Opinion
Civil Action No. SA-05-CA-140-XR.
February 6, 2006
FACT FINDINGS AND CONCLUSIONS OF LAW
This suit involves competing claims to the benefits of a life insurance policy. The case was tried before the Court on February 6, 2006. The Court finds that Betty Jo Sinski is entitled to judgment in her favor. Pursuant to Rule 52(a), this Court now issues these fact findings and conclusion of law in support of its judgment.
PROCEDURAL BACKGROUND
This suit was originally filed by Metropolitan Life Insurance Company ("MetLife") as an interpleader action, in which MetLife asked the Court to determine which of two competing claimants — Maria Valdepena or Betty Jo Sinski — is entitled to the proceeds of a life insurance policy issued to Wayne Valdepena. This Court previously found that it has jurisdiction over this case and that this case was properly brought as an interpleader action. On MetLife's motion for deposit of funds, discharge, and attorneys' fees, the Court allowed MetLife to deposit the $10,000, plus applicable interest, less an award of $2,514 in attorneys' fees into the registry of the Court. MetLife has deposited the money as ordered, and has been dismissed from this case. The remaining proceeds have been invested in accordance with this Court's order of September 13, 2005. Thus, the only remaining parties are the two claimants to the proceeds, Maria Valdepena and Betty Jo Sinski. Both parties are proceeding pro se. Maria Valdepena has filed an answer asserting a claim to the plan proceeds. Betty Jo Sinski has filed an answer asserting a claim to the proceeds and also asserting that she "has a claim against . . . Maria Valdepena for breach of contract and fraud."
FINDINGS OF FACT
1. Wayne Valdepena was a participant in an employee benefit plan, titled the JohnsonDiversey Inc. Subsidiary #1 Salaried Employee Benefit Plan, provided by his employer, DuBois Chemicals (a part of JohnsonDiversey, Inc.). Wayne Valdepena was enrolled for $10,000 in Basic Life Insurance coverage under the plan. The plan was originally issued by Life Insurance Company of North America. MetLife succeeded Life Insurance Company of North America as the issuer of the group policy that funded the plan. Metropolitan Life Insurance Company ("MetLife") is currently the claims administrator for the plan.
2. The life insurance plan is an employee welfare benefit plan governed by ERISA. 29 U.S.C. § 1002(1) (defining welfare plan as "any plan, fund or program . . . established or maintained by an employer . . . to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance . . . benefits in the event of . . . death"). The plan states it is an employee welfare plan including life benefits and accidental death or dismemberment benefits. The plan is not excluded from ERISA coverage by Department of Labor regulations criteria. See 29 C.F.R. 2510.3-1(j) (listing criteria for plans excluded from ERISA coverage). A reasonable person could conclude that the intended benefits were accidental death and dismemberment insurance, that the beneficiaries were JohnsonDiversey Inc. employees, that the premiums for two times Basic Annual Earnings Non-Smoker Basic Life Benefits or two times Basic Annual Earnings Accidental Death or Dismemberment Benefits were paid by the employer and that premiums for additional coverage were paid by employees, and that benefits would be paid when MetLife received notice and satisfactory proof of loss. The plan was established and maintained by Wayne Valdepena's employer for the purpose of providing benefits to its employees.
3. In 1990, Wayne Valdepena divorced Betty Jo Valdepena (now Betty Jo Sinski). The October 19, 1990 Agreed Decree of Divorce awarded Wayne Valdepena "[a]ny and all policies of life insurance insuring the life of Respondent [Wayne Valdepena], subject to the orders set forth hereinafter with respect to any change in the Beneficiary of that certain policy issued by Life Insurance Company of North America, policy number OK2210 through DuBois Chemicals" and provided that "as long as Petitioner [Betty Jo] remains alive and the policy remains in force, Respondent [Decedent Wayne Valdepena] shall not change the designation of Petitioner, BETTY JO VALDEPENA, as Beneficiary of that certain policy of life insurance issued by Life Insurance Company of North America . . . through DuBois Chemicals."
