Opinion
G043746 Consol. with G044210 Super. Ct. No. 02D009176
09-22-2011
In re Marriage of ALI and SOUSAN DARIAN. ALI DARIAN, Appellant, v. SOUSAN DARIAN, Respondent.
Lascher & Lascher, Wendy C. Lascher and Aris E. Karakalos; Ferguson Case Orr Paterson, Wendy C. Lascher and Aris E. Karakalos, for Appellant. Center for Enforcement of Family Support and Raymond R. Goldstein for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
Appeals from orders of the Superior Court of Orange County, Nancy A. Pollard and Ronald P. Kreber, Judges. Affirmed.
Lascher & Lascher, Wendy C. Lascher and Aris E. Karakalos; Ferguson Case Orr Paterson, Wendy C. Lascher and Aris E. Karakalos, for Appellant.
Center for Enforcement of Family Support and Raymond R. Goldstein for Respondent.
Appellant Ali Darian appeals from two orders denying his claims to exempt an investment account from levy as a retirement account. But he offered insufficient evidence to meet his burden of showing the account is exempt. We affirm.
FACTS
Respondent Sousan Darian obtained a writ of execution directing the Orange County Sheriff to enforce an approximately $140,000 debt against appellant, representing an unpaid equalization payment arising from their marriage dissolution. The sheriff delivered notice to Ameriprise Financial Services, Inc. (Ameriprise), it was levying "any and all Financial Accounts, Brokerage Accounts, Money Markets, Securities and/or Cash standing in the name of [appellant]."
Appellant filed a claim of exemption (claim 1). He sought to exempt from levy "[a]ll financial accounts, brokerage accounts, money markets, securities and/or cash standing in the name of [appellant] with Ameriprise Financial Services, Inc." He offered the following "facts which support this claim:" "I have a private retirement plan through Ameriprise Financial Services, and the levy is for property division and not subject to execution." He stated he was relying on "Code of Civil Procedure Sections 704.080 and 704.115."
All further statutory references are to the Code of Civil Procedure.
In a supplemental brief, appellant clarified his position. He stated, "[appellant's] retirement account is exempt from enforcement of a money judgment under . . . §704.115 (a) (1) as a 'private retirement plan.'" He asserted he was not required to file a financial statement to prove his exemption, but offered a supporting declaration. In it, he claimed he had two dependents, his new wife and a son; he earned "$0" and his wife "earn[ed] zero income"; his assets are an "IRA with a value of $160,000"; and he had obligations totaling over $95,000. He also stated, "The retirement account is for my support when I retire." He attached, but did not authenticate, a letter to him from Ameriprise. The letter stated, "Please accept this letter as confirmation that the above referenced RiverSource RAVA Advantage Plus annuity account is a Rollover IRA retirement account." The account number had been redacted except for the last four numbers ("2 004").
The court denied claim 1. It stated at the hearing, "[Appellant] failed to describe who controls the Ameriprise account or any account activities and that it was not established by a third party or an employer or a union, so [the court] feel[s] that it's not exempt under [section] 704.115 (a) (1). It is not truly for retirement purposes." The court also noted the financial statement failed to disclose his dependents' earnings, assets, and obligations.
Respondent later obtained a second writ of execution to enforce appellant's unpaid child and spousal support. The sheriff again notified Ameriprise it was levying "any and all Financial Accounts, Brokerage Accounts, Money Markets, Securities and/or Cash standing in the name of [appellant]," this time in an amount just over $120,000.
Appellant filed a second claim of exemption (claim 2), again invoking "Code of Civil Procedure Sections 704.080 and 704.115." Now he sought to exempt from levy "[a]ll financial accounts, brokerage accounts, money markets, securities and/or cash standing in the name of [appellant] with Ameriprise Financial Services, Inc.; specifically IRA Retirement Account # XXXX XXXX XXXX 2004." He stated, "I have a private retirement plan through Ameriprise Financial Services, Inc., and I need this retirement account to support myself and my dependents when I retire."
Appellant also submitted a financial statement on a judicial council form. He claimed he and his dependents combined earned $3,500 per month; their combined assets were $47 in bank accounts, $30,000 in tangible goods, and $158,000 in an "IRA ACCOUNT;" their monthly expenses are just over $6,700; and their total obligations exceeded $80,000. He attached a list of bullet points, in which he claimed he had "in excess of $60K in debt just on my credit cards and $40K to my former attorney."
