                                                                         FILED
                                                                    Jan 31 2017, 9:20 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court




      ATTORNEY FOR APPELLANT
      John William Davis, Jr.
      Davis & Roose
      Goshen, Indiana


                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Russell F. Dumka,                                          January 31, 2017
      Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                                 20A03-1605-PL-1178
              v.                                                 Appeal from the Elkhart Circuit
                                                                 Court
      Lori Erickson and Edward                                   The Honorable Terry C.
      Jones,                                                     Shewmaker, Judge
      Appellees-Defendants                                       Trial Court Cause No.
                                                                 20C01-1405-PL-000127




      Crone, Judge.


                                              Case Summary
[1]   Russell F. Dumka appeals from the trial court’s order denying garnishment of

      an individual retirement account inherited by Lori Erickson from her husband.

      Although he concedes that the asset is exempt from garnishment, he argues that

      the trial court erred by applying the statutory exemption because it was Lori’s


      Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017             Page 1 of 9
      burden to assert the exemption and she failed to do so. Concluding that the

      order complies with the evidence and the law, we affirm.


                                  Facts and Procedural History
[2]   In May 2014, Dumka and Craig Erickson (now deceased) each owned fifty

      percent of MIKO-Home Machine Co., Inc. Craig served as president, and

      Dumka served as vice-president. Craig’s wife, Lori, served as secretary and

      treasurer. Craig, Lori, and Dumka constituted the board of directors. Dumka

      filed a stockholder’s derivative action on behalf of MIKO against Craig and

      Lori, alleging that they had stolen property from MIKO and requesting that a

      receiver be appointed for MIKO. In July 2014, the trial court entered a default

      judgment (“the MIKO Judgment”) in favor of MIKO and against the Ericksons

      jointly and severally for $2,124,132.24 plus attorney fees and court costs. In

      January 2015, the trial court issued an order approving the receiver’s final

      accounting, conveying MIKO’s tangible assets to Dumka, and assigning part of

      the MIKO Judgment to Dumka.


[3]   In December 2015, Dumka filed a motion for proceedings supplemental against

      Lori and naming Edward Jones as garnishee-defendant, seeking to recover the

      unpaid balance of $984,129.48 remaining under the MIKO Judgment. In

      January 2016, a hearing was held. Dumka appeared in person and by counsel,

      and Lori appeared pro se. Dumka submitted Edward Jones’s answer to

      interrogatories, in which it indicated that it held in Lori Erickson’s name an

      “Inherited Traditional Individual Retirement Account (IRA) … held for the

      benefit of Craig D. Erickson, C/O Lori L. Erickson,” with an estimated value
      Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017   Page 2 of 9
      of $51,115.02. Appellant’s App. at 190. The answer to interrogatories also

      stated, “Please note this account was formerly a traditional IRA held for the

      benefit of Craig D. Erickson.” Id. Dumka also submitted Lori’s affidavit, in

      which she attested that she had the Edward Jones IRA. Id. at 194. Both

      documents were admitted into evidence without objection. Dumka asked the

      trial court to enter a final order of garnishment directing Edward Jones to

      liquidate the IRA. The trial court asked Lori whether she had any problems

      with the submission by Dumka’s attorney of a final garnishment order against

      Edward Jones, and she said, “No.” Tr. at 3. At no time did Lori assert that the

      IRA was exempt from garnishment. The trial court then directed Dumka’s

      attorney to submit a proposed garnishment order and stated that it would

      approve the order. Id. The entry in the chronological case summary states,

      “[W]ithout objection, Final Order in Garnishment will issue upon receipt of

      same.” Appellant’s App. at 13.


[4]   In February 2016, the trial court issued an order denying Dumka’s request for

      garnishment (“the Order”). The trial court found that pursuant to Indiana

      Code Section 34-55-10-2(c)(6), “non-spousal inherited IRAs are not exempt

      from garnishment,” but “IRAs inherited by surviving spouses are exempt,” and

      because the Edward Jones IRA was inherited by a surviving spouse, it is

      exempt from garnishment. Id. at 21. Dumka filed a motion to correct error,

      arguing that the trial court erred by asserting exemptions on Lori’s behalf and

      acting as her advocate. Following a hearing, the trial court denied the motion,




      Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017   Page 3 of 9
      finding that it did not err by taking judicial notice of Section 34-55-10-2(c)(6).

      This appeal ensued.


                                      Discussion and Decision
[5]   Initially, we note that Lori did not file a brief.

