Bruce Schwartz v. Ardis Bogen , 913 F.3d 777 ( 2019 )

United States Court of Appeals
For the Eighth Circuit
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No. 17-3812
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Bruce G. Schwartz
lllllllllllllllllllllPlaintiff - Appellant
v.
Ardis Bogen, formerly known as Ardis Schwartz
lllllllllllllllllllllDefendant - Appellee
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: November 14, 2018
Filed: January 16, 2019
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Before COLLOTON, SHEPHERD, and STRAS, Circuit Judges.
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SHEPHERD, Circuit Judge.
Bruce Schwartz filed an action against Ardis Bogen, his ex-wife, alleging
violations of the anti-alienation provisions of the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., that arose from payments he
made to her for almost three decades. Bogen moved for dismissal on the ground of
res judicata, and the district court1 dismissed the matter with prejudice. On appeal,
Schwartz argues the district court erred in granting Bogen’s motion. Having
jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.
I.
Schwartz and Bogen entered into a marital property settlement agreement
(Agreement) in New Jersey. The Agreement was incorporated into their final
judgment of divorce (Judgment), which was entered in 1983, and provided, in relevant
part, that if Bogen remarried after January 1, 1986, but in or before 1990, Schwartz
would pay Bogen, “as equitable distribution, a yearly sum equal to Twenty (20%)
percent of [Schwartz]’s Basic Bell System Management Pension Plan . . . .” Schwartz
retired in 1985, and Bogen remarried in 1989. Neither Schwartz nor Bogen made a
request for a qualified domestic relations order (QDRO) at either time. From 1989
through 2016, Schwartz made payments to Bogen using personal checks. Bogen
never received distribution or payment from the pension plan itself. Both reported the
payments as alimony on their federal tax returns.
In 2016, Schwartz contacted Bogen and told her he realized that, under the
terms of the Agreement, he should have stopped making the alimony payments
in 1995 because she had remarried. Bogen, through her attorney, responded that
the payments were not alimony but rather were an equitable distribution of the
pension plan. According to Schwartz’s complaint, Bogen’s attorney stated in a letter
that because the Judgment was entered before the effective date of the Retirement
Equity Act of 1984 (REA), Pub. L. No. 98-397, 98 Stat. 1426 (1984), “the division
of the pension was done without a QDRO.”
1
The Honorable Michael J. Davis, United States District Judge for the District
of Minnesota.
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Bogen commenced an action for enforcement of her rights in New Jersey state
court, requesting, among other things, that Schwartz be compelled to pay her 20% of
his pension plan in monthly installments. Schwartz argued that the relief Bogen
sought was “contrary to Federal law.” Specifically, he argued that the anti-alienation
provisions of ERISA prohibited sharing his pension and entitled him to a refund of
money already paid to Bogen. He also argued that there was no QDRO to divide his
pension and, without a QDRO, the pension plan could not be divided. He did not
argue that the state court was without subject-matter jurisdiction to entertain the
alleged ERISA violations.
The state court made several rulings. First, it found that the doctrine of laches
barred Schwartz’s request for a refund of the money paid to Bogen since 1995.
“Notwithstanding” this ruling, the state court then explained that “the issue of whether
these payments were alimony or intended as equitable distribution and the arguments
[Schwartz] asserts regarding ERISA must be addressed, as [he] may have an ongoing
obligation to pay [Bogen].” The court further found that the payments were an
equitable distribution, not alimony. The court also found that while ERISA prohibits
the assignment or alienation of pension-plan benefits, it “was not intended to prevent
the assignment to a spouse or former spouse that is entitled to support,” citing New
Jersey case law. Schwartz did not appeal the state court’s judgment.
Instead, Schwartz filed a complaint against Bogen in United States District
Court for the District of Minnesota, asserting two counts: recovery of payments in
violation of ERISA and the REA, and a declaration of federal preemption under the
aforementioned federal laws. Bogen moved, in relevant part, for dismissal on the
ground of res judicata. The district court granted Bogen’s motion. It concluded that
res judicata applied because, among other things, the state court determined Bogen
was entitled to a portion of Schwartz’s pension, notwithstanding ERISA. The district
court rejected Schwartz’s argument that res judicata did not apply because the state
court was without jurisdiction to determine whether Bogen was entitled to a portion
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of his pension. It concluded that state and federal courts have concurrent jurisdiction
to determine whether a divorce decree, judgment, or order qualifies as a QDRO.
