Opinion
(X03)HHDCV106012959S
02-13-2018
D’Anna WELSH v. William V. MARTINEZ, Jr. et al.
UNPUBLISHED OPINION
OPINION
Hon. Ingrid L. Moll, Superior Court Judge
Before the court is plaintiff/judgment creditor D’Anna Welsh’s application for a turnover order (application) (# 205.00). Plaintiff submits her application pursuant to General Statutes § 52-356b, requesting " an execution and an order in aid of the execution directing the judgment debtor," defendant William V. Martinez, Jr. (Dr. Martinez), and certain third parties to " transfer to the levying officer either or both of the following: (1) possession of specified personal property that is sought to be levied on; or (2) possession of documentary evidence of title to property of, or a debt owed to, the judgment debtor that is sought to be levied on."
Section 52-356b provides:
In her application, plaintiff seeks a turnover order as follows:
(1) " Count One: Turnover of Dr. Martinez’s Personal Property," directed to Dr. Martinez and Cristina Martinez (Cristina); (2) " Count Two: Turnover of Dr. Martinez’s American Funds IRA," directed to The Capital Group Companies, Inc. a/k/a Capital Group, Inc. a/k/a Capital Group; (3) " Count Three: Turnover of Dr. Martinez’s Schwab IRA," directed to Charles Schwab & Co., Inc. and RBC Capital Markets, LLC a/k/a RBC Wealth Management; (4) " Count Four: Turnover of Dr. Martinez’s Schwab Joint Investment Account," directed to Charles Schwab and Catherine Martinez (Catherine); (5) " Count Five: Turnover of Debts Owed by Stoney River Lodge to Dr. Martinez and His Personal Property," directed to Stony River Lodge, Inc.; and (6) " Count Six: Turnover of Debts Owed by Golf Club of Avon to Dr. Martinez and His Personal Property," directed to Golf Club of Avon, Inc.
I. FACTUAL AND PROCEDURAL BACKGROUND
This matter was tried to a jury in 2012. On June 25, 2012, the jury returned a verdict in favor of the plaintiff on all counts and awarded her $2,000,000 in damages. Thereafter, the trial court, Robaina, J., awarded the plaintiff a sum of $360,000 as punitive damages. Post-judgment interest was awarded at the rate of 3.5% per annum. Judgment was rendered in accordance with the verdict, and Dr. Martinez appealed therefrom. The Appellate Court affirmed the judgment. Welsh v. Martinez, 157 Conn.App. 223, 225, 114 A.3d 1231 (2015). Thereafter, the Supreme Court denied Dr. Martinez’s petition for certification. Welsh v. Martinez, 317 Conn. 922, 118 A.3d 63 (2015). The judgment remains unsatisfied, and Dr. Martinez has not voluntarily paid plaintiff any amount toward the judgment.
On November 21, 2016, as part of her postjudgment collection efforts, plaintiff filed the instant application. (## 205.00, 206.00.) On December 30, 2016, Dr. Martinez filed an objection to plaintiff’s application. (# 215.00.) A request for adjudication was filed on March 15, 2017. (# 221.00.) On March 16, 2017, Dr. Martinez filed an affidavit in support of his claim of exemptions. (# 224.00.) On July 6, 2017, Cristina filed an objection to plaintiff’s application. (# 240.00.) On July 10, 2017, Dr. Martinez filed a memorandum of law in opposition to plaintiff’s motion for turnover order of exempt IRA accounts. (# 241.00.) An evidentiary hearing on the application was held on July 11, 2017 (hearing), during which the court received evidence and heard the testimony of two witnesses, Dr. Martinez and Michelle Duer, a records custodian from Charles Schwab & Co., Inc. Respective counsel for plaintiff, Dr. Martinez, Catherine, and Cristina appeared.
Numerous post-hearing submissions were filed thereafter, including: (1) plaintiff’s post-hearing brief in support of her application for an execution and an order in aid of execution against Dr. Martinez’s property dated August 21, 2017 (## 251.00-253.00); (2) Catherine’s objection to application for a turnover order as to Catherine Martinez dated December 9, 2016, filed on September 14, 2017 (# 255.00); (3) Catherine’s property execution proceedings claim for determination of interests in disputed property (# 256.00); (4) Cristina’s post-hearing brief regarding turnover order dated September 22, 2017 (# 257.00); (5) Dr. Martinez’s post-trial memorandum in opposition to plaintiff’s motion for turnover order dated September 22, 2017 (# 258.00); (6) Catherine’s post-trial memorandum in opposition to plaintiff’s motion for turnover order dated September 22, 2017 (# 259.00); (7) plaintiff’s reply to Dr. Martinez, Catherine, and Cristina’s briefs dated October 6, 2017 (# 260.00); (8) defendant’s request for leave to file limited sur-reply brief in response to plaintiff’s reply memorandum dated October 12, 2017 (# 261.00); (9) Dr. Martinez’s sur-reply brief in response to plaintiff’s reply memorandum dated October 12, 2017 (# 262.00); (10) plaintiff’s reply to Dr. Martinez’s motion for permission to file a sur-reply brief dated October 13, 2017 (# 263.00); and (11) Dr. Martinez’s reply to plaintiff’s reply to defendant’s request for leave to file sur-reply brief dated October 16, 2017 (# 264.00).
