MacLean v. Ford Motor Co., 86-2819

• Citation: 831 F.2d 723
• Decision Date: 21 September 1987
• Docket Number: No. 86-2819,86-2819
• Parties: , 8 Employee Benefits Ca 2627 Kenneth MacLEAN, Executor of the Estate of David Jamie Pithie, Deceased, Plaintiff-Appellant, v. FORD MOTOR COMPANY, Ford Electronics and Refrigeration Corporation, Ford Aerospace and Communications Corporation, Manufacturers National Bank of Detroit, Trustee for Ford Motor Company's Savings and Stock Investment Plan, and also that of Ford Aerospace and Communications Corporation, Ford Electronics and Refrigeration Corporation, and Allen David Pithie, Defendants- Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 723

831 F.2d 723

56 USLW 2199, 8 Employee Benefits Ca 2627

Kenneth MacLEAN, Executor of the Estate of David Jamie Pithie, Deceased, Plaintiff-Appellant, v. FORD MOTOR COMPANY, Ford Electronics and Refrigeration Corporation, Ford Aerospace and Communications Corporation Manufacturers National Bank of Detroit, Trustee for Ford Motor Company's Savings and Stock Investment Plan, and also that of Ford Aerospace and Communications Corporation, Ford Electronics and Refrigeration Corporation, and Allen David Pithie, Defendants- Appellees.

No. 86-2819.

United States Court of Appeals Seventh Circuit.

Argued April 1, 1987.

Decided Sept. 21, 1987.

Robert G. Burton, Burton & Simkin, Richmond, Ind., for plaintiff-appellant.

Lisa Stone Sciscoe, Ice, Miller, Donadio & Ryan, Indianapolis, Ind., for defendants-appellees.

Before BAUER, Chief Judge, FLAUM and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

In this case, we must decide whether the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1001 et seq., preempts state law governing testamentary transfers. The appellant, Kenneth MacLean, is the executor of the estate of David Jamie Pithie (the decedent). Mr. MacLean filed suit to collect, on behalf of the estate, the assets accumulated in the decedent's Savings and Stock Investment Plan (SSIP or Plan). The decedent was employed by Ford Motor Company, Ford Electronics and Refrigeration Corporation, and Ford Aerospace and Communications Corporation (collectively referred to as Ford) for over twenty years prior to his death. Manufacturers National Bank of Detroit (Bank) serves as the trustee for Ford's SSIP. Mr. MacLean filed a motion for summary judgment, claiming that the decedent's SSIP assets should be distributed in accordance with the terms of his will. The appellees filed a motion for summary judgment, contending that the SSIP assets should be distributed in accordance with the terms of the SSIP's beneficiary designation provision. The district court granted the appellees' motion for summary judgment. We affirm.

I Facts

The material facts underlying this case are undisputed. The decedent was employed by Ford prior to his death, and during his employment, he participated in Ford's SSIP. A prospectus dated April 30, 1983 contained Ford's newly implemented policy regarding the designation of SSIP beneficiaries. The prospectus, in pertinent part, provided:

Designation of Beneficiaries. Effective on and at all times after January 1, 1983, a member shall be deemed to have designated as beneficiary or beneficiaries under the Plan the person or persons who are entitled in the event of the member's death to receive the proceeds under the Company's Group Life Insurance Plan unless such member shall have filed with the Company on or after November 1, 1982, a written designation of a different beneficiary or beneficiaries.... Any designation of beneficiary under the Plan shall be controlling over any testamentary or other disposition....

R.10, Ex. 1 at 50, p XXX. ¹

The decedent never executed a beneficiary clause to designate the person he wanted to be the recipient of the SSIP assets upon his death. However, in 1963, he had designated Allen David Pithie, his son, as the beneficiary of the proceeds from his life insurance policy with a group carrier for Ford. R.5, Ex. H.

The decedent executed his will on October 4, 1984 and died on October 25, 1984. The will, inter alia, provided that the residue of the decedent's estate be distributed in the following manner: three-fourths of the residue to the decedent's sister, if she survives, and if not, to the decedent's brother-in-law, and if neither of them survives, to the decedent's niece; and one-fourth of the residue to the decedent's son, if he survives the decedent, and, if not, then to the same persons receiving the three-fourths share. R.5, Ex. D. The decedent intended that the SSIP assets be included as part of the estate. Affidavit of Lawrence M. Simkin, R.4, Ex. B p 5. The issue presented in this case is whether the SSIP assets pass with the residue of the decedent's estate under the terms of his will or whether the SSIP assets are distributed to the designated beneficiary of his life insurance policy in accordance with the terms of the employee pension plan.

