BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 1388
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        CONCURRENCE IN SENATE AMENDMENTS
        AB 1388 (Wieckowski)
        As Amended June 10, 2011
        Majority vote 
         
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        |ASSEMBLY:  |49-26|(May 2, 2011)   |SENATE: |24-13|(August 29,    |
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        |COMMITTEE VOTE:  |6-3  |(September 6, 2011) |RECOMMENDATION: |concur    |
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        Original Committee Reference:    JUD.  

         SUMMARY  :  Allows the court to grant a judgment debtor's claim of 
        exemption from wage garnishment in cases where the underlying debt 
        was incurred for medical care or hospital services rendered to the 
        judgment debtor or his or her family.  Specifically,  this bill  
        deletes the current exception for "common necessaries of life" to 
        the general rule that exempts from wage garnishment the portion of 
        the judgment debtor's earnings that he or she proves is necessary 
        to support himself or herself and his or her family, and makes 
        other clarifying and conforming changes.

         The Senate amendments  :  

         1)Delete the current exception for "common necessaries of life" to 
          the general rule that exempts from wage garnishment the portion 
          of the judgment debtor's earnings that he or she proves is 
          necessary to support himself or herself and his or her family.  
          In other words, where the exemption from wage garnishment is 
          currently unavailable for debts incurred for the "common 
          necessaries of life," under the Senate amendments, the exemption 
          would be available without regard to this former exception.

        2)Clarify that the above exemption from wage garnishment remains 
          unavailable for debts incurred pursuant to an order or award for 
          the payment of attorney's fees in certain divorce, custody, and 
          support cases (pursuant to Family Code Sections 2030, 3121, and 
          3557), as specified.









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        3)Make conforming changes to Government Code Section 68632 to 
          correct a cross reference in that statute to the use of the term 
          "common necessaries of life" as used in a paragraph deleted by 
          this bill.
          
         EXISTING LAW  :  


        1)Exempts from levy, with certain categorical exceptions, the 
          portion of a judgment debtor's earnings which the judgment debtor 
          proves is necessary for the support of the judgment debtor or his 
          or her family supported in whole or in part by the judgment 
          debtor.  



        2)Provides that the above exemption is not available if any of the 
          following exceptions applies:  

           a)   The debt was incurred for the common necessaries of life 
             furnished to the judgment debtor or the family of the judgment 
             debtor;

           b)   The debt was incurred for personal services rendered by an 
             employee or former employee of the judgment debtor;

           c)   The order is a withholding order for support to collect 
             delinquent amounts payable under a judgment for the support of 
             a child, or spouse or former spouse, of the judgment debtor; 
             or,

           d)   The order is a state tax order, governed by Article 4 
             (commencing with Civil Code of Procedure (CCP) Section 
             706.070). 

        3)Provides that hospital services rendered to a judgment debtor or 
          his or her family constitute a "common necessary of life" for 
          which the debtor is not entitled to exemption from levy or 
          earnings withholding pursuant to CCP Section 706.051.  (J.J. 
          MacIntyre Co. v. Duren (1981) 118 Cal.App.3d Supp. 16.)
         
         4)Establishes that the rendering of legal services and the 
          advancement of costs of litigation giving rise to a pendente lite 
          award to any attorney in a marriage dissolution action qualify as 
          "common necessaries of life" for the benefit of the indigent 








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          spouse, thereby allowing enforcement of the award by a writ of 
          execution on the other spouse's earnings against a claim of 
          exemption of those earnings.  (In re Marriage of Pallesi (1977) 
          73 Cal. App. 3d 424.)  

        AS PASSED BY THE ASSEMBLY  , this bill was substantially similar to 
        the version approved by the Senate.
        
