Commercial Research, LLC v. Roup

Decision Date05 December 2013
Docket NumberCourt of Appeals No. 12CA0453
Citation353 P.3d 859
PartiesCOMMERCIAL RESEARCH, LLC, Plaintiff–Appellee, v. Gary S. ROUP, Defendant–Appellant.
CourtColorado Court of Appeals

Stokes & Wolf, P.C., James R. Wolf, Denver, Colorado, for PlaintiffAppellee.

Gary S. Roup, Pro Se.


Opinion by JUDGE J. JONES

¶ 1 This case presents the question whether a health savings account (HSA) meeting the requirements of 26 U.S.C. § 223 (2006) is a “retirement plan” as contemplated by the Colorado statute exempting certain property from garnishment, section 13–54–102, C.R.S.2013. We hold that it is not and therefore affirm the district court's order denying judgment debtor Gary S. Roup's claim of exemption.

I. Background

¶ 2 Commercial Research LLC (Creditor) obtained an assignment of a default judgment that had been entered against Mr. Roup in a Texas court. Creditor then filed the judgment in Colorado and began collection proceedings against Mr. Roup's assets, including $3,729 held in an HSA. In the course of the proceedings, Mr. Roup asserted that the funds in his HSA were exempt from attachment or garnishment because the HSA qualified as a “retirement plan” under section 13–54–102(1)(s). The district court ruled that Mr. Roup's HSA was not a pension, retirement, or deferred compensation plan because the HSA merely allowed Mr. Roup to defer income on a tax-exempt basis to pay medical bills. The court concluded that no authority supported exempting the HSA from garnishment, and consequently the court ordered the funds in Mr. Roup's HSA to be released to Creditor.

¶ 3 In the course of the district court proceedings, Mr. Roup filed for bankruptcy protection and was granted a discharge. Because we were unable to determine from the record the effect that Mr. Roup's discharge had on the continuing validity of Creditor's garnishment against Mr. Roup's HSA, and were concerned that the case might have become moot, we remanded this case for further argument of the parties and for findings by the trial court. On remand, the district court ruled that the underlying judgment had been discharged in bankruptcy, but that the discharge did not extinguish Creditor's garnishment because Mr. Roup had not taken any affirmative step toward extinguishing the lien. See In re Haberman, 516 F.3d 1207, 1209 (10th Cir.2008) ([L]iens generally pass through bankruptcy unaffected.”); In re Deutchman, 192 F.3d 457, 460 (4th Cir.1999) (“In order to extinguish or modify a lien, the debtor must take some affirmative step toward that end.”). Mr. Roup does not challenge that ruling on appeal.

¶ 4 Because Creditor's garnishment of Mr. Roup's HSA survived bankruptcy, this case still presents an actual controversy, and we therefore proceed to consider the merits of the appeal. See In re Marriage of Wiggins, 2012 CO 44, ¶ 16, 279 P.3d 1.

II. Discussion

¶ 5 Mr. Roup contends that his HSA is a “retirement plan” and therefore exempt from garnishment under section 13–54–102(1)(s). We reject this contention.

A. Standard of Review and Principles of Statutory Interpretation

¶ 6 Mr. Roup's contention requires us to interpret the meaning of a statutory term. We review such an issue de novo.

Weinstein v. Colborne Foodbotics, LLC, 2013 CO 33, ¶ 8, 302 P.3d 263.

¶ 7 The principles governing our interpretation of a statutory term are well-established. Our primary goals are to discern and give effect to the General Assembly's intent. Hassler v. Account Brokers of Larimer Cnty., Inc., 2012 CO 24, ¶ 15, 274 P.3d 547 ; Krol v. CF & I Steel, 2013 COA 32, ¶ 15, 307 P.3d 1116. To do this, we look first to the statutory language; we give the words and phrases used in the statute their plain and ordinary meanings. Hassler, ¶ 15; Krol, ¶ 15. And we must also read the relevant statutory language in the dual contexts of the particular statute at issue and the entire related statutory scheme so as to give consistent, harmonious, and sensible effect to the statute's language. Jefferson Cnty. Bd. of Equalization v. Gerganoff, 241 P.3d 932, 935 (Colo.2010) ; BP Am. Prod. Co. v. Patterson, 185 P.3d 811, 813 (Colo.2008). If, after doing this, we determine that the statute's meaning is clear, we will enforce it as written and will not resort to other rules of statutory construction. Denver Post Corp. v. Ritter, 255 P.3d 1083, 1089 (Colo.2011) ; Krol, ¶ 15. But if we determine that the statutory language is ambiguous—that is, susceptible of more than one reasonable meaning—we may consider other indicators of legislative intent. See § 2–4–203, C.R.S.2013; Bd. of Cnty. Commis v. Costilla Cnty. Conservancy Dist., 88 P.3d 1188, 1193 (Colo.2004) ; see also A.M. v. A.C., 2013 CO 16, ¶ 8, 296 P.3d 1026 (“Statutory language is ambiguous when it is susceptible to multiple valid interpretations.”).

