2010-00088854-CL-CL

Discover Bank vs. Donna M. Klug

Nature of Proceeding: Notice of Hearing on Claim of Exemption

Filed By: Hoffmann, Martin

Appearance Required.

The court continued this matter from March 18, 2014 at oral argument to allow
judgment debtor an opportunity to contact her debt consolidation firm and obtain
paperwork stating this debt has been paid. The Court ordered the parties to appear in
person or by phone on this date.

The tentative ruling from March 18, 2014 is reprinted below, for the parties
convenience:

The claim of exemption is denied.

This case involves a bank levy in which claimant contends the funds levied on were
insurance proceeds from an automobile accident. The exemption for insurance
proceeds for the loss, damage or destruction of a motor vehicle of up to $2,300
provides that the exemption exists for a period of 90 days after the time the proceeds
are actually received by the judgment debtor. CCP 704.010(b). Here, the proceeds
were deposited in claimant’s account on April 22, 2013. Therefore, the exemption has
expired. Moreover, even if the exemption had not expired, claimant has not traced the
funds levied upon to the exempt source. CCP § 703.580(b) requires that the
exemption claimant has the burden of proof.

CCP Section 703.080 pertains to the tracing of exempt funds: (a) Subject to any
limitation provided in the particular exemption, a fund that is exempt remains exempt to
the extent that it can be traced into deposit accounts or in the form of cash or its
equivalent. (b) The exemption claimant has the burden of tracing an exempt fund. (c)
The tracing of exempt funds in a deposit account shall be by
application of the lowest intermediate balance principle unless the
exemption claimant or the judgment creditor shows that some other method of tracing would better serve the interests of justice and equity
under the circumstances of the case. Claimant has not traced the funds to an exempt
source using the lowest intermediate balance principle.