13.6.1 Assignment of Judgments

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State laws regarding assignment of judgments often require the assignment to be recorded on the docket of the court that entered the judgment.³⁰² The statute may specify information that assignments must contain and requirements such as notarization that they must meet.³⁰³ Court rules may impose additional requirements on the form, content, acknowledgment, and filing of assignments.³⁰⁴ Court rules may also require that notice of the assignment be given to the debtor.³⁰⁵ Although Article 9 of the Uniform Commercial Code has a number of provisions regarding sale and assignment of obligations, it does not apply to the assignment of judgments.³⁰⁶

Some state laws explicitly require that the assignment of a judgment be signed by the owner of the judgment or the owner’s attorney or agent,³⁰⁷ but even when this is not set forth explicitly it is likely an implicit requirement. A debt buyer that acquired a judgment from another party may be unable to show that that party owned the judgment. This is particularly true if any of the previous owners of the judgment are out of business.³⁰⁸ A New York court refused to allow a debt buyer to enforce a judgment when it did not show a chain of assignments from the original judgment creditor to it.³⁰⁹

A court will not construe a document as assigning a judgment unless it refers specifically to the judgment.³¹⁰ An assignment of an unpaid debt does not constitute an assignment of a judgment based on that debt.³¹¹ Once a judgment is obtained, the debt merges into the judgment and ceases to exist. At that point, the judgment creditor can no longer assign the debt to anyone but can only assign the judgment.³¹² Conversely, once a judgment creditor assigns a debt, it no longer has an interest in the debt and cannot obtain a judgment upon it.

A debt buyer that is a foreign corporation may be required to register to do business in the state before it can engage in the practice of bringing suit in the courts of that state to enforce assigned judgment debts.³¹³ A judgment creditor may have to obtain the consent of the judgment debtor to partial assignment of a judgment;³¹⁴ if a judgment could be split into many claims, the judgment debtor could face a multiplicity of suits.³¹⁵ A partial assignment can also be a cloak for the unauthorized practice of law.³¹⁶

The Fourth Circuit has held that filing an assignment of judgment and mailing a copy to the debtor is debt collection and is subject to the Fair Debt Collection Practices Act (FDCPA).³¹⁷ Thus, material misrepresentations in the assignment papers—specifically, overstatement of the amount of the judgment and misrepresentation that the debtor had not made any payments on it—were actionable under the FDCPA.³¹⁸

