Honesty is Best Policy in Judgment-Debtor Exam

Given the current economic times, greater emphasis will be placed on collecting debts that are owed. Once a debt is reduced to a judgment, various collection options are available. One of the most common steps for debt collection is a judgment-debtor examination. In many respects, these are routine efforts used to identify the location of assets which could be used to satisfy the judgment. The recent case cited as Ohio Department of Taxation v. Kunkle, 179 Ohio App. 3d 747, 2008-Ohio-6393 is an example of potential strategies and also risks that can be encountered if the testimony provided at a judgment-debtor exam is less than truthful.

The Ohio Department of Taxation obtained a judgment against Kunkle for past due personal income taxes. In an effort to collect that debt, the Department conducted a judgment-debtor exam which was transcribed but not presided over by the lower court. Subsequently, there was a second judgment-debtor exam conducted before a trial judge. In both of those proceedings, Kunkle denied owning any real estate or having any interest in the real estate.

Several years later, the Department filed a motion to cite Kunkle for criminal contempt of court for lying under oath at the second judgment-debtor exam taken before a judge. In support of the motion, the Department provided certified copies of deeds and other records showing that Kunkle, indeed, owned or had an interest in real estate. After reviewing the evidence, the lower court concluded that Kunkle was guilty of criminal contempt as also civil contempt. Upon conviction for criminal contempt, Kunkle was sentenced to 10 days in jail. Kunkle appealed.

The appellate court upheld the conviction of Kunkle for criminal contempt. The court noted that this was an example of “direct contempt,” meaning misbehavior in the actual or constructive presence of the court while acting within its judicial function. The appellate court found that the conviction was proper since there was false testimony, which had an obstructive effect, made with knowledge of the false testimony, and presented on issues pertinent to the case.

Often the judgment-debtor exam is not considered an important step in the litigation, but that is not necessarily true. The risks of exposure to both civil and criminal contempt and the risks of incarceration make full and accurate testimony that much more important. Further, the use of these claims can be very useful in collection efforts.

Posted by: David C. Olson

Categories: Claims / Dispute Resolution, Construction Contracts, Current Developments / Legislation, Legislation & Regulation, Mechanics’ Liens