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Michigan Supreme Court Allows Seizure of Prisoner's Pension Despite ERISA
by Matthew T. Clarke
The Supreme Court of Michigan (SCM) upheld a court's ordering a prisoner to have his pension benefits deposited in his prisoner account so that the state can seize a large portion of it to reimburse incarceration costs.
The Michigan State Treasurer filed a complaint in state court under the State Correctional Facility Reimbursement Act (SCFRA), M.C.L. § 800.401, et seq., against Thomas K. Abbott, a Michigan state prisoner, seeking to gain access to Abbott's pension benefits. The Treasurer showed how much it costs to incarcerate Abbot and requested an order that Abbott's pension benefits be deposited in his prisoner account and appropriated by the warden. The court ordered Abbot to direct his pension funds to his prison address. It ordered the warden to give Abbot $20 of each payment and divide the remainder, giving 67% to Abbott's wife and 33% to the state. It also ordered the pension plan to send the benefits to Abbott's prison address. Abbott appealed.
Following the federal district court's ruling in State Treasurer
v. Baugh, 986 F.Supp. 1074 (E.D.Mich. 1997), the appeals court held that the trial court's order would violate the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. ERISA specifically states: "Each plan shall provide that benefits provided under the plan may not be assigned or alienated." 29 U.S.C. § 1056(d)(1). The Treasurer appealed.
The SCM first noted that ERISA does not define the terms "alienate" and "assign." It then used convoluted reasoning to conclude that a pension benefit is only "assigned" if sent from the pension plan to a third party directly, and not if deposited into the pensioner's own account. The term "alienate," it reasoned, was similar to assign in that it "refers to a conveyance or transfer of property to another." This was not happening even though the transfer to Abbott's prisoner account was involuntary and the warden would seize and appropriate all but $20 of each payment as soon as it arrived at his account. The SCM specifically refused to follow the Baugh court's interpretation of federal ERISA law.
The SCM adopted the "prevailing view" that the ERISA does not protect pension funds from distribution pursuant to the SCFRA after the beneficiary receives them and they are deposited. In contrast to other federal statutes dealing with benefits, ambiguous wording in ERISA makes it impossible to determine whether "benefits" refers to "the right to future payment or the actual money paid under the plan and received by the beneficiary." The SCM accepted the Tenth Circuit's adoption of the Treasury Department's definition of "benefit" as a right or interest enforceable against the pension plan. Guidry v. Sheet Metal Workers, 10 F.3d 700 (10th Cir. 1994). In Wright v. Riveland, 219 F.3d 905 (9th Cir. 2000), the Ninth Circuit held that the ERISA did not protect Washington state prisoners' pension funds from being deducted from prison accounts to pay for costs of incarceration. The SCM found Wright, Guidry, and a similar Third Circuit opinion, more persuasive than United States v. Smith, 47 F.3d 681 (4th Cir. 1995), which held that deposited pension benefits were protected. Thus, ERISA did not preclude forced deposit and distribution of Abbott's benefit moneys because it not give the warden any rights enforceable against the pension plan. The judgment of the court of appeals was reversed and the trial court's decision reinstated. Justice Marilyn J. Kelly strongly dissented, joined by two other justices. See: State Treasurer v. Abbott, 468 Mich. 143, 660 N.W.2d 714 (Mich. 2003).
The Supreme Court of Michigan (SCM) upheld a court's ordering a prisoner to have his pension benefits deposited in his prisoner account so that the state can seize a large portion of it to reimburse incarceration costs.
The Michigan State Treasurer filed a complaint in state court under the State Correctional Facility Reimbursement Act (SCFRA), M.C.L. § 800.401, et seq., against Thomas K. Abbott, a Michigan state prisoner, seeking to gain access to Abbott's pension benefits. The Treasurer showed how much it costs to incarcerate Abbot and requested an order that Abbott's pension benefits be deposited in his prisoner account and appropriated by the warden. The court ordered Abbot to direct his pension funds to his prison address. It ordered the warden to give Abbot $20 of each payment and divide the remainder, giving 67% to Abbott's wife and 33% to the state. It also ordered the pension plan to send the benefits to Abbott's prison address. Abbott appealed.
