LG&E & KU Energy Pension Plan v. Rollins

• Docket Number: Civil Action 3:20-CV-00363-DJH-CHL
• Decision Date: 27 October 2021
• Parties: LG&E AND KU ENERGY PENSION PLAN, et al., Plaintiffs, v. GLORIA JEAN ROLLINS, et al., Defendants.
• Court: U.S. District Court — Western District of Kentucky

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LG&E AND KU ENERGY PENSION PLAN, et al., Plaintiffs, v. GLORIA JEAN ROLLINS, et al., Defendants.

Civil Action No. 3:20-CV-00363-DJH-CHL

United States District Court, W.D. Kentucky, Louisville Division

October 27, 2021

Gloria Rollins, pro se

Annette Harrod, pro se

REPORT AND RECOMMENDATION

Colin H Lindsay, Magistrate Judge United States District Court

Before the Court is a “Motion for a decision to release all Benefits and Pension to the legal spouse” filed by Defendant Gloria Jean Rollins (“Rollins”). (DN 19.) No. response has been filed, and the time to respond has expired. See L.R. 7.2. United States District Judge David J. Hale referred the motion to the undersigned for a report and recommendation. (DN 21.)

I. FINDINGS OF FACT

Plaintiffs LG&E and KU Energy Pension Plan (the “Plan”) LG&E and KU Energy LLC (“LG&E”), and the Employee Benefit Plan Board (collectively “Plaintiffs”) bring this action for declaratory judgment to determine the proper beneficiary of death benefits of Willie James Rollins (the “decedent”). (DN 1.) The decedent was an employee of LG&E and accrued benefits under the Plan throughout his employment. (DN 1, at PageID # 3.) Payment of the accrued benefits was to commence on January 1, 2009, the month following his fifty-fifth birthday. (Id.) The decedent died on December 3, 2003, leaving his accrued benefit to be distributed to the beneficiary or beneficiaries entitled to a death benefit under the Plan, in this case, the decedent's surviving spouse. (DN 24-1, at PageID # 160.)

Around the time of the decedent's passing, Rollins contacted LG&E about claiming her surviving spouse benefits. (DN 14-3, at PageID # 99.) Upon request, Rollins provided her marriage license and the decedent's death certificate. (Id., at PageID # 100.) Rollins asserts that she subsequently received a letter in 2004 stating that her claim was approved, but that she no longer has a copy of the letter. (Id.) Plaintiffs state that in early 2009, Rollins inquired about her surviving spouse benefits, and that LG&E's benefits center responded that she was not entitled to benefits because the decedent's death certificate indicated that he was single at the time of his death. (DN 1, at PageID # 4.) These correspondences have not been filed in the record. On August 1, 2009, Rollins began receiving monthly benefit payments and continued to receive payments through August 2012. (DN 14-1, at PageID # 58.) Plaintiffs claim that these payments were made “due to an administrative error.” (DN 1, at PageID # 4.) On August 27, 2012, LG&E's benefits center sent Rollins a letter notifying her that a review of the Plan revealed that Plan benefits had been paid to her due to an error. (DN 14-1, at PageID # 58.) Specifically, the letter noted that the death certificate Rollins submitted indicated that the decedent was single at the time of his death, and that “the Plan determined that there was to be no pre-retirement survivor benefit payable upon death.” (Id.) LG&E and the Plan thus demanded a repayment of benefits paid with interest in the amount of $2, 981.68. (Id.)

Rollins and the decedent married On November 2, 1980 under a marriage license issued by the Commonwealth of Kentucky. (DN 1-1, at PageID # 11.) On October 11, 1991, Defendant Annette Francis Harrod (“Harrod”) and the decedent married under a marriage license issued by the state of Indiana. (DN 1-2, at PageID # 14.) On May 1, 2020, Plaintiffs brought this action pursuant to 28 U.S.C. § 2201 for declaratory judgment as to the rights of Rollins and Harrod under the Plan. (DN 1.)

