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Commissioner of Revenue Services v. Coleman

Superior Court of Connecticut, Judicial District of Hartford, Hartford

May 26, 2016

Commissioner of Revenue Services
Carolyn Coleman Opinion No. 133801

          Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Santos, Thelma A., J.


          THELMA A. SANTOS, J.

         A tax warrant was issued by the Department of Revenue Services naming Carolyn Coleman as the Debtor and Wells Fargo Bank as the banking institution in which Ms. Coleman had funds in three separate accounts. On January 4, 2016, a total of $4, 164.54 was removed by Wells Fargo Bank from these accounts which were numbered #0484, #9667 and #6865. That total amount was made up in its entirety of social security payments made to Ms. Coleman. $3, 250.48 was removed from one of the accounts and the remaining $914.06 from the other two. Since each of these amounts was under $1, 000 they both would have been amenable to the " wild card" exemption.[1] On January 5, 2016, Wells Fargo Bank mailed the exemption claim form to the debtor. Sometime after January 5, 2016, but on or before January 14, 2016, Ms. Coleman received the Exemption Claim Form from Wells Fargo Bank Levy Processing Center in Phoenix, Arizona. On January 14, 2016, she filled out Section IV, the Affidavit of Exemption and had it notarized. The form indicates that the funds were exempt because they constituted social security benefits.

         At the hearing in this matter held on February 11, 2016, Ms. Coleman, appearing without counsel, testified at the suggestion of the Assistant Attorney General representing the Department of Revenue Services. As an officer of the court, he felt compelled to have Ms. Coleman testify as to the reason this application appears on its face to have never been mailed or delivered for an exemption request to Wells Fargo Bank within the fifteen-day statutory period.[2] Her testimony revealed that on January 19, 2016, the fourteenth day of the statutory period, Ms. Coleman did, in fact, bring the notarized Exemption Claim Form to a Wells Fargo branch bank on Campbell Avenue in West Haven.[3] She requested help from a bank employee and handed the Exemption Claim Form to the employee who examined and read through the document. He then stated to Ms. Coleman that he did not know what to do with the document and handed it back to her. When she told him that he was supposed to fill it out he said he was not going to do that. Ms. Coleman then proceeded to seek out advice from two H& R Block Offices. Getting no direction there, she filed the document with the Superior Court in Hartford on that same day, January 19. Finally, on February 10, the day before the scheduled hearing on this matter, Ms. Coleman went to another branch of Wells Fargo Bank to speak to a supervisor whom she knew from previous bank business. The supervisor, however, was not in that day so Ms. Coleman was unable to discuss the exemption claim with her.

         Plaintiff, Department of Revenue Services concedes that all of the funds recovered from Wells Fargo constituted social security benefits paid to Ms. Coleman and were her sole source of income. However, Plaintiff's position at the conclusion of the hearing was, because Ms. Coleman failed to mail or deliver her Exemption Claim Form to Wells Fargo within the required fifteen-day period and simply filed it with the court, her claim should be denied. Counsel stated that it was the policy of the Department of Revenue Services to oppose return of any funds once they had already been paid over to the Plaintiff by the marshal.

         Counsel for the Department of Revenue Services cited two cases at the conclusion of his remarks in support of his argument that the Exemption Claim should be denied.[4] Both of them appear to be distinguishable on their facts from the instant case in more than one way. The most important difference both have to the instant case is that both defendants in Milford F.C.U. and Happy Rock Merchant Solutions, LLC, clearly failed to comply with the fifteen-day statutory notice period referred to in General Statutes § 52-367b(e). In the instant case Ms. Coleman did not mail the document to Wells Fargo but, rather, hand delivered it to an employee of Wells Fargo Bank. Other differences include that the defendants in the aforementioned cases were represented by counsel, in neither case did the parties make any affirmative efforts to notice the financial institution by " mail or other means" as directed by General Statutes § 52-367b(e), nor are any portions of the requested exemptions social security benefits.

