Carpenters Pension Fund v. Maryland Department of Health

Filing

PUBLISHED AUTHORED OPINION filed. Motion disposition in opinion denying Motion to dismiss appeal [998858296-2] Originating case number: 1:07-cv-01414-BEL. [999138214]. [12-1480]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 12-1480

CARPENTERS PENSION FUND OF BALTIMORE, MARYLAND, by its
Trustee, Augustus L. Lester; MID−ATLANTIC REGIONAL COUNCIL
OF CARPENTERS HEALTH AND WELFARE FUND, by its Trustee,
Augustus L. Lester; MID−ATLANTIC REGIONAL COUNCIL OF
CARPENTERS SEVERANCE AND ANNUITY FUND, by its Trustee,
Augustus L. Lester; MID−ATLANTIC REGIONAL COUNCIL OF
CARPENTERS, BALTIMORE DISTRICT; CARPENTERS VACATION FUND OF
BALTIMORE, MARYLAND, by its Trustee, Augustus L. Lester;
BALTIMORE CARPENTERS' JOINT APPRENTICESHIP AND TRAINING
COMMITTEE, by its Trustee, Augustus L. Lester,
Plaintiffs – Appellees,
v.
MARYLAND DEPARTMENT OF HEALTH AND MENTAL HYGIENE,
Garnishee – Appellant,
and
TAO CONSTRUCTION COMPANY, INC.,
Defendant,
WACHOVIA BANK,
Garnishee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.
Benson Everett Legg, Senior District
Judge. (1:07-cv-01414-BEL)

Argued:

March 22, 2013

Decided:

June 26, 2013

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Before DUNCAN and DIAZ, Circuit Judges, and HAMILTON, Senior
Circuit Judge.

Reversed and remanded by published opinion.
Judge Diaz wrote
the opinion, in which Judge Duncan and Senior Judge Hamilton
joined.

ARGUED: William F. Brockman, OFFICE OF THE ATTORNEY GENERAL OF
MARYLAND, Baltimore, Maryland, for Appellant.
Brian G. Esders,
ABATO, RUBENSTEIN & ABATO, PA, Baltimore, Maryland, for
Appellees.
ON BRIEF: Douglas F. Gansler, Attorney General of
Maryland, Baltimore, Maryland, for Appellant.
Kimberly L.
Bradley, ABATO, RUBENSTEIN & ABATO, PA, Baltimore, Maryland, for
Appellees.

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DIAZ, Circuit Judge:
We

consider

whether

the

jurisdictional

shield

of

the

Eleventh Amendment 1 insulates a state from a writ of garnishment
under Federal Rule of Civil Procedure 69(a).
Fund

of

“the

Fund”)

Maryland

Baltimore,
filed

Department

Maryland,
this
of

and

co-plaintiffs

garnishment
Health

Carpenters Pension

and

proceeding
Mental

(collectively
against
Hygiene

the
(the

“Department”) to collect monies owed to a debtor construction
company.

The Department moved to quash the writ of garnishment

on grounds of sovereign immunity and Maryland public policy.
The district court denied the motion, and the Department filed
this interlocutory appeal.
We conclude that a federal proceeding that seeks to attach
the property of a state to satisfy a debt, whether styled as a
garnishment action or an analogous common law writ, violates the
Eleventh Amendment.

As the Department is immune from suit, we

reverse

with

and

remand

instructions

to

quash

the

writ

of

garnishment.

1

While this appeal nominally arises under the Eleventh
Amendment, we note “that the sovereign immunity enjoyed by the
States extends beyond the literal text of the Eleventh
Amendment,” Fed. Mar. Comm’n v. S.C. State Ports Auth., 535 U.S.
743, 754 (2002), deriving from the common law immunity that the
states possessed before ratification and which the Constitution
should merely be seen “as evidencing and exemplifying,” Alden v.
Maine, 527 U.S. 706, 728 (1999).

3

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I.
The

instant

litigation

originates

from

an

Employee

Retirement Income Security Act action filed by the Fund in May
2007, against Tao Construction Company, Inc. (“Tao”) alleging
deficient employer contributions.
summons,

the

district

court

When Tao failed to answer the

entered

a

$16,140.64

default

judgment for the Fund.
In an effort to collect the judgment, the Fund filed an
enforcement

action

District

Maryland.

of

in

the

federal

After

district

failed

court

attempts

to

for

the

locate

any

assets owned by Tao, the Fund discovered that Tao’s CEO had
contracted

with

under

trade

the

the

Department

name

to

“Pharoah

perform

Building

construction
and

work

Construction.”

