Zero Balance Agreement Is Not Enough

Having won a default judgment over Art and Frame Direct/Timeless Industries Georgia (“A&F Direct”), Dallas Market sought to execute that judgment by filing a post-judgment writ of garnishment against Wachovia, A&F Direct’s bank.  Wachovia sought to comply, identifying an account they believed to be held by A&F Direct as well as three other accounts held by Art & Frame (a separate entity).  Dallas Market claimed entitlement to the funds in the Art &  Frame account based on a “Zero Balance Agreement,” which allowed Wachovia to transfer funds from one of the Art & Frame accounts to the A&F Direct account.   The trial court eventually granted Dallas Market’s summary judgment motion, permitting them to obtain the funds held in the Art & Frame account, even though Art & Frame was not the judgment debtor.

On appeal, the Court delved into the factual record to determine the nature of the relationship between the two accounts.    Among other things, the Court examined the scope of the Zero Balance Agreement, as well as testimony about how transfers under the agreement actually worked in practice.  Ultimately, however, the Court concluded that Dallas Market could not establish that A&F Direct was the true owner of the funds based on the Zero Balance Agreement or any other facts.  In sum, the Court concluded that Dallas Market did not meet its burden on summary judgment, and proceeded to reverse and remand the trial court’s decision.

Art and Frame Direct v. Dallas Market, No. 05-01471-CV