Weaver v. Keen
| Decision Date | 10 January 2001 |
| Docket Number | No. 10-99-305-CV,10-99-305-CV |
| Citation | 43 S.W.3d 537 |
| Parties | (Tex.App.-Waco 2001) DIANA WEAVER, INDEPENDENT EXECUTRIX OF THE ESTATE OF FRANCIS J. WEAVER AND RITA MARIE WILSON WEAVER, Appellants v. PATSY KEEN, Appellee |
| Court | Texas Court of Appeals |
Before Chief Justice Davis Justice Vance, and Justice Gray
At issue is whether under federal law a former spouse, who was designated as the primary beneficiary of an ERISA1-qualified pension plan, is entitled to the proceeds under that plan. The former spouse argues that ERISA requires the administrator to follow the plan documents, i.e., pay the designated beneficiary (the former spouse) despite an intervening divorce. The contingent beneficiary's estate argues that the Texas "redesignation statute," as applied through federal common law, prevents the former spouse from receiving such benefits. Because we agree with the contingent beneficiary's estate, we reverse the trial court's judgment and hold as a matter of law that the contingent beneficiary's estate is entitled to the proceeds of the pension plan. We remand.
Francis J. (Frank) Weaver and Patsy Keen were married in 1967. During a portion of their marriage, Frank was employed by Baylor College of Medicine. In 1972, Frank purchased two annuity contracts issued by Teacher's Insurance and Annuity Association and College Retirement Equities Fund (TIAA-CREF). He named Patsy as the primary beneficiary of those annuity contracts. Baylor College of Medicine made contributions to the annuity contracts until 1980 when Frank terminated his employment. In 1982, Frank and Patsy divorced. As part of the property settlement, Frank received the annuity contracts as his sole and separate property.
Frank married Diana in 1983. They were married for eleven and one-half years before his unexpected death in 1995. At the time of Frank's death, Patsy remained the beneficiary designated on Frank's TIAA-CREF annuity contracts. The plans' administrators, relying on this designation and the plan documents, paid part of the death-benefits to Patsy.
Frank's mother, Rita Weaver, the contingent beneficiary under each plan, died shortly after this lawsuit was filed. Diana, as the independent executrix of both Frank's and Rita's estates, continued this suit against Patsy and the plans' administrators to recover the proceeds of Frank's pension plans (annuity contracts). The plans' administrators interpleaded the remaining benefits and obtained an order absolving them from further liability on the plans, other than to pay the benefits according to a final judgment.
The suit was tried to the court. The primary issue was whether under federal law a former spouse designated as the primary beneficiary of an ERISA-qualified pension plan is entitled to the proceeds under that plan. The court found that Patsy was entitled to the benefits and awarded her attorney's fees. This appeal followed.
Patsy argues that section 1104(a)(1)(D) of ERISA specifically controls. 29 U.S.C.A. § 1104(a)(1)(D) (West 1999). That section requires that a plan be administered "in accordance with the documents and instruments governing the plan." Id. Accordingly, Patsy claims that the administrators were obligated to follow the plan documents and pay her as the named beneficiary despite her divorce. See id. Alternatively, Patsy claims that Frank's pension plan is governed by New York law, which dictates that the beneficiary designation controls. Patsy also argues that Diana lacks standing to seek the benefits.
Diana argues that Patsy specifically waived any claim to proceeds from the pension plans through her agreed settlement agreement and divorce decree. The agreement provided:
DIVISION OF EMPLOYEE BENEFITS. . .
4.02 Community Ownership. Husband has earned certain employee benefits arising out of present and past employment and the parties agree that Husband shall own all of said pension, profit sharing, retirement and deferred compensation benefits of all kinds resulting from his present and past employment as his sole and separate property, without any claim thereto by Wife.[2]
. . .
Schedule 2
PROPERTY TO HUSBAND
. . .
(6) All sums, whether matured or unmatured, accrued or unaccrued, vested or otherwise, together with all increases thereof, the proceeds therefrom, and any other rights related to any profit-sharing plan, retirement plan, pension plan, or like benefit program existing by reason of Husband's past, present, or future employment, including but not limited to:
. . .
b) The Teachers' Insurance and Annuity Association - College Retirement Equities Fund.