Finding sufficient evidence that Pharoah was indeed the alter
ego of Tao, the district court issued a writ of garnishment
against the Department for amounts due ($9,963.52) to “Tao d/b/a
Pharoah Building and Construction.”
The

Department

moved

to

J.A. 41.

quash

the

writ

sovereign immunity and Maryland public policy.

on

grounds

of

In a preliminary

memorandum opinion and order, the district court concluded that
sovereign

immunity

did

not

apply

because

by

providing

for

immunity from suit only under a public policy doctrine, Maryland
had implicitly waived its sovereign immunity under the Eleventh
Amendment.

The court further concluded that Maryland public
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not

foreclose

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the

garnishment

sought “wages” rather than property.
deferred

a

final

ruling

on

the

action

because

it

Nevertheless, the court
Department’s

motion

in

anticipation of a joint status report regarding disputes about
the payment obligations of the underlying contract.
The court subsequently held a hearing, during which the
Department renewed its Eleventh Amendment objection.

The court

reaffirmed its conclusion that sovereign immunity did not bar
the

writ,

but

garnishment

on

action

different
was

not

grounds.
a

“suit”

It

concluded

against

a

that

state

the

entity,

noting that although the garnishment action resembled a suit in
the

procedural

sense,

in

substance

it

was

not

because

the

Department was not a real party in interest--but rather a “mere
custodian” of the contract sums.

J.A. 99.

Accordingly, the

court denied the Department’s motion to quash.
We have jurisdiction 2 under the collateral order doctrine to
review

this

interlocutory

order

inasmuch

as

it

involves

the

2

We deferred action on the Fund’s motion to dismiss for
lack of subject matter jurisdiction pending arguments.
We now
deny that motion.
We do, however, agree with the Fund that we lack appellate
jurisdiction to consider whether Maryland “public policy”
supplies an independent basis for quashing the writ.
The
district court’s analysis on that issue in its preliminary
memorandum was advisory, as the court postponed its ruling on
the Department’s motion until its final order. The final order
(Continued)
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denial of an immunity from suit.

See P.R. Aqueduct & Sewer

Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144-46 (1993).

II.
A.
We review the denial of sovereign immunity de novo.

S.C.

Wildlife Fed’n v. Limehouse, 549 F.3d 324, 332 (4th Cir. 2008).
“[T]he States’ immunity from suit is a fundamental aspect
of

the

sovereignty

ratification

of

the

which

the

States

Constitution.”

enjoyed

Alden,

527

before
U.S.

at

the
713.

Because that protection inheres with the constitutional notion
of sovereignty that the states retained, Seminole Tribe of Fla.
v.

Florida,

517

U.S.

44,

54

(1996),

it

literal text of the Eleventh Amendment,”

“extends

beyond

the

Fed. Mar. Comm’n, 535

U.S. at 754, to any “suit” that “subject[s] a State to the
coercive

process

U.S.

58.

at

judicial
state.
In

action

of

Thus,
must

judicial
we

tribunals,”

consider

fairly

be

here

deemed

Seminole
whether

a

‘suit’”

Tribe,

“the

517

federal

against

the

In re NVR, LP, 189 F.3d 442, 450 (4th Cir. 1999).
a

case

testing

the

Supreme

Court’s

jurisdiction

to

review state court criminal judgments in which the state is a

in this case addressed only the Eleventh Amendment question,
which is the sole issue before us.

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party, Chief Justice Marshall remarked: “What is a suit?

We

understand it to be the prosecution, or pursuit, of some claim,
demand, or request.”
264,

407

(1821).

The

Cohens v. Virginia, 19 U.S. (6 Wheat.)
Supreme

Court

has

scarcely

elaborated

since, stating only that a “suit” is to be determined “‘by the
essential nature and effect of the proceeding.’” Idaho v. Coeur
d’Alene Tribe, 521 U.S. 261, 277 (1997) (quoting In re State of
New York, 256 U.S. 490, 500 (1921)).
For our part, we have outlined a more technical analysis
based on “both the procedural posture and substantive nature of
the proceeding.”

In re NVR, 189 F.3d at 450.

And although our

decision in In re NVR likely does not survive Central Virginia
Community College v. Katz, 546 U.S. 356 (2006), 3 we believe its
general test for determining a “suit”--which the Supreme Court
did not disturb--is nonetheless instructive.

