Friday, July 23, 2010
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Court Ends Fight Over Courthouse Sniper’s Retirement Funds
By STEVEN M. ELLIS, Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday granted a trustee’s request to remove herself from a dispute over $500,000 in retirement funds of a Nevada man who murdered his wife and shot a state court judge overseeing their bitter divorce proceedings.
A three-judge panel ruled that the Nevada Supreme Court had jurisdiction to affirm an order dated prior to Charla Mack’s death confirming terms to which she and Darren Mack allegedly agreed before he murdered her, including naming her as a payee of his 401k plan.
But the panel said a federal judge in Nevada erred when he relied on the state decision to dismiss a federal lawsuit in which the plan trustee sought to deposit the funds with the U.S. District Court and let it resolve dueling claims by Mack and his wife’s estate.
Pawnshop Dealer
Mack, a former Reno pawnshop dealer, is serving life in prison for the June 2006 stabbing death of his wife and the attempted murder of Family Court Judge Chuck Weller the same day in a sniper-style shooting through the window of the Washoe County Courthouse. Weller was struck by bullet fragments, but recovered from his wounds.
A state court granted Mack’s wife’s estate’s request for an order dated nunc pro tunc to a time before her death memorializing divorce terms the estate said the two agreed to before the murder. The order stated that a Qualified Domestic Relations Order, as defined by the Employee Retirement Income Security Act, would be executed transferring $500,000 from Mack’s 401k.
Mack appealed to the Nevada Supreme Court and threatened to sue the plan trustee—his mother, Joan Mack—if she paid the estate, so she filed an interpleader action in federal court to wash her hands of the money and any claims related to it. Darren Mack answered his mother’s complaint and filed a cross-claim against the administrator of his wife’s estate, Randal Kuckenmeister, who moved to dismiss both.
‘No Independent Interest’
U.S. District Judge Edward C. Reed agreed with Kuckenmeister that the suit sought to decide issues already resolved in the state court action, even though Joan Mack had not been a party. Finding that the trustee had “no independent interest as to which party receives the retirement funds,” he dismissed the complaint and the cross-claim as precluded by collateral estoppel.
While Darren Mack appealed the federal court’s ruling, the Nevada Supreme Court upheld the validity of the nunc pro tunc order and ruled that it was a QRDO under federal law.
The Ninth Circuit, following that decision, allowed the parties to brief whether a state court has subject matter jurisdiction to determine whether an order issued in a domestic relations case is a QRDO, and ultimately answered in the affirmative.
Writing for the court, Judge Sidney R. Thomas said that a state court had such jurisdiction in a civil action brought “to recover benefits” or “to enforce…or to clarify” rights under the terms of an ERISA plan. He also opined that a plan administrator need not be given the opportunity to determine if an order was a QDRO before a state court does so because administrative exhaustion is a prudential rather than jurisdictional requirement.
Ruling Not Binding
But the judge said Reed’s dismissal was error because the Nevada Supreme Court ruling wasn’t binding on Joan Mack as a non-party to the state proceedings. He also noted that she had a fiduciary duty as plan administrator to her son, who continued to assert a right to the funds.
Instead, Thomas wrote, Reed should have denied Kuckenmeister’s motion to dismiss the complaint and allowed Joan Mack to deposit the money with the court and get out of the case.
“For interpleader to be held improper based on the merits of the claims being asserted against the fund or stakeholder, courts would be required to address the merits of the claims before propriety of the interpleader,” he explained. “This is backwards of the usual order, and would defeat the resource-conservation purposes of interpleader”
The district court should then have granted Kuckenmeister’s motion to dismiss Darren Mack’s claim and entered a judgment for the estate, Thomas said, and he remanded with instructions to do so.
Judge A. Wallace Tashima and Senior U.S. District Judge William Stafford of the Northern District of Florida, sitting by designation, joined Thomas in his opinion.
The case is Mack v. Kuckenmeister, 09-15290.
Copyright 2010, Metropolitan News Company