Gale v. General Motors

• Citation: 556 F.Supp.2d 689
• Decision Date: 24 March 2008
• Docket Number: No. 06-CV-15710-DT.,06-CV-15710-DT.
• Parties: Joseph R. GALE, Plaintiff/Counter-Defendant, v. GENERAL MOTORS, Defendant/Cross and Counter-Plaintiff, and Michigan State Treasurer, Defendant/Cross-Defendant.
• Court: U.S. District Court — Eastern District of Michigan

556 F.Supp.2d 689

Joseph R. GALE, Plaintiff/Counter-Defendant, v. GENERAL MOTORS, Defendant/Cross and Counter-Plaintiff, and Michigan State Treasurer, Defendant/Cross-Defendant.

No. 06-CV-15710-DT.

United States District Court, E.D. Michigan, Southern Division.

March 24, 2008.

COPYRIGHT MATERIAL OMITTED

Joseph R. Gale, Carson City, MI, pro se.

David M. Davis, Hardy, Lewis, Birmingham, MI, for Defendant/Cross and Counter-Plaintiff.

Kathleen A. Gardiner, Mi. Dept. of Atty. Gen., Detroit, MI, for Defendant/Cross-Defendant.

ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION AND GRANTING DEFENDANT/CROSS AND COUTER-PLAINTIFF GENERAL MTORS' MOTION FOR DECLARTORY JUDGMENT

GERALD E. ROSEN, District Judge.

This Section 1983 prisoner civil rights matter having come before the Court on the December 27, 2007 Report and Recommendation of United States Magistrate Judge Steven D. Pepe recommending that the Court grant Defendant/Cross and Counter-Plaintiff General Motors' motion for declaratory judgment; and no timely objections having been filed; and the Court having reviewed the Magistrate Judge's Report and Recommendation, and the Court's entire file of this action, and having concluded that, for the reasons stated in the Report and Recommendation, General Motors' motion should be granted; and the Court being otherwise fully advised in the premises,

NOW, THEREFORE, IT IS HEREBY ORDERED that the Magistrate Judge's Report and Recommendation of December 27, 2007 [Dkt. #50] be, and hereby is, adopted by this Court.

IT IS FURTHER ORDERED that, for the reasons set forth in the Magistrate Judge's Report and Recommendation, Defendant/Cross and Counter-Plaintiff General Motors' Motion for Declaratory Judgment [Dkt. # 16] is hereby GRANTED. Accordingly,

IT IS FURTHER ORDERED that the Orders, Notices and Michigan State Treasurer's requests to General Motors and/or the GM Hourly Rate Employees Pension Plan (or its administrator) under SCFRA are hereby declared PREEMPTED by ERISA and void, to the extent the Orders, Notices and/or SCFRA directs GM and/or the Pension Plan to send or make payments of Plaintiffs Pension Plan benefits to any address or account other than as designated by the Plaintiff who is the Participant under the terms of the Plan.

IT IS FURTHER ORDERED that any Action or Order (including the Notices) which the State of Michigan may seek in the future for payments or reimbursements by GM and/or the Pension Plan (or its administrator) under SCFRA is hereby declared PREEMPTED by ERISA and void to the extent that any such Order and/or SCFRA either (1) directs GM and/or the Pension Plan (or its administrator), or directs a correctional facility Warden (or his or her representative) to direct GM and/or the Pension Plan (or its administrator), to send or make payments of Plaintiffs Pension Plan benefits to any address or account other than as designated by the Plaintiff who is the Participant under the terms of the Pension Plan, or (2) otherwise orders GM and/or the Pension Plan (or its administrator) to make surrogate payments, reimbursements or pay damages to or on behalf of the State of Michigan for Plaintiffs Pension Benefits for Plaintiffs Pension Benefits not sent to Plaintiffs prison address.

IT IS FURTHER ORDERED that the State of Michigan is precluded from attempting to enforce any Order and/or Notice to GM and/or the Pension Plan (or its administrator) and any future similar Orders and/or Notices by seeking orders of contempt against GM and/or the Pension Plan (or its administrator) to the extent such enforcement efforts would run contrary to this Court's rulings as stated hereinabove.

SO ORDERED.

REPORT and Recommendation on Defendant General Motors' Motion for Declaratory Judgment (Dkt.# 16)

STEVEN D. PEPE, United States Magistrate Judge.

On December 26, 2006, Plaintiff, in pro per, filed a Complaint, and related motions, alleging violations of the Civil Rights Act, 42 U.S.C. § 1983, and the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., against the Michigan State Treasurer ("State Treasurer") and General Motors ("GM") seeking declaratory relief and $75,000 in damages against each Defendant. On January 12, 2007, the Michigan State Treasurer filed a motion arguing that Plaintiffs Complaint and motions should be dismissed under Fed.R.Civ.P. 12(b)(6) for lack of jurisdiction (Dkt.# 6). On January 31, 2007, Defendant GM filed its Answer and a Counter-Claim as well as a Cross-Claim under ERISA against the Michigan State Treasurer seeking a declaration of its rights and exoneration of its actions (Dkt.# 12).