              When an appellee fails to submit a brief, we do not undertake the
              burden of developing appellee’s arguments, and we apply a less
              stringent standard of review. We may reverse if the appellant
              establishes prima facie error, which is error at first sight, on first
              appearance, or on the face of it. The prima facie error rule
              relieves this Court of the burden of controverting arguments
              advanced in favor of reversal where that burden properly rests
              with the appellee.


      Jenkins v. Jenkins, 17 N.E.3d 350, 351-52 (Ind. Ct. App. 2014) (citations

      omitted).


[6]   Dumka argues that the trial court erred by denying his request for garnishment

      based on an exemption that Lori failed to assert. We observe that

              [p]roceedings supplemental are designed as a remedy where a
              party fails to pay a money judgment. The proceedings are merely
              a continuation of the underlying claim, initiated under the same
              cause number for the sole purpose of enforcing a judgment.
              These proceedings serve the limited purpose of determining
              whether an asset is in the judgment debtor’s possession or subject
              to the judgment debtor’s control and can be attached to satisfy
              the judgment.


              Our system vests trial courts with broad discretion in conducting
              proceedings supplemental. [I]n proceedings supplemental, we are

      Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017      Page 4 of 9
        constrained to treat a trial court’s judgment as being general only.
        We will not disturb a trial court’s judgment regarding a
        proceedings supplemental unless the record does not provide
        sufficient support for any theory on which the judgment may be
        sustained. We will affirm the trial court’s judgment on any legal
        theory supported by the evidence most favorable to the judgment,
        together with all reasonable inferences to be drawn therefrom.


Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628, 668-69 (Ind. Ct. App. 2008)

(citations and quotation marks omitted). Here, the trial court took judicial

notice of Indiana Code Section 34-55-10-2(c)(6). We review a trial court’s

decision to take judicial notice of a matter for abuse of discretion. Horton v.

State, 51 N.E.3d 1154, 1157 (Ind. 2016) (citing Storey v. Leonas, 904 N.E.2d 229,

236 (Ind. Ct. App. 2009)).


Dumka concedes that the IRA is exempt from garnishment pursuant to Indiana

Code Section 34-55-10-2(c)(6) and that Lori would have been entitled to it if she

had timely asserted the exemption. Indiana Code Section 34-55-10-2(c)(6)

provides that “an interest, whether vested or not, that a debtor has in a

retirement plan or fund to the extent of contributions, or portions of

contributions, that were made to the retirement plan or fund by or on behalf of

the debtor or the debtor’s spouse,” is exempt from execution of judgment. See

also In re Klipsch, 435 B.R. 586, (2010) (concluding that IRA inherited from

father by son was not exempt but explaining that IRA held by surviving spouses

are exempt). The evidence clearly establishes that the IRA is a retirement plan

held for the benefit of Craig and that it was inherited by Lori, his surviving

spouse. Therefore, the IRA is exempt from garnishment. Nevertheless, Dumka

Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017   Page 5 of 9
      asserts that Lori is not entitled to the exemption because she failed to timely

      assert it.


[7]   Although the general rule is that exemptions to attachment must be asserted by

      the debtor, our supreme court has recognized exceptions. Branham v. Varble,

      952 N.E.2d 744, 746 (Ind. 2011); Mims v. Commercial Credit Corp., 261 Ind. 591,

      596, 307 N.E.2d 867, 870 (1974). In Branham, our supreme court explained the

      justification for exemptions:


              The principle that debtors should have a certain amount of
              property or income exempted from collection finds its origin in
              our constitution, which says:


                       The privilege of the debtor to enjoy the necessary comforts
                       of life, shall be recognized by wholesome laws, exempting
                       a reasonable amount of property from seizure or sale, for
                       the payment of any debt or liability hereafter contracted:
                       and there shall be no imprisonment for debt, except in case
                       of fraud.


                       Ind. Const. Art. 1, § 22.


              To enforce Article 1, Section 22, our General Assembly has
              enacted multiple exemption statutes sheltering certain property
              and income from attachment. The general rule of civil litigation is
              that these exemptions must be asserted by the debtor. [Mims, 261 Ind.
              591, 307 N.E.2d 867]. Because the statutory exemptions exist to
              give life to a constitutional right, we have held that there should be
              exceptions and modifications to this general rule “consistent with fairness
              and practical realities.” Id. at 595, 307 N.E.2d at 869.


