Guidry v. Sheet Metal Workers Nat. Pension Fund

• Decision Date: 01 November 1994
• Docket Number: Nos. 92-1018,92-1034,No. 9,D,9,s. 92-1018
• Citation: 39 F.3d 1078
• Parties: , 18 Employee Benefits Cas. 2313, Pens. Plan Guide P 23904X Curtis GUIDRY, Plaintiff-Appellee and Cross-Appellant, v. SHEET METAL WORKERS NATIONAL PENSION FUND, Sheet Metal Workers' Local Unions and Councils Pension Plan, Defendants-Appellees, Sheet Metal Workers International Association, Localefendant-Intervenor-Appellant and, Cross-Appellee, Sheet Metal Workers' LocalPension Fund, Party Under Rule 19, F.R.C.P., Defendant-Intervenor and Appellee, Edward J. Carlough; Robert T. Stringer; C.T. Roff; Cavet Snyder; Cecil D. Clay; George J. Cuddihy; Urie E. Williams, Jr.; and Richard J. Scott, Trustees, Defendants. Josephine Upah, Amicus Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1078

39 F.3d 1078

63 USLW 2301, 18 Employee Benefits Cas. 2313,

Pens. Plan Guide P 23904X

Curtis GUIDRY, Plaintiff-Appellee and Cross-Appellant, v. SHEET METAL WORKERS NATIONAL PENSION FUND, Sheet Metal Workers' Local Unions and Councils Pension Plan Defendants-Appellees Sheet Metal Workers International Association, Local No. 9 Defendant-Intervenor-Appellant and, Cross-Appellee Sheet Metal Workers' Local No. 9 Pension Fund, Party Under Rule 19, F.R.C.P., Defendant-Intervenor and Appellee, Edward J. Carlough; Robert T. Stringer; C.T. Roff; Cavet Snyder; Cecil D. Clay; George J. Cuddihy; Urie E. Williams, Jr.; and Richard J. Scott, Trustees, Defendants. Josephine Upah, Amicus Curiae.

Nos. 92-1018, 92-1034.

United States Court of Appeals, Tenth Circuit.

Nov. 1, 1994.

Eldon E. Silverman of Elrod, Katz, Preeo, Look, Moison & Silverman, P.C., Denver, CO, for plaintiff-appellee and cross-appellant.

Joseph M. Goldhammer (Ellen M. Kelman with him on the briefs) of Brauer, Buescher, Valentine, Goldhammer & Kelman, P.C., Denver, CO, for Local No. 9.

Amicus Curiae Josephine Upah submitted on brief by Daniel J. Wintz and William Jay Riley, of Fitzgerald, Schorr, Barmettler & Brennan, P.C., Omaha, NE.

Before SEYMOUR, Chief Judge, LOGAN, MOORE, ANDERSON, TACHA, BALDOCK, BRORBY, EBEL, KELLY, HENRY, Circuit Judges.

ON REHEARING EN BANC

Upon rehearing this case en banc, we return to the issue of whether the anti-alienation provision of the Employee Retirement Income Security Act of 1974 (ERISA) Sec. 206(d)(1), 29 U.S.C. Sec. 1056(d)(1), prohibits the garnishment of pension benefits after the benefits have been paid to and received by the beneficiary. The district court held that the ERISA provision applies and protects the funds from garnishment so long as they are clearly identified, are not commingled, and have not been used to acquire other assets. The panel opinion reversed, concluding that the ERISA anti-alienation provision does not apply. The panel further held that an exemption from garnishment provided by Colorado law is preempted by ERISA. On rehearing en banc, we agree with the panel that ERISA's anti-alienation provision is not applicable here. However, we conclude that state law is not preempted, and that the funds fall within the coverage of Colorado's exemption from garnishment. We modify the panel opinion accordingly and remand for further proceedings in light of this opinion.

Circuit Judge BRORBY delivered the unanimous opinion of the court with respect to Part I below.

Chief Judge SEYMOUR delivered the opinion of the court with respect to Part II, in which Circuit Judges LOGAN, MOORE, BALDOCK, EBEL, KELLY, and HENRY joined.

Circuit Judge BRORBY dissented with respect to Parts II-A and II-B, joined by Circuit Judges STEPHEN H. ANDERSON and TACHA.

BRORBY, Circuit Judge, for a unanimous court.

BACKGROUND

Essentially, Mr. Guidry is a judgment debtor of the union intervenor, Local No. 9, in the amount of $275,000 plus interest. ¹ The district court ordered union pension plans to pay Mr. Guidry's back and future pension benefits after Local No. 9's unsuccessful attempt to impose a constructive trust on pension benefits held by the funds. Local No. 9 then sought to collect its judgment through garnishment of a bank account established in Denver, Colorado, and through attempted seizure of funds tendered to Mr. Guidry at his home in Texas. Mr. Guidry challenged these efforts in United States District Courts in Colorado and in the Southern District of Texas.