II The District Court Opinion

The district court held that the provisions under the employee pension plan for the designation of beneficiaries preempted the state testamentary transfer law and accordingly granted the appellees' motion for summary judgment. The court stated that "[c]learly, a state law which would change the beneficiary designated by the terms of an employee benefit plan is a law relating to the plan and as such would be superseded by ERISA." MacLean v. Ford Motor Co., No. 85-1305-C, mem. op. at 4-5 (S.D.Ill. Oct. 8, 1986); R.16 at 4-5 [hereinafter Mem. op.]. The court further noted that Ford and Manufacturers upheld their fiduciary obligations under ERISA by holding the assets accrued in the plan for the beneficiary designated by the terms of the plan. Finally, the court observed that, if the decedent had desired his SSIP assets to pass through his will, this intent could have been effectuated in accordance with the terms of the plan by filing with Ford a written designation of the intended beneficiaries. As the court noted, "neither the decedent nor his attorney attempted to provide Ford with the written notification required to alter the beneficiary designation provided by the terms of the plan." Id. at 5.

III Analysis

A. The Standard of Review

The district court decided this case on the appellees' motion for summary judgment. As the Supreme Court has stated, "Rule 56(c) [of the Federal Rules of Civil Procedure] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). In reviewing the district court's grant of summary judgment, "all factual inferences must be taken in favor of the opposing party and against the moving party." Vachet v. Central Newspapers, Inc., 816 F.2d 313, 316 (7th Cir.1987). "[W]e must decide whether the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Colan v. Cutler-Hammer, Inc., 812 F.2d 357, 360 (7th Cir.1987) (per curiam). In this case, we agree with the district court that, after drawing all factual inferences in favor of the appellant, no genuine issue of material fact exists and that summary judgment for the appellees was properly granted.

B. The Preemptive Scope of ERISA

It is undisputed in this case that the SSIP is an "employee pension benefit plan" as defined by 29 U.S.C. Sec. 1002(2)(A) and that it is covered by ERISA pursuant to 29 U.S.C. Sec. 1003(a). ERISA defines the term "beneficiary" as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C. Sec. 1002(8). In this case, the terms of the SSIP provided a mechanism for determining who would be the beneficiary. After January 1, 1983, unless the employee filed a written designation of a different beneficiary, the employee would be deemed to have designated as the beneficiary the recipient of his group life insurance policy. The terms of the SSIP further stated that "[a]ny designation of beneficiary under the Plan shall be controlling over any testamentary or other disposition...." R.10, Ex. 1 at 50, p XXX. Therefore, if ERISA preempts state law, it is clear that, according to the terms of the plan, the decedent's son, as the designated beneficiary of the life insurance policy, would be the recipient of the SSIP assets.

In determining whether a state law is preempted by ERISA, " 'the purpose of Congress is the ultimate touchstone.' " Fort Halifax Packing Co. v. Coyne, --- U.S. ----, 107 S.Ct. 2211, 2216, 96 L.Ed.2d 1 (1987) (quoting Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747, 105 S.Ct. 2380, 2393, 85 L.Ed.2d 728 (1985)). The sponsors of ERISA in Congress emphasized the importance of the preemption provisions. As stated by Senator Williams:

It should be stressed that with the narrow exceptions specified in the bill, the substantive and enforcement provisions of the conference substitute are intended to preempt the field for Federal regulations, thus eliminating the threat of conflicting or inconsistent State and local regulation of employee benefit plans. This principle is intended to apply in its broadest sense to all actions of State or local governments, or any instrumentality thereof, which have the force or effect of law.

120 Cong.Rec. 29,933 (1974).

The "statutory complexity" of ERISA's three preemption provisions, Metropolitan Life, 471 U.S. at 740, 105 S.Ct. at 2389, require us to examine them carefully before we determine whether the Indiana law governing testamentary transfers is preempted. Section 514(a) of ERISA, the preemption clause, contains broad preemption language: "Except as provided in subsection (b) of this section [the saving clause], the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...." 29 U.S.C. Sec. 1144(a). Another provision, section 514(b)(2)(A) of ERISA, the saving clause, exempts state laws regulating insurance, banking or securities from the preemptive scope of ERISA. Finally, a third preemption provision, the deemer clause, mandates that:

Neither an employee benefit plan ... nor any trust established under such a plan, shall be deemed to be an insurance company or other insurer, bank, trust company, or...