Aflac Inc v. Diaz-Verson et al
Filing
100
ORDER denying 38 Motion for Partial Summary Judgment; finding as moot in part and denying in part 39 Motion to Dismiss; denying 42 Motion for Release of Funds; granting in part and denying in part 61 Motion for Summary Judgment; finding as mo ot 64 Motion for Protective Order; denying 67 Motion for Leave to File; finding as moot 84 Motion for Protective Order; finding as moot 96 Motion to Compel; finding as moot 97 Motion to Stay. Ordered by Judge Clay D. Land on 05/25/2012.(aaf)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
AFLAC
INCORPORATED,
in
its
capacity as Plan Sponsor and
Administrator
of
American
Family Corporation Retirement
Plan for Senior Officers, and
AMERICAN
FAMILY
CORPORATION
RETIREMENT
PLAN
FOR
SENIOR
OFFICERS,
*
*
*
CASE NO. 4-11-CV-81 (CDL)
*
*
Plaintiffs,
*
vs.
*
SALVADOR DIAZ-VERSON, JR., and
PORTER BRIDGE LOAN COMPANY, *
INC.,
*
Defendants.
O R D E R
In
this
declaratory
judgment
and
interpleader
action,
Plaintiff AFLAC seeks guidance on whether and to what extent the
monthly
Salvador
payments
it
owes
Diaz-Verson,
garnishment
by
Defendant
(“Porter Bridge”).1
“retirement
Jr.
to
its
former
employee,
(“Diaz-Verson”),
Porter
Bridge
are
Loan
Defendant
subject
Company,
to
Inc.
Diaz-Verson contends that the payments are
benefits”
that
are
not
subject
to
garnishment.
AFLAC and Porter Bridge maintain that the payments arise from a
1
AFLAC also sought a temporary restraining order and injunctive relief
as to the state court garnishment actions filed by Porter Bridge,
which was resolved by this Court’s Order Granting Plaintiffs’ Motion
for Preliminary Injunction (ECF No. 8).
top
hat
pension
plan
under
the
Employee
Retirement
Income
Security Act of 1974, 29 U.S.C. § 1001 et seq., (“ERISA”) or
alternatively the compromise of a disputed pension claim, and
therefore,
at
least
twenty-five
subject to garnishment.2
percent
of
the
payments
are
Since filing this action, AFLAC has
periodically deposited into this Court’s registry twenty-five
percent of the amount that it is legally obligated to pay DiazVerson.
Diaz-Verson seeks a release of all funds paid into this
Court by AFLAC arguing that none of AFLAC’s payments are subject
to garnishment.
Alternatively, Diaz-Verson seeks the release of
$14,631.32 of the interpleaded funds, which were paid into the
Court pursuant to a “continuing garnishment” filed by Porter
Bridge.
Diaz-Verson maintains that the “continuing garnishment”
was improper because he was not an employee of AFLAC at the time
of the garnishment.
No. 42.
Diaz-Verson’s Mot. to Release Funds 2, ECF
Porter Bridge contends that it is entitled to all funds
interpleaded into the Court and to a minimum of twenty-five
percent of any amounts AFLAC owes Diaz-Verson until the judgment
Porter Bridge obtained against him is satisfied.
Verson
and
Porter
Bridge
seek
summary
Both Diaz-
judgment
on
the
declaratory judgment/interpleader issues—in essence, whether the
payments from AFLAC are subject to garnishment, and if so, to
2
Porter Bridge argues that 100% of the portion of the payments that
are for perquisites are subject to garnishment.
2
what extent.
See generally Diaz-Verson’s Mot. for Partial Summ.
J. as to Count I, ECF No. 38; Porter Bridge’s Mot. for Summ. J.,
ECF No. 61.
In addition to the declaratory judgment and interpleader
issues, Diaz-Verson filed a cross-claim against Porter Bridge,
alleging
that
Porter
Bridge
fraudulently
obtained
and
domesticated the underlying judgment that Porter Bridge seeks to
collect through garnishment.
Porter Bridge moves to dismiss the
cross-claim pursuant to Federal Rule of Civil Procedure 12(b)(6)
for failure to state a claim and also seeks Federal Rule of
Civil Procedure 11 (“Rule 11”) sanctions regarding Diaz-Verson’s
cross-claims.
Porter Bridge’s Mot. to Dismiss, Mot. for Att’ys
Fees, and Mot. for Sanctions, ECF No. 39 [hereinafter Porter
Bridge’s Mot. to Dismiss].
For the following reasons, the Court finds that twenty-five
percent of the amounts owed by AFLAC to Diaz-Verson are subject
to garnishment by Porter Bridge.
Accordingly, the Court grants
in part Porter Bridge’s Motion for Summary Judgment (ECF No. 61)
and denies Diaz-Verson’s motion for summary judgment as to Count
I (ECF No. 38).3
sua
sponte
for
The Court dismisses Diaz-Verson’s cross-claims
lack
of
subject
matter
jurisdiction,
making
Porter Bridge’s Rule 12(b)(6) motion to dismiss the cross-claims
3
The Court denies Porter Bridge’s motion to the extent it seeks more
than twenty-five percent of the amounts owed to Diaz-Verson by AFLAC.
3
(ECF No. 39) moot, but the Court denies Porter Bridge’s motion
for Rule 11 sanctions (ECF No. 39) as to those cross-claims.
The Court also denies Diaz-Verson’s Motion for Leave to Amend
Crossclaim
(ECF
No.
67).
Finally,
the
Court
denies
Diaz-
Verson’s Motion to Release Funds (ECF No. 42).
DISCUSSION
The Court divides its discussion into three parts.
addresses
the
declaratory
judgment
and
Part I
interpleader
issues
presented by the summary judgment motions of Diaz-Verson and
Porter
Bridge
and
concludes
that
twenty-five
percent
of
the
payments owed by AFLAC to Diaz-Verson, including payments for
perquisites, are subject to garnishment by Porter Bridge.
II
addresses
garnished
by
garnishment”
subject
Verson.
