Generally speaking, people bring suit against another because they feel wronged by another to the point where they need a third party, namely a Court, to make them whole and exact justice against the wrongdoer. Laying aside, for the purposes of this post, the chances of success for such suits, which, of course, rely upon things like legal merits and sufficient evidence, the persons bringing suit expect their suit, if successful, to bring them the justice they feel they deserve. Although such an expectation seems intuitive and obvious, most people are shocked to learn that, even if they win a verdict, they may not receive the justice they desire, sought, and may even deserve.
Very often people do not receive the justice they seek because the person or entity that they sue is what attorneys call, “judgment proof.” What does it mean to be judgment proof? A judgment proof person is someone who, although subject to a judgment, cannot pay it by virtue of his circumstance. The easiest way to explain it is by way of example.
A common example is this: suppose Larry gets into a car accident with Fred and, as a result of the accident, Larry suffers extensive damages and/or injuries. It is clear from the evidence available that Fred is totally at fault for Larry’s damages and/or injuries. Fred, as it turns out, is uninsured. To make matters worse, Fred does not own a home, has little to no money in his bank account, has no significant assets, and/or has a spotty employment record.
As one may expect, Larry initiates a law suit against Fred in order to be compensated for his various damages and injuries. The evidence available is clear, sufficient, and unambiguous in favor of Larry. The legal arguments to support Larry’s case clearly have merit. Due to the evidence and legal merits, Larry’s law suit against Fred is successful and he wins a judgment of $100,000 against Fred.
At first, Larry feels vindicated and that justice was done; after all, an independent fact-finder and tribunal, the Court, viewed all of the information presented and found in Larry’s favor. The Court publicly found that Fred was in the wrong and Larry in the right and that Fred must make Larry whole through the payment of $100,000 to Larry.
While basking in his moral and emotional victory, Larry then attempts to collect on the $100,000 verdict. Unfortunately, no matter how willing Fred may be to pay off the $100,000, he has no real assets to pay it. Of course, he could, out of good will and conscience, establish a payment plan to Larry to pay off the judgment, but what if he doesn’t do that? What are Larry’s options? In Pennsylvania, Larry cannot garnish Fred’s wages. He cannot put a lien on his real estate, as he owns none. He could try to freeze and take the money in Fred’s bank account, but it is not much and will not come close to paying the $100,000. As the hypothetical scenario involves a car accident, Larry may be able to get Fred’s driver’s license suspended, but that does not really equate to payment on the judgment and, indeed, if one has a judgment as a result of another sort of case (i.e.: not a car accident) even this remedy is unavailable.
See, Fred is judgment proof. As the old saying goes, “you cannot get blood from a stone.” In the same way, one cannot get money from someone who has none. So, was justice done? Well, inasmuch as Larry got a verdict in his favor, yes it was. Also, inasmuch as Fred will likely always have the $100,000 judgment hanging over him, which will impede or prevent his ability to get a mortgage or loan in the future until it is paid, yes it was. Unfortunately, though, the justice of being made whole by being paid the judgment means, for many like Larry, such lawsuits, taken as a whole, are unjust as judgments such as Fred’s will likely never be paid.
Unfortunately, there is not much which can be done about this sort of thing. Gone are the days of debtor’s prisons and/or indentured servitude to pay off such debts, and even then the debt may not have been truly paid off. So, potential plaintiffs should beware the peril of outlaying time and money pursing a law suit against someone who may never be able to pay it.
The general advice provided above should serve as an corollary or an addendum to a previous post on this blog called “Losing Even Though You Win” which deals with outlaying more money to bring suit than you will win at the end. The example of a judgment proof defendant is the problem identified in “Losing Even Though You Win” taken to the extreme.
Judgment proof litigants are more common than one may think and, despite not receiving the justice one believes one is deserved, it should give one pause before bringing suit against someone as it may, at the end of the day, cause an injured party to lose even more money than the damages already suffered as a result of another.