Scott v. the Pub. Sch. Ret. System of Mo.
| Decision Date | 24 January 2011 |
| Docket Number | Case No. 09–4241–CV–C–NKL. |
| Parties | Jacqueline L. SCOTT, Jeffery A. Scott, and Jennifer A. Scott, Plaintiffs,v.The PUBLIC SCHOOL RETIREMENT SYSTEM OF MISSOURI, Tina Zubeck, Wayne Wheeler, Donald Cupps, Yvonne Heath, Aaron Zalis, M. Steve Yoakum, Ronda Peterson, Scott Hunt, and Deborah K. Scott, Defendants. |
| Court | U.S. District Court — Western District of Missouri |
OPINION TEXT STARTS HEREWest CodenotesValidity Called into DoubtV.A.M.S. § 169.076(2) Thomas B. Snider, Bandre' Hunt & Snider LLC, Heidi Doerhoff Vollet, Cook, Vetter, Doerhoff & Landwehr, P.C., Jefferson City, MO, for Plaintiffs.Allen Allred, Lawrence C. Friedman, Thompson Coburn, LLP, St. Louis, MO, Kent L. Brown, Kent L. Brown, P.C., Jefferson City, MO, for Defendants.
Plaintiffs bring this action under 42 U.S.C. § 1983, seeking declaratory and equitable relief based on the refusal to pay certain death benefits. The named Defendants are Deborah Scott, the Public School Retirement System of Missouri (“PSRS”), and Tina Zubeck, Wayne Wheeler, Donald Cupps, Yvonne Heath, Scott Hunt, Aaron Zalis, M. Steve Yoakum, and Ronda Peterson (collectively, “the individual PSRS Defendants”). Before the Court are the Motion for Summary Judgment filed by the individual PSRS Defendants [Doc. # 94] and the Motion for Summary Judgment filed by Deborah Scott [Doc. # 100]. For the following reasons, the Court denies both motions.
I. Background1A. The Parties and the Oral Agreement
The individual PSRS Defendants include Tina Zubeck, Wayne Wheeler, Donald Cupps, Yvonne Heath, Aaron Zalis, and M. Steve Yoakum—members or officers of the PSRS Board sued in their official and individual capacities. Individual PSRS Defendant Ronda Peterson, also sued in her official and individual capacity, is the Director of Member Services within the PSRS and is responsible for supervising the entire staff. Plaintiffs allege that PSRS and the individual Defendants named above acted under the color and pretense of the statutes and legal authority of the State of Missouri.
Plaintiff Jacqueline L. Scott was married to James Scott for thirty-four years, beginning in 1971. Their children are Plaintiffs Jeffery A. Scott and Jennifer A. Scott, both adults. Jacqueline and James were both public school teachers.
In 1973, Jacqueline became a member of PSRS, a public school teachers retirement system created by Missouri law. James became a PSRS member in 1987. During their marriage, each spouse was the named beneficiary of the other's PSRS account, with their children Jennifer and Jeffrey as contingent beneficiaries. Jacqueline retired and started collecting PSRS retirement benefits in 2002. When Jacqueline retired, she selected retirement plan Option 2 and named James as her beneficiary. Under Option 2, Jacqueline could not change her designated beneficiary unless James died or Jacqueline remarried and named her new spouse as her survivor beneficiary within ninety days of the remarriage.
In September 2004, James informed Jacqueline of his relationship with Defendant Deborah Scott. In October 2004, James and Jacqueline separated. On October 26, 2004, Jacqueline called PSRS and was told that she could not remove James as her Option 2 beneficiary. Alan Thompson, PSRS General Counsel, provided Jacqueline with a November 3, 2004 affidavit stating that Jacqueline was receiving a monthly benefit of $2,857.31 under Option 2, as opposed to the $2,985.49 she would have received under Option 1. On November 3, 2004, PSRS also provided to Jacqueline a document titled “The Effect of Divorce on PSRS/NTRS Benefits,” which stated:
[I]f an active PSRS/NTRS member has designated his/her spouse or a relative of his/her spouse as the survivor beneficiary of the member's retirement benefits, and the member later obtains a divorce, pursuant to Section 461.051 RSMo., the ex-spouse ... shall automatically be removed as beneficiary as of the date of the divorce by operation of law.
...
[I]f a retired PSRS/NTRS member has listed his/her spouse as the survivor beneficiary of the member's retirement benefits, and then later obtains a divorce, the effect of divorce varies with the type of benefit payment(s) the spouse was scheduled to receive.... Under options 2, 3, or 4, the only circumstance where the ex-spouse can be removed as beneficiary is where the divorce decree provides that the member has sole retention of all rights in the retirement benefit and the member has remarried and the member substitutes the new spouse as the survivor beneficiary.