Accordingly, we

examine whether the procedural means and substantive end of the
instant writ of garnishment involve the compulsory exercise of
3

In Katz, the Supreme Court held that the Eleventh
Amendment has limited application in the arena of federal
bankruptcy jurisdiction, for the Bankruptcy Clause, U.S. Const.
art. I, § 8, cl. 4, represented a partial cession by the states
of their sovereign immunity.
See Katz, 546 U.S. at 373.
Accordingly, it is doubtful that In re NVR, which applied the
Eleventh Amendment to a bankruptcy reorganization that sought
refunds of exempted taxes paid to Maryland and Pennsylvania,
remains viable.

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federal jurisdiction over the state of Maryland.

See In re NVR,

189 F.3d at 450, 452-53.
The procedural inquiry compares the process of the legal
action to that of a typical suit, see Fed. Mar. Comm’n, 535 U.S.
at 756-59 (comparing putative “suit” to “civil litigation”), but
principally as a measure of “the degree of coercion exercised by
the federal court in compelling the state to attend,” In re NVR,
189 F.3d at 452.
indignity
insult

against

to

consent.”

For a suit qua “suit” involves “[t]he specific

a

which

State

of

sovereign
being

immunity

haled

into

protects[:]

court

without

the
its

Va. Office for Prot. & Advocacy v. Stewart, 131 S.

Ct. 1632, 1640 (2011).
The

substantive

“demand[s]

something

inquiry
[from

asks

the

whether

state]

by

the

the

proceeding

institution

of

process in a Court of justice,” Cohens, 19 U.S. (6 Wheat.) at
408,

and

“[t]he

indication

that

demand
a

for

federal

money

judicial

‘suit’” as a substantive matter.
see

also

Coeur

d’Alene

from

Tribe,

a

state

proceeding

is

a

strong

is

indeed

a

In re NVR, 189 F.3d at 454;
521

U.S.

at

277

(“[W]hen

the

action is in essence one for the recovery of money from the
state,

the

state

interest . . . .”).

is

the

Where

real,
relief

substantial
is

premised

party
on

in

federal

jurisdiction over the state, as opposed to where the state is
merely an adjunct to a dispute that “collaterally affects” its
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interests, 4 id., the proceeding is a suit in the substantive
sense.
B.
We now apply these principles to the instant proceeding,
which is a federal enforcement action by the Fund under Federal
Rule

of

Civil

Procedure

69

to

execute

their

legal

judgment

against Tao.

The law of the forum state governs such ancillary

proceedings.

See Fed. R. Civ. P. 69.

As a result, the district

court in this case issued a writ of garnishment, which is a
valid procedural device in Maryland for enforcing a judgment.
See Parkville Fed. Sav. Bank v. Md. Nat’l Bank, 681 A.2d 521,
524 (Md. 1996) (“A writ of garnishment is a means of enforcing a
judgment.

It allows a judgment creditor to recover property

owned by the debtor but held by a third party.”).
We begin by noting that procedurally this action resembles
a

conventional

“suit.”

The

garnishment

proceeding

commences

upon the issuance of a writ, see Md. R. 2-645(b)-(c), at which
point the garnishee must file an answer admitting or denying
indebtedness and asserting any applicable defenses “within the
4

An example is a purely in rem proceeding in which “the
state is not in possession of the property.”
Tenn. Student
Assistance Corp. v. Hood, 541 U.S. 440, 446-50 (2004). In this
context, “jurisdiction is premised on the res, not on the
persona” of the states, Hood, 541 U.S. at 450, while the remedy
does not involve recovery from the state treasury, Cf. In re
NVR, 189 F.3d at 453-54.

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provided

by

Rule

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2-321”--a

period

which

answering a complaint in a civil action.

coincides

with

See Md. R. 2-645(e).

If the garnishee timely answers and the creditor timely replies,
“the

matter

shall

proceed

as

if

it

were

an

original

action

between the judgment creditor as plaintiff and the garnishee as
defendant and shall be governed by the rules applicable to civil
actions.”

Md. R. 2-645(g).

It is therefore not surprising that Maryland courts have
designated garnishment actions as “separate cases, even though
filed

in

the

underlying

action.”

Mayor

&

City

Council

of

Baltimore v. Utica Mut. Ins. Co., 802 A.2d 1070, 1083 (Md. Ct.
Spec. App. 2002).
“established

that

In fact, the Maryland Court of Appeals has
garnishment

is,

in

essence,

a

suit

by

the

debtor against the garnishee for the use and benefit of the
attaching creditor, and that the rights of the creditor against
the garnishee cannot rise above those of the debtor.”

Peninsula

Ins. Co. v. Houser, 238 A.2d 95, 97 (Md. 1968) (emphasis added).
Perhaps most importantly, a garnishee who fails to file an
answer to the writ risks default judgment.

See Md. R. 2-645(f).