Diaz-Verson’s
to
Porter
procedure
garnishment
motion
Bridge
and
and
to
release
pursuant
concludes
should
to
that
not
be
those
a
those
Part
payments
“continuing
payments
released
to
are
Diaz-
Part III addresses Porter Bridge’s motion to dismiss
Diaz-Verson’s cross-claims for fraud relating to the underlying
state court judgments and resulting garnishments and concludes
that the cross-claims must be dismissed for lack of subject
matter jurisdiction.
4
I.
Motions for Summary Judgment as to Whether and to What
Extent Payments are Subject to Garnishment
A.
Summary Judgment Standard
Summary judgment may be granted only “if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Civ. P.
56(a).
Fed. R.
In determining whether a genuine dispute of
material fact exists to defeat a motion for summary judgment,
the evidence is viewed in the light most favorable to the party
opposing summary judgment, drawing all justifiable inferences in
the opposing party’s favor.
477 U.S. 242, 255 (1986).
Anderson v. Liberty Lobby, Inc.,
A fact is material if it is relevant
or necessary to the outcome of the suit.
Id. at 248.
A factual
dispute is genuine if the evidence would allow a reasonable jury
to return a verdict for the nonmoving party. Id.
B.
Factual Background
The following facts are undisputed for purposes of summary
judgment unless otherwise noted.
Diaz-Verson was an employee of American Family Corporation
(“AFLAC”).
AFLAC
offered
a
retirement
plan
for
its
senior
officers: the American Family Corporation Retirement Plan for
Senior Officers (“the Plan”).
Loudermilk
Decl.
Attach.
1,
Sept. 7, 2011 TRO Hr’g Ex. P-1,
American
Family
Corp.
Retirement
Plan for Senior Officers ¶ I., ECF No. 25-1 at 24-33 of 145
[hereinafter Plan].
On October 25, 1989, Diaz-Verson became a
5
participant
Retirement
service
in
the
Plan.
eligibility
status.
Id.
under
at
the
Participants
10,
Plan
are
ECF
is
No.
25-1
based
on
eligible
for
at
33.
age
and
voluntary
retirement with full benefits after attaining twenty or more
years of credited service.
25.
Id. at 2 ¶ III.B., ECF No. 25-1 at
Participants who have not attained twenty years of credited
service
and
who
are
involuntarily
terminated
from
employment
with more than ten years of credited service are entitled to
“[r]etirement with reduced benefits (based on years of actual
credited service expressed as a percentage of 20 years).”
Id.
at 3 ¶ III.E., ECF No. 25-1 at 26.
Diaz-Verson and AFLAC entered into a series of subsequent
agreements regarding payments due to him by AFLAC as a Plan
participant.
AFLAC and Diaz-Verson entered into an Employment
Agreement
August
on
1,
1990.
Loudermilk
Decl.
Attach.
1,
Employment Agreement, ECF No. 25-1 at 54-70 of 145 [hereinafter
Employment Agreement].
This agreement stated that Diaz-Verson’s
term of employment was three years, to end on July 31, 1993,
unless
extended
agreement.
or
terminated
earlier
as
Id. ¶ 4, ECF No. 25-1 at 55.
provided
in
the
The agreement also
provided that the term would be extended annually in one-year
periods,
unless
one
of
the
parties
gave
written
notice
termination to prevent extension before the annual date.
of
Id.
Because Diaz-Verson was still employed on the annual extension
6
date
of
August
1,
1991,
he
states
that
his
employment
termination date extended one year from the original date to
July
31,
1994.
Def.
Salvador
Diaz-Verson,
Jr.’s
Mot.
for
Partial Summ. J. & Br. in Supp. Thereof as to Count I of the
Compl. Attach. 1, Diaz-Verson Decl. ¶ 4, ECF No. 38-1.
Employment
Agreement
also
provided
continue participating in the Plan.
that
Diaz-Verson
The
would
Employment Agreement ¶ 9,
ECF No. 25-1 at 56.
On August 14, 1991, AFLAC and Diaz-Verson entered into a
Separation Agreement prior to the end of the term under the
original
Employment
Separation
Agreement.
Agreement,
Separation Agreement].
purpose
of
compromising
ECF
Loudermilk
No.
25-1
at
Decl.
34-53
1,
[hereinafter
The agreement was “entered into for the
and
settling
disputed
claims
avoid time-consuming and expensive litigation.”
No. 25-1 at 50.
Attach.
and
to
Id. ¶ 16, ECF
The Separation Agreement stated that “[a]ll
agreements, covenants, undertakings and obligations agreed to by
Diaz-Verson
or
[AFLAC]
in
this
Agreement,
the
Employment
Agreement and the Retirement Plan for Senior Officers, which are
ongoing and continuing after his termination of employment shall
remain in full force and effect in accordance with the terms
thereof.”
Separation
Id. ¶ 10, ECF No. 25-1 at 46.
Agreement,
Diaz-Verson
agreed
Pursuant to the
to
tender
his
resignation in writing as an officer and employee, and this
7
resignation
would
be
‘without good cause.’”
“treated
as
a
termination
by
[AFLAC]
Id. ¶ 3, ECF No. 25-1 at 38.
The Separation Agreement further provided that, among other
things, Diaz-Verson would be entitled to bonus compensation and
the benefits under the Employment Agreement through July 31,
1994 and “payment thereafter as provided by the Retirement Plan
for Senior Officers.”
Id. ¶ 3(a), ECF No. 25-1 at 38.
AFLAC
also agreed to make “payment to Diaz-Verson (or, if elected by
Diaz-Verson,
his
wife)
of
all
retirement
benefits
for
a
‘voluntary retirement with full benefits’ under the Retirement
Plan, with such benefits to commence on August 1, 1994.”
3(e), ECF No. 25-1 at 40-41.
Id. ¶
He would also continue to accrue
credited service as an employee under that Plan through July 31,
1994.
Id.
