In the “good old days,” in order to levy on a debtor’s deposit account, a writ of execution had to be served on the bank branch where the account was “maintained,” which usually meant where the account was opened. Upon receipt of the levy, the bank was required to freeze funds on deposit to satisfy the judgment or order for writ of attachment. This procedure was often costly, requiring multiple levies if the debtor’s bank branch was unknown. If the debtor resisted by moving funds to different branches or banks, it became almost impossible to execute quickly enough at the proper location before the funds were moved again. In addition, coordination with the local sheriff’s departments and process servers was difficult to arrange if timed levies were required in different counties.
In good news for creditors, effective January 1, 2013, a new and streamlined procedure now allows creditors to perform much broader bank levies, and levies against safety deposit boxes and other property being held by the financial institution. Section 684.115 of the California Code of Civil Procedure requires all depository financial institutions with ten or more California branches to designate one or more centralized locations for accepting service of process for enforcement of judgments and attachments against their customer’s deposit accounts. Failure to designate a centralized location for service of process allows the creditor to levy against any branch located in California and that levy is deemed automatically effective as to all branches within the state. Smaller banks with nine or less branch offices may voluntarily establish a centralized service location. Even if a “small” bank does not establish a centralized service location, the statute allows the creditor to serve a simplified deposit account location request on the bank and receive a response within ten (10) days of receipt.
All designated central locations for service of process are posted at the California Department of Financial Institutions website at: www.dfi.ca.gov/laws/legislation/
service_of_legal_process/default.html. Over 200 depository financial institutions are listed at this website, providing information to creditors to complete their levies, including the location’s street address, hours of operation, and any other limitations regarding service of the legal process. Currently, Wells Fargo Bank, Chase, Citibank and US Bank have elected not to designate a centralized location and therefore service of process on any of their branches in California should be effective to reach a debtor’s deposit accounts located anywhere in that institution throughout the state.
With this new streamlined bank levy process, creditors should now be able to more quickly and effectively levy against bank accounts (and the contents of safety deposit boxes and other property being held by the bank) throughout the State of California. In fact, since the top ten banks in California hold approximately 75 percent of all bank deposits throughout the state, it is possible that a creditor can reach all these potential accounts with as little as ten separate levies. Section 684.115 should help creditors to simplify its enforcement strategies without all the drawbacks of the “old” system and more quickly realize on their judgments or right to attach orders.
A post-Riverisland decision
In our March 2013 Alert, we discussed an important California Supreme Court case, Riverisland Cold Storage, Inc. v. Fresno-Madera ProductionCredit Association (2013) 55 Cal.4th 1169 which upheld the introduction of evidence of alleged fraud, notwithstanding the fact that the underlying agreement was a fully integrated writing. Recently in Julius Castle Restaurant, Inc. v. Payne 2013 DJDAR 7363 (June 10, 2013), the California 1st District Court of Appeal provided further guidance on the interpretation of Riverisland.
In confirming the admission of oral statements of fraud regarding the condition of real property and equipment subject to an integrated buy-sell agreement, the Court declined to make Riverisland inapplicable to sophisticated parties or limit its holding to contracts of adhesion. Rather, the Court instructed that the better way to proceed in the post-Riverisland environment was to focus on the credibility of the evidence instead of its exclusion, stating:
In the post-Riverisland world, parties would be better served in addressing the heightened burden of proving fraud in a civil action. Fraud demands specialized pleadings. Credibility of the parties who negotiated the agreement and their relative bargaining positions will be assessed. Attention will now focus on the justifiable reliance element of fraud. Among the questions to ask are: What are the plausible reasons for the alleged discrepancy between the claimed oral promises and the side writing? Is there compatibility between the oral representations and the written document? What is the evidence relating to whether the document was read and considered before signing? [citations omitted]Good advice for both parties involved in contract disputes with a related fraud claim.
 Rosenberg, AB 2364 Simplifies Levies on Financial Institutions, Business Law News, State Bar of California, p.16 (Issue 2/2013).