Winter 2012 #6. Attachment On Trustee Process: A Primer For The Practitioner.

Author:by Kelly McDonald

Maine Bar Journal


Winter 2012 #6.

Attachment On Trustee Process: A Primer For The Practitioner

Maine Bar JournalVOLUME 27 , NUMBER 1, WINTER 2012Attachment On Trustee Process: A Primer For The Practitionerby Kelly McDonald(fn1)Introduction to Prejudgment Trustee Process

Trustee process can make or break a lawsuit. It gives a plaintiff the ability to seize assets early in the case, providing security for payment on the judgment. It encourages quick and efficient settlement: the court's ruling on the motion for trustee process gives the parties early feedback on the merits of their claims and defenses. Finally, from a defense perspective, it can seriously impair the defendant's financial position for the duration of the litigation. Being able to wield and defend against trustee process is a vital skill for all litigators.

However, the law of trustee process is complex and full of pitfalls for the unwary. This isn't surprising: trustee process has been a part of the laws of Maine since statehood and has its roots in early Massachusetts law. The authority governing trustee process includes Rule 4B, 89 statutory provisions, and more than 200 years of case law. Successfully using or defending against trustee process requires in-depth analysis of these authorities. This article is intended to provide lawyers with a guide for navigating this maze.

One point of clarification: there are two forms of attachment. Attachment (under Rule 4A) permits a plaintiff to place a lien on assets in the hands of the defendant (e.g., a lien on defendant's residence). Attachment on trustee process (under Rule 4B) permits a plaintiff to freeze the defendant's assets that are in the hands of a third party (e.g., a lien on defendant's bank account). This article only addresses attachment on trustee process (trustee process). While there are substantial overlaps between the two remedies, there are key differences as well. Caution should be used in applying this article in a pure Rule 4A attachment context.

When to Request Trustee Process

The general rule is that trustee process may be used in "any personal action . . . in Superior Court or District Court."(fn2) Of course, there are exceptions to the rule; trustee process may not be used in actions involving:(fn3 )specific recovery of goods and chattels; malicious prosecution; slander by writing or speaking; assault and battery;(fn4) collection of consumer debts;(fn5) and civil actions against an employee of a governmental entity based on a negligent act or omission of such employee in the course of scope of his duties.(fn6)

In cases involving multiple claims where trustee process is not allowed for some of the claims, trustee process may still be granted on the allowable claims. For example, trustee process has been granted for emotional distress based on slanderous statements (but would not have been for the slander itself).(fn7)

Trustee process is available to any party bringing a claim, counterclaim, cross-claim, or third-party complaint (the party bringing the motion will be referred to here as the plaintiff). However, trustee process that is based on cross-claims, third-party claims, or non-compulsory counterclaims is only permitted if the trustee resides (or has a place of business, if an entity) in the county where the action was brought. If the counterclaim is compulsory, this venue limitation does not apply.(fn8)

The plaintiff may move for trustee process at the beginning of a case, more than once during a case,(fn9) and during the pendency of an interlocutory appeal.(fn10)

Trustee process is available in actions in the United States District Court of Maine.(fn11)

Where a Maine court has subject matter jurisdiction over the underlying claim, it will have subject matter jurisdiction over the trustee process aspect of the case as well because "[t]rustee process is ancillary to the underlying action."(fn12)

Motions for Trustee Process

Drafting the motion for trustee process properly is vital. After all, this is likely the first time that the court will make a ruling on the merits of the case. In addition to high levels of advocacy, however, the careful practitioner will ensure that his or her motion and supporting documents comply with statutory requirements. The Law Court has admonished that "there must be strict compliance with the procedures prescribed by legislation and implemented by court rules" "[b] ecause prejudgment attachment may operate harshly upon the party against whom it is sought."(fn13)

The only issues before the court in deciding a motion for approval of attachment on trustee process "are (1) the amount of the judgment that the plaintiff [will more likely than not recover] and (2) the amount of any liability insurance or other security that is already available to satisfy the judg-ment."(fn14)

The motion for trustee process must be accompanied by affidavits that "set forth specific facts sufficient to warrant the required findings" of liability and to prove damages.(fn15) The only evidence that may be considered must be submitted with a supporting affidavit.(fn16)

The jurat on the supporting affidavit should track the language of the rule and state that the facts in the affidavit are "based on the affiant's own knowledge, or if they are based on the affiant's information and belief, the affiant must state that the affiant believes the information to be true."(fn17) Failure to carefully track the language of the rule may result in the affidavit being stricken and the denial of the motion.(fn18) Some courts have permitted counsel to resubmit an affidavit with corrected affidavit prior to a ruling on the motion.(fn19) Other courts have accepted affidavits with insufficient jurats where the substance of the affidavit indicates that the requirements of the rule have been met.(fn20)

Motions: Standard of Liability

The plaintiff has the burden of proof in requesting trustee process.(fn21) The court must find that it is "more likely than not" that the plaintiff will recover the requisite sum.(fn22) In other words, "[a] moving party must show a greater than 50 percent chance of prevailing."(fn23)

Before 1992, the standard was lower: the plaintiff was only required to show that the plaintiff was "reasonably likely" to recover damages in the amount sought to be attached on trustee process.(fn24) The Law Court stated that under this standard, a motion for trustee process would be denied "only when a plaintiff has virtually no chance of recovery."(fn25) This change in the plaintiff's burden means that pre-1992 cases discussing the plaintiff's burden should be cited only with caution.

The court may analyze liability and damages questions separately, applying the applicable standard to each.(fn26) The court should liberally construe the statutes governing trustee process in furtherance of the goal of rendering effects and credits of principal debtor in the hands of a trustee available for the benefit of a creditor.(fn27)

A court may not deny a motion for trustee process on public policy or equitable grounds.(fn28) Similarly, the court has no discretion to deny a motion for trustee process because it concludes that the defendant would have sufficient assets to satisfy any anticipated judgment.(fn29)

Motions: Damages

Counsel moving for trustee process must make a strategic choice of how much to request. As a general rule, the simpler the motion for trustee process, the better. It may be wise to seek trustee process only on claims that are easy to value and leave more complex claims for trial. This increases the likelihood of success and decreases the costs of the motion.

A plaintiff "can make a sufficiently specific showing of damages if he or she can provide, among other things, evidence 'from which some informed projection could be made' as to the amount of damages suffered by the party."(fn30) In other words, vague statements about damages are likely to be deemed insufficient while predictions of future damages based on well-grounded affidavits may succeed.

A plaintiff may include anticipated legal fees if a claim for recovery of those fees exists.(fn31) However, failure to provide a sufficiently detailed affidavit may imperil the request.(fn32) Prejudgment interest may be included.(fn33) Punitive damages are not eligible to be included in an order for trustee process because such an award is discretionary and cannot be predicted.(fn34) If the amount of damages sought is only nominal, granting an attachment would be an abuse of judicial process.(fn35)

The amount of a trustee process order must take into consideration any other security available to satisfy the judg-ment.(fn36) The defendant has the burden of showing that the security exists and is available to satisfy the judgment.(fn37) Where there are multiple defendants, each with independent liability, attachment may be had against each, even where the plaintiff already has security as to one defendant.(fn38)

The mere existence of a commercial general liability insurance policy for the requisite period is insufficient proof of security. Even if the insurance company agrees to undertake the duty of defense, the policy may not represent security because the insurance company may not indemnify defendant and therefore, without more, the insurance policy does not provide security.(fn39)

Any offsetting claim by the defendant against the plaintiff does not represent "security" and does not reduce the amount to be trusteed.(fn40)

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