During the dog days of summer, anything with the word “freeze” may sound appealing. But if the freeze is a “trustee process attachment” (tying up a bank or other institutional account), a whole different set of emotions can be evoked. As I discussed in Gain Leverage by Freezing Bank Accounts – Part I and Part II, knowing the law surrounding trustee process attachments can create or defuse significant and sometimes dispositive leverage. Further, and as the Federal District Court reminded us recently in DeBenedictis v. Dougherty, the speed with which a party acts or reacts when a trustee process is sought can be critical.… Keep reading
trustee process attachment
It is not unusual for a plaintiff to have the ability to choose from at least two states when deciding the venue of a litigation. In such situations, many automatically choose to file suit in their home state, without giving much thought to potential advantages or disadvantages beyond having a home field advantage and/or forcing their adversary to travel long-distance. While the substantive law applicable to an underlying dispute often is the same no matter where suit is brought (although even this is far from a hard and fast rule), below are three reasons why Massachusetts might be an attractive choice for your next lawsuit.… Keep reading
In addition to having a choice of law provision in a contract (a topic on which I posted last week), many contracts also include what is commonly known as a forum selection clause. Such clauses can be extremely important and can have an impact that goes well beyond simply setting up one party as the “home team” and the other an outsider.
For instance, even if a contract has a choice of law provision calling for the law of New York to apply to all contract disputes, if a forum selection clause requires suit to be brought in Massachusetts, the procedural law of Massachusetts applies. Consequently, while New York law does not have a trustee process attachment rule like we have in Massachusetts, a plaintiff should be able to obtain a freeze on the defendant’s bank account as long as a showing is made that the plaintiff is likely to succeed on the merits of its claim. The logic behind this is that, freezing a bank account (known as a “trustee process attachment”) is governed by procedural law (Rule 4.2 of the Massachusetts Rules of Civil Procedure), not by substantive law. Alternatively, if a suit was … Keep reading
As implied by my prior posting on trustee process attachments (“Gain Leverage By Freezing Bank Accounts – Part I, Offense“), the best way to avoid having your own bank account frozen is to make sure that you do not use a bank that has branches in Massachusetts. Even if your company does bank in Massachusetts, however, there are measures that can be taken to decrease the chances of having the company’s bank account frozen through a trustee process attachment.
An often overlooked fact about trustee process attachments is that payroll accounts are exempt from being attached. Thus, one prophylactic strategy you can employ is to fund your payroll account early and abundantly in order to shield as much money as possible from being attached. Be forewarned, however, that the payroll account exemption only applies if the account is used exclusively for payroll. Thus, if a company places money in its payroll account and later uses it for something other than payroll, the entire account can be attached – even those funds that are needed to comply with the company’s payroll obligation. Accordingly, and because there may be no better way to bring a company to its knees … Keep reading