Title: In re Honeycutt

State: wyoming

Issuer: Wyoming Supreme Court

Document:

In re Honeycutt1995 WY 212908 P.2d 976Case Number: 95-119Decided: 12/28/1995Supreme Court of Wyoming
In re David Alan 
HONEYCUTT and Antoinette Marie Honeycutt, 

a/k/a Antoinette Marie 
Lentz, Debtors. Timothy KINGSTON, 

Appellant 
(Trustee/Objector),

v.

Antoinette Marie 
HONEYCUTT, 

Appellee 
(Debtor/Respondent).

Appeal from the United 
States Bankruptcy Court for the District of Wyoming, Peter J. McNiff, Chief 
Judge, the Supreme Court, Lehman, J.

Timothy C. 
Kingston, Cheyenne, for Appellant.

Georg Jensen of 
Law Offices of Georg Jensen, Cheyenne, for 
Appellee.

Before 
GOLDEN, C.J., and THOMAS, MACY, TAYLOR, and LEHMAN, 
JJ.

LEHMAN, 
Justice.

[¶1]      In this case we 
are asked to answer two questions certified to this court from the United States 
Bankruptcy Court for the District of Wyoming. The first concerns whether 
privately established and funded individual retirement accounts (IRAs) are 
exempt from attachment under W.S. 1-20-110(a)(i)(A) (Cum.Supp. 1994). The second 
asks, if such IRAs are not exempt, whether W.S. 1-20-110(a)(i)(A) violates the 
provisions of Article 1, Section 34 of the Wyoming 
Constitution.

[¶2]      We answer both 
questions in the negative.

FACTS

[¶3]      Antoinette 
Honeycutt (Debtor), along with her husband, filed for bankruptcy in the United 
States Bankruptcy Court for the District of Wyoming. Debtor filed a claim of 
exemption for an individual retirement account, which was acquired in March of 
1986 and currently has a value of approximately $2,200. Debtor based her claim 
of exemption upon W.S. 1-20-110(a)(i)(A). The funds used to acquire and maintain 
the IRA were from the Debtor's personal earnings. The IRA was not established 
pursuant to an employer's retirement plan, nor did any employer make 
contributions to it.

[¶4]      The bankruptcy 
trustee objected, arguing that the exemption provided by W.S. 1-20-110(a)(i)(A) 
was not applicable as the IRA in question was not paid or funded by an employer 
or established pursuant to a contract with an employer. The bankruptcy court 
then certified the two questions of law before us today. 

A.        Question 1: 
Whether a person may exempt from execution, attachment or other process, 
pursuant to Wyo. Stat. § 1-20-110(a)(i)(A) (Supp. 1994), an individual 
retirement account which is neither established by an employer of that person, 
nor paid to that person as an employee or retired 
employee[.]

[¶5]      Naturally, we 
must begin with the language of the statute at issue, W.S. 
1-20-110(a)(i)(A):

§ 1-20-110. Exemptions 
for retirement funds and accounts.

(a)       The following are 
exempt from execution, attachment, garnishment or any other process issued by 
any court:

(i)         Any 
person's interest in a retirement plan, pension or annuity, whether by way of a 
gratuity or otherwise, granted, paid or payable:

(A)       By any private 
corporation or employer to an employee or a retired employee under a plan or 
contract which provides that the pension or annuity shall not be 
assignable[.]

The 
determination of the legislature's intent when enacting a statute is this 
court's primary focus when interpreting a statute. Coones v. F.D.I.C., 894 P.2d 613, 616 (Wyo. 1995); Halpern v. Wheeldon, 890 P.2d 562, 564 (Wyo. 1995). A 
statute will be construed as a whole with ordinary and obvious meaning applied 
to words as they are arranged in paragraphs, sentences, clauses and phrases to 
express the intent of the legislature. Wyoming Ins. Guar. Ass'n v. Woods, 888 P.2d 192, 197 (Wyo. 1994). If a statute is clear and unambiguous, we will give 
effect to the plain and ordinary meaning of the words and will not resort to 
rules of statutory construction. Lancto v. City of Rawlins, 892 P.2d 800, 802 
(Wyo. 1995). Only if we find the statute to be ambiguous will we resort to 
extrinsic aids of statutory interpretation to determine the legislature's 
intent. Lancto, 892 P.2d  at 803.

[¶6]      As the statute 
makes clear, in order to be exempt from execution, attachment, garnishment or 
any other legal process, an IRA must be: (1) paid or payable by a private 
corporation or employer; (2) to an employee or a retired employee; (3) under a 
plan or contract; and (4) which provides that the IRA is not 
assignable.

[¶7]      Debtor's argument 
hinges upon the phrase "paid or payable . . . [b]y any private 
corporation or employer." (Emphasis added.) Debtor suggests that "private 
corporation" can refer to the plan administrator, which is the entity that 
manages the IRA, who, pursuant to the plan, will make the required payments to 
the holder of the IRA. The Debtor reasons that since the plan administrator is a 
private corporation and the IRA is payable by it, necessarily the IRA is exempt 
by the statute.

[¶8]      We must disagree 
with Debtor for two reasons. First, Debtor's interpretation does violence to the 
plain language of the statute. Debtor ignores the consequences of the 
conjunctive "or" between "private corporation" and "employer" in the statute. 
The statute should be read as saying "paid or payable by any private corporation 
. . . to an employee or a retired employee." Clearly, Debtor was not an employee 
or a retired employee of the plan administrator. In the context used, "employer" 
and "private corporation" refer to different types of 
employers.

