An Under Appreciated Tool to Protect Recovery When Trial is Over

​When a client is deciding whether or not to file a lawsuit, it is important to analyze what assets a defendant has and whether the defendant will actually be able to pay-up after losing at trial. You can’t get water from a stone or blood from a turnip.  Sometimes, a defendant has assets, but they’re extremely limited (think single-member LLCs, holding companies etc.).  In those cases, clients may be rightfully concerned that the defendant will start dumping assets once they sense litigation coming. 

Fortunately, under Article 35 in Chapter 1 of the North Carolina General Statutes, there is a mechanism to bring the defendant’s assets under the custody of the court until the conclusion of the case. Attachment is available in any case that is seeking to secure a judgment for money upon a showing that the defendant has an intent to defraud its creditors by disposing of the property or removing property from the state. The type of property doesn’t matter, it can be a personal property item or a parcel of real estate.

When it comes to proving defendant’s intent to defraud, evidence can range from a statement by the defendant to a listing of real property for sale by a real estate company. The potential trap for the plaintiff in using this strategy is the requirement that plaintiff to post a bond, set by the court, in an amount they deem necessary to afford reasonable protections to the defendant. If the evidence of defendant’s intent to dispose of their property is clear, the court may affix a statutory minimum bond. The sheriff then levies the property, prohibiting the defendant from disposing of it until the conclusion of the case.  
 
For some reason, this attachment tool seems to be little known and used even less in North Carolina. Strategic use of the attachment process can greatly increase a client’s likelihood of actually collecting any judgment they are entitled too, removing a significant source of uncertainty that comes with filing a lawsuit.
 
For more information on strategic use of statutory liens and commercial litigation, contact Parton Law, PLLC.
 
Drafted by J. Burton Powell with edits from Corey V. Parton