II. LEGAL PRINCIPLES
" The law of turnover orders is entirely statutory ... These statutes have not been extensively litigated." Sarasota CCM, Inc. v. Golf Mktg., LLC, 94 Conn.App. 34, 37-38, 891 A.2d 72 (2006). In the present case, numerous statutes apply. General Statutes § 52-356b provides in relevant part:
(a) If a judgment is unsatisfied, the judgment creditor may apply to the court for an execution and an order in aid of the execution directing the judgment debtor, or any third person, to transfer to the levying officer either or both of the following: (1) Possession of specified personal property that is sought to be levied on; or (2) possession of documentary evidence of title to property of, or a debt owed to, the judgment debtor that is sought to be levied on.
(b) The court may issue a turnover order pursuant to this section, after notice and hearing or as provided in subsection (c) of this section, on a showing of need for the order. If the order is to be directed against a third person, such person shall be notified of his right pursuant to section 52-356c to a determination of any interest claimed in the property.
General Statutes § 52-356b(a) & (b). In addition, General Statutes § 52-350f provides:
A money judgment may be enforced against any property of the judgment debtor unless the property is exempt from application to the satisfaction of the judgment under section 52-352a, 52-352b, 52-352d or 52-361a, or any other provision of the general statutes or federal law. The money judgment may be enforced, by execution or by foreclosure of a real property lien, to the amount of the money judgment with (1) all statutory costs and fees as provided by the general statutes, (2) interest as provided by chapter 673 on the money judgment and on the costs incurred in obtaining the judgment, and (3) any attorneys fees allowed pursuant to section 52-400c.
General Statutes § 52-350f. Because numerous exemptions are claimed, they are addressed in turn below.
The burden to demonstrate the applicability of a claimed exemption under General Statutes § 52-352b is on the exemptioner. See, e.g., Lienfactors, LLC v. Belamour, No. CV 06-5002622, 2007 WL 4410354, at *2 (Conn.Super. Nov. 20, 2007); Phillips v. Phillips, No. CV 03-0070077, 2004 WL 503905, at *2 (Conn.Super. Feb. 25, 2004); see also 31 Am.Jur.2d Exemptions § 311 (" As a general rule, the party asserting an exemption from execution, attachment, or seizure to satisfy a judgment bears the burden of establishing entitlement to the exemption. Once a judgment creditor proves a judgment debtor owns property, it is the judgment debtor’s burden to prove that the property is exempt from attachment. Where an issue is left in doubt by the proof so that a court would be required to speculate, the party on which the burden of proof ultimately rests must lose. It lies with the party claiming property to be exempt to prove the facts affirmatively which go to establish such an exemption. If the moving party makes a prima facie showing that no genuine issue of material fact existed, the opposing party has the burden of presenting evidence to the contrary. Once a prima facie case of exemption has been put forward, the burden is on the party who claims the benefit of any exception to the exemption law to bring the case within the exception" ).
III. PLAINTIFF’S APPLICATION
A. Count One
In Count One, plaintiff seeks a turnover order directed to Dr. Martinez and Cristina with respect to the personal property enumerated below.
To the extent count one of the application seeks a turnover order directed to Cristina Martinez, the application is denied. Although the application was filed at a time when Dr. Martinez and Cristina were still married, they were divorced on May 5, 2017 (i.e., prior to the hearing). See William Martinez v. Cristina Martinez, No. HHD-FA17-6076589S, judicial district of Hartford, # 109.00. Plaintiff has not demonstrated that any of Dr. Martinez’s " specified personal property that is sought to be levied on," enumerated below, is in the possession of Cristina.
With regard to Count One, Dr. Martinez argues as a threshold matter that a turnover order is not available to plaintiff pursuant to § 52-356b because an execution must first be served on the judgment debtor, which did not occur here. The plaintiff argues that § 52-356b, as amended, does not require that an execution be served prior to an application for a turnover order. The court agrees with the plaintiff.
