Guidry v. Sheet Metal Workers Intern. Ass'n, Local No. 9, 9

• Citation: 10 F.3d 700
• Decision Date: 04 November 1993
• Docket Number: No. 9,92-1034,Nos. 92-1018,9,s. 92-1018
• Parties: , 17 Employee Benefits Cas. 1826 Curtis GUIDRY, Plaintiff-Appellee and Cross-Appellant, v. SHEET METAL WORKERS INTERNATIONAL ASSOCIATION, LOCAL NO. 9, Defendant-Intervenor-Appellant and Cross-Appellee, Sheet Metal Workers National Pension Fund; Sheet Metal Workers' Local Unions and Councils Pension Plan, Defendants and Cross-Appellees, Sheet Metal Workers' LocalPension Fund, Party Under Rule 19, F.R.C.P., Defendant-Intervenor and Cross-Appellee, and Edward J. Carlough; Robert T. Stringer; C.T. Roff; Cavet Snyder; Edward J. Carlough; Cecil D. Clay; George J. Cuddihy; Urie E. Williams, Jr.; Richard J. Scott, Trustees, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 700

10 F.3d 700

62 USLW 2301, 17 Employee Benefits Cas. 1826

Curtis GUIDRY, Plaintiff-Appellee and Cross-Appellant, v. SHEET METAL WORKERS INTERNATIONAL ASSOCIATION, LOCAL NO. 9 Defendant-Intervenor-Appellant and Cross-Appellee Sheet Metal Workers National Pension Fund; Sheet Metal Workers' Local Unions and Councils Pension Plan Defendants and Cross-Appellees Sheet Metal Workers' Local No. 9 Pension Fund, Party Under Rule 19, F.R.C.P., Defendant-Intervenor and Cross-Appellee, and Edward J. Carlough; Robert T. Stringer; C.T. Roff; Cavet Snyder; Edward J. Carlough; Cecil D. Clay; George J. Cuddihy; Urie E. Williams, Jr.; Richard J. Scott, Trustees, Defendants.

Nos. 92-1018, 92-1034.

United States Court of Appeals, Tenth Circuit.

Nov. 4, 1993.

Eldon E. Silverman of Elrod, Katz, Preeo, Look, Moison & Silverman, P.C., Denver, CO, for plaintiff-appellee and cross-appellant.

Joseph M. Goldhammer (Ellen M. Kelman with him, on the briefs) of Brauer, Buescher, Valentine, Goldhammer & Kelman, P.C., Denver, CO, for defendant-intervenor-appellant and cross-appellee.

Raymond J. Sweeney (Ellen Ranzman and Michael Wolf of Katz & Ranzman, Washington, D.C., with him, on the brief) of Raymond J. Sweeney & Associates, North Andover, MA, for defendant-intervenor-appellant and cross-appellee.

Before TACHA and BRORBY, Circuit Judges, and BROWN, ^* Senior United States District Judge.

BRORBY, Circuit Judge.

The issue in this case is whether Employee Retirement Income Security Act of 1974 (ERISA) Sec. 206(d)(1), 29 U.S.C. Sec. 1056(d)(1) (1988), and its coordinate section in the Internal Revenue Code, I.R.C. Sec. 401(a)(13)(A) (1986), prohibit garnishment of Mr. Guidry's pension benefits after the benefits have been paid and received.

I. BACKGROUND

The relevant facts are undisputed. ¹ Prior to 1981, appellee Curtis Guidry was the chief executive officer of appellant Sheet Metal Workers International Association, Local No. 9 (Local 9). As an employee of Local 9, Mr. Guidry was entitled to receive benefits from certain pension funds associated with Local 9. The litigation underlying this appeal began as an action for benefits brought by Mr. Guidry under ERISA against the cross-appellee Pension Funds (Pension Funds). The Pension Funds' defense to Mr. Guidry's claim for benefits was that he had forfeited the right to his pensions because of criminal misconduct against Local 9.

Local 9 intervened in the action asserting an interest in the property which was the subject of the litigation. That interest was based upon Local 9's common law and Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. Secs. 401-531 (1988), claims against Mr. Guidry. Local 9 asserted six claims against Mr. Guidry, five of which were settled by stipulation for entry of judgment. The claims for which a stipulation was signed included violation of fiduciary duties under 29 U.S.C. Sec. 501(a); conversion; actual fraud; money had and received; and negligence. The stipulation entered a $275,000 judgment in favor of Local 9. Local 9's sixth claim for relief sought imposition of a constructive trust over any pension funds due to Mr. Guidry and was not settled.

In this posture the case was heard by the district court. The district court and this court ultimately agreed Mr. Guidry was entitled to his pension under ERISA and that Local 9 was entitled to the imposition of a constructive trust under the LMRDA. Guidry, 641 F.Supp. at 360; Guidry, 856 F.2d at 1457. The United States Supreme Court, however, reversed the imposition of the constructive trust, ruling that the anti-alienation provisions of ERISA superseded Local 9's claim for a constructive trust. Guidry, 493 U.S. at 375-76, 110 S.Ct. at 686-87.

