How Wells Fargo uses Texas courts to empty its own customers' bank accounts: By Suing Itself

WELLS FARGO BANK, NA VS. WELLS FARGO BANK, NA  

Wells Fargo regularly sues itself, styling itself both as Garnishor (Plaintiff and Judgment Creditor) and as Garnishee Bank (Defendant holding deposits of a customer/Judgment Debtor). It then agrees with itself to award all of the money from its customer's account to itself, and also agrees with itself to apportion attorney's fees to its second law firm (appearing for Wells Fargo as Garnishee) for its role in the operation.

Wells Fargo Bank N.A. vs. Wells Fargo Bank, N.A. 

All this is done through an "AGREED" JUDGMENT OF GARNISHMENT that the attorneys for both of its law firms sign off on after the account has previously been frozen through a writ of garnishment so that the customer cannot withdraw any money.

Because the judgment submitted by Wells Fargo is agreed, trial court judges routinely sign it.

In one such Wells Fargo vs. Wells Fargo case, the customer/judgment debtor obtained the help of a good consumer defense attorney and challenged the "agreed" judgment that took away his and his son's money. Wells Fargo then argued that the debtor did not have "standing" because he was not a party to the Wells Fargo vs. Wells Fargo garnishment action. The trial court ruled for the Bank.

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Wells Fargo's two law firms see eye to eye on emptying out the customer's
Wells Fargo bank account. 

The Fort Worth Court of Appeal, however, disagreed on the standing issue, and sent the case back to the trial court, so the judgment debtor would receive a hearing. Barrow v Wells Fargo Bank, N.A., No. 02-19-00026-CV (Tex.App.-Fort Worth, Sep. 5, 2019, no pet. h.) 

In the

Court of Appeals

Second Appellate District of Texas

at Fort Worth

___________________________

No. 02-19-00026-CV 

___________________________

On Appeal from the 431st District Court

Denton County, Texas

Trial Court No. 18-8946-431

Before Sudderth, C.J.; Kerr and Birdwell, JJ.

Opinion by Chief Justice Sudderth

ADAM I. BARROW, Appellant

V.

WELLS FARGO BANK, N.A., Appellee

OPINION

Appellee Wells Fargo Bank, N.A., garnishor, filed an application for writ of
garnishment against itself as garnishee, on September 25, 2018, to collect on its
judgment against Appellant Adam I. Barrow, the judgment debtor. The writ of
garnishment issued the following day, and on October 17, Wells Fargo as garnishee
filed an answer. On November 16, Wells Fargo entered into an agreed final judgment
with itself, awarding $6,751.44 from Barrow’s Wells Fargo account to Wells Fargo,
awarding $650.00 in attorney’s fees against Barrow’s account in favor of Wells Fargo,
and assessing filing fees and court costs in the action against Barrow. On December
14, Barrow filed a motion for new trial, challenging the sufficiency of the affidavit
supporting the application and agreed judgment and asserting that some of the seized
money belonged to his 11-year-old son.

At the time the judgment was signed, no proof of service on Barrow was on
file. See Tex. R. Civ. P. 663a (providing that the judgment debtor—the “defendant”—
in a garnishment action “shall be served in any manner . . . provided in Rule 21a”); see
also Tex. R. Civ. P. 21a(a)(2) (providing that “[e]very notice required by these rules . . .
may be served by delivering a copy to the party to be served . . . in person, mail, by
commercial delivery service, by fax, by email, or by such other manner as the court in
its discretion may direct”). But in an affidavit attached to its response to Barrow’s
motion for new trial, Thomas Sellers, attorney for Wells Fargo, as garnishor, averred
that in compliance with rule 663a,1 Wells Fargo had sent Barrow the required notices
and documents by first class mail and certified mail, return receipt requested on
October 12, 2018. In its response to Barrow’s motion, Wells Fargo argued that
because Barrow was not a party to the case, he lacked standing to bring a motion for
new trial.

On January 25, 2019, after hearing argument on Barrow’s motion for new trial,
the trial court found that Barrow did not have standing. In its written order denying
the motion, which was signed on the same day, the trial court ruled, “After reviewing
the evidence, [2] the court concludes that the Motion should be denied, as Adam
Barrow does not have standing.”

In two issues, Barrow complains that he had standing to file the motion for
new trial and that the evidence was legally and factually insufficient to grant a
judgment of garnishment to Wells Fargo.