Because this issue raises a question of statutory interpretation, the court begins by applying the plain meaning rule, as set forth in General Statutes § 1-2z, which provides: " The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered." General Statutes § 1-2z. " The test to determine ambiguity is whether the statute, when read in context, is susceptible to more than one reasonable interpretation ..." Comm’r of Pub. Safety v. FOIC, 301 Conn. 323, 338, 21 A.3d 737 (2011). Section 52-356b(a) provides:
If a judgment is unsatisfied, the judgment creditor may apply to the court for an execution and an order in aid of the execution directing the judgment debtor, or any third person, to transfer to the levying officer either or both of the following: Possession of specified personal property that is sought to be levied on; or possession of documentary evidence of title to property of, or a debt owed to, the judgment debtor that is sought to be levied on.
General Statutes § 52-356b(a). The express language of the statute does not require that an execution be served prior to an application for an order in aid of the execution. Instead, the only current, statutory precondition to an application for a turnover order is that " a judgment is unsatisfied." Id. Because there is no statutory requirement that an execution be served prior to an application for a turnover order, the court concludes that the statute is clear and unambiguous. Even if this language were deemed ambiguous, the legislative history supports the court’s conclusion that service of an execution is not a precondition to the issuance of a turnover order. In 1997, § 52-356b(a) was amended by No. 97-86, § 2, of the 1997 Public Acts, which provides as follows:
Sec. 2. Subsection (a) of section 52-356b of the general statutes is repealed and the following is substituted in lieu thereof:
(a) If [an execution is issued] A JUDGMENT IS UNSATISFIED, the judgment creditor may apply to the court for an EXECUTION AND AN order in aid of the execution directing the judgment debtor, or any third person, to transfer to the levying officer either or both of the following: (1) Possession of specified personal property that is sought to be levied on; or (2) possession of documentary evidence of title to property of, or a debt owed to, the judgment debtor that is sought to be levied on.
The former language, indicated in brackets, required the issuance of an execution as a precondition to an application. However, the amendment removed that precondition. The legislative history also reflects a written statement submitted on behalf of the Connecticut Bar Association’s commercial law and bankruptcy section in support of the amendment, which stated in relevant part:
Presently, a judgment creditor cannot apply for an order in aid of execution unless there is an execution issued and outstanding. Since executions expire within four months, this provides a judgment creditor a fairly short time period to obtain an order in aid of execution. This legislation allows an order in aid of execution as long as the judgment is unsatisfied. An execution would be issued when the order in aid of execution was issued or immediately thereafter.
Conn. Joint Standing Committee Hearings, Judiciary, Pt. 10, 1997 Sess., p. 3214 (written statement of Houston Lowry, Esq.). In sum, based on the foregoing, the court concludes that the service of an execution is not a precondition to an application for, or the issuance of, a turnover order. Accord In re Allen-Main Assocs., Ltd. P’ship, 233 B.R. 631, 635 (Bankr.D.Conn. 1999) (" [Section] 52-356b, as amended in 1997, makes no reference to an ‘order’ of execution, permitting a judgment creditor to apply for an order in aid of execution provided only that the judgment is unsatisfied" ).
Accordingly, the court proceeds to consider the merits of Count One insofar as it is directed to Dr. Martinez. Specifically, plaintiff seeks a turnover order as to three motor vehicles and various personal property located at his Northgate residence in Avon, the ownership of which he retained after his divorce from Cristina. Based on the testimony presented and evidence admitted during the hearing, the court makes the following findings of fact and issues the related orders.
(1) 2008 BMW M5. Dr. Martinez owns a 2008 BMW M5, with 74,000 miles (at the time of the hearing) in relatively good condition. Dr. Martinez first claimed that the 2008 BMW M5 is exempt pursuant to General Statutes § 52-321b(j). (See # 224.00.) Because there is no such statutory provision, however, such claim of exemption is invalid. In his post-hearing brief, he cites § 52-352b(j), which provides an exemption for " [o]ne motor vehicle to the value of three thousand five hundred dollars, provided value shall be determined as the fair market value of the motor vehicle less the amount of all liens and security interests which encumber it." The only evidence presented regarding the " value" of this vehicle was: (1) a Kelly Blue Book entry, placing a value on a 2008 BMW M5 in fair condition with 90,000 miles at $14,579; and (2) Dr. Martinez’s testimony that his M5 needed new catalytic converters at a cost of $10,000. Because Dr. Martinez did not demonstrate that the value of the 2008 BMW M5 is less than the statutory amount of exemption, the court finds that such vehicle is not exempt. The application with regard to the 2008 BMW M5 is granted.
(2) 2007 BMW X5. Dr. Martinez owns a 2007 BMW X5. He does not claim an exemption with respect to this vehicle. (See # 224.00; 7/11/17 Hrg. Tr. (testimony of Dr. Martinez).) The court grants plaintiff’s application for a turnover order with regard to the 2007 BMW X5.
