Carpenters Pension Fund of Balt. v. Md. Dep't of Health & Mental Hygiene

Decision Date26 June 2013
Docket NumberNo. 12–1480.,12–1480.
Citation721 F.3d 217
PartiesCARPENTERS PENSION FUND OF BALTIMORE, MARYLAND, by its Trustee, Augustus L. Lester; Mid–Atlantic Regional Council of Carpenters Health and Welfare Fund, by its Trustee, Augustus L. Lester; Mid–Atlantic Regional Council of Carpenters Severance and Annuity Fund, by its Trustee, Augustus L. Lester; Mid–Atlantic Regional Council of Carpenters, Baltimore District; Carpenters Vacation Fund of Baltimore, Maryland, by its Trustee, Augustus L. Lester; Baltimore Carpenters' Joint Apprenticeship and Training Committee, by its Trustee, Augustus L. Lester, Plaintiffs–Appellees, v. MARYLAND DEPARTMENT OF HEALTH AND MENTAL HYGIENE, Garnishee–Appellant, and Tao Construction Company, Inc., Defendant, Wachovia Bank, Garnishee.
CourtU.S. Court of Appeals — Fourth Circuit

OPINION TEXT STARTS HERE

ARGUED:William F. Brockman, Office of the Attorney General of Maryland, Baltimore, Maryland, for Appellant. Brian G. Esders, Abato, Rubenstein & Abato, PA, Baltimore, Maryland, for Appellees. ON BRIEF:Douglas F. Gansler, Attorney General of Maryland, Baltimore, Maryland, for Appellant. Kimberly L. Bradley, Abato, Rubenstein & Abato, PA, Baltimore, Maryland, for Appellees.

Before DUNCAN and DIAZ, Circuit Judges, and HAMILTON, Senior Circuit Judge.

Reversed and remanded by published opinion. Judge DIAZ wrote the opinion, in which Judge DUNCAN and Senior Judge HAMILTON joined.

DIAZ, Circuit Judge:

We consider whether the jurisdictional shield of the Eleventh Amendment 1 insulates a state from a writ of garnishment under Federal Rule of Civil Procedure 69(a). Carpenters Pension Fund of Baltimore, Maryland, and co-plaintiffs (collectively the Fund) filed this garnishment proceeding against the Maryland Department of Health and Mental Hygiene (the Department) to collect monies owed to a debtor construction company. The Department moved to quash the writ of garnishment on grounds of sovereign immunity and Maryland public policy. The district court denied the motion, and the Department filed this interlocutory appeal.

We conclude that a federal proceeding that seeks to attach the property of a state to satisfy a debt, whether styled as a garnishment action or an analogous common law writ, violates the Eleventh Amendment. As the Department is immune from suit, we reverse and remand with instructions to quash the writ of garnishment.

I.

The instant litigation originates from an Employee Retirement Income Security Act action filed by the Fund in May 2007, against Tao Construction Company, Inc. (Tao) alleging deficient employer contributions. When Tao failed to answer the summons, the district court entered a $16,140.64 default judgment for the Fund.

In an effort to collect the judgment, the Fund filed an enforcement action in the federal district court for the District of Maryland. After failed attempts to locate any assets owned by Tao, the Fund discovered that Tao's CEO had contracted with the Department to perform construction work under the trade name “Pharoah Building and Construction.” Finding sufficient evidence that Pharoah was indeed the alter ego of Tao, the district court issued a writ of garnishment against the Department for amounts due ($9,963.52) to “Tao d/b/a Pharoah Building and Construction.” J.A. 41.

The Department moved to quash the writ on grounds of sovereign immunity and Maryland public policy. In a preliminary memorandum opinion and order, the district court concluded that sovereign immunity did not apply because by providing for immunity from suit only under a public policy doctrine, Maryland had implicitly waived its sovereign immunity under the Eleventh Amendment. The court further concluded that Maryland public policy did not foreclose the garnishment action because it sought “wages” rather than property. Nevertheless, the court deferred a final ruling on the Department's motion in anticipation of a joint status report regarding disputes about the payment obligations of the underlying contract.

The court subsequently held a hearing, during which the Department renewed its Eleventh Amendment objection. The court reaffirmed its conclusion that sovereign immunity did not bar the writ, but on different grounds. It concluded that the garnishment action was not a “suit” against a state entity, noting that although the garnishment action resembled a suit in the procedural sense, in substance it was not because the Department was not a real party in interest—but rather a “mere custodian” of the contract sums. J.A. 99. Accordingly, the court denied the Department's motion to quash.

We have jurisdiction 2 under the collateral order doctrine to review this interlocutory order inasmuch as it involves the denial of an immunity from suit. See P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144–46, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993).

