Labertew v. Langemeier

Labertew v. Langemeier (9th Cir. 14-15879 1/20/17) Garnishment of Wages/Removal



The panel vacated the district court’s judgment discharging insurers, and remanded for further proceedings in a garnishment proceeding arising out of an insurance settlement and assignment [of an employment dispute].



In the underlying settlement, the plaintiffs and defendant stipulated to a judgment against the defendant for $1.5 million, and defendant assigned to the plaintiffs her rights against her liability insurers. Plaintiffs applied in state court for writs of garnishment against the insurers. The insurers removed the state garnishment proceedings to federal district court.



The district court, pursuant to Fed. R. Civ. P. 69, applied Arizona garnishment law, and held that because the plaintiffs missed their ten day window for objecting, the garnishment failed and the garnishees/insurers were discharged.



The panel held that the garnishment proceeding was removable, and the district court had jurisdiction. The panel held that under Swanson v. Liberty National Insurance Co., 353 F.2d 12 (9th Cir. 1965), the garnishment proceeding against the insurers, for purposes of removal, was a separate and independent civil action from the suit by the plaintiffs in the underlying action; and as such, it was removable.



The panel held that there was no federal judgment in this case upon which to execute. The panel noted that the only judgment was in the Superior Court of the State of Arizona. The panel further held that the necessary predicate for application of Fed. R. Civ. P. 69 was a judgment in the federal district court in which execution was sought. The panel also held that there was no state judgment against the insurance companies that could be registered and enforced in federal court.



The panel held that the district court had discretion under Fed. R. Civ. P. 81(c)(2) to order repleading. The panel held that the Arizona laws for garnishment proceedings, were, upon removal, supplanted by the federal rules. The panel also held that the district court may order repleading because this case was in substance a claim by the insureds’ assignee against the insurers for breaching their obligations under their insurance policies, and the claims in the state court pleadings were no longer at issue.

For More Information contact us at: http://beverlyhillsemploymentlaw.com/