Metropolitan Life Ins. Co. v. Person

• Decision Date: 03 September 1992
• Docket Number: Civ. A. No. 90-CV-40229-FL.
• Citation: 805 F. Supp. 1411
• Parties: METROPOLITAN LIFE INSURANCE COMPANY, a foreign corporation, Plaintiff, v. Claudetta PERSON, S. Jane Allison, Joyce Slavik, Paul L. Sova, Jr., Paula M. Sova and Shannon R. Sova, Defendants. and S. Jane ALLISON and Paula M. Sova, Defendants and Cross Plaintiffs, v. Claudetta PERSON, Joyce Slavik, Paul Sova, Jr., and Shannon R. Sova, Defendants and Cross Defendants. and S. Jane ALLISON and Paula M. Sova, Defendants and Counter Plaintiffs, v. METROPOLITAN LIFE INSURANCE COMPANY, a Foreign Corporation, Plaintiff and Counter Defendant. and S. Jane ALLISON and Paula M. Sova, Third Party Plaintiffs, v. GENERAL MOTORS CORPORATION, a foreign corporation, Third Party Defendant.
• Court: U.S. District Court — Western District of Michigan

805 F. Supp. 1411

METROPOLITAN LIFE INSURANCE COMPANY, a foreign corporation, Plaintiff, v. Claudetta PERSON, S. Jane Allison, Joyce Slavik, Paul L. Sova, Jr., Paula M. Sova and Shannon R. Sova, Defendants. and S. Jane ALLISON and Paula M. Sova, Defendants and Cross Plaintiffs, v. Claudetta PERSON, Joyce Slavik, Paul Sova, Jr., and Shannon R. Sova, Defendants and Cross Defendants. and S. Jane ALLISON and Paula M. Sova, Defendants and Counter Plaintiffs, v. METROPOLITAN LIFE INSURANCE COMPANY, a Foreign Corporation, Plaintiff and Counter Defendant. and S. Jane ALLISON and Paula M. Sova, Third Party Plaintiffs, v. GENERAL MOTORS CORPORATION, a foreign corporation, Third Party Defendant.

Civ. A. No. 90-CV-40229-FL.

United States District Court, E.D. Michigan, S.D., at Flint.

September 3, 1992.

Richard A. Patterson, Bloomfield Hills, Mich., for Met Life.

Richard J. Behm, Flint, Mich., for plaintiff.

John R. Moynihan, Flint, Mich., for defendants.

Daniel G. Galant, Maurice G. Jenkins, Detroit, Mich., for GM.

MEMORANDUM OPINION AND ORDER

NEWBLATT, District Judge.

This case involves several interesting questions of ERISA law. For reasons discussed, infra, the Court DENIES General Motors' Motion to Dismiss; DENIES Metropolitan Life's Motion for Summary Judgment; and DENIES Claudetta Person, Joyce Slavik, and Paul Sova, Jr.'s Motion for Summary Judgment.

FACTS AND PROCEDURAL HISTORY

Before the Court are three dispositive motions by Cross-Defendants arising from the payment of an employment-issued life insurance policy to a decedent's mother instead of his child, in spite of a state divorce decree requiring the decedent to name the child as beneficiary.

This case has a complex procedural history involving a prior dispute over the proceeds of survivor benefits between Cross-plaintiffs, S. Jane Allison and her child, Paula Sova, with Cross-Defendants Joyce Slavik, a prior ex-wife of the decedent, and her two children. That issue has previously been decided by this Court, See Order of January 2, 1992, and the only issues that remain are those addressed in this Memorandum.¹

Cross-Plaintiff Allison (then S. Jane Sova) and Paul Sova (Decedent) were divorced in Genesee County Circuit Court on July 29, 1983, and the decree included a provision ordering Decedent to name Paula Sova as the beneficiary of his life insurance policy. The condition was included under the heading of "Support" and states:

"Both parties shall forthwith irrevocably designate the within minor child as beneficiary sic of any fringe benefit employer-funded life insurance policies which they may have by virtue of their present or future places of employment and they shall each continue such beneficiary designation for as long as the minor child is subject to support as set forth herein. Further, each party may obtain additional insurance beyond their basic fringe benefit policy and may name anyone as the beneficiary of such additional policy or policies."

Sova Divorce Decree of July 29, 1983, Genesee County Circuit Court.

The only named child in the decree is Paula Melody Sova, born February 7, 1977. The divorce decree gave custody of Paula to her mother and denied Paul Sova unsupervised visitation with his daughter.

Prior to his marriage with Ms. Allison, Decedent had previously married and divorced Joyce Slavik. During the course of that marriage, he fathered a child, Paul Sova, Jr., and Ms. Slavik also gave birth to another child, Shannon Sova, who has been adjudged not to be Decedent's daughter. See Order of January 2, 1992²

At the time of his death, Decedent owned a life insurance policy (Policy) from Met Life under the terms of his union contract with General Motors (GM), his employer from the mid-1970s until his death. Decedent never changed the beneficiary in his policy from his mother, now Claudetta Person (then Jachimovicz). Decedent passed away on September 30, 1989. Allison attended the funeral of her former husband and contacted GM on October 3 or 4, 1989 concerning her daughter, Paula's, interest in the life insurance policy pursuant to the divorce decree. On October 9, 1989, Cross-Defendant Claudetta Person filed a claim with Met Life for the life insurance proceeds. She asked that a portion of the proceeds be sent to Brown Funeral Home to cover the costs of burial for Decedent.

