### IN THE CO URT OF APPEALS OF TE NNE SS EE AT JACKSON Mar ch 23 , 20 11 Ses si on

PATRICI A ANN GHO MASSE Y v. GREG ORY JO EL CASALS

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.

R a c h a e l E m i l y P u t n a m , M e m p h i s , T e n n e s s e e , f o r t h e a p p e l l e e , P a t r i c i a A n n G h o M a s s e y

.

O P I N I O N

This appea l is the latest chapte r in a long sag a betwee n these parties. I n 2 0 0 5, Appellee Patricia Ann Gho Massey (M s

. M as s ey ), filed a petition in the Shelby County J uvenile Court to modify Appellant Gre g ory J oel Casals’ obliga tion for support of the parties’ child born in May 1994. I n J uly 2008, the Shelby County J uvenil e Court enter ed an order modify ing Mr. Casals’ child support obliga

tion and order ing him to pay Ms. Massey ’s attorney ’s fee s in the amount of $22,214. Mr. Casals appea led the juvenile court’s order incre asing his child support obliga tion and awa

rding attorney ’s fee s to Ms. Massey

. Mr. Casals also filed a motion in the trial court to stay the judgme nt pending appea l. The trial court denied Mr. Casals’ motion to stay

. We aff irmed the judgme nt of the juvenile court, including the awa rd of attorney ’s fee s. Massey v. Casals
, 315 S.W .3d 788 (Tenn. Ct. App. 2009).

The prese nt appea l conce rns the g arnishment of acc ounts held by Mr. Casals with E*Tra deBa

nk to satisfy the awa

rd of attorney ’s fee s to M s

. M as s ey

. I n November 2008, an office r of the juvenile court cause d to be issued a g arnishment of Mr. Casals’ acc ounts with E*Tra de Ba nk in order
to satisfy the awa

rd. An amende d g arnishment was issued in January 2009. On J anuar y 27, 2009, Mr. C asals filed a m o t i o n t o quash t he writ of gar nishment on the grounds that the accounts wer e exempt from g arnishment under Tenne ssee Code Annotated § 26-2-105 and/or § 26-2-111. He also

asser ted that the juvenile court’s order was not a final judgme nt beca use the matter was pending in
t h i s Court. Ms. Massey ’s leg al counsel, Racha el E. Putnam (Ms. Putnam) filed a response in Fe bruar y 2009. I n her response , Ms. Putnam asser ted that the court’s J uly 2008 order beca me a final order thirty day s afte r it was enter ed wher e the judgme nt had not been stay ed. She further asser ted
t hat Mr. Casals’ acc ounts wer e not exempt from g arnishment under § 26-2-105 or § 2 6 -2 -1 1 1

. Following a hear ing in Marc h 2009, Refer ee Sheldon McCall dismiss ed Mr. C as al s ’ motion to quash. Mr. Casals filed a reque st f or a hear ing befor e the judge
, and in Marc h 2009 filed a motion
to stay the matter pending appea l of the court’s denial of his mo t i o n t o quash. I n his motion, he

asser ted that he would incur a tax penalty in the amount of $5,000 if the g arnished f unds were not returne d to his E*Tra de I RA acc ount. The matter was hear d by a specia l judge in Dec ember 2009. I n Fe bruar

y 2010, the spec ial judge rec onfirmed the r efe ree ’s ruli ng as t he decre e of the cour t and dismiss ed Mr. Casa ls’ motion to quash. Mr. Casals filed a notice of appe al to this Court.

Issue Presented

The deter minative issue prese nted by this appea l, as we perc eive it, is whether the trial court

err ed by deter

mining that Mr. Casals’ acco u n t s we re not exempt from g arnishment pursuant to Tenne ssee Code A nnotated §§ 26-2- 105 and 26-2- 111.

Stan dard of Revie w

This matter prese nts both questions of fac t and law. We revie w the trial court’s finding s of fac t de novo upon the re cord, w ith a presumption of cor rec tness. Tenn. R. App. P. 13(d). We will
not reve rse the trial court’s fac tual fin d ings unless they are contra ry to the preponde ranc e of the evidenc e. Berryhill v. Rhode s , 21 S.W .3d 188, 190 (Tenn. 2000). To preponde rate ag ainst a trial court’s finding of fac t, the evidenc e must support another finding of fac t with g rea ter convincing evidenc e. Mosley v . McCanless
, 207 S.W .3d 247, 251 (Tenn. Ct. App. 2006). We r eview the trial court’s deter

minations on questions of law, and its application of law to the fac ts, de novo , with no presumption of corr ectne ss. Bowden v. W ard
, 27 S.W .3d 913, 916 (Tenn. 2000). Simi larly
, we

rev i ew mix ed questions of law and fac t de novo , with no presumption of corr ectne ss. State v. Thacker , 164 S.W .3d 208, 248 (Tenn. 2005)

.