Against the Michigan State Treasurer, GM seeks a declaration that its suspension of pension payments to Plaintiff or its sending them as directed by Plaintiff and not to his custodial institution does not violate an October 20, 2003, Cheboygan County Circuit Court order discussed below. GM also filed a separate Motion for Declaratory Judgment that it has no liability to Plaintiff by forwarding monthly pension checks payable to Plaintiff to his address at the prison during the period from January 1, 2005, through December 2006 (Dkt. # 16, p. 14).¹ Further, GM seeks a declaration that Plaintiffs pension benefits held in suspense commencing January 1, 2007, and pension benefits payable in the future should be forwarded to the address designated by Plaintiff, or should continue to be held in suspense at his direction. Id.

A February 20, 2007, Report recommended that the State Treasurer's motion to dismiss against Plaintiff be granted based on this Court's lack of subject matter jurisdiction under the Rooker-Feldman doctrine and Michigan's doctrine of res judicata. Because Plaintiff and the State Treasurer were both parties to the previous state court action in which a final order was entered, it was determined that this Court would not have jurisdiction under the Rooker-Feldman doctrine to alter or amend the order of the Cheboygan County Circuit Court (Dkt.# 25, p. 5).² In addition, because state courts enjoy jurisdiction to decide federal ERISA defenses, Clayton Group Services, Inc. v. First Allmerica Financial Life Ins. Co., 166 F.Supp.2d 566, 576 (E.D.Mich.2001) (citing Warner v. Ford Motor Co., 46 F.3d 531, 535 (6th Cir.1995) (en banc); Zuniga v. Blue Cross and Blue Shield of Michigan, 52 F.3d 1395, 1399 (6th Cir.1995)), and Plaintiff failed to raise such a defense in Cheboygan County Circuit Court, it was determined that Plaintiffs claim against the State Treasurer was also barred from this Court's review under Michigan's doctrine of res judicata.³ On September 28, 2007, the Court dismissed Plaintiffs Complaint in its entirety (Dkt. # 48 referring to Dkt. # 5).

The Court further ordered that GM's Counter-Claim and Cross-Claim against Plaintiff/Counter-Defendant Joseph Gale and Cross-Defendant Michigan State Treasurer proceed pursuant to the prior plenary Order of Reference under 28 U.S.C. § 636(b) (Dkt. # 5). For the reasons indicated below, it is RECOMMENDED that Defendant GM's Motion for Declaratory Judgment be GRANTED.

I. BACKGROUND FACTS

Plaintiff is a former GM employee who retired and receives a monthly pension benefit under the GM Hourly Rate Employees Pension Plan ("Pension Plan") with benefits commencing October 1, 1981. Plaintiff is currently incarcerated by the Michigan Department of Corrections ("MDOC") at 8585 N. Croswell Road, St. Louis, MI 48880. On July 9, 2002, he was sentenced to a term of incarceration of eight to twenty years by the Cheboygan County Circuit Court for criminal sexual conduct first degree (person under 13) and criminal sexual conduct first degree (relationship).

Pursuant to the State Correctional Facility Reimbursement Act ("SCFRA"), MCL § 800.401 et seq, as amended, the State Treasurer brought an action in state court against Plaintiff to recover the costs involved in his incarceration.⁴ See, State Treasurer v. Joseph Russell Gale, Cheboygan Co. Cir. Court, Case No. 03-7186-CZ. The State Treasurer sought Plaintiffs monthly pension benefits of approximate $840.00 per month which it asserted was an asset, as defined by SCFRA, MCL § 800.401a(a). On September 5, 2003, Plaintiff was served with the State Treasurer's Summons and Complaint and the Cheboygan County Circuit Court's Order to Show Cause. A hearing was held in this matter on October 20, 2003. Plaintiff did not respond to or oppose the State Treasurer's action, nor did he appear at the hearing or send a written answer to the State Treasurer's Complaint.⁵

On October 20, 2003, the Cheboygan County Circuit Court awarded 90% of Plaintiffs pension to the State of Michigan as partial reimbursement of his cost of incarceration. Pursuant to § 800.404(3) of the Michigan Compiled Laws, the state court may order any person, corporation, or entity having custody of a prisoner's assets to "appropriate and apply the assets or a portion thereof toward reimbursing the state." But this specific provision of SCFRA is not applicable where, as in the present case, a prisoner's assets are held by a private pension plan. The State recognizes that application of § 800.404(3) in those cases would violate ERISA's antialienation provision, which states that each plan must "provide that benefits provided under the plan may not be assigned or alienated." 29 U.S.C. § 1056(d)(1). Instead, in order to recover a prisoner's benefits held by a private pension plan, the state utilizes SCFRA in conjunction with other Michigan laws and with MDOC's prison directives.

Under SCFRA, the Attorney General first pursues a judgment against the prisoner and is awarded a percentage of the prisoner's pension payments. See Mich. Comp. Laws §§ 800.403(3), 800.404. The court then orders the prisoner to inform his or her pension plan that any benefit payments should be sent to the institutional address. If the prisoner refuses to comply, the warden of the prisoner's institution must send a copy of the court...