As it is the compulsory aspect of one sovereign exerting its
jurisdiction over another that concerns the Eleventh Amendment,
see Alden, 527 U.S. at 749, a proceeding that encumbers the
property of a sovereign unless it participates certainly amounts

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to unconstitutional “coercion exercised by the federal court in
compelling the state to attend,” In re NVR, 189 F.3d at 452.
The Fund’s service of the writ left the Department with two
options: (1) answer the writ and appear before the court to
assert its defenses, or (2) ignore the writ and have a default
judgment imposed against the state treasury.
ultimatum

was

present

in

Federal

Maritime

When a similar
Commission,

the

Supreme Court stated: “To conclude that this choice does not
coerce a State to participate in an . . . adjudication would be
to blind ourselves to reality.”
The

Fund’s

claim

that

535 U.S. at 763-64.

the

Department

indebtedness to Pharoah is immaterial.

has

admitted

its

The Eleventh Amendment

is a matter of jurisdiction, not liability.

See In re NVR, 189

F.3d at 452 (“The Eleventh Amendment, of course, does not free
Maryland
federal

from

federal

courts.”).

jurisdiction

on

a

law,

but

simply

is

the

mere

It
state,

thereby

the

jurisdiction

imposition

offending

its

of

of

federal

dignity

as

a

sovereign, that violates this constitutional protection.

See

Fed. Mar. Comm’n, 535 U.S. at 769; Alden, 527 U.S. at 715.

This

injury results “regardless of the relief sought,” Metcalf and
Eddy, 506 U.S. at 146, and regardless of whether the relief is
actually owed, see Automatic Sprinkler Corp. of Am. V. Darla
Env’t

Specialists

(“Automatic

Inc.,

Sprinkler

53

F.3d

believes
11

181,
that

182

(7th

sovereign

Cir.

1995)

immunity

is

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inapplicable

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because

it

is

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trying

to

collect

United States concededly owes to Darla.

money

that

the

This does not cut much

ice.”).
Accordingly, we conclude that this garnishment action is a
“suit”

in

the

procedural

sense.

garnishee,

the

adversarial

The

posture

state

of

the

is

the

action

named

“demands

affirmative action by Maryland,” In re NVR, 189 F.3d at 453, and
the action is indisputably premised on jurisdiction over the
sovereign.
We

also

satisfies

find

the

that

the

substantive

underlying

criteria

of

a

demands recovery from the state treasury.
F.3d 426, 433 (4th Cir. 1995).
a

sovereign

has

enjoyed

garnishment
“suit”

action

because

it

See Gray v. Laws, 51

From the outset of the Republic

immunity

from

suits

to

attach

its

property, see The Schooner Exch. v. McFaddon, 11 U.S. (7 Cranch)
116 (1812) (attachment of foreign vessel), and this principle
applies equally to efforts to attach the funds of the sovereign
to satisfy the debt of another, see Mine Safety Appliances Co.
v. Forrestal, 326 U.S. 371, 375 (1945) (“In effect . . . this is
an

indirect

government

effort
in

a

to

collect

proceeding

a

to

debt

which

allegedly
the

owed

government

by

the

has

not

consented.”).
As early as 1846, the Supreme Court rejected efforts by
creditors to garnish the wages of navy seamen from the federal
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Buchanan v. Alexander, 45 U.S. 20 (1845).

acknowledged
sovereign

that

the

immunity

to

disbursements
prevent

the

were

owed,

disruption

The Court

yet
on

applied

government

functions that would attend the garnishment of public funds held
in the Treasury.

Id.

Later in Federal Housing Administration, Region No. 4 v.
Burr, 309 U.S. 242, 245 (1940), the Supreme Court affirmed that
a

sovereign

is

immune

from

garnishment,

but

confronted

the

separate question of whether Congress waived that immunity in
the National Housing Act, 12 U.S.C. § 1702, by allowing the
Federal

Housing

Administrator

to

“sue

or

be

sued.”

In

determining “whether or not garnishment comes within the scope
of

that

authorization,”

Burr,

309

U.S.

at

244,

the

Court

concluded:
Clearly the words ‘sue and be sued’ in their normal
connotation embrace all civil process incident to the
commencement or continuance of legal proceedings.
Garnishment and attachment commonly are part and
parcel of the process, provided by statute, for the
collection
of
debts.
In
Michigan
a
writ
of
garnishment is a civil process at law, in the nature
of an equitable attachment.
But however it may be
denominated, whether legal or equitable, and whenever
it may be available, whether prior to or after final
judgment, garnishment is a well-known remedy available
to suitors.
Id. at 245-46 (emphasis added).
our

own.