        FISCAL EFFECT  :  None

         COMMENTS  :  According to the author, the working poor in California 
        remain at risk of falling into hunger and homelessness when they 
        are unable to pay medical bills because existing case law 
        effectively prevents a judgment debtor from obtaining an exemption 
        from wage garnishment for that portion of his or her earnings 
        needed for the support of the debtor and his or her family when the 
        underlying debt was incurred for medical care for the debtor or his 
        family.  This bill makes this exemption from wage garnishment 
        available to a judgment debtor where the underlying debt was 
        incurred for medical care.  As a result, this bill merely allows 
        the court in medical debt cases to consider the debtor's claim that 
        his current financial hardship requires a certain portion of his 
        wages to be exempted from wage garnishment for the support of the 
        debtor and his family, and allows the court to exercise its 
        existing authority to fashion a partial payment plan or otherwise 
        modify the terms of the earnings withholding order.  However, the 
        judgment debtor is not permanently relieved of any portion of the 
        underlying medical debt under this bill.

        Section 706.051(c) of the Code of Civil Procedure provides that an 
        exemption from wage garnishment for the support of a judgment 
        debtor and his or her family "is not available if...Ýt]he debt was 
        incurred for  the common necessaries of life  (emphasis added) 
        furnished to the judgment debtor or the family of the judgment 
        debtor."  Case law, J.J. MacIntyre Co. v. Duren (1981) 118 
        Cal.App.3d Supp. 16, explicitly holds that medical care or hospital 
        services constitute a "common necessary of life" for the purpose of 
        determining whether the exception for common necessaries of life 
        should apply to disallow the hardship exemption.  Legal service 
        attorneys contacted by the Judiciary Committee report that when 
        judgment creditors file a notice of opposition to the claim of 
        exemption in medical debt cases, they typically cite the "common 
        necessaries of life" exception and the J.J. MacIntyre decision as 
        the basis for which the claim of exemption should be denied by the 
        court.








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        This bill deletes the existing exception to the hardship exemption 
        for "common necessaries of life."  In other words, where the 
        hardship exemption from wage garnishment is currently unavailable 
        for debts incurred for the "common necessaries of life," under the 
        Senate amendments, the exemption would be available without regard 
        to this former exception.  In effect, this bill would permit but 
        not require the court to grant a judgment debtor's claim of 
        exemption from wage garnishment in cases where the underlying debt 
        was incurred for medical care or hospital services rendered to the 
        judgment debtor or his or her family.  The bill does not affect the 
        right of a debtor to file a claim of exemption, nor of a creditor 
        to file a notice of opposition to the claim to obtain a court 
        hearing to decide the matter.  

        Under this bill, the judgment debtor will still have to submit a 
        detailed financial statement to demonstrate the portion of his or 
        her earnings that he or she contends should be exempt from 
        garnishment for the necessary support of his or her family.  The 
        court will still have to determine the merit of the judgment 
        debtor's claim of exemption, but it would allow approval of the 
        claim in cases of medical debt where the court is currently 
        constrained by the J.J. MacIntyre decision.  Importantly, this bill 
        does not discharge the underlying debt.  Regardless of whether the 
        court approves the claim of exemption or not, the underlying 
        judgment is still valid and can be collected in the future, 
        including interest.

        The bill also clarifies that the above exemption from wage 
        garnishment remains unavailable for debts incurred pursuant to an 
        order or award for the payment of attorney's fees in certain 
        divorce, custody, and support cases (pursuant to Sections 2030, 
        3121, and 3557 of the Family Code), as specified.  The Senate 
        amendments narrow, not broaden, the scope of the bill to ensure 
        that its effect is only with respect to wage garnishment in medical 
        debt cases, and to ensure it does not upset existing law or public 
        policy unrelated to medical debt.  The bill effectively preserves 
        the status quo with respect to wage garnishment and court orders 
        for attorney fees in certain family law matters, and does not 
        create new rights or means of enforcing these orders.

        Finally, this bill makes conforming changes to Section 68632 of the 
        Government Code (relating to waiver of court fees and costs) to 
        correct a cross reference in that statute to the "common 
        necessaries of life" provision deleted by this bill.  These changes 








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        are necessary to ensure that current application of those sections 
        of the Family and Government Codes, in those particular contexts, 
        remains unchanged by the deletion of the "common necessaries of 
        life" exception under this bill.
         

        Analysis Prepared by  :    Anthony Lew / JUD. / (916) 319-2334 


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