4. Wayne Valdepena married Maria Valdepena on December 28, 1992 and remained married to her until the time of his death.
5. In 2001, MetLife received a Retiree Life Insurance Beneficiary Form designating Maria Valdepena as the sole beneficiary of the plan proceeds, allegedly signed and submitted to Wayne Valdepena's employer by Wayne Valdepena. There was some dispute at trial regarding whether the signature on the beneficiary form was authentic. For purposes of this order, the Court assumes that the signature was authentic and that Wayne Valdepena submitted the form.
6. Wayne Valdepena died on July 10, 2004.
7. On or about August 2004, Maria Valdepena submitted a claim for the proceeds on the grounds that she was the named beneficiary of the proceeds under the beneficiary designation in effect on the date of Wayne's death.
8. On or about September 1, 2004, Betty Jo Sinski filed a claim to the proceeds and submitted the 1990 divorce decree to MetLife. In her letter, Betty Jo Sinski submitted the divorce decree "as a qualified domestic relations order (QDRO), in accordance with U.S. Code, Title 29: Section 1056."
CONCLUSIONS OF LAW
1. Any finding of fact herein above that also constitutes a conclusion of law is adopted as a conclusion of law. Any conclusion of law herein made that also constitutes a finding of fact is hereby adopted as a finding of fact.
2. This Court has jurisdiction over this case pursuant to 29 U.S.C. § 1132(e) based on § 1132(a)(3)(B)(ii).
3. Title 29 U.S.C. § 1144(a), ERISA's preemption provision, provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." State law includes "all laws, decisions, rules, regulations, or other State action having the effect of law." 29 U.S.C. § 1144(c)(1). However, subsection (a) does not apply to qualified domestic relations orders within the meaning of section 1056(d)(3)(B)(i). 29 U.S.C. § 1144(b)(7).
4. To the extent Betty Jo Sinski is asserting cross-claims against Maria Valdepena for breach of contract and fraud, these claims meet the ERISA definition of state law and are thus preempted. Metropolitan Life Ins. Co. v. Pettit, 164 F.3d 857, 861 (4th Cir. 1998). Accordingly, the Court orders that Betty Jo Sinski take nothing in her claims against Maria Valdepena directly. However, Betty Jo Sinski may assert a claim to the insurance plan proceeds based on the existence of a qualified domestic relations order ("QDRO").
5. Section 1144 preempts all state law that relates to an ERISA plan, while specifically excepting qualified domestic relations orders. Pettit, 164 F.3d at 864; 29 U.S.C. § 1144(a), (b)(7). Under § 1144(b)(7), QDROs, as defined by § 1056(d)(3)(B)(i), are specifically excepted from preemption. 29 U.S.C. §§ 1147(b)(7), 1056(d)(3). Thus, ERISA provides a method for a former spouse to secure an interest in plan benefits — by obtaining a QDRO. Pettit, 164 F.3d at 863. This QDRO exception to the preemption provision applies to all ERISA plans, not just pension plans, and thus applies to this welfare plan. Pettit, 164 F.3d at 863 n. 4; see also Metropolitan Life Ins. Co. v. Bigelow, 283 F.3d 436, 440 n. 3 (2d Cir. 2002); Metropolitan Life Ins. Co. v. Marsh, 119 F.3d 415, 421 (6th Cir. 1997); Metropolitan Life Ins. Co. v. Wheaton, 42 F.3d 1080, 1083 (7th Cir. 1994); Carland v. Metropolitan Life Ins. Co., 935 F.2d 1114, 1119-20 (10th Cir. 1991); Barrs v. Lockheed Martin Corp., 287 F.3d 202, 209 n. 7 (1st Cir. 2002) (noting that although the issue was not directly before it, it saw no reason to depart from the prevailing view that QDROs assigning welfare benefits are not preempted). But where there is no QDRO, awards of property pursuant to a divorce decree must fall before a conflicting designation of ERISA beneficiaries. Pettit, 164 F.3d at 864-65 (citing Mattei v. Mattei, 126 F.3d 794, 809 (6th Cir. 1997)).