(3) 2010 BMW 328X Drive. This vehicle is owned by Cristina Martinez pursuant to the dissolution decree, see William Martinez v. Cristina Martinez, No. HHD-FA17-6076589S, judicial district of Hartford, and therefore does not constitute property subject to a turnover order in the present case. See General Statutes § 52-350a(16). The court denies plaintiff’s application with regard to the 2010 BMW 328X Drive.
(4) Two wine refrigerators/wine collection. Dr. Martinez owns two wine refrigerators and approximately 30 bottles of wine for personal use. He claims these items are exempt pursuant to General Statutes § 52-352b(a) (see # 224.00), which provides an exemption for " [n]ecessary apparel, bedding, foodstuffs, household furniture and appliances." The term " necessary" for purposes of § 52-352b is defined as " reasonably required to meet the needs of the exemptioner and his or her dependents including any special needs by reason of health or physical infirmity." General Statutes § 52-352a(b). The court finds that the wine refrigerators and bottles of wine are not necessary to meet the needs of Dr. Martinez; therefore, the claimed exemption with regard to such items is deemed invalid. The application with respect to the wine refrigerators and wine bottles is granted.
(5) Hot tub. Dr. Martinez owns a hot tub. Based on his affidavit (see # 224.00), it appears that Dr. Martinez claims such property is exempt pursuant to either (a) § 52-352b(a) (as furniture or an appliance), (b) § 52-321b(b) (as health equipment), or (c) Connecticut common law (as a fixture). It was not made clear during the hearing the basis for the claim of exemption.
In any event, the court concludes that Dr. Martinez has not asserted a valid claim of exemption on any of these bases. First, with respect to any claim under § 52-352b(a), the court finds that the hot tub is not necessary, or reasonably required, to meet the needs of Dr. Martinez. Second, § 52-321b(b), cited in the affidavit, does not exist. Finally, exemptions are strictly statutory and, therefore, Dr. Martinez’s general reliance on " Connecticut common law" is unavailing. Comm’r of Revenue Servs. v. Schiavone, No. HHD-CV 15-5039603, 2015 WL 5975300, at *2 (Conn.Super. Sept. 11, 2015) (Elgo, J.) . The application with respect to the hot tub is granted.
In Pac v. Altham, 49 Conn.App. 503, 714 A.2d 716 (1998), the Appellate Court held that " the trial court improperly created an exemption not otherwise provided by statute ... Specifically, the trial court found that the entire account was exempt from execution because of the proceedings related to the service of the first execution, which was untimely and therefore improper. This exemption is not provided for in the General Statutes. To the contrary, General Statutes § 52-352b sets forth the list of statutory exemptions. We conclude that the trial court’s exemption is not provided for by statute and, accordingly, the judgment should be reversed." (Citation omitted; footnote omitted.) Id. at 508-09.
(6) Items in " theatre room" including system receiver, DVD player, video projector, projector screen, movie collection, and 7 leather theatre seats. In his " theatre room," Dr. Martinez owns a system receiver, video projector, and seven leather theatre seats. With respect to these items, he claims an exemption pursuant to § 52-352b(a), discussed above. The court finds that the system receiver, video projector, and seven leather theatre seats are not necessary to meet the needs of Dr. Martinez and/or any dependents; therefore, the claimed exemption with regard to such items is deemed invalid. The application with respect to the system receiver, video projector, and seven leather theatre seats is granted. Insufficient evidence was proffered concerning a DVD player, projector screen, or movie collection; accordingly, the application with respect to such items is denied.
(7) Home speaker/sound system. During the hearing, plaintiff proffered no evidence regarding this specific property and, therefore, this particular claim is deemed abandoned.
The attachments to plaintiff’s application relating to these and other items do not serve as a proxy for the admission of evidence.
(8) Pool table, ping pong table, and accessory equipment. Dr. Martinez owns a pool table and ping pong table. He claims these items are exempt pursuant to § 52-352b(a), discussed above. The court finds that the pool table and ping pong table are not necessary to meet the needs of Dr. Martinez and/or any dependents; therefore, the claimed exemption with regard to such items is deemed invalid. The application with respect to the pool table and ping pong table is granted. Because insufficient evidence was proffered during the hearing regarding any accessory equipment, the application regarding any accessory equipment is denied.
(9) Card playing table and 8 associated chairs. During the hearing, plaintiff proffered insufficient evidence regarding this specific property and, therefore, this particular claim is deemed abandoned.
(10) 10 bar stools/chairs. Dr. Martinez denied that he owns ten bar stools, and there was insufficient evidence presented during the hearing to enable the court to make any findings regarding these requested items. Accordingly, the application with regard to these items is denied.
(11) 4 out of 5 high definition televisions. During the hearing, plaintiff proffered insufficient evidence regarding this specific property and, therefore, this particular claim is deemed abandoned.
