State ex rel. Koster v. Bailey

• Decision Date: 24 May 2016
• Docket Number: WD 78982,WD 78947
• Citation: 493 S.W.3d 423
• Parties: State of Missouri, ex rel., Chris Koster, Attorney General, Appellant–Respondent, v. Mark Bailey, Respondent–Appellant.
• Court: Missouri Court of Appeals

493 S.W.3d 423

State of Missouri, ex rel., Chris Koster, Attorney General, Appellant–Respondent,

v.Mark Bailey, Respondent–Appellant.

WD 78947

WD 78982

Missouri Court of Appeals, Western District.

OPINION FILED: May 24, 2016

Motion for Rehearing and/or Transfer to Supreme Court Denied July 5, 2016.

Michael Morris, Jefferson City, MO, Counsel for Appellant–Respondent.

Michael Shipley, Liberty, MO, Counsel for Respondent–Appellant.

Before Division Three: Gary D. Witt, P.J., James Edward Welsh, and Anthony Rex Gabbert, JJ.

James Edward Welsh

, Judge

The State of Missouri appeals the circuit court's judgment in its lawsuit against Mark Bailey, a Missouri prison inmate, seeking reimbursement for the cost of Bailey's incarceration. Bailey cross-appeals. We affirm in part and reverse and remand in part.

Background

Mark Bailey began serving a seven-year prison sentence in September 2010. In August 2013, after discovering that Bailey had substantial assets, the State brought a cause of action pursuant to the Missouri Incarceration Reimbursement Act

(“MIRA”), §§ 217.825–.841, RSMo

,¹ seeking reimbursement for the expenses incurred, and to be incurred, for Bailey's incarceration. The cause was tried to the circuit court on January 12, 2015.

At trial, the parties stipulated to the admission of Exhibits A through G, which established that Bailey was incarcerated and had assets subject to MIRA.² The record on appeal submitted by the State includes only Exhibits B and F, which the parties agree are the only exhibits that are pertinent to this appeal.

Exhibit B is a copy of Bailey's deposition. It indicates that Bailey was divorced from his wife, Glenda Bailey, in 2011, and that Glenda³ was awarded certain real property, with an obligation to maintain and sell it, and to pay Bailey one-half of the net proceeds. Glenda also agreed to pay and deduct Bailey's legal expenses from his share of the proceeds. Bailey further testified that he and his sister, Beth, are co-owners of an account at United Missouri Bank.

Exhibit F is a copy of a Charles Schwab statement for a “Contributory” individual retirement account (“IRA”) in Bailey's name for the period of September 1–30, 2014. The statement shows an ending balance of $277,877.27. The circuit court found (and the parties do not dispute) that, under the Baileys' divorce decree, 50% of the IRA account was awarded to Glenda, less offsets for her own contributory IRA and 401(k) plan. No evidence was presented as to the value of Glenda's share of the Schwab account.

At trial, counsel for the State asserted that, having established that Bailey is incarcerated in the Department of Corrections and that he has substantial assets, the State asks “for a judgment requiring [Bailey] to help pay for those [incarceration] costs under [MIRA].”⁴ Counsel argued for a judgment attaching Bailey's IRA so that, when Bailey begins receiving funds from it, those funds can be applied to reimburse the State.

The circuit court entered judgment in favor of the State for 50% of the funds that Bailey is owed from his ex-wife Glenda and 50% of his share of the funds in the UMB bank account, for a total of $16,575.55. The court concluded that Bailey's IRA is excluded from a MIRA judgment on federal pre-emption grounds. The court found that MIRA is in direct conflict with, and thus pre-empted by, the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001

–1191c.⁵ Pursuant to 29 U.S.C. § 1056(d)(1), “pension plans” under the purview of ERISA “may not be assigned or alienated.” Here, the circuit court found that § 1056(d)(1)

is applicable to IRAs, and, thus, a MIRA judgment attaching Bailey's IRA was forbidden by ERISA.

In a post-trial motion, the State argued that the circuit court erred in applying ERISA's anti-alienation provision to Bailey's IRA because IRAs are specifically excluded from ERISA coverage. The State asked the court to amend the judgment to include Bailey's IRA as an asset subject to MIRA. Alternatively, the State argued that Bailey failed to produce any evidence to show that his IRA fell within ERISA's coverage, and thus the court should grant a new trial. The State's post-trial motion was denied by operation of law.

Standard of Review

Our review of this court-tried case is governed by the standard in Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976)

, under which we will affirm the judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. State ex rel. Nixon v. Griffin, 291 S.W.3d 817, 819 (Mo.App.2009). We review issues of law de novo . Id.