Footnotes

302 See, e.g., N.C. Gen. Stat. § 1-246; Wis. Stat. § 806.18. But cf. Moukengeschaie v. Eltman, Eltman & Cooper, P.C., 2016 WL 1274541, at *8–10 (E.D.N.Y. Mar. 31, 2016) (assignee that fails to file assignment in court still has legal right to enforce the judgment).
303 See, e.g., N.J. Stat. Ann. § 2A:16-41 (West) (assignment of judgment must be in writing and must be acknowledged or proved in same manner as real estate conveyances); Or. Rev. Stat. § 18.205 (must be signed by judgment creditor or its agent or attorney, signature must be acknowledged before a notary, and assignment must be filed with court that entered the judgment or in any county lien record where judgment was recorded); Wash. Rev. Code § 4.56.090 (assignment of judgment may not be filed unless it is properly acknowledged before an officer qualified to take acknowledgment of deeds); Wis. Stat. § 806.18 (assignment may be made by statement signed by owner of judgment, with date affixed and witnessed by court clerk).
304 See In re Pinpoint Techs., L.L.C., 5 N.Y.S.3d 329 (N.Y. Civ. Ct. 2014) (table; text available at 2014 WL 6780640) (refusing to allow judgment buyer to file assignment forms when they were not notarized or acknowledged as required by law, debt buyer was unlicensed, and assignments appeared to be robo-signed; buyer must serve notice of assignment on debtor; also noting that some of the debts were time-barred when suit was filed); Chase Bank v. Cardello, 896 N.Y.S.2d 856 (N.Y. Civ. Ct. 2010) (dismissing action because assignment of judgment was not acknowledged in same manner as deed, was not accompanied by certificate establishing notary’s authority to take the acknowledgment, and did not indicate that judgment debtor had been notified of the assignment, all as required by Civil Practice Law and Rules).
305 Baltazar v. Houslanger & Assocs., P.L.L.C., 2018 WL 3941943 (E.D.N.Y. Aug. 16, 2018) (Mag.) (denying motion to dismiss; assignee has no legal right to issue bank account execution against judgment debtor who has not received notice of assignment), adopted by 2018 WL 4781143 (E.D.N.Y. Sept. 30, 2018); Moukengeschaie v. Eltman, Eltman & Cooper, P.C., 2016 WL 1274541, at *10–11 (E.D.N.Y. Mar. 31, 2016); Musah v. Houslanger 7 Assocs., P.L.L.C., 962 F. Supp. 2d 636 (S.D.N.Y. 2013) (assignee is not legally entitled to enforce judgment until assignee sends—and debtor receives—notice of the assignment; denying motion to dismiss FDCPA claim against collector); Collins Fin. Servs. v. Vigilante, 915 N.Y.S.2d 912 (N.Y. Civ. Ct. 2011) (notice of assignment must be given to debtor by assignor; refusing to allow assignment where notice was not given, and vacating underlying judgment because of other errors).
306 U.C.C. § 9-109(d)(9) (Article 9 does not apply to assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral).
307 See, e.g., Or. Rev. Stat. § 18.205; Wis. Stat. § 806.18.
308 See, e.g., Centurion Capital Corp. v. Guarino, 951 N.Y.S.2d 85 (N.Y. City Civ. Ct. 2012) (table; text available at 2012 WL 1543286) (finding evidence that assignor had authority to assign judgment insufficient when assignor had ceased business before date of assignment).
309 Id. See also Capitol One Bank v. Stewart, 7 N.Y.S.3d 240 (N.Y. Civ. Ct. 2015) (table; text available at 2015 WL 135105) (rejecting assignment of judgment that did not indicate chain of ownership and was signed pursuant to a power of attorney that had expired). See generally § 4.3.4, supra.
310 In re Foy, 469 B.R. 209, 214 (Bankr. E.D. Pa. 2012).
311 Id.
312 Id.
313 Centurion Capital Corp. v. Guarino, 951 N.Y.S.2d 85 (N.Y. City Civ. Ct. 2012) (third-party debt buyer must be registered to do business in state and licensed as debt collector before it can file suit on assigned judgments); Chase Bank v. Cardello, 896 N.Y.S.2d 856 (N.Y. Civ. Ct. 2010) (before it can enforce assigned judgments, debt buyer must show that it is registered to do business in state). See generally § 3.3, supra; National Consumer Law Center, Fair Debt Collection § 16.2.3.3.2 (9th ed. 2018), updated at www.nclc.org/library (application of state debt collection statutes to debt buyers).
314 In re Foy, 469 B.R. 209, 214 (Bankr. E.D. Pa. 2012); Rathbone v. Ward, 603 S.E.2d 20 (Ga. Ct. App. 2004).
315 Rathbone v. Ward, 603 S.E.2d 20, 22 (Ga. Ct. App. 2004).
316 Roberts v. LaConey, 650 S.E.2d 474 (S.C. 2007) (issuing declaratory judgment that non-lawyer engaged in unauthorized practice by obtaining assignments of judgments, with assignor retaining a 66% interest in any amounts collected, and then threatening and initiating judicial proceedings to enforce judgment). See generally National Consumer Law Center, Fair Debt Collection §§ 16.2.3.3.2 (sham assignments), 16.5.2 (unauthorized practice of law by collection agencies) (9th ed. 2018), updated at www.nclc.org/library.
317 Powell v. Palisades Acquisition XVI, L.L.C., 782 F.3d 119 (4th Cir. 2014).
318 Id. at 126–127.