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REPORT AND RECOMMENDATION

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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

LESLIE LAWSON,

Plaintiff,

v.

HAROLD W. CLARKE, et al.,

Defendants.

CASE NO. C06-1100-JLR-JPD

REPORT AND RECOMMENDATION

INTRODUCTION AND SUMMARY CONCLUSION

This is a civil rights action brought under 42 U.S.C. § 1983. Plaintiff alleges in his civil rights

complaint that defendants unlawfully withdrew monies from his military retirement checks which were

entitled to the exemption protection afforded by 38 U.S.C. § 5301, and that they unlawfully converted

his retirement checks to public funds in violation of the National Bank Act, the Washington Financial

Institution Individual Act, and the Washington Public Funds Deposit Act. Plaintiff names the

following individuals/entities as defendants in this action: Harold Clarke, the Secretary of the

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1

 Plaintiff also names John and Jane Doe as defendants in this action and identifies these

individuals as employees of the Washington State Treasury or the Department of Corrections. 

Plaintiff has never identified these individuals by name and, thus, service has never been effectuated on

these individuals. Accordingly, none of these individuals is a party to the instant action. 

REPORT AND RECOMMENDATION

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Washington Department of Corrections; Ken Quinn, Superintendent of the Monroe Correctional

Complex; and, the Bank of America.1

Plaintiff has filed a summary judgment motion in this action. Defendants have filed crossmotions for summary judgment in conjunction with their responses to plaintiff’s summary judgment

motion. While plaintiff has been provided an opportunity to file a response to defendants’ summary

judgment motions, and has been advised of the summary judgment requirements pursuant to Rand v.

Rowland, 154 F.3d 952 (9th Cir. 1998), plaintiff has filed no response to either of the pending crossmotions for summary judgment. The briefing is now deemed complete and the pending summary

judgment motions are ripe for review. 

This Court, having reviewed the pending summary judgment motions, and the balance of the

record, concludes that plaintiff’s motion for summary judgment should be denied, defendants’ crossmotions for summary judgment should be granted, and this action should be dismissed with prejudice.

FACTS

Plaintiff Leslie Lawson is retired from the United States Army. (Dkt. No. 1, Ex. 1.) In May

2004, while in the custody of the Washington Department of Corrections (“DOC”), plaintiff began

receiving military retirement benefits checks. (Id.) When these checks were received at plaintiff’s 

institution, they were identified as retirement funds, and were posted to plaintiff’s individual account 

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within the DOC Trust Accounting System (“TAS”). (Dkt. No. 23-2, Ex. 1 at 2.) Deductions were 

then taken from the deposited funds in accordance with RCW 72.09.480. (Dkt. No. 23-2, Ex. 1 at 2.)

Certain deposit types are protected by federal statute and are therefore exempted from the

deductions required by state statute. (See id, Ex. 1 at 3.) Exempt deposit types include tribal funds

protected by federal law or court order, veteran’s and social security disability benefits when received

directly from the federal agency, and proceeds from lawsuits filed under § 1983. (See id., Ex. 1,

Attachment A at 3.) The DOC has not identified any federal statute which exempts military retirement

funds from the mandatory deductions. (See id., Ex. 1 at 3.) 

Each day, deposits received for offenders are taken to a local Bank of America branch where

they are deposited in an Institutional Resident Deposit Account. (See id., Ex. 1 at 1-3.) The

Institutional Resident Deposit Account consists of funds held for all offenders housed within a

designated “administrative caseload.” (Id., Ex. 1 at 1-2.) Each offender has a personal account

within the TAS which is unique to his DOC number within the “administrative caseload” where he is

housed. (Id., Ex. 1 at 2.) Offenders are permitted to spend the funds in their personal accounts within

the confines of DOC Policy 200.00, Trust Accounts for Offenders. (See id., Ex. 1 at 2-3 and

Attachment A.) 

DISCUSSION

Plaintiff asserts the following claims in his civil rights complaint: (1) he was unlawfully denied

the exemption protection of 38 U.S.C. § 5301 when the Department of Corrections deducted 35%

from his military retirement pension checks; (2) the Department of Corrections unlawfully converted

his U.S. Treasury Checks into public funds in violation of the Due Process Clause, the National Bank

Act, Title 12, United States Code, et seq., the Washington Financial Institution Individual Account

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Deposit Act, RCW 30.22, et seq., and state law provisions governing deposits of public funds in public

depositaries, RCW 39.58, et seq.; and, (3) the Bank of America conspired with the Department of

Corrections to deprive plaintiff of his property.

