Critchell v. Critchell

• Decision Date: 10 February 2000
• Docket Number: No. 98-FM-1304.,98-FM-1304.
• Citation: 746 A.2d 282
• Parties: Douglas A. CRITCHELL, Appellant, v. Penelope B. CRITCHELL, Appellee.
• Court: D.C. Court of Appeals

746 A.2d 282

Douglas A. CRITCHELL, Appellant, v. Penelope B. CRITCHELL, Appellee.

No. 98-FM-1304.

District of Columbia Court of Appeals.

Argued December 2, 1999.

Decided February 10, 2000.

Linda J. Ravdin, Washington, DC, for appellant.

Peter R. Sherman, with whom Claudia A. Pott, Washington, DC, was on the brief, for appellee.

Before and TERRY, FARRELL and WASHINGTON, Associate Judges.

WASHINGTON, Associate Judge:

The issue on appeal is whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 832, as amended by the Retirement Equity Act of 1984 (REA), 29 U.S.C. § 1001 et seq., pre-empts state marital property law and proscribes a nonparticipating spouse's waiver of a property interest in her husband's pension at divorce by a validly executed prenuptial agreement. The trial judge ruled that ERISA pre-empted the District of Columbia's marital property law and ordered an equal distribution of the husband's pension fund. For the following reasons, we reverse.

I. FACTUAL SUMMARY

Douglas Critchell was employed by the American Funds Group and at the time of divorce participated in two qualified retirement plans, the Master Retirement Plan and the 401(k) Tax Advantage Plan. Douglas Critchell and Penelope Critchell entered into a prenuptial agreement on August 8, 1986, in anticipation of marriage. The prenuptial agreement provided in pertinent part:

12. Each party shall, during his or her lifetime, keep and retain sole ownership, control and enjoyment of all property, real, personal or mixed, now owned or hereafter solely acquired by him or her, free and clear of any claim by the other, other than as provided herein. No property titled to either party separately shall be considered marital property.

The couple married on August 10, 1986, and separated in December 1995. Penelope Critchell filed a complaint for divorce, alimony, equitable distribution of marital property and other relief. On January 30, 1998, the trial court held that the prenuptial agreement was valid and proceeded to determine the parties' rights and obligations with respect to spousal support and the division of marital property pursuant to the law of the District of Columbia.

Douglas Critchell filed a motion for partial summary judgment arguing that his wife had waived any interest in his separate property, including his qualified retirement plans, because both plans were titled in his name alone. Penelope Critchell responded to the motion for summary judgment by asserting that any waiver of her interest, by the prenuptial agreement, was invalid under ERISA. The trial judge granted summary judgment in favor of Penelope Critchell and ruled that ERISA pre-empted the District of Columbia marital property law permitting the premarital waiver of a former spouse's interest in the participant's pension at the time of divorce.

II. STANDARD OF REVIEW

We review the grant of a motion for summary judgment de novo. Kendrick v. Fox Television, 659 A.2d 814, 818-19 (D.C.1995). In reviewing a trial court order granting a summary judgment motion, we conduct an independent review of the record, and our standard of review is the same as the trial court's standard in considering the motion for summary judgment. Sherman v. District of Columbia, 653 A.2d 866, 869 (D.C.1995).

III. ANALYSIS

The central question in regard to federal pre-emption is whether "state law conflicts with the provisions of ERISA or operates to frustrate its objects." Boggs v. Boggs, 520 U.S. 833, 841, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997).¹ ERISA's general preemption clause, 29 U.S.C. § 1144(a), provides that the Act "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan. . . ." "Initially, the Supreme Court interpreted ERISA's pre-emption statute as creating a `deliberately expansive' preemption of state law." Emard v. Hughes Aircraft Co., 153 F.3d 949, 953 (9th Cir. 1998) (citation omitted). "Recently, `the Court has come to recognize that ERISA pre-emption must have limits when it enters areas traditionally left to state regulation.'" Id. (citations omitted). Domestic relations is an area of law usually governed by state law, and general legislation enacted by Congress rarely attempts to displace the authority of the state in this area. Mansell v. Mansell, 490 U.S. 581, 587, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989). "On the rare occasion when state family law has come into conflict with a federal statute, the United States Supreme Court has limited review under the Supremacy Clause to a determination whether Congress has `positively required by direct enactment' that state law be pre[-]empted." Rahn v. Rahn, 914 P.2d 463, 465 (Colo.Ct.App.1995) (citing Rose v. Rose, 481 U.S. 619, 107 S.Ct. 2029, 95 L.Ed.2d 599 (1987)). Moreover, 29 U.S.C. § 1056(d)(3)(B)(i)(1) of ERISA expressly defers to state domestic relations law to define a spouse's property rights in the event of divorce. Because we conclude that the District of Columbia's marital property law, that recognizes the waiver of a spouse's potential property interest upon divorce pursuant to a valid prenuptial agreement is consistent with ERISA, we need not engage in a traditional pre-emption analysis.

