Titler v. STATE EMPLOYEES'RETIREMENT BD.

• Decision Date: 09 February 2001
• Citation: 768 A.2d 899
• Parties: Kimberly Jean TITLER, Petitioner, v. STATE EMPLOYEES' RETIREMENT BOARD, Respondent.
• Court: Pennsylvania Commonwealth Court

768 A.2d 899

Kimberly Jean TITLER, Petitioner, v. STATE EMPLOYEES' RETIREMENT BOARD, Respondent.

Commonwealth Court of Pennsylvania.

Argued October 30, 2000.

Decided February 9, 2001.

As Amended February 22, 2001.

Michael J. Savona, Charleroi, for petitioner.

Paul M. Stahlnecker, Harrisburg, for respondent.

Mark S. Galpher, Monessen, for intervenors, Clyde M. Titler, Sr. and Clyde M. Titler, Jr.

Before KELLEY, Judge, FLAHERTY, Judge and RODGERS, Senior Judge.

FLAHERTY, Judge.

Kimberly Jean Titler (Claimant) appeals from an order of the State Employees' Retirement Board (Board) denying Claimant's request to be designated as beneficiary of George Titler's (Member) State Employees' Retirement System (SERS) death benefits. For the reasons set forth herein, we affirm.

The relevant facts are as follows. Member enrolled in SERS in 1971 when he began his employment with the Pennsylvania State Police. Claimant and Member were married in 1972 and Member designated Claimant his primary beneficiary of his retirement account on two successive beneficiary forms completed in 1977 and 1980. Claimant and Member separated in June 1996 and Claimant initiated divorce proceedings in the Court of Common Pleas of Fayette County in October 1996. In November 1996, without Claimant's knowledge, Member changed his SERS primary beneficiary from Claimant to Clyde Titler Sr. and Clyde Titler Jr. (Intervenors), Member's father and brother, respectively.

On March 3, 1997, pursuant to a release authorization signed by Member, SERS provided Claimant information pertaining to Member's retirement account. Claimant, through counsel, requested "any and all information, records and correspondence" pertaining to Member's SERS retirement account. Reproduced Record (R.R.) at 281a. SERS responded to Claimant's request by providing a benefit estimate, a sample SERS Domestic Relations Order (DRO), a SERS DRO pamphlet and the name of a SERS representative should further information be required.¹ SERS did not provide Claimant information regarding Member's designated beneficiaries.

The contentious negotiations between Claimant and Member regarding their divorce property settlement proceeded slowly. Claimant and Member and their respective counsel had scheduled a meeting for June 8, 1998 to attempt to finalize a divorce settlement agreement. The meeting never took place because Member was killed that morning in an automobile accident. Since the trial court had not issued a divorce decree, Claimant and Member were still married at the time of his death. Member's SERS death benefit is approximately $784,000.

On August 21, 1998, Intervenors requested that SERS make the death benefit payment from Member's retirement account to them as his last named beneficiaries. Following notification from SERS that it would comply with Intervenors' request for payment of death benefits, Claimant sought and obtained a preliminary injunction from this Court preventing distribution of Member's death benefit pending final disposition addressing the rights of the parties. Thereafter, Claimant initiated an administrative action before the Board seeking to be named primary beneficiary of Member's SERS retirement account assets. The Board granted Clyde Titler Sr. and Clyde Titler Jr. permission to intervene and appointed an independent hearing examiner who conducted an evidentiary hearing on June 2, 1999. Following the close of the record, the hearing examiner recommended denial of Claimant's claim to Member's death benefits. By decision and order dated December 27, 1999, the Board accepted the hearing examiner's recommendation upon concluding that nothing in the Retirement Code required Member to designate his spouse as his beneficiary. The Board further held that absent a court issued injunction directing SERS to freeze all action regarding Member's retirement account pending final disposition of the divorce proceeding, Member was free to designate whomever he chose as his SERS beneficiary. Claimant now brings the instant appeal.²

Claimant's sole issue presented on appeal is whether the Board erred by determining that Member properly designated Intervenors as the last named beneficiaries of his SERS benefits. Claimant argues that she is entitled to receive Member's SERS benefits because Member fraudulently dissipated this marital asset prior to his death. We disagree.

Claimant's assertion of fraud is simply without merit and her focus on the Divorce Code is misplaced. Claimant argues that the facts of this case establish that Member's SERS retirement account was a marital asset that accrued throughout their marriage while Member was at all times employed by the Pennsylvania State Police. Claimant further maintains that § 3102(a)(6) of the Divorce Code provides that retirement benefits constitute a marital asset subject to equitable distribution. 23 Pa.C.S. § 3102(a)(6). However, while it is not disputed that Member's SERS account was a marital asset fully subject to equitable distribution under the Divorce Code, this fact is not determinative of the outcome here. In order for a spouse to acquire an interest in a member's retirement account, a Board approved DRO must be issued through the divorce proceedings and the specific requirements that must be contained in a DRO are generally not resolved until the property settlement has been finalized through entry of a divorce decree. 71 Pa.C.S. § 5953.1. On the facts here, Member died prior to the court of common pleas' issuance of a divorce decree or a DRO. As the Board correctly found, absent a divorce decree, marital assets remain marital assets when one spouse dies no matter how close the estranged spouses had come to a property settlement agreement. Drumheller v. Marcello, 516 Pa. 428, 532 A.2d 807 (1987)(an action in divorce is personal to the parties, and upon the death of either party, the action necessarily dies); In re Estate of Cochran, 738 A.2d 1029 (Pa.Super.1999)(the death of a spouse during the pendency of divorce proceeding abates the divorce action and any and all claims for equitable distribution).

Regarding Member's change in beneficiary from Claimant to Intervenors after commencement of the divorce proceedings, the Retirement Code specifies that SERS members must designate a beneficiary and may change such designation at any time. 71 Pa.C.S. §§ 5906(e); 5907(e), (j). This Court has recently confirmed that the Retirement Code does not encumber a member's ability to designate any person as his or her beneficiary or to change beneficiaries at any time. Hoffman v. Pennsylvania State Employes' Retirement Board, 743 A.2d 1014 (Pa. Cmwlth.2000); petition for allowance of appeal denied, 563 Pa. 705, 761 A.2d 552 (2000). Hoffman involved a case with facts similar to the instant matter. In Hoffman, the claimant, Linda Hoffman, had separated from and filed a divorce against her husband, Robert Hoffman, a SERS member by virtue of his employment as a trooper with the Pennsylvania State Police. At the time the divorce action was initiated, Linda Hoffman was the named beneficiary of Robert Hoffman's SERS retirement account. As occurred in this case, Robert Hoffman subsequently changed his named beneficiary from his spouse to another family member without his spouse's knowledge and then unfortunately passed away prior to the issuance of a divorce decree. Linda Hoffman then challenged the Board's dispersal of Robert Hoffman's death benefits to his last named beneficiary. Although presented in the context of a constitutional equal protection and due process issue, Linda Hoffman raised a similar argument to that which Claimant presents here, which an en-banc panel of this Court addressed as follows:

Petitioner concedes that the General Assembly has created no right in the spouse of a member to the death benefits afforded by the [Retirement] Code. However, Petitioner notes that her husband had a contractual right to the benefits and that the benefits were earned primarily during his marriage to her. Petitioner maintains that the benefits of the pension are therefore marital property subject to equitable distribution in divorce and that she has a vested right to receive them. However, Pennsylvania Courts have consistently held that divorce actions and the associated equitable distribution claims are abated by the death of one of the parties prior to

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