Metropolitan Life Ins. Co. v. Parker, 03-16518.

• Decision Date: 02 February 2006
• Docket Number: No. 03-16620.,No. 03-16518.,03-16518.,03-16620.
• Citation: 436 F.3d 1109
• Parties: METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, Plaintiff, v. Eileen M. PARKER, aka Eileen Marrero, Defendant-Appellant, Anita Pietrofitta; Estate of Scott Parker, by and through its personal representative, Defendants-Appellees, and Zachary Dry, a minor child by and through his natural mother and guardian Lisa Dry, Defendant. Metropolitan Life Insurance Company, a New York corporation, Plaintiff, v. Eileen M. Parker, aka Eileen Marrero, Defendant-Appellee, Anita Pietrofitta, Defendant-Appellant, and Zachary Dry, a minor child by and through his natural mother and guardian Lisa Dry; Estate of Scott Parker, by and through its personal representative, Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

436 F.3d 1109

METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, Plaintiff, v. Eileen M. PARKER, aka Eileen Marrero, Defendant-Appellant, Anita Pietrofitta; Estate of Scott Parker, by and through its personal representative, Defendants-Appellees, and Zachary Dry, a minor child by and through his natural mother and guardian Lisa Dry, Defendant.

Metropolitan Life Insurance Company, a New York corporation, Plaintiff, v. Eileen M. Parker, aka Eileen Marrero, Defendant-Appellee, Anita Pietrofitta, Defendant-Appellant, and Zachary Dry, a minor child by and through his natural mother and guardian Lisa Dry; Estate of Scott Parker, by and through its personal representative, Defendants.

No. 03-16518.

No. 03-16620.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 15, 2005.

Filed February 2, 2006.

Richard M. Waugh, Richard M. Waugh, Ltd., Phoenix, AZ, for defendant-appellant Eileen Marrero.

Candess J. Hunter and Isabel M. Humphrey, Phoenix, AZ, for defendant-appellee/cross-appellant Anita Pietrofitta.

David L. Haga and Jennifer R. Houde, Gallagher & Kennedy, P.A., Phoenix, AZ, for defendant-appellee estate of Scott Parker.

Kevin J. Parker, Snell & Wilmer, Phoenix, AZ, for defendant-appellee Zachary Dry.

Appeal from the United States District Court for the District of Arizona; James A. Teilborg, District Judge, Presiding. D.C. No. CV-01-00881-JAT.

Before: TALLMAN, BYBEE, and BEA, Circuit Judges.

BYBEE, Circuit Judge:

This is a cautionary tale for ERISA administrators. We are met with three claimants to an ERISA-governed life insurance policy held by the decedent, Scott Parker: Anita Pietrofitta, his widow; Eileen Marrero, his ex-wife; and the Estate of Scott Parker, which represents Zachary Dry, a son born to a third woman five months after Parker died. Metropolitan Life Insurance Company ("MetLife") declared the policy proceeds owing but could not identify the proper beneficiary and filed this action in interpleader in the District of Arizona. We narrow the field from three to two and remand to the district court for further findings of fact.

I. BACKGROUND AND PROCEEDINGS

The Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. governs the administration of employer-provided benefit pension plans. Congress passed the Act to protect the interests of the participants in these plans and their designated beneficiaries and to provide employers with uniform guidelines and rules regarding the administration of benefit plans. See 29 U.S.C. §§ 1001(a)-(c), 1001b(a)-(c). The two most basic components of any ERISA plan are the plan administrator and the plan documents. The plan administrator is a fiduciary charged with the duty to administer the benefit plan "in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent [with ERISA]." 29 U.S.C. § 1104(a)(1)(D). The fiduciary is responsible for paying benefits to the "beneficiary," who is a "person designated [1] by a participant, or [2] by the terms of an employee benefit plan." 29 U.S.C. § 1002(8).

Scott Parker worked for Bank of America and participated in the Bank of America Group Benefits Program at the time of his death. Through the program, Parker obtained an insurance policy from MetLife for $120,000 in basic life insurance benefits and $337,000 in additional option benefits, for a total life insurance coverage of $457,000. Bank of America's plan was subject to ERISA.

Parker and Eileen Marrero married in 1981. In 1990, Parker executed a will leaving his entire estate to Marrero, provided that she survived him for longer than four months. On October 11, 1991, Marrero filed a Petition for Dissolution of Marriage in the Superior Court of Maricopa County in Arizona, and Parker accepted service of the petition four days later. Just two weeks later, on October 29, 1991, Parker executed a Beneficiary Designation and Change Form to distribute his ERISA benefits. Under the line to designate the "Primary Beneficiary(ies)," there were five boxes to be filled in: "Name," "Relationship to You," "Relationship Code," "% of Benefits to be Allocated," and "Social Security Number (if available)." The box labeled "Relationship Code" referred to six codes listed at the bottom of the page: "SP-Spouse," "CH-Child(ren)," "PA-Parent," "TR-Trust," "ES-Estate," and "OT-Other." Parker filled in three of the five boxes. On the line for "Name" he wrote "As Indicated in My Will." In the space provided under "Relationship Code" he wrote "ES" for estate. He then allocated 100% of his benefits and left the remaining two boxes—"Relationship to You" and "Social Security Number"—blank. No will was attached to the beneficiary designation form, which Bank of America accepted without objection.

