Metropolitan Life Ins. Co. v. Bigelow

• Decision Date: 07 March 2002
• Docket Number: Docket No. 01-7474.
• Citation: 283 F.3d 436
• Parties: METROPOLITAN LIFE INSURANCE COMPANY and General Electric Company, Plaintiffs-Counter-Defendants-Appellees, v. Tracy BIGELOW and Sherri Bigelow Gallup, Defendants-Counter-Claimants-Cross-Claimants-Appellees, Michael J. Bigelow, Defendant-Cross-Defendant-Counter-Claimant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

283 F.3d 436

METROPOLITAN LIFE INSURANCE COMPANY and General Electric Company, Plaintiffs-Counter-Defendants-Appellees, v. Tracy BIGELOW and Sherri Bigelow Gallup, Defendants-Counter-Claimants-Cross-Claimants-Appellees Michael J. Bigelow, Defendant-Cross-Defendant-Counter-Claimant-Appellant.

Docket No. 01-7474.

United States Court of Appeals, Second Circuit.

Argued December 13, 2001.

Decided March 7, 2002.

COPYRIGHT MATERIAL OMITTED

Chaim Jaffe, Scolaro, Shulman, Cohen, Lawler & Burstein, P.C., Syracuse, NY, for Defendant-Cross-Defendant-Counter-Claimant-Appellant, Michael J. Bigelow.

Robert J. Krzys, Amsterdam, NY, for Defendants-Counter-Claimants-Cross-Claimants-Appellees, Tracy Bigelow and Sherri Bigelow Gallup.

Before: POOLER, SOTOMAYOR, and B.D. PARKER, Circuit Judges.

B.D. PARKER, JR., Circuit Judge.

Plaintiffs Metropolitan Life Insurance Company ("MetLife") and General Electric Company ("GE") brought an interpleader action against defendants Michael J. Bigelow, Tracy Bigelow, and Sherri Bigelow Gallup to determine the proper beneficiary of two employee benefits plans governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). The District Court (Frederick J. Scullin, Jr., Chief Judge) concluded that Tracy Bigelow and Sherri Bigelow Gallup were the proper beneficiaries of the plans and granted their motion for summary judgment. Michael J. Bigelow appealed. We affirm and remand for a determination of interest.

BACKGROUND

Michael J. Bigelow (the "Decedent"), the son of defendant Michael J. Bigelow, was employed at GE until his death on March 11, 1999. The Decedent participated in three ERISA-regulated employee benefits plans: a life insurance plan administered by MetLife, a pension plan administered by GE, and a Savings and Security Plan administered by GE. This dispute involves competing claims to the benefits of the life insurance and pension plans (collectively, the "Plans").¹ The competing claimants are Michael J. Bigelow, the Decedent's father (the "Father"), on one side, and Tracy Bigelow and Sherri Bigelow Gallup the Decedent's daughters (the "Daughters"), on the other.

The Decedent and his then-wife, Karen L. Bigelow, obtained a divorce decree in Supreme Court, Montgomery County, New York on December 17, 1982, and the decree was entered in the Montgomery County Clerk's Office on January 4, 1983. They subsequently reached a settlement agreement distributing their marital property (the "Stipulation"), which was read into the record of the Supreme Court proceeding on January 12, 1983. The Stipulation referred to "a General Electric insurance plan which consists of group life insurance, disability death and insurance for the dependant children," and it provided that "the children of this marriage shall be designated irrevocable beneficiaries and the proceeds of such policies if ever paid will be paid in equal share or to the survivor of them." In the Stipulation, the Decedent also agreed to designate "the children or the surviving child an irrevocable beneficiary" of "any retirement benefits... attached to this G.E. program." It is not disputed that the Daughters are the only children of the Decedent's marriage to Karen L. Bigelow. The Stipulation was incorporated into a state court order and judgment on February 1, 1983 (the "Judgment"). Despite his previous agreement to designate the Daughters irrevocable beneficiaries, in 1991 the Decedent designated the Father as the primary beneficiary on the Plans' documents.

The Decedent died on March 11, 1999, and two days later the Daughters submitted to GE a claim to the life insurance, pension, and Savings and Security benefits. On March 18, 1999, the Father submitted a claim to the life insurance and pension benefits. After receiving the competing claims, neither MetLife nor GE followed the procedures outlined in 29 U.S.C. § 1056(d)(3)(G) and (H).² Instead, MetLife and GE informed the Daughters and the Father that they were unable to make a decision, fearing exposure to double liability if they reached a conclusion that ultimately proved incorrect. MetLife and GE, as stakeholders, then initiated an interpleader action, naming the Daughters and the Father as defendants. In their complaint, GE and MetLife alleged that they were unable to determine to whom the benefits should be paid and that they were "ready, willing and able" to pay them to whichever party the court determined to be the appropriate beneficiary.

