Walters v. Cox

342 F.Supp.2d 670

Donald WALTERS, Plaintiff, v. Mike COX, et al., Defendants.

Civil Action No. 04-CV-73367-DT.

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

October 25, 2004.

Donald Walters, Jackson, MI, pro se.

ORDER ACCEPTING MAGISTRATE JUDGE'S OCTOBER 4, 2004 REPORT AND RECOMMENDATION AND DISMISSING PLAINTIFF'S CLAIMS

STEEH, District Judge.

Plaintiff Donald Walters, a state prisoner, filed a pro se complaint on August 30, 2004 against Michigan Attorney General Michael Cox, Eaton County, Michigan, Circuit Court Judge Calvin Osterhaven, and the Michigan Department of Corrections ("MDOC") alleging the defendants unlawfully seized his pension benefits under Michigan's State Correctional Facility Reimbursement Act ("SCFRA"), M.C.L. § 800.401 et seq., which authorizes the Michigan Treasurer to seek reimbursement for incarceration costs. Plaintiff specifically alleges that defendants Cox and MDOC filed a state SCFRA suit in Eaton County Circuit Court, which was assigned to Judge Osterhaven. Plaintiff was ordered by Judge Osterhaven on April 28, 2004 to show cause on or before July 1, 2004 why MDOC should not be entitled to seize plaintiff's pension funds.¹ Plaintiff timely responded to Judge Osterhaven's show cause order, arguing inter alia that his pension benefits are protected from seizure under state law by the non-alienation provisions of the federal Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1101 et seq., On July 1, 2004, Judge Osterhaven issued an order rejecting plaintiff's ERISA defense, and facilitating the seizure of 90% of plaintiff's pension benefits pursuant to the SCFRA.

Plaintiff's August 30, 2004 federal complaint invokes 28 U.S.C. § 2201 and 42 U.S.C. §§ 1983-1985, seeking declaratory and injunctive relief ordering the defendants to cease and desist seizing his pension benefits under the SCFRA, in violation of ERISA. In Count I, plaintiff alleges he was denied access to the courts when Judge Osterhaven refused to provide a teleconference allowing plaintiff to present affirmative defense to the SCFRA seizure, and by failing to adjudicate plaintiff's defense that Judge Osterhaven lacked subject matter jurisdiction to rule on plaintiff's federal ERISA defense. Count II alleges the defendants unlawfully used the state SCFRA statute to seize plaintiff's pension benefits, when defendants knew or should have known that the benefits were exempt from seizure by the non-alienation provisions of ERISA.

Plaintiff filed motions for injunctive relief in federal court on September 9, 2004. The matter was referred to Magistrate Judge Mona Majzoub, who issued an October 4, 2004 Report and Recommendation recommending that plaintiff's claims be dismissed for lack of subject matter jurisdiction because the Rooker-Feldman doctrine precludes this court from altering or amending Judge Osterhaven's July 1, 2004 state court order. "The doctrine prevents both a direct attack of the substance of a state court decision and a challenge to the procedures used by the state court in arriving at its decision." Report and Recommendation ("R & R"), at 4 (citing Anderson v. Charter Twp. of Ypsilanti, 266 F.3d 487, 493 (6th Cir.2001)). Magistrate Judge Majzoub also reasoned that the full faith and credit statute of 28 U.S.C. § 1738 likewise precludes this court from overruling Judge Osterhaven's decision. R & R, at 5 (citing Allen v. McCurry, 449 U.S. 90, 98, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980)). Magistrate Judge Majzoub further reasoned that plaintiff's due process claim was barred by the doctrine of res judicata, as an issue that could have been raised in a state court appeal of Judge Osterhaven's July 1, 2004 Order. The Magistrate Judge thus recommends dismissal of plaintiff's claims pursuant to Apple v. Glenn, 183 F.3d 477, 479 (6th Cir.1999) (allowing for sua sponte dismissal for lack of subject matter jurisdiction where a plaintiff's claims are "totally implausible, attenuated, unsubstantial, frivolous devoid of merit, or not longer open to discussion").

Plaintiff filed objections to the Report and Recommendation on October 13, 2004 arguing the Rooker-Feldman doctrine is inapplicable because ERISA completely preempts state law here, and therefore removal to federal court is the appropriate remedy. Plaintiff also objects that res judicata is inapplicable because his denial of due process claim was not litigated, and he was denied an opportunity to litigate the issue. Plaintiff further asks this court to "transfer" his case to the Michigan Court of Appeals.

