MacInnes v. MacInnes

• Decision Date: 02 April 2004
• Docket Number: Docket No. 241649.
• Citation: 677 N.W.2d 889,260 Mich. App. 280
• Parties: Cheryl A. MacINNES, also known as Cheryl A. Rowley, Plaintiff-Appellee, v. Joe Dee MacINNES, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

677 N.W.2d 889

260 Mich. App. 280

Cheryl A. MacINNES, also known as Cheryl A. Rowley, Plaintiff-Appellee, v. Joe Dee MacINNES, Defendant-Appellant.

Docket No. 241649.

Court of Appeals of Michigan.

Submitted November 12, 2003, at Detroit.

Decided January 8, 2004, at 9:05 a.m.

Released for Publication April 2, 2004.

Gentry Law Offices, P.C. (by Kevin S. Gentry), Brighton, for the plaintiff.

Schmidt, Isgrigg & Anderson (by Russell C. Anderson), Waterford, for the defendant.

Before: FORT HOOD, P.J., and MURPHY and NEFF, JJ.

NEFF, J.

Defendant appeals by delayed leave a postjudgment enforcement order of the trial court in a divorce action directing him to pay to plaintiff $ 95,000 in life insurance proceeds he received upon the death of his former wife, Cheryl Rowley, where she failed to change the beneficiary designation on her life insurance policy after the couple's divorce. The decedent's estate was substituted for the original plaintiff by the court pursuant to MCR 2.202. The court concluded that the provision in the consent judgment of divorce that released all rights of either party to the proceeds of any life insurance policy on the life of the other waived defendant's right to Rowley's life insurance proceeds. We affirm.

I

Defendant and Rowley divorced on November 1, 1995, after a nine-year marriage. The consent judgment of divorce provided "that ... all rights of either party in and to the proceeds of any policy or contract of life insurance ... upon the life of the other in which said party was named or designated as beneficiary ... shall hereupon become and be payable to the estate of the owner of said policy, or such named beneficiary as shall hereafter be affirmatively designated." Rowley died on November 1, 2000. At the time of her death, she participated in a Delphi Automotive Life and Disability Benefits Program administered by Metropolitan Life Insurance Company, an employee welfare benefit plan regulated by the Employee Retirement Income Security Act (ERISA), 29 USC 1001 et seq. The deceased had participated in this program before the couple's divorce and had designated defendant as her beneficiary. She had not changed the beneficiary designation after the divorce and before her death. Metropolitan Life paid the insurance proceeds of approximately $95,000¹ to defendant.² The trial court granted plaintiff's motion to enforce the judgment of divorce and ordered defendant to pay plaintiff an amount equal to the insurance proceeds.

II

The construction and application of a statute involve questions of law. Burba v. Burba (After Remand), 461 Mich. 637, 647, 610 N.W.2d 873 (2000); Atchison v. Atchison, 256 Mich.App. 531, 534-535, 664 N.W.2d 249 (2003). Similarly, the question of what constitutes a waiver is a question of law. Leibel v. Gen. Motors Corp., 250 Mich.App. 229, 240, 646 N.W.2d 179 (2002). A settlement agreement, such as a stipulation and property settlement in a divorce, is construed as a contract. Interpretation of unambiguous and unequivocal contract language is a question of law. Massachusetts Indemnity & Life Ins. Co. v. Thomas, 206 Mich.App. 265, 268, 520 N.W.2d 708 (1994). This Court reviews de novo questions of law. Burba, supra.

III

Defendant argues that he is entitled to the $ 95,000 proceeds from Rowley's life insurance policy because the provisions of ERISA preempt the provision of the divorce judgment, purporting to alter the beneficiary to an insurance plan governed by ERISA, and because the provision in the divorce judgment is not binding as a contract between Rowley and him. Accordingly, he contends, the trial court erred in circumventing the preemption issue and concluding that the terms of the divorce judgment constituted a contract under which defendant waived his rights as a beneficiary.

A. Preemption

Defendant relies principally on Egelhoff v. Egelhoff, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001), in arguing that the life insurance provision in the divorce judgment is preempted by ERISA. We find Egelhoff inapposite to the ultimate issue in this case.