ERISA was passed by Congress as a federal regulatory scheme to govern employee benefit plans by providing standards for the establishment, operation and administration of these plans so as to ensure their financial soundness for employees. 29 U.S.C. § 1001(a). ERISA prohibits the alienation or assignment of benefits because the statute was designed with the main purpose of protecting the interests of plan participants and their beneficiaries by minimizing the dissipation of pension funds. 29 U.S.C. § 1001(b); see also Boggs, 520 U.S. at 845,117 S.Ct. 1754. We are informed by the United States Supreme Court that "ERISA does not confer beneficiary status on . . . [former spouses] by reason of their marital . . . status." Boggs, 520 U.S. at 847,117 S.Ct. 1754. Instead, "ERISA confers beneficiary status on a nonparticipant spouse . . . in only narrow circumstances delineated by its provisions." Id. at 846, 117 S.Ct. 1754. The protections afforded to spouses of plan participants are found in two ERISA provisions: 1) the qualified joint and qualified pre-retirement survivor annuity (survivor annuity); and 2) the qualified domestic relations order (QDRO) proviso, which is exempt from ERISA's anti-alienation provision, 29 U.S.C. § 1056(d)(3)(A), and general pre-emption clause, 29 U.S.C. § 1144(b)(7). Boggs, 520 U.S. at 846,117 S.Ct. 1754. "The QDRO and the surviving spouse annuity provisions define the scope of a nonparticipant spouse's community property interest in pension plans consistent with ERISA." Id. at 850, 117 S.Ct. 1754. In this case, Penelope Critchell is a former wife; therefore, the ERISA surviving spouse annuity and related protections are inapplicable to her.²See id. at 843, 117 S.Ct. 1754 (commenting that "the statutory object of the qualified joint and survivor annuity provisions, along with the rest of [29 U.S.C.] § 1055, is to ensure a stream of income to surviving spouses") (emphasis added).

The plain language of the statute creates a dichotomy between current spouses who are potentially surviving spouses and former spouses. ERISA provides only one mechanism to vindicate the rights of a former spouse at the time of divorce, the QDRO procedure set forth in 29 U.S.C. § 1056(d)(3). Although ERISA is silent on the issue of the validity of a former spouse's waiver of a property interest in a participant's pension benefits by a prenuptial agreement, the statute clearly expresses that the division of marital property upon divorce is subject to state law by the court's entry of a QDRO:

(B)For purposes of this paragraph —

(i) the term "qualified domestic relations order" means a domestic relations order —

(I) which creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan, . . .

(ii) the term "domestic relations order" means any judgment, decree, or order (including the approval of a property settlement agreement) which —

(I) relates to the provision . . . [of] marital property rights to a spouse [or] former spouse . . . and

(II) is made pursuant to a State domestic relations law (including community property law).

29 U.S.C. § 1056(d)(3)(B)(i), (ii). In Boggs, the Court expressed that "the QDRO provisions address the rights of divorced and separated spouses, . . . which are the traditional concern of domestic relations law." 520 U.S. at 849,117 S.Ct. 1754. Here, Congress sought to protect divorcing wives by allowing, but not requiring, state law to circumvent ERISA's anti-alienation election by designating the former spouse as an alternate payee and providing her with an interest in the participant's pension benefits. See Boggs, 520 U.S. at 839,117 S.Ct. 1754. ERISA does not insist that a state court recognize a former wife as an alternate payee to an interest in her spouse's pension, but only yields to the prerogative of state law to do so. Penelope Critchell conflates the status distinctions between surviving or current spouses and former spouses, arguing for example, that the Treas.Regs. § 1.401(a)-20, A-28 (1991), which provide that "[a]n agreement entered into prior to marriage does not satisfy the applicable consent requirements" apply to a spouse at the time of divorce. The treasury regulations proffered by Penelope Critchell specifically reference the consent requirements designated for the waiver of a surviving spouse annuity by a current souse, not the situation presented in this case.

Indeed, case law has articulated that "[a] divorced spouse, unlike a current spouse, is not protected by the explicit terms of the statute," and a divorced spouse may waive benefits without following...