In a decision approved for publication, the New Jersey Appellate Division recently held that a debtor’s spouse did not waive her right to dispute a bank levy on a joint account when her attorney executed a consent agreement and represented to the creditor that she agreed to the same. See Banc of Am. Leasing & Capital, LLC v. Fletcher-Thompson Inc., 2018 WL 259383 (N.J. Super. Ct. App. Div. Jan. 2, 2018). In the case, plaintiff obtained a judgment against defendant Kurt Baur, among others, and domesticated the judgment in New Jersey. The next year, plaintiff levied on a joint bank account held by Kurt and his wife, Kristi. Plaintiff filed a motion for turnover of the funds, and Kurt and Kristi opposed, arguing that the funds are Kristi’s personal property and include exempt pension funds. While the motion was pending, plaintiff and the judgment debtors entered a consent order whereby the debtors agreed to make certain payments to plaintiff, and plaintiff agreed to release the levied funds. The debtors’ counsel executed the agreement on their behalf and, although Kristi did not execute the agreement, counsel represented to plaintiff that Kristi consented to it. The debtors then defaulted on the agreement and plaintiff filed a new motion seeking a turnover of the funds. The trial court granted the motion, holding that “[t]here was an agreement reached by the parties to avoid turnover of the funds. The terms of the agreement appear to have been breached and so turnover is granted.”

On appeal, the Appellate Division reversed the trial court’s decision. The Appellate Division held that plaintiff failed to demonstrate that the levied funds belong to Kurt. Kristi had submitted evidence that “the funds in the joint account derive solely from her earnings, teacher’s pension and reimbursements for funds paid out for Kurt’s business expenses. She argues that the funds are not only hers alone, but also exempt from seizure as protected pension payments.” The trial court, however, did not make a determination of whether the funds belonged to Kristi, nor whether they were exempt as pension funds, because it found Kristi consented to the turnover through the consent order. The Appellate Division rejected the trial court’s finding that the turnover of funds was proper under the consent agreement, finding instead that the agreement’s terms did not include a waiver of Kurt and Kristi’s right to dispute the bank levy. The Appellate Division held that, although the debtors’ counsel represented that Kristi consented to the agreement, she “was not a party to the underlying litigation, nor a signatory to the agreement, [and] did not forfeit her right to her sole funds deposited in the joint account.” The Appellate Division then remanded the action in order for the trial court to determine whether the funds belong to Kurt and whether they are exempt. This holding reiterates the fact that creditors levying on joint accounts must prove that the funds belong to the debtor, and that any consent agreements, particularly those involving non-parties, should be fully executed by the involved individuals/entities and not just counsel, and should be clear as to what rights or arguments are being waived.