Hewitt v. Thrift Sav. Plan

• Decision Date: 04 February 2009
• Docket Number: C.A. No. 2:08-2059-PMD.
• Parties: Steve A. HEWITT, Plaintiff, v. THRIFT SAVING PLAN and Federal Employees Group Life Insurance Program, Defendants.
• Court: U.S. District Court — District of South Carolina

664 F.Supp.2d 529

Steve A. HEWITT, Plaintiff, v. THRIFT SAVING PLAN and Federal Employees Group Life Insurance Program, Defendants.

C.A. No. 2:08-2059-PMD.

United States District Court, D. South Carolina, Charleston Division.

February 4, 2009.

John Christopher Lanning, Brush Law Firm, Charleston, SC, for Plaintiff.

John H. Douglas, U.S. Attorneys Office, Charleston, SC, James Derrick Quattlebaum, Joel M. Bondurant, Jr., Haynsworth Sinkler Boyd, Greenville, SC, for Defendants.

ORDER

PATRICK MICHAEL DUFFY, District Judge.

This matter is before the Court on separate Motions for Summary Judgment filed by Defendant Federal Retirement Thrift Investment Board ("FRTIB") (misidentified by Plaintiff in Complaint and in the caption of this matter as "Thrift Savings Plan") and Defendant Metropolitan Life Insurance Company ("MetLife") (misidentified by Plaintiff in Complaint and in the caption of this matter as "Federal Employees Group Life Insurance Program"). For the foregoing reasons, Defendants' Motions for Summary Judgment are granted.

BACKGROUND

Gairey Woolum ("Decedent") worked as an army recruiter for the Department of the Army stationed in Ohio. While employed by the Army, Decedent was eligible for the Thrift Savings Plan, a retirement plan for certain federal government employees that was designed to allow government employees savings-related benefits very similar to those enjoyed by private sector employees whose employers offer them 401(k) retirement plans.

He also participated in the Federal Employees' Group Life Insurance Plan ("FEGLI"). This was a life insurance plan which provided life insurance benefits for eligible government employees. On January 7, 2000, Decedent signed a Designation of Beneficiary Form naming Helen Ann Woolum as the beneficiary of all his FEGLI benefits.

On December 12, 2006, Plaintiff Steve A. Hewitt ("Plaintiff"), Decedent's grandson, alleges that Decedent signed Designation of Beneficiary forms for both his FRTIB and FEGLI benefits making Plaintiff his sole beneficiary under both plans. Plaintiff further alleges that both of these beneficiary forms were attested to and signed by two disinterested witnesses on that date. Plaintiff alleges that Decedent mailed him copies of both of these forms, and attached to these forms a handwritten note informing Plaintiff that he wished to make Plaintiff his sole beneficiary under both of these plans.

On October 15, 2007, Decedent passed away. Not having been contacted by anyone from the government regarding either set of Decedent's benefits, Plaintiff contacted the FRTIB's call center regarding Decedent's FRTIB benefits, and informed them that he was the Decedent's grandson and requested information regarding Decedent's FRTIB account. He was told that in order to get that information, he would have to first submit a form requesting information along with a copy of the Decedent's death certificate. Later that day, Plaintiff submitted the proper form, and noted in a blank box marked "Additional information" that he "has 100% beneficiary status according to designation of beneficiary form (attached.)," via fax. He also submitted a copy of Form TSP-3, which was the form on which Decedent allegedly attempted to leave Plaintiff all of his FRTIB benefits.

Plaintiff also filed a Claim for Death Benefits with MetLife, who had, pursuant an agreement with the government, been administering Decedent's FEGLI account. Plaintiff provided MetLife with a copy of the Designation of Beneficiary Form that Decedent had mailed him in support of his claim.

However, both MetLife and the FRTIB claim that Decedent never actually submitted the documents himself, and that they did not receive these documents or even learn of their existence until after Decedent had passed away, when Plaintiff submitted them in support of his claim to be the sole beneficiary of both sets of benefits. Both Defendants claim that since the forms were not validly submitted and were not received before Decedent passed away, the rightful beneficiaries of Decedent's benefits under the plans were his children.¹ Accordingly, both Defendants disbursed all due benefits to Decedent's three children, Ms. Robin Hewitt, Mr. David Woolum, and Mr. Gairey Woolum.

