Moss, Mason, & Hill, by Matthew L. Mason and William L. Hill
for plaintiff-appellee.
Smith, James, Rowlett, & Cohen, L.L.P., by Seth R. Cohen for
defendant-appellant.
WYNN, Judge.
This case arises from Thomas Stewart Kroh's motion to collect
a defamation judgment against his former wife, Teresa Ledford Kroh,
by executing on Ms. Kroh's future interest in the couple's pending
equitable distribution proceeding. The trial court granted Mr.
Kroh's motion, and held under N.C. Gen. Stat. § 1-362, that he
“should be deemed the holder of all right, title and interest in
[Ms. Kroh's] equitable distribution claim . . . including but not
limited to her claims to [his] 401(k) retirement accounts.”
On appeal, Ms. Kroh raises one issue: Did the trial court's
order, with respect to the 401(k) retirement account, violate North
Carolina's “Individual Retirement Plan” execution exemptioncodified at N.C. Gen. Stat. § 1C-1601(a)(9)?
(See footnote 1)
We answer, no, and
therefore uphold the order of the trial court.
The underlying facts to this matter tend to show that on 28
December 2001, an $80,000 judgment was entered against Ms. Kroh, in
favor of Mr. Kroh, for slander per se.
(See footnote 2)
Twice, on 15 February 2001
and 14 June 2001, Mr. Kroh attempted to execute this judgment.
However, the executions were returned unsatisfied. Unable to
satisfy his judgment, Mr. Kroh filed a Motion in Aid of Execution
in Superior Court, Guilford County.
In his motion, Mr. Kroh noted Ms. Kroh's pending equitable
distribution claim, filed 26 March 1999, in which Ms. Kroh
requested equitable distribution of Mr. Kroh's 401(k) retirement
account. Accordingly, Mr. Kroh requested the Superior Court to
“declare him the holder of all right, title, and interest” in Ms.
Kroh's future “equitable distribution” award “to any portion of his
retirement account” not in excess of his unsatisfied judgment.”
On 8 November 2001, the Superior Court granted Mr. Kroh's
motion under N.C. Gen. Stat. § 1-362 which provides: “The court or
judge may order any property, whether subject or not to be soldunder execution (except the homestead and personal property
exemptions of the judgment debtor) . . . due to the judgment
debtor, to be applied towards the satisfaction of the judgment.”
Ms. Kroh argues, however, the trial court should have applied N.C.
Gen. Stat. § 1C-1601(a)(9), providing that: “Each individual,
resident of this State, who is a debtor is entitled to retain free
of the enforcement of the claims of creditors . . . . Individual
retirement plans.”
Ms. Kroh contends that since the execution exemption for
“retirements accounts” is neither restricted nor eliminated by
Section 1-362, the trial court erroneously applied Section 1-362
frustrating the legislative purpose of Section 1C-1601. We
disagree.
Our Supreme Court has consistently held that we are required
to “give effect to statutes covering the same subject matter where
they are not absolutely irreconcilable and when no purpose of
repeal is clearly indicated.” Person v. Garrett, 280 N.C. 163,
165-66, 184 S.E.2d 873, 874 (1971). Here, Section 1-362 was
enacted in 1870. See N.C. Gen. Stat. § 1-362. In 1981, the
legislature repealed sections 1-369 through 1-392, entitled
“Property Exempt from Execution,” and replaced that section with
1C-1601. See N.C. Gen. Stat. §§ 1-369 through 1-392 (repealed by
Session Laws 1981, Ch. 490, codified at N.C. Gen. Stat. § 1C-1601
et seq). The legislature, however, did not repeal section 1-362.
Chapter 1C contains no suggestion or evidence of a legislativeintent to repeal section 1-362.
(See footnote 3)
Ms. Kroh relies on Section 1C-1601 to support the proposition
that the trial court erroneously used her exempt property to
satisfy a judgment. Ms. Kroh's reliance on this section is
misplaced. Her argument incorrectly equates a claim for equitable
distribution with an ownership interest in property. Ms. Kroh does
not own a retirement account, rather Ms. Kroh has an expectancy in
an equitable distribution claim. Under N.C. Gen. Stat. § 50-20, we
have consistently held that an equitable distribution claim is not
a property right in specific marital property.
Equitable distribution is a statutory right
granted to spouses under G.S. 50-20 which
vests at the time of separation. This vested
right does not create a property right in
marital property. Perlow v. Perlow, 128 B.R.
412, 415 (E.D.N.C.1991). Nor does the
separation create a lien on specific marital
property in favor of the spouse. Id. It only
creates “a right to an equitable distribution
of that property, whatever a court should
determine that property is.” Id. (quoting
Wilson v. Wilson, 73 N.C. App. 96, 99, 325
S.E.2d 668, 670, cert. denied, 314 N.C. 121,
332 S.E.2d 490 (1985)).
Hearndon v. Hearndon, 132 N.C. App. 98, 101, 510 S.E.2d 183, 185
(1999).
Under section 1C-1601, a debtor may use the retirement accountexemption to shield her own retirement account, but not to shield
her claim to someone else's account. Here, Ms. Kroh does not even
have a legal claim to the retirement account. Rather, Ms. Kroh has
an equitable distribution claim to a marital estate that might
include the retirement account. Accordingly, Ms. Kroh's assignment
of error is without merit.
In sum, because Ms. Kroh does not have a property interest in
the 401(k), Ms. Kroh is precluded from arguing, under section 1C-
1601, that the trial court erred by using her exempt property to
satisfy a claim.
Affirmed.
Judges TIMMONS-GOODSON and HUNTER concur.
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