[1] On January 24, 2019, Wells Fargo filed a supplemental affidavit by Sellers,again attesting to Rule 663a service. 

[2] Notwithstanding this recitation in the written order, the trial court did not consider evidence at the hearing. After hearing only argument, the court made its oral ruling as follows,

After considering the authorities you both cited in your oral arguments
as well as your responsive brief, the Court finds that, based upon the
procedural posture of this case and the capacity in which the motion for
new trial was brought in Mr. Barrow’s name, that he does not have
standing and the motion for new trial is denied.

Garnishment is a statutory proceeding governed by civil practice and remedies
code chapter 63 and rules of civil procedure 657–679. See Tex. Civ. Prac. & Rem.
Code Ann. §§ 63.001–.008; Tex. R. Civ. P. 657–679. A post-judgment garnishment
proceeding is a quasi in rem action brought by a judgment creditor (the garnishor)
against another party (the garnishee) who holds property or funds belonging to the
judgment debtor. Bank One, Tex., N.A. v. Sunbelt Sav., F.S.B., 824 S.W.2d 557, 558
(Tex. 1992); Zeecon Wireless Internet, LLC v. Am. Bank of Tex., N.A., 305 S.W.3d 813,
816 (Tex. App.—Austin 2010, no pet.). In the garnishment action, the garnishor
seeks to have the property or funds held by the garnishee applied toward payment of
the underlying judgment against the debtor. Zeecon, 305 S.W.3d at 816.

Because garnishment was unknown at common law and is “purely a creature of
statute,” id., the Texas Supreme Court has held that garnishment proceedings “cannot
be sustained unless they are in strict conformity with statutory requirements.” Beggs v.
Fite, 106 S.W.2d 1039, 1042 (Tex. 1937); see also Zeecon, 305 S.W.3d at 816 (observing
that the supreme court has held that garnishment proceedings cannot be sustained
without strictly conforming to the statutory requirements and related rules governing
such proceedings). This is because the remedy of garnishment is “summary and
harsh.” Beggs, 106 S.W.2d at 1042.

To ensure a debtor’s due process right to not be deprived of his property
without notice and opportunity to be heard, rule 663a requires a garnishor to serve the
debtor with notice of the garnishment and of his rights to regain his property. Tex. R.
Civ. P. 663a; see also Hering v. Norbanco Austin I, Ltd., 735 S.W.2d 638, 639–41 (Tex.
App.—Austin 1987, writ denied) (noting that in 1978, the Texas Rules of Civil
Procedure relating to garnishment actions were amended in response to prejudgment
garnishment procedures that were declared unconstitutional based on U.S. Supreme
Court holdings in Sniadach v. Family Fin. Corp., 394 U.S. 337, 89 S. Ct. 1820 (1969), and
Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983 (1972)). Thus, a garnishor’s failure to
strictly conform with rule 663a’s notice requirement will result in a void judgment. See
Zeecon, 305 S.W.3d at 818–20 (holding that “failure to properly serve the debtor
deprived the trial court of jurisdiction over the debtor’s property—the res,” but
pointing out that a “mere irregularity” is waivable and will not render the garnishment
judgment void).

The supreme court has identified “three parties” to a garnishment action: (1) a
creditor (the garnishor), (2) a debtor (also referred to as “the defendant”), and (3) a
third person who possesses the debtor’s funds or owes money to the debtor (the
garnishee). 3  Orange Cty. v. Ware, 819 S.W.2d 472, 474 (Tex. 1991) (op. on reh’g).
Thus, while the judgment debtor (the defendant) is not a “necessary party”
4 to the

[3] Although the rules of civil procedure provide that the garnishment action is docketed with the garnishor as plaintiff and the garnishee as defendant, see Tex. R. Civ.P. 659, in the rules, the term “the defendant” refers to the debtor, and the garnishee is referred to as “the garnishee.” See Tex. R. Civ. P. 658–679.  

