Pardee v. Estate of Pardee

• Decision Date: 31 August 2004
• Docket Number: No. 98,947.,98,947.
• Parties: Betty Schack PARDEE, Plaintiff/Appellant, v. PERSONAL REPRESENTATIVE FOR the ESTATE OF Douglas Debaun PARDEE, Deceased, and Mary Frances Pardee, Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

112 P.3d 308

2005 OK CIV APP 27

Betty Schack PARDEE, Plaintiff/Appellant, v. PERSONAL REPRESENTATIVE FOR the ESTATE OF Douglas Debaun PARDEE, Deceased, and Mary Frances Pardee, Defendants/Appellees.

No. 98,947.

Court of Civil Appeals of Oklahoma, Division No. 2.

August 31, 2004.

Rehearing Denied January 31, 2005.

Gary L. Watts, Gretchen M. Schilling, Riggs, Abney, Neal, Turpen, Orbison & Lewis, Tulsa, OK, for Plaintiff/Appellant.

Ted L. Moore, Broken Arrow, OK, for Defendants/Appellees.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2. Opinion by KEITH RAPP, Judge:

¶ 1 Trial court plaintiff, Betty Schack Pardee, (Plaintiff) appeals the trial court's Order sustaining the summary judgment motion of defendant, Mary Frances Pardee, as personal representative of the Estate of Douglas DeBaun Pardee, and individually, (Defendants) and denying her motion for summary judgment in this breach of contract and constructive trust action. This appeal was assigned to the accelerated docket pursuant to Okla. Sup.Ct. R. 1.36, 12 O.S.2001, ch. 15, app.

BACKGROUND

¶ 2 Plaintiff was married to Douglas DeBaun Pardee, (Pardee) now deceased, in 1968. They divorced on December 6, 1991, pursuant to a Final Decree filed in the Circuit Court of Roanoke County, Virginia. Their Final Decree incorporated a Post-Nuptial Agreement, dated October 2, 1991, (Agreement) wherein Plaintiff and Pardee resolved all matters involving their property rights. The Agreement provided, in part, that Plaintiff was entitled to one-half of Pardee's annuity or retirement plans with his employer, Blue Circle Cement Company, and with Lone Star Company. The Agreement specifically stated:

8. INTANGIBLE PERSONAL PROPERTY:

A. The husband agrees that the wife shall be entitled to one-half of his annuity or retirement plans with Lone Star Company and with Blue Circle Company. Both of these plans make provisions for retirement payments to the husband at the time he reaches the age of 65. The husband agrees to execute any and all documents necessary to insure that the wife obtains a one-half interest in said plans and receives at the time said funds are distributable to the husband one-half of such payments as may be made to the husband thereunder.

....

19. FUTURE COMPLIANCE: Each party does hereby agree that he or she will execute any and all documents necessary to carry forth the intent, express or implied, of this agreement and shall do so in a rapid and timely manner upon request by the other party.

20. GOVERNING LAW: This agreement shall be construed and governed in accordance with the laws of the Commonwealth of Virginia.

¶ 3 Pardee moved to Oklahoma and later married the defendant, Mary Frances Pardee, on December 21, 1991. Pardee and Defendant were married until the time of his death on July 28, 2000.

¶ 4 Pardee began working with Blue Circle Cement on October 15, 1984. He elected early retirement from Blue Circle Cement and retired on July 15, 2000. At the time of his retirement, he was a participant in the Blue Circle Cement Retirement Plan which was administered under the provisions of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA) as amended by the Retirement Equity Act of 1984 (REA). Upon retiring, Pardee elected, with Defendant's requisite consent, the "lump sum payment" rather than the "qualified joint and survivor annuity" under the Blue Circle Cement Retirement Plan.¹ The Plan Administrator paid Pardee the lump sum payment of $189,397.41 on July 27, 2000. The distribution was made to an Individual Retirement Account (I.R.A.) in Pardee's name, with Defendant named as the beneficiary. Pardee did not pay Plaintiff any of the proceeds from the retirement account or the I.R.A. Pardee died from brain cancer on July 28, 2000.

¶ 5 Upon Pardee's death, Defendant collected the retirement funds from Pardee's I.R.A. and moved the funds into an account in her name.

¶ 6 According to Plaintiff, she made a claim for one-half of the retirement funds with Blue Circle Cement, which it denied. Plaintiff then made a demand upon Defendant for payment of these funds, which Defendant declined to do. Plaintiff therefore filed this litigation in an attempt to recover one-half of Pardee's retirement funds from either Defendant and/or Pardee's estate.² Plaintiff alleged in her Petition that Pardee breached their Agreement by withdrawing the retirement funds and failing to deliver one-half of the funds to her. She also alleged certain assets, including the retirement fund proceeds, were transferred to Defendant prior to and after the death of Pardee, that such transfers by Pardee or at his direction were a breach of the Agreement, and the trial court should determine Plaintiff has a constructive trust in these assets.

