Tr. Of The Ronald J. Lehn Declaration Of Trust Dated Ju1y 252002 v. Pension Plan
| Citation | 614 F.3d 684 |
| Decision Date | 30 July 2010 |
| Docket Number | No. 09-2430.,09-2430. |
| Parties | Mary Beth PONSETTI, Trustee of the Ronald J. Lehn Declaration of Trust dated Ju1y 25, 2002, Plaintiff-Appellant, v. GE PENSION PLAN, GE Savings and Security Program, and General Electric Company, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
OPINION TEXT STARTS HERE
Richard L. Steagall, Nicoara & Steagall, Peoria, IL, for Plaintiff-Appellant.
Mark A. Casciari, Seyfarth Shaw LLP, Chicago, IL, John S. Sandberg, Sandberg, Phoenix & Von Gontard, St. Louis, MO, for Defendants-Appellees.
Before EASTERBROOK, Chief Judge, FLAUM, Circuit Judge, and HIBBLER, District Judge. 1 FLAUM, Circuit Judge.
This is an appeal from a district court order granting summary judgment in favor of the defendant benefit plans and company. Plaintiff-appellant alleged that defendants breached their fiduciary duty and their obligation to provide a “full and fair” review of a request for claims when they refused to disburse cash to a trust fund established by a former employee of General Electric. Both parties agree that by default, under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., money should go to the surviving spouse of the decedent. They also agree that decedent did not execute a valid transfer of entitlements to the plaintiff Trust. The plans required that any such change involve a form that bore the signature of the beneficiary, the signature of the spouse consenting to a transfer of benefits, and the signature of a notary or plan representative witnessing the prior two. At one point, decedent brought in the appropriate form to work with his signature on it and another he claimed belonged to his wife. A notary public signed it, but later swore in an affidavit that she did not actually witness the two principal signatures and that her certification was invalid. The Trustee acknowledges all of this, but nonetheless attempts to mount a collateral attack on the plans' decision to disburse money to the then-living spouse (the one beneficiary recognized by law). We affirm.
Defendants-appellees GE Pension Plan and GE Savings and Security Program (collectively, “the Plan”) are benefit plans organized under ERISA. Defendant General Electric Company (“GE”) operated a facility in Ottawa, Illinois. The Plan designated GE as its administrator.
Decedent, Ronald J. Lehn (“Lehn”) was employed by GE at the Ottawa facility. Lehn had two children from a prior marriage, Samuel Lehn (“Samuel”) and Sarah Lehn (“Sarah”). He married Lisa Lehn on June 6, 1991, and remained married to her until his death. On June 3, 1991, he designated Lisa Lehn as his primary beneficiary under the Plan. By 2002, Lehn's retirement accounts with the Plan exceeded a million dollars. After consulting with an attorney, Lehn signed a Declaration of Trust on July 25, 2002 (“the Trust”), to implement his estate plan. The Trust provided that following payment of expenses and taxes, the Trustee was directed to pay 25% of the principal and undistributed income to Lehn's spouse, Lisa Lehn; 25% of the principal and undistributed income to Samuel; 25% of the principal and undistributed income to Sarah; and 25% of the principal and undistributed income to Lehn's siblings and parents.
Sometime prior to March 2005, Lehn contacted employees at GE's Ottawa facility to obtain a Beneficiary Designation (“BD”) form. On March 27, 2005, 2 he presented to GE the signed BD form designating the Trustee as the primary beneficiary and recipient of all of his benefits under the Plan. The form bore the following language:
STOP-If you are married your spouse is automatically your only primary beneficiary
under the GE Pension and Savings & Security Plans. If you wish to name someone other than your spouse as primary beneficiary for these plans you must do the following: 1) complete and sign this designation form; 2) obtain your spouse's signature on this designation form; AND 3) complete and obtain the required signatures on the Consent Form which accompanies this designation form.
Likewise, the Plan specifically provided that if a participant is married at the time of his death, his spouse will be the automatic beneficiary of any death benefits payable under the Plan unless the spouse consents to the designation of a different beneficiary in accordance with specific procedures. Among other requirements, the spouse's consent must acknowledge the effect of the decision to waive benefits, and the spouse's signature must be “witnessed by a Plan representative or notary public.” These criteria parallel the ERISA rule that a spouse may waive his or her right to death benefits under a retirement plan only if the spouse's consent acknowledges the effect of the waiver “and is witnessed by a plan representative or notary public.” 29 U.S.C. § 1055(c)(2)(A)(iii).
