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Charles F. Sposato v. First Mariner Bank

March 28, 2013

CHARLES F. SPOSATO
v.
FIRST MARINER BANK



The opinion of the court was delivered by: Catherine C. Blake United States District Judge

MEMORANDUM

Plaintiff Charles F. Sposato brought this suit against defendant First Mariner Bank for declaratory and injunctive relief with respect to Sposato's rights to receive distributions from the Cecil Bank Supplemental Executive Retirement Plan ("SERP") despite the writs of garnishment First Mariner has served on Cecil Bank for those distributions. Now pending are First Mariner's motion to dismiss or, in the alternative, for summary judgment and Sposato's cross motion for summary judgment. Most of the issues have been fully briefed, and no hearing is necessary. See Local Rule 105.6. For the following reasons, First Mariner's motion to dismiss will be granted on the issue of ERISA protection but denied without prejudice on the issue of partial protection by other law. Sposato's motion for summary judgment will be denied on the issue of ERISA protection and denied without prejudice on the issue of partial protection by other law.

Background

Both parties agree on the following facts. Sposato, a former executive employee of Cecil Bank, is a participant in, and beneficiary of, the SERP. (Def.'s Mem. in Supp. of Mot. to Dismiss or for Summ. J. [hereinafter Def.'s Mem.] at 2, ECF No. 6-1; Pl.'s Mem. in Supp. of Mot. for Summ. J. [hereinafter Pl.'s Mem.] at 2, ECF No. 9-2.) The SERP is "a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" as described in Section 201(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1051(2). (See SERP ¶ 11.10, Compl., Ex. 1, ECF No. 1-1.) This type of "unfunded" retirement plan is generally referred to as a "top hat" plan. (Def.'s Mem. at 9; Pl.'s Mem. at 3.) According to the SERP's anti-alienation provision,

[t]he benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by any person, at any time, or to any person whatsoever. Those benefits shall be exempt from the claims of creditors or other claimants of the Participant or Beneficiary and from all orders, decrees, levies, garnishment or executions to the fullest extent allowed by law.*fn1

(SERP ¶ 10.1.)

First Mariner has brought three actions against Sposato in the Circuit Court of Baltimore City and sought to enforce the judgments entered against him by serving writs of garnishment on Cecil Bank pursuant to Maryland garnishment law, Md. Rule § 2-645. (Compl. ¶¶ 16-21; Def.'s Mem. at 4.) Cecil Bank has identified Sposato's retirement benefits under the SERP as a debt it owes Sposato. (Compl. ¶ 21; Def.'s Reply at 2.) Sposato claims, however, that SERP benefits are not subject to garnishment.

Legal Standard

In reviewing a defendant's motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), the court accepts as true all well-pleaded allegations and views the complaint in the light most favorable to the plaintiff. Philips v. Pitt Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citing Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The court, however, is not required "to accept as true a legal conclusion couched as a factual allegation." A Soc'y Without A Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011), cert. denied, 132 S. Ct. 1960 (2012) (quoting Iqbal, 556 U.S. at 678) (internal quotations omitted).

The court may consider documents attached to the complaint, as well as documents attached to the motion to dismiss, if they are integral to the complaint and their authenticity is not disputed. Philips, 572 F.3d at 180; CACI Int'l v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009); Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006). Additionally, a federal court may take judicial notice of documents from prior state court proceedings and other matters of public record in conjunction with a Rule 12(b)(6) motion to dismiss without converting it into a motion for summary judgment. Philips, 572 F.3d at 180 (citing Papasan v. Allain, 478 U.S. 265, 268 n.1 (1986)); Walker v. Kelly, 589 F.3d 127, 139 (4th Cir. 2009); see also Fed. R. Evid. 201 (Judicial Notice of Adjudicative Facts).

Analysis

In reviewing First Mariner's motion to dismiss under Rule 12(b)(6), the court may properly consider the terms of the SERP, which Sposato attached to his complaint, and the state court judgments entered against Sposato in favor of First Mariner. Because the court need not consider materials other than those outlined above, it will review First Mariner's motion as a motion to dismiss.

The outcome of this case turns on whether the SERP's anti-alienation provision barring a creditor from garnishing a participant's SERP benefits is enforceable under ERISA, 29 U.S.C. ยง 1002 et seq., or whether state ...


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