Alternatively, Diana claims that by virtue of Patsy's and Frank's divorce, section 9.302 of the Texas Family Code,3 as applied through federal common law, prevents Patsy from receiving such benefits. That section provides:
§ 9.302. Pre-Decree Designation of Ex-Spouse as Beneficiary in Retirement Benefits and Other Financial Plans
(a) If a decree of divorce or annulment is rendered after a spouse, acting in the capacity of a participant, annuitant, or account holder, has designated the other spouse as a beneficiary under an individual retirement account, employee stock option plan, stock option, or other form of savings, bonus, profit-sharing, or other employer plan or financial plan of an employee or a participant in force at the time of rendition, the designating provision in the plan in favor of the other former spouse is not effective unless:
(1) the decree designates the other former spouse as the beneficiary;
(2) the designating former spouse redesignates the other former spouse as the beneficiary after rendition of the decree; or
(3) the other former spouse is designated to receive the proceeds or benefits in trust for, on behalf of, or for the benefit of a child or dependent of either former spouse.
(b) If a designation is not effective under Subsection (a), the benefits or proceeds are payable to the named alternative beneficiary or, if there is not a named alternative beneficiary, to the designating former spouse.
Tex. Fam. Code Ann. § 9.302(a), (b) (Vernon 1998).
Whether under federal law a former spouse designated as the primary beneficiary of an ERISA-qualified pension plan is entitled to the proceeds under that plan is a question of law. See Clift v. Clift, 210 F.3d 268, 269-70 (5th Cir. 2000); see Emmens v. Johnson, 923 S.W.2d 705, 712 (Tex. App.--Houston [1st Dist.] 1996, writ denied). We apply a de novo standard of review to questions of law. Lee v. Mitchell, 23 S.W.3d 209, 212 (Tex. App.--Dallas 2000, pet. denied). A trial court's legal conclusion will be upheld on appeal unless it is erroneous as a matter of law. Mack v. Landry, 22 S.W.3d 524, 528 (Tex. App.--Houston [14th Dist.] 2000, no pet.).
Initially, we address Patsy's standing argument. It is undisputed that the TIAA-CREF annuity contracts are "employee pension benefit plans," as defined by ERISA. 29 U.S.C.A. § 1002(2)(A) (West 1999). Frank Weaver designated Patsy as the primary beneficiary and his mother, Rita Weaver, as the contingent beneficiary of these contracts. Diana, as the independent executrix of Rita Weaver's estate, brought suit against Patsy and the two plans' administrators on grounds that the primary designation is no longer enforceable.
Under ERISA, the term "beneficiary" means a person designated by a participant, or by terms of an employee benefit plan, who is or may become entitled to a benefit thereunder. 29 U.S.C.A. § 1002(8). A beneficiary may bring a cause of action "to recover benefits due to him under the terms of [the] plan." 29 U.S.C.A. § 1132(a)(1)(B) (West 1999). Because Rita's estate "may become entitled" to the pension benefits, if Patsy's designation is unenforceable, we find that Diana as the independent excecutrix of Rita's estate has standing. Id. § 1002(8); see Emmens, 923 S.W.2d at 706-07.
Congress passed ERISA in 1974 to establish a comprehensive federal scheme for the protection of participants and beneficiaries of employee benefit plans. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44, 107 S.Ct. 1549, 1551, 95 L.Ed.2d 39 (1987). ERISA broadly preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C.A. § 1144(a) (West 1999). A state law "relates to" an employee benefit plan when the law has "a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983).
There is no doubt that Diana's claims on behalf of the estate, to the extent that they rely directly upon the Texas redesignation statute, cannot be sustained because the Texas statute is preempted. Likewise, we reject Patsy's argument that Frank's pension plan is governed by New York law because it is also preempted. Almost every federal circuit court to consider the issue has determined that a state law governing the designation of an ERISA beneficiary "relates to" the ERISA plan, and is therefore preempted.4 Manning v. Hayes, 212 F.3d 866, 870 (5th Cir. 2000).
Having established that state law is preempted, we must determine the applicable federal law which will govern the resolution of this dispute. Id. In making this determination, we "look to either the statutory language [of ERISA] or, finding no answer there, to federal common law which, if not clear, may draw guidance from analogous state law." Brandon v. Travelers Ins. Co., 18 F.3d 1321, 1325 (5th Cir. 1994). There is presently a circuit split on this issue. Manning, 212 F.3d at 870.
Patsy contends that ERISA section 1104(d) expressly requires that plan benefits be paid directly to the designated beneficiary and, further, bars any...
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Keen v. Weaver
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