Following the federal district court's ruling in State Treasurer
v. Baugh, 986 F.Supp. 1074 (E.D.Mich. 1997), the appeals court held that the trial court's order would violate the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. ERISA specifically states: "Each plan shall provide that benefits provided under the plan may not be assigned or alienated." 29 U.S.C. § 1056(d)(1). The Treasurer appealed.
The SCM first noted that ERISA does not define the terms "alienate" and "assign." It then used convoluted reasoning to conclude that a pension benefit is only "assigned" if sent from the pension plan to a third party directly, and not if deposited into the pensioner's own account. The term "alienate," it reasoned, was similar to assign in that it "refers to a conveyance or transfer of property to another." This was not happening even though the transfer to Abbott's prisoner account was involuntary and the warden would seize and appropriate all but $20 of each payment as soon as it arrived at his account. The SCM specifically refused to follow the Baugh court's interpretation of federal ERISA law.
The SCM adopted the "prevailing view" that the ERISA does not protect pension funds from distribution pursuant to the SCFRA after the beneficiary receives them and they are deposited. In contrast to other federal statutes dealing with benefits, ambiguous wording in ERISA makes it impossible to determine whether "benefits" refers to "the right to future payment or the actual money paid under the plan and received by the beneficiary." The SCM accepted the Tenth Circuit's adoption of the Treasury Department's definition of "benefit" as a right or interest enforceable against the pension plan. Guidry v. Sheet Metal Workers, 10 F.3d 700 (10th Cir. 1994). In Wright v. Riveland, 219 F.3d 905 (9th Cir. 2000), the Ninth Circuit held that the ERISA did not protect Washington state prisoners' pension funds from being deducted from prison accounts to pay for costs of incarceration. The SCM found Wright, Guidry, and a similar Third Circuit opinion, more persuasive than United States v. Smith, 47 F.3d 681 (4th Cir. 1995), which held that deposited pension benefits were protected. Thus, ERISA did not preclude forced deposit and distribution of Abbott's benefit moneys because it not give the warden any rights enforceable against the pension plan. The judgment of the court of appeals was reversed and the trial court's decision reinstated. Justice Marilyn J. Kelly strongly dissented, joined by two other justices. See: State Treasurer v. Abbott, 468 Mich. 143, 660 N.W.2d 714 (Mich. 2003).
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Related legal case
State Treasurer v. Abbott
| Year | 2003 |
|---|---|
| Cite | 468 Mich. 143, 660 N.W.2d 714 (Mich. 2003) |
| Level | State Supreme Court |
State Treasurer v. Abbott, 468 Mich. 143, 660 N.W.2d 714 (Mich. 05/14/2003)
[1] Michigan Supreme Court
[2] No. 120803
[3] 468 Mich. 143, 660 N.W.2d 714, 2003.MI
[4] May 14, 2003
[5] STATE TREASURER, PLAINTIFF-APPELLANT,
v.
THOMAS K. ABBOTT, DEFENDANT-APPELLEE, AND AUTO BODY CREDIT UNION AND JOANN A. ABBOTT, DEFENDANTS.
[6] Chief Justice Maura D. Corrigan Justices Michael F. Cavanagh, Elizabeth A. Weaver, Marilyn Kelly, Clifford W. Taylor, Robert P. Young, Jr., Stephen J. Markman
[7] The opinion of the court was delivered by: Corrigan, C.J.
[8] OPINION
[9] BEFORE THE ENTIRE BENCH
[10] We granted leave to appeal to consider whether an order reimbursing the state for the cost of caring for defendant, a prison inmate, violates the Employee Retirement Income Security Act (ERISA), 29 USC 1001 et seq. The trial court ordered defendant to receive his pension benefits at his prison address and directed the warden to appropriate the funds from defendant's prison account under the State Correctional Facility Reimbursement Act (SCFRA), MCL 800.401 et seq. The Court of Appeals reversed because subsection 1056(d)(1) of ERISA prohibits an assignment or alienation of pension benefits.