The construction of a sta t u t e al s o is a question of law which we revie w de novo , with no presumption of corr ectne ss attache d to the deter mina t i o n o f the trial court. W aters v. Farr
, 291 S.W .3d 873, 881 (Tenn. 2009). When interpre ting a statute, we seek to asce rtain and eff ectua te the leg islature’ s intent, neither unduly restric ting nor expanding the statute bey ond its intended scope in light of the context of the entire statute and the natura l and ordinary meaning of the s tatutory lang uage. Hathaway v. First Family Fin. Servs., Inc.
, 1 S.W .3d 634, 640 (Tenn. 1999) (citations

-2-omitted); JJ & TK Corp. v. Bd. of Comm’rs
, 149 S.W .3d 628, 630-31 (Tenn. Ct. Ap p

. 2 004)

(citations om i t t ed). When the lang uag e of the statute is clea r, we must utiliz e the plain, acc epted meaning of t he words used by the leg islature to asc erta in the statute’s purpose and application. I f the wording is ambig uous, howeve r, we must look t o the entire statutory scheme and at the leg islative history to a scer tain and eff

ectua te the leg islature’s intent and pur pose. Eastman Chem. Co. v. Johnson , 151 S.W .3d 503, 507 (Tenn. 2004) (citations omitted).

Discussion

We beg in our discussion by noting that this appea l conce rns the application of the exemptions from gar

nishment provided by

Tenne ssee Code A nnotated §§ 26-2-105 and 26-2-111
to an awa rd of attorney ’s fee s in an action to modify child support. I t does not conce rn g arnishment of ac counts to satisfy

a child support orde r.

Tenne ssee Code A nnotated § 26-2- 105(b) pr ovides:

Ex cept as provided in subsection (c)
, any funds or other asset s p ay ab l e to a participa nt or benef

iciary from, or any interest of any participa nt or benef

iciary in, a

re tirement pl an which is qualified under §§ 401(a)
, 403(a)
, 403(b), 408 an d 4 0 8 A,

or an Arc her m edica l saving s acc ount qualified under § 220 or a health saving s

acc ount qualified under § 223 of the I nterna l Revenue Code of 1986, as amende d, are exempt from any and all claims of cre ditors of the participa nt or benef

iciary
, except the state of Tenne ssee. All rec ords of the debtor conce rning such plan and of the plan

conce rning the debtor’ s participation in the plan, or interest in the plan, ar e exempt from the subpoe na proc ess.

Tenn. Code Ann. § 26-2- 105 (Supp. 2010). This provision is limited by subsection 105(c)
, which provides that, any plan descr ibed in subsection 105(b), except a public plan under subsection 105(a)
, is not exempt from the claims of an alterna te pay ee under a qualified domestic rela tions order

. Thus, subject to statutory limit ations, Mr. Casals’ acc ounts with E*Tra de are exempt from g arnishment
to satisfy a judgme nt for attorney ’s fee s if they constitute a retire ment plan that is qualified under the

enumer ated se ctions of the I nterna l Revenue Code.

I n his brief to this Court, Mr. C asals asserts t h at t he undis puted proof in this case is that his E*Tra de acc ounts qualify as retire ment acc ounts under section 408 of the I nterna l Re venue Code. This section curr ently

provides, in per

tinent part:

(a) I ndividual retire ment acc ount.--F or purposes of this section, the term “individual retire ment acc ount ” m ea n s a trust cre ated or org anized in the Unit ed S tates for the exclusive benef

it of an individual o r h i s benef iciarie s, but only if the written
g overning instrument cre ating the trust meets the following require ments:

(1) Ex cept in the case of a rollover contribut i o n descr ibed in subsection (d)( 3) in section 402(c)
, 403(a) (4), 403(b)( 8), or 457(e) (16), no

-3-contribution will be acc epted unless it is in cash, and contributions will not be acc epted for the taxable y ear on behalf of any individual in excess of the amount in effe ct for suc h taxable y ear under se ction 219(b)( 1)(A)

. (2) The trustee is a bank (as define d in subsection (n)) or s u ch other
person who demonstrates to the satisfac tion of the Secre tary that the manner in which such other person will a dminist er the trust w ill be consistent with the re quirements of this sec tion. (3) No part of t h e t ru st funds will be invested in life insurance
contra cts. (4) The interest o f an individual in the balanc e in his acc ount is nonforf eitable. (5) The assets of the trust will not be commingle d with other proper ty except in a common trust fund or c ommon investment fund. (6) Under reg

ulations presc ribed by the Secre tary , rules simil ar to the rules of section 401(a) (9) and the inci d ental death benef it require ments of section 4 0 1 (a) shall apply to the distribution of the entire interest of an individual for whose be nefit the trust is maintained.