Pursuant to orders of remand, the district court entered judgment ordering payment of Mr. Guidry's back and future pension payments. The Pension Funds then began making Mr. Guidry's monthly pension payments into an account which he established at the First Interstate Bank of Denver for that purpose. Subsequently, Local 9 made efforts to collect its judgment against Mr. Guidry both through monthly garnishment of the bank account at the First Interstate Bank and through a seizure of past due pension payments which were tendered to Mr. Guidry in Texas by the Pension Funds. With respect to the monthly payments, the Pension Funds and Local 9 arranged that a representative of the Pension Funds would make out a deposit slip to Mr. Guidry's account, and then Local 9 would seek to garnish the funds immediately after deposit. Mr. Guidry, in turn, attempted to garnish certain accounts of Local 9 claiming the tender in Texas to be invalid.

The parties then entered into a series of stipulations concerning both the ongoing monthly pension payments and payments of past due amounts. The parties agreed that ongoing payments would be deposited into Mr. Guidry's First Interstate Bank account and would be subject to the initial garnishment filed by Local 9 without a formal garnishment each month. The parties also agreed to remove past due amounts from the Registry of the United States District Court for the Southern District of Texas, where they were stored after an attempted delivery by the pension funds to Mr. Guidry, and to deposit them into the First Interstate Bank account subject also to the initial garnishment. An additional stipulation authorized removal of some of the funds to two other financial institutions, but all funds remained subject to the initial garnishment.

Under the stipulations, the district court was presented with the issue of whether Local 9 was entitled, under ERISA, to garnish bank accounts designated as containing, and in fact containing, only the proceeds of pension payments received by Mr. Guidry. The district court held that the ERISA exemption from garnishment applies to pension proceeds "so long as the proceeds are clearly identified as such and have not been commingled with other funds or used for the acquisition of assets." The court stated that its decision was mandated by the law of the case, citing Guidry, 493 U.S. at 365, 110 S.Ct. at 680. The court also held that "[t]he attempt of the Funds to satisfy the judgment against them by the tender made in Texas ... was not a legally effective tender of payment of the judgment and is a nullity."

Upon receipt of the district court's order, Mr. Guidry removed all funds from the bank accounts which were subject to the stipulations of the parties.

II. CONTENTIONS OF THE PARTIES

The parties to this bitter and interminable litigation have locked horns yet again over the district court's order. Local 9 claims the anti-alienation protection of ERISA Sec. 206(d)(1) does not extend to funds once the plan participant asserts dominion over them. In support, Local 9 cites applicable Department of the Treasury regulations, principles of statutory construction, and the common law of trusts. Mr. Guidry, on the other hand, claims by the "law of the case" he is to receive his pension benefits and that the garnishment proceeding at issue here is contrary to the Supreme Court's mandate in Guidry. ² It is also his position that the appeal is in part moot; that Local 9 conceded the issue in this case; and that in any event because the purpose of ERISA is to safeguard a stream of income, interdicting that income at the moment of payment is prohibited by ERISA Sec. 206(d)(1). Mr. Guidry also claims alternative exemptions under state law, and cross-appeals claiming the district court erred in not awarding him attorney's fees under ERISA.

III. MOOTNESS

Following the district court's order invalidating the writ of garnishment, Mr. Guidry removed the funds from the bank accounts that were subject to the stipulations of the parties. Local 9 sought a stay of the district court's order and return of the funds. Local 9's motions were denied and this court affirmed. Because the funds are no longer in the account, Mr. Guidry contends that this appeal is at least in part moot. We disagree. As to future benefit payments to be received by Mr. Guidry, the parties agree this appeal presents a live issue. Mr. Guidry concedes that "even if the anti-alienation issues are decided adversely to [Mr.] Guidry, the effect would not be moot, since it would apply to all subsequent payments to [Mr.] Guidry during his lifetime." As to the past payments, including the lump sum originally tendered in Texas and ultimately paid in Colorado, Local 9's claim is only moot, as Mr. Guidry contends, if this court is without the power to order a return of the past payments or if it presupposes facts not in the record to the effect that the payments have been dissipated and cannot be returned. We decline to make either finding. Without commenting on the shape of any appropriate relief that might be granted by the district court on remand from this decision, we find this appeal justiciable.

IV. LAW OF THE CASE

The district court held the "law of the case" compelled it to bar garnishment of the pension benefits received by Mr. Guidry, the reason offered being that since the Supreme Court ordered Mr. Guidry receive a "stream of income," it is impermissible to garnish pension income paid and received by Mr. Guidry and in an account established by him for the receipt of those funds. In defending this conclusion, Mr. Guidry rather colorfully states that if his pension may be garnished after received:

[t]he "Employee Retirement Income Security Act of 1974" should be retitled the "Creditor Income Security Act of 1974," since pensions become simply a fund that cannot be touched by either the debtor/worker or the creditor, until the debtor's retirement at which time it matures into a fund for the creditor, not the pensioner.

In support, he recites from Guidry, as follows:

[ERISA] [s]ection 206(d) reflects a considered congressional policy choice, a decision to safeguard a stream of income for pensioners (and their dependents, who may be, and...