B. The Exemption Statute

¶ 8 Article XVIII, section 1 of the Colorado Constitution provides: “The general assembly shall pass liberal homestead and exemption laws.” To that end, the General Assembly has from time to time enacted laws placing specified property out of the reach of creditors. Many of these exemptions are currently collected in section 13–54–102. Of the many provisions therein, only one, subsection (1)(s), is relevant in this case. It provides:

(1) The following property is exempt from levy and sale under writ of attachment or writ of execution:
(s) Property, including funds, held in or payable from any pension or retirement plan or deferred compensation plan, including those in which the debtor has received benefits or payments, has the present right to receive benefits or payments, or has the right to receive benefits or payments in the future and including pensions or plans which qualify under the federal Employee Retirement Income Security Act of 1974 [ERISA], as amended, as an employee pension benefit plan, as defined in 29 U.S.C. sec. 1002, any individual retirement account, as defined in 26 U.S.C. sec. 408, any Roth individual retirement account, as defined in 26 U.S.C. sec. 408A, and any plan, as defined in 26 U.S.C. sec. 401, and as these plans may be amended from time to time....

¶ 9 In general, and as relevant here, this provision exempts from garnishment “any pension or retirement plan or deferred compensation plan.” Mr. Roup concedes that an HSA is not a pension plan or a deferred compensation plan; he contends only that it is a “retirement plan.”


¶ 10 An HSA is a “trust created or organized in the United States as a health savings account exclusively for the purpose of paying the qualified medical expenses of the account beneficiary, but only if the written governing instrument creating the trust meets [specified requirements].” 26 U.S.C. § 223(d)(1) (2006). “Under federal tax law, eligible individuals may establish and make pretax contributions to [an HSA] and then use those monies to pay or reimburse medical expenses.” Retail Indus. Leaders Ass'n v. Fielder, 475 F.3d 180, 196 (4th Cir.2007). If money is withdrawn from an HSA, but is not used to pay the beneficiary's qualified medical expenses, the money becomes taxable income and the beneficiary must pay an additional twenty percent penalty. 26 U.S.C. § 223(f)(2), (4)(A) (2006). However, the twenty percent penalty does not apply if the beneficiary makes the withdrawal after becoming Medicare-eligible at age sixty-five.

26 U.S.C. § 223(f)(4)(C) (2006) ; 42 U.S.C. § 1395c (2006).

¶ 11 HSAs are not considered “employee welfare benefit plans” for purposes of the provisions of Title I of ERISA. See United States Dep't of Labor, Employee Benefits Security Administration, Field Assistance Bulletin 2004–1 (Apr. 7, 2004), available at–1.html; see also Fielder, 475 F.3d at 196 (characterizing employer contributions to employees' HSAs as “non-ERISA healthcare spending”).

D. Analysis

¶ 12 Section 13–54–102(1)(s) does not define the term “retirement plan,” nor does any other provision of article 54 of title 13. In Dillabaugh v. Ellerton, 259 P.3d 550 (Colo.App.2011), a division of this court looked to the following three definitions of the term to discern its usual and ordinary meaning:

• A “retirement plan” is ‘a systematic arrangement established by an employer for guaranteeing an income to employees upon retirement according to definitely established rules with or without employee contributions.’ In re Staniforth, 116 B.R. 127, 131 (Bankr.W.D.Wis.1990) (quoting Webster's Third New International Dictionary 1939 (1986)).
• A retirement plan is [a]n employee benefit plan—such as a pension plan or Keogh plan—provided by an employer (or a self-employed person) for an employee's retirement.” Black's Law Dictionary 603 (9th ed. 2009). As the Dillabaugh division noted, Black's Law Dictionary further defines “employee benefit plan” as a [a] written stock-purchase, savings, option, bonus, stock-appreciation, profit-sharing, thrift, incentive, pension, or similar plan solely for employees, officers, and advisers of a company.” Id. at 602.
• A retirement plan is “a plan or account created by an employer, the principal, or another individual to provide retirement benefits or deferred compensation of which the principal is a participant, beneficiary, or owner, including [various enumerated qualified and nonqualified plans or accounts under the Internal Revenue Code].” § 15 –14–738(1), C.R.S.2013.

See Dillabaugh, 259 P.3d at 552–53.

¶ 13 Considering these similar definitions, the Dillabaugh division concluded that the term “retirement plan” is not ambiguous and held that a “future retirement obligation” owed to the judgment debtor was a retirement plan within the meaning of section 13–54–102(1)(s). In so holding, the division rejected the argument that only plans that possess attributes of the specific ERISA-qualified or tax-qualified examples listed in section 13–54–102(1)(s) are “retirement plans.” Id. at 553–54 ; but see In re Ludwig, 345 B.R. 310 (Bankr.D.Colo.2006) (applying the limiting...

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