EAGLE BANK & TRUST COMPANY and Bid Central, Inc., d/b/a BCI Management Company, Appellants
RAYNOR MANUFACTURING COMPANY, Appellee
FROM THE FAULKNER COUNTY CIRCUIT COURT [NO. 23CV-17-677],
HONORABLE CHRIS CARNAHAN, JUDGE
Quattlebaum, Grooms & Tull PLLC, Little Rock, by: Mary-Tipton
Thalheimer, for appellant.
Key Firm, PLLC, by: Shawn Key, for appellee.
J. HARRISON, Judge
Bank & Trust Company appeals a $ 66,569.58 judgment entered
against it in the Faulkner County Circuit Court. The bank
argues that Arkansas Code Annotated section 4-4-303— a
provision in the Uniform Commercial Code for banking—
gives a bank like it a "reasonable time" to comply
with a writ of garnishment. The circuit court decided that
the statute did not apply. Although the bank presents a novel
argument, we hold that the circuit court did not err in
finding that the bank is liable to Raynor Manufacturing
Company. The statutory "reasonable time" period
conflicts with specific garnishment statutes and Arkansas
Supreme Court case law that has held a garnishees potential
liability starts when the writ of garnishment is served.
E.g., J.B. Hunt, LLC v. Thornton, 2014 Ark.
62, at 7, 432 S.W.3d 8, 12 (stating that "the effect of
the service of a writ of garnishment is to impound all
property in the hands of the third-party garnishee that
belongs to the judgment debtor at the time of the
service ") (emphasis added).
case is about an effort by Raynor to collect a judgment from
Bid Central, Inc. (doing business as BCI Management Company).
On 1 August 2017, Raynor obtained a default judgment against
Bid Central for $ 102,905 in the Faulkner County Circuit
Court. On August 3 at approximately 2:20 p.m., Raynor served
Eagle Bank with a writ of garnishment, by certified mail, to
the office of Eagle Banks registered agent in Little Rock.
The writ directed the bank to lien on all money belonging to
Bid Central. The writ contained five interrogatories.
parties do not dispute that the bank held no money belonging
to Bid Central when the writ was served on August 3. This was
because on 31 July 2017, the day before the default judgment
was entered against Bid Central, Eagle Bank had guaranteed a
cashiers check. The cashiers check was for 100 percent of
the account balance. Consequently, on August 3, Bid Centrals
deposit account at the bank was closed.
August 4 at approximately 8:45 a.m., an agent for Bid Central
deposited the cashiers check ($ 66,569.58) at an Eagle Bank
branch in Vilonia, Arkansas. The teller deposited the check
into Bid Centrals closed deposit account. The deposit
reopened the account. In less than two hours, however, the
money was wired out of the account and to a creditor, minus a
$ 15 transaction fee. The deposit account was then closed,
August 10, Michelle Garth, an Eagle Bank customer-service
manager, filed an unsworn written statement in the circuit
court responding to the writs five interrogatories. On
September 5, Raynor filed more interrogatories and requests
for document production in the circuit court; one month later
the bank filed responses to Raynors requests.
moved for judgment against the bank in November 2017. The
circuit court convened a hearing in May 2018 on Raynors
motion. The sole witness was Michelle Schrodt, an Eagle Bank
employee and twenty-seven-year banking veteran who runs all
the banks branches.
Schrodt explained that when the bank receives a writ of
garnishment it checks whether a relevant account exists and
then places a "hold" on the account. She explained
that there is a "two-day research period" in the
garnishment training and testified that "the State said
theres two days" to see if there are any federal
in the account that cannot be garnished because those
benefits are "protected funds." When asked if
safeguards were in place to ensure that nonprotected funds
are captured if the accountholder makes a deposit during the
two-day research period, Schrodt replied "yes." She
said that the account would be flagged, signifying that a
writ had been received.
Schrodt said that the writ in this case was delivered after
2:00 p.m. on August 3 and the bank closed at 5:00 p.m.,
including the Shackleford branch in Little Rock. According to
Schrodt, after the bank received the writ it started a review
to see if there was a relevant open account. The review
revealed that Bid Centrals account was closed July 31. So on
the date the writ was served on the bank, Bid Centrals
deposit account was closed. Schrodt agreed that the bank had
no process in place to flag a closed account. Only open and