(12) 4 out of 6 couches. There was insufficient evidence presented at the hearing to permit the court to make any findings regarding the ownership of any couches following the divorce between Dr. Martinez and Cristina. Thus, the application is denied with regard to these items.
(13) 4 out of 6 accent or reclining chairs. During the hearing, plaintiff proffered no evidence regarding this specific property and, therefore, this particular claim is deemed abandoned.
(14) Guest room bedroom set. During the hearing, plaintiff proffered no evidence regarding this specific property and, therefore, this particular claim is deemed abandoned.
(15) 1 of 2 dining tables with 8 associated chairs. During the hearing, plaintiff proffered no evidence regarding this specific property and, therefore, this particular claim is deemed abandoned.
(16) Personal sporting equipment, including treadmill, golf clubs, golf trainer, and bicycle. Dr. Martinez owns a treadmill, relating to which he claims an exemption pursuant to § 52-321b(b). (See # 224.00.) Because there is no such statutory provision, however, such claim of exemption is invalid. Even if the court were to assume that the intended exemption statute is § 52-352b(a), the court finds that the treadmill is not necessary to meet the needs of Dr. Martinez because, at a minimum, he belongs to a fitness center. Therefore, the claimed exemption with regard to the treadmill is deemed invalid. The application with respect to the treadmill is granted. Because no evidence was proffered during the hearing regarding any other personal sporting equipment (including golf clubs, golf trainer, and bicycle), the application with respect to such items is denied.
(17) 2 chandeliers. During the hearing, plaintiff proffered no evidence regarding this specific property and, therefore, this particular claim is deemed abandoned.
(18) Firearms. Dr. Martinez owns several firearms. He first claimed that his firearms are exempt pursuant to General Statutes § 52-321b(i). (# 224.00.) Because there is no such statutory provision, however, such claim of exemption is invalid. In a post-hearing brief, Dr. Martinez asserted a claim under § 52-352b(i), which provides an exemption for " [a]rms and military equipment, uniforms or musical instruments owned by any member of the militia or armed forces of the United States." Because Dr. Martinez is not a member of the militia or armed forces of the United States, any claim of exemption by Dr. Martinez under § 52-352b(i) is invalid. The application with respect to Dr. Martinez’s firearms is granted.
Insofar as the court has granted in part the application with respect to Count One, the court finds that plaintiff has demonstrated the requisite " need for the order." General Statutes § 52-356b(b).
B. Count Two: Dr. Martinez’s American Funds IRA
In Count Two, plaintiff seeks a turnover order directed to The Capital Group to sell, transfer, or liquidate securities or securities entitlements held in connection with Dr. Martinez’s financial accounts in order to transfer to a levying officer an amount equal to the post-April 15, 2010 additions and contributions to the Cardiothoracic Surgery, P.C. 401(k) or the American Funds IRA, and the investment gains or other proceeds therefrom. At the commencement of the hearing, plaintiff narrowed her application with respect to Count Two, stating that she presently seeks only documentation showing activity in the American Funds IRA since April 15, 2010, and not the funds in the account.
Dr. Martinez is a cardiothoracic surgeon employed by Saint Francis Medical Group, Inc. (Saint Francis) from which he receives an annual salary of $1.2 million. Prior to his employment at Saint Francis, which commenced on January 6, 2015, Dr. Martinez was the president and 33% shareholder of a private medical group, Cardiothoracic Surgery, P.C., where he earned an annual salary in 2012-2014 in the range of $922,000-$1,032,500. While employed at Cardiothoracic Surgery, P.C., Dr. Martinez participated in a 401(k) plan established by his employer. His participation in the 401(k) plan terminated on July 6, 2015, and his 401(k) funds were rolled over into an American Funds IRA administered by the Capital Group. (Pl. Ex. 3; # 258.00 at 11.)
Dr. Martinez principally contends (see # 241.00 at 2) that plaintiff’s claim in Count Two is preempted by the anti-alienation provision, § 206(d)(1), of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. § 1001 et seq. See 29 U.S.C. § 1056(d)(1). The crux of the issue presented by this argument is whether an individual retirement account is exempt from creditors’ claims under 29 U.S.C. § 1056(d)(1), which provides: " Each pension plan shall provide that benefits provided under the plan may not be assigned or alienated." This provision has been applied to protect ERISA pension benefits against claims of creditors under state laws. Indeed, Dr. Martinez cites numerous of these cases. See, e.g., Guidry v. Sheet Metal Workers Nat. Pension Fund, 493 U.S. 365 (1990); Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825 (1988); Kickham Hanley P.C. v. Kodak Retirement Income Plan, 558 F.3d 204 (2d Cir. 2009); Commercial Mortgage Ins., Inc. v. Citizens National Bank of Dallas, 526 F.Supp. 510 (N.D.Tex. 1981); Ditto v. McCurdy, 978 P.2d 783 (Haw. 1999). He also cites Citizens Bank of Ashburn v. Shingler, 326 S.E.2d 861 (Ga.App. 1985), which applied the anti-alienation protections of 29 U.S.C. § 1056(d)(1) to an individual retirement account. Id. at 861-62. The court finds the former set of cases to be inapplicable because their analyses of the anti-alienation provision involved an active ERISA pension benefit plan, not present here. And the court finds Citizens Bank of Ashburn, which contains no statutory analysis, unpersuasive based on the analysis below.