Summary Judgment Standard

Summary judgment is appropriate when, viewing the evidence in the light most favorable to

the nonmoving party, there exists “no genuine issue as to any material fact” such that “the moving

party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A material fact is a fact

relevant to the outcome of the pending action. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248 (1986). Genuine issues of material fact are those for which the evidence is such that “a reasonable

jury could return a verdict for the nonmoving party.” Id. 

In response to a properly supported summary judgment motion, the nonmoving party may not

rest upon mere allegations or denials in the pleadings, but must set forth specific facts demonstrating a

genuine issue of fact for trial and produce evidence sufficient to establish the existence of the elements

essential to his case. See Fed. R. Civ. P. 56(e). A mere scintilla of evidence is insufficient to create a

factual dispute. See Anderson, 477 U.S. at 252. In ruling on summary judgment, the court does not

weigh evidence to determine the truth of the matter, but “only determine[s] whether there is a genuine

issue for trial.” Crane v. Conoco, Inc., 41 F.3d 547, 549 (9th Cir. 1994). 

Section 1983 Standard

In order to sustain a cause of action under 42 U.S.C. §1983, a plaintiff must show (i) that he

suffered a violation of rights protected by the Constitution or created by federal statute, and (ii) that

the violation was proximately caused by a person acting under color of state law. See Crumpton v.

Gates, 947 F.2d 1418, 1420 (9th Cir. 1991). The causation requirement of § 1983 is satisfied only if a

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plaintiff demonstrates that a defendant did an affirmative act, participated in another's affirmative act,

or omitted to perform an act which he was legally required to do that caused the deprivation

complained of. Arnold v. IBM, 637 F.2d 1350, 1355 (9th Cir. 1981) (quoting Johnson v. Duffy, 588

F.2d 740, 743-44 (9th Cir. 1978)). 

38 U.S.C. § 5301

Plaintiff asserts in his first claim for relief that defendants Clarke and Quinn unlawfully

deducted from his military retirement pension checks 35% of the total amount of each check. At issue

here is the DOC’s application of RCW 72.09.480(2) to plaintiff’s military retirement checks. 

RCW 72.09.480(2) mandates that certain deductions be taken from funds received by inmates

in Washington state prisons:

 When an inmate, except as provided in subsection (7) of this section, receives any

funds in addition to his or her wages or gratuities, except settlements or awards

resulting from legal action, the additional funds shall be subject to the following

deductions and the priorities established in chapter 72.11 RCW:

(a) Five percent to the public safety and education account for the purpose of crime

victim’s compensation;

(b) Ten percent to a department personal inmate savings account;

(c) Twenty percent to the department to contribute to the cost of incarceration;

(d) Twenty percent for payment of legal financial obligations for all inmates who have

legal financial obligations owing in any Washington state superior court; and

(e) Fifteen percent for any child support owed under a support order.

Plaintiff argues that his military retirement benefits payments are exempt from these state

mandated deductions under the provisions of 38 U.S.C. § 5301(a). Section 5301(a) provides in

relevant part as follows:

Payments of benefits due or to become due under any law administered by the

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2

 Plaintiff does cite to Wright v. Riveland, 219 F.3d 905 (9th Cir. 2000), a class action suit

brought by Washington inmates challenging the legality of RCW 72.09.480 on federal constitutional

grounds and on the grounds that the mandatory deductions under the statute impaired their rights to

receive certain federal benefits and funds. While the Ninth Circuit cited to § 5301 in its decision, it did

so only in its discussion of the “anti-alienation” provisions contained in § 206(d)(1) of the Employee

Retirement Income Security Act. Nothing in Wright can be read to suggest that § 5301 applies to

military retirement benefits payments.

REPORT AND RECOMMENDATION

PAGE - 6

Secretary shall not be assignable except to the extent specifically authorized by law,

and such payments made to, or on account of, a beneficiary shall be exempt from

taxation, shall be exempt from the claim of creditors, and shall not be liable to

attachment, levy, or seizure by or under any legal or equitable process whatever, either

before or after receipt by the beneficiary. . . .

Defendants Clarke and Quinn argue in their motion for summary judgment that the nonassignability and exemption protections of § 5301(a) apply to benefits paid by the Department of

Veterans Affairs and not to funds received as a military retirement pension.

Plaintiff, in his summary judgment motion, cites to case law which amply supports the

proposition that § 5301(a) applies to disability benefits paid by the Department of Veterans Affairs. 