¶ 7 In her Answer, Defendant denied any breach of the Agreement and also argued Plaintiff failed to perfect her interest in the retirement funds because she did not request that Pardee execute a Qualified Domestic Relations Order (QDRO) or "any and all documents necessary to insure that the wife obtains a one-half interest" in the retirement funds pursuant to the Agreement.

¶ 8 Defendant subsequently filed a summary judgment motion arguing there were no material facts in issue and the trial court should grant summary judgment as a matter of law. Defendant argued the preemption and anti-alienation provisions of ERISA, as amended by the REA, precluded Plaintiff from recovery on her breach of contract action. Defendant also argued Plaintiff's failure to file a QDRO with the Virginia court prevented her from now seeking one-half of the retirement funds pursuant to the Agreement. Furthermore, Defendant argued Defendant's beneficiary interest in the funds held by the plan administrator vested on the date of Pardee's retirement.

¶ 9 In her response to Defendant's summary judgment motion, Plaintiff alleged there were material issues of fact in dispute and Defendant was not entitled to summary judgment as a matter of law. Plaintiff's primary argument was that the retirement plan funds were no longer subject to ERISA protection once the funds were removed from the plan.

¶ 10 Plaintiff filed a motion for summary judgment on January 9, 2003, arguing she was entitled to judgment as a matter of law. Plaintiff argued that once the "funds are removed from a retirement plan that has anti-alienation provisions and is subject to federal preemption of state law, the funds are no longer subject to such provisions or federal preemption." In her second proposition, Plaintiff argued she was entitled to a constructive trust in one-half of the retirement funds held by Defendant.

¶ 11 The trial court entered an order, filed March 31, 2003, sustaining Defendant's motion for summary judgment and denying Plaintiff's motion for summary judgment. The trial court specifically found:

4. That Title 29 U.S.C. § 1056(d) specifically restricts the alienation of "pension plan benefits", but does not mention "welfare plan benefits", whereas, Title 29 U.S.C. § 1144, employs an expanded scope of preemption, stating that ERISA provisions "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan", encompassing both "pension plans" and "benefit plans".

5. That, for any employee benefit plan governed by ERISA, the only permitted exception to alienation permitting a former spouse to secure an interest in plan benefits, whether pension or welfare, is by use of the Qualified Domestic Relations Order (QDRO), pursuant to 29 U.S.C. §§ 1056(d)(3) and 1144(b)(7), allowing the former spouse to be designated as an "alternate payee" with respect to the Participant.

....

7. That the former spouse (Plaintiff), though previously represented by counsel, wholly failed or neglected to "perfect" her interest in, and with respect to the Participant's interest, in the Blue Circle Retirement Plan as Alternate Payee pursuant to the explicit requirements of Title 29 U.S.C. § 1056(d)(3).

8. That, under the laws of the Fourth Circuit Court of Appeals within and for the State of Virginia, as set forth in Hopkins v. AT & T Global Information Solutions Company, 105 F.3d 153 (4th Cir.1997), the surviving spouse's interest in the Participant's retirement plan irrevocably vested in the surviving spouse on the date of the Decedent's retirement, or, in this case, July 15, 2000.

....

11. That the Plaintiff's attempt to establish a constructive trust over those funds now vested in the Surviving Spouse, after payment by the plan fiduciary, would create a diversion of retirement benefits that would be improperly sanctioned by "state law" contrary to the dictates of Boggs v. Boggs, 520 U.S. 833, 117 S.Ct. 1754 (1996), contrary to the case law applicable to the State of Virginia, Metropolitan Life Insurance Company v. Pettit, 164 F.3d 857 (4th Cir., 1998), and contrary to the statutory provisions of ERISA which expressly gave the Plaintiff her sole remedy, and would obstruct the accomplishment of the goals of ERISA rendering the requirement for adherence to those statutes meaningless.

12. That a constructive trust imposed on a plan beneficiary arising from and premised upon a domestic relations agreement, for funds paid by the plan fiduciary, according to the Pettit case, directly "relates to" and affects the distribution of plan benefits of the Blue Circle Cement Employee Benefit Plan, more particularly its even more restricted salaried "Employee Pension Plan", and would constitute a prohibited alternative enforcement mechanism.

13. That the Plaintiff's claim under the settlement agreement is an alternative enforcement mechanism that impacts the relationship of the traditional parties and is exactly the situation Congress sought to avoid by the enactment of ERISA.

Plaintiff appeals.

STANDARD OF REVIEW

¶ 12 Disposition of a case by summary judgment is reviewed by this Court by a de novo rev...