[11] We hold that the trial court's order did not violate the federal statute. An order requiring a prisoner to receive his pension benefits at his current address is not an assignment or alienation of those benefits. Moreover, once the funds are in the inmate's account, the warden may distribute them under the SCFRA. The federal ban on alienation or assignment of pension funds does not extend to benefits that the pensioner has already received. We thus reverse the judgment of the Court of Appeals and reinstate the trial court's judgment.
[12] I. Factual background and procedural posture The State Treasurer filed a complaint under the SCFRA seeking to recover the costs of confining defendant Thomas K. Abbott, *fn1 a prisoner under the jurisdiction of the Michigan Department of Corrections. Plaintiff submitted documentation of the costs it has incurred and expects to incur in caring for defendant during his incarceration. *fn2 Plaintiff argued that defendant's monthly pension payments should be sent to his prison address, deposited in his prison account, and appropriated by the warden. The trial court ordered defendant to show cause why the funds should not be appropriated. Defendant filed a responsive pleading.
[13] After reviewing the pleadings, the trial court ordered defendant to direct his monthly pension proceeds to his prison address. The court further ordered the warden to provide $20 of each payment to defendant, with the remainder divided between defendant's wife (sixty-seven percent) and the state (thirty-three percent). In addition, the court ordered the pension plan to send the benefit payments to defendant's "new address of record" in prison in the event that defendant failed to direct the plan to do so.
[14] Defendant subsequently filed a pleading entitled a "writ of mandamus." The trial court treated the "writ of mandamus" as a motion for reconsideration and denied it. Defendant filed a delayed application for leave to appeal, which the Court of Appeals denied for lack of merit in the grounds presented. *fn3 Defendant then applied for leave to appeal to this Court. In lieu of granting leave to appeal, we remanded the case to the Court of Appeals for consideration as on leave granted. *fn4 In a published opinion, the Court of Appeals held that ERISA barred the deposit of funds into defendant's prison account. *fn5 Plaintiff filed an application for leave to appeal to this Court, which we granted. *fn6
[15] II. The Court of Appeals opinion
[16] In concluding that the trial court's order violates ERISA's antialienation provision, the Court of Appeals relied on State Treasurer v Baugh, 986 F Supp 1074 (ED Mich, 1997). In Baugh, the State Treasurer sought an order under the SCFRA directing a pension plan to deposit benefits into an inmate-beneficiary's prison account. The federal district court held that ERISA preempted such an order:
[17] The Court agrees that once pension benefits are placed in a personal account, ERISA no longer operates to protect those funds. However, in the instant case, defendant Chrysler Corp. would not be voluntarily depositing the pension funds into [the inmate's] personal prisoner account but would be doing so only by court order. Such an involuntary transfer clearly constitutes an assignment. [Id. at 1077 (citation deleted).]
[18] The Court of Appeals followed Baugh:
[19] There is no dispute that directly garnishing defendant's pension benefits to reimburse the state would violate the ERISA's antialienation provision.
[20] Baugh, supra. Plaintiff attempts to distinguish Baugh by asserting that plaintiff did not make a claim against the pension plan in this case and did not seek an order compelling the plan to do anything. Plaintiff argues that ordering defendant to direct his pension to be sent to his prison address is consistent with Baugh and does not violate the ERISA. This argument fails for two reasons. First, defendant did not voluntarily change his pension address to his prison address and did not voluntarily have the pension funds deposited into his personal prisoner account, but rather was ordered by the court to do so. The court's order effectively required the pension fund to make the pension payment to defendant's prison account against defendant's will. Such an involuntary transfer clearly constitutes an assignment and conflicts with the ERISA's antialienation provision. Second, if defendant refuses to direct the pension fund to pay the benefits to his prison account, the only method of ensuring that the benefits reach the prison account is by reliance on the order directing the fund to send the money to the prison, just as in Baugh. [249 Mich App 107, 113; 640 NW2d 888 (2001).]