[¶9]      Second, Debtor's 
interpretation would swallow the exemption. Following Debtor's logic, it is 
difficult to imagine any IRAs which were not exempt since all IRAs which were 
administered by private corporations would be exempt. Debtor's reading of the 
statute would render the purpose of enacting § 1-20-110 as an exemption 
superfluous as everything would be exempt, nullifying the attachment, execution 
and garnishment statutes.

[¶10]   We are not able to read the 
language of § 1-20-110(a)(i)(A) to allow an exemption for Debtor's self-funded 
IRA without twisting the definitions of the plain and ordinary words contained 
therein beyond any semblance of rational meaning. Therefore, we must answer the 
first certified question in the negative.

B.        Question 2: 
If a person is not entitled to exempt such an individual retirement account, 
whether Wyo. Stat. § 1-20-110(a)(i)(A) (Supp. 1994) violates the provisions of 
Article 1, Section 34 of the Wyoming Constitution, requiring the uniform 
operation of all laws of a general nature.

[¶11]   Article 1, Section 34 of the 
Wyoming Constitution provides that "[a]ll laws of a general nature shall have a 
uniform operation." In the past, this court has treated this provision of our 
constitution as an equal protection limitation. Allhusen v. State By and Through 
Mental Health Professions Licensing Bd., 898 P.2d 878, 884-85 (Wyo. 1995); 
Keiter and Newcomb, The Wyoming State Constitution: A Reference Guide, p. 71 
(1993). There are two levels of scrutiny in analyzing claims under this 
provision. If a suspect class or fundamental right is involved, we apply a 
strict scrutiny test which requires a showing that the classification created by 
the statute in question is necessary to achieve a compelling state interest. 
Allhusen, 898 P.2d  at 885 (quoting Kautza v. City of Cody, 812 P.2d 143, 147 
(Wyo. 1991)). If neither a suspect class nor a fundamental right is at issue, 
then we use a rational relationship test - whether the classification is 
rationally related to a legitimate state interest. Meyer v. Kendig, 641 P.2d 1235, 1239 (Wyo. 1982).

[¶12]   A fundamental right is a right 
which is guaranteed explicitly or implicitly by the constitution. Mills v. 
Reynolds, 837 P.2d 48, 53-54 (Wyo. 1992). We do not find, nor do the parties 
disclose, either an explicit or implicit guarantee by the constitutions of the 
United States or of Wyoming that there is a fundamental right involved in 
creating an exemption from court process for retirement plans. As we have noted 
in tax cases, an exemption from the operation of a statute is a matter of 
legislative grace.

[¶13]   When a class, rather than a 
fundamental right, is at issue, we utilize a four-part test for analyzing equal 
protection claims. The test asks:

(1) what class is harmed 
by the legislation and has that group been subjected to a tradition of disfavor 
by our laws; (2) what is the public purpose to be served by the law; (3) what is 
the characteristic of the disadvantaged class that justifies disparate 
treatment; and (4) how are the characteristics used to distinguish people for 
disparate treatment relevant to the purpose the challenged law purportedly 
intends to serve.

Allhusen, 898 
P.2d at 885-86; Johnson v. State Hearing Examiner's Office, 838 P.2d 158, 166-67 
(Wyo. 1992). The classification created here, IRAs funded by private funds, is 
not composed of a group that has been subjected to disfavor by our laws; 
certainly Debtor has not demonstrated this nor can we discern any basis for so 
concluding. Turning to the remaining three parts of the test, we conclude that 
the disparate treatment is justified.

[¶14]   Initially our attempt to discern a 
rational reason for the created classifications is hindered, once again, by the 
lack of legislative history regarding W.S. 1-20-110. Thus we must attempt to 
deduce, from the language and structure of the statute, a rational reason for 
the legislatively created classifications. We can identify two possible reasons 
which would rationally support the legislature's action. First, it is rational 
for the legislature to assume that the reasons supporting IRAs funded by 
employers are more likely to be legitimate than those funded by individuals. The 
legislature could have been afraid that if individual IRAs were exempt, then 
certain unscrupulous debtors may have been tempted to "park" a portion of their 
funds in an IRA prior to filing for bankruptcy. While there is certainly no 
insinuation that the debtor in this case had such motives, it is rational to 
presuppose that some in that class may be so motivated.

[¶15]   Second, the legislature may have 
thought it was sound public policy to encourage employers to set up such plans 
for their employees and that without the incentive of an exemption from court 
process, some employers might be reticent to do so for fear that they will 
become entangled in legal proceedings or have to incur administrative costs in 
forwarding such funds due to an employee to a third party under a court 
order.

[T]here must be some 
difference which furnishes a reasonable basis for different legislation as to 
different classes, and the differences must not be arbitrary and without just 
relation to the subject of the legislation. One who assails a classification 
must carry the burden of showing that it does not rest on a reasonable basis, 
but is essentially arbitrary.

Hoem v. State, 
756 P.2d 780, 782 (Wyo. 1988) (quoting Mountain Fuel Supply Co. v. Emerson, 578 P.2d 1351, 1354-55 (Wyo. 1978)). Debtor has failed to demonstrate that the 
classification created is arbitrary; and, having found a rational basis for the 
exemption contained in W.S. 1-20-110, we find the statute to be constitutional 
and thus answer the second certified question in the 
negative.

CONCLUSION

[¶16]   An IRA funded by an individual is 
not entitled to an exemption under W.S. 1-20-110, nor is the classification 
created by the statute violative of Article 1, Section 34 of the Wyoming 
Constitution. Both questions certified to this court from the Bankruptcy Court 
for the District of Wyoming are answered "No."