On September 2, 1991, Diaz-Verson notified AFLAC of
his election to adopt full retirement with the surviving spouse
benefit.
Loudermilk
Decl.
Attach.
1,
Letter
from
S.
Diaz-
Verson, Jr. to M. Durant (Sept. 2, 1991), ECF No. 25-1 at 23 of
145.
On
July
13,
1995,
Diaz-Verson
filed
a
complaint
for
declaratory judgment, Diaz-Verson v. AFLAC, Inc., No. 5:95-CV00321 (M.D. Ga. July 13, 1995), “seeking, among other things, an
interpretation
of
the
benefits
under
the
Retirement
Plan.”
Loudermilk Decl. Attach. 1, Settlement Agreement 2, ECF No. 25-1
at 4 of 145.
That prior action was dismissed pursuant to a
8
Settlement
Agreement
February 10, 1997.
between
Diaz-Verson
and
Id. ¶ 7, ECF No. 25-1 at 11.
AFLAC
dated
The agreement
reflected the parties’ “resolution of all disputes and claims
between and among them of any kind and character arising out of
or in any manner connected directly or indirectly with the
. Plan and/or the Litigation.”
. .
Id. at 2, ECF No. 25-1 at 4.
The agreement also contained a release by Diaz-Verson of any
claims against AFLAC and its employee benefit plans as of the
date of the Settlement Agreement, including claims or rights
“arising out of or related to Salvador Diaz-Verson’s employment
or
separation
from
employment
with
AFLAC,
the
Separation
Agreement, and any and all rights, claims or causes of action
arising out of or related to the Retirement Plan . . . .”
15.a, ECF No. 25-1 at 14.
Id. ¶
The Settlement Agreement stated that
Diaz-Verson severed his employment with AFLAC according to the
Separation Agreement, was paid under the Employment Agreement as
if
employed
until
August
effective July 31, 1994.”
1,
1994,
and
“retired
from
AFLAC
Id. at 1, ECF No. 25-1 at 3.
The Settlement Agreement calculated that according to the
Plan, the amount due under the Plan for 1996 was 54% of DiazVerson’s
bonuses.
total
compensation,
which
included
salary
Id. ¶¶ 2.a. & 3, ECF No. 25-1 at 5-6.
and
cash
The agreement
further concluded that the base figure is paid pursuant to the
Plan and is subject to future increases provided for by the
9
Plan.
The agreement also entitled Diaz-Verson to a $10,000
payment
and
perquisites,
“in
addition
to
those
amounts
paid
under Paragraph IV of the Retirement Plan,” in specified amounts
for the years 1996 to 2000.
Id. ¶¶ 4-5, ECF No. 25-1 at 6-7.
From 2001 until Diaz-Verson’s death, the agreement entitled him
to perquisites from AFLAC in the sum of $90,000 per year.
5.c., e, ECF No. 25 at 8-10.
clause:
“This
Settlement
Id. ¶
The agreement contained a merger
Agreement
incorporates
by
reference
herein and makes a part hereof the Retirement Plan for Senior
Officers and all Exhibits attached hereto including, but not
limited to, the Separation Agreement . . ., and sets forth the
entire agreement and understanding between the parties.”
Id. ¶
22, ECF No. 25-1 at 18.
After these agreements, Porter Bridge, an Alabama lending
institution, obtained a deficiency judgment issued on October
30,
2009
against
Diaz-Verson.
According
to
that
judgment,
because of a final judgment in foreclosure, Diaz-Verson owed
$397,386.87 plus interest to Porter Bridge.
Compl. Ex. 1, Final
J.
Loan
of
Deficiency
¶¶
5-6,
Porter
Bridge
Co.
v.
SALCO
Enters., LLC, No. 2008 CA 000538 (Fla. Cir. Ct. Oct. 30, 2009),
ECF No. 1-2 [hereinafter Final J. of Deficiency].
Porter Bridge
domesticated that judgment in Georgia on June 23, 2010.
Compl.
Ex. 2, Order to Domesticate Foreign Judgment, Porter Bridge Loan
Co. v. Salco Enters., LLC, Civil Action No. HS-10-CV-011 (Ga.
10
Harris
Cnty.
Super.
Ct.
June
23,
2010),
ECF
No.
1-3.
Thereafter, Porter Bridge filed garnishments against AFLAC to
collect on the judgment by garnishing payments made to DiazVerson by AFLAC under the forgoing agreements.
AFLAC identified
the payments as in the nature of retirement benefits and paid
twenty-five percent of the funds subject to garnishment into the
registry of the Superior Court of Muscogee County.
Some of the
funds have been disbursed by the Superior Court to Diaz-Verson,
while others have been held in the court registry.
Diaz-Verson filed a complaint in the United States District
Court for the Middle District of Florida seeking a judgment
requiring continued payment of funds to him.
AFLAC’s motion to
dismiss was granted for lack of personal jurisdiction over AFLAC
and improper venue.
Diaz-Verson v. AFLAC Inc., No. 8:11-CIV-
852-T-17-TBM, 2012 WL 398329 (M.D. Fla. Feb. 8, 2012).
Prior to
that court granting dismissal, AFLAC filed its Complaint in this
Court.
This Court enjoined the parties from proceeding with the
garnishment actions in the Superior Court, attempting to enforce
orders related to the funds, and seeking to disburse payments
made by AFLAC until declaration by the Court (ECF No. 8) and
ordered
AFLAC
to
deposit
garnishment
registry (ECF No. 9).
11
funds
into
the
Court
C.
Analysis
Diaz-Verson seeks a declaratory judgment that the benefits
paid to him and due to him from AFLAC are retirement benefits
that are exempt from garnishment under ERISA and/or O.C.G.A.
§ 18-4-22.
Porter Bridge seeks a contrary declaration that
twenty-five percent of the non-perquisite payments and 100% of
the
perquisite
garnishment.
payments
made
to
Diaz-Verson
are
subject
to
Both Diaz-Verson and Porter Bridge argue that they
are entitled to summary judgment.
