Metropolitan Life Ins. Co. v. Marsh

• Decision Date: 15 July 1997
• Docket Number: No. 96-1270,96-1270
• Parties: 21 Employee Benefits Cas. 1341, Pens. Plan Guide (CCH) P 23937J METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff, v. Julie A. MARSH, Defendant-Appellee, Dana Lyn Weaver and James R. Marsh, III, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 415

119 F.3d 415

21 Employee Benefits Cas. 1341,

Pens. Plan Guide (CCH) P 23937J

METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff, v. Julie A. MARSH, Defendant-Appellee, Dana Lyn Weaver and James R. Marsh, III, Defendants-Appellants.

No. 96-1270.

United States Court of Appeals, Sixth Circuit.

Submitted April 29, 1997.

Decided July 15, 1997.

Thomas E. Chittle, Flint, MI, for Plaintiff.

J. Edmund Frost (briefed), Bay City, MI, for Defendant-Appellee Julie A. Marsh.

Mark A. Kolka (briefed), Allsopp, Kolka & Wackerly, Bay City, MI, for Defendants-Appellants Dana Lyn Weaver, James R. Marsh, III.

Before: BROWN, KENNEDY, and BOGGS, Circuit Judges.

OPINION

KENNEDY, Circuit Judge.

This is an interpleader action to determine who is entitled to the proceeds of a life insurance policy governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461. Decedent's widow claims as his last designated beneficiary under the policy, while decedent's children from his first marriage claim under a divorce decree that allegedly requires that they be named as the beneficiaries of two-thirds of the insurance proceeds. The District Court granted summary judgment to the widow on the ground that the terms of the plan controlled, because the divorce decree did not constitute a qualified domestic relations order ("QDRO") and was therefore preempted by ERISA. Decedent's children appeal. We conclude the divorce decree substantially complies with ERISA's QDRO provisions and excepts it from ERISA's preemption provisions. Accordingly, we shall REVERSE.

I. Facts

This case arises out of a dispute over the proceeds of a life insurance policy insuring the life of James R. Marsh, Jr. ("James"), which was issued by Metropolitan Life Insurance Company ("Met Life"). James, an employee of General Motors Corporation, was a participant in the General Motors Life and Disability Program ("Plan"). The Plan included "basic life insurance" through Met Life. With regard to this insurance, the Plan provided that "[i]f the Employe dies while insured for Basic Life Insurance under the Group Policy, the amount of Basic Life Insurance in force on account of the Employe at the date of the Employe's death shall be paid to the Beneficiary of record." The Plan defined "beneficiary" as "the person or persons designated by the Employe, on a form approved by the Insurance Company and filed with the records maintained in connection with the insurance under the Group Policy to receive upon the Employe's death the amount of the Basic Life Insurance then payable." The Plan further provided that "[t]he Employe [sic] may change the Beneficiary at any time by filing written notice thereof on such a form with the Employer or the Insurance Company. Consent of the Beneficiary shall not be requisite to any change of Beneficiary."

Appellants, James R. Marsh, III and Dana Lyn Weaver, are the children of James and Linda Marsh, n.k.a. Linda Davidson ("Linda"). On October 31, 1978, James and Linda divorced. The judgment of divorce which incorporated James' and Linda's property settlement provided the following under a section entitled "Statutory Insurance Provision":

IT IS FURTHER ORDERED AND ADJUDGED that all rights of either party in and to the proceeds of any policy or contract of life insurance, endowment, or annuity upon the life of the other in which he or she was named or designated as beneficiary during the marriage or in anticipation thereof, whether such contract or policy was heretofore or shall hereafter be written or become effective shall hereupon become and be payable to the estate of the owner of such policy or such named beneficiary as he or she shall affirmatively designate except that the minor children of the parties shall be named as beneficiaries to the extent of two thirds (2/3) of the proceeds of Plaintiff's insurance through Metropolitan Life Insurance Company, maintained at his place of employment.

(emphasis added). Under a section entitled "Custody of Children," the "minor children of the parties" are identified as "DANA LYN MARSH, born August 24, 1965; and JAMES R. MARSH, III., born December 7, 1967."

James filed a beneficiary designation in connection with the Met Life life insurance policy seven times during the over twenty-nine years that he was a plan participant. On the date of his death on January 2, 1995, the last designation of record was dated January 18, 1989, and named appellee Julie A. Marsh, his widow, as the sole beneficiary.

On January 10, 1995, appellants gave notice to Met Life that, pursuant to their parents' divorce decree, they were entitled to two-thirds of the life insurance benefits. Appellee filed her formal claim to the entirety of the benefit proceeds on January 20, 1995. On May 25, 1995, Met Life filed a complaint of interpleader, which named appellants and appellee as defendants. The District Court dismissed Met Life after the insurance company deposited $51,043.21, the proceeds of James' policy plus interest, with the clerk of the court.

