United Guar. Residential Ins. Co. v. Dimmick, 94CA1226

• Decision Date: 22 February 1996
• Docket Number: No. 94CA1226,94CA1226
• Citation: 916 P.2d 638
• Parties: UNITED GUARANTY RESIDENTIAL INSURANCE COMPANY, Plaintiff-Appellant, v. Kenneth P. DIMMICK, Defendant, v. WOODY CREEK TAVERN, Garnishee-Appellee. . III
• Court: Colorado Court of Appeals

Page 638

916 P.2d 638

UNITED GUARANTY RESIDENTIAL INSURANCE COMPANY, Plaintiff-Appellant, v. Kenneth P. DIMMICK, Defendant, v. WOODY CREEK TAVERN, Garnishee-Appellee.

No. 94CA1226.

Colorado Court of Appeals Div. III.

Feb. 22, 1996.

As Modified on Denial of Rehearing

March 28, 1996.

Roger Moore, Denver, for Plaintiff-Appellant.

Dennis B. Green, Aspen, for Garnishee-Appellee.

Opinion by Judge BRIGGS.

Plaintiff, United Guaranty Residential Insurance Company (judgment creditor), appeals the trial court's order upholding the calculation by Woody Creek Tavern (garnishee) of the garnishable earnings of defendant, Kenneth M. Dimmick (debtor). The judgment creditor contends the trial court erred in its determination of the garnishee's liability under the judgment creditor's writ of garnishment and further erred in refusing to order the garnishee to pay its attorney fees. We reverse the order as it pertains to the calculation of earnings and affirm it as to attorneys fees.

In November 1993, the judgment creditor obtained a writ of garnishment against the debtor and had it served on the garnishee, the debtor's employer. The garnishee answered the writ, providing its calculations of the debtor's earnings and exemptions and stating that no earnings were available for garnishment. The judgment creditor traversed the answer, challenging the garnishee's calculations and its conclusion that no garnishable earnings existed.

At the outset of the traverse hearing, the garnishee conceded that it had erroneously deducted from earnings a debt owed to it by the debtor. However, it maintained that tips should not be included in the calculation of earnings for garnishment purposes because the debtor's tips were neither controlled by it nor owed to the debtor. The trial court agreed and determined that, after subtracting exemptions from the debtor's earnings calculated without including tips, the judgment creditor was entitled to judgment against the garnishee in the amount of $29.72, plus costs. The court ordered each party to pay its own attorneys fees. This appeal followed.

Soon after the judgment creditor filed its notice of appeal, the debtor filed for Chapter 7 bankruptcy. Several months later, the bankruptcy court concluded the bankruptcy proceedings by releasing the debtor from all dischargeable debts, including the debt owed to the judgment creditor.

I.

In its answer brief, the garnishee initially argues that, because the judgment creditor failed to take timely action in the bankruptcy proceedings, it is barred from taking any action to collect on the debt owing from the debtor, including proceeding with this appeal. We disagree.

The release from dischargeable debts enjoins creditors from collecting discharged debts as personal liabilities of the debtor. See 11 U.S.C. § 524(a)(2) (1994). It does not, however, prevent the judgment creditor from seeking to collect from the garnishee earnings of the debtor which the garnishee had a duty to withhold and pay to the judgment creditor. See 11 U.S.C. § 524(e) (1994) (with exception not applicable here, discharge of a debt of the debtor does not affect the liability of any other entity on such debt); City & County of Denver v. Jones, 85 Colo. 212, 274 P. 924 (1929) (after service of writ of garnishment, garnishee paid debtor's wages to debtor's assignee at its own risk); In re Marriage of Flohr, 672 P.2d 1024 (Colo.App.1983) (garnishee liable for not withholding funds of debtor); see also In re Sowers, 164 B.R. 256 (Bankr.E.D.Va.1994) (action against garnishee after debtor's bankruptcy concerned garnishee's liability, not debtor's debt). The discharge of the debtor's debts therefore does not affect this appeal.

II.

The judgment creditor contends the trial court erred in its conclusion that, in determining the potential liability of the garnishee, tips should not be included in "earnings" as defined in Colo.Sess.Laws 1991, ch. 65, § 13-54.5-101(2)(a)(I). We agree.

A.

Section 13-54.5-102(1), C.R.S. (1987 Repl.Vol. 6A) provides that, to the extent that earnings are not exempt from garnishment, a judgment creditor shall be entitled to garnish the earnings of a judgment debtor.

Two years preceding the garnishment in question, "earnings" had been defined under § 13-54.5-101(2), C.R.S. (1987 Repl.Vol. 6A) as "compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, avails of any pension or retirement benefits, or deferred compensation plan, avails of health, accident, or disability insurance, or otherwise." In the following year, however, the General Assembly amended the definition. The reference to "avails of any pension or retirement benefits, or deferred compensation plan" was deleted, and the remainder of the definition was divided into two subparts. At the same time, the concluding phrase, "or otherwise," was also stricken from the definition of "earnings." See Colo.Sess.Laws 1991, ch. 65, § 13-54.5-101(2)(a)(I) & (II). The statute in this amended form was in effect at the time of the garnishment in question.

In 1994, the definition of "earnings" was again amended to read "[c]ompensation paid or payable for personal services, whether denominated as wages, including tips calculated pursuant to the federal internal revenue service percentage of gross wages, salary, commission, or bonus...." Section 13-54.5-101(2)(a)(I), C.R.S. (1995 Cum.Supp.) (emphasis added).

We must determine whether, in this series of amendments, the definition of "earnings" in § 13-54.5-101(2) included tips at the time of the garnishment in question. For several reasons, we conclude that it did.

B.

When a statute is ambiguous, courts may consider the statute's legislative history, prior enactments of the statute, and subsequent amendments to determine legislative intent. See Thurman v. Tafoya, 895 P.2d 1050 (Colo.1995); Douglas County Board of Equalization v. Fidelity Castle Pines, Ltd., 890 P.2d 119 (Colo.1995).

When the General Assembly amends a statute, an intent to change the law is presumed. However, the presumption may be rebutted by a showing that the General Assembly amended the statute in order to clarify an ambiguity. See Douglas County Board of Equalization v. Fidelity Castle Pines, Ltd., supra.

Whether an amendment was intended as a change or clarification is a question of statutory interpretation subject to our independent review. In making our determination we may refer to the language of the statute and to the legislative history of the amendment. See Douglas County Board of Equalization v. Fidelity Castle Pines, Ltd., supra.

The definition of "earnings" in § 13-54.5-101(2) before 1991, "compensation paid or payable for personal services, whether denominated as wages ... or otherwise," is sufficiently broad to include tips. However, it is unclear whether, in deleting the words "or otherwise" from the definition in 1991, the General Assembly still intended tips to be included as part of earnings.

The legislative history of the 1991 amendment gives no indication of an intent to change the definition of earnings to exclude tips. Rather, the General Assembly's focus was on deleting the reference to pension or retirement benefits and deferred compensation plans. See, e.g., Tape Recordings of Testimony before House Judiciary Committee on H.B. 91-1233, 58th General Assembly, First Regular Session (February 12, 1991).

Furthermore, the legislative history of the 1994 amendment indicates that the General Assembly was then amending the definition of "earnings" in 13-54.5-101(2)(a)(I) in response to what it considered an incorrect interpretation of the statute that had been asserted after the 1991 amendment in an unreported and unidentified court proceeding. According to a sponsor, the purpose of the 1994 amendment was to clarify that the definition of "earnings" had always been intended to include tips. See Tape Recordings of Testimony before Senate on S.B. 94-088, 59th General Assembly, Second Regular Session (February...