ALTCM, LOCAL 395 PENSION TRUST FUND v. Nevarez

• Decision Date: 19 May 1987
• Docket Number: CIV 86-1973 to 86-1975 PHX RCB,CIV 86-1990 PHX RCB.
• Citation: ALTCM, LOCAL 395 PENSION TRUST FUND v. Nevarez, 661 F.Supp. 365 (D. Ariz. 1987)
• Parties: ARIZONA LABORERS, TEAMSTERS, AND CEMENT MASONS, LOCAL 395 PENSION TRUST FUND, et al., Plaintiffs, v. Samuel NEVAREZ et al., Defendants.
• Court: U.S. District Court — District of Arizona

661 F. Supp. 365

ARIZONA LABORERS, TEAMSTERS, AND CEMENT MASONS, LOCAL 395 PENSION TRUST FUND, et al., Plaintiffs, v. Samuel NEVAREZ et al., Defendants.

CIV 86-1973 to 86-1975 PHX RCB, CIV 86-1990 PHX RCB.

United States District Court, D. Arizona.

May 19, 1987.

Daniel F. Gruender, James M. Nelson, Keith F. Overholt, Shimmel, Hill, Bishop & Gruender, P.C., Phoenix, Ariz., for plaintiffs.

Philip W. Messinger, Deputy Maricopa Co. Atty., Support Enforcement Unit, Phoenix, Ariz., for defendant/judgment creditors Ophelia Marie Moya, Alice Vasquez, and Geneice Center.

Robert Bushor, Tempe, Ariz., for defendant/judgment creditor Ernestine W. Noel.

Herman Alcantar, Phoenix, Ariz., for defendant/judgment debtor Samuel Nevarez.

Peter Moya, pro se.

Wilson Noel, pro se.

Defendant Benny Center, pro se.

ORDER

BROOMFIELD, District Judge.

Plaintiffs and defendants filed crossed motions for summary judgment pursuant to Fed.R.Civ.P. 56. There being no genuine issue of material fact, the court finds summary judgment is proper in this case.

The facts of this case are not in dispute. Plaintiffs are six trust funds created under and governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. Plaintiff Arizona Laborers, Teamsters, and Cement Masons, Local 395 (ALTCM) has three trust funds involved:

ALTCM Pension Trust Fund, ALTCM Health and Welfare Trust Fund, and ALTCM Vacation and Savings Trust Fund. Plaintiff Arizona State Carpenters also has three trust funds involved: Arizona State Carpenters Pension Trust Fund, Arizona State Carpenters Health and Welfare Trust Fund, and Arizona State Carpenters Vacation and Savings Trust Fund.

The defendants in this action are participants in the above pension plans or former spouses of the participants. The former spouses of the participants are judgment creditors of the participants. The former spouses obtained judgments in the Superior Court of Arizona in Maricopa County against the participants for failure to make required alimony and child support payments. They subsequently obtained writs of garnishment pursuant to Ariz.Rev.Stat. Ann. § 12-1570 et seq. (West Supp.1986) which they served upon the trust funds. The writs sought to collect the child support and alimony arrearages owed by the participant spouses from the monies that the trust funds held for the participant spouses. The judgment creditor spouses served the Superior Court judgments on the trust funds along with the writs of garnishment.

Defendants Ernestine Noel and Wilson Noel differ from the other defendants because they are still married. Ernestine Noel claims both a community property and a contractual interest in her husband's share of the trust funds. They entered into a post-nuptial agreement on December 21, 1979. Under the agreement, Wilson Noel agreed to provide monetary support for Ernestine as well as convey an interest to her in certain items of his property. Ernestine sued Wilson for breach of this agreement and obtained a default judgment against him in the Superior Court in Maricopa County on October 26, 1983. Like the other non-participant spouses, she instituted garnishment proceedings against the trust funds to execute the judgment.

After receiving the writs of garnishment, the plaintiffs filed this action seeking declaratory and injunctive relief. They seek a declaration that they are exempt from the state garnishment proceedings because ERISA and the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq., preempts such a state proceeding. In addition, they seek a permanent injunction enjoining the state garnishment action against them.

The plaintiffs contend ERISA's preemption provision, 29 U.S.C. § 1144(a), and anti-alienation provision, 29 U.S.C. § 1056(d)(1), preclude the garnishment of the trust funds involved. The trust funds in this case fall into two distinct categories under ERISA. The ALTCM Pension Trust Fund and the Arizona State Carpenters Pension Trust Fund constitute an "employee pension benefit plan" or "pension plan" under 29 U.S.C. § 1002(2). In contrast, the ALTCM and the Arizona State Carpenters Health & Welfare Trust Fund and the Vacation & Savings Trust Fund constitute an "employee welfare benefit plan" or "welfare plan" under 29 U.S.C. § 1002(1). Thus, the court must address each type of plan individually (i.e., the pension plan and the welfare plan) in determining whether ERISA and the NLRA preempt the state garnishment proceeding.