After discovery, the Father and the Daughters cross-moved for summary judgment. The District Court concluded that the Daughters were the proper beneficiaries of the Plans and, accordingly, denied the Father's motion and granted the Daughters' cross-motion. Following entry of judgment, the Father appealed.

DISCUSSION

Initially we note that MetLife and GE, as fiduciaries of the Plans, had standing to bring an interpleader action pursuant to Fed.R.Civ.P. 22 and 29 U.S.C. § 1132(a)(3)(B), and that federal subject matter jurisdiction exists under 29 U.S.C. § 1132(e)(1) and 28 U.S.C. § 1331. See Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1033-34 (9th Cir.2000); Metro. Life Ins. Co. v. Marsh, 119 F.3d 415, 418 (6th Cir.1997).

We turn now to the merits of the appeal, where the standard of review is well-established. "On appeal from a grant of summary judgment we review the record de novo to determine whether genuine issues of material fact exist requiring a trial." Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir.2001) (citation omitted). Summary judgment is appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

No material facts are in dispute. Rather, the controversy involves solely statutory interpretation — namely, whether ERISA or state law governs the determination of the proper beneficiaries. If ERISA governs, then the Father, who is the named beneficiary in the Plans' documents, is the proper beneficiary. See 29 U.S.C. § 1144(a) (2000). If ERISA does not apply, or if the state-law Judgment is exempt from ERISA's preemption provision, then the Daughters, who were designated "irrevocable beneficiaries" in the Stipulation, are the proper beneficiaries. See id. § 1144(b)(7).

Generally, ERISA preempts state laws that "relate to" employee benefits plans. 29 U.S.C. § 1144(a). The Supreme Court has held that "a state law relates to an ERISA plan if it has a connection with or reference to such a plan." Egelhoff v. Egelhoff, 532 U.S. 141, 147, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001) (citation and internal quotation marks omitted). To determine whether a state law has a "connection with" an ERISA plan, we look to "the objectives" of ERISA and "to the nature of the effect of the state law on ERISA plans." Id. (citation and internal quotation marks omitted). State laws governing the designation of plan beneficiaries, such as the law giving effect to the Judgment, "relate to" employee benefits plans and thus are subject to ERISA preemption. Id. at 1327-28; Krishna v. Colgate Palmolive Co., 7 F.3d 11, 14-16 (2d Cir.1993). ERISA, however, creates several exceptions to its general preemption provision, one of which is relevant here: ERISA does not preempt "qualified domestic relations orders (within the meaning of section 1056(d)(3)(B)(i) of this title)...." 29 U.S.C. § 1144(b)(7). This, then, is the nub of the present dispute: if the Judgment is a qualified domestic relations order ("QDRO"), ERISA does not preempt it, and the Daughters are the proper beneficiaries; if, however, the Judgment is not a QDRO, then ERISA preempts, and the Father is the proper beneficiary.³

The concept of the QDRO originated with the Retirement Equity Act (the "REA"), an amendment to ERISA which took effect, for relevant purposes, on January 1, 1985. Pub. L. No. 98-397 § 303(d), 98 Stat. 1426 (1984). Timing is significant because prior to the REA and its QDRO provisions, ERISA preempted state court orders such as the Judgment. Since employment benefits were commonly at issue in state court matrimonial disputes and since ERISA's preemption provision had the unintended effect of disturbing interests and expectations fixed in such proceedings, the REA was designed to give effect to divorce decrees and related state-court orders insofar as they pertained to ERISA-regulated plans. Boggs v. Boggs, 520 U.S. 833, 847, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997) (stating that "one of REA's central purposes ... is to give enhanced protection to the spouse and dependent children in the event of divorce or separation, and in the event of death[,] the surviving spouse").

The REA defines a QDRO as a domestic relations order "which creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan...." 29 U.S.C. § 1056(d)(3)(B)(i)(I) (2000). In order to qualify as a QDRO, a domestic relations order must also meet several other requirements. These include:

(C) A domestic relations order meets the requirements of this subparagraph only if such order clearly specifies —

(i) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order,

(ii) the amount or percentage of the participant's benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined,

(iii) the number of payments or period to which such order applies, and

(iv) each plan to which such order applies.

(D) A domestic relations order meets the requirements of this subparagraph only if such order —

(i) does not require a plan to provide any type or form of benefit, or any option, not otherwise provided...