Summary
This Second Circuit opinion addresses whether ERISA’s anti-alienation provision preempts New York Civil Practice Law and Rules § 5205(c)(5), which creates an exception to retirement account exemptions for judgments entered after a ninety-day look-back period. The court held that ERISA expressly preempts the state law exception because allowing creditors to reach pension plan funds would directly conflict with Congress’s clear intent to protect such assets from involuntary alienation. After resolving a threshold issue regarding appellate jurisdiction over a previously non-final order, the court affirmed the District Court’s denial of the creditor’s objection to the debtors’ claim of exemption.
Topics
Practice areas
Questions Presented
- Whether ERISA preempts New York Civil Practice Law and Rules §5205(c)(5) as applied to ERISA‑qualifying retirement accounts.
- Whether the district court’s order denying the objection is a final, appealable order granting the appellate court jurisdiction.
Holdings
- ERISA preempts NYCPLR §5205(c)(5).
- The district court’s order is final and appealable after Office Create withdrew its request for a hearing with prejudice.
Key quotations
“Accordingly, we conclude that ERISA preempts NYCPLR §5205(c)(5). Accordingly, we conclude that the District Court did not err in denying Office Create’s objection to Appellees’ claim of exemption as to those accounts.” (*13)
“Although we generally review a district court’s decision on a post‑judgment motion for abuse of discretion, where the determination is based upon a legal interpretation, de novo review is appropriate.” (*5)
Factual background
Office Create Corp. obtained a money judgment against Planet Entertainment and Steve Grossman after confirming an arbitration award. It sought to restrain five Merrill retirement cash‑management accounts allegedly owned by Grossman to satisfy the judgment. The respondents claimed the accounts were exempt from collection under ERISA’s anti‑alienation provision and that ERISA preempted New York’s Civil Practice Law and Rules §5205(c)(5). The district court agreed and denied Office Create’s objection.
Procedural history
Office Create Corp. obtained a judgment confirming an arbitration award and sought to restrain retirement accounts of the respondents. The district court held the accounts were ERISA‑qualifying and exempt, preempting NYCPLR §5205(c)(5), and denied Office Create's objection. Office Create appealed the denial and the jurisdictional issue of finality.