By its express language, 29 U.S.C. § 1056(d)(1) applies to " pension plan[s]." " Pension plan" is defined as:
any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program-
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,
regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.29 U.S.C. § 1002(2)(A). Dr. Martinez’s American Funds IRA was not established by " an employer or by an employee organization, or by both." Rather, an individual retirement account is governed by 26 U.S.C. § 408(a), which contains no anti-alienation provision. Moreover, pursuant to the express terms of 29 U.S.C. § 1051(6), part 2 of the statute, entitled " Participation and Vesting," - which includes 29 U.S.C. § 1056(d)(1), the anti-alienation provision on which Dr. Martinez relies- does not apply to " an individual retirement account or annuity described in section 408 of Title 26 ..." " Thus, Congress clearly intended to exclude IRAs from the anti-alienation protection of section 1056(d)(1)." Smith v. Winter Park Software, Inc., 504 So.2d 523, 524 (Fla.Dist.Ct.App. 5th Dist. 1987); see also, e.g., Johns v. Rozet, 826 F.Supp. 565, 567 (D.D.C. 1993) (" The Plaintiffs correctly note that this IRA is not protected from garnishment by ERISA because funds rolled over from an employee benefit plan into an IRA are not covered by ERISA" ).
The court therefore turns to Dr. Martinez’s exemption claim under Connecticut law. Specifically, Dr. Martinez claims that his American Funds IRA account is exempt pursuant to § 52-352b(m) and § 52-321a, namely, § 52-321a(a)(1)(B). Section 52-321a(a)(1) provides in relevant part: " Except as provided in subsection (b) of this section [not relevant here], any interest in or amounts payable to a participant or beneficiary from the following shall be exempt from the claims of all creditors of such participant or beneficiary: (A) Any trust, custodial account, annuity or insurance contract established as part of a Keogh plan or a retirement plan established by a corporation which is qualified under Section 401, 403, 404 or 409 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; (B) any individual retirement account which is qualified under Section 408 of said internal revenue code to the extent funded, including income and appreciation, (i) as a roll-over from a qualified retirement plan, as provided in subparagraph (A) of this subdivision, pursuant to Section 402(a)(5), 403(a) or 408(d)(3) of said internal revenue code ..." Therefore, among other things, § 52-321a(a)(1)(B) exempts from the claims of creditors any individual retirement account that is qualified under 26 U.S.C. § 408 to the extent funded, including income and appreciation, as a roll-over from a qualified retirement plan, as provided in subparagraph (A), which includes a qualified 401(k) plan established by a corporation (i.e., Cardiothoracic Surgery, P.C.).
Section 52-352b provides in relevant part: " The following property of any natural person shall be exempt: ... (m) Any assets or interests of an exemptioner in, or payments received by the exemptioner from, a plan or arrangement described in section 52-321a ..."
Section § 52-321a provides:
Plaintiff attempts to carve out an exception to the above exemption by relying on § 52-321a(c), which provides:
Nothing in this section shall affect the status of additions or contributions to a trust, account, contract, plan or other arrangement described in subsection (a) of this section if (1)(A) the debtor-participant or the debtor-beneficiary is a self-employed individual, partner of the entity sponsoring the Keogh plan or a one per cent or more shareholder of the corporation sponsoring the retirement plan, or in the opinion of a court of competent jurisdiction, exercises dominion and control over such proprietorship, partnership, corporation or other entity and (B) the addition or contribution is made less than ninety days before the filing of the claim on which the judgment is thereafter entered or (2) such additions or contributions are determined to be a fraudulent conveyance under applicable federal or state law.
General Statutes § 52-321a(c). Plaintiff seeks to apply this language to additions or contributions made to a qualified retirement plan prior to a roll-over from the now-terminated plan. The court concludes that § 52-321a(c) lends plaintiff no support in connection with additions or contributions made to the Cardiothoracic Surgery, P.C. 401(k) plan, or any income or appreciation therefrom. Specifically, the court concludes that the language in § 52-321a(c) on which plaintiff relies- " the debtor-participant ... is ... a one per cent or more shareholder of the corporation sponsoring the retirement plan" - does not apply when the account that is the subject of the turnover application and claimed exemption is an individual retirement account, as there simply is no " corporation sponsoring the retirement plan."