26 U.S.C.A. § 408(a).

I n her brief to this Court, Ms. Massey asser ts tha t the acc ounts at issue are not I RA acc ounts that are exem p t fr o m gar n ishment under the statutes. Ms. Massey contends that opinions of the United States Ba

nkruptcy Court stand for the proposition that, p u rs u an t to Tenne ssee Code Annotated § 26- 2-111(1) (D), Mr . Casals’ acc ounts do not qualify for the e x emption provided in § 26-2-105.

Tenne ssee Code A nnotated § 26-2- 111 provides:

I n addition to the proper

ty exempt under § 26-2-103, the following shall be exempt from execution, seizure or attachme nt in the hands or possession of any person who is a bona fide citizen permane ntly residing in Tennesse e: (1) The debtor’s r ight to re ceive :

(A) A social secur ity benef it, unemploy

ment compensa tion, a Families First prog ram benef it or a local public assistance benef

it; (B ) A ve tera

ns’ bene fit; (C) A disability
, illness, o r u n em ploy ment benef

it, or a pension that vests as a r esult of disability ; (D) To the same extent that ear nings are exempt pursuant to § 26-2-106, a pay

ment under a stock bonus, pension, profitsharing
, annuity
, or simil ar plan or contra ct on acc ount of death, a g e or le ng th of servic e, unless: (i) Such plan or

contra ct was established by or under the

-4-auspice s of an insider that employ ed the de btor at the time that the debtor' s rig hts under such pla n or contra ct ar ose; (ii) Such pay

ment is on acc ount of ag e or leng th of service ; and (iii) Such plan or contra ct does not qualify under §§ 401(a)
, 403(a)
, 4 0 3(b), 408, 408A, or 409 of the I nterna l Revenue Code of 1954 [26 U.S.C. § § 4 01(a)
, 403(a)
, 403(b), 408, 408A or 409]; The assets of the fund o r plan from which any such
p ay ments are made, or are to be made, are exempt only to th e extent t h at t he debtor has no rig ht or option to rec eive them

ex cept as monthly or other periodic pay ments beg inning at o r afte r ag e fifty -eig ht (58). Assets of such funds or plans are not exempt if the debtor may , at the debtor’s option, ac ce l era te pay ment so as to rec eive pa

y ment in a lump sum or in periodic
pay ments over a

period of sixty

(60) months or less; (E) Alimony to the extent that pay ment become s due more than thirty (30) day s afte r t he debtor as s er t s a claim to such ex emption in
any judicial proce eding ; and (F ) Child support pay

ments to the extent that pay ment become s due more than thirty (30) day s afte r the debtor asser ts a claim to such exemption i n any

judicial proce eding ; (2) The debtor’s rig ht not to exceed in the aggr ega t e fi ft een thousand dollars ($15,000) to re ceive or prope rty that is trace able to: (A) An awa

rd not t o ex ce ed fi v e t housand dollars ($5,000) under a crime vic tim’s repar ation law; (B ) A p ay

m en t , n o t to exceed seven t h o u s an d fi v e hundred dollars ($7,500) on acc ount of pe rs o n al bodily injury
, not including pain and suffe ring or compensa tion for actua l pecunia ry loss, of th e debtor or an individual of whom the debtor is a de pendent; or (C ) A p aym en t n o t t o ex cee d ten thousa n d d o l l ar s ($10,000) on a ccount of the wrong ful dea th of an individual of whom the debtor w as a de pendent; (3) A pay

ment in compe n s at i on of loss of future ear nings of the debtor or an individual of whom the debtor is or was a depende nt, to the ext en t reasonably

nece ssary for the suppor

t of the debtor a

nd any depende nt of the debtor; (4 ) The debtor’s ag g reg ate interest, not to exceed one thousand nin e h u n d re d dollars ($1,900) in value in any implements, profe ssional books, or tools of the trade of the de btor or the tra de of a depende nt of the debtor; (5) Professionally presc ribed health car e aids for the debtor or a depende nt of the debtor; and (6) L iquid assets, stocks or bonds, to the extent of the amount of any obliga tions owed by the debtor pur suant to any final cour

t order or judgme nt for child support.

-5-T h e exemption shall be eff ective as of the date such exemption is claimed b y t h e debtor or by an intervening repr es entative of the child or children to whom such support is owed. Fur

ther, this exemption is only valid if such assets are immediately deposited into court by the debtor or immediately executed upon, seized or attache d

on behalf of t he child or children for the par tial or full satisfac tion of child support obliga tions.

Tenne ssee Code A nnotated § 26-2- 111(Supp. 2010).

