The court ruled in favor of an ACA member company, supporting the plain language of Washington’s marital bankruptcy statute.
09/25/2023 12:35 P.M.
5.5 minute read
What does the word “within” mean? The Washington State Supreme Court considered that very question in a recent case (PDF) interpreting the statutory text of the state’s so-called “marital bankruptcy” statute, RCW 26.16.200.
RCW 26.16.200 generally shields spouses from liability for one another’s separate, premarital debts. Specifically, in Washington State—a community property state—the statute provides that an individual’s debt cannot be enforced against that individual’s wages or assets after the individual gets married. In effect, once the individual debtor gets married, he or she might as well be “bankrupt” for the purposes of debt collection.
But the statute contains a critical exception that allows creditors to reach a spouse’s “earnings and accumulations” to satisfy his or her “separate debt” (i.e., a debt for which the individual’s spouse does not share liability) if the creditor reduces that individual debt to judgment “within three years of the marriage.” RCW 26.16.200 (emphasis added).
In this case, the plaintiffs asserted that “within,” as used in 26.16.200, means “not more than three years before and not more than three years after,” meaning that a judgment taken against an individual who then gets married more than three years after the judgment would essentially be immune from lawful post-judgment collections process. In short, the plaintiffs argued that a creditor could take a judgment too soon and then find the individual judgment consumer immune from collection (if the judgment consumer were then to get married more than three years after the date of that judgment).
The defendant collection agency argued that, as with all Washington limitations periods, “within” means only “not more than three years after,” i.e., that the legislature could not possibly have intended to punish a diligent creditor for taking a judgment “too soon.”
Judge John Coughenour of the U.S. District Court for the Western District of Washington determined that the case raised an unsettled issue of Washington law, and—rather than speculate on how the Washington Supreme Court might handle the question—he certified three questions to the Washington Supreme Court to get an answer.
Most critically, Judge Coughenour asked the Washington Supreme Court to determine “the meaning of the term ‘within’ as used in RCW 26.16.200.”
After the briefing and oral argument—and after receiving amicus briefs from four consumer-protection organizations and from ACA International—the Washington Supreme Court held that the statutory language of 26.16.200 and the legislative history of the amendment that added the “within three years” proviso to the statute had to be read to support the defendant debt collection agency’s (and ACA’s) proffered interpretation of the text.
Plaintiffs Matthew and Melanie Nelson married in 2020. The following year, Puget Sound Collections Inc. (PSC), a debt collection agency, garnished Matthew’s wages in an attempt to satisfy a 2014 default judgment against him and his former wife, stemming from her medical expenses.
Matthew claimed he did not know about the 2014 default judgment until an October 2021 wage garnishment, although his wages had been garnished previously—before his marriage to Melanie—in 2014 and 2015. In any event, by the time the debt caught up to Matthew in 2021, the total judgment debt had grown from $69,706.14 to $123,794.50, mostly as the result of accrued judgment interest.
In March 2022, PSC obtained a 60-day writ of garnishment against Matthew’s wages. By this point, and despite the previous wage garnishment, the outstanding balance had climbed to $126,277.68, which Matthew described as “an amount that I could never pay in my lifetime.”
In May 2022, the Nelsons brought an action in King County Superior Court, pleading various claims under the Fair Debt Collection Practices Act and various state laws. In particular,
the Nelsons alleged that PSC had engaged in unlawful debt collection practices by garnishing Matthew’s community property wages to satisfy his individual premarital debt.
PSC removed the lawsuit to the U.S. District Court for the Western District of Washington.
The Nelsons argued that RCW 26.16.200 requires any eligible debt be reduced to judgment within the six-year period surrounding the individual consumer’s marriage. Take judgment too soon, and the debt is6 uncollectible after the consumer gets married. In the Nelsons’ view, the marital bankruptcy statute barred PSC from garnishing Matthew’s wages because the 2014 judgment against him predated his 2020 marriage to Melanie by more than three years.
In contrast, PSC argued that “within three years of the marriage” simply means “not later in time than three years after the marriage.” Under this interpretation, PSC had lawfully garnished Matthew’s wages because the debt had been reduced to judgment no later than three years after Matthew and Melanie’s marriage began.
Upon review, the Washington Supreme Court held that as used in RCW 26.16.200:
- “Within” means “not later in time than.”
- Where a creditor reduces a debt to judgment more than three years before a consumer’s marriage, RCW 26.16.200 does not bar the creditor from garnishing that consumer’s wages in satisfaction of that debt.
- Nothing in RCW 26.16.200 or related statutes limits the amount of the consumer spouse’s earnings subject to garnishment provided the statute’s other requirements are met.
Despite the Nelsons’ proffered interpretation, the Washington Supreme Court found the statutory language unambiguously supported the position that PSC and ACA took in their briefing and, additionally, found that “even if we were to conclude otherwise and resort to statutory construction, the legislative history supports PSC’s interpretation.”
ACA International, in cooperation with the Washington Collectors Association, submitted an amicus brief in this case in defense of its member.
The court referenced this brief in its decision:
“As PSC and amicus ACA International accurately observe, the Nelsons’ interpretation of ‘within’ would frustrate this purpose by punishing creditors that act too diligently, i.e., by diligently reducing the [consumer] spouse’s obligation to judgment more than three years prior to the marriage. This approach is unreasonable because a creditor cannot know when this three-year period preceding the marriage will occur until it is already over. The Nelsons’ interpretation ‘results in one party losing its right to enforce a judgment without notice and at a point in time that is only knowable retroactively.’”
ACA thanks its amicus counsel in the appellate group at Gray Reed LLP—the Hon. James Moseley, Angela Brown, and Greg White—as well as the members of the ACA Judicial Committee, including then-chair David Kaminski and current chair Kevin Underwood, who participated in refining the arguments in ACA’s brief.
In addition, ACA thanks Tim Franzen, partner at Cosgrave, Vergeer, Kester, LLP, who represented PSC in this matter, for his cooperation in this matter and congratulates Franzen for his excellent advocacy on PSC’s behalf throughout this litigation.
Read the case here (PDF).