II.
A.

We review the denial of sovereign immunity de novo. S.C. Wildlife Fed'n v. Limehouse, 549 F.3d 324, 332 (4th Cir.2008).

[T]he States' immunity from suit is a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution.” Alden, 527 U.S. at 713, 119 S.Ct. 2240. Because that protection inheres with the constitutional notion of sovereignty that the states retained, Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), it “extends beyond the literal text of the Eleventh Amendment,” Fed. Mar. Comm'n, 535 U.S. at 754, 122 S.Ct. 1864, to any “suit” that “subject[s] a State to the coercive process of judicial tribunals,” Seminole Tribe, 517 U.S. at 58, 116 S.Ct. 1114. Thus, we consider here whether “the federal judicial action must fairly be deemed a ‘suit’ against the state. In re NVR, LP, 189 F.3d 442, 450 (4th Cir.1999).

In a case testing the Supreme Court's jurisdiction to review state court criminal judgments in which the state is a party, Chief Justice Marshall remarked: “What is a suit? We understand it to be the prosecution, or pursuit, of some claim, demand, or request.” Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 407, 5 L.Ed. 257 (1821). The Supreme Court has scarcely elaborated since, stating only that a “suit” is to be determined ‘by the essential nature and effect of the proceeding.’ Idaho v. Coeur d'Alene Tribe, 521 U.S. 261, 277, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997) (quoting In re State of New York, 256 U.S. 490, 500, 41 S.Ct. 588, 65 L.Ed. 1057 (1921)).

For our part, we have outlined a more technical analysis based on “both the procedural posture and substantive nature of the proceeding.” In re NVR, 189 F.3d at 450. And although our decision in In re NVR likely does not survive Central Virginia Community College v. Katz, 546 U.S. 356, 126 S.Ct. 990, 163 L.Ed.2d 945 (2006),3 we believe its general test for determining a “suit”—which the Supreme Court did not disturb—is nonetheless instructive. Accordingly, we examine whether the procedural means and substantive end of the instant writ of garnishment involve the compulsory exercise of federal jurisdiction over the state of Maryland. See In re NVR, 189 F.3d at 450, 452–53.

The procedural inquiry compares the process of the legal action to that of a typical suit, see Fed. Mar. Comm'n, 535 U.S. at 756–59, 122 S.Ct. 1864 (comparing putative “suit” to “civil litigation”), but principally as a measure of “the degree of coercion exercised by the federal court in compelling the state to attend,” In re NVR, 189 F.3d at 452. For a suit qua “suit” involves [t]he specific indignity against which sovereign immunity protects [:] the insult to a State of being haled into court without its consent.” Va. Office for Prot. & Advocacy v. Stewart, ––– U.S. ––––, 131 S.Ct. 1632, 1640, 179 L.Ed.2d 675 (2011).

The substantive inquiry asks whether the proceeding “demand[s] something [from the state] by the institution of process in a Court of justice,” Cohens, 19 U.S. (6 Wheat.) at 408, and [t]he demand for money from a state is a strong indication that a federal judicial proceeding is indeed a ‘suit’ as a substantive matter. In re NVR, 189 F.3d at 454;see also Coeur d'Alene Tribe, 521 U.S. at 277, 117 S.Ct. 2028 ([W]hen the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest....”). Where relief is premised on federal jurisdiction over the state, as opposed to where the state is merely an adjunct to a dispute that “collaterally affects” its interests,4id., the proceeding is a suit in the substantive sense.

B.

We now apply these principles to the instant proceeding, which is a federal enforcement action by the Fund under Federal Rule of Civil Procedure 69 to execute their legal judgment against Tao. The law of the forum state governs such ancillary proceedings. SeeFed.R.Civ.P. 69. As a result, the district court in this case issued a writ of garnishment, which is a valid procedural device in Maryland for enforcing a judgment. See Parkville Fed. Sav. Bank v. Md. Nat'l Bank, 343 Md. 412, 681 A.2d 521, 524 (1996) (“A writ of garnishment is a means of enforcing a judgment. It allows a judgment creditor to recover property owned by the debtor but held by a third party.”).

We begin by noting that procedurally this action resembles a conventional “suit.” The garnishment proceeding commences upon the issuance of a writ, see Md. R. 2–645(b)(c), at which point the garnishee must file an answer admitting or denying indebtedness and asserting any applicable defenses “within the time provided by Rule 2–321—a period which coincides with answering a complaint in a civil action. See Md. R. 2–645(e). If the garnishee timely answers and the creditor timely replies, “the matter shall proceed as if it were an original action between the judgment creditor as plaintiff and the garnishee as defendant and shall be governed by the rules applicable to civil actions.” Md. R. 2–645(g).

It is therefore not surprising that Maryland courts...

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