Ms. Massey cites In Re Pee ler
, 37 B.R. 517 (B ankr. M.D. Tenn. 1984), In Re Paul Don Elsea
, 47 B.R. 142 (B ankr. E.D. Tenn. 1985), and In Re W illie Edward Barrett Ca ssada v. W estvac o Corporati on, B a n ke rs Trust Company and W illie Edward Barrett Cassada
, 86 B.R. 541 (B ankr. E.D. Tenn. 1988) for the proposition that, under § 26-2-111( 1)(D)
, Mr. Casals’ ac co u n t s d o not qualify for the exemption provided by subsection 105(b) beca use the acc ounts “we re all self-dire cted and under the complete control of” Mr. Casals. Ms. Massey contends that a debtor is prec luded from “cla iming the exemption of an I RA acc ount when the owner of the acc ount can withdraw the funds contained in the a ccount a t any time.”

Mr. Casals, on t h e o t h er h and, asser ts that beca

use the unref

uted proof establishes that the

acc ounts qualify under section 408 of the I nterna l Revenue Code, they ar e “ a b solutely ” exempt under section 2-16-105( b). He contends that Tenne ssee Code Annotated § 26-2-111 is inapplicable to this

case

. Mr. C asals further arg ues t hat, although di cta found in In Re Pee ler is somewhat co n fu s ing and ambig uous, the case s cited by Ms. M as s ey ar e not rele vant to this appea l wher e they do not implicate the g arnishment of I RA acc ounts.

Up o n revie w of the rec ord, we observe that there has been some confusion in this ca s e

co n cer ning the adequa cy of notice; exactly which of Mr. Casals’ acc ounts wer e frozen an d / o r liquidated upon g arnishment (appa rently
, the g arnishment was amende d at least twice)
, and which of those are asser

ted to be I RA acc ounts; and whether Mr. Casals proper ly filed a claim for exemption. The acc ounts that are the subject of this appea l are two acc ounts, one which ends in 21 (ac count 21) a

nd one which e nds in 91 (acc ount 91).

At the Dec ember 2009 hear ing of the matter, Mr. Casals t es t i fi ed t h at the acc ounts wer e traditional I RAs, a

nd that acc ount 91 was a rollover I RA. Upon questioning by the juvenile court, Mr. Casals testified that all his acc ounts with E*Tra de had been liquidated and the funds sent to the juvenile court, including acc ounts 2 1 and 91. Mr. C asals testi fied that the t wo accounts had been opened five or six y ear s ag o, when he rolled over a 401k plan. Mr. Casals testified that althoug h he filed a claim for exemption in “some particula r court,” althoug h not the juvenile court, with respe ct to some acc ounts, he did not file a claim of exemptions for acc ounts 21 and 91 b ec au s e they are statutorily exempt. Mr. Casals could not reca ll in which court he f iled a cla im of exempti on. Mr. Casals testified t h at t he I RA acc ounts wer e “self-dire cted,” and that the frequenc y of hi s trade s in them varie d. He testified tha t in 2008, he trade d in the acc ounts “often.”

-6-The transcr ipt of the hear ing befor e the trial court demonstrates that the court was fac ed with

four que stions in t his case: ( 1) whe ther a ccounts 21 and 91 wer e I RA acc ounts under § 408 of t he I nterna l Revenue Code; ( 2) whe ther the matter is g overne d by Tenne ssee Code A nnotated § 26-2- 105(b), § 26-2-111( 1)(D)
, or both; (3) if the acc ounts wer e I RA acc ounts qualified under § 408, wer e they exempt from g ar n i s h m en t under the Tenne ssee exemption statutes; (4) if the acc ounts are exempt under the Tenne ssee statutes, whether a claim of exemption must be filed in order to exempt them from g arnishment.

The transcr ipt ref

lects that the trial court deter mined that acc ount 21 and acc ount 91 wer e I RA

acc ounts; that section 26-2-105( b) and section 26-2-111( 1)(D) are both applicable to this matter; and that I RA acc ounts ge nera lly are exempt under the Code. The c ourt also deter mined that, althoug h Mr. Casals’ acc ounts wer e I RA acc ounts, they wer e not exempt under section 26-2-111( 1)(D) wher e they wer e self-dire cted acc ounts in which Mr. Casals could trade at will, and wher e Mr. Casals could

acc es s and withdraw funds from the acc ount, albeit by incurring a tax penalty

. The trial court conclud ed t hat the funds there fore wer e not exempt from g arnishment under the Tenne ssee exemption statutes. The trial court appea rs to have prete rmitted the question of whether Mr. Casals

was requir ed to file a claim of exemption as unnece ssary in light of the court’s construction and application of the statutes.

