GARNISHMENT – IRS Discharge: Lifestyles of Jasper, Inc. v. Gremore (COA 11/6/2009)

Lifestyles of Jasper, Inc. v. Gremore
2008-CA-001396 11/06/09 2009 WL 3672881

Opinion by Judge VanMeter; Judges Keller and Stumbo concurred.

On discretionary review, the Court reversed and remanded an order of the circuit court affirming a district court order upholding a garnishment challenge, ordering appellant to return amounts collected, and holding that a default judgment had been discharged when appellant filed a Form 1099-C, Cancellation of Debt, with the I.R.S. The Court held that Commonwealth ex rel. Bates v. Hall, 251 Ky. 280, 64 S.W.2d 585 (1933) was sufficiently broad to cover the instant situation in which the judgment creditor filed the form to comply with I.R.S. regulations and not in satisfaction of the debt. Therefore, the district court abused its discretion in holding that the judgment was discharged.