Christopoulos v. Trout

• Decision Date: 24 September 2018
• Docket Number: Case No. 15 CV 3466
• Citation: 343 F.Supp.3d 812
• Parties: Joanna CHRISTOPOULOS, as Legal Guardian and Next Friend of D. Wertz and P. Wertz, Plaintiff, v. Linda TROUT et al., Third-Party Defendants.
• Court: U.S. District Court — Northern District of Illinois

343 F.Supp.3d 812

Joanna CHRISTOPOULOS, as Legal Guardian and Next Friend of D. Wertz and P. Wertz, Plaintiff,

v.Linda TROUT et al., Third-Party Defendants.

Case No. 15 CV 3466

United States District Court, N.D. Illinois, Eastern Division.

Signed September 24, 2018

Graham B. Schmidt, Lincoln Law Partners, Chicago, IL, for Plaintiff.

Thomas George DiCianni, Matthew T. DiCianni, Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., Chicago, IL, for Third-Party Defendants.

MEMORANDUM OPINION AND ORDER

Joan B. Gottschall, United States District Judge

This case involves a dispute between two groups of individuals over the proceeds of a group life insurance policy covering Howard Wertz ("Wertz"), who passed away on March 8, 2015. See Resp. to Pl.'s SOF ¶¶ 1–2, 8, 15, ECF. No. 76. Wertz had two minor children, P. Wertz and Dionysius Wertz, who has since turned 18. Id. ¶¶ 4, 5, 9–11. Acting as their next friend, Joanna Christopoulos ("Christopoulos"), their mother, brought this action, shortly after Wertz's death, in the Circuit Court of Cook County against the company that issued the policy, Prudential Insurance Company of America ("Prudential"). Prudential removed the suit to this court and, due to the existence of competing claims, deposited (interpleaded) the proceeds in the court's registry, so the court could settle the dispute. See ECF Nos. 36, 38. The case was stayed pending related litigation in state court. That litigation has concluded.¹ Wertz v. Christopoulos , 2017 IL App 160560-U, appeal denied 2018 IL 122880, 94 N.E.3d 639 (Ill. App. Ct. Jan. 8, 2018).

Christopoulos moves for summary judgment. She asks the court to find that Wertz's children are entitled to the proceeds and to impose a constructive trust on 50% of them for P. Wertz's benefit. A group of nineteen claimants, aligned here as third-party plaintiffs and referred to as "named beneficiaries," oppose the motion and argue in the alternative that the court should defer the motion's consideration until they have had an opportunity to conduct discovery on their equitable defense of laches.

I. Background

The facts are undisputed, though the parties disagree about the legal effect of two orders entered by the state court in divorce proceedings. See Resp. to Pl.'s SOF ¶ 22 (sole disputed fact as to "characterization" of state court's order). In 2013, two years before he died, Wertz began divorce proceedings against Christopoulos in state court. Id. ¶ 12. The state court did not enter an order of marriage dissolution before Wertz's death. Wertz v. Christopoulos , 2017 IL App 160560-U, ¶¶ 13–14.

On November 2, 2014, Wertz submitted a designation of beneficiary form to Prudential. See id. ¶ 13. The form named neither Christopoulos nor Wertz's children as beneficiaries. See Group Universal Life Beneficiary Designation Form & attach., ECF No. 19-1. Rather, Wertz apportioned various percentages of the proceeds to people identified as his nieces and nephews (1% each), siblings (7% each), and the remaining 52% to Linda Trout ("Trout"), one of Wertz's sisters. See id. attach. In sum, Trout stands to receive 59% of the proceeds under the designation form. See id.

About a month later, in December 2014, Christopoulos filed an emergency petition in the divorce proceedings seeking an order requiring Wertz to designate his children as the policy's beneficiaries. Wertz , 2017 IL App 160560-U ¶ 11. The state court entered a handwritten "Domestic Relations Order" on December 16, 2014, providing, among other things, that "the children of the parties, D. Wertz, and P. Wertz, shall be designated as irrevocable beneficiaries, share and share alike, until further order of court without prejudice." Resp. to Pl.'s SOF ¶ 14 (quoting ECF No. 19-3 at 3). Wertz did not comply before his death in March 2015. See id. ¶¶ 14–15; Wertz , 2017 IL App 160560-U ¶ 12. The state court dismissed the divorce proceedings twice after Wertz's death—once due to his death in June 2015 and again for want of prosecution in September 2015. Wertz , 2017 IL App 160560-U ¶ 14.