The court denied claim 2, finding appellant "has not met his burden of proof." In so doing, it took judicial notice of a declaration filed in October 2007, in which appellant stated he had approximately $750,000 in real and personal property at that time. But the financial statement filed with claim 2 listed no real property. Appellant told the court his property "values have declined" since 2007, and so "right now [he] [had] no property with equity." The court responded, "I know. But based on the records and the court documents that the court has reviewed, I would still maintain that that would be the order of the court."
DISCUSSION
Appellant contends the court wrongly rejected his exemption claims because his Ameriprise account is exempt pursuant to section 704.115. "Orders granting or denying a claim of exemption are appealable. [Citation.] A judgment or order of the trial court is presumed correct, and must be upheld if it is supported by substantial evidence, no matter how slight it may be. [Citation.] Further, all evidence must be viewed in the light most favorable to the prevailing party, and all conflicts in evidence or in inferences must be resolved in favor of upholding the trial court's judgment or order. [Citations.] Where sufficiency of the evidence is questioned, the duty of an appellate court begins and ends with a determination that there is in the record evidence legally sufficient to support the judgment or order. [Citation.] Where there is no conflict in the evidence, or an issue is presented on appeal upon undisputed facts, the appellate court is free to draw its own conclusions of law." (Schwartzman v. Wilshinsky (1996) 50 Cal.App.4th 619, 626 (Schwartzman).) "[E]xemption statutes must be construed, so far as practicable, to the benefit of the judgment debtor." (Id. at p. 630.)
Section 704.115 exempts from levy "[a]ll amounts held, controlled, or in process of distribution by a private retirement plan, for the payment of benefits as an annuity, pension, [or] retirement allowance." (Id., subd. (b).) The statute defines several different kinds of exempt retirement plans.
One kind of exempt private retirement plan is a "private retirement plan[]." (§ 704.115, subd. (a)(1).) At first blush, this is an "unhelpful tautological definition." (In Re Barnes (Bankr. E.D. Cal. 2002) 275 B.R. 889, 896 (Barnes).)Courts have straightened out the circularity by gleaning additional elements of an exempt plan. First, "section 704.115(a)(1) applies only to retirement plans set up by private employers, 'not by individuals acting on their own, outside of the employment sphere.'" (Simpson, supra, 557 F.3d at p. 1018.) Second, a plan is not "exempt merely by virtue of its name." (In re Bloom (9th Cir. 1988) 839 F.2d 1376, 1378 (Bloom).)It must be actually "used and designed for retirement purposes." (Ibid.; accord Yaesu, supra, 28 Cal.App.4th at p. 14.) These additional elements make sense because "the amount exemptible in a private retirement plan under section 704.115(a)(1) is unlimited," instead of being "limited to what is necessary to support a debtor." (Barnes, supra, 275 B.R. at pp. 896-897.) Without the "private employer" and "designed and used for retirement" requirements, debtors could shield their every penny by unilaterally dubbing their bank accounts "retirement plans." (See id. at p. 897.)
"California has enacted legislation 'opting out' of the federal bankruptcy exemption scheme . . . ." (In re Simpson (9th Cir. 2009) 557 F.3d 1010, 1014 (Simpson).)And "the Bankruptcy Act permits an individual debtor to exclude from the bankruptcy estate property exempted by applicable state law." (Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 14, fn. 4 (Yaesu).) Thus, federal bankruptcy courts often apply California exemption statutes, and California courts often turn to federal decisions. (See id. at pp. 13-14 [relying on federal cases]; Schwartzman, supra, 50 Cal.App.4th at pp. 628-629 [discussing federal cases].)
A second kind of exempt retirement plan is an "individual retirement annuit[y] or account[]." (§ 704.115, subd. (a)(3).) But these plans are "exempt only to the extent necessary to provide for the support of the judgment debtor when the judgment debtor retires and for the support of the spouse and dependents of the judgment debtor taking into account all resources that are likely to be available for the support of the judgment debtor when the judgment debtor retires." (Id., subd. (e).) To show this necessity, the claimant must offer a financial statement. (§ 703.530, subd. (a).) "The financial statement shall be executed under oath, and include all sources and amounts of earnings and other income, a list of assets, and all outstanding obligations" for the judgment debtor and his or her spouse and dependents. (Schwartzman, supra, 50 Cal.App.4th at p. 627; accord § 703.530, subd. (b)(3)-(5).)
On appeal, appellant contends his Ameriprise account was exempt either as a "private retirement plan[]" pursuant to section 704.115, subdivision (a)(1) or a "individual retirement annuity[y] or account[]" pursuant to section 704.115, subdivision (a)(3). He does not differentiate his arguments for each of his two claims. But when he asserted claim 1 below, he repeatedly disclaimed reliance on section 704.115, subdivision (a)(3). Thus, we will determine whether he showed in claim 1 the Ameriprise account was an exempt private retirement plan. And we will determine whether he showed in claim 2 the account was exempt either as a private retirement plan or individual retirement account.
