs of execution is wrong and is leading to disastrous results. Obviously, not all levies are the same, nor will they automatically result in the collection of exempted governmental financial aid funds. For instance, a "moneys due levy," which attaches funds owed to a debtor by a third party for the sale of goods and services, has no relationship whatsoever to any exempted funds. Yet, under the current erroneous reading and misapplication of the governor's order by California courts, a judgment creditor is unable to obtain a writ of execution to levy upon such clearly collectible and unprotected funds. Indeed, there are an infinite number of levies that could properly be effectuated which would not involve protected funds.

In addition to the governor's order, the California Code of Civil Procedure is replete with laws and procedures which prevent the collection of exempted funds. In effect, the order operates in the same manner as several long existing exemptions under current law, such as the attachment of monies received from Social Security, welfare, public retirement and Medicare benefits, and places the burden on the debtor to establish that any monies sought to be collected are "traceable" to some form of financial assistance. See CCP section 703.080 et seq. Accordingly, all avenues of collection, such as executing on bank accounts, monies due levies, sheriff keepers, and till taps, must remain available to judgment creditors as a legal and proper means of recovering debt and executing on judgments.

Even if the Los Angeles County courts' reading of the governor's order was not inexplicable, what parameters will the court require be satisfied before deciding to change policy and start issuing writs of execution? The order itself certainly provides no guidance. The current unworkable reading of the order -- with the ramification being the complete bar to all writs of execution -- is self-evident.

It is time for the courts of California to accept and issue all properly submitted writs of execution, without further delay or rejection, and to follow the clear laws and procedures of the state. The misinterpretation and application of the governor's order, which is preventing the execution and enforcement of money judgments against debtors at least in Los Angeles County, regardless of the nature of the execution or the nature of the attached assets, must stop. It is an unequivocal violation of our inalienable rights under Article 1, Section 1 of the California Constitution to enjoy life, liberty and the possession and protection of property. Moreover, the continual rejection of the writs of execution is in direct violation of Code of Civil Procedure Section 699.510 which specifically states, in relevant part, "a writ of execution shall be issued by the clerk of the court, upon application of the judgment creditor." If allowed to continue unchecked, immediate and long-lasting fiscal damage will be suffered by businesses who depend on the collection of debts for goods and services rendered in order to continue their daily operations, employ their workers and staff, and serve the community. 