In re Estate of Sauers

• Decision Date: 17 April 2009
• Docket Number: No. 1060 MDA 2007.,1060 MDA 2007.
• Citation: 971 A.2d 1265
• Parties: In re ESTATE OF Paul J. SAUERS, III, Deceased. Appeal of Jodie L. Sauers.
• Court: Pennsylvania Superior Court

971 A.2d 1265

In re ESTATE OF Paul J. SAUERS, III, Deceased Appeal of Jodie L. Sauers.

No. 1060 MDA 2007.

Superior Court of Pennsylvania.

Argued October 23, 2008.

Filed April 17, 2009.

James G. Keenan, York, for appellant.

David A. Mills, York, for appellee.

BEFORE: STEVENS, MUSMANNO, KLEIN, BENDER, BOWES, GANTMAN, SHOGAN, FREEDBERG and CLELAND, JJ.

OPINION BY FREEDBERG, J.:

¶ 1 This matter is before the Court on an appeal from the order entered in the Court of Common Pleas for York County directing Jodie L. Sauers ("Appellant") to surrender all of the life insurance proceeds which she received following the death of her former husband. We affirm.

¶ 2 Pursuant to an employee group benefit plan, effective June 1, 1997, Paul J. Sauers, III, ("Decedent") obtained a $40,000.00 life insurance policy issued by the Hartford Life Insurance Company ("Insurer"). There is no dispute that the insurance policy is part of an employee benefit plan subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. On June 27, 1998, Decedent married Jodie L. Sauers ("Appellant"). On October 13, 1998, Decedent named Appellant as beneficiary and his nephew, Ian D. Rehn ("Nephew"), as contingent beneficiary. On June 11, 2002, Decedent and Appellant divorced. Decedent died on September 19, 2006. He had not changed the designation of Appellant as beneficiary. In accordance with plan documentation, Insurer paid to Appellant $40,000.00 on March 19, 2007.

¶ 3 On September 26, 2006, William F. Sauers ("Administrator") received letters of administration for the estate of Decedent. On February 16, 2007, Administrator filed a petition requesting Appellant to show cause why she should not relinquish all interest and title to the proceeds of Decedent's life insurance policy for the benefit of Nephew. Appellant filed preliminary objections on March 30, 2007. The trial court overruled Appellant's preliminary objections on April 27, 2007. Appellant filed a motion to dismiss on April 25, 2007. On May 16, 2007, the trial court denied Appellant's motion to dismiss and directed Appellant to surrender the life insurance proceeds to Nephew.

¶ 4 Appellant filed a notice of appeal on June 15, 2007. On June 25, 2007, the trial court ordered Appellant to file a statement of matters complained of on appeal. Appellant filed a Pa.R.A.P. 1925(b) statement on July 5, 2007. The trial court filed a Pa.R.A.P. 1925(a) statement on July 16, 2007.

¶ 5 Appellant raises three questions for our consideration: (1) whether ERISA pre-empts 20 Pa.C.S.A. § 6111.2, a beneficiary re-designation statute; (2) whether the Administrator lacked the capacity to bring this suit; and (3) whether the petition brought by the Administrator should have been dismissed for lack of subject matter jurisdiction. We address each question in turn.

¶ 6 Appellant contends that the trial court erred in not concluding that ERISA pre-empts 20 Pa.C.S.A. § 6111.2 which provides:

If a person domiciled in this Commonwealth at the time of his death is divorced from the bonds of matrimony after designating his spouse as beneficiary of a life insurance policy, annuity contract, pension or profit-sharing plan or other contractual arrangement providing for payments to his spouse, any designation in favor of his former spouse which was revocable by him after the divorce shall become ineffective for all purposes and shall be construed as if such former spouse had predeceased him unless it appears from the wording of the designation, a court order or a written contract between the person and such former spouse that the designation was intended to survive the divorce. Unless restrained by court order, no insurance company, pension or profit-sharing plan trustee or other obligor shall be liable for making payments to a former spouse which would have been proper in the absence of this section. Any former spouse to whom payment is made shall be answerable to anyone prejudiced by the payment.

20 Pa.C.S.A. § 6111.2.

¶ 7 This is a question of law subject to plenary review. See C.B. ex rel. R.R.M. v. Com., Dept. of Public Welfare, 567 Pa. 141, 786 A.2d 176, 180 (2001) (noting that "the proper interpretation and interplay of statutes" is a question of law).