I. The Pension Plans

The Ninth Circuit previously considered whether ERISA preempted state garnishment proceedings against a pension fund. In Operating Engineers Local No. 428 v. Zamborsky, 650 F.2d 196, 200-201 (9th Cir. 1981), the court held a state law which allows an individual to garnish an exspouse's pension benefits is impliedly excepted from ERISA's preemption and anti-alienation provisions. The court noted that allowing spousal and child support garnishment did not frustrate the Congressional intent behind these two provisions of ERISA. Id. at 201. The court reasoned that Congress did not intend to provide a means by which an individual could effectively frustrate the enforcement of a court ordered spousal support obligation. Id.

Subsequent to Zamborsky, Congress enacted the Retirement Equity Act of 1984 (REA), Pub.L. 98-397; 98 Stat. 1426, which amended ERISA. These amendments limit the scope of the implied domestic relations exception Zamborsky read into the statute. By amending ERISA with regard to support obligations, Congress' intention was to clarify when ERISA's preemption and anti-alienation provisions do and do not apply to family support obligations. Congress wished to provide guidelines for determining whether the exception to the above provisions apply. See S.Rep. No. 575, 98th Cong., reprinted in 1984 U.S.Code Cong. & Admin.News 2547, 2564-65.

Under the REA amendments to ERISA there is a distinction between a "qualified domestic relations order" (QDRO) and a "domestic relations order." See 29 U.S.C. § 1056(d)(3)(B). A QDRO is a domestic relations order "which creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan," and meets certain other requirements specified in 29 U.S.C. § 1056(d)(3)(C) & (D). See 29 U.S.C. § 1056(d)(3)(B)(i) and 1984 U.S.Code Cong. & Admin.News at 2566. In contrast, a domestic relations order is "any judgment, decree, or order ... which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of a participant, and is made pursuant to a State domestic relations law (including a community property law)." See 29 U.S.C. § 1056(d)(3)(B)(ii) and 1984 U.S.Code Cong. & Admin.News at 2546. An exception exists only for QDRO's under ERISA's anti-alienation and preemption provisions. See 29 U.S.C. §§ 1056(d)(3)(A) and 1144(b)(7). See also 1984 U.S.Code Cong. & Admin.News at 2565. Therefore, ERISA's anti-alienation and preemption provisions do not apply to the judgments in this case if they are QDRO's. The court must therefore determine whether the judgments here constitute QDRO's and thus fall within the exception to the above provisions.

29 U.S.C. § 1056(d)(3)(C) & (D) specifies the requirements for a QDRO. The order must clearly specify:

1. The name and last known mailing address (if available) of the participant and the name and address of each alternate payee to which the order relates,

2. The amount or percentage of the participant's benefits to be paid to an alternate payee or the manner in which the amount is to be determined,

3. The number of payments or period for which payments are required, and

4. The plan to which the order applies. (With respect to this fourth requirement, Congress intended that a QDRO remains qualified regarding a successor plan of the same employer or a plan of a successor employer.)

1984 U.S.Code Cong. & Admin.News at 2566. The order still qualifies as a QDRO even if it fails to specify the current mailing address of the participant and alternate payee if the plan administrator knows the address independently of the order. Id.

The judgments in this case fail to meet the requirements of a QDRO. None of the orders involved meet any of the above requirements.¹ Therefore, they do not fall within the exception to ERISA's anti-alienation and preemption provisions. Consequently, the judgment creditor spouses cannot garnish the ALTCM Pension Trust Fund or the Arizona State Carpenters Pension Trust Fund because 29 U.S.C. § 1144(a) preempts such a state garnishment proceeding. Furthermore, 29 U.S.C. § 1056(d)(1) precludes the alienation of such pension benefits.

This conclusion does not mean that the judgment creditor spouses cannot ever reach their ex-spouses' pension benefits. Nothing precludes them from going back to the Superior Court to seek an order which qualifies as a QDRO.

II. The Welfare Plans (the Health & Welfare Trust Fund and the Vacation & Savings Trust Fund)

As the REA amendments to ERISA indicate Congress' intent to preempt state garnishment of ERISA covered pension plans pursuant to a state domestic relations order unless the order is a QDRO, the next issue is whether these amendments indicate a congressional intent to preempt state garnishment of ERISA covered welfare plans such as the health and welfare funds and vacation and savings funds involved in this case. Before addressing this issue however, the court must determine whether ERISA's anti-alienation provision, 29 U.S.C. § 1056(d)(1), covers employee welfare benefit plans.

The plaintiffs contend § 1056(d)(1) covers welfare plans. They rely on Franchise Tax Bd. of the St. of California v. Construction Laborers Vacation Trust For So. Calif., 679 F.2d 1307 (9th Cir.1982) to assert this proposition. In that case, the court...