After Lehn attempted to submit the March 27, 2005 BD form, a GE employee informed him that he had to provide evidence of spousal consent in order to designate his trust as a beneficiary. On April 6, 2005, Lehn presented Karen Riveland, an administrative assistant employed at the GE plant who was licensed as an Illinois notary public, with a spousal consent form bearing a signature purporting to belong to Lisa Lehn. The consent form itself included a statement that the spouse's consent must be witnessed by the notary. Riveland, whose usual duties included handling travel arrangements and performing clerical tasks, signed the form. On April 11, 2005, Lehn submitted this consent form to GE along with the BD form directing the Plan to pay death benefits to appellant Trust.
Lehn died on November 8, 2005. On November 11, 2005, Susan VanderVoort, GE Benefits Specialist, sent a letter to Lisa Lehn, advising her that GE was aware of Lehn's death and that the records indicated that the Ronald J. Lehn Declaration of Trust was the named beneficiary. On December 15, 2005, Delia Garcia, acting as Lisa Lehn's guardian and representative, submitted a claim for benefits. Garcia stated that “Lisa Lehn did not validly consent to the payment of any GE benefits to the Ronald J. Lehn Declaration of Trust.” Garcia followed up with a letter dated January 4, 2006 asserting that Lisa Lehn was not mentally competent on the date of her purported consent.
On March 22, 2006, an Illinois court adjudicated Lisa Lehn disabled and officially appointed Garcia as her guardian. Garcia informed VanderVoort of this development in a letter dated April 26, 2006. On August 28, 2006, an attorney for Lisa Lehn submitted to VanderVoort affidavits from two of Lisa Lehn's physicians stating that Lisa's “cognitive function was severely impaired” from advanced multiple sclerosis and that Lisa was “totally incapable of making financial decisions and understanding financial matters” in March and April 2005. Garcia also forwarded the Plan a letter Ronald Lehn sent to his health insurance company on September 27, 2005, in which he characterized his wife as suffering from dementia and a “senile degenerative brain” disorder since at least June 2004. Said letter described Lisa as “confused,” “disoriented,” “combative,” and “profoundly demented.” Finally, Garcia assembled evidence showing that Lisa had been concerned about her ability to cover her escalating medical expenses at the time of her alleged consent and would not have waived her right to benefits.
During the summer of 2006, the Plan informed plaintiff-appellant about Garcia's claim that Lisa Lehn could not have competently waived her rights to the decedent's benefits. Raymond Nolasco, attorney for the Trust, called Riveland and asked if she had notarized the Consent Form for Lehn. Riveland indicated that she had and may have suggested that Lisa Lehn was present when she notarized the document. Approximately a month later, Nolasco called Riveland and asked her to sign an affidavit stating that Lisa Lehn was present when Riveland notarized the Consent Form. Riveland responded that she could not sign the affidavit because she had never met Lisa Lehn and that Lisa Lehn was not present when the Consent Form was notarized. Nolasco then advised VanderVoort and Joyce Anderson, GE's in-house Benefits Counsel, to speak to Riveland about the notarization. Anderson contacted Riveland, who admitted that Lisa Lehn was not present when she notarized the Consent Form and swore to as much in an affidavit. VanderVoort subsequently received a copy of the letter written by Lehn on September 27, 2005 that sought medical coverage for his wife's inpatient care and described Lisa Lehn as “profoundly demented.”
On October 19, 2006, the Trust filed a complaint against GE, the GE Pension Plan, and the Estate of Lisa Lehn in Illinois Circuit Court. The Trust held off serving process on defendants to facilitate negotiation. The complaint alleged a breach of fiduciary duty and failure to pay benefits under ERISA as well as several state-law violations.
On December 5, 2006, Anderson sent a letter to the Trust and Garcia advising them that Lisa Lehn's claim for benefits was granted while the Trust's claim was denied. The letter stated:
Anderson attached Riveland's affidavit.
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