Although AFLAC has not filed
its own motion for summary judgment, it takes the position that
twenty-five percent of the payments owed to Diaz-Verson, whether
they are for perquisites or not, are subject to garnishment.
Porter Bridge and AFLAC contend that AFLAC’s payments to
Diaz-Verson
subject
to
are
subject
ERISA’s
to
garnishment
anti-alienation
because
they
provision,
are
29
not
U.S.C.
§ 1056(d)(1), which protects certain pension plan benefits from
garnishment.
Porter
Bridge
and
AFLAC
argue
that
the
anti-
alienation provision does not apply here because either: (1) the
Plan
is
a
top
hat
plan;
or
alternatively,
(2)
because
the
payments arise not from the Plan but from a “contested pension
claim,” namely the Separation and Settlement Agreements.
Diaz-
Verson argues that regardless of whether the Plan is a top hat
plan, the Plan is still an ERISA benefits plan under 29 U.S.C. §
1002(2)(A), and the Georgia anti-garnishment statute, O.C.G.A. §
12
18-4-22, exempts from garnishment all funds or benefits from a
29 U.S.C. § 1002(2)(A) plan.
The Court finds that Porter Bridge
and AFLAC have the more persuasive argument.
Under
ERISA’s
anti-alienation
provision,
“[e]ach
pension
plan shall provide that benefits provided under the plan may not
be
assigned
or
alienated.”
29
U.S.C.
§
1056(d)(1).
This
prohibition extends to voluntary and involuntary assignments,
including garnishments.
455,
460
benefits
(6th
from
Cir.
a
Gen. Motors Corp. v. Buha, 623 F.2d
1980).
qualified
Under
pension
this
plan
statute,
cannot
be
funds
and
garnished.
Travelers Ins. Cos. v. Fountain City Fed. Credit Union, 889 F.2d
264, 266 (11th Cir. 1989) (per curiam) (App., Clemon, J., Mem.
Op.); Tenneco Inc. v. First Va. Bank of Tidewater, 698 F.2d 688,
689 (4th Cir. 1983).
Top hat plans, however, are exempt from
ERISA’s anti-alienation provision, 29 U.S.C. § 1056(d)(1), and
are thus assignable and subject to garnishment.
See 29 U.S.C. §
1051(2) (exempting certain plans from 29 U.S.C. § 1056(d)(1));
Buha, 623 F.2d at 460.4
an ERISA top hat plan.
The parties agree that the AFLAC Plan is
See Holloman v. Mail-Well Corp., 443
F.3d 832, 837 (11th Cir. 2006) (“A top hat plan is ‘a plan which
is unfunded and is maintained by an employer primarily for the
4
Top hat plans are exempt from certain ERISA provisions based on the
rationale that “high-level employees are in a strong bargaining
position relative to their employers and thus do not require the same
substantive protections that are necessary for other employees.”
Holloman, 443 F.3d at 837 (internal quotation marks omitted).
13
purpose of providing deferred compensation for a select group of
management
or
highly
compensated
employees.’”)
U.S.C. §§ 1051(2), 1081(a)(3), 1101(a)(1)).
(quoting
29
Therefore, payments
under that Plan are subject to garnishment, unless some other
reason exists for their exemption.
Diaz-Verson argues that Georgia law exempts the payments
from garnishment.
Citing Georgia statutory law, he maintains
that all funds or benefits from pension programs as defined in
29 U.S.C. § 1002(2)(A), including top hat plans, are exempt from
garnishment.
O.C.G.A. § 18-4-22(a).
The Court rejects Diaz-
Verson’s interpretation of the Georgia statute.
statute
in
conjunction
provisions,
the
Court
with
finds
the
that
ERISA
Reading the
anti-alienation
retirement
benefits
paid
pursuant to top hat plans are not exempt from garnishment under
Georgia
law.
To
the
extent
that
the
Georgia
statute
is
inconsistent with this interpretation, it is preempted by ERISA.
29 U.S.C. § 1144(a); Metro. Life Ins. Co. v. Massachusetts, 471
U.S.
724,
Agency
&
739
(1985);
Serv.,
Inc.,
see
also
Mackey
486
U.S.
825,
v.
Lanier
829-30
Collection
(1988)
(holding
former exemption to the Georgia garnishment statute, O.C.G.A.
§ 18-4-22.1, preempted by ERISA because the statute expressly
referenced ERISA plans and singled out welfare benefit plans for
different
treatment
in
state
14
garnishment
proceedings).
Accordingly, the Plan payments to Diaz-Verson are subject to
garnishment because the Plan is a top hat plan.5
The
next
question
is
subject to garnishment.
to
what
extent
the
payments
are
Georgia law limits the amount subject
to garnishment to twenty-five percent of “disposable earnings.”
O.C.G.A. § 18-4-20(d)(1).
payments
made
pursuant
O.C.G.A. § 18-4-20(a).
five
percent
perquisites.
Disposable earnings includes periodic
to
a
pension
or
retirement
program.
Porter Bridge argues that this twenty-
limitation
does
not
apply
to
payments
for
Diaz-Verson and AFLAC contend that the perquisite
payments are made as part of the periodic payments to DiazVerson and are, thus, disposable earnings subject to the twentyfive percent limitation.
O.C.G.A. § 18-4-20 determines the amount of funds subject
to garnishment under the following definitions:
(1) “Disposable earnings” means that part of the
earnings
of
an
individual
remaining
after
the
deduction from those earnings of the amounts required
by law to be withheld.
(2) “Earnings” means compensation paid or payable for
personal services, whether denominated as wages,
5
Moreover, AFLAC’s payments to Diaz-Verson are being made based on the
settlement of a contested pension claim arising from a top hat plan.
Therefore, the payments are also subject to garnishment because they
arise from a contested pension claim separate and apart from whether
the claim arose from a top hat plan.
Lynn v. CSX Transp., Inc., 84
F.3d 970, 975 (7th Cir. 1996) (holding that ERISA’s anti-alienation
provision “does not impose a bar on settlement agreements wherein
pension
claims
are
knowingly
and
intentionally
resolved
by
employees.”).