[21] III. Standard of review
[22] Whether the trial court's order effectuates an alienation or assignment of pension funds under 29 USC 1056(d)(1) is a question of law. We review questions of law de novo. Cardinal Mooney High School v Michigan High School Athletic Ass'n, 437 Mich 75, 80; 467 NW2d 21 (1991).
[23] IV. Principles of interpretation
[24] This case requires us to interpret a federal statutory provision. Where a federal statute clearly addresses the issue at hand, we apply the statute as written. If, however, the text is silent or ambiguous regarding the issue before the Court, we must defer to a federal agency's interpretation if it is based on a permissible construction of the statute. Chevron USA Inc v Natural Resources Defense Council, Inc, 467 US 837; 104 S Ct 2778; 81 L Ed 2d 694 (1984).
[25] V. Discussion
[26] The trial court's order requires that (1) defendant receive his monthly pension payments at his prison address and (2) the warden distribute the funds after their deposit in defendant's prison account. We conclude that this arrangement does not alienate or assign the pension proceeds in violation of ERISA.
[27] We note initially that the SCFRA permits the trial court to provide reimbursement to the state from "assets" owned by a prisoner for expenses incurred in caring for the prisoner. MCL 800.404(3). The statute defines "assets" to include "income or payments to such prisoner from . . . pension benefits . . . ." MCL 800.401a.
[28] It is not disputed that the trial court's order was proper under the SCFRA. The question presented is whether ERISA's prohibition on assignment and alienation of pension benefits supersedes the SCFRA in this case.
[29] A. Receipt of the funds at defendant's prison address
[30] ERISA's antialienation provision states: "Each plan shall provide that benefits provided under the plan may not be assigned or alienated." 29 USC 1056(d)(1). *fn7 To determine whether the order requiring defendant to receive pension benefits at his prison address alienates or assigns those benefits, we must discern the meanings of the statutory terms.
[31] ERISA does not define the terms "alienate" and "assign." Because the federal statute is silent on the question presented, we defer to a federal agency's definition. Chevron, supra. The Treasury Department has defined the term "assignment" as "[a]ny direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan in, or to, all or any part of a plan benefit payment which is, or may become, payable to the participant or beneficiary." 26 CFR 1.401(a)-13(c)(1). This definition plainly contemplates a transfer of the interest to another person, i.e., a person other than the beneficiary himself. Sending a pension payment to a beneficiary at his own address, and depositing it in his own account, does not assign that payment. Neither the warden nor any other third person acquires a right or interest enforceable against the plan when the pension proceeds are sent to defendant at his current address. *fn8
[32] A property interest is assigned or alienated when it has been transferred to another person. The trial court here did not order defendant to have his pension proceeds sent to another person's address. On the contrary, the court ordered defendant to receive the benefits at his own address.
[33] Moreover, the deposit of the funds into defendant's prison account did not transfer any legal title to, or interest in, the funds to another person. The warden's access to defendant's account does not alter the fact that the account is in defendant's name. Legal title was not conveyed to the warden or to any other person when the funds were deposited in defendant's account. *fn9
[34] We respectfully decline to follow the federal district court's opinion in Baugh. The Baugh court held that "an order by this Court forcing [a pension plan] to deposit pension funds into an [inmate's prison] account from which [the state] may withdraw monies clearly operates as an assignment." Baugh, supra at 1077. The Baugh court characterized the transfer of the funds to the inmate's prison account as an assignment because it was "involuntary." The involuntary nature of a deposit does not establish an assignment unless a person other than the beneficiary acquires a right or interest enforceable against the plan. An assignment does not occur where the pension proceeds are sent to the pensioner's current address and deposited into his own account.
