may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Bonny L. Halliday,
on behalf of her minor daughters,
Grace E. Halliday and Alexis M. Halliday,
Laurie Benefield and Greg Benefield,
on behalf of their minor daughter,
Bryne M. Benefield,
Ronald K. Halliday, III,
Filed July 15, 1997
Reversed and remanded
Rice County District Court
File No. C3-95-741
Robert J. Hennessey, James A. Lodoen, Lindquist & Vennum, PLLP, 80 South 8th Street, IDS Center Building, Minneapolis, MN 55402 (for Appellants Benefield)
Peter J. Schmitz, Schmitz & Ophaug, 220 Division Street, Post Office Box 237, Northfield, MN 55057 (for Respondent)
Considered and decided by Short, Presiding Judge, Lansing, Judge, and Klaphake, Judge.
Appellants Bonny L. Halliday and Laurie and Greg Benefield, on behalf of their minor daughters, appeal the trial court's judgment exempting respondent Ronald K. Halliday III's retirement funds from attachment under Minn. Stat. § 550.37, subd. 24 (1996). Because the record does not support the court's conclusion that the funds were reasonably necessary for respondent's retirement needs and because the court improperly ordered payment of attorney fees out of exempt funds, we reverse and remand.
The debtor's right to receive present or future payments, or payments received by the debtor, under a stock bonus, pension, profit sharing, annuity, individual retirement account, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, disability, death, age, or length of service:
* * *
(2) to the extent of the debtor's aggregate interest under all plans and contracts up to a present value of [$51,000] and additional amounts under all the plans and contracts to the extent reasonably necessary for the support of the debtor and any spouse or dependent of the debtor.
Id. The parties agree that respondent was entitled to the $51,000 exemption. They disagree with the interpretation and application of the part of the statute allowing additional exemptions as "reasonably necessary for the support of the debtor."
The basis for section 550.37 is the constitutional provision that "[a] reasonable amount of property shall be exempt from seizure or sale for the payment of any debt or liability." Minn. Const. art. I, § 12.
The policy underlying exemption of retirement income from creditors reflects a well founded desire of the legislature to insure that debtors, despite their debts, will nevertheless have a reasonable means to support themselves and their dependents.
Estate of Jones by Blume v. Kvamme, 529 N.W.2d 335, 339 (Minn. 1995). The exemption is identical to a federal bankruptcy exemption. See In re Bari, 43 B.R. 253, 255 (D. Minn. 1984) (explaining similarity between state and federal exemption under 11 U.S.C. § 522(d)(10)(E)).
The statutory language exempting "additional amounts * * * for the support" has been construed to include amounts reasonably necessary for retirement needs. See Westinghouse Credit Corp. v. J. Reiter Sales, Inc., 443 N.W.2d 837, 840-41 (Minn. App. 1989) (exemption allowed to meet basic retirement needs of debtor and spouse, based on present and anticipated income). Courts construing the identical federal exemption also focus on the debtor's needs at retirement. See, e.g., In re Schlee, 60 B.R. 524, 528 (D. Minn. 1986); In re Montavon, 52 B.R. 99, 103 (D. Minn. 1985); In re Taff, 10 B.R. 101, 107 (D. Conn. 1981) ("amount to be set aside for the debtor ought to be sufficient to sustain basic needs, * * * taking into account the special needs that a retired and elderly debtor may claim"). Determining "needs at retirement" involves consideration of the debtor's present and anticipated circumstances and earning capacity. Where the facts indicate that the debtor will be able to replenish the retirement fund, an additional exemption will be disallowed. See, e.g., In re Kochell, 732 F.2d 564, 565-66 (7th Cir. 1984) (exemption denied because debtor was relatively young, had present earning capacity, and could easily reestablish retirement fund). The trial court's analysis in this case relied on factors other than those related to retirement and does not support its decision to exempt the funds in excess of $51,000.
Respondent presently has substantial debt and liabilities arising out of criminal convictions and civil damages for his sexual abuse of his daughters and other minors. A court has ordered him to pay for his victims' therapy, his children's support, his own treatment, and criminal fines. Appellants, on behalf of respondents' daughters and niece, have a judgment against him for compensatory and punitive damages in the amount of $10,550,000. Respondent presently is unemployed while he attends court-ordered sex offender treatment.
Despite his current situation, respondent can be anticipated to obtain gainful employment and replenish at least some retirement funds to add to his $51,000 exempt funds. Respondent is 44 years old and, prior to his criminal convictions, was a successful anesthesiologist. Although he has lost his medical license in Minnesota, he is relatively young, highly educated, and has many years of potential employment. He has no physical health problems, and his primary therapist at the treatment center believes he will soon be ready to work.
Because we conclude that an exemption over $51,000 is justified only if there are retirement needs and the record is silent as to respondent's retirement needs, we remand to allow respondent an opportunity to present evidence on this issue.
Further, we find no authority for the trial court's ordering respondent to pay attorney fees out of his $51,000 exempt retirement fund. Therefore, we reverse on that issue.
Reversed and remanded.
[ ]1The parties agree that the applicable Department of Commerce adjustment to the previous $30,000 exemption is $51,000, effective July 1, 1996. See Minn. Stat. § 550.37, subd. 4a (setting out index and indicating periodic changes in dollar amounts of exemptions).