Trust v. Kuckenmeister, s. 09-15290, 09-15291.

• Citation: 619 F.3d 1010
• Decision Date: 22 July 2010
• Docket Number: Nos. 09-15290, 09-15291.,s. 09-15290, 09-15291.
• Parties: Joan R. MACK, as Trustee of the Palace Jewelry & Loan Co., Inc. 401(k) Profit Sharing Plan and Trust, Plaintiff-Appellee, v. Randal S. KUCKENMEISTER, CPA, MST, as Administrator of the Estate of Charla Marie Mack, Deceased, Defendant-Appellee, Darren Roy Mack, an individual, Defendant-Appellant, and John Does, 1 through 50, inclusive, Defendant. Joan R. Mack, as Trustee of the Palace Jewelry & Loan Co., Inc. 401(k) Profit Sharing Plan and Trust, Plaintiff-Appellant, v. Randal S. Kuckenmeister, CPA, MST, as Administrator of the Estate of Charla Marie Mack, Deceased; Darren Roy Mack, an individual, Defendants-Appellees, and John Does, 1 through 50, inclusive, Defendant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

619 F.3d 1010

Joan R. MACK, as Trustee of the Palace Jewelry & Loan Co., Inc. 401(k) Profit Sharing Plan and Trust, Plaintiff-Appellee,

v.Randal S. KUCKENMEISTER, CPA, MST, as Administrator of the Estate of Charla Marie Mack, Deceased, Defendant-Appellee,Darren Roy Mack, an individual, Defendant-Appellant,andJohn Does, 1 through 50, inclusive, Defendant.

Joan R. Mack, as Trustee of the Palace Jewelry & Loan Co., Inc. 401(k) Profit Sharing Plan and Trust, Plaintiff-Appellant,

v.Randal S. Kuckenmeister, CPA, MST, as Administrator of the Estate of Charla Marie Mack, Deceased; Darren Roy Mack, an individual, Defendants-Appellees,andJohn Does, 1 through 50, inclusive, Defendant.

Nos. 09-15290, 09-15291.

United States Court of Appeals,Ninth Circuit.

Submitted April 16, 2010. ^*

Filed July 22, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Mark Wray, Law Offices of Mark Wray, Reno, NV, for defendant-appellant/cross-appellee Darren Roy Mack.

Todd A. Bader, Bader & Ryan Ltd., Reno, NV, for plaintiff-appellee/cross-appellant Joan R. Mack.

Ryan W. Herrick and Ann Morgan, Jones Vargas, Reno, NV, for defendant-appellee/cross-appellee Randal S. Kuckenmeister.

Appeals from the United States District Court for the District of Nevada, Edward C. Reed, District Judge, Presiding. D.C. No. 3:08-cv-00370-ECR-RAM.

Before: A. WALLACE TASHIMA and SIDNEY R. THOMAS, Circuit Judges, and WILLIAM STAFFORD, Senior District Judge. ^**

OPINION

THOMAS, Circuit Judge:

Darren Mack murdered his wife, Charla Mack, and shot the state court judge overseeing their divorce proceedings before a final written divorce decree could be filed. Believing Darren Mack and Charla Mack had agreed to the terms of their divorce before Charla Mack's murder, the Estate of Charla Mack filed a motion in state court for the divorce decree to be memorialized in an order dated nunc pro tunc to a time before her death. The Nevada district court entered a domestic relations order (“order” or “DRO”) over Darren Mack's objection. Among other things, the DRO decreed that a Qualified Domestic Relations Order (“QDRO”) should issue. Darren Mack appealed to the Nevada Supreme Court, which affirmed the judgment.

These appeals require us to determine whether state courts have subject matter jurisdiction to decide that a state court issued domestic relations order is a QDRO as defined by the Employee Retirement Income Security Act of 1974 (“ERISA”), 88 Stat. 832, as amended, 29 U.S.C. § 1001 et seq. We conclude that they do and thus that the Nevada Supreme Court's QDRO determination in Mack v. Estate of Mack, --- Nev. ----, 206 P.3d 98 (2009), is entitled to full faith and credit. We reverse and remand with instructions for the district court to direct Joan Mack to deposit the contested funds with the court, if she has not already done so, and to award the funds to Randal Kuckenmeister, administrator of Charla Mack's Estate. ¹

I

Darren Mack and Charla Mack were engaged in divorce proceedings throughout 2005 and into the early part of 2006. As part of the divorce, Darren Mack agreed that the court would execute an order that would name Charla as the alternate payee of a 401(k) plan. The state court tasked Charla Mack's attorney with writing an order to that effect for the court's signature. Prior to the signing of the order, however, Darren Mack murdered Charla and shot the state court judge who was presiding over the divorce. ² No written order was entered by the state court before Charla's death.

After Charla's death, her estate was granted permission to substitute for Charla in the remainder of the divorce proceedings. The estate moved for entry of an order nunc pro tunc that would memorialize what the estate saw as oral orders entered by the original divorce judge before Charla was killed. The motion was granted, and on June 20, 2007, the state court entered an order, nunc pro tunc as of January 9, 2006-a date when Charla was still alive-stating that “a QDRO will be executed which will transfer to Mrs. Mack the sum of five hundred thousand dollars with any appreciation that is distributed to that five hundred thousand dollars.” Darren Mack appealed the order to the Nevada Supreme Court, where he argued, inter alia, that the order contravened federal law relating to retirement accounts.