[35] The dissent argues that an assignment or alienation occurred because the pension fund itself was directed to send the benefit payments to defendant's prison address in the event that defendant did not ask the fund to do so. The dissent's argument ignores the Treasury Department's definition of the term "assignment." The federal statute would be violated if the court had ordered the fund to send the payments to another person, i.e., to a person other than defendant, and thereby granted a right or interest enforceable against the plan to that third person. Thus, if the court had ordered the pension fund to distribute the payments directly to the state of Michigan, an assignment or alienation would result. Here, however, the court ordered the funds to be sent to defendant himself at his current address and deposited in his own account. Because defendant thus receives the funds, no assignment or alienation occurs. *fn10
[36] B. Appropriation of the funds
[37] after deposit in defendant's account We next consider whether the distribution of pension funds after they are deposited in defendant's account contravenes ERISA. The prevailing view is that ERISA does not protect pension funds after the beneficiary receives them. We adopt this view and hold that ERISA does not preclude distribution pursuant to the SCFRA after the funds are deposited in an inmate's account.
[38] The leading case on this subject is Guidry v Sheet Metal Workers, 10 F3d 700 (CA 10, 1993) (Guidry II), mod on reh 39 F3d 1078 (CA 10, 1994) (Guidry III). *fn11 In these Guidry cases, a former union official pleaded guilty of embezzling funds from his union. The union asserted an interest in the embezzler's pension benefits. The federal district court granted the union a constructive trust against the pension plan, thus preventing the beneficiary from receiving the funds. On its review, the United States Supreme Court held that this remedy violated ERISA's prohibition of alienation and assignment. Guidry v Sheet Metal Workers, 493 US 365; 110 S Ct 680; 107 L Ed 2d 782 (1990) (Guidry I).
[1] Michigan Supreme Court
[2] No. 120803
[3] 468 Mich. 143, 660 N.W.2d 714, 2003.MI
[4] May 14, 2003
[5] STATE TREASURER, PLAINTIFF-APPELLANT,
v.
THOMAS K. ABBOTT, DEFENDANT-APPELLEE, AND AUTO BODY CREDIT UNION AND JOANN A. ABBOTT, DEFENDANTS.
[6] Chief Justice Maura D. Corrigan Justices Michael F. Cavanagh, Elizabeth A. Weaver, Marilyn Kelly, Clifford W. Taylor, Robert P. Young, Jr., Stephen J. Markman
[7] The opinion of the court was delivered by: Corrigan, C.J.
[8] OPINION
[9] BEFORE THE ENTIRE BENCH
[10] We granted leave to appeal to consider whether an order reimbursing the state for the cost of caring for defendant, a prison inmate, violates the Employee Retirement Income Security Act (ERISA), 29 USC 1001 et seq. The trial court ordered defendant to receive his pension benefits at his prison address and directed the warden to appropriate the funds from defendant's prison account under the State Correctional Facility Reimbursement Act (SCFRA), MCL 800.401 et seq. The Court of Appeals reversed because subsection 1056(d)(1) of ERISA prohibits an assignment or alienation of pension benefits.
[11] We hold that the trial court's order did not violate the federal statute. An order requiring a prisoner to receive his pension benefits at his current address is not an assignment or alienation of those benefits. Moreover, once the funds are in the inmate's account, the warden may distribute them under the SCFRA. The federal ban on alienation or assignment of pension funds does not extend to benefits that the pensioner has already received. We thus reverse the judgment of the Court of Appeals and reinstate the trial court's judgment.
[12] I. Factual background and procedural posture The State Treasurer filed a complaint under the SCFRA seeking to recover the costs of confining defendant Thomas K. Abbott, *fn1 a prisoner under the jurisdiction of the Michigan Department of Corrections. Plaintiff submitted documentation of the costs it has incurred and expects to incur in caring for defendant during his incarceration. *fn2 Plaintiff argued that defendant's monthly pension payments should be sent to his prison address, deposited in his prison account, and appropriated by the warden. The trial court ordered defendant to show cause why the funds should not be appropriated. Defendant filed a responsive pleading.
[13] After reviewing the pleadings, the trial court ordered defendant to direct his monthly pension proceeds to his prison address. The court further ordered the warden to provide $20 of each payment to defendant, with the remainder divided between defendant's wife (sixty-seven percent) and the state (thirty-three percent). In addition, the court ordered the pension plan to send the benefit payments to defendant's "new address of record" in prison in the event that defendant failed to direct the plan to do so.