In a case such as this, where the circuit court did not observe witness testimony but instead reviewed depositions and documentary evidence, the Missouri Supreme Court has explained that the reviewing court

defers to the trial court as the finder of fact in determinations as to whether there is substantial evidence to support the judgment and whether that judgment is against the weight of the evidence, even where those facts are derived from pleadings, stipulations, exhibits and depositions.

MSEJ, LLC v. Transit Cas. Co., 280 S.W.3d 621, 623 (Mo. banc 2009)

(emphasis added). “In other words, even though this Court has the same opportunity to review the evidence as does the circuit court, the law allocates the function of fact-finder to the circuit court.” Id.

Likewise, in State v. Williams,

this Court explained that the trial court's findings of fact are entitled to deference even where they are based on physical or documentary evidence which is equally available to an appellate court. 334 S.W.3d 177, 181 (Mo.App.2011) (citing Anderson v. City of Bessemer City, 470 U.S. 564, 573–74, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) ). The Anderson Court explained the justification for deferring to the trial court's factual findings when those findings are based on “physical or documentary evidence or inferences from other facts”:

The trial judge's major role is the determination of fact, and with experience in fulfilling that role comes expertise. Duplication of the trial judge's efforts in the court of appeals would very likely contribute only negligibly to the accuracy of fact determination at a huge cost in diversion of judicial resources. In addition, the parties to a case on appeal have already been forced to concentrate their energies and resources on persuading the trial judge that their account of the facts is the correct one; requiring them to persuade three more judges at the appellate level is requiring too much.... [T]he trial on the merits should be the “main event ... rather than a tryout on the road.”

Id. at 181–82

(quoting Anderson, 470 U.S. at 574–75, 105 S.Ct. 1504 (internal citations omitted)).

MIRA Statutory Overview

The State of Missouri enacted MIRA, §§ 217.825–.841, as a means of obtaining reimbursement for the cost of caring for and maintaining prisoners in the Missouri Department of Corrections. State ex rel. Nixon v. Turpin, 994 S.W.2d 53, 55 (Mo.App.1999)

. “The procedure in the MIRA for reimbursement is similar to an attachment proceeding.” State ex rel. Nixon v. Peterson, 253 S.W.3d 77, 82 (Mo. banc 2008).

Under MIRA, every prisoner must complete a form listing, under oath, his or her assets. § 217.829. The form is forwarded to the attorney general, along with an estimate of the total cost of caring for the prisoner. § 217.831.1. Section 217.831 dictates the procedure the attorney general must follow prior to filing a petition for reimbursement, beginning with an investigation of an offender's assets. § 217.831.2. After completing the investigation, the attorney general may file a petition for reimbursement against an offender if he has

good cause to believe that an offender ... has sufficient assets to recover not less than ten percent of the estimated cost of care of the offender or ten percent of the estimated cost of care of the offender for two years, whichever is less, or has a stream of income sufficient to pay such amounts within a five-year period....

§ 217.831.3. Upon receiving a MIRA petition, the court must issue an order to the prisoner to show cause as to why the petition should not be granted. § 217.835.2. At the hearing on the State's petition, the State must prove that the offender (1) is incarcerated in a state correctional facility and (2) has assets that could be used for reimbursement, in order to establish a prima facie case. State ex rel. Nixon v. Hughes, 281 S.W.3d 902, 907 (Mo.App.2009)

. If the circuit court finds that the offender has assets that ought to be subjected to MIRA, the court shall issue an order requiring any person or entity having possession or custody of such assets “to appropriate and apply such assets” to satisfy the claim. § 217.835. 3. No more than ninety percent of the value of those assets may be paid to the State as reimbursement. § 217.833.1.

Discussion

In its sole point on appeal, the State argues that the circuit court erred in holding that MIRA is pre-empted by ERISA with respect to Bailey's IRA, because ERISA's anti-alienation provision at 29 U.S.C. § 1056(d)

does not apply to IRAs; consequently, there is no conflict between MIRA and ERISA and, thus, no ERISA pre-emption as to Bailey's IRA.

In ruling on the IRA issue, the circuit court found that Bailey's IRA falls within MIRA's broad definition of “assets.”⁶ But the court noted that “[t]he real issue ... is whether federal law pre-empts Missouri law, so as to prevent this Court from issuing an order” under section 217.835. The court concluded that federal law pre-empts Missouri law on this issue, stating:

The provisions of Subchapter 1 of the Employee Retirement Income Security Act [ERISA] are applicable to IRA accounts.

Boggs v. Boggs, 520 U.S. 833, 844–45 [117 S.Ct. 1754, 138, L.Ed.2d 45] (1997)

. Those provisions include 29 USCA § 1056(d), which provides that, with the exception of qualified domestic relations orders, benefits may not be assigned or...