Plaintiff filed this suit in the Charleston County Court of Common Pleas on April 10, 2008. On May 30, Defendants removed this action to this Court. On July 15, Defendant FRTIB filed a Motion for Summary Judgment. On August 21, Defendant MetLife filed a Motion for Summary Judgment. On August 22, Plaintiff filed a Response in Opposition to FRTIB's Motion, to which FRTIB filed a Reply on September 9. On September 8, Plaintiff filed a Response in Opposition to MetLife's Motion, to which MetLife filed a Reply on September 15.

STANDARD OF REVIEW

To grant a motion for summary judgment, the court must find that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The judge is not to weigh the evidence but rather to determine if there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All evidence should be viewed in the light most favorable to the non-moving party. See Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 123-24 (4th Cir.1990). "[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate." Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir.1991). Summary judgment is not "a disfavored procedural shortcut," but an important mechanism for weeding out "claims and defenses [that] have no factual bases." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

ANALYSIS

While the underlying facts of Plaintiff's claims against both FRTIB and MetLife are very similar, the rules and regulations governing the conduct of the two Defendants are distinct. Therefore, the Court must consider these as two separate and distinct claims for summary judgment.

I. Plaintiff's Claim against FRTIB

FRTIB is an agency in the executive branch of the United States Government which is responsible for administering the Thrift Savings Plan, for which Decedent was eligible. Decedent had made contributions into his TSP, and thus had accrued substantial benefits. In the event of a TSP members' death, FRTIB procedure is to disburse all accrued funds to the decedent's chosen beneficiary. 5 U.S.C. § 8433. If decedent has not chosen a beneficiary, or if the chosen beneficiary has predeceased the decedent, FRTIB follows statutory rules to determine the beneficiary or beneficiaries of the decedent's TSP. 5 U.S.C. § 8424(d). In this case, since FRTIB claims it had no election of beneficiary form, § 8424(d) dictated that Decedent's three children were the proper beneficiaries of his benefits, and each of his children received one-third of their father's TSP death benefits.

FRTIB's Executive Director has issued a regulation governing the proper procedure for electing a beneficiary for one's TSP benefits. According to this regulation, "[t]o designate a beneficiary of a TSP account, a participant must complete and file a TSP designation of beneficiary form with the TSP record keeper." 5 C.F.R. § 1651.3. The regulation goes on to require that in order to be valid, an election of beneficiary must be "[r]eceived by the TSP record keeper on or before the date of the participant's death" and "[s]igned by the participant and two witnesses." Id. The regulation also explicitly notes that "[a] participant cannot use a will to designate a TSP beneficiary." Id.

The Court will first address Plaintiff's contention that this Court lacks jurisdiction to decide Defendants' Motions because this place properly belongs in state probate court, and therefore is subject to the probate exception to federal jurisdiction. "The law is well settled that federal courts have no jurisdiction over matters within the exclusive jurisdiction of state probate courts." Foster v. Carlin, 200 F.2d 943, 947 (4th Cir.1952) (emphasis added). The Supreme Court of the United States has held that a federal court has no jurisdiction to probate a will or administer an estate. Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946).

As an initial matter, the Court notes that Plaintiff's own activity in pursuing this suit is fatal to his claim that this case presents an exception to federal jurisdiction. Plaintiff himself clearly did not view this as a case which was "within the exclusive jurisdiction of [South Carolina] probate court," since he actually filed the Complaint in the Charleston County Court of Common Pleas, not in the county probate court.

Furthermore, the distribution of TSP benefits is an area over which federal law preempts state law, and South Carolina probate courts would therefore not have exclusive jurisdiction over his claim. As previously noted, 5 C.F.R. § 1651.3 explicitly provides that the only method for designating or changing the beneficiary for TSP benefits is by filling out Form TSP-3, which in turn explicitly instructs those filling it out that in order to be valid, it must be mailed to the TSP record keeper.² If no TSP-3 form is received before the decedent passes away, 5 U.S.C. § 8424(d) mandates that all TSP benefits be disbursed to the spouse; in the event there is no living spouse, 5 U.S.C. § 8424(d) mandates that all TSP benefits be disbursed in equal shares to the children, which they were in this case. Section 8424(d) also notes that "a designation, change, or cancellation of beneficiary in a will or other document not so executed and filed has no force or effect [on the disbursement of TSP benefits]." This point is reiterated by 5 C.F.R. § 1651.3, which says that "[a] participant cannot use a will to designate a TSP beneficiary."

The federal...