In October 2015, Christopoulos filed in the divorce proceedings a motion to clarify nunc pro tunc the December 2014 order. Id. ¶ 15. The motion recited that "[t]he Plan Administrator of Wertz's life insurance policy may be governed by the Employee Retirement Income Security Act of 1974 (ERISA) and if so, there would be a question as to whether the December 16, 2014 order is a ‘qualified domestic relations order’ (QDRO) under ERISA, and QDRO status is necessary for Prudential to comply with the December 16, 2014 order." Id. The motion further stated that "in order to effectuate the interest of the December 16, 2014 order, the order must be clarified nunc pro tunc to provide that it is a QDRO as defined under ERISA." Id. Trout objected that the state trial court lacked jurisdiction to enter such an order. See ECF No. 53 Ex. A at 1 (minutes entered Feb. 2, 2016, noting objection).²

The state court granted Christopoulos' motion on February 2, 2016 and entered a nunc pro tunc order titled "Qualified Domestic Relations Order." See Resp. to Pl.'s SOF ¶ 22. Whether this order qualifies as such an order under ERISA is disputed, so it will be referred to as the "February 2016 order," ECF No. 53 Ex. B. The February 2016 order made stylistic changes to the text of the December 16, 2014, order and added the following:

4. It is intended that this Order constitute a Qualified Domestic Relations Order ("QDRO") as defined in section 414(p) of the Internal Revenue Code of 1986, as amended ("Code"), and section 206(d)(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), so as to provide certain Plan benefits, as hereinafter specified, to an "Alternate Payee" (within the meaning of section 414(p)(8) of the Code and section 206(d)(3)(K) of ERISA). This Order shall be administered and interpreted in conformity with the provisions thereof which shall preempt any provisions of state law inconsistent therewith. No amendment of this Order shall require the Plan to provide any type or form of benefit, or any option, not otherwise provided under the then applicable terms of the Plan.

....7. Effective immediately, One Hundred Percent (100%) of the Participant's policy benefits accrued under the Plan are assigned to Alternate Payees in equal parts, to be paid in accordance with the provisions of the Plan.

Compare ECF No. 53 Ex. B, with ECF No. 19-3.

Trout appealed the February 2016 order. Resp. to Pl.'s SOF ¶ 23. The Illinois appellate court affirmed in an unpublished opinion, 2017 IL App 160560-U ¶ 44 (Ill. App. Ct. Sept. 29, 2017), and the Illinois Supreme Court denied Trout's petition for leave to appeal that decision on January 18, 2018, Resp. to Pl.'s SOF ¶ 26; Wertz v. Christopoulos , No. 122880, ECF No. 70 Ex. 6. Armed with this decision, Christopoulos filed the instant motion for summary judgment.

II. Summary Judgment Standard

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The underlying substantive law governs whether a factual dispute is material: ‘irrelevant or unnecessary’ factual disputes do not preclude summary judgment." Carroll v. Lynch , 698 F.3d 561, 564 (7th Cir. 2012) (quoting Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ). In resolving summary judgment motions, "facts must be viewed in the light most favorable to," and all reasonable inferences from that evidence must be drawn in favor of, "the nonmoving party[–but] only if there is a ‘genuine’ dispute as to those facts." Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) ; Blasius v. Angel Auto., Inc. , 839 F.3d 639, 644 (7th Cir. 2016) (citing Cairel v. Alderden , 821 F.3d 823, 830 (7th Cir. 2016) ).

The party seeking summary judgment has the burden of establishing that there is no genuine dispute as to any material fact. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Modrowski v. Pigatto , 712 F.3d 1166, 1168 (7th Cir. 2013) (explaining that Rule 56"imposes an initial burden of production on the party moving for summary judgment to inform the district court why a trial is not necessary" (citation omitted) ). After "a properly supported motion for summary judgment is made, the adverse party must" go beyond the pleadings and "set forth specific facts showing that there is a genuine issue for trial." Anderson , 477 U.S. at 250, 106 S.Ct. 2505 (quotation omitted); see also Modrowski , 712 F.3d at 1169 (stating party opposing summary judgment "must go beyond the pleadings (e.g. , produce affidavits, depositions, answers to interrogatories, or admissions on file), to demonstrate that there is evidence upon which a jury could properly proceed to find a verdict in her favor") (citations and quotations omitted). Summary judgment is warranted when the nonmoving party cannot establish an essential element of its case on which it will bear the burden of proof at trial. Kidwell v. Eisenhauer , 679 F.3d 957, 964 (7th Cir. 2012).

III. Analysis

At the threshold stands the parties disagreement about whether Illinois or federal law, specifically ERISA, determines who gets the life insurance proceeds. The briefs give the matter surprisingly terse treatment. Christopoulos cites a single case, Travelers Ins. Co. v. Daniels , 667 F.2d 572, 573 (7th Cir. 1981), to support her contention that Illinois law governs. Daniels applied Illinois law in an interpleader action without conducting an extensive, and apparently unnecessary, choice of law analysis.³ See id. The named beneficiaries concede that if the December 2014 and January 2016 orders are...