"A judge of the court shall make a de novo determination of those portions of a report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1)(C). "A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." Id.

Plaintiff's objections are without merit. Plaintiff clearly raised ERISA as a defense in the state court action. State courts enjoy jurisdiction to decide such 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)). Judge Osterhaven enjoyed jurisdiction to adjudicate plaintiff's ERISA defense to the SCFRA. Plaintiff's argument that removal to federal court is the appropriate remedy is misplaced for a number of reasons, not the least of which is that plaintiff did not file a notice of removal in federal district court within 30 days of receiving service of the state Eaton County lawsuit. See 28 U.S.C. § 1446(a-b). Plaintiff's argument that he was denied the opportunity to argue the alleged lack of due process — lack of a telephonic conference — fails to explain how plaintiff was denied the opportunity to appeal Judge Osterhaven's decision in state court. Indeed, plaintiff asks the court to "transfer" this federal lawsuit to the Michigan Court of Appeals. The request is frivolous.

IT IS ORDERED that the Magistrate Judge's October 4, 2004 Report and Recommendation is hereby ACCEPTED in its entirety. Plaintiff's objections are hereby OVERRULED. Plaintiff's claims are hereby DISMISSED in their entirety for lack of subject matter jurisdiction.

SO ORDERED.

REPORT AND RECOMMENDATION

MAJZOUB, United States Magistrate Judge.

RECOMMENDATION: The Court recommends that Plaintiff's complaint be dismissed pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction and his Motion For Preliminary Injunction or Order to Show Cause Why an Injunction Should Not Issue be DENIED as moot.

* * *

Plaintiff filed the instant complaint on August 30, 2004 pursuant to 42 U.S.C. § 1983 alleging violations of his federally secured rights. The Defendants to this action, all sued in their official capacity, are Michigan Attorney General Mike Cox, Eaton County Circuit Judge Calvin Osterhaven, and the Michigan Department of Corrections (MDOC), none of whom have yet been served. On September 9, 2004, Plaintiff filed an Ex Parte Motion For Preliminary Injunction or Order to Show Cause Why An Injunction Should Not Issue. In his motion, Plaintiff seeks injunctive relief "to preserve the status quo of his property rights (ERISA pension checks) until a hearing or trial is held in the matter." (Plaintiff's Motion, pg. 1). The case has been referred to the undersigned for all pretrial proceedings pursuant to 28 U.S.C. § 636(b)(1)(B).

Plaintiff is currently incarcerated at the Cooper Street Correctional Facility in Jackson, Michigan. On April 20, 2004, Defendants filed a complaint under the State Correctional Facility Reimbursement Act (SCFRA), Mich. Comp. Laws § 800.401 et seq.¹ claiming entitlement to Plaintiff's retirement pension benefits. Plaintiff filed objections to Defendants' SCFRA claim asserting that the circuit court lacked subject matter jurisdiction to consider Defendants' claim. Specifically, Plaintiff alleged that his pension benefits were subject to the non-alienation provision of ERISA such that Defendants' claim should fail. After filing his objections, Plaintiff sought removal of the action to federal court and requested that he be allowed to participate by teleconference at a hearing on the matter. Although the circuit court conducted a teleconference hearing on July 1, 2004, Plaintiff alleges that he was "never summoned to talk on the phone or allowed to call the court to present his argument, even though he informed the facility unit ARUS of the scheduled hearing as well as have his family call the circuit court clerk to ensure that arrangements were properly made for the teleconference." (Plaintiff's Complaint, pg. 4, ¶ 12).

On July 10, 2004, Plaintiff alleges that he received an order dated July 1, 2004 directing him to notify his pension administrator to change his address to that of the prison where he was incarcerated. The order also directed the Warden of the prison to notify the pension administrator to change Plaintiff's address in the event he failed to do so. Apparently, Plaintiff failed to notify his pension administrator of his change of address such that the Warden took the appropriate steps to have Plaintiff's address changed to that of the prison. Shortly thereafter, Plaintiff's pension checks were sent to Plaintiff's prisoner account where the checks were deposited. Pursuant to the SCFRA, 90% of Plaintiff's pension benefits were confiscated. Plaintiff then filed the instant § 1983 action in this Court claiming that (1) the state actions were preempted by ERISA such that the circuit court was without subject matter jurisdiction over his pension benefits, and (2) the state failed to provide him with due process where he had no opportunity to be heard at the court proceedings.

ERISA ANTI-ALIENATION AND PREEMPTION PROVISIONS

The Employee...