Between the time of their separation and the divorce, James and Jacqueline discussed PSRS beneficiary designations at least five times. The discussions took place at Jacqueline and James's family home. The first time Jacqueline brought up the PSRS designations with James was just to say that the situation was unfair. It took more than two or three discussions before they arrived at an oral agreement in November or December of 2004. Jacqueline testified:
James is a quiet man, and so he just listened mostly. And when I finished telling him how unfair I thought it was, he said the only thing that he could do to make it fair would be that he would make sure that Deborah and her children would not receive one cent of my money.... That he would divert it to Jeffrey and Jennifer in equal parts, and that he would like his own retirement done the same.
[Doc. # 110, Ex. 5 at 105.] Jacqueline also testified:
[H]e told me that he would not allow Deborah and her family to have any of my teacher retirement, and that he wanted me to do likewise. He would keep me as beneficiary and I would disburse my money to the children for education and help in whatever way they needed help.
[Doc. # 110, Ex. 4 at 29.] Jacqueline testified that this agreement was to stay in place “until death.” Id. at 65. Jacqueline considered this an oral agreement or oral contract. Id. at 80. The last time they discussed the agreement in detail was on Christmas Day 2004, when James reiterated that he would never let Deborah and her family have a penny of Jacqueline's money. Id. at 47–48.B. The Divorce and the Settlement Agreement
Jacqueline decided to divorce James in January 2005, after he refused to stop seeing Deborah. James and Jacqueline did not discuss the PSRS designations after filing for divorce because their lawyers told them not to talk to each other about anything.
On October 14, 2005, James and Jacqueline concluded a “Marital Settlement and Separation Agreement,” which is referenced in the Complaint and is a public record of which the Court takes judicial notice. [Doc. # 95, Ex. J.] That settlement agreement listed under “MARITAL PROPERTY TO BE AWARDED TO [JAMES]”: “All right, title and interest in [James's] retirement, 401K or pension plan derived through his employment as a teacher including his retirement with the Public School Retirement System of Missouri.” Id. at 10. The settlement agreement further stated:
16. Petitioner and respondent hereby exchange with and release to the other, any and all rights, claims and obligations either had, has or may acquire in law or equity arising out of the marital relationship, the parties agreeing that the marital rights of each are equal in value.
17. Petitioner and respondent acknowledge by signing this agreement that same constitutes a full and complete settlement of their respective rights against the other for all contractual obligations arising out of their marriage; and that this agreement constitutes a full division of their marital assets and marital liabilities....
The divorce became final in October 2005. After the divorce, Jacqueline did not talk to James about their oral agreement because she believed it was settled. [Doc. # 110, Ex. 4 at 71.] James married Deborah in 2006.
After the divorce, PSRS sent James an annual one-page “Member Statement Account” that showed, among other things, the beneficiaries he had listed. In the years 2006, 2007, and 2008, under the heading of “Current Beneficiary Designations” were listed Jacqueline L. Scott as the primary beneficiary and Jeffrey A. Scott and Jennifer L. Scott as the first and second contingent beneficiaries. On the second page of the above statements, in the lower quadrant in small-print, is a statement reading: “Prior to retirement and upon a change in life status (marriage, divorce, birth or adoption), your beneficiary designation is void and benefits paid upon your death are made in accordance with the statutory succession of beneficiaries, unless you file a new Nomination of Beneficiary form.” [Doc. # 48, Ex. C at 2.] Jacqueline testified that James had never mentioned the second page of these statements and that she did not think he had read information from PSRS discussing the effect of the new law which automatically cancelled his primary beneficiary designation. [Doc. # 110, Ex. 5 at 65, 173.]
C. James's Death and the Distribution of Benefits
James died intestate on October 21, 2008. James had been married to Deborah for approximately two years. He had never taken action to change the beneficiary designation on his PSRS account to remove Jacqueline.
On November 3, 2008, PSRS sent a letter to Deborah informing her of her options for survivor benefit payments. According to that letter:
Legislation enacted August 28, 2005 [i.e., section 169.076] established a statutory succession of beneficiaries that applies if, at the time of the member's death a change in life status (i.e. marriage) has occurred since the member's previous beneficiary designation. Since you and James William Scott were married after he completed his previous beneficiary designation you are designated as the primary beneficiary of Mr. Scott to receive any benefits due at his death.
[Doc. # 95, Ex. O.] Since that time, PSRS has been paying those benefits to Deborah in the amount of $2,235.53 per month.
Jacqueline contacted PSRS in...
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