There appear to have been no actual additions or contributions to the American Funds IRA account after its creation. Although the relevant quarterly statement dated June 30, 2017 reflects one so-called " addition" of $11 since the initial funding, the amount distributed from the 401(k) for rollover purposes was $464,170.94 according to the 1099 tax form. (Pl. Ex. 6.) The June 30, 2017 quarterly statement for the American Funds IRA reflects this amount as $464,159.61 in " exchanges" and $11 in " additions." (Def. Ex. F.) Such statement demonstrates that there have been no " other" additions or contributions.
Based on the foregoing, plaintiff’s application with respect to Count Two is denied.
C. Count Three: Dr. Martinez’s Charles Schwab IRA
In Count Three, plaintiff seeks a turnover order relating to Dr. Martinez’s Charles Schwab & Co, Inc. individual retirement account (Schwab IRA). At the commencement of the hearing, plaintiff narrowed her application with respect to Count Three, stating that she presently seeks only documentation showing activity in the Charles Schwab IRA since April 15, 2010, and not the funds in the account. Dr. Martinez claims that his Charles Schwab IRA is exempt pursuant to § 52-321a(a)(1)(B). Although the record reflects that Dr. Martinez maintains a Charles Schwab IRA, the record is insufficient to permit the court to determine the extent to which any funds therein are exempt. Accordingly, plaintiff’s application with respect to Count Three is granted to the extent it seeks a turnover order directed to Charles Schwab & Co, Inc. to produce documentation reflecting account activity since April 15, 2010 relating to the IRA maintained by defendant William V. Martinez, Jr.
D. Count Four: Charles Schwab Joint Investment Account
Count Four seeks a turnover order relating to a Charles Schwab brokerage account held jointly by Dr. Martinez and Catherine, which has been and is being funded by Dr. Martinez and/or Catherine pursuant to their stipulated divorce decree dated August 1, 2007, for the purpose of paying for their children’s college educations (Education Account). See Martinez v. Martinez, No. FA 05-4015699S, judicial district of Hartford. Plaintiff’s application with respect to Count Four is denied. A separate memorandum of decision containing the court’s analysis with respect to this count will issue forthwith.
E. Count Five: Stoney River Lodge
In Count Five, plaintiff seeks a turnover order directed to Stoney River Lodge, an Alaska corporation with a principal place of business in Sleetmute, Alaska. In December 2015, Dr. Martinez, or someone on his behalf, made a $28,000.00 deposit with Stoney River Lodge in connection with Dr. Martinez’s moose hunting expedition in Alaska in the summer of 2017. As to Count Five, the application is denied. Even if the deposit were still held by the Stoney River Lodge, no evidence was presented that Stoney River Lodge is within the jurisdiction of this court.
F. Count Six: Golf Club of Avon
In Count Six, plaintiff seeks a turnover order directed to the Golf Club of Avon, insofar as it is in possession of personal property of Dr. Martinez, including golf clubs, golf equipment and accessories, and a redeemable certificate in the amount of $4,000.00. During the hearing, plaintiff proffered no evidence regarding this specific property and, therefore, this particular claim is deemed abandoned. Accordingly, as to Count Six, the application is denied.
IV. CONCLUSION
For the foregoing reasons, the court grants in part and denies in part Counts One and Three of the application. Counts Two, Four, Five, and Six of the application are denied.
NOTICE IS GIVEN THAT FAILURE TO COMPLY WITH ANY TURNOVER ORDER CONTAINED HEREIN MAY SUBJECT THE PERSON SERVED TO BEING HELD IN CONTEMPT OF COURT. SEE GENERAL STATUTES § 52-356b(d).
(a) If a judgment is unsatisfied, the judgment creditor may apply to the court for an execution and an order in aid of the execution directing the judgment debtor, or any third person, to transfer to the levying officer either or both of the following: (1) Possession of specified personal property that is sought to be levied on; or (2) possession of documentary evidence of title to property of, or a debt owed to, the judgment debtor that is sought to be levied on.
(b) The court may issue a turnover order pursuant to this section, after notice and hearing or as provided in subsection (c) of this section, on a showing of need for the order. If the order is to be directed against a third person, such person shall be notified of his right pursuant to section 52-356c to a determination of any interest claimed in the property.
(c) The court may issue a turnover order against a judgment debtor, without notice or hearing, upon affidavit by the judgment creditor or another competent affiant stating facts from which the court concludes that there is a reasonable likelihood that the judgment debtor is about to remove the property from the state or is about to fraudulently dispose of the property with intent to hinder, delay or defraud his creditors. The court shall expeditiously hear and determine any motion by the judgment debtor to dissolve such an ex parte order.