II. CONCLUSIONS OF LAW

When adjudicating a dispute about the proper beneficiary for ERISA benefits, ERISA “supplies the rule of law” for making that determination. Metro. Life Ins. Co. v. Pressley, 82 F.3d 126, 129-30 (6th Cir. 1996). See 29 U.S.C. § 1001 et seq. That statutory scheme requires that a plan administrator award benefits “in accordance with the documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D). The Sixth Circuit has interpreted this language as establishing “a clear mandate that plan administrators follow plan documents to determine the designated beneficiary.” Pressley, 82 F.3d at 130 (citing McMillan v. Parrott, 913 F.2d 310, 312 (6th Cir. 1990)). See Union Sec. Ins. Co. v. Blakeley, 636 F.3d 275, 276 (6th Cir. 2011) (emphasizing that ERISA “underscores the primacy of the written plan” documents). Accordingly, to the extent the plan documents provide an answer regarding the proper beneficiary of the pension plan, the Court should rely on those documents to settle the dispute. IBEW Pac. Coast Pension Fund v. Lee, 462 Fed.Appx. 546, 548, 2012 WL 447490, at *2 (6th Cir. 2012) (unreported).

Here, under Section 2.52 of the Plan, “[s]pouse shall mean the legally married spouse of the Participant at the earlier of the Participant's date of death or the date benefits commence to the Participant under the Plan.” (DN 24-1, at PageID # 144.) Because the decedent's date of death precedes the date his benefits commenced, his surviving spouse as defined by the Plan is his “legally married spouse” on the date of his death on December 3, 2003. The validity of competing claims for the status of legal spouse is determined by state law. Lee, 462 Fed.Appx. at 549 (citing DaimlerChrysler Corp. Healthcare Benefits Plan v. Durden, 448 F.3d 918, 922 (6th Cir. 2006). Thus, the undersigned's analysis begins with the question of which state's law applies and ends with a finding of whether Rollins or Harrod was the decedent's legal spouse under that state's law.

A. Choice of Law Analysis

The Plan includes a choice of law provision that provides that, except when superseded by ERISA, it “shall be construed in accordance with the laws of the Commonwealth of Kentucky.” (DN 24-1, at PageID # 184.) In Durden, the Sixth Circuit held that the test set out in Section 187 of the Restatement (Second) of Conflict of Laws (the “Restatement”) applies in determining when an ERISA plan's choice of law provision should be enforced. 448 F.3d at 922. Under Section 187 of the Restatement:

(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.

(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or

(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

Restatement § 187 (1971).

Here, Section 187(1) does not apply, because “the parties to the Plan could not have resolved the issue of which claimant is entitled to [the decedent]'s survivor's benefits by explicit provision in the contract.” Durden, 448 F.3d at 924. Therefore, the choice of law provision will be enforceable under Section 187(2) if neither of the exceptions listed in 187(2)(a) and (b) applies.

The first exception is where “the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice.” Restatement § 187(2)(a). This exception clearly does not apply in this case. LG&E is a Kentucky limited liability company with its principal place of business in the state where it administered the Plan. (DN 1, at PageID # 2.) Both Rollins and Harrod reside in Kentucky, and the decedent died in Kentucky. (Id.; DN 14-1, at PageID # 81.) Therefore, there was a reasonable basis for the Kentucky choice of law provision.

The second exception requires a three-step analysis. Durden, 448 F.3d at 924. First, the undersigned must determine applicable state law but for the choice of law provision. If it's the same as the state selected in choice of law provision, in this case Kentucky, that state's law applies. If not, the undersigned must proceed to step two, which is to determine whether application of Kentucky law would violate any fundamental policy of the other state. If it would not, the choice of law provision prevails, but if it would, the undersigned must proceed to step three. Step three is to determine whether the other state has a materially greater interest than Kentucky in the determination of the issue. If not, the choice of law provision prevails, but is so, the choice of law provision will not be enforced.

Under step one, the undersigned looks to Section 283 of the Restatement to determine which state's law would apply but for the choice of law provision. Lee, 462 Fed.Appx. at 549 n.3 (citing Durden, 448 F.3d at 925). Section 283 provides, in pertinent part, that “[t]he validity of a marriage will be determined by the local law of the state which, with respect to the particular issue, has the most significant relationship to the spouses and the marriage . . . .” Restatement § 283(1). The undersigned finds that Kentucky has the most significant relationship to both marriages and to the decedent, Rollins and Harrod. The decedent and Rollins's marriage was solemnized in Kentucky, where Rollins currently resides and the decedent worked and died. (DN 1, at PageID # 2; DN 14, at PageID # 52; DN 14-1, at PageID # 81.) Although it is a...