Mendez-Bellido v. BD. OF TR. OF DIV. 1181, ATU

• Decision Date: 30 March 1989
• Docket Number: No. 87 CV 3000.,87 CV 3000.
• Citation: 709 F. Supp. 329
• Parties: Minerva MENDEZ-BELLIDO, as mother and natural guardian of Cynthia Mendez, an infant over the age of fourteen years, to wit: seventeen years of age, Janie Mendez, an infant under the age of fourteen years, to wit: eleven years of age and Jessica Mendez, an infant under the age of fourteen years, to wit: seven years of age, Plaintiffs, v. BOARD OF TRUSTEES OF DIVISION 1181, A.T.U. NEW YORK EMPLOYEES PENSION FUND AND PLAN and Edith Abreu Mendez, Defendants.
• Court: U.S. District Court — Eastern District of New York

709 F. Supp. 329

Minerva MENDEZ-BELLIDO, as mother and natural guardian of Cynthia Mendez, an infant over the age of fourteen years, to wit: seventeen years of age, Janie Mendez, an infant under the age of fourteen years, to wit: eleven years of age and Jessica Mendez, an infant under the age of fourteen years, to wit: seven years of age, Plaintiffs, v. BOARD OF TRUSTEES OF DIVISION 1181, A.T.U. NEW YORK EMPLOYEES PENSION FUND AND PLAN and Edith Abreu Mendez, Defendants.

No. 87 CV 3000.

United States District Court, E.D. New York.

March 30, 1989.

Martin S. Friedman, Charles Berkman, Brooklyn, N.Y., for plaintiffs.

Joy M. Holtz, Wilfred L. Davis & Stephen Davis, P.C., New York City, for defendants.

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

Defendant, Board of Trustees of Division 1181, A.T.U. New York Employees Pension Fund and Plan ("the Pension Fund"), moves pursuant to Fed.R.Civ.P. 56 for summary judgment. Plaintiff, Minerva Mendez-Bellido, on behalf of her children ("the infant plaintiffs"), also moves for summary judgment against defendant Edith Abreu Mendez ("Abreu"). For the reason set forth below, the Pension Fund's motion is denied and plaintiff's motion is granted.¹

FACTS

On September 17, 1985 Carlos Mendez was murdered. On December 15, 1986, defendant Abreu pleaded guilty to an indictment charging her with first degree manslaughter and was subsequently sentenced to a two-to-six-year term of imprisonment. Abreu was the second wife of the decedent.

At the time of his death, Carlos Mendez was vested in his rights to a pension administered by the Pension Fund with payments to commence on December 1, 1999, the first month following his 55th birthday. The Pension Fund is established pursuant to the Labor Management Relations Act of 1947, 29 U.S.C. § 186(c)(5), and is an employee benefit fund within the meaning of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.

On December 22, 1986, plaintiff, Carlos Mendez's first wife, made a claim on behalf of her children for the death benefits provided for in the pension plan.² Plaintiff's claim was rejected on the ground that the Trust Agreement, which was established pursuant to collective bargaining agreements, required that a qualified preretirement joint and survivor's annuity be paid to the decedent's surviving spouse. The Appeal Board of the Pension Fund subsequently affirmed that determination.

Plaintiff commenced this action in Supreme Court, Kings County, seeking to declare defendant Abreu disqualified from receiving benefits from the pension plan and an adjudication that plaintiffs share equally the plan benefits. The Pension Fund removed the action to this Court, and now moves for summary judgment on the ground that ERISA preempts any state law that would operate to divest defendant Abreu's right to the pension plan benefits. Plaintiff moves for summary judgment against defendant Abreu alleging that as a matter of New York law and public policy, Abreu cannot enjoy the benefits derived from the pension.

DISCUSSION

There is no dispute that New York law forbids one who kills another to take through intestacy or under the victim's will. See Riggs v. Palmer, 115 N.Y. 506, 22 N.E. 188 (1889). The prohibition holds true even when the would-be beneficiary is convicted of second degree manslaughter — a reckless but non-intentional killing. See Matter of Wells, 76 Misc.2d 458, 350 N.Y.S.2d 114, 119 (Surr.Ct.Nassau Co. 1973), aff'd without opinion, 45 A.D.2d 993, 359 N.Y.S.2d 872 (2d Dep't 1974).