On January 17, 1995, the District Court held a hearing on cross-motions for summary judgment. The court found that the case turned on the question whether the judgment of divorce was a qualified domestic relations order under ERISA. It concluded that it was not because it did not meet certain of the statutory requirements and that therefore the terms of the plan controlled. Accordingly, the court awarded the benefits to appellee. Appellants appeal that decision.

II. Discussion

A. Standing

We must initially determine whether we have subject matter jurisdiction over this action. Appellee argues that appellants do not have standing to assert an ERISA cause of action because they are neither plan participants nor plan beneficiaries. ERISA section 502(a) limits those who can bring ERISA causes of action to plan participants, beneficiaries, fiduciaries, and the Secretary of Labor. See 29 U.S.C. § 1132(a). Our jurisdiction over ERISA-related questions is defined and limited by ERISA section 502(a). See id. § 1132(e). Thus, we have subject matter jurisdiction over suits brought by parties who have standing to assert a cause of action pursuant to section 502(a). However, appellee wrongly focuses on appellants' standing apparently overlooking the fact that Met Life brought this action.

Met Life brought this interpleader action pursuant to FED.R.CIV.P. 22. Rule 22(1) interpleader allows a party to join all other claimants as adverse parties when their claims are such that the stakeholder may be exposed to multiple liability. This permits the insurance company, the stakeholder who has no claim to the money and is willing to release it to the rightful claimant, " 'to put the money ... in dispute into court, withdraw from the proceeding, and leave the claimants to litigate between themselves the ownership of the fund in court.' " Commercial Union Ins. Co. v. United States, 999 F.2d 581, 583 (D.C.Cir.1993) (quoting Zechariah Chaffee, Jr., The Federal Interpleader Act of 1936: I, 45 YALE L.J. 963, 963 (1936)). ¹

Rule 22(1) provides a procedural framework for interpleader actions, but it does not confer subject matter jurisdiction on federal courts. See FED.R.CIV.P. 82; Commercial Nat'l Bank of Chicago v. Demos, 18 F.3d 485, 488 (7th Cir.1994). Thus, for interpleader to be proper under Rule 22(1), the action must be based on a statutory grant of jurisdiction. See Gelfgren v. Republic Nat'l Life Ins. Co., 680 F.2d 79, 81 (9th Cir.1982). Met Life asserts in its complaint that this court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331, because its claim arises under ERISA. ² In its complaint, Met Life asserts a cause of action under ERISA section 502(a)(3)(B)(ii), which provides that a civil action may be brought "by a participant, beneficiary, or fiduciary ... to obtain other appropriate equitable relief ... to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3)(B)(ii). Met Life alleges that "as claims fiduciary, [it] processes all claims for [basic life insurance] benefits" under the plan and that it cannot safely determine the proper beneficiary of the benefits due.

Met Life has standing to assert a cause of action pursuant to § 1132(a)(3)(B)(ii), and we therefore have subject matter jurisdiction to hear this interpleader action. First, Met Life alleges that it is the "claims fiduciary." This Court has held that "[w]hen an insurance company administers claims for an employee welfare benefit plan and has authority to grant or deny the claims, the company is an ERISA 'fiduciary' under 29 U.S.C. § 1002(21)(A)(iii)." Libbey-Owens-Ford Co. v. Blue Cross & Blue Shield Mut., 982 F.2d 1031, 1035 (6th Cir.1993). Appellee does not dispute that Met Life is a fiduciary. Second, an interpleader action is equitable for purposes of ERISA. Some courts have held that they do not have federal jurisdiction over suits brought by insurance companies seeking declarations of liability under a policy, because such suits do not seek equitable relief. See, e.g., Transamerica Occidental Life Ins. Co. v. DiGregorio, 811 F.2d 1249, 1251-52 (9th Cir.1987); Gulf Life Ins. Co. v. Arnold, 809 F.2d 1520, 1523 (11th Cir.1987). However, interpleader is fundamentally equitable in nature. See Commercial Union Ins. Co., 999 F.2d at 588-89. In sum, Met Life has properly asserted a cause of action pursuant to 29 U.S.C. § 1132(a)(3)(B)(ii), and this action arises under federal law. Therefore, it does not matter whether appellants have standing to assert an ERISA cause of action. ³

B. Standard of Review

Summary judgment is appropriate where there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. FED.R.CIV.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Metropolitan Life Ins. Co. v. Pressley, 82 F.3d 126, 128 (6th Cir.1996),...