See, e.g., Nelson v. Heiss, 271 F.3d 891 (9th Cir. 2001) (§ 5301(a) precluded state prison officials

from placing a hold on inmate's trust account in order to ensure repayment of funds withdrawn by the

inmate, who was permitted to make withdrawals despite lack of sufficient funds in account, from

expected deposit of veteran's disability benefits); Higgins v. Beyer, 293 F.3d 683 (3rd Cir. 2002) (New

Jersey statute providing for collection of crime victims' assessment from inmate account conflicted

with provisions of § 5301 and was void to the extent it allowed prison officials to deduct funds derived

from inmate's veteran’s disability benefits). Plaintiff does not, however, cite to any authority which

supports his argument that § 5301(a) applies equally to military retirement benefits payments.2 

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REPORT AND RECOMMENDATION

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A review of the statutes governing veteran’s disability benefits and military retirement pay

suggests that plaintiff’s position is untenable. Title 38 is concerned with Veterans’ Benefits. Section

5301(a) of Title 38 specifically exempts from “attachment, levy, or seizure” benefits “due or to

become due under any law administered by the Secretary.” The general provisions of Title 38 make

clear that for purposes of that title, the term Secretary means the Secretary of Veterans Affairs. See

38 U.S.C. § 101. While the Secretary of Veterans Affairs does administer certain pensions, the

pensions administered by the Secretary of Veterans Affairs appear to be those awarded to veterans

based upon age or disability who have served during periods of war. See 38 U.S.C. § 1501, et seq. 

Regular military retirement benefits are not administered by the Secretary of Veterans Affairs, but are

instead administered by the Secretaries of the various branches of the military in accordance with the

provisions of Title 10 of the United States Code. See generally, 10 U.S.C. §§ 1201-1412. 

Nothing in the record suggests that plaintiff’s pension benefits were awarded under any

provision of Title 38. In fact, defendants have provided copies of two of the checks received by

plaintiff and each indicates on its face that is constitutes “retired pay” and that it was issued by the

Defense Finance and Accounting Service. (Dkt. No. 23-2, Ex. 1, Attachment B.) This Court is

satisfied, based upon the evidence in the record, that plaintiff’s military retirement benefits are

administered by the Secretary of the Army in accordance with the provisions of Title 10 of the United

States Code, and that the non-assignability and exemptions protections of § 5301(a) do not apply to 

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3

 The conclusion that plaintiff’s pension was not awarded under any provision of Title 38 is

bolstered by the fact that § 1505 of that title expressly precludes any pension administered by the

Secretary of Veterans Affairs from being paid to an individual who is imprisoned in a federal, state, or

local penal institution as a result of conviction of a felony or misdemeanor. The fact that plaintiff

received his retirement benefits while incarcerated suggests that his benefits were not pension benefits

administered by the Secretary of Veterans Affairs. 

REPORT AND RECOMMENDATION

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those funds.3 Accordingly, defendants Clarke and Quinn are entitled to judgment as a matter of law

with respect to plaintiff’s first claim for relief.

National Bank Act

Plaintiff asserts in his second claim for relief that defendants Clarke and Quinn violated the

National Bank Act, Title 12, United States Code, et seq., and state banking laws, when they seized his

private funds; i.e., United States Treasury checks specifically naming plaintiff as the payee, and

converted those funds into public funds without due process of law. 

Defendants Clarke and Quinn argue that this claim is without merit because the National Bank

Act does not provide a private cause of action to a plaintiff in an action brought under § 1983. 

Defendants Clarke and Quinn further argue that even if the Court were to entertain a cause of action

under the National Bank Act, the only proper defendant would be the Bank of America because the

Department of Corrections and its personnel are not regulated by the Act.

The provisions of the National Bank Act cited by plaintiff, 12 U.S.C. §§ 90 and 332, relate to

the designation by the Secretary of the United States Treasury of banking institutions as depositaries

of public moneys, to the employment of such institutions as financial agents for the government, and to

the requirement that security be given for the safe-keeping and prompt payment of public funds on

deposit. Plaintiff fails to explain in his papers how either of these provisions gives rise to a cause of

action against either defendant Clarke or defendant Quinn. Defendants Clarke an Quinn are

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4

 The Court does not interpret this claim to challenge the mandatory deductions taken

pursuant to RCW 72.09.480. Instead, it appears that plaintiff seeks to challenge, generally, the

manner in which funds are processed through the Department of Corrections.