Appellant never asserts the Ameriprise account is exempt as a "[p]rofit-sharing plan[] designed and used for retirement purposes." (§ 704.115, subd. (a)(2).) That exemption appears inapplicable on its face.
As for claim 1, appellant failed to show that his Ameriprise account was a "private retirement plan[]." (§ 704.115, subd. (a)(1).) He did not show the account was "set up by [a] private employer[]," "'not by [himself] acting on [his] own, outside of the employment sphere.'" (Simpson, supra, 557 F.3d at p. 1018.) And he did not show the plan was actually "used and designed for retirement purposes." (Bloom, supra, 839 F.2d at p. 1378.) There is no "uniform test or a comprehensive list of relevant factors" on this point — "[a]ll factors are relevant, but no one is dispositive." (Id. at p. 1379.) But appellant offered almost no evidence on the account's design or use. He did not show who created the account, how it was funded, who controlled or managed it, what deposits or withdrawals have been or will be made, or how the funds will be used in retirement. (Cf. In re Jacoway (Bankr. 9th Cir. 2000) 255 B.R. 234, 239-240 [listing possible factors].) Appellant contends the letter from Ameriprise proved the account was a "rollover IRA." But that letter was not authenticated — it was just stapled to his declaration. And it does not describe the account meaningfully; it simply labels it. But a plan is not "exempt merely by virtue of its name." (Bloom, supra, 839 F.2d at p. 1378.)
And the letter addresses only one Ameriprise account, whose number ends in 2 004. But appellant sought to exempt "[a]ll financial accounts, brokerage accounts, money markets, securities and/or cash standing in the name of [appellant] with Ameriprise Financial Services, Inc." If nothing else, his claims are overbroad.
As for claim 2, appellant similarly failed to show his Ameriprise account was an exempt private retirement plan. He simply offered insufficient evidence to show the account was set up by a private employer and used and designed for retirement purposes. (See Simpson, supra, 557 F.3d at p. 1018; Bloom, supra, 839 F.2d at p. 1378.)
And appellant failed to show in claim 2 the Ameriprise account was exempt as an individual retirement account. (§ 704.115, subd. (a)(3).) An individual retirement account is "exempt only to the extent necessary" to support the debtor and his dependents upon retirement. (§ 704.115, subd. (e).) Appellant's incomplete financial statement failed to show the extent to which exempting the Ameriprise account was necessary. Appellant conceded at the claim 2 hearing he had omitted assets from the financial statement — a Laguna Niguel home worth $1.2 million and six rental condominiums. He claimed the home had a "$1,750,000 loan on it" and the condominiums were "upside down." But he failed to disclose any encumbrances on his financial statement. He also claimed he owed "in excess of $60,000 in debt just on [his] credit cards, and $40,000 to [his] former attorney," but the financial statement showed only that he owed less than $52,000 to various banks and his wife owed less than $32,000 to various banks. In short, appellant failed to file the required "list of [all] assets . . . and the value of such assets" (§ 703.530, subd. (b)(4)) or a complete list of "[a]ll outstanding obligations" (§ 703.530, subd. (b)(5)). He thus failed to give the court sufficient evidence to determine what amount, if any, of the Amerprise account would be necessary for retirement. (§ 704.115, subd. (e).)
Unhelpfully, the judicial council form contains a blank for "Real estate equity," not separate spaces for listing all real properties, their fair market values, and any encumbrances. Appellant filled in the blank, "$0."
Even if appellant had proved up claim 2, the exemption is not automatic. The court may apply otherwise exempt assets to satisfy child or spousal support. (§ 704.115, subd. (c)(1).) It must "take into account the needs of the judgment creditor, the needs of the judgment debtor and all other relevant circumstances." (§ 703.070, subd. (c).) Appellant's inadequate evidence does not allow this determination.
--------
Appellant's theme is that the court should have "giv[en] [him] the benefit of the doubt" and accepted his conclusory representations on their face. But his evidentiary showings woefully missed their marks, and his omissions reasonably damaged his credibility. Section 704.115 requires him to support his exemption claims with evidence regarding the account and his finances. While the statute should "be construed, so far as practicable," to his benefit (Schwartzman, supra, 50 Cal.App.4th at p. 630), it cannot be bent beyond its breaking point.
DISPOSITION
The orders are affirmed. Respondent shall recover her costs on appeal.
IKOLA, J. WE CONCUR: MOORE, ACTING P. J. ARONSON, J.