[14] Defendant subsequently filed a pleading entitled a "writ of mandamus." The trial court treated the "writ of mandamus" as a motion for reconsideration and denied it. Defendant filed a delayed application for leave to appeal, which the Court of Appeals denied for lack of merit in the grounds presented. *fn3 Defendant then applied for leave to appeal to this Court. In lieu of granting leave to appeal, we remanded the case to the Court of Appeals for consideration as on leave granted. *fn4 In a published opinion, the Court of Appeals held that ERISA barred the deposit of funds into defendant's prison account. *fn5 Plaintiff filed an application for leave to appeal to this Court, which we granted. *fn6
[15] II. The Court of Appeals opinion
[16] In concluding that the trial court's order violates ERISA's antialienation provision, the Court of Appeals relied on State Treasurer v Baugh, 986 F Supp 1074 (ED Mich, 1997). In Baugh, the State Treasurer sought an order under the SCFRA directing a pension plan to deposit benefits into an inmate-beneficiary's prison account. The federal district court held that ERISA preempted such an order:
[17] The Court agrees that once pension benefits are placed in a personal account, ERISA no longer operates to protect those funds. However, in the instant case, defendant Chrysler Corp. would not be voluntarily depositing the pension funds into [the inmate's] personal prisoner account but would be doing so only by court order. Such an involuntary transfer clearly constitutes an assignment. [Id. at 1077 (citation deleted).]
[18] The Court of Appeals followed Baugh:
[19] There is no dispute that directly garnishing defendant's pension benefits to reimburse the state would violate the ERISA's antialienation provision.
[20] Baugh, supra. Plaintiff attempts to distinguish Baugh by asserting that plaintiff did not make a claim against the pension plan in this case and did not seek an order compelling the plan to do anything. Plaintiff argues that ordering defendant to direct his pension to be sent to his prison address is consistent with Baugh and does not violate the ERISA. This argument fails for two reasons. First, defendant did not voluntarily change his pension address to his prison address and did not voluntarily have the pension funds deposited into his personal prisoner account, but rather was ordered by the court to do so. The court's order effectively required the pension fund to make the pension payment to defendant's prison account against defendant's will. Such an involuntary transfer clearly constitutes an assignment and conflicts with the ERISA's antialienation provision. Second, if defendant refuses to direct the pension fund to pay the benefits to his prison account, the only method of ensuring that the benefits reach the prison account is by reliance on the order directing the fund to send the money to the prison, just as in Baugh. [249 Mich App 107, 113; 640 NW2d 888 (2001).]
[21] III. Standard of review
[22] Whether the trial court's order effectuates an alienation or assignment of pension funds under 29 USC 1056(d)(1) is a question of law. We review questions of law de novo. Cardinal Mooney High School v Michigan High School Athletic Ass'n, 437 Mich 75, 80; 467 NW2d 21 (1991).
[23] IV. Principles of interpretation
[24] This case requires us to interpret a federal statutory provision. Where a federal statute clearly addresses the issue at hand, we apply the statute as written. If, however, the text is silent or ambiguous regarding the issue before the Court, we must defer to a federal agency's interpretation if it is based on a permissible construction of the statute. Chevron USA Inc v Natural Resources Defense Council, Inc, 467 US 837; 104 S Ct 2778; 81 L Ed 2d 694 (1984).
[25] V. Discussion
[26] The trial court's order requires that (1) defendant receive his monthly pension payments at his prison address and (2) the warden distribute the funds after their deposit in defendant's prison account. We conclude that this arrangement does not alienate or assign the pension proceeds in violation of ERISA.
[27] We note initially that the SCFRA permits the trial court to provide reimbursement to the state from "assets" owned by a prisoner for expenses incurred in caring for the prisoner. MCL 800.404(3). The statute defines "assets" to include "income or payments to such prisoner from . . . pension benefits . . . ." MCL 800.401a.