         Plaintiff's counsel also directed the Court's attention to the matter of Frauenglass & Associates, LLC v. Bisi, Superior Court, Judicial District of Hartford, No CV11-6020686 (January 26, 2012, Scholl, J.) [53 Conn L. Rptr. 81], in which the court denied defendant's motion to vacate an execution on a bank account. This case, too, is distinguishable on the facts for the same reasons as the prior cases cited by Plaintiff, i.e. no notice to bank, represented by counsel, and not social security benefits. The court, in Fraunenglass & Associates, LLC, concluded that, since the defendant had not filed a timely exemption, once the funds had been paid out by the bank, the statute does not provide a remedy and the only recourse the defendant has is an action against the financial institution. Plaintiff argues that this case supports it's contention the Department of Revenue Services should not be required to return the funds once they have been turned over to it and it is the policy of the Department to oppose such exemption requests.

         Having reviewed the testimony of the defendant in this matter the Court is able to find from the credible evidence that Ms. Coleman made sufficient effort to notice Wells Fargo Bank by her delivery of the notarized Exemption Claim Form to an agent of Wells Fargo on January 19, 2016. An employee of Wells Fargo reviewed the document and had the opportunity to inform the appropriate department of the financial institution prior to the expiration of the fifteen-day statutory period of the notice for the requested exemption. Ms. Coleman did not stop there. Although actual notice upon Wells Fargo " by other means" had been effectuated on January 19, 2016, she pursued her inquiry with two H& R Block offices that same day, and after that, drove from West Haven to Hartford to file the document with the Superior Court to insure she received a hearing, since it appeared to her that Wells Fargo had taken no action after having been given actual notice. Moreover, she even revisited another Wells Fargo branch the day before the hearing on February 10 and attempted to notice the Bank again. Finally, prior to the hearing in Hartford the next day, Ms. Coleman related all of these facts to the Assistant Attorney General representing the Department of Revue Services prior to the hearing and, later, under oath to the Court.

         A balancing of the equities seems to be in order in the instant matter. In the case of Connecticut Light and Power v. Rosa Spencer, Superior Court, Judicial District of New Haven, Docket Number CV11 6004029S (Dec. 6, 2012, Fischer, J.) [55 Conn. L. Rptr. 130], Judge Fischer felt similarly compelled. In his opinion in that matter he offered the following analysis: This is a case in which an unrepresented defendant who was claiming that she wished to have certain funds turned over to CL& P returned to her because they were social security benefits and her sole source of income. But Ms. Spencer had not complied with General Statutes § 52-367b(e) and had not filed her claim for exemption with the bank within the fifteen-day statutory period. CL& P, therefore, argued that her non-compliance with a mandatory statute required the court to deny her request. Judge Fischer disagreed and after reciting certain portions of General Statutes § 52-367b(e) and § 52-367b(h), he makes the following observation by quoting two applicable Connecticut cases:

         " It is well settled that one of the more reliable guides in determining whether a statutory provision is directory or mandatory is whether the provision is accompanied by language that expressly invalidates any action taken after noncompliance with the provision." Ruotolo v. Inland Wetlands Agency, 18 Conn.App. 440, 448, 558 A.2d 1021 (1989). Inasmuch as there is nothing in the language of the statutes at issue here that provides that a judgment debtor loses all interest in otherwise exempt funds when the financial institution does not receive an exemption claim within the fifteen days after the institution has mailed the notice to the debtor, the court finds them to be directory.

         Further support for this construction is found in the fact that these statutes dealing with exempted funds, such as the protection of social security benefits, are plainly remedial in nature. Therefore these statutes are to be " liberally construed in favor of those whom the legislature intended to benefit." Hartford Fire Ins. Co. v. Brown, 164 Conn. 497, 503, 325 A.2d 228 (1973).

         As did Judge Fischer for Ms. Spencer, this Court shall not deprive Ms. Coleman of otherwise protected funds. Her method of notice to the financial institution may have been unorthodox but it was effective. Wells Fargo had actual notice of her claim even though she did not mail it to the Bank. Further, she should not be required to take action against Wells Fargo Bank for the return of the social security benefits simply because the funds have already been turned over to the Commissioner of Revenue. Such result would be inimical to the concept that statutes dealing with exempted funds such as social security benefits should be liberally construed.[5] Her request should be granted.

         Accordingly, the court orders that the plaintiff return forthwith the defendant's exempted social security funds taken from ...

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