We first turn to the trial court’s deter mination that acc ounts 21 and 91 wer e I RA acc ounts. Despite Ms. Ma ssey ’s asser tion that the acc ounts did not qua lify as I RA acc ounts, the re is nothing i n t he rec ord to preponde rate ag ainst the trial court’s finding

. We are not insensitive to M s

. Massey ’s asser

tions with respe ct to the cre dibilit y of Mr. Casals reg arding h i s fi nancia l status throug hout this long dispute. See Massey v. Casals
, 315 S.W .3d at 792. Howeve r, the only evidenc e contained in the rec ord reg arding the nature of the acc ounts was Mr. C as al s ’ t est imony that the

ac co u nts wer e traditional I RA acc ounts, and that they wer e established by rollover funds fr o m a 401(k) acc ount. M s

. Massey ’s arg ument that the acc ounts are not I RA acc ounts qualified under section 408 of the I nterna l Revenue Code for the purpose of the exemption provided by section 26-2- 105(b) is predic ated only on the fac t that the investments in the acc ounts w ere self-dire cted by Mr. Casals. Additional l y , M r. C asals’ testimony that the funds could not be acc essed without considera ble tax penalties is not dis puted by any evidenc e in the re cord.

We next turn to Mr. Casals’ asser tion that the trial court err ed by concluding that the acc ounts

wer e not “absolutely ” exempt under section 2-26-105( b) in light of section 26-2-111( 1)(D)

. At the oral a rg ument of this matter befor e this Court, counsel for Mr. Casals asse rted sec tion 26-2-111 is irrele vant to this ca s e, an d that the matter is g overne d exclusively by section 26-2-105( b). Mr. C as als’ brief ref

lects this asser

tion wher e it does not addre ss the implications of the limit ing lang uag e in section 26-2-111( 1)(D)

. Ms. Massey ’s arg ument, on the other hand, as we perc eive it, is that the trial court’s conclusion is corr ect beca use, under bank ru p t cy case law interpre ting I RA

acc ounts in light section 26-2-111, the acc ounts are not exempt wher e the investments in the funds

wer e dire cted by

Mr. Casals and w here the assets c an be a cce ssed notwithstanding ta x penalties.

The statutes providing exemptions from g arnishment are to be liberally construed in favor of the debtor. W

right v. Brooks
, 49 S.W

. 828 829 (Tenn. 1899); Newark Ins. Co. v. Seyfe rt , 392 S.W .2d

-7-336, 345 (Tenn. Ct. App. 1964). Additionally
, we note that opinions of the bankruptc y co u rt,

althoug h persua sive, are not binding on this Court. Tenne ssee, moreov er , h as “opted out” of the exemptions scheme provided by the Ba n k ru p t cy Reform Act of 1978, 11 U.S.C. 522; the only

ex em p t ions available to the citizens of Tenne ssee are those provided by the Tenne ssee C o d e. Tenne ssee Code Annotated § 26-2-112 (20 0 0 ) ; I n r e Le n ore Berry Ross Storey v. Bradford Furniture Co., Inc.
, 910 S.W .2d 857, 859 (Tenn. 1995). Wit h these observa tions in mind, we turn first to the plain lang uag e of the Code and then to the c ase la w re lied on by

the par ties.

As noted above, Tenne ssee Code Annotated § 26-2-105(b ) provides an exemption from
g arnishment for retire ment plans qualified under §§ 4 0 1 (a)
, 403(a)
, 403(b), 408, and 408A of the I nterna l Revenue Code. This exemption is in addition to the persona l proper ty exemptions aff

orded by sections 26-2-103 and 104; the disposable ear nings exemption provided by section 26-2-106; the exemptions fo r d ep endent children provided by section 26-2-107; and the insurance benef its exemption af

fo rded by section 26-2-110. Section 26-2-111 provides “additional ex emptions” for “ce rtain benefit p aym en t s - awards - tools of t rade - health car e aids - child support obliga tions.” Section 26-2-111( 1)(D) states that, in a ddition to the exemption provided by section 26-2-103, the debtor shall be entitled to an exemption of his rig ht to rec eive a pay ment under, inter alia
, a pension

or “similar plan” to the same extent t h at ea rn i ng s are exempt pursuant to section 26-2-106. The exemption is available u n l es s , i nter alia
, the plan or contra ct does not qualify under §§ 401(a)
, 403(a)
, 403(b), 408, 408A or 409 of the I nterna l Revenue Code. Thus, the plain lang uag e of the section applies to the r ights to re ceive pay ments from a pe nsion or simil ar pla n.

Subsection 111(1)(D ) fur ther provide s, howeve r,

[t ]he assets o f t h e fu nd or plan from which any such pay ments are made, or are to be made, are exempt only to the extent that the debtor has no rig ht or option to rec eive them except as monthly or other periodic pay ments beg inning at or afte r ag e fifty -eig ht (58). Assets of such funds or plans are not exempt i f t he debtor may , at t he debtor’s option,

acc eler ate pay

ment so as to rec eive pay

ment in a lump sum or in periodic pay ments over a per iod of six ty

(60) months or less[.]