15
salary, commission, bonus, or otherwise, and includes
periodic payments pursuant to a pension or retirement
program.
O.C.G.A. § 18-4-20(a).
By limitation, the statute provides:
the maximum part of the aggregate disposable earnings
of an individual for any work week which is subject to
garnishment may not exceed the lesser of: (A) Twentyfive percent of his disposable earnings for that week;
or (B) The amount by which his disposable earnings for
that week exceed 30 times the federal minimum hourly
wage prescribed by Section 6(a)(1) of the Fair Labor
Standards Act of 1938, U.S.C. Title 29, Section
206(a)(1), in effect at the time the earnings are
payable.
O.C.G.A. § 18-4-20(d)(1).
“interpret[ed]
the
phrase
The Georgia Court of Appeals has
‘aggregate
disposable
earnings’
to
mean that if the employer against whom the garnishment is filed
has control or possession of more than one item or source of
earnings, only those items or sources would be added together
and the appropriate formula applied to determine to what extent
the
subsection
(d)
exemption
applied.”
Parham
v.
Lanier
Collection Agency & Serv., Inc., 178 Ga. App. 84, 85, 341 S.E.2d
889,
891
whether
(1986).
a
The
perquisite
Court
has
payment
located
no
qualifies
case
as
addressing
“earnings”
or
payments
for
“disposable earnings” under the statute.
The
Court
perquisites
can
should
conceive
be
carved
of
no
out
reason
of
the
why
disposable
earnings
protected by the statute’s twenty-five percent limitation.
legislature
did
not
choose
to
16
treat
periodic
payments
The
that
include
compensation
for
perquisites
different
from
other
periodic payments that do not, and the plain language of the
statute does not disclose any such intention.
Bridge
has
not
distinction.
articulated
The
Court
a
statutory
finds
that
Moreover, Porter
basis
the
for
any
twenty-five
such
percent
garnishment limitation under O.C.G.A. § 18-4-20(d)(1) applies to
all payments owed by AFLAC to Diaz-Verson.
Therefore, Porter
Bridge is only entitled to garnish twenty-five percent of all
payments owing from AFLAC to Diaz-Verson.
AFLAC
registry
has
of
the
been
periodically
Court
making
payments
pursuant
this
interpleader
to
into
the
action.
Those payments have equaled twenty-five percent of each payment
AFLAC has paid to Diaz-Verson.
Porter Bridge is now entitled to
the proceeds being held in the registry of the Court, unless
Diaz-Verson can convince the Court that any of those payments
should
be
discussion,
released
to
him.
Diaz-Verson’s
As
argument
discussed
that
he
in
is
the
following
entitled
to
a
portion of the interpleaded funds is unpersuasive.
II.
Diaz-Verson’s Motion for Release of Funds Paid Pursuant to
“Continuing Garnishment”
Diaz-Verson seeks release of $14,631.32 paid by AFLAC into
the Court registry pursuant to a continuing garnishment filed by
Porter Bridge in the Superior Court of Muscogee County and this
Court’s Order to Deposit Funds into Registry of Court, ECF No.
17
9.
See generally Diaz-Verson’s Mot. to Release Funds, ECF No.
42.
On September 13, 2011, Porter Bridge filed a continuing
garnishment in the Superior Court of Muscogee County supported
by
an
affidavit
alleging
employment relationship.
AFLAC
and
Diaz-Verson
were
in
an
Answering this garnishment, AFLAC paid
$14,631.32 into the Court’s registry.
Subsequently, but before
any further payments were garnished, Porter Bridge dismissed the
continuing
garnishment
action
against
Diaz-Verson.
Mot.
to
Release Funds Ex. D, Dismissal Without Prejudice, ECF No. 42-4.
Porter Bridge then resumed filing ordinary garnishments.
Diaz-Verson argues he is entitled to the $14,631.32 on two
grounds:
Georgia
(1)
the
law
continuing
because
garnishment
O.C.G.A.
garnishment
to
wages
relationship
and
AFLAC
§
paid
and
was
18-4-110
within
Diaz-Verson
unlawful
limits
the
under
continuing
employer-employee
were
not
in
such
a
relationship at the time the garnishment was filed; and (2)
because
Porter
Bridge
dismissed
the
continuing
garnishment
action, any payments thereunder are to be returned to DiazVerson because the claims against the funds were abandoned by
the dismissal.
Continuing
garnishment
garnishment remedy.
is
in
addition
O.C.G.A. § 18-4-110.
to
a
traditional
A “plaintiff shall be
entitled to the process of continuing garnishment against any
garnishee who is an employer of the defendant against whom the
18
judgment has been obtained.”
Id.
If an employment relationship
between the garnishee and the defendant does not exist at the
time
the
summons
for
continuing
garnishment
is
served,
the
garnishee may state that no employment relationship exists and
if no traverse is filed “the garnishee shall be automatically
discharged from further liability and obligation . . . with
respect to the period of continuing garnishment remaining after
the employment relationship.”
that
only
employer
garnishment.
process
law,
to
O.C.G.A. § 18-4-117.
garnishees
are
subject
to
It is clear
continuing
Because continuing garnishment is an additional
traditional
O.C.G.A.
§
garnishment
18-4-110,
proceedings
“[O.C.G.A.]
§
under
18-4-117
Georgia
does
not,
however, purport to discharge a non-employer garnishee from such
general garnishment liability and obligation as was otherwise in
existence at the time his original answer was filed.”
Melnick
v. Fund Mgmt., Inc., 172 Ga. App. 773, 776, 324 S.E.2d 595, 597
(1984).
Rather, a non-employer garnishee is only “entitled to
an automatic discharge pursuant to [O.C.G.A.] § 18-4-117 from
further liability and obligation.”
598.
