Is your Business Account at Risk of "Attachment"?

          In North Carolina, a Plaintiff (the party filing a lawsuit) can seek an “Order of Attachment” in certain circumstances. Generally, this means that any property in North Carolina that the Defendant owns, including bank accounts, can be seized by the County Sheriff to satisfy any eventual judgment pending the outcome of the lawsuit. This can be problematic for several reasons: first of all, the Plaintiff may lose the case and not be awarded any damages and the property was seized unnecessarily! Also, at the beginning of a lawsuit, the number that a Plaintiff claims he or she has been damaged may not be a realistic number and is based purely on their opinion of the case. Having large sums of money seized during the pendency of a case (which could take years to settle) could cause a business to go bankrupt.

          Thankfully, an attachment order will only be issued in a few circumstances. The Defendant must be:

• Nonresident of North Carolina;
• A foreign corporation;
• A domestic corporation whose president, vice president, secretary, or treasurer cannot be found in North Carolina;
• A resident of North Carolina who is intending to defraud his creditors by leaving the state or avoiding service; or
• A person or domestic corporation who is trying to remove property from the state or dispose of property in order to defraud their creditors.

If you as the Defendant do not fit into one of those categories then, in general, an order of attachment cannot be granted against you or your business. However, if you do fall into one of those categories, any property you own in North Carolina can be attached pending the outcome of the lawsuit.

The Plaintiff must pay a bond to the Court which must be high enough to compensate the Defendant if the Defendant prevails in the lawsuit or is damaged by an improper attachment. Obviously that bond will greatly vary and is somewhat up to the discretion of the judge who is hearing the attachment order.

Fortunately, if you have received an attachment order, you do have options to dissolve or modify the order. To dissolve the order, you must show that something was done improperly in obtaining the order (for example, that you do not fall into one of the categories of people who can have their property attached). If you are unable to make that showing, you can try to have the attachment order modified—either the amount of the attachment, the bond, the terms, or both.

Attachment orders are just one more way that lawsuits can cause problems to the people involved. If you, or someone you know, receives a summons, attachment order, or notice of garnishment, the attorneys at Jesson & Rains, PLLC are ready to assist.