Tenne ssee Code A nnotated § 20-2-111( 1)(D) (iii)(2000 & Supp. 2010). There fore , construing the statutory sections toge ther to eff ectua te the intent of the leg islature in light o f the entire statutory scheme
, we must disag ree with Mr. Casals’ asser tion that the exemption provided to an I RA acc ount is g overne d exclusively by the plain lang uag e of section 26-2-10 5 (b ), and that section 26-2- 111(1)( D) is irrele vant. Section 26-2-111, by its title, provides “additional exemptions ” applicable to, inter alia
, “[c]ertain benef i t p aym en ts.” Among the pay ments enumer ated by the section are pay ments under a pensi o n or “similar plan.” These pay ment are exempt to “the same extent that

ear nings are exempt pursuant to § 26-2-106” if the plan or contra ct qualifies u n d er § § 401(a)
, 403(a) , 403(b), 408, or

409. Tenne ssee Code Annotated § 26-2-111( 1)(D) (iii). This subsection also provides that the assets of the fund or plan from which the pay ments are rec eived or “ar e to be made, are exempt only to the extent that the debtor has no rig ht or option to rec eive them except as monthly or other periodic pay ments beg inning at or afte r ag e fifty -eig ht (58).” I t also provides that

-8-the assets are not exempt wher e “the debtor may , at the debtor’s option, acc eler ate pay ment so as to

rec eive pay

ment in a lump sum or in periodic pay ments over a period of six ty (60) months or less[.] ”

We are not insensitive to the fact that this subsection appears somewhat out of conte x t with the re m ai n d er o f the section wher e it perta ins to the assets of the fund rathe r than only pay ments from the fund. Howeve r, the plain lang uage o f the subsection applies to the assets of funds from which pay

ments are to be made, in addition to those from which pay ments are being rec eived. Thus,

we c annot ag ree with Mr. Casals that the subsec tion is i rre levant.

We also do not ag ree that the case law relied upon by Mr. Casals in his brief, In re Martin
, 102 B.R. 639 (B ankr. E.D. Tenn. 1989); In re Bowman
, 109 B.R. 789 (B ankr. E.D. Tenn. 1990); and In

re Vandenbe rg , 276 B.R. 581 (B ankr. E.D. Tenn. 2001), stands for the proposition that I RA acc ounts

are “absolutely exempt” under the statutes. The Martin court deter mined that ERI SA did not pree mpt the Tennessee statutes and that an I RA that qualified under s ection 408(a) of the I nterna l Revenue Code constituted a “r etireme nt acc ount” for the purpose of the Tennessee statutes. In re Martin
, 102 B.R. at 645. The Bowman court conclude d that a “retirement plan” as ref ere nced in section 26-2-105( b) (then c odified at 26-2-104( b)) included a plan established by an ag ency of the United States, and was not limit ed to p ri v at e s ec t o r plans. In re Bowman
, 109 B.R. at 792. The Vandenbe rg court conclude d that from the time they wer e established by section 408A of the I nterna l Rev en u e Code, Roth I RAs fell within the exemption provided by section 26-2-105( b) despite the leg islatures’ delay in amending the section until 2000 to expli citly include plans that qualify under section 408A. In re Vandenbe rg, 276 B.R. at 5 8 6

. T he Vandenbe rg court opined that “[t] he
structure an d p u rp o s e of traditional and Roth I RAs are analog ous and it is inconce ivable that the Tenne ssee leg islature would consciously chose to protec t one and not the o t h er

. ” Id

. The court further noted that Roth I RAs did not exis t wh en the statute orig inally was enac ted, and that to conclude otherwise w ould defe at the purpose of the e x emption. Id

.

The historical pu rp o s e b ehind the statutory exemptions is to prese rve the debtor’s ability to support himself and his family

. In re Storey v. Bradford Furniture Co., Inc.
, 910 S.W .2d 857, 859 (Tenn. 1995)(quoting Jones v . W illiams , 32 Tenn. 105, 106 (T enn. 1852): the exemptions “sec ure the poor in the possession and use of the means nece ssary for their subsistence.” ). As the Vandebe rg court noted, the Attorney Gene ral of Tenne ssee has “identified two primary g oals in the leg islative history of § 26–2–105.” Vandebe rg , 276 B.R. at 586. First, the leg islature intended to protec t private retire ment plans in order t o “b en ef it and encour ag e people who are saving money for their retirem en t

. ” Id. (quoting Tenn. Att’y Gen. Op. 98–184). Second, the leg islature extended the exemption t o private pla

ns protecte d by

fede ral law

. Id. (citing Tenn. Att’y Gen. Op. 98–184)