Verson
Id. at 776, 324 S.E.2d at
Therefore, even if AFLAC was not an employer of Diazat
the
garnishment,
time
the
of
service
one-time
of
payment
the
of
summons
funds
of
continuing
amounting
to
$14,631.32 into the Court registry in answer to this garnishment
were properly paid by AFLAC according to traditional garnishment
19
proceedings.
Accordingly,
Diaz-Verson
is
not
entitled
to
release of these funds even if AFLAC was not his employer when
Porter Bridge filed the summons for continuing garnishment.
As
to
Diaz-Verson’s
second
argument
that
Porter
Bridge
abandoned its claim to these funds by dismissing the continuing
garnishment after AFLAC’s payment, Diaz-Verson fails to point to
any legal authority in support of this proposition.
The Court
finds no basis for Diaz-Verson’s assertion of abandonment and
finds, as discussed above, that the one-time payment by AFLAC
under the continuing garnishment was proper.
Accordingly, Diaz-
Verson’s Motion to Release Funds (ECF No. 42) is denied, and
Porter Bridge is entitled to 100% of the funds paid into the
registry of this Court by AFLAC.
III. Porter Bridge’s Motion to Dismiss Diaz-Verson’s
Claims & Motion for Attorney’s Fees & Sanctions
In
his
cross-claims
against
Porter
Bridge,
Cross-
Diaz-Verson
alleges that Porter Bridge and its attorneys: (1) fraudulently
obtained
foreclosure
and
deficiency
judgments
in
Escambia
County, Florida; (2) domesticated a foreign judgment in Georgia
by fraudulent statement, knowing the judgment debtor’s stated
address
Verson’s
to
be
false;
payments
and
from
domesticated judgment.
(3)
AFLAC
fraudulently
based
on
garnished
a
Diaz-
fraudulently
Diaz-Verson’s Answer 11-16, ECF No. 26.
Porter Bridge moves to dismiss Diaz-Verson’s cross-claims and
20
seeks
Rule
claims.6
Fees,
&
11
sanctions
for
having
to
defend
against
these
Def. Porter Bridge’s Mot. to Dismiss, Mot. for Atty’s
Mot.
for
Sanctions,
Bridge’s Mot. to Dismiss].
cross-claims
must
be
ECF
No.
39
[hereinafter
Porter
As explained below, Diaz-Verson’s
dismissed
for
lack
of
subject
jurisdiction based upon the Rooker-Feldman doctrine.7
matter
The Court,
however, denies Porter Bridge’s motion for Rule 11 sanctions.
A.
Sua Sponte Dismissal
Jurisdiction
Although
Porter
Bridge
for
seeks
Lack
to
of
Subject
dismiss
Matter
Diaz-Verson’s
cross-claims pursuant to Rule 12(b)(6) for failure to state a
claim, the Court finds sua sponte that it lacks subject matter
jurisdiction
over
the
cross-claims,
them for that reason.
Ins.
Exch.,
391
F.
and
therefore,
dismisses
See Jackson v. Farmers Ins. Grp./Fire
App’x
854,
856-57
(11th
Cir.
2010)
(per
curiam) (affirming a district court’s sua sponte dismissal of
plaintiff’s
complaint
under
the
Rooker-Feldman
doctrine
and
stating that “a district court may sua sponte consider subject
matter jurisdiction at any stage in the litigation and must
dismiss
a
complaint
if
it
concludes
that
subject
matter
jurisdiction is lacking.”) (citing Fed. R. Civ. P. 12(h)(3)).
In evaluating a facial challenge to subject matter jurisdiction,
6
The Court finds no reason to convert Porter Bridge’s Motion to
Dismiss into a summary judgment motion as the parties discussed at the
March 30, 2012 hearing.
7
See D.C. Court of Appeals v. Feldman, 460 U.S. 462, 476 (1983);
Rooker v. Fid. Trust Co., 263 U.S. 413, 416 (1923).
21
the
Court
thereto.
may
consider
the
pleadings
and
any
attachments
E.g., Samco Global Arms, Inc. v. Arita, 395 F.3d 1212,
1214 n.4 (11th Cir. 2005).
As with a motion to dismiss pursuant
to Rule 12(b)(6), the Court “may consider an extrinsic document
if it is (1) central to the plaintiff's claim, and (2) its
authenticity
is
not
challenged.”
Speaker
v.
U.S.
Dep't
of
Health & Human Servs., 623 F.3d 1371, 1379 (11th Cir. 2010)
(internal quotation marks omitted).
Specifically, “[a] court
may take judicial notice of another court’s orders to recognize
judicial action or the litigation’s subject matter.”
Jiles v.
United Parcel Serv., Inc., 413 F. App’x 173, 174 (11th Cir.
2011) (per curiam); accord United States v. Jones, 29 F.3d 1549,
1553 (11th Cir. 1994).
B.
Factual Background Regarding Cross-Claims
The facts taken in the light most favorable to Diaz-Verson
as to his cross-claims against Porter Bridge are as follows.
In 2008, Porter Bridge issued a notice of lis pendens and
foreclosure
action
on
property
in
Escambia
County,
Florida
arising from a default on a note and mortgage that Diaz-Verson
had guaranteed.
Diaz-Verson alleges that Porter Bridge was not
the real party in interest because Colonial Bank, N.A. owned the
mortgage and note at the time the foreclosure action was filed.
As discussed above, after a judgment of foreclosure on the
property,
Porter
Bridge
obtained
22
a
deficiency
judgment
in
Florida, stating that Diaz-Verson and Salco Enterprises, LLC,
jointly and severally owed $397,386.87 plus interest to Porter
Bridge.
Final J. of Deficiency ¶¶ 5-6, ECF No. 1-2.
Porter
Bridge sought to collect the deficiency judgment in Georgia and
garnish property belonging to Diaz-Verson in Georgia.
Porter
Bridge’s attorneys filed a Notice of Filing Foreign Judgment and
affidavit
in
the
Superior
Court
of
Harris
County,
Georgia,
alleging that judgment debtor Diaz-Verson’s last known address
was in Fortson, Georgia.
