Court: Louisiana Court of Appeal; October 7, 1998; Louisiana; State Appellate Court
Sears, Roebuck and Co. initiated litigation to collect a $3,839.96 credit card debt from Gerald G. Patterson, resulting in a default judgment and wage garnishment. From January 1995 to October 1995, Patterson's employer withheld $8,925.00 from his wages. In January 1997, Sears resumed garnishment, despite having exceeded the amount necessary to satisfy the debt. Patterson filed a reconventional demand in March 1997, claiming wrongful wage seizure and seeking recovery for overpayments, mental anguish, credit damage, and a preliminary injunction against further garnishments, which became moot when Sears dismissed the garnishment. Prior to trial, Sears acknowledged an overpayment of $96.44 and refunded that amount. The trial court found Sears had overpaid Patterson by $451.03, awarding Patterson $354.59, $100.00 in general damages under 15 U.S.C. 1692k, and $2,600.00 in attorney fees. Sears appealed, citing multiple errors, while Patterson sought additional legal interest on the attorney fee award and an increase in fees for services related to the appeal.
The trial court's ruling on payment imputation related to Sears' credit card debt was found to be incorrect. According to Louisiana Civil Code articles 1866 and 1868, payments on a debt with interest must first be applied to interest before addressing principal. Furthermore, if multiple debts exist, payments must be allocated to the debt with interest. The original debt from the Sears credit card fell under these rules, and payments made before the filing of the suit on April 4, 1991, should have followed this order.
After the suit was filed, the imputation of payments must also consider additional procedural aspects and circumstances. The December 16, 1992 judgment awarded Sears the amount owed, including interest, attorney fees, and court costs due to the Pattersons' default. These fees were deemed necessary expenses incurred by Sears for enforcing existing contractual rights, not separate debts under the imputation rules.
The six percent collection fee is owed to the Lafayette City Marshal, not Sears. The cases cited by Patterson concerning payment imputation did not apply, as they pertained to prejudgment situations and did not involve garnishment, which is the context of the current case. The imputation of payments should be divided into three periods: payments made from January 28, 1989, until the suit's filing should be credited first to interest, and after the suit's initiation, the obligation for attorney fees and court costs arose due to the Pattersons' default, necessitating a different approach to payment allocation.
Funds collected during the garnishment process are to be allocated first to court costs. After the reimbursement of court costs, payments will be split, with 25% directed towards attorney fees and 75% towards the original debt, prioritizing interest followed by principal. The statutory fee of 6% for the city marshal is included in the payment process and must be deducted before other disbursements. Payments received should first cover the marshal’s fee, then court costs, and the remaining balance divided according to the established ratio.
The trial court, Sears, and Patterson used differing methods in their calculations. The applied method indicates that Sears was not overpaid and, in fact, had not collected the full debt amount, leading to the conclusion that the trial court incorrectly favored Patterson in his reconventional demand. The judgment awarding Patterson is reversed, and judgment is rendered in favor of Sears, dismissing Patterson's demands and taxing him with the appeal costs.
In subsequent proceedings, BJ Services Company withheld funds for seven pay periods, with six payments of $153.87 and one of $142.60. The trial court awarded Patterson $451.03, but considering a previous check of $96.44 issued to him by Sears, the actual award amounts to $354.59.