¶ 8 Federal pre-emption originates in the Supremacy Clause of the United States Constitution. U.S. Const. Art. VI, cl. 2. "Congress has the undisputed power to pre-empt state law in areas of federal concern." Stone Crushed Partnership v. Kassab Archbold Jackson & O'Brien, 589 Pa. 296, 908 A.2d 875, 880 (2006), citing Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n, 461 U.S. 190, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983). In those areas traditionally regulated by the states, "it should be presumed that Congress did not intend to supersede state authority absent a clear and manifest legislative purpose to the contrary." Stone Crushed Partnership, 908 A.2d at 880. There are three forms of federal pre-emption:

First, state law may be pre-empted where the United States Congress enacts a provision which expressly pre-empts the state enactment. Likewise, preemption may be found where Congress has legislated in a field so comprehensively that it has implicitly expressed an intention to occupy the given field to the exclusion of state law. Finally, a state enactment will be pre-empted where a state law conflicts with a federal law. Such a conflict may be found in two instances, when it is impossible to comply with both federal and state law, or where the state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

Id. at 881 (internal citations omitted). Because the ERISA statute explicitly defines the extent of its pre-emptive power, we are dealing with express pre-emption in this case.

¶ 9 In Egelhoff v. Egelhoff, ex rel. Breiner, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001), the scope of ERISA pre-emption was discussed as follows:

ERISA's pre-emption section, 29 U.S.C. § 1144(a), states that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA. We have observed repeatedly that this broadly worded provision is clearly expansive. But at the same time, we have recognized that the term "relate to" cannot be taken to extend to the furthest stretch of its indeterminacy, or else for all practical purposes pre-emption would never run its course.

We have held that a state law relates to an ERISA plan if it has a connection with or reference to such a plan. Petitioner focuses on the "connection with" part of this inquiry. Acknowledging that "connection with" is scarcely more restrictive than "relate to," we have cautioned against an uncritical literalism that would make pre-emption turn on infinite connections. Instead, to determine whether a state law has the forbidden connection, we look both to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive, as well as to the nature of the effect of the state law on ERISA plans.

Egelhoff, 532 U.S. at 146-147, 121 S.Ct. 1322 (internal citations and quotations omitted).

¶ 10 A principal objective of ERISA is "to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits." Egelhoff at 148, 121 S.Ct. 1322, quoting Fort Halifax Packing Company v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987). ERISA directs fiduciaries to administer a plan "in accordance with the documents and instruments governing the plan." 29 U.S.C. § 1104(a)(1)(D). Any state law which undermines this goal is subject to pre-emption.

¶ 11 In Egelhoff, children from an intestate's first marriage sued intestate's second wife whose marriage to intestate had been dissolved shortly before his death, claiming entitlement to life insurance proceeds and pension plan benefits. Washington had a beneficiary re-designation statute which provided:

If a marriage is dissolved or invalidated, a provision made prior to that event that relates to the payment or transfer at death of the decedent's interest in a nonprobate asset in favor of or granting an interest or power to the decedent's former spouse is revoked. A provision affected by this section must be interpreted, and the nonprobate asset affected passes, as if the former spouse failed to survive the decedent, having died at the time of entry of the decree of dissolution or declaration of invalidity.

Wash. Rev.Code § 11.07.010(2)(a) (1994).

¶ 12 Because the Washington statute required that plan administrators "pay benefits to the beneficiaries chosen by state law, rather than to those identified in the plan documents," the statute implicated an area of core ERISA concern. Egelhoff at 147, 121 S.Ct. 1322. Thus, the Supreme Court found that the state statute ran counter to ERISA's provisions that a plan shall "specify the basis on which payments are made to and from the plan," Id., quoting 29 U.S.C. § 1102(b)(4), and that the plan fiduciary shall administer the plan "in accordance with the documents and instruments governing the plan," Id., quoting 29 U.S.C. § 1104(a)(1)(D), making payments to a beneficiary "designated by a participant or by the terms of the plan." Id., quoting 29 U.S.C. § 1002(8). In addition, the Washington statute interfered with the objective of a nationally uniform plan administration. "Uniformity is impossible, ... if plans are subject to different legal obligations in different states." Id. at 148, 121 S.Ct. 1322.

¶ 13 Unlike the Washington statute, Section 6111.2 ensures that Pennsylvania's re-designation statute has no impact on ERISA plan administrators. Thus, the second sentence of the statute provides: "Unless restrained by court order, no insurance company, pension or profit sharing plan trustee, or other obligor shall be...