Russell F. Dumka v. Lori Erickson and Edward Jones
2017 Ind. App. LEXIS 38
| Ind. Ct. App. | 2017Background
- Russell Dumka obtained a judgment (the MIKO Judgment) against Craig and Lori Erickson after a shareholder-derivative action and a receiver’s accounting; part of the judgment was assigned to Dumka and an unpaid balance remained.
- Dumka initiated proceedings supplemental and sought garnishment of an Edward Jones account listed as an "Inherited Traditional IRA" in Lori Erickson’s name, valued at about $51,115.
- At the supplemental hearing Dumka introduced Edward Jones’s interrogatory answers and Lori’s affidavit showing the IRA; Lori appeared pro se, did not assert any exemption, and said she had no objection when Dumka’s counsel proposed a final garnishment order.
- The trial court sua sponte took judicial notice of Indiana Code § 34-55-10-2(c)(6) and concluded that IRAs inherited by surviving spouses are exempt from garnishment, so it denied garnishment of Lori’s IRA.
- Dumka moved to correct error, arguing the court improperly asserted exemptions on Lori’s behalf and acted as her advocate; the court denied the motion and this appeal followed.
Issues
| Issue | Plaintiff's Argument (Dumka) | Defendant's Argument (Lori) | Held |
|---|---|---|---|
| Whether the trial court erred by denying garnishment based on an exemption Lori did not assert | Lori had the burden to plead/claim the exemption; failure to do so bars relief | (Implicit) The IRA is exempt as an inherited spouse IRA and the court may apply the exemption | The court may recognize the exemption sua sponte; denied garnishment — affirmed |
| Whether the trial court improperly took judicial notice of the exemption statute | Judicial notice cannot replace the debtor’s burden to plead and prove exemptions | The court may take judicial notice of statutes at any stage and apply governing law | Taking judicial notice of the statute was proper and not an abuse of discretion |
| Whether exceptions to the general rule (debtor must assert exemptions) apply here | Exceptions (Branham/Mims) do not apply; those cases differ (income vs. accumulated assets; small claims context) | As an unrepresented litigant, Lori is entitled to protection under the exceptions; court should protect exemptions tied to constitutional rights | Exceptions apply where fairness/practical realities warrant; here Lori was unrepresented and exemption was obvious, so exception applies |
| Whether the court became an advocate in violation of judicial conduct by asserting the exemption | The court acted as Lori’s advocate by asserting exemptions for her and thus violated impartiality | The court applied the law, took judicial notice of the statute, and performed its duty to enforce exemptions grounded in the constitution and statutes | Court did not err or violate judicial conduct; applying the law to undisputed facts was appropriate |
Key Cases Cited
- Jenkins v. Jenkins, 17 N.E.3d 350 (Ind. Ct. App.) (when appellee fails to brief, court reviews for prima facie error)
- Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628 (Ind. Ct. App.) (standard of review and scope of proceedings supplemental)
- Horton v. State, 51 N.E.3d 1154 (Ind.) (trial court’s taking of judicial notice reviewed for abuse of discretion)
- Branham v. Varble, 952 N.E.2d 744 (Ind.) (recognizing exceptions to debtor’s burden to assert exemptions; protect constitutional exemption rights)
- Mims v. Commercial Credit Corp., 307 N.E.2d 867 (Ind.) (trial court must protect exemptions for unrepresented debtors; burden on represented debtors to plead exemptions)
- Holtzleiter v. Holtzleiter, 944 N.E.2d 502 (Ind. Ct. App.) (presumption that trial court knows and applies the law)
- In re Klipsch, 435 B.R. 586 (Bankr. S.D. Ind.) (discussion that non-spousal inherited IRAs are not exempt but surviving-spouse-held IRAs can be exempt)