Baldauf v. Vt. State Treasurer

• Decision Date: 30 April 2021
• Docket Number: No. 20-168,20-168
• Citation: 255 A.3d 731
• Parties: Becky A. BALDAUF and Estate of Ronald Baldauf v. VERMONT STATE TREASURER et al.
• Court: Vermont Supreme Court

255 A.3d 731

Becky A. BALDAUF and Estate of Ronald Baldauf

v.VERMONT STATE TREASURER et al.

No. 20-168

Supreme Court of Vermont.

October Term, 2020

April 30, 2021

Reargument Denied June 2, 2021

Deborah T. Bucknam of Bucknam Law PC, Walden, for Plaintiffs-Appellants.

Thomas J. Donovan, Jr., Attorney General, and Timothy M. Duggan and Justin E. Kolber, Assistant Attorneys General, Montpelier, for Defendant-Appellee.

PRESENT: Reiber, C.J., Robinson, Eaton, Carroll and Cohen, JJ.

CARROLL, J.

¶ 1.Wife, in both her personal capacity and as administrator of her deceased husband's estate, appeals the superior court's order dismissing her claims against the Vermont State Treasurer and the Vermont State Employees’ Retirement System (VSERS)(collectively, the State).Wife argues that she is entitled to receive a retirement allowance on account of her husband's death while in active service under 3 V.S.A. § 465.She also argues that the State failed to adequately inform husband about his retirement allowance before his death, and accordingly, husband's estate is entitled to relief under breach of contract, breach of fiduciary duty, and negligent misrepresentation theories.We conclude that wife failed to state claims for which relief can be granted and affirm.

¶ 2.The following facts appear on the face of wife's complaint, including external documents incorporated therein.The State hired husband in 2001 and he became a VSERS Group F member at that time.Shortly thereafter, he received a Certificate of Membership with an enclosed beneficiary-designation form.The Certificate stated in part:

We urge you to read the enclosed general information handbook carefully.It explains all the benefits and forms of protection provided by the system.

A form is enclosed for you to designate the beneficiary of your retirement account.Please do not neglect this as your growing account could provide very substantial survivorship protection.If you fail to designate a beneficiary, your retirement account would become part of your estate.Please return the notarized form to the address below.

Husband never designated a dependent beneficiary.

¶ 3.Each year, husband received an annual statement from VSERS.The statement provided general information regarding certain benefits, summarized husband's data in the system, and estimated husband's current benefits in the event of disability, retirement, or death.The statement reflected that husband's primary beneficiary was his estate.A notation to this data explained that "[i]f no designation has been filed, ‘Estate’ is the default designation."In the paragraph discussing the monthly retirement allowance, the statement explained that "[n]o death benefit is payable if your dependent beneficiary is not your named beneficiary."Under "Death," the statement reflected that husband's designated dependent beneficiary would receive "$0.00 a month for life payable from the System."

¶ 4.After seventeen years as a State employee, husband died unexpectedly of a heart attack on his way to work.He was survived by wife and their four children.Wife opened a probate estate and was appointed as the estate's administrator.Because husband failed to designate a dependent beneficiary to receive the retirement allowance, the Retirement Division of the Treasurer's Office directed husband's accumulated contributions to VSERS to be paid to his estate under 3 V.S.A. § 465(b).Wife sought to receive the retirement allowance instead and appealed to the VSERS Board, which affirmed the Retirement Division's decision.¹

¶ 5.Wife then filed suit in Caledonia superior court.She asked for declaratory relief establishing that either she or husband's estate was entitled to the retirement allowance under 3 V.S.A. § 465.Additionally, she brought claims alleging breach of contract, breach of fiduciary duty, and negligent misrepresentation on behalf of husband's estate.²

¶ 6.The superior court granted the State's motion to dismiss wife's complaint.As to the statutory claim, the court found that wife was not personally entitled to the retirement allowance because husband never designated her as a beneficiary, and the estate was not entitled to the benefit because an estate cannot be designated as a dependent beneficiary under 3 V.S.A. § 465.The court concluded that wife lacked standing and therefore dismissed the claim for lack of subject matter jurisdiction.Alternatively, it found that she failed to state a claim for which relief could be granted.As to the breach-of-contract claim, the court found no facts showing that the State breached an employment contract with husband or acted in bad faith.As to the negligent misrepresentation and breach-of-fiduciary-duty claims, the court found that sovereign immunity barred these claims.Accordingly, the court dismissed all of wife's claims.