[28] It is not disputed that the trial court's order was proper under the SCFRA. The question presented is whether ERISA's prohibition on assignment and alienation of pension benefits supersedes the SCFRA in this case.
[29] A. Receipt of the funds at defendant's prison address
[30] ERISA's antialienation provision states: "Each plan shall provide that benefits provided under the plan may not be assigned or alienated." 29 USC 1056(d)(1). *fn7 To determine whether the order requiring defendant to receive pension benefits at his prison address alienates or assigns those benefits, we must discern the meanings of the statutory terms.
[31] ERISA does not define the terms "alienate" and "assign." Because the federal statute is silent on the question presented, we defer to a federal agency's definition. Chevron, supra. The Treasury Department has defined the term "assignment" as "[a]ny direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan in, or to, all or any part of a plan benefit payment which is, or may become, payable to the participant or beneficiary." 26 CFR 1.401(a)-13(c)(1). This definition plainly contemplates a transfer of the interest to another person, i.e., a person other than the beneficiary himself. Sending a pension payment to a beneficiary at his own address, and depositing it in his own account, does not assign that payment. Neither the warden nor any other third person acquires a right or interest enforceable against the plan when the pension proceeds are sent to defendant at his current address. *fn8
[32] A property interest is assigned or alienated when it has been transferred to another person. The trial court here did not order defendant to have his pension proceeds sent to another person's address. On the contrary, the court ordered defendant to receive the benefits at his own address.
[33] Moreover, the deposit of the funds into defendant's prison account did not transfer any legal title to, or interest in, the funds to another person. The warden's access to defendant's account does not alter the fact that the account is in defendant's name. Legal title was not conveyed to the warden or to any other person when the funds were deposited in defendant's account. *fn9
[34] We respectfully decline to follow the federal district court's opinion in Baugh. The Baugh court held that "an order by this Court forcing [a pension plan] to deposit pension funds into an [inmate's prison] account from which [the state] may withdraw monies clearly operates as an assignment." Baugh, supra at 1077. The Baugh court characterized the transfer of the funds to the inmate's prison account as an assignment because it was "involuntary." The involuntary nature of a deposit does not establish an assignment unless a person other than the beneficiary acquires a right or interest enforceable against the plan. An assignment does not occur where the pension proceeds are sent to the pensioner's current address and deposited into his own account.
[35] The dissent argues that an assignment or alienation occurred because the pension fund itself was directed to send the benefit payments to defendant's prison address in the event that defendant did not ask the fund to do so. The dissent's argument ignores the Treasury Department's definition of the term "assignment." The federal statute would be violated if the court had ordered the fund to send the payments to another person, i.e., to a person other than defendant, and thereby granted a right or interest enforceable against the plan to that third person. Thus, if the court had ordered the pension fund to distribute the payments directly to the state of Michigan, an assignment or alienation would result. Here, however, the court ordered the funds to be sent to defendant himself at his current address and deposited in his own account. Because defendant thus receives the funds, no assignment or alienation occurs. *fn10
[36] B. Appropriation of the funds
[37] after deposit in defendant's account We next consider whether the distribution of pension funds after they are deposited in defendant's account contravenes ERISA. The prevailing view is that ERISA does not protect pension funds after the beneficiary receives them. We adopt this view and hold that ERISA does not preclude distribution pursuant to the SCFRA after the funds are deposited in an inmate's account.
[38] The leading case on this subject is Guidry v Sheet Metal Workers, 10 F3d 700 (CA 10, 1993) (Guidry II), mod on reh 39 F3d 1078 (CA 10, 1994) (Guidry III). *fn11 In these Guidry cases, a former union official pleaded guilty of embezzling funds from his union. The union asserted an interest in the embezzler's pension benefits. The federal district court granted the union a constructive trust against the pension plan, thus preventing the beneficiary from receiving the funds. On its review, the United States Supreme Court held that this remedy violated ERISA's prohibition of alienation and assignment. Guidry v Sheet Metal Workers, 493 US 365; 110 S Ct 680; 107 L Ed 2d 782 (1990) (Guidry I).