In Egelhoff, the United States Supreme Court held that a state of Washington statute, which provided that the designation of a spouse as the beneficiary of a nonprobate asset is revoked automatically upon divorce, was expressly preempted by ERISA to the extent that it applies to ERISA plans. "ERISA's pre-emption section, 29 USC § 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." Egelhoff, supraat 146, 121 S.Ct. 1322. The Court concluded that the Washington statute "related to" an ERISA plan, i.e., had an impermissible connection with ERISA, because it governed the payment of benefits and it interfered with nationally uniform plan administration—both areas of core ERISA concern. The Court observed that the Washington statute bound "ERISA plan administrators to a particular choice of rules for determining beneficiary status," and, consequently, plan "administrators were required to pay benefits to the beneficiaries chosen by state law, rather than those identified in the plan documents." Id. at 147, 121 S.Ct. 1322. The statute therefore ran "counter to ERISA's commands that a plan shall `specify the basis on which payments are made to and from the plan,' § 1102(b)(4), and that the fiduciary shall administer the plan `in accordance with the documents and instruments governing the plan,' § 1104(a) (1)(D), making payments to a `beneficiary' who is `designated by a participant, or by the terms of [the] plan. § 1002(8)." Egelhoff, supra at 147, 121 S.Ct. 1322.

In finding that the Washington statute was preempted, the Court reasoned that the statute frustrated ERISA's goal of uniform administration because plan administrators must familiarize themselves with state statutes to determine whether the named beneficiary's status was revoked by operation of law. The problem could be exacerbated by choice-of-law issues when an employer was located in one state, the plan participant in another state, and the former spouse in, perhaps, a third state. The Court recognized that all state laws created the potential for a lack of uniformity, but that differing state regulations affecting claim processing and payment of benefits under an ERISA plan were the exact burdens ERISA's preemption was intended to avoid. Id. at 149-150, 121 S.Ct. 1322.

We find the Egelhoff analysis inapposite because in this case the ultimate issue is not whether a state statute is preempted. To the extent that defendant contends that the provision in the divorce judgment is indirectly preempted because MCL 552.101(2) and (3) require that all divorce judgments contain a provision determining the rights of the divorcing spouse to the proceeds of any life insurance policy owned by the other spouse, we disagree.

The circumstances of this case convince us that the issue presented is most appropriately resolved under principles of waiver rather than preemption. See Metropolitan Life Ins. Co. v. Pressley, 82 F.3d 126, 129 (C.A.6, 1996) ("[a]lthough [federal courts of appeal] agree that ERISA preempts state law regarding the designation of beneficiaries, [they] are split concerning the manner in which the beneficiary is then determined"). Under the view taken by the majority of the federal circuits, "[e]ven where ERISA preempts state law with respect to determining beneficiary status under an ERISA-regulated benefits plan, ERISA does not preempt an explicit waiver of interest by a nonparticipant beneficiary of such a plan." Melton v. Melton, 324 F.3d 941, 945 (C.A.7, 2003); see also Silber v. Silber, 99 N.Y.2d 395, 402, 404, 757 N.Y.S.2d 227, 786 N.E.2d 1263 (2003); Pressley, supra. We concur with the majority view and resolve this case accordingly.³

B. Waiver

A majority of federal circuit courts of appeal have concluded that waivers of beneficiary rights are possible under ERISA-governed plans.⁴Silber, supra at 402, 757 N.Y.S.2d 227,786 N.E.2d 1263. The majority view reasons that, because "ERISA is silent on the issue of what constitutes a valid waiver of interest," the courts must turn to federal common law and state law to fill the gap. Melton, supra at 945; see also Silber, supra at 404, 757 N.Y.S.2d 227,786 N.E.2d 1263. Circuits following the majority view have examined whether there is proof of a specific termination of the rights in question or, stated differently, whether a waiver by a designated beneficiary of an ERISA-regulated benefits plan was explicit, voluntary, and made in good faith. Melton, supra at 945." Essentially, when we are evaluating whether the waiver is effective in a given case, we are more concerned with whether a reasonable person would have understood that she was waiving her interest in the proceeds or benefits in question than with any magic language contained in the waiver itself." Id. at 945-946, citing,e.g., Clift v. Clift, 210 F.3d 268, 271 (C.A.5, 2000). Michigan courts have defined "waiver" as the voluntary and intentional relinquishment of a known right. Roberts v. Mecosta Co. Gen. Hosp., 466 Mich. 57, 69, 642 N.W.2d 663 (2002); People v. Carines, 460 Mich. 750, 762 n. 7, 597 N.W.2d 130 (1999).

In this case, the provision at issue in the divorce judgment stated:

LIFE INSURANCE

It is further ordered and adjudged, that except as otherwise provided, all rights of either party in and to the proceeds of any policy or contract of life insurance, endowment, or annuity upon the life of the other in which said party was named or designated as beneficiary, or to which said party became entitled by assignment or change of beneficiary during the marriage or in anticipation thereof, whether such contract or policy was heretofore or shall hereafter be written or become effective, shall hereupon become and be payable to the estate of the owner of said policy, or such named beneficiary as shall hereafter be

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