Barnum v. Cohen

• Decision Date: 20 June 1996
• Citation: 644 N.Y.S.2d 828,228 A.D.2d 957
• Parties: Marjorie J. BARNUM, Respondent, v. Georgette COHEN, as Executor of the Estate of Philip G. Barnum, Deceased, and as Trustee of the Testamentary Trust made by the Will of Philip G. Barnum, Appellant, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 828

644 N.Y.S.2d 828

228 A.D.2d 957

Marjorie J. BARNUM, Respondent, v. Georgette COHEN, as Executor of the Estate of Philip G.

Barnum, Deceased, and as Trustee of the

Testamentary Trust made by the Will of

Philip G. Barnum, Appellant,

et al., Defendants.

Supreme Court, Appellate Division,

Third Department.

June 20, 1996.

Drake, Sommers, Loeb, Tarshis & Catania P.C. (Stephen J. Gaba, of counsel), Newburgh, for appellant.

James R. Pawliczek, Florida, for respondent.

Before CARDONA, P.J., MIKOLL, MERCURE, WHITE and SPAIN, JJ.

CARDONA, Presiding Justice.

Appeal (transferred to this court by order of the Appellate Division, Second Department) from that part of an order of the Surrogate's Court of Orange County (Slobod, S.), entered March 31, 1995, which, inter alia, granted plaintiff's cross motion for summary judgment.

Plaintiff seeks a determination of her rights to benefits in a trust and a health and welfare plan, both of which were established for the benefit of members of a union to which her father, Philip G. Barnum (hereinafter decedent), belonged. Named as defendants in the action are the trust, Boilermaker-Blacksmith National Pension Trust, and the plan, Boilermakers National Health and Welfare Plan, as well as the executive administrator of both. ¹ Also named as a defendant is decedent's sister, Georgette Cohen, who is executor and trustee under his will. The pertinent facts are as follows.

Decedent died on October 10, 1992. Prior to his death, decedent executed and filed a pension beneficiary form with the Boilermakers on February 11, 1991 naming plaintiff as the beneficiary under both the plan and the trust. Decedent then executed another designation of beneficiary form dated November 16, 1991 naming his estate as the beneficiary; however, this form was never filed with the Boilermakers. Upon discovering the latter form amongst decedent's possessions, Cohen filed it with the Boilermakers. It was marked as received on October 26, 1992. By letter dated November 6, 1992, plaintiff disputed the validity of the November 16, 1991 beneficiary form. The Boilermakers never replied to plaintiff's claim. Instead they recognized the second form and made payments to Cohen as decedent's executor, prompting plaintiff to commence this action. Following the receipt of responsive pleadings, all sides moved for summary judgment. Surrogate's Court granted judgment in plaintiff's favor. The court also determined that Cohen, as the trustee and executor under decedent's will was not entitled to counsel fees. Cohen appeals. ²

We affirm. Both the plan and the trust were governed by the Federal Employee Retirement Income Security Act of 1974 (see, 29 USC § 1001 et seq.) (hereinafter ERISA). ERISA requires administration of plans within its purview in accordance with the documents governing such plans and a review thereof is based on Federal statutory language and common law (see, 29 USC § 1104[a][1][D]; McMillan v. Parrott, 913 F.2d 310 (6th Cir.)). In developing Federal common law under ERISA, it is sometimes necessary to look to state common law (see, Krishna v. Colgate Palmolive Co., 7 F.3d 11 (2nd Cir.)). The standard of judicial review is whether after a full and fair review by the plans' administrators, their actions were arbitrary and capricious or an abuse of discretion (see, Weaver v. Phoenix Home Life Mut. Ins. Co., 990 F.2d 154, 157-159 (4th Cir.)).

Based upon the above standards and the record before us, Surrogate's Court properly granted summary judgment to plaintiff. We agree with the court that the Boilermakers failed to address plaintiff's claim as required under the terms of both the trust and the plan. The record supports the court's conclusion that the Boilermakers simply "ignored" plaintiff's request for review. Cohen claims for the first time that plaintiff failed to exhaust her administrative remedies and that a remittal to the Boilermakers for a proper administrative decision is required. Even accepting that this contention is properly before us, the Boilermakers' actions in not answering plaintiff's request and paying Cohen were tantamount to a final determination, thereby making remittal unnecessary.

We agree with Surrogate's Court that the Boilermakers' decision to honor the designation set forth in the second beneficiary form dated November 16, 1991 was in contravention of the documents and instruments governing the trust and the plan (see, 29 USC § 1104[a][1][D] ). The trust provided that a participant could designate a beneficiary by "filing such designation" and that the participant had the right to change the designation. The plan stated that "[i]f you wish to change your beneficiary, get another blank card * * * fill it out completely and send it to the Administrative Office". The plan also provided that "[y]ou may change your beneficiary at any time by giving written notice". The life insurance policy issued in accordance with the terms of the plan declared that "[a]ny employee may designate a new beneficiary at any time by filing * * * a written request for such change". This language unquestionably required that a change in beneficiary be filed before it would be effective and, although it does not explicitly necessitate that the change be filed prior to death, the language clearly calls for the participants themselves to effect the filing (see, McMillan v. Parrott, 913 F.2d 310, supra ; Pipe Fitters' Local No. 392 Pension Plan v. Huddle, 549 F.Supp. 359 (S.D.Ohio); see also, Continental Assur. Co. v. Patrick, 157 A.D.2d 1016, 550 N.Y.S.2d 505).

We recognize that a court may look to determine whether there was substantial compliance when a participant does not comply strictly with all the policy provisions (see, Perez v. Metropolitan Life Ins. Co., 820 F.Supp. 640 (D.Puerto Rico); see also, Cable v. Prudential Ins. Co. of Am., 89 A.D.2d 636, 453 N.Y.S.2d 86). Nevertheless, to acknowledge a change through substantial compliance, the evidence must show that the participant definitely intended to change the beneficiary and that the participant did everything possible to effect the change (see, id.).

In this case, even accepting that decedent intended to change beneficiaries by signing the change in beneficiary form in November 1991, he did not do all that was possible to accomplish the change (see, Pipe Fitters' Local No. 392 Pension Plan v....