.
“[S] tatutes must be construed ‘with the saving g rac e of common sense.’ ” State ex rel. Maner

v. Leech
, 588 S.W .2d 534, 540 (Tenn. 1979). The most important and compelling rule of statutory construction “is that the law be rende red intelligible an d absurditi es avoided.” Roberts v. Cahill Forge & Foundry Co.
, 184 S.W .2d 29, 31 (Tenn. 1944). The courts must avoid a construction that would defe at or frustra te the purpose of the statute or that “would work to the prejudice of the public interest.” Maner
, 588 S.W .2d at 540 (citations omitted). Construing sections 2-26-105( b) and 2-26-

-9-111(1)( D)(iii) toge ther in light of the purpose of the statutory exemption scheme
, we ag ree with the

Attorney Gene ral that the leg islature intended to encour ag e the citizens of Tenne ssee to save for their retire ment and to protec t retire ment plans that qualify under the enumer ated sections of the I nterna l Revenue Code. We believe the leg islature also intended to limit the exemption to retire ment plans that cannot, at the option of the debtor an d wi t hout an involuntary penalty
, such as a fede rally mandated tax pena l t y , be acc essed by the debtor befor e 58-y ear s of ag e, as a lump sum, or

acc eler ated suc h that pay

ments may

be re ceive d over a

period of 60 months or f ewe r.

Notwithstanding lang uag e in Pee ler which s ug g ests that “ty pical” I RAs established by the debtor are not e x empt beca use they can be acc essed by pay ing a tax pena lty , we do not believe the leg islature intended to ev i s ce ra t e rathe r than limit the exemption provided in section 26-105(b)

. Virtually all I RA acc ounts ma y be acc essed upon the pay ment of the penalty , and we cannot a g ree with Ms. Massey that the ability to encr oach upon an I RA only by incurring a substantial tax penalty
amounts to a “rig ht” to rec eive funds. I f, howeve r, the debtor may , without a penalty presc ribed by law, rec eive the assets as a lump-sum pay ment, in periodic pay

ments over a period of 60 months or less, or befor e 58-y ear s of ag e, the pension or retire ment plan is not exempt. This inter preta tion is supported by the purpose of the exemption, the logic al interplay betwee n the statutory sections, and the majority

of applica

ble ca se law.

Fur ther, we do not ag ree with Ms. Massey that the case s relied upon in her brief, In re Elsea, 47 B.R. 142 (B ankr. E.D. Tenn

. 1 9 85) and In re Casada
, 86 B.R. 541 (B ankr. E.D. Tenn. 1988), support the proposition that an I RA is not exempt from g arnishment for the purposes o f the Tenne ssee C o d e i f t he debtor controls and trade s the investments within the funds. I n Elsea
, the bankruptc y court addre ssed whether debtor’s pla

ns, which we re qua lified as tax-exempt under the Employ ee Retirement I ncome Security Act (ERI SA) and I nterna l Revenue Code 401(a)
, wer e exempt under the Tenne ssee Code. The pension plans in that ca s e consisted of g roup annuity

co n t ra cts under which the debtor had a rig ht only to the income. Contributions to the plans wer e made entirely by the debtor’s employ er, and the debtor in Elsea did not have acc ess to the funds prior
to retire ment. The Elsea court noted t h at t h e provision in section 26-2-111( 1)(D) (iii) “ca n be confusing in its trea tment of assets as something differ ent from a rig ht to pay ment[,] ” but deter

mined that it “ef fec tively denies the debtor any exemption of his rig ht to pay ment” under the plans in that

case

. Id. at 146. The court conclude d, howeve r, that the Tenne s see courts would consider the pension plans to me et the require ments of a spendthrift trust, a nd held that they wer e exempt fr om the bankruptc y estate. In re Paul Don Elsea, Sr.
, 47 B.R. 142 (B ankr. E.D. Tenn. 1985). The Elsea
court specific ally “[left] open” whether the same deter mination would be made in a case wher ein the debtor ha d contributed to the funds or had “unre stricted acce ss” t o them befor e retirement. Id. at 149.

I n Cassada
, the bankruptc y court considere d the debtor’s stock owner ship pla n and defe rre d income plan. In re W

illie Edward Barrett Cassada v. W estvac o Corp., Banke rs Trust Co. and W illie Edward Ba r r et t Cassada
, 86 B.R. 541 (1988) (B ankr. E.D. Tenn. 1988). The debtor’s employ er established both plans, all of the assets in the plans consisted of voluntary contributions made by the debtor plus interest or dividends, and the plans wer e q u al i fi ed under fede ral law. Id. at 542-543.