According to Diaz-Verson, the company
and its attorneys purportedly failed to give notice to DiazVerson, knew that Diaz-Verson had never lived at the stated
address or used the address for any purpose, and knew that DiazVerson had been living in Florida.
¶¶ 9-10, 12.
Diaz-Verson’s Answer 12-13
Nonetheless, as discussed above, in June 2010,
Porter Bridge successfully domesticated the judgment.
Based on
this judgment, Porter Bridge filed numerous garnishment actions
in Muscogee County, Georgia.
In response to these garnishments,
AFLAC paid twenty-five percent of each garnished payment owed to
Diaz-Verson to the Clerk of Court of Muscogee County or into
this Court’s registry, amounting to more than $102,000.
C.
Analysis of Cross-Claims
Each of Diaz-Verson’s cross-claims relies on allegations
that were decided against him in the underlying state court
actions or relates to rulings that could have been challenged in
23
those state actions.
Diaz-Verson first cross-claims that Porter
Bridge obtained fraudulent foreclosure and deficiency judgments
in Florida state courts.
The cross-claim specifically alleges
that Porter Bridge was not the party in interest in the Florida
foreclosure action because it did not own the mortgage or the
note subject to foreclosure.
It also alleges that Porter Bridge
committed slander to title by filing the foreclosure in a way
that prevented Diaz-Verson from accepting a bona fide offer to
purchase the property.
These issues were decided against Diaz-
Verson when the Florida court issued the deficiency judgment
against him which had the effect of confirming the validity of
the foreclosure proceedings.
reason
for
failing
to
Diaz-Verson offers no persuasive
challenge
the
Florida
foreclosure
proceeding in the Florida courts.
In his second cross-claim, Diaz-Verson alleges that Porter
Bridge and its attorneys fraudulently domesticated the Florida
deficiency
judgment
in
the
Superior
Court
of
Harris
County,
Georgia.
Diaz-Verson made this same argument in the action
before the Georgia superior court in a motion to vacate the
domestication of the deficiency judgment.
He argued there as he
does here that Porter Bridge and its counsel knew Diaz-Verson
was a resident of Florida not living at the Fortson, Georgia
address and thus the domestication order was procured by fraud.
Porter Bridge’s Mot. to Dismiss Ex. L, Order on Mot. to Vacate
24
1, Porter Bridge Loan Co. v. Salco Enters., LLC, No. HS-10-CV011 (Ga. Harris Cnty. Super. Ct. July 12, 2011), ECF No. 39-12.
That court held that Porter Bridge had a good faith basis as to
Diaz-Verson’s “last known address” and properly domesticated the
judgment issued in Florida.
Id. at 2.
The order denying Diaz-
Verson’s Motion to Vacate Order to Domesticate Foreign Judgment
affirmed the domestication order, ended the suit, and was final
and appealable.
Diaz-Verson did not appeal.
See R.J. Reynolds
Tobacco Co. v. Fischer, 207 Ga. App. 292, 293, 427 S.E.2d 810,
811-12 (1993) (an order is final under Georgia law where no
issues remain for resolution in that court).
Finally,
Diaz-Verson
cross-claims
that
Porter
Bridge
engaged in fraudulent garnishment actions in the Superior Court
of
Muscogee
County,
Georgia
based
on
the
fraudulently
domesticated judgment.
Under
the
Rooker–Feldman
doctrine,
“‘a
United
States
District Court has no authority to review final judgments of a
state court in judicial proceedings.
Review of such judgments
may be had only in the [United States Supreme Court].’”
Narey
v. Dean, 32 F.3d 1521, 1524 (11th Cir. 1994) (alteration in
original) (quoting Feldman, 460 U.S. at 482).
“‘is
confined
to
.
.
.
cases
brought
by
This doctrine
state-court
losers
complaining of injuries caused by state-court judgments rendered
before
the
district
court
proceedings
25
commenced
and
inviting
district
court
review
and
rejection
of
those
judgments.’”
Alvarez v. Att’y Gen. for Fla., __ F.3d __, No. 11-10699, 2012
WL 1579489, at *5 (11th Cir. May 8, 2012) (quoting Exxon Mobil
Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 292 (2005)).
The Eleventh Circuit has explained that the “doctrine operates
as a bar to federal court jurisdiction where the issue before
the federal court was ‘inextricably intertwined’ with the state
court judgment so that (1) the success of the federal claim
would ‘effectively nullify’ the state court judgment, or that
(2) the federal claim would succeed ‘only to the extent that the
state court wrongly decided the issues.’”
Id. (quoting Casale
v. Tillman, 558 F.3d 1258, 1260 (11th Cir. 2009) (per curiam)).
For
this
each
Court
intertwined
of
is
called
with
determination
Diaz-Verson’s
the
by
cross-claims,
upon
to
underlying
this
Court
resolve
state
as
to
the
are
issues
that
inextricably
court
judgments.
fraud
in
the
Any
Florida
foreclosure and deficiency actions would “effectively nullify”
those state court judgments and thus Rooker-Feldman bars this
Court’s jurisdiction over these claims.
1260.
Similarly,
Georgia
action
Diaz-Verson’s
domesticating
the
Casale, 558 F.3d at
cross-claim
Florida
related
judgment
to
the
seeks
to
nullify the Georgia state court’s judgment and finding of no
fraud.
A federal court challenge to this judgment is, thus,
exactly what the Rooker-Feldman doctrine prohibits: a federal
26
case brought by a state-court loser complaining of an injury
caused by a state-court judgment rendered before this action was
filed
and
effectively
seeking
district
rejection of the state-court judgment.
court
review
and
See Exxon-Mobil, 544
U.S. at 284.
Therefore, the Court has no jurisdiction over
Diaz-Verson’s
cross-claim
alleging
that
Porter
fraudulently domesticated the deficiency judgment.
cross-claim
attacking
the
subsequent
Bridge
Finally, the
garnishments
could
have
been brought in the state court, and this Court does not have
jurisdiction to reevaluate each superior court garnishment.
Id.