¶ 7.On appeal, wife argues that 3 V.S.A. § 465 is ambiguous and we should construe the statute to establish that either she or husband's estate is entitled to receive the retirement allowance.She also argues, under multiple common-law theories, that the State failed to adequately inform husband that his benefits had vested and that he had not designated a beneficiary.

¶ 8."We review motions to dismiss de novo."Deutsche Bank v. Pinette, 2016 VT 71, ¶ 9, 202 Vt. 328, 149 A.3d 479.Under Vermont Rule of Civil Procedure 12(b)(6), we"assume that the facts pleaded in the complaint are true and make all reasonable inferences in the plaintiff's favor," and will conclude that a party fails to state a claim "only when it is beyond doubt that there exist no facts or circumstances that would entitle the plaintiff to relief."Montague v. Hundred Acre Homestead, LLC, 2019 VT 16, ¶ 10, 209 Vt. 514, 208 A.3d 609(quotation omitted)(alteration omitted).As discussed below, we conclude that dismissal was appropriate here.³

I.Statutory Interpretation of 3 V.S.A. § 465

¶ 9.We begin with a brief overview of the state retirement plan.VSERS provides retirement benefits for State employees and their beneficiaries.Both employees and the State contribute to the system, and qualifying members receive certain retirement benefits.VSERS is overseen by a Board of Trustees, and the plan is administered under chapter 16 of Title 3 of the Vermont Statutes Annotated.VSERS holds all funds in trust and is required to manage the plan for the exclusive benefit of members and their beneficiaries in accordance with federal law.3 V.S.A. §§ 456,472a.

¶ 10.Chapter 16 divides State employees into membership groups based on their employment and the date at which they became a member of the system.Seeid.§ 455(a)(11)(defining group membership).Group F is the largest membership group and includes any employee who became a member of the system on or after January 1, 1991.⁴Id.§ 455(a)(11)(E).Once a Group F member completes a certain number of years of service and retires, the member is eligible to receive a retirement allowance.Id.§ 459.Group F members may select a dependent beneficiary to receive the retirement allowance if the member dies prior to retirement.Id.§ 465(c).

¶ 11.This case asks us to decide whether a spouse of a Group F member is entitled to receive a retirement allowance under § 465 if the member did not designate a dependent beneficiary or, alternatively, if the member's estate can receive the allowance as a beneficiary by default.In construing a statute, our goal is to effectuate the intent of the Legislature, and we look first to the plain meaning of the language used.Northfield Sch. Bd. v. Wash. S. Educ. Ass'n, 2019 VT 26, ¶ 13, 210 Vt. 15, 210 A.3d 460.

¶ 12.The statute provides, in relevant part:

(b)(1) Upon the death of a member in service who has not reached his or her normal retirement date and who has not completed 10 years of creditable service ... the member's accumulated contributions shall be paid to such person as he or she shall have designated for such purpose in a writing duly acknowledged and filed with the Board.In the absence of a written designation of beneficiary or in the event the designated beneficiary is deceased, the return of accumulated contributions with interest payable as a result of the death of the member prior to retirement shall be payable [to the member's estate or certain other parties, depending on whether there is an open estate and the value of the account.]

....

(c) If a Group A, Group D, or Group F member dies in service after becoming eligible for early retirement or after completing 10 years of creditable service, a retirement allowance will be payable to the member's designated dependent beneficiary during his or her life.If the designated dependent beneficiary so elects, however, the return of the member's accumulated contributions shall be made in lieu thereof.

(d) If a Group C member dies in service after reaching his or her normal retirement date or after completing 10 years of creditable service, a retirement allowance will be payable to ... [listing individuals who receive retirement allowance by default, beginning with dependent spouse].

(e) Unless the designated dependent beneficiary elects to receive payment of a deceased member's accumulated contributions as provided under subsection (c) of this section, the retirement allowance payable to the designated dependent beneficiary of a deceased Group A, Group D, or Group F member under this section shall be equal to ... [calculating benefit].If the deceased member has no eligible dependent beneficiary, the member's accumulated contributions shall be payable in accordance with the provisions of subsection (b) of this section.

3 V.S.A. § 465(b) - (e).

¶ 13.Wife argues that § 465 is ambiguous because the statute does not define the terms "designated,""dependent," or "eligible."She urges us to construe § 465(e) to mean that a Group F member's accumulated contributions are paid out in place of the retirement allowance only if the member has no dependent...