REPORT AND RECOMMENDATION

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designated by statute as custodians of inmate funds, see RCW 72.11.020 and RCW 72.02.045 (3). 

However, they have no authority over, or responsibility for, how banking institutions manage public

funds. Accordingly, defendants Clarke and Quinn are entitled to summary judgment to the extent

plaintiff asserts any claim against them under the National Bank Act. 

Defendants Clarke and Quinn are also entitled to summary judgment to the extent plaintiff

asserts that these defendants violated his due process rights.4

 Plaintiff argues in his motion for

summary judgment that inmate funds are personal property and that inmates are entitled to due

process before those funds are attached, seized, or alienated. Plaintiff maintains that defendants

violated due process when they “converted 100% of Plaintiffs funds to state title without a hearing.” 

(See Dkt. No. 24 at 11.)

The evidence presented by defendants Clarke and Quinn in conjunction with their summary

judgment motion establishes that inmate funds are deposited in an Institutional Resident Deposit

Account at a local Bank of America branch. (See Dkt. No. 23-2, Ex. 1 at 3.) The account is

comprised of funds deposited on behalf of all offenders at a particular institution, and offenders funds

are deposited to the account on a daily basis. (Id., Ex. 1 at 1-2.) The Institutional Resident Deposit

Account is not a treasury fund nor is it co-mingled with a treasury fund. (Dkt. No. 23-2, Ex. 1 at 3.) 

Personal inmate accounts are maintained by the DOC utilizing the TAS ( id., Ex. 1 at 2 and

Attachment A), and offenders are permitted to spend the funds on deposit in their personal accounts

within the confines of DOC policy (id., Ex. 1 at 3). 

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While plaintiff alleges that his private funds have been “converted,” he offers no evidence that

he was ever denied access to the funds on deposit in his personal account, or that any such funds were

ever withheld from him, except to the extent that funds received for deposit in plaintiff’s personal

account were subject to mandatory deductions under RCW 72.09.480. As plaintiff provides no

evidence to support the assertion that his personal funds were ever converted to state ownership, his

due process claim must fail. 

Bank of America

Plaintiff asserts in his third claim for relief that the Bank of America conspired with the other

defendants to deprive him of his property. Plaintiff maintains that the Bank of America acted

negligently in permitting plaintiff’s private funds to be deposited in a “public funds” account.

Defendant Bank of America argues in its summary judgment motion that plaintiff does not

have any claim against it under 42 U.S.C. § 1983. Specifically, Bank of America argues that plaintiff

has not shown, nor can he show, that Bank of America has acted under color of state law. Bank of

America also argues that plaintiff cannot show that it has deprived plaintiff of any rights, privileges or

immunities secured by the Constitution or the laws of the United States. These arguments have merit. 

Plaintiff offers no evidence or argument establishing that the Bank of America acted under

color of state law when it permitted the DOC to set up Institutional Resident Deposit Accounts, and

authority cited by Bank of America suggests to the contrary. See Mitchell v. Kirk, 20 f.3d 936 (8th

Cir. 1994) (holding that the “district court properly dismissed the banks and the bank employees

because in merely agreeing to open a non-interest bearing inmate account, those private parties were

not acting under color of state law for purposes of Section 1983.”) 

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Moreover, Bank of America correctly notes that plaintiff has identified nothing in the National

Bank Act, or any other federal law, which prohibits it, or any national bank, from permitting the DOC

to set up the Institutional Resident Deposit Account at issue here, or from permitting the DOC to

administer that account internally through the TAS. As noted above, plaintiff also fails to offer any

evidence that his personal funds were ever converted to state ownership. Accordingly, the Bank of

America is also entitled to judgment as a matter of law 

Pendant State Law Claims

Plaintiff alleges in his complaint that the conduct of defendants not only violated federal law,

but violated state law as well. The Supreme Court has stated that federal courts should refrain from

exercising their pendent jurisdiction when the federal claims are dismissed before trial. United Mine

Workers v. Gibbs, 383 U.S. 715, 726 (1966). Because defendants are entitled to summary judgment

with respect to each of plaintiff’s federal law claims, plaintiff’s state law claims should be dismissed.

CONCLUSION

For the foregoing reasons, this Court recommends that plaintiff’s motion for summary

judgment be denied, that defendants’ cross-motions for summary defendant be granted, and that

plaintiff’s complaint, and this action, be dismissed with prejudice. A proposed order accompanies this

Report and Recommendation. 

DATED this 29th day of August, 2007.

AJAMES P. DONOHUE

United States Magistrate Judge 

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