If

a

waiver

from

13

The analysis in Burr mirrors
“suit”

includes

post-judgment

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garnishment, then certainly the scope of immunity from “suit”
does as well.
Recent
bars

precedent

creditors

Treasury.”

from

has

confirmed

attaching

or

that

“sovereign

garnishing

immunity

funds

in

the

Dep’t of Army v. Blue Fox, Inc., 525 U.S. 255, 264

(1999); see Franchise Tax Bd. of Cal. v. U.S. Postal Serv., 467
U.S. 512, 516-17 (1984) (“[U]nless waived, sovereign immunity
prevents

the

creditor . . . from

judicial

order

requiring

employee’s salary.”). 5
when

we

noted

that

the

collecting

United

States

a

debt

to

through

garnishee

a

the

And we implicitly endorsed this rule
Congress

needed

to

legislatively

federal sovereign immunity from garnishment.

annul

See Diaz v. Diaz,

586 F.2d 1061, 1063 (4th Cir. 1977) (“Indeed, it appears that
the

purpose

and

effect

of

42

U.S.C.

§ 659

is

to

waive

the

sovereign immunity of the United States for garnishment and like
purposes in a limited class of State court actions . . . .”).
Even though the relevant cases mostly concern the immunity
of the federal government from post-judgment attachment, we see
no reason why a state should not enjoy this immunity as well.
5

Our sister circuits have also affirmed this principle.
See Watters v. Wash. Metro. Area Transit Auth., 295 F.3d 36, 40
(D.C. Cir. 2002); Shaw v. United States, 213 F.3d 545, 548 (10th
Cir. 2000); Neukirchin v. Wood Cnty. Head Start, Inc., 53 F.3d
809, 812 (7th Cir. 1995); Ramsdell v. G.H. Coffey Co., 632 F.2d
162, 163 (1st Cir. 1980); May Dep’t Stores Co. v. Smith, 572
F.2d 1275, 1277 (8th Cir. 1978).

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State and federal immunity from suit are coextensive inasmuch as
both sovereigns derive their immunity from the same common law
heritage.

See Maxwell v. Cnty. of San Diego, 708 F.3d 1075,

1087-88 (9th Cir. 2013) (“Tribal sovereign immunity derives from
the same common law immunity principles that shape state and
federal sovereign immunity.”).
Swimming against the current of this precedent, the Fund
can only repeat the reasoning of the district court that the
instant proceeding is not a suit because the Department is a
“mere custodian” for sums it admittedly owes to Pharoah. 6

But

this characterization is true of all monies held in the state
treasury

in

the

sense

that

they

are

all

allocated

for

some

governmental purpose or obligation.
At bottom, the Fund’s effort to distinguish the specific
money it requests from the rest of Maryland’s treasury is an
unsuccessful attempt to characterize its garnishment action as
an in rem proceeding.

But “[w]hile garnishment has been said to

be a proceeding in rem, it is not, strictly speaking, in rem.
It partakes both of the nature of a proceeding in personam and a

6

The principle precedent the Fund relies on for this
proposition is inapposite. In re Visiting Home Services did not
involve a writ of garnishment issued against a state in federal
court, but rather sought to enjoin a garnishment judgment that
had already been executed against a state agency in state court.
643 F.2d 1356, 1361 (9th Cir. 1981).

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proceeding in rem.”

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38 C.J.S. Garnishment § 2; see also Shaffer

v. Heitner, 433 U.S. 186, 211 n.38 (1977) (“[G]arnishment or
foreign attachment is a proceeding quasi in rem.”).
In this case, the garnishment proceeding has an in personam
character in that it requires jurisdiction over the sovereign
and its treasury.

And it is clear that “an action--otherwise

barred as an in personam action against the State--cannot be
maintained

through

seizure

of

property

owned

by

the

State.

Otherwise, the Eleventh Amendment could easily be circumvented;
an action for damages could be brought simply by first attaching
property that belonged to the State and then proceeding in rem.”
Fla. Dep’t of State v. Treasure Salvors, Inc., 458 U.S. 670, 699
(1982) (plurality).
Regardless of how the Fund characterizes its claim in this
case,

it

treasury.

is

ultimately

Accordingly,

seeking
the

recovery

Fund’s

from

the

post-judgment

Maryland

garnishment

action is a suit in the substantive sense.

III.
As a matter of procedure and substance, the garnishment
proceeding

we

consider

here

is

Amendment.

As a result, the Department is entitled to sovereign

16

a

“suit”

under

the

Eleventh

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We therefore reverse the district court’s order and

remand with instructions to quash the writ of garnishment.

REVERSED AND REMANDED

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