Met Life sent a check to Ms. Person and the funeral home jointly in the amounts of $29,680.55 to Ms. Person and $3,913.06 to Brown Funeral Home on or about October 17, 1989.

At some point between October 4 and October 20, GM contacted Met Life regarding Allison's inquiry. A Met Life memorandum dated October 20 states, "She wanted to know why you paid claim? She was awaiting another divorce decree. Please pull file and call her on Monday." A second Met Life file memorandum dated Monday, October 23, 1989 states, "She told me that she received the divorce decree and it names the minor children as bene. I told her to mail it to me ..." An interoffice memo dated October 26, 1989 from Mike Catera to Carolyn Schmidt, GM Group Life Claims states, "Before we do anything, should I wait for a divorce decree." The response under "Action to be taken" states, "Call TCA unit to verify that kit has been sent, once account is established we can have a hold put on it. Call Joe Tovata in law explain situation and ask the best procedure to follow. I feel we'll have to wait for decree review it and then refer to law...." Cross-Plaintiffs' Exhibit 1.

Cross-Plaintiff Allison states in her affidavit that she was requested by at least one person in GM's Regional Personnel Office in Flint to provide the office with a copy of the Judgment of Divorce, and that she did so upon return from the funeral to her home in Texas. She further states that she made telephone calls during the two week period surrounding Decedent's funeral in early October, 1989, and that she followed up with several telephone calls upon her return to Texas through the spring of 1990.

In January, 1990 Allison received a letter informing her that the life insurance proceeds had been paid to Ms. Person and that Ms. Allison's claim had been denied. Allison made further calls, and she received a second letter dated February 22, 1990 advising her that she had 60 days to file a claim for review. She sent a letter requesting an appeal on or about February 27, 1990, erroneously dated January 27, 1990, requesting an appeal. On April 13, 1990, she sent a follow-up letter to Met Life informing them that her appeal was never heard.

Met Life filed an interpleader action in August, 1990 over survivor benefits, a separate benefit provided by Met Life and GM under Paul Sova's employee contract. Cross-Plaintiffs filed the instant action against Met Life, alleging that Met Life breached a fiduciary duty to Paula Sova by paying the life insurance proceeds to Claudetta Person and Brown Funeral Home. The complaint contended Met Life knew or reasonably should have known that these were not the appropriate beneficiaries or assignees of the policy; failed to withhold payment until they knew for sure who was to receive the proceeds; failed to interplead the funds; failed to stop payment on the check after becoming aware of a controversy; and failed to promptly inform Ms. Allison that they had wrongfully or inappropriately paid the insurance benefits so she could promptly institute suit.

Met Life has filed a motion for summary judgment under Fed.R.Civ.P. 56. Met Life alleges that under ERISA, the claims by Cross-Plaintiffs are preempted; Met Life did not abuse its discretion in approving and paying Cross-Plaintiffs' claims; and Cross-Plaintiffs failed to exhaust administrative remedies.

Cross-Plaintiffs also sued GM, alleging that GM was an agent of Met Life, and that by failing to inform Met Life of Allison's claim to the insurance, and by failing to investigate Allison's claim, GM breached a fiduciary duty to Paula Sova. GM has filed a motion to dismiss under Fed. R.Civ.P. 12(b)(6) making essentially the same arguments as Met Life.

Cross-Plaintiffs also sued Claudetta Person, Decedent's mother, Joyce Slavik, Decedent's other ex-wife, and her children, Paul Sova, Jr. and Shannon Sova, for an accounting of the life insurance proceeds paid to Person by Met Life. Cross-Plaintiffs allege that Person shared the proceeds with Slavik and her children. Cross-Defendants Slavik, Paul Sova, Jr., Shannon R. Sova, and Claudetta Person have filed a motion seeking summary judgment in Cross-Plaintiffs' suit against them.³ They also contend that the proceeds were correctly paid to Ms. Person, and that therefore they owe no accounting to Cross-Plaintiffs.

All parties seek attorney's fees.

LEGAL ANALYSIS

I. Standards of Review

A. GM's Motion to Dismiss

Under a Rule 12(b)(6) motion, the factual allegations of the complaint are taken as true. Zinermon v. Burch, 494 U.S. 113, 117, 110 S.Ct. 975, 979, 108 L.Ed.2d 100 (1990). If as a matter of law, "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations, a claim must be dismissed, without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one." Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 1832, 104 L.Ed.2d 338 (1989) (internal quotation omitted).

B. Met Life's and Person et al's Motions For Summary Judgment

The standard for Met Life's and Person et al's motions is that summary judgment should be granted only when, considered in the light most favorable to the opposing party, no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

II. ERISA Preemption

A. The General Rule and the Retirement Equity Act of 1984

All...