Garnishment (MCL 600.4001 et seq.); MCL 600.4011; Ward v. Detroit Auto. Inter.-Ins. Exch.; Westland Park Apts. v. Ricco, Inc.; Nationsbanc Mtg. Corp. of GA v. Luptak; Postjudgment garnishments; MCR 3.101(B)(1)-(2); Periodic garnishment; MCL 600.4012(1); MCR 3.101(A)(4); MCR 3.101(B)(1)(a); The injunction provision; MCR 3.101(E)(3)(d); Royal York of Plymouth Ass’n v. Coldwell Banker Schweitzer Real Estate Servs.; Writ; MCR 3.101(I)(1); Garnishee liability; MCR 3.101(G)(1) & (2); MCR 3.101(O)(1); Chayka v. Brown; Effect of a bankruptcy automatic stay on garnishment proceedings; 11 USC § 362; MCR 3.101(K)(2)(b); Frederick v. Federal-Mogul Corp.; In re Buchanan (Bankr. GA); Scope of discovery in garnishment proceedings; MCR 3.101(L)(1); MCR 3.101(M)(2); MCR 3.101(T)(2)-(5); Decker v. Trux R Us, Inc.

The court held that the trial court erred by denying plaintiff’s request for a judgment on the basis it would not hold garnishee defendant (True North) personally liable for the full amount of payments made to defendant-subcontractor (Crater) in violation of a writ of garnishment. It also held that while Crater’s bankruptcy proceedings may stay the garnishment proceedings, the trial court failed to adequately address plaintiff’s argument that the payments were actually due to Crater’s painting businesses and not subject to the stay. Plaintiff served the writ to satisfy a judgment it obtained against Crater and his businesses. However, True North withheld only 25% of the funds it owed to Crater and paid him the rest. Plaintiff then sought to recover the remaining 75% from True North. Crater filed for bankruptcy. The trial court concluded it would not hold True North liable for the amount of payments made to Crater and that plaintiff needed to seek recovery from Crater in the bankruptcy court instead. It also granted True North’s motion for a protective order barring plaintiff from further discovery. On appeal, the court agreed with plaintiff that the trial court erred by denying it entry of judgment on the basis it would not hold True North liable for the amount that it paid to Crater in violation of the writ. “[T]he trial court denied plaintiff’s request for a judgment against True North because it had already paid Crater the garnished funds. Under such reasoning, a garnishee who violates a writ of garnishment by making payment directly to the defendant cannot be held liable because it is no longer in possession of an obligation owed to the defendant.” The court rejected this reasoning as “circular.” It next found that, to the extent the trial court ruled plaintiff had to “seek recovery from the bankruptcy trustee rather than seek collection through garnishment,” it erred and remand was required to “address plaintiff’s argument that the bankruptcy stay does not prevent further garnishment proceedings against True North because the payments made in violation of the writ were actually owed to [Crater’s businesses] and so not part of the bankruptcy estate.” Finally, the court held that if the trial court determines “the garnishment proceedings against True North are wholly precluded by the bankruptcy stay,” further discovery is unnecessary. But if it finds to the contrary, then it should decide “whether plaintiff’s request to depose of True North is warranted under the circumstances.” Reversed and remanded.