[4] Rule of civil procedure 39, the “necessary party” rule, describes the necessary party and the circumstances for joinder of a necessary party as follows:

proceeding, he is nevertheless a party to the proceeding who has rights in the process.
Hering, 735 S.W.2d at 642; see also Tex. R. Civ. P. 663a (providing the right to notice),
664 (providing the right to replevy), 664a (providing the right to have the writ of
garnishment vacated, dissolved, or modified).5

[5] Wells Fargo cites to Missouri Pacific Railway Co. v. Whipker, 13 S.W. 639, 639(Tex. 1890), as “well-established” authority for the proposition that a judgment debtor is not a party to a garnishment proceeding. We note that Whipker predates the enactment of the rules of civil procedure and the civil practice and remedies code,which govern modern-day garnishment actions, and it predates Orange County by almost a hundred years. Because the law has changed in the intervening century, we decline to follow Whipker. We also decline to follow our sister court’s holding in Mullins v. Main Bank & Trust, 592 S.W.2d 24, 26 (Tex. App.—Beaumont 1979, no writ)—also cited by Wells Fargo in support of its position that Barrow was not a party to the garnishment proceeding—because it, too, predates Orange County.

As the judgment debtor, or “defendant” in the garnishment action, Barrow had
standing to participate in the proceeding. He had standing to replevy or to file a
motion seeking to have the garnishment vacated, dissolved, or modified. See Tex. R.
Civ. P. 664–664a. But first and foremost, he had the right to notice of the

A person who is subject to service of process shall be joined as a party in
the action if (1) in his absence complete relief cannot be accorded
among those already parties, or (2) he claims an interest relating to the
subject of the action and is so situated that the disposition of the action
in his absence may (i) as a practical matter impair or impede his ability to
protect that interest, or (ii) leave any of the persons already parties
subject to a substantial risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of his claimed interest. If he has not
been so joined, the court shall order that he be made a party. If he
should join as a plaintiff but refuses to do so, he may be made a
defendant, or, in a proper case, an involuntary plaintiff.
Tex. R. Civ. P. 39(a).

garnishment action. See Tex. R. Civ. P. 663a; see also Hering, 735 S.W.2d at 641 & n.3
(considering, without deciding, whether a defendant in a post-judgment garnishment
action has a due process right or merely a rule-created right to notice). On appeal,
Barrow complains of defects in service of the garnishment action.

Wells Fargo makes an interesting argument: that Barrow was required to
intervene in the garnishment proceeding to acquire standing but that it was too late
for Barrow to intervene once the agreed judgment had been signed. Whether Wells
Fargo’s approach is correct appears to be a matter of first impression. But as we see
it, Wells Fargo’s position, were we to adopt it, would create a quintessential catch-22
for defendants in garnishment actions.

In considering Wells Fargo’s argument, we note as a practical matter that
complaints regarding defective service normally occur postjudgment because that is
when a judgment debtor who has not been properly served would become aware of
the consequences of the garnishment action. To require a garnishment defendant to
intervene in a garnishment action at a time prior to acquiring proper notice of the
proceeding would render meaningless the right to notice of the proceedings in the
first place because most garnishment-action defendants would learn of improper
service only after it was too late to complain. Such a paradox in the law should be
avoided. See Whittlesey v. Miller, 572 S.W.2d 665, 668 (Tex. 1978) (explaining that its
holding “corrects a paradox in the law of this state”).

We are not inclined to create such a catch-22 for garnishment defendants, and
Wells Fargo cites no authority directing us to do so.6

[6] Wells Fargo cites to Bechem v. Reliant Energy Retail Services, LLC, 441 S.W.3d839, 844 (Tex. App.—Houston [14th Dist.] 2014, no pet.), as authority for the proposition that as a nonparty, Barrow was required to intervene in the garnishment action to acquire standing. Wells Fargo’s position appears to be based upon a misreading of one sentence in the case. In Bechem, our sister court states, “A debtormay controvert the garnishee’s answer, however, or a third party may intervene claiming an interest in the garnished property.” Id. Couched in the disjunctive, Bechem does not support the proposition that a debtor must intervene in a garnishment action to acquire standing. Furthermore, as explained above, the supreme court has identified the judgment debtor as a party to a garnishment action. See Orange Cty., 819S.W.2d at 474.

Consequently, we hold that

Barrow had standing to file a motion for new trial, to be heard on the matter, and to
offer evidence in support thereof.

The trial court erred by holding otherwise.

Having sustained Barrow’s first issue, we need not reach Barrow’s second issue
challenging the sufficiency of the evidence to support the judgment. Accordingly, we
reverse the trial court’s judgment and remand the case to the trial court to hear and
consider Barrow’s motion for new trial.

/s/ Bonnie Sudderth

Bonnie Sudderth
Chief Justice

Delivered: September 5, 2019