Creditor Who Seeks Turnover of Funds From Joint Account Must Show That Funds in That Account Belong to the Debtor

Banc of America Leasing & Capital, LLC v. Fletcher-Thompson, Inc., ___ N.J. Super. ___ (App. Div. 2018).  Judge Koblitz kicked off 2018 with a concise opinion that expresses an important legal rule: a creditor of an individual debtor may not obtain turnover of funds in a joint account unless the creditor establishes that the funds belong to the debtor alone.  Plaintiff sought and obtained a turnover order against several parties, including defendant Kurt Baur, a guarantor of the amount owed.  Plaintiff levied on a joint account that Kurt Baur held with his wife, Kristi.  She was not a debtor or guarantor, and she contended in a certification that the funds in the joint account all belonged solely to her, as they derived from her pension, earnings, and tax refunds.

The Law Division granted plaintiff’s turnover motion.  The Baurs (both represented by the same counsel, the propriety of which Judge Koblitz questioned in a footnote) appealed, and won reversal.

Citing two prior cases, Judge Koblitz stated that “[u]nquestionably, when seeking a turnover from a joint account, the judgment creditor has the burden to prove that the moneys thus deposited are the individual property of the judgment debtor, and therefore applicable to the satisfaction of the judgment.”  Plaintiff did not show that the funds in the joint account belonged to Kurt Baur.

Instead, plaintiff relied on a purported settlement agreement that only defendants’ counsel, and not either Kurt or Kristi Baur, had signed.  “Certainly Kristi, who was not a party to the underlying litigation, nor a signatory to the agreement, did not forfeit her right to her sole funds deposited in the joint account.”  Instead, plaintiff was required “to demonstrate to the court that these funds belong to Kurt.”  The panel reversed the Law Division and remanded the case for further proceedings.