Cody v. Riecker

• Decision Date: 05 July 1978
• Docket Number: No. 78 C 525.,78 C 525.
• Citation: 454 F. Supp. 22
• Parties: John CODY and Herbert Schneider, as Trustees of the Local 282 Pension Trust Fund, Plaintiffs, v. Margaret RIECKER, Hon. Yorka C. Linakis, Judge of the Family Court of the State of New York, County of Queens, and Michael P. Seniuk, Sheriff of Nassau County, Defendants.
• Court: U.S. District Court — Eastern District of New York

454 F. Supp. 22

John CODY and Herbert Schneider, as Trustees of the Local 282 Pension Trust Fund, Plaintiffs, v. Margaret RIECKER, Hon. Yorka C. Linakis, Judge of the Family Court of the State of New York, County of Queens, and Michael P. Seniuk, Sheriff of Nassau County, Defendants.

No. 78 C 525.

United States District Court, E. D. New York.

July 5, 1978.

O'Connor, Quinlan & Mangan, P.C., Long Island City, N. Y. (J. Warren Mangan, Long Island City, N. Y., of counsel), for plaintiffs.

Stanley Joseph Pryor, Maspeth, N. Y., for defendant Riecker.

MEMORANDUM AND ORDER

NICKERSON, District Judge.

Plaintiffs are trustees of an employment benefit plan which, since January 1, 1978, has been paying a retirement benefit of $400 per month to one Fred J. Riecker. On January 13, 1978, defendant Ms. Margaret Riecker obtained a judgment of the Family Court of the State of New York, Queens County, against Fred J. Riecker for $5,280.00 for arrears on his obligation to pay for the support of Ms. Riecker, who either is or was his wife.^* On February 14, 1978, defendant Seniuk, the Sheriff of Nassau County, levied on the pension fund benefits payable to Riecker to enforce the judgment against him.

Plaintiffs move in this court to enjoin the levy. The pension fund of which plaintiffs are trustees is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq., and they claim that the execution is invalid under that Act.

The pertinent provisions of ERISA, 29 U.S.C. § 1056(d), recite:

"(1) Each pension plan shall provide that benefits provided under the plan may not be assigned or alienated.

(2) For the purposes of paragraph (1) of this subsection, there shall not be taken into account any voluntary and revocable assignment of not to exceed 10 percent of any benefit payment, or of any irrevocable assignment or alienation of benefits executed before September 2, 1974. The preceding sentence shall not apply to any assignment or alienation made for the purposes of defraying plan administration costs. For purposes of this paragraph a loan made to a participant or beneficiary shall not be treated as an assignment or alienation if such loan is secured by the participant's accrued nonforfeitable benefit and is exempt from the tax imposed by section 4975 of Title 26 (relating to tax on prohibited transactions) by reason of section 4975(d)(1) of Title 26."

The trust agreement establishing the pension fund satisfies and even exceeds the ERISA requirement by providing in Article IX, § 2(b) that no moneys payable from the funds shall be subject "by any employee or person claiming through such employee, to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, garnishment, mortgage, lien or charge, and any attempt to cause the same to be subject thereto shall be null and void." Article VI, § 10 of the Rules and Regulations of the pension fund further limits the alienability of benefits payable and provides, among other things, that a retirement payment "shall not in any way be subject to any legal process to levy execution upon or attachment or garnishment proceedings against the same for the payment of any claim against any Employee or Pensioner."

The question of law is whether ERISA or these provisions of the pension fund agreement bar execution upon pension benefits to enforce the beneficiary's obligation to support his spouse.

I

Absent the ERISA provision the exemption of pension benefits from attachment set forth in the Fund documents would not preclude the levy. New York courts have often permitted enforcement of the obligation to support a spouse against the supporting spouse's pension benefits despite restrictions on alienation of those benefits similar to the restrictions in plaintiffs' trust's documents. See, e. g., Weigold v. Weigold, 236 App.Div. 126, 258 N.Y.S. 348 (1 Dept. 1932); Monck v. Monck, 184 App. Div. 656, 172 N.Y.S. 401 (1 Dept. 1918); Zwingmann v. Zwingmann, 150 App.Div. 358, 134 N.Y.S. 1077 (2 Dept. 1912); Michel v. Michel, 86 Misc.2d 774, 384 N.Y.S.2d 381 (Family Ct. Rensselaer County 1976). Plaintiffs contend that the ERISA provision which required inclusion in the trust documents of such a restriction on alienation now forecloses such enforcement.

If read literally 29 U.S.C. § 1056(d), quoted above, would not foreclose an involuntary diversion of pension benefits such as defendants' levy imposes. The statute requires only that pension plans forbid benefits from being "assigned" or "alienated". These terms imply that the statute seeks only to prevent active disposition of the benefits by the beneficiary. Cf. Hook v. Hook & Ackerman, Inc., 187 F.2d 52, 58 (3rd Cir. 1951).

However, the legislative history throws considerable doubt on such a reading and indeed appears to assume that a "garnishment" or a "levy" is to be treated as an "assignment" or "alienation". The House Conference Report recites that under the bill a plan must provide that benefits "may not be assigned or alienated" but might provide for a "voluntary revocable assignment" (not to exceed 10 percent) not for purposes of defraying the administrative costs of the plan. The report then states: "For purposes of this rule, a garnishment or levy is not to be considered a voluntary assignment." H.R.Conf.Rep. No. 93-1280, 93d Cong. 2d Sess., 1974 U.S.Code Cong. and Admin.News, pp. 4639, 5038, 5061. The context in which that sentence appears in the Report indicates that it may have been intended to suggest that while a garnishment or levy was to be considered an "alienation" or "assignment" it was not a "voluntary" one. Judge Guy so held in General Motors Corp. v. Townsend (D.C.E. Mich., S.Div., decided December 16, 1976). Certainly a garnishment or levy could not be thought of as a "revocable" assignment.

On the other hand, Mr. Justice Wager in National Bank, etc. v. Intern. Broth., etc., 400 N.Y.S.2d 482, 486-487 (Sup.Ct.Nass.Cty. 1977), read the House Conference Report as showing an intent not to prohibit a garnishment.

If a beneficiary by consenting to the entry of a judgment could in effect assign or alienate the trust funds, the purpose of the statute to protect him against his own improvidence would be thwarted. Moreover, judgment enforcing remedies such as garnishment, levy, attachment and the like can work the same result as an intentional assignment of alienation. They can dilute the benefits established by the trust. Cf. Bryan v. Itasca Cty., Minnesota, 426 U.S. 373, 391, 96 S.Ct. 2102, 48 L.Ed.2d 710 (1976). This court will therefore not construe § 1056(d) as permitting a garnishment or levy by every judgment creditor.

II

The question remains whether an obligation of a husband to support his wife, which arises by operation of law, may be enforced against the trust funds. The legislative history of 29 U.S.C. § 1056(d) contains no reference to this specific problem. However, a Congressional intent to preempt state law in such a matter is not lightly to be presumed in the absence of an unambiguous declaration of intent. Stone v. Stone, 450 F.Supp. 919 (N.D.Cal.1978). The state-created obligation to support a spouse has consistently been afforded deference, dating back to the turn of the century when the Supreme Court inferred an exception in favor of support claims from the general rule that a debtor's obligations are discharged by an adjudication in...