In Sposato v. First Mariner Bank, 2013 WL 1308582 (D. Md. March 29, 2013), a federal district court allowed the creditor (First Mariner Bank) of a former executive (Sposato) to garnish the Top-Hat plan (the Cecil Bank Supplemental Executive Retirement Plan) benefits of the former executive even though the company (Cecil Bank) was not in bankruptcy. (I spotted this first in a Womble Carlyle blog on BenefitsLink.)
The court found that:
- ERISA's ant-alienation provisions did not apply to non-qualified plans such as the Cecil Bank SERP, and
- ERISA did not preempt Maryland garnishment law.
The lessons of this case are as follows:
- Qualified Plans are always better than non-qualified plans. Either ERISA's ant-alienation or its preemption provisions would have prevented this result, and
- To the extent you need to rely on your non-qualified plans, which nearly every company does, for the love of Pete, at least fund the plan with a rabbi trust, which would have placed the executive's funds out of the reach of his creditors.
On April 18, 1942, Jimmy Doolittle's B-25s left the aircraft carrier Hornet to bomb Tokyo in one of the most audacious moves in military history. The raid caught the Japanese totally unprepared because they were certain that no U.S. planes could reach the mainland. The Japanese would have been correct, except that Doolittle's team modified the light bombers to launch from a carrier and fly farther. Additionally, the planes could not return to the carrier, as they were nearly out of fuel by the time they reached Tokyo, a fact that every flight crew understood from the start of mission planning. If they were lucky, they could crash land in China or Russia, who were allies at the time. The Doolittle raid did very little damage from a military standpoint. However, it was a massive boost to U.S. morale and a blow to Japanese morale – remember, this was only four months after Pearl Harbor. I was fortunate enough to meet the four surviving members of the Doolittle raid and three survivors from the Hornet last April 18 at their 75th anniversary reunion at Wright-Patterson Air Force base. I have several of the autographs in my office and I would rather have them than the autographs of every single player in the NFL, NBA, MLB and NHL. Truly great Americans.