On December 20, 1991, the State of Arizona dissolved Parker and Marrero's marriage pursuant to her petition for dissolution. Eight years later, in 1999, Parker married Anita Pietrofitta. Parker died on July 21, 2000, and as far as the parties can document, failed to revise or alter his 1990 will or his 1991 beneficiary designation form.

In probate proceedings in Arizona, the Maricopa County Superior Court ruled that the testamentary devise under Parker's 1990 will was revoked by operation of Arizona's divorce revocation statute, ARIZ. REV. STAT. § 14-2804. The court then found that, there being no will, Parker died intestate. The court awarded Parker's estate to Pietrofitta. See ARIZ. REV. STAT. § 14-2102(1). A wrinkle appeared when Parker's son from a different relationship was born on December 6, 2000, more than five months after Parker's death. The court amended the order of intestacy and declared Zachary Dry, the recently born son, an heir of Parker's and entitled to one-half of Parker's separate property and all of Parker's undivided one-half community property share.

Although the record is silent on this point, it appears that the ERISA plan administrators at Bank of America had no clue how to distribute Parker's insurance proceeds. MetLife filed this interpleader action in the District of Arizona to determine the proper beneficiary of Parker's life insurance benefits. It named Pietrofitta, Marrero, Dry and other potential claimants as defendants. The district court dismissed MetLife from the action and awarded MetLife attorneys' fees.

Three parties filed summary judgment motions, none of whom disputed the underlying facts of the litigation. The parties disagreed as a matter of law as to whether the plan benefits should be paid to: (1) Marrero under the testamentary devise in Parker's will pursuant to his designation that benefits be paid "As Indicated [by his] Will"; (2) Parker's Estate as indicated by his designation of "ES" or "Estate" under the "Relationship Code" box on the beneficiary designation form; or (3) Pietrofitta as Parker's surviving wife in accordance with the default plan documents.

The district court held that, although Parker wrote "As Indicated in My Will" as the name of the only beneficiary on the beneficiary designation form, that designation is not a person under ERISA because it does not designate an "individual" or one of the statutorily defined beneficiaries in 29 U.S.C. §§ 1002(8)-(9). Since Parker had written "ES" in the "Relationship Code" portion of the beneficiary designation form, however, the district court found that the designation of his estate was consistent with Parker's designation of "As Indicated in My Will." Accordingly, the district court found that "Parker designated his Estate as the beneficiary of the [plan] benefits." The district court also noted that its "finding [was] consistent with ERISA policies because the plan administrator would have to look only at the plan documents—not the Will or state law—in paying the Policy benefits to the designated beneficiary."

Both Marrero and Pietrofitta appeal the decision of the district court.

II. JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction pursuant to the interpleader statute, 28 U.S.C. § 1335; State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 535, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967), and the presence of a federal question, 28 U.S.C. § 1331. We have jurisdiction to review final district court orders, including the denial of Marrero's and Pietrofitta's Motions for Summary Judgment, and the grant of the Estate's Motion for Summary Judgment. See 28 U.S.C. § 1291; Bosley Med. Inst., Inc. v. Kremer, 403 F.3d 672, 675-76 (9th Cir.2005).

We review de novo an order granting summary judgment. Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir.2004). We also review de novo the district court's interpretation of an ERISA insurance policy's language. Shaver v. Operating Eng'rs Local 428 Pension Trust Fund, 332 F.3d 1198, 1201 (9th Cir.2003); Cisneros v. UNUM Life Ins. Co., 134 F.3d 939, 942 (9th Cir.1998). We review the district court's findings of fact for clear error. Mont. Right to Life Ass'n v. Eddleman, 343 F.3d 1085, 1090 (9th Cir.2003).

III. ANALYSIS

We are asked to determine the proper beneficiary of Parker's benefit plan. Under ERISA, a beneficiary is determined in one of two ways: it is designated by the participant or by the terms of an employee benefit plan. The facts of this case involve the unfortunate situation where neither the participant, nor the beneficiary designation form clearly designate the beneficiary. Our task is further complicated by ERISA's silence on how ERISA plan administrators are to determine the proper designee in situations where they are presented with conflicting or ambiguous designations. While ERISA does not specifically address these situations, there are general provisions and directives that guide us in our resolution of the issue.

As in any determination of the award of benefits under any ERISA plan, we begin with an examination of the governing plan documents. ERISA requires a benefit plan to "specify the basis on...