While his state appeal was pending, Darren Mack threatened suit against the trustee of the 401(k) plan-his mother, Joan Mack-should she pay the benefit to Charla Mack's Estate. Joan Mack filed a complaint in federal court seeking to interplead the $500,000 in retirement money. ³

Darren Mack answered the complaint and filed a cross-claim against the Administrator of Charla Mack's Estate, Randal Kuckenmeister, claiming the right to the $500,000. ⁴ Kuckenmeister filed a motion to dismiss Joan Mack's complaint, and a second motion to dismiss Darren Mack's cross-claim. In both, he argued that the issue of who has the right to the pension funds mentioned in the state court order had already been resolved by the state court and that relitigation was barred by the doctrine of collateral estoppel. Joan Mack and Darren Mack argued that Joan Mack's complaint was not estopped because she had not participated in the Nevada court proceedings and was not in privity with Darren Mack. They also argued that while the state court did purport to determine who would be entitled to the retirement fund under state law, the issue before the federal court was whether that order was a QDRO under federal law.

The district court agreed with Kuckenmeister that “the issue to be decided in this case” was “the rights of the various parties with respect to th[e] retirement funds,” which “is the same issue that was decided in the prior state court action.” It found that because Joan Mack “as trustee of the retirement plan ... has no independent interest as to which party ... receives the retirement funds,” her “interests were represented in the state court proceeding when the state court determined to execute the QDRO in favor of Charla.” It therefore dismissed Joan Mack's complaint and Darren Mack's cross-claim as precluded by collateral estoppel. Darren Mack has appealed the dismissal of the complaint and the dismissal of his cross-claim. Joan Mack filed a cross-appeal regarding the dismissal of her complaint.

While the federal appeals were pending, the Nevada Supreme Court issued an opinion in the state court appeal. The opinion not only decided the validity of a nunc pro tunc domestic relations order under state law, but determined that the order was in fact a QDRO under federal law. See Mack, 206 P.3d at 109-10.

This appeal was briefed after the Nevada Supreme Court published its opinion. Darren Mack and Joan Mack maintain that a state court lacks subject matter jurisdiction to determine whether an order issued in a domestic relations case is a QDRO, and therefore that its determination cannot be binding in a federal case. Even if a state court can have jurisdiction, they argue that the plan administrator must be given the first opportunity to evaluate an order and determine if it is a QDRO. They continue to argue that Joan Mack was not in privity with any party that participated in the state court proceeding, and thus that the state court decisions are not binding on her.

II

“Under the federal full faith and credit statute, federal courts must give state court judgments the preclusive effect that those judgments would enjoy under the law of the state in which the judgment was rendered.” Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 993 (9th Cir.2001) (citing 28 U.S.C. § 1738). Nevada applies “Nevada issue preclusion” to “determine the issue preclusive effect of a state decision.” Bower v. Harrah's Laughlin, Inc., 125 Nev. 37, 215 P.3d 709, 718-19 (2009).

In Nevada, issue preclusion requires that (1) an issue be identical, (2) the initial ruling was final and on the merits, (3) the party against whom the judgment is asserted was a party or in privity with a party in the prior case, and (4) the issue was actually and necessarily litigated.

Id. at 718 (internal quotation marks omitted).

The preclusive effect of a prior judgment is a question of law reviewed de novo. See Far Out, 247 F.3d at 993. “The party seeking to assert a judgment against another has the burden of proving the preclusive effect of the judgment.” Bower, 215 P.3d at 718.

As an initial matter, we reject Darren Mack's contention that he has raised any issue in federal court that was not already litigated in state court. The question of whether the order was a QDRO was actually and necessarily litigated before the Nevada Supreme Court, as was the state court's subject matter jurisdiction to answer that question in the first instance. See Mack, 206 P.3d at 109 (“Darren [Mack] argues that in order for there to be a QDRO, the court must issue a domestic relations order (DRO) and the plan administrator must then determine if it is qualified.”); id. at 109-10 (holding that “[w]hether a DRO constitutes a valid QDRO under ERISA is a question of law,” which a state court can determine in the first instance by looking to the statutory requirements and underlying order (internal quotation marks omitted)); id. at 109 (reviewing the applicable statute).

[5] [6] [7] This is not the end of our inquiry, however. Under Nevada law, a court judgment must be “valid” to have preclusive effect. Exec. Mgmt., Ltd. v. Ticor Title Ins. Co., 114 Nev. 823, 963 P.2d 465, 473 (1998). That is to say, the court must have personal and subject matter jurisdiction. Infirm judgments are not entitled to full faith and credit in federal courts. See Kremer v. Chem. Constr. Corp., 456 U.S. 461, 482-83, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982); see also Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 386, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996) (noting that state court judgments are binding only if the state court had power to enter the judgment). Judgments...