-10-The court deter mined that neither plan was exempt under section 26-2-111( 1)(D)
, howeve r, beca use the debtor was entitled to rec eive t h e m o n ey in both plans in a lump sum upon termination of employ ment. The court rea soned that the debtor’s voluntary termination of employ ment would not

am o u n t t o a penalty
, and that the pl ans were not exempt wher e the debtor had the right to rec eive
pay ment in a lump sum of the total in either acc ount upon voluntary as well as involuntary termination of employ

ment. Id

. at 543. The court further noted that, under the statute, the acc ount would not be exempt if the debtor could withdraw the total in a lump sum, or in periodic pay ments over 60 or

few er months. Id.

There i s n o t h i n g i n the statutes that limit s or restric ts who may direc t or control the way in which the assets which comprise a retire ment fund are manag ed. I n this case , Mr. Casals may selfdirec t the funds with r espec t to the way in which the assets are invested. He cannot alter the terms under which pay

ments from the funds are rec eived. As noted above, the trial court found that

acc ounts 21 and 91 are I RAs. Acc ording ly
, Mr. Casals’ rig ht to rec eive pay ment from the acc ounts

are limit ed to the provisions of I nterna l Revenue Code r eg ardle ss of how the a ssets are invested.

W e finally addre ss Ms. Massey ’s asser tion that to exempt an I RA from g arnishment would allow a debtor to shield his income from child support. Section 26-2-108 specific ally provides that

a debtor’s “per sonal ear

nings shall not be exempt from an order ” of child support or alimony

. Although section 26-2-102 define s “ea rning s” to include pay

ments pursuant to a retire ment plan, the
courts have long held that it was not the leg islature’s intent to shield proper ty from court-or dere d child support. Edwards v. Edwards
, 713 S.W .2d 642, 6 4 9 (T en n

. 1986). (Tenn. Ct. App. Sep. 8, 2005). Tenne ssee c ourts “have rea soned that the purpose behind such exemptions is to prese rve a

means of support for the debtor’s family .” Ausley v. Ausley
, No. M2004-01360-COA- R3-CV, 2005 WL 2205922, at *4 (quoting State ex rel Bake r v. Tolli ver , No. 03A01-9710-JV-00041, 1997 WL 367200, at *1 (Tenn. Ct. App. J une 30, 1997)) . The e x emption doe s not pr ovide a device throug h which one may

be re lieved of one ’s obliga tion to support one’s children. Id. (citations om itted). This arg ument is without m erit.

We finally

turn to Ms. Massey ’s asser tion before the trial cour

t that Mr. Casals had fa iled to file a timely claim of exemption to the g arnishment, and to Mr. Casals’ asser tion that h e fi rst

rec eived notice of the g arnishment of acc ount 21 and acc ou n t 91 while attempting to trade investments in the acc ounts in J anuar y 2009, and that he was not serve d with notice of the
g arnishments. Upon revie w of the rec ord, we note that the November 2008 wr i t gar n i s h ed other

acc ounts belong ing to Mr. Casals, and not acc ounts 21 and 91. Acc ounts 21 and 91 wer e added on J anuar y 21
, 2 0 0 9

. The J anuar

y 21, 2009, writ also purported to g arnish “all acc ounts solely or jointly ” in Mr. Casals’ name. On J an u ar y 2 7
, 2 0 0 9, Mr. Casals filed a motion to “quash writ of
g arnishment” and specific ally ref ere nced the November 2008 writ and the two acc ounts ref ere nced in it. I n his moti on, howeve r, he a sserted tha t those acc ounts were exempt under Tenne ssee Code Annotated § 26-2-105 and or Tenne ssee Code Annotated 26-2-111. Additionally
, the rec ord does
not include any

thing to evidence when Mr. C asals rece ived not ice of the gar nishment of accounts 21 and 91. The hear ing of Mr. Casals’ motion to quash in the trial court, howeve r, perta ined entirely
to acc ounts 21 and 91, and the parties clea rly had actua l notice of the exemptions asser ted. Wit hout

-11-adopting Mr. Casals’ asser tion that the exemption is “absolute” and that no claim of exemption must be filed, w e ar e satisfied tha t the exemption was sufficiently asser ted in this case.

Holdin g

T h e u n re futed proof in this case is that Mr. C asals’ acc ounts ending in 21 and 91 we re I R A

acc ounts that qualify under section 408 of t he I nterna l Revenue Code, and that Mr. Casals had no rig ht to acc ess t he assets in the accounts other than by incurring a subst antial fe d er al t ax penalty

. Acc ording ly
, the acc ounts wer e exempt from g arnishment under Tenne ssee Code Annotated § 26-2- 105(b) an d T en nessee Code Annotated § 26-2-111( 1)(D)

. I n light of the foreg oing, the judgme nt of t he trial court is reve rsed. Ms. Massey ’s req u es t for attorney ’s fees on appea l is denied. Costs of this appea l are taxed to the Appellee, Patric ia Ann Gho Ma ssey

.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ D A V I D R

. F A R M E R
, J U D G E

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