Jack Johnson v. Clyde E. Carlson And Priscilla Carlson
74240-0
| Wash. Ct. App. | Feb 13, 2017Background
- Key Development Pension (the Pension), an ERISA-qualified private pension plan, sued Clyde Carlson on promissory notes; Carlson successfully asserted usury and obtained a judgment against the Pension.
- Carlson served a writ of garnishment on the Pension’s bank (Washington Federal), seizing $1,539.82 from the Pension’s account.
- The Pension filed a claim of exemption, arguing the seized funds were retirement benefits protected from garnishment under ERISA and RCW 6.15.020.
- The trial court denied the exemption and entered judgment against the Pension as garnishee; the Pension appealed.
- The core legal dispute: whether ERISA or Washington law prevents garnishment of undistributed pension plan assets to satisfy a judgment against the plan itself.
Issues
| Issue | Pension's Argument | Carlson's Argument | Held |
|---|---|---|---|
| Whether Carlson could sue the ERISA-qualified plan on a state-law usury claim | Suit barred because plaintiff not a proper ERISA plaintiff; claim should be subject to ERISA restrictions | State-law "run-of-the-mill" claims may be brought against ERISA plans | Allowed: state-law tort/contract claims may be brought directly against ERISA plans (Mackey) |
| Whether ERISA’s anti-alienation provision preempts state garnishment of plan assets | ERISA protects pension benefits and should preempt state law allowing garnishment of funds intended for participants | ERISA’s anti-alienation protects benefits only after distribution; plan corpus can be used to satisfy debts of the plan | Allowed garnishment: ERISA does not bar attachment of plan corpus to satisfy valid judgments against the plan |
| Whether RCW 6.15.020(3) prevents execution against plan assets for judgments incurred by the plan | RCW should be read to limit collections to ERISA-permitted "reasonable expenses" for plan administration | RCW permits actions against employee benefit plans for valid obligations incurred by the plan | Held that RCW 6.15.020(3) permits execution against plan assets for valid plan obligations; no conflict with ERISA |
| Whether ERISA fiduciary-duty limits (payment only for benefits/administration) bar satisfaction of a judgment from plan assets | ERISA fiduciary standards preclude using plan assets to pay judgments that are not plan administration expenses | Fiduciary-duty rules do not apply to a judgment creditor enforcing a judgment under the plan’s "sue or be sued" liability | Held fiduciary-duty provisions inapplicable; paying a judgment is a ministerial act and not restricted by §1104 |
Key Cases Cited
- Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825 (U.S. 1988) (ERISA plans may be sued on ordinary state-law claims; ERISA does not provide exclusive enforcement for such suits)
- Guidry v. Sheet Metal Workers Nat'l Pension Fund, 493 U.S. 365 (U.S. 1990) (discusses ERISA anti-alienation and exceptions)
- Milgram v. Orthopedic Assocs. Defined Contribution Pension Plan, 666 F.3d 68 (2d Cir. 2011) (ERISA anti-alienation protects benefits after distribution; plan corpus may be attached to satisfy plan's debts)
- Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204 (2d Cir. 2009) (attachment of plan assets to satisfy plan obligations is permissible)
- O'Toole v. Arlington Trust Co., 681 F.2d 94 (1st Cir. 1982) (plan participants lack claim to specific trust corpus prior to distribution)
- Harris Trust & Sav. Bank v. Hancock Mut. Life Ins. Co., 302 F.3d 18 (2d Cir. 2002) (distinguishes ministerial vs. discretionary fiduciary acts)