Subsequently, the parties entered into a series of stipulations directing the deposit of past pension payments and future payments into a single bank account in Denver, Colorado. The parties also agreed to remove amounts from the Registry of the United States District Court for the Southern District of Texas and place the funds into the Denver account. All disputed funds, therefore, would be subject to a single writ of a garnishment so as to specifically present the issue before us. The United States District Court for the District of Colorado concluded the anti-alienation provision of ERISA continues to protect pension benefits from garnishment "so long as the proceeds are clearly identified as such and have not been co-mingled with other funds or used for the acquisition of assets." Findings, Conclusions and Order On Post Judgment Issues, No. 84-M-879 (D.Colo. Jan. 8, 1992), slip op. at 3 p 1. The district court held this conclusion was mandated by the law of the case established by the United States Supreme Court in Guidry v. Sheet Metal Workers Nat'l Pension Fund, 493 U.S. 365, 375-76, 110 S.Ct. 680, 686-87, 107 L.Ed.2d 782 (1990).

On appeal, our three-judge panel reversed the district court, with one judge dissenting. Guidry II, 10 F.3d 700, 717 (10th Cir.1993) (Brown, J., dissenting). The panel first held the mandate of the Supreme Court did not require a bar on garnishment of received pension payments. The Supreme Court was not factually presented with the issue of post-payment garnishment and therefore did not explicitly bar such garnishment as part of the law of the case. Nor would our decision to allow garnishment of distributed benefits unsettle any implicit resolution within the Court's mandate. ²

The panel reached, then, the fundamental issue of whether the anti-alienation provision, ERISA Sec. 206(d)(1), barred post-payment garnishment. After a review of the language of the statute, its legislative history and interpretive regulations, and other benefit protection statutes, we concluded the scope of section 206(d)(1) did not extend to protect private pension benefits once paid to and received by the beneficiary. The panel also held Mr. Guidry was not entitled to protection through state law exemptions from garnishment. Mr. Guidry then petitioned for rehearing with a suggestion for rehearing en banc, under Fed.R.App.P. 35 and 40, which we granted. ³

I.

Having reheard the arguments of the parties and reexamined the panel's opinion, we affirm the primary holding of Guidry II. Although the plain language of the anti-alienation provision of ERISA and its legislative history are inconclusive, the applicable administrative regulations show the provision was not intended to apply to benefits following distribution to and receipt by the beneficiary. This interpretation is also consistent with comparison of other statutory provisions that expressly provide greater protection to retirement income.

ERISA is a comprehensive statute intended in significant part to ensure pension benefits will actually be received upon retirement by plan participants and beneficiaries. See Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361, 374-75, 100 S.Ct. 1723, 1726, 1732-33, 64 L.Ed.2d 354 (1980). To that end, ERISA imposes "minimum standards" on private plan managers and employers. ERISA Sec. 101(a), 29 U.S.C. Sec. 1001(a). The anti-alienation provision of ERISA states, as a required standard for the form and payment of benefits, "[e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated." ERISA Sec. 206(d)(1), 29 U.S.C. Sec. 1056(d)(1). ⁴ The provision focuses on benefits, see Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 836, 108 S.Ct. 2182, 2189, 100 L.Ed.2d 836 (1988), but is silent on whether the term is meant to include benefits in the nature of distributed funds no longer within the fund and held by the plan participant or beneficiary. We therefore look to traditional aids in constructing the statute. See Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 13, 101 S.Ct. 2615, 2622-23, 69 L.Ed.2d 435 (1981).

Legislative history of section 206(d)(1) has been described as sparse and inconclusive. See Coar v. Kazimir, 990 F.2d 1413, 1420 (3d Cir.) (citing Ellis Nat'l Bank v. Irving Trust Co., 786 F.2d 466, 470 (2d Cir.1986); GMC v. Buha, 623 F.2d 455, 460 (6th Cir.1980)), cert. denied, --- U.S. ----, 114 S.Ct. 179, 126 L.Ed.2d 138 (1993). A House Report explains the anti-alienation provision was designed "[t]o further ensure that the employee's accured [sic] benefits are actually available for retirement purposes." H.R.Rep. No. 807, 93d Cong., 2d Sess. (1974), reprinted in 1974 U.S.C.C.A.N. pp. 4639, 4670, 4734. ⁵ This history indicates a plan is obligated to protect benefits from alienation at least up to point of payment so that benefits will be available for retirement purposes. Again, however, legislative history does not resolve whether ERISA protection extends past the mere availability of funds within the plan to include funds held by the beneficiary after distribution.

In the absence of clear Congressional intent, we give deference to reasonable agency regulations. ⁶ See Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). Treasury regulations define "assignment" and "alienation" as "[a]ny direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan in, or to, all or any part of a plan benefit payment which is, or may become, payable to the participant or beneficiary." 26 C.F.R. Sec. 1.401(a)-13(c)(1)(ii) (1992) (emphasis added). While the regulation does not define "benefits," it resolves our issue from another direction. The terms "alienation" and "assignment" are meant only to cover those arrangements that generate a right enforceable against a plan. Therefore, "benefits" are protected by the anti-alienation provision of section 206(d)(1) only so long as they are within the fiduciary responsibility of private plan managers. Following distribution of benefits to the plan participant or beneficiary, a creditor no longer has a right against the plan. Instead, the creditor must collect directly from the participant or beneficiary or, as here, initiate an enforceable garnishment procedure...