      952 N.E.2d at 746-47 (emphases added).
      Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017           Page 6 of 9
[8]   The Branham court concluded that the circumstances of that case justified an

      exception to the general rule that exemptions from attachment must be asserted

      by the debtor. There, the judgment debtors were unrepresented and failed to

      assert two exemptions–the general wage exemption and the Social Security

      Income exemption–during proceedings supplemental brought in small claims

      court. The Branham court observed that small claims trials are purposefully

      informal and that “[p]eople often appear in small claims court without

      attorneys and may not have any knowledge of exemptions or any realistic way

      to determine which exemptions might apply.” Id. at 747. The court also noted

      that the specific facts of the case illustrated why “holding unrepresented

      litigants to account on appeal for affirmatively pleading exemptions may often

      prove too harsh.” Id. The court found that there was “no evidence that the

      Branhams [had] any property or income that [was] not covered by an

      exemption.” Id. at 748. Accordingly, the court reversed the order requiring the

      Branhams to make payments.


[9]   Mims involved two exemptions: the Uniform Consumer Credit Code

      (“UCCC”) garnishment exemption and the resident-householder exemption.

      The debtor, who had defaulted on a retail installment sales contract, was

      unrepresented and did not assert the resident-householder exemption, and the

      trial court applied the UCCC exemption. The Mims court held that a “debtor-

      defendant, who satisfies the resident-householder requirement and whose

      indebtedness flows from a contractual breach, should have the protection of

      whichever garnishment exemption results in the least amount of garnished


      Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017   Page 7 of 9
       income.” 261 Ind. 591, 594, 307 N.E.2d 867, 868. To “preserve the integrity of

       the garnishment exemptions and insure full enjoyment of a constitutional

       right,” the court explained that if a debtor “is represented by counsel during

       proceedings supplemental, the burden is upon the debtor to affirmatively

       interpose the resident-householder claim.” Id. at 595-96, 307 N.E.2d at 869.

       However, if a debtor is not represented by counsel, then the trial court must

       determine whether the debtor is a resident-householder, and if so, whether the

       resident-householder exemption or the UCCC exemption would place the lesser

       burden on the debtor. Id. at 596, 307 N.E.2d at 869.


[10]   Dumka argues that an exception is not warranted here because Branham and

       Mims are distinguishable. He asserts that those cases involved garnishment of

       current and future income, whereas this case involves accumulated savings and

       earnings thereon; this case is not a small claims case; and the judgment against

       Lori is based on her embezzlement of corporate assets.1 Dumka also argues

       that by asserting the exemption on Lori’s behalf, the trial court became an

       advocate for her rather than remaining impartial as required by Canon 2 of the

       Indiana Code of Judicial Conduct, which provides, “A judge shall uphold and

       apply the law, and shall perform all duties of judicial office fairly and

       impartially.” We are unpersuaded.




       1
        Unless and until the legislature creates an exception to the exemption for claims based upon embezzlement,
       we will not create one by judicial fiat.

       Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017                     Page 8 of 9
[11]   Like the debtors in Branham and Mims, Lori was unrepresented. Based on the

       undisputed facts, the IRA is lawfully exempt from attachment. Her failure and

       the trial court’s failure to initially recognize that the IRA was lawfully exempt is

       of no consequence. The trial court may take judicial notice of public statutory

       law, and it may take judicial notice on its own at any stage of the proceeding.

       Ind. Evid. Rule 201(b), -(c), -(d).2 The trial court did not abuse its discretion in

       taking judicial notice of Section 34-55-10-2(c)(6). See Horton, 51 N.E.3d at

       1157; see also Holtzleiter v. Holtzleiter, 944 N.E.2d 502, 506 (Ind. Ct. App. 2011)

       (“[T]he trial court is presumed to know the law, and apply it correctly.”)

       Dumka has failed to establish prima facie error. We conclude that the Order

       complies with the evidence and the law, and therefore we affirm.


[12]   Affirmed.


       Kirsch, J., and May, J., concur.




       2
         Dumka asserts that judicial notice may take the place of proof, but an exemption to garnishment is an
       affirmative defense that must be pleaded as well as proved. See Ind. Trial Rule 8(C) (requiring affirmative
       defenses to be set forth in a responsive pleading). However, this claim is merely a restatement of the general
       rule that the debtor must assert an exemption, and we have already discussed that there are exceptions to the
       general rule.

       Court of Appeals of Indiana | Opinion 20A03-1605-PL-1178 | January 31, 2017                        Page 9 of 9