In
sum,
Diaz-Verson’s
cross-claims
must
be
See
dismissed
because this Court lacks subject matter jurisdiction over those
claims under the Rooker-Feldman doctrine.8
Diaz-Verson also filed a motion for leave to amend his
cross-claim.
Mot. for Leave to File First Am. Cross-cl., ECF
No. 67. Because any amendments to these claims will not change
the result that they are barred by Rooker-Feldman, this motion
is denied.
See Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir.
2001) (per curiam) (“[L]eave to amend ‘shall be freely given
8
Even if the Rooker-Feldman doctrine did not deprive this Court of
jurisdiction to consider Diaz-Verson’s cross-claims, the Court, upon
considering them, would be required to dismiss them pursuant to Rule
12(b)(6) for failure to state a claim based upon the principles of
res judicata and collateral estoppel.
See 126th Ave. Landfill, Inc.
v. Pinellas Cnty., No. 10-14529, 2012 WL 739387, at *2 (11th Cir. Mar.
7, 2012) (per curiam); Lops v. Lops, 140 F.3d 927, 950 (11th Cir.
1998) (Kravitch, J., dissenting) (quoting Kent v. Kent, 265 Ga. 211,
211, 452 S.E.2d 764, 766 (1995)).
27
when justice so requires.’ . . . A district court need not,
however,
allow
an
amendment
.
.
.
where
amendment
would
be
futile.”) (quoting Fed. R. Civ. P. 15(a)(2)).
D.
Motion for Attorney’s Fees & Sanctions
Porter
Bridge
seeks
attorney’s
fees
and
sanctions
under
Federal Rule of Civil Procedure 11 (“Rule 11”) for having to
defend against Diaz-Verson’s cross-claims.
Porter Bridge argues
it is entitled to attorney’s fees under Rule 11 because DiazVerson’s
cross-claims
were
meritless,
frivolous,
only to cause delay in resolution of the case.
P. 11(b)(1)-(2).
and
brought
See Fed. R. Civ.
The Court does not find that Diaz-Verson’s
cross-claims were sufficiently frivolous to authorize Rule 11
sanctions.
The Court observes that Porter Bridge did not even
raise in its motion to dismiss or in its Rule 11 letters to
Diaz-Verson
this
Court’s
under Rooker-Feldman.
lack
of
subject
matter
jurisdiction
Instead, Porter Bridge sought dismissal
on the merits solely pursuant to Rule 12(b)(6).
While a sua
sponte dismissal based on lack of subject matter jurisdiction
may under certain circumstances authorize Rule 11 sanctions, the
Court finds that the focus should be upon whether the party
asserting the claim had a good faith basis that subject matter
jurisdiction
Bridge’s
existed.
counsel
jurisdiction
In
never
suggests
that
this
case,
recognized
the
the
Diaz-Verson’s
28
fact
that
Court’s
conclusion
Porter
lack
of
that
the
Court had subject matter jurisdiction, albeit wrong, was not
frivolous.
Because the Court did not dismiss the cross-claims
on the merits pursuant to Porter Bridge’s Rule 12(b)(6) motion
and because it would be inappropriate to address those arguments
before resolving the Court’s jurisdiction, the Court finds it
unnecessary
Verson’s
to
evaluate
counsel
should
for
be
Rule
11
sanctioned
purposes
for
whether
filing
the
Diazcross-
claims in light of the res judicata and collateral estoppel
defenses.
The
appropriate
determination
is
whether
the
assertion of the claims in light of the reasons for the Court’s
dismissal of them authorizes sanctions.
Under the circumstances
of this case and based upon the lack of any finding of bad
faith,
the
Court
denies
Porter
Bridge’s
motion
for
Rule
11
sanctions.
CONCLUSION
To summarize, twenty-five percent of the amount owed by
AFLAC to Diaz-Verson is subject to garnishment by Porter Bridge;
Diaz-Verson is not entitled to receive the funds garnished under
the
“continuing
garnishment”;
the
Court
lacks
subject
matter
jurisdiction over Diaz-Verson’s cross-claims; and Porter Bridge
is not entitled to Rule 11 sanctions.
Accordingly, the Court
grants Porter Bridge’s Motion for Summary Judgment (ECF No. 61)
to the extent it seeks twenty-five percent of the amounts owed
by AFLAC to Diaz-Verson, but the Court denies the motion to the
29
extent that it seeks more than twenty-five percent of those
payments.
The Court dismisses Diaz-Verson’s cross-claims sua
sponte for lack of subject matter jurisdiction, making Porter
Bridge’s Rule 12(b)(6) motion to dismiss (ECF No. 39) moot.
The
Court also denies Porter Bridge’s motion for attorney’s fees and
sanctions (ECF No. 39).
The Court further denies Diaz-Verson’s
Motion for Partial Summary Judgment (ECF No. 38), Diaz-Verson’s
Motion to Release Funds (ECF No. 42), and Diaz-Verson’s motion
for leave to amend his cross-claim (ECF No. 67).
In light of
these rulings, the remaining motions that are pending (ECF Nos.
64, 84, 96, & 97) are moot.
Today’s
rulings
resolve
all
outstanding
issues
in
this
case, and therefore, the Court directs the Clerk to release the
funds held in the Court’s registry to Porter Bridge pursuant to
the Order to Deposit Funds into Registry of Court, ECF No. 9,
and orders AFLAC to cease making any further payments into the
Court registry.9
thirty
(30)
days
The Clerk shall not disburse these funds until
after
the
date
of
today's
Order.
Going
forward, AFLAC shall be guided by the rulings in today’s Order.
9
As of the last payment received by the Court on April 17, 2012, the
amount of funds deposited by AFLAC into the Court registry is
$112,204.48 plus interest earned on the account in the amount of
$18.36 for a total of $112,222.84.
The Clerk shall pay to Porter
Bridge this sum and any other payments made into the Court registry
between April 17, 2012 and issuance of today’s Order.
30
IT IS SO ORDERED, this 25th day of May, 2012.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE
31
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