(d) Unless directed to a person who is before the court, any turnover order shall be personally served and shall contain a notice that failure to comply therewith may subject the person served to being held in contempt of court.
(a)(1) Except as provided in subsection (b) of this section, any interest in or amounts payable to a participant or beneficiary from the following shall be exempt from the claims, of all creditors of such participant or beneficiary: (A) Any trust, custodial account, annuity or insurance contract established as part of a Keogh plan or a retirement plan established by a corporation which is qualified under Section 401, 403, 404 or 409 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; (B) any individual retirement account which is qualified under Section 408 of said internal revenue code to the extent funded, including income and appreciation, (i) as a roll-over from a qualified retirement plan, as provided in subparagraph (A) of this subdivision, pursuant to Section 402(a)(5), 403(a) or 408(d)(3) of said internal revenue code, or (ii) by annual contributions which do not exceed the maximum annual limits set forth in Section 219(b) of said internal revenue code, determined without regard to any reduction or limitation for active participants required by Section 219(g) of said internal revenue code; (C)(i) any simple retirement account established and funded pursuant to Section 408(p) of said internal revenue code, (ii) any simple plan established and funded pursuant to Section 401(k)(11) of said internal revenue code, (iii) any Roth IRA established and funded pursuant to Section 408A of said internal revenue code, (iv) any education individual retirement account established and funded pursuant to Section 530 of said internal revenue code, (v) any account established pursuant to any qualified tuition program, as defined in Section 529(b) of the Internal Revenue Code, or (vi) any simplified employee pension established under Section 408(k) of said internal revenue code to the extent such pension is funded by annual contributions within the limits of Section 408(j) of said internal revenue code or roll-over contributions from a qualified plan, as provided in subparagraph (A) of this subdivision, pursuant to Section 402(a)(5), 403(a) or 408(d)(3) of said internal revenue code; (D) any medical savings account established under Section 220 of said internal revenue code, to the extent such account is funded by annual deductible contributions or a roll-over from any other medical savings account as provided in Section 220(f)(5) of said internal revenue code; (E) any pension plan, annuity or insurance contract or similar arrangement not described in subparagraph (A) or (B) of this subdivision, established by federal or state statute for federal, state or municipal employees for the primary purpose of providing benefits upon retirement by reason of age, health or length of service; or (F) any allocated or unallocated group annuity contract issued to an employer or a pension plan for the purpose of providing retirement benefits to employees or retirees of such employer under a defined benefit plan, which retirement benefits were protected under the Employee Retirement Income Security Act of 1974 or the federal Pension Benefit Guaranty Corporation prior to the effective date of the group annuity contract and which group annuity contract benefits will not be protected under the Employee Retirement Income Security Act of 1974 or the federal Pension Benefit Guaranty Corporation on and after the effective date of the group annuity contract. " (2) Any such trust, account, contract, plan or other arrangement under subdivision (1) of this subsection shall be (A) conclusively presumed to be a restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under the laws of this state, and (B) considered a trust which has been created by or which has proceeded from a person other than such participant or beneficiary, even if such participant or beneficiary is a self-employed individual, a partner of the entity sponsoring the Keogh plan or a shareholder of the corporation sponsoring the retirement plan.
(b) Nothing in this section shall impair the rights of an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended. Nothing in this section or in subsection (m) of section 52-352b shall impair the rights of the state to proceed under section 52-361a to recover the costs of incarceration under section 18-85a and regulations adopted in accordance with section 18-85a from any federal, state or municipal pension, annuity or insurance contract or similar arrangement described in subdivision (5) of subsection (a) of this section, provided the rights of an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, shall take precedence over any such recovery. Nothing in this section or in subsection (m) of section 52-352b shall impair the rights of a victim of crime to proceed under section 52-361a to recover damages awarded by a court of competent jurisdiction from any federal, state or municipal pension, annuity or insurance contract or similar arrangement described in subdivision (5) of subsection (a) of this section when such damages are the result of a crime committed by a participant or beneficiary of such pension, annuity or insurance contract or similar arrangement, provided the rights of an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, shall take precedence over any such recovery.
(c) Nothing in this section shall affect the status of additions or contributions to a trust, account, contract, plan or other arrangement described in subsection (a) of this section if (1)(A) the debtor-participant or the debtor-beneficiary is a self-employed individual, partner of the entity sponsoring the Keogh plan or a one per cent or more shareholder of the corporation sponsoring the retirement plan, or in the opinion of a court of competent jurisdiction, exercises dominion and control over such proprietorship, partnership, corporation or other entity and (B) the addition or contribution is made less than ninety days before the filing of the claim on which the judgment is thereafter entered or (2) such additions or contributions are determined to be a fraudulent conveyance under applicable federal or state law. (Footnotes omitted.)