Whether the state court “correctly determined that the prior order was an enforceable
QDRO,” the district court explained, is irrelevant to the application of res judicata.
Accordingly, the district court dismissed the matter with prejudice. This appeal
followed.
II.
For the first time at oral argument, the parties addressed whether the
Rooker-Feldman doctrine, not res judicata, more appropriately applied to this case.
Under the doctrine, “lower federal courts are precluded from exercising appellate
jurisdiction over final state-court judgments.” Lance v. Dennis, 546 U.S. 459,
463 (2006) (per curiam). Because the doctrine “is jurisdictional, it may be addressed
for the first time on appeal and may be raised sua sponte.” Lemonds v. St. Louis
Cnty., 222 F.3d 488, 492 (8th Cir. 2000), abrogated on other grounds by Shelby Cnty.
Health Care Corp. v. S. Farm Bureau Cas. Ins. Co., 855 F.3d 836, 840-41 (8th Cir.),
cert. denied sub nom. Ford v. Shelby Cnty. Health Care Corp., 138 S. Ct. 473 (2017).
However, we need not address the application of the Rooker-Feldman doctrine in this
case because it is “permissible to bypass Rooker–Feldman to reach a preclusion
question that disposes of a case.” In re Athens/Alpha Gas Corp., 715 F.3d 230, 235
(8th Cir. 2013). Accordingly, we only address the application of res judicata in this
appeal.
A.
Schwartz argues the district court erred in granting Bogen’s motion to dismiss
on the basis of res judicata. “We review de novo the district court’s grant of a motion
to dismiss for failure to state a claim based on res judicata . . . [and] accept the
plaintiff’s factual allegations as true.” Laase v. Cnty. of Isanti, 638 F.3d 853, 856 (8th
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Cir. 2011) (internal quotation marks and citations omitted). In determining whether
res judicata applies, “[t]he law of the forum that rendered the first judgment controls
the res judicata analysis.” Id. (internal citations and quotation marks omitted).
Accordingly, as the district court correctly found, New Jersey law governs the res
judicata analysis in this case.
B.
Under New Jersey law, “[t]he term ‘res judicata’ refers broadly to the
common-law doctrine barring relitigation of claims or issues that have already been
adjudicated.” Velasquez v. Franz, 589 A.2d 143, 147 (N.J. 1991). “In essence, the
doctrine of res judicata provides that a cause of action between parties that has been
finally determined on the merits by a tribunal having jurisdiction cannot be relitigated
by those parties or their privies in a new proceeding.” Id. (citing Roberts v.
Goldner, 397 A.2d 1090, 1091 (N.J. 1979)). Res judicata “applies not only to matters
actually determined in an earlier action, but to all relevant matters that could have
been so determined,” but were not. Watkins v. Resorts Int’l Hotel & Casino, Inc., 591
A.2d 592, 599 (N.J. 1991) (citing Culver v. Ins. Co. of N. Am., 559 A.2d 400, 406
(N.J. 1989)).
Schwartz argues res judicata does not apply because the state court was without
jurisdiction to address violations of ERISA and the REA because Congress has given
exclusive jurisdiction to the federal district courts to address such violations. In other
words, the state court could not and did not rule on the violations. Moreover,
Schwartz argues res judicata does not apply because “the ERISA violations claims did
not arise prior to and were not litigated in New Jersey. To the contrary, it was the
New Jersey Order that ripened the ERISA violations claims.” Appellant’s Br. 34, 38-
39. We disagree.
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First, Schwartz concedes he did not raise his lack-of-jurisdiction argument
before the state court, and he does not claim that he was prevented from asserting this
argument in the earlier proceeding. He also concedes that he did not appeal the state
court’s judgment, though he could have. Additionally, he does not dispute that the
state court’s judgment was final and on the merits. “[T]he principles of [r]es judicata
apply to all types of issues including issues of jurisdiction over the subject matter as
well as the person.” State v. Am. Can Co., 198 A.2d 753, 757
(N.J. 1964) (citing Treinies v. Sunshine Mining Co., 308 U.S. 66, 78 (1939)). “A
party that has had an opportunity to litigate the question of subject-matter jurisdiction
may not . . . reopen that question in a collateral attack upon an adverse judgment.”
Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694,
702 n.9 (1982); see also Grey v. New Jersey, 91 F. App’x 747, 750-51 (3d Cir.
2003) (explaining that res judicata barred litigant from contesting New Jersey state
court’s subject-matter jurisdiction for the first time in federal court because she had
a “full and fair opportunity” to do so in state court, “but chose not to do so”). And
here, the New Jersey state court unquestionably had jurisdiction to hear Bogen’s attempt to
enforce the Agreement. There are “res judicata consequences” to a “final, unappealed
judgment on the merits . . . .” Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394,
398 (1981); cf. Geiger v. Foley Hoag LLP Ret. Plan, 521 F.3d 60, 68 (1st Cir. 2008)
(“In the final analysis, Geiger rejected the opportunity to challenge the QDROs at both
the state trial and appellate levels. That he did so on the mistaken belief that the
federal courts had exclusive jurisdiction over those challenges does not alter the
finality of those judgments, nor their preclusive effect.”).
Second, a cursory glance at the state court’s judgment demonstrates that
Schwartz fully participated in the state court proceeding; indeed, he raised the alleged
ERISA violations before the state court, the same court he now claims was without
jurisdiction to address the violations. In state court, he argued that the relief Bogen
sought was “contrary to Federal law.” Specifically, Schwartz argued that ERISA
“clearly prohibits any such intent to assign or alienate the benefits provided under his
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pension plan”; that “both ERISA and the Internal Revenue Code . . . did not allow the
benefits provided under the plan to be assigned or alienated and there could not legally
be a division of his pension plan”; and that “the pension plan itself also prevented the
assignment or alienation of the benefits provide [sic] to him.” Schwartz also argued
that, under ERISA and the REA, his “pension plan could not be divided without a
QDRO” and that “there was no QDRO in place dividing the pension plan.”
Schwartz’s arguments before the state court, as evidenced by the state court’s
judgment, are prima facie evidence that the ERISA violations “ripened” well before
the entry of the state court’s judgment, contrary to Schwartz’s position. See Grey,
91 F. App’x at 750-51 (explaining that res judicata barred litigant from contesting
New Jersey state court’s subject-matter jurisdiction for the first time in federal court
because she “did not dispute jurisdiction until she had lost on the merits at every level
of the New Jersey court system”). He is precluded from getting a second bite of the
apple in federal court.
Schwartz also argues that “[b]ecause Bogen was not a participant or beneficiary
under the Plan, she could not properly bring 29 U.S.C. § 1132(a)(3) claims in New
Jersey.” Appellant’s Br. 32. But she never did. Rather, she sought to enforce her
rights and Schwartz’s obligations under the terms of the Agreement. Nothing in the
state court’s judgment suggests it treated Bogen’s motion as a civil-enforcement
action pursuant to 29 U.S.C. §§ 1132(a)(1)(B) or 1132(a)(3). In fact, if Schwartz
believed Bogen was actually bringing a civil-enforcement action under § 1132(a), he
could have sought removal to federal court, arguing that Bogen’s motion was both
completely preempted by ERISA and “displaced by [ERISA’s] civil enforcement
provisions . . . .” Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987). However,
Schwartz neither sought removal after Bogen filed in state court nor appealed the state
court’s judgment. Nor did Schwartz expressly raise his preemption claim in state
court even though state courts are asked to determine, with regularity, “whether a state
law cause of action falls to ERISA’s preemption provision . . . .” Mack v.
Kuckenmeister, 619 F.3d 1010, 1019 (9th Cir. 2010).
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Accordingly, based on our reading of New Jersey law, the district court did not
err in dismissing the matter on the basis of res judicata.
III.
The judgment is affirmed.
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