Strobel v. Dillon

STANLEY STROBEL, Plaintiff,

v. ANDY DILLON, State Treasurer in his official capacity as Treasurer of the State of Michigan, BILL SCHUETTE,in his official capacity as Attorney General for the State of Michigan, Defendants.

Case No. 11-11684

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

Dated: November 14, 2011

HON. AVERN COHN

MEMORANDUM AND ORDER

GRANTING DEFENDANTS' MOTION TO DISMISS OR FOR SUMMARY JUDGMENT

(Doc. 13)¹

I. Introduction

This is a case filed under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. Plaintiff Stanley Strobel is a state inmate currently incarcerated at the West Shoreline Correctional Facility in Muskegon Heights, Michigan. Plaintiff is also a former employee of General Motors Corporation (GM). Plaintiff retired from GM with a monthly pension benefit in the amount of $3,160.00² which he receives from Fidelity. As will be explained, the State Treasurer, a defendant in this case, brought an action against plaintiff in state court under the State Correctional FacilityReimbursement Act, (SCFRA), M.C.L. § 800.401, to recover the costs of his incarceration which involved freezing his assets, including his pension benefit. While the state court case was pending, on the day before a final judgment entered, plaintiff filed suit in federal court, essentially claiming that the state's attempt to recoup the costs of incarceration via his pension violates ERISA. Plaintiff names as defendants Andy Dillon, in his official capacity as State Treasurer, and Bill Schuette, Attorney General for the State of Michigan, also in his official capacity. The two count complaint claims an ERISA violation under count one and seeks injunctive relief based on ERISA under count two.

As will also be explained, this is not the first attempt to challenge the SCFRA as violative of ERISA. Both the Michigan Supreme Court and the Michigan Court of Appeals have spoken on the issue, with only the Michigan Supreme Court speaking more squarely to the situation in this case.

Before the Court is defendants' motion to dismiss or for summary judgment. Defendants cite the Eleventh Amendment, the doctrine under Ex parte Young,³ the Rooker-Feldman doctrine,⁴ and res judicata in support of dismissal. In the end, the Rooker-Feldman and res judicata arguments carry the day for defendants, making it unnecessary to consider defendants' other grounds for dismissal.

II. Background

In May 2010, plaintiff was sentenced to two to fifteen years incarcerationfollowing a conviction for involuntary manslaughter. In late 2010, the State Treasurer, brought an action under SCFRA in Gladwin County Circuit Court seeking an ex parte order to freeze plaintiff's assets, including the bank account where plaintiff's pension check was being deposited, and to appoint a receiver. On November 5, 2010, the state court entered a show cause order, giving plaintiff until January 25, 2011 to show cause "why an order should not be entered appropriating and applying [plaintiff's] assets to reimburse the State of Michigan for the cost of his confinement in a state correctional facility . . . and . . . show cause why he should not be ordered to notify General Motors Corporation of his current legal address at the State correctional facility where he is confined for purposes of receiving pension benefits." The show cause order also stated that

. . . If [plaintiff] objects to the State's request for an order indicating his legal address for purposes of receiving funds for deposit into his only legal bank account, or to the State's claim to 90% of his assets, then before the scheduled hearing date he shall provide this Court and the Attorney General's office with a written response explaining te reasons for the objection.

The show cause hearing was adjourned several times, including one adjournment so plaintiff could retain new counsel.

According to defendants, plaintiff's new (and current) counsel asked the State Treasurer to agree to remove the case to federal count to allow for review of whether the pension benefits are protected from reach under ERISA. The State Treasurer declined the request. A show cause hearing was eventually set for April 19, 2011.

On April 18, 2011, the day before the show cause hearing, plaintiff filed a complaint in federal court, claiming that the State's attempt to reach his pension benefits under SCFRA violates ERISA.

Although the show cause order directed plaintiff to file a written response before the hearing, plaintiff filed a written answer on the date of the hearing, April 19, 2011, denying that the State was entitled to his pension benefits under ERISA. In the answer, plaintiff also explained the filing of the federal complaint, as follows:

. . . [plaintiff] has sought to have this matter litigated in the United States District Court for the Eastern District of Michigan and have filed suit, entitled Strobel v. Dillon, et al., being case number 2:11-cv-11684. This suit has been commenced prior to any order(s) being entered in this case to prevent application of Rooker-Feldman doctrine.

On April 19, 2011, the state court issued a Final Order, stating in relevant part that:

During the period of his incarceration [plaintiff's] legal address is the Michigan correctional facility in which he is currently confined, currently the West Shoreline Correctional Facility.

Within one week of being served with a copy of this Order, [plaintiff] is ordered to notify Fidelity that all pension benefits shall be mailed by check made payable to him at he West Shoreline Correctional Facility, and within one week of any transfer to a different facility, he shall notify Fidelity of his new prison address.

The Final Order further provided that if plaintiff refused to comply with the notification provision and directs that his pension payments be paid to his power of attorney, the power of attorney is required to direct payment in the amount of 90% of the pension payment to the correctional facility and 10% to plaintiff. The Final Order does not direct GM to take any action whatsoever with regard to plaintiff's pension payment; GM was not a party to the state court action.

Under Michigan's court rules, the state court's Final Order became effective on May 10, 2011, 21 days after its entry. See M.C.R. 2.614(A)(1). Plaintiff's right to appeal the Final Order expired on that same date. See M.C.R. 7.101(B)(1)(a). Plaintiff did notappeal the Final Order.

Although plaintiff disclosed the filing of the federal complaint in his response to the show cause order, he did not serve defendant with the complaint until July 6, 2011, almost three months after entry of the Final Order.

III. Legal Standards

"A Rule 12(b)(1) motion can either attack the claim of jurisdiction on its face, in which case all allegations of the plaintiff must be considered as true, or it can attack the factual basis for jurisdiction, in which case the trial court must weigh the evidence and the plaintiff bears the burden of proving that jurisdiction exists." DLX, Inc. v. Ky., 381 F.3d 511, 516 (6th Cir.2004). A district court has no subject matter jurisdiction over a claim if that claim is barred by the Rooker-Feldman doctrine, res judicata, or by the Eleventh Amendment. Id.

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. To survive a Rule 12(b)(6) motion to dismiss, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true." Bell Atlantic Corp. v. Twombley, 550 U.S. 544, 545 (2007). See also Ass'n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007). The court is "not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950 (internal quotation marks and citation omitted). Moreover, "[o]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id. Thus, "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more thanconclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. In sum, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face." Id. at 1949 (internal quotation marks and citation omitted).

Summary judgment will be granted when the moving party demonstrates that there is "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). There is no genuine issue of material fact when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

The nonmoving party may not rest upon his pleadings; rather, the nonmoving party's response "must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). Showing that there is some metaphysical doubt as to the material facts is not enough; "the mere existence of a scintilla of evidence" in support of the nonmoving party is not sufficient to show a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Rather, the nonmoving party must present "significant probative evidence" in support of its opposition to the motion for summary judgment in order to defeat the motion. Moore v. Philip Morris Co., 8 F.3d 335, 340 (6th Cir. 1993); see Anderson, 477 U.S. at 249-50.

IV. Analysis

A. SCFRA...