The pension plan at issue is subject to ERISA's requirement for joint and survivor annuity and preretirement survivor annuity. See 29 U.S.C. § 1055. Section 205(a)(2) of ERISA provides that "each pension plan ... shall provide that ... in the case of a vested participant who dies before the annuity starting date and who has a surviving spouse, a qualified preretirement survivor annuity shall be provided to the surviving spouse of such participant." Id. § 1055(a)(2). In furtherance of this requirement, the plan provides:

Effective August 23, 1984, if a married participant who has been married to his spouse for at least one year dies and has at least one (1) hour of employment or paid service on or after August 23, 1984 with sufficient years of credited service for a pension:

(1) who has not attained age 55 then, at such time as he should have met the age requirement, his surviving spouse shall be entitled to receive a joint and survivor benefit payable as of the first of the month following the month in which the participant would have attained age 55, based upon the benefit rate in effect at the time of participant's demise. The benefit amount the spouse will receive shall be 50% of the pension the participant would have been entitled to receive upon attainment of age 55 based upon the benefit rate in effect at the time of participant's demise.

Article V, § 5(b)(1).

In order to determine whether defendant Abreu can benefit from the pension plan, the Court must determine whether ERISA preempts New York law prohibiting a killer from profiting from her crime.

Section 514(a) provides that ERISA "shall supersede any and all state laws insofar as they may now or hereinafter relate to any employee benefit plan" covered by the Act. 29 U.S.C. § 1144(a). Although § 514(b)(2), which contains the "saving clause" and the "deemer clause", creates exceptions to the preemption rule, the exceptions are inapplicable to this case. The Court thus focuses on whether the state law "relates to" an employee benefit plan.

The words "relate to" must be interpreted broadly, Shaw v. Delta Airlines Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983), to effectuate Congress' purpose of "establishing pension plan regulation as exclusively a federal concern." Id. at 98, 103 S.Ct. at 2900. This congressional mandate, however, does not reach all state laws. Indeed, as the Shaw Court points out, "some states actions may affect employee benefit plans in too tenuous, remote, or peripheral manner to warrant a finding that the law `relates to' the plan." Id. at 100 n. 21, 103 S.Ct. at 2901 n. 21.

There is no hard and fast rule for determining whether a state law "relates to" and is therefore preempted by ERISA, or is "too remote" and can therefore coexist with the federal scheme. The Second Circuit in Aetna Life Insurance Co. v. Borges, 869 F.2d 142 (2d Cir.1989), however, has recently provided some guidance. After reviewing the relevant case law, the Borges Court made the following analysis:

we find that laws that have been ruled preempted are those that provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically to ERISA plans and apply solely to them, or interfere with the calculation of benefits owed to an employee. Those that have not been preempted are laws of general application — often traditional exercises of state power or regulatory authority — whose effect on ERISA is incidental.

Id. at 146.

Using this framework, the Court must conclude that a state law prohibiting a killer from profiting from her crime is not preempted by ERISA. This common law rule is rooted in public policy and has broad application to insurance policies, wills and intestacy. The application of this rule to pension plans governed by ERISA will not affect the determination of an employee's eligibility for benefits, compare Gilbert v. Burlington Industries Inc., 765 F.2d 320, 327 (2d Cir.1985) (state severance law preempted where it would determine whether benefits were to be paid), aff'd, 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 558 (1986), nor will it impact on the method of calculating the amount of benefits due. See Mackey v. Lanier Collections Agency & Service, Inc., ___ U.S. ___, 108 S.Ct. 2182, 2185, 100 L.Ed.2d 836 (1988) (state garnishment law that distinguishes between ERISA plans and non-ERISA plans preempted); Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 524, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981) (preempting state law because it eliminated a method of calculating benefits otherwise permitted by ERISA); Rebaldo v. Cuomo, 749 F.2d 133, 138-39 (2d Cir.1984) (state law upheld because it did not affect the structure, administration or type of benefits provided by ERISA), cert. denied, 472 U.S. 1008, 105 S.Ct. 2702, 86 L.Ed.2d 718 (1985).

The Pension Fund nevertheless argues that MacLean v. Ford Motor Co., 831 F.2d 723 (7th Cir.1987) mandates a contrary result. In MacLean, the executor of an employee's estate brought an action to collect the accumulated benefits from the employee's Savings and Stock Investment Plan ("SSIP"), an employee pension plan governed by ERISA. On a motion for summary judgment, the executor argued that the SSIP benefits should be distributed in accordance with the employee's will rather than to the SSIP designated beneficiary. The Seventh Circuit held that ERISA preempted state testamentary law. In so concluding, the MacLean court found that state testamentary law "interfered with the administration of the SSIP and violated its terms" since the SSIP provided "a valid method for determining the beneficiary." Id. at 728. The court also discussed the havoc that would result if state testamentary law controlled since each state has different laws regarding testamentary transfers. Id. It is on the latter point that the Court finds MacLean distinguishable. Unlike state testamentary transfer laws, state laws prohibiting murderers from receiving death benefits are relatively uniform.³ Thus, there is little threat of creating a "patchwork scheme of regulation." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 2217, 96 L.Ed.2d 1 (1987).

Moreover, it appears that federal law is in accord. In Ridgway v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 70 L.Ed.2d 39 (1981), the Supreme Court considered the effect of a state constructive trust on the proceeds of an insurance...