The Fifth Circuit has not yet decided this issue, but the Court finds that the conclusion reached by these circuits is correct. The Court also notes that the Eighth Circuit has held that ERISA does not preempt the assignment or alienation of welfare benefit plans (only pension benefit plans) and thus a state divorce decree effecting such a transfer does not conflict with ERISA. Equitable Life Assur. Soc'y v. Crysler, 66 F.3d 944, 948 (8th Cir. 1995). Under this approach, federal common law determines which claimant is entitled to the proceeds.
6. To be a QDRO, a domestic relations order must designate, inter alia, the spouse or former spouse as an alternate payee. Dorn v. Int'l Brotherhood of Elec. Workers, 211 F.3d 938, 943 (5th Cir. 2000). A domestic relations order can only be "qualified" (and thus can only become a QDRO), however, if it creates or recognizes the existence of an alternate payee's right, or assigns to an alternate payee the right, to receive all or a portion of the benefits payable with respect to a participant under a plan, and meets the other requirements of the statute.
7. Specifically, a domestic relations order meets the requirements of subparagraph (d)(3)(B)(i) only if the order creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan and clearly specifies (1) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order, (2) the amount or percentage of the participant's benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined, (3) the number of payments or period to which such order applies, and (4) each plan to which such order applies. 29 U.S.C. § 1056(d)(3)(C). Further, a QDRO may not (1) require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan, (2) require the plan to provide increased benefits (determined on the basis of actuarial value), and (3) require the payment of benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order. Id. § 1056(d)(3)(D).
8. Most courts have not demanded literal compliance with § 1056 so long as it is clear what the divorce decree intended. Bigelow, 283 F.3d at 443.
9. The divorce decree was issued by the District Court for the 207th Judicial District, Comal County, Texas. The divorce decree creates and recognizes the existence of an alternate payee (Betty Jo Valdepena)'s right to receive all of the life insurance benefits payable with respect to a participant (Wayne Valdepena) under a plan.
10. The divorce decree does not specify the last known mailing address of Wayne Valdepena. The divorce decree does not specify the last known mailing address of Betty Jo Sinski, but it does include the address of her divorce attorney. This is sufficient to comply with § 1056. See Bigelow, 283 F.3d at 443 ("While the Judgment does not contain the Decedent's address, it does contain his name, as well as his attorney's name and address, which is sufficient."); Carland, 935 F.2d at 1120.
11. The divorce decree does not expressly state the amount of percentage of the participant's benefits to be paid by the plan to the alternate payee Betty Jo Sinski, but it can be easily inferred that 100% of the life insurance proceeds are to be paid to the alternate payee as the designated beneficiary of the life insurance policy. See Marsh, 119 F.3d at 422; Metropolitan Life Ins. Co. v. Cronenwett, 162 F. Supp. 2d 889, 896 (S.D. Ohio 2001). The divorce decree does not specify the number of payments or period to which it applies, but this information is unnecessary for payment of all of the proceeds upon death of the insured. See Cronenwett, 162 F. Supp. 2d at 896 (noting that, given the nature of the policy, the number of payments is obviously one).
12. The divorce decree clearly specifies the plan to which the order applies.
13. The divorce decree does not require the plan to provide any type or form of benefit, or any option, not otherwise provided under the plan, does not require the plan to provide increased benefits, and does not require the payment of benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO.
14. The divorce decree is a QDRO. See Carland, 935 F.2d at 1120; Cronenwett, 162 F. Supp. 2d at 896. The assignment of life insurance proceeds to Betty Jo Sinski pursuant to the divorce decree is thus not preempted by ERISA.
15. Betty Jo Sinski is entitled to the remaining insurance proceeds that have been interpleaded.
Conclusion
The Court concludes that judgment shall be rendered in favor of Betty Jo Sinski on her claim for the insurance proceeds. However, the Court orders that Betty Jo Sinski take nothing on her claims for fraud and breach of contract against Maria Valdepena. The Court further orders that Maria Valdepena take nothing on her claim for the insurance proceeds. Each party shall bear her own costs.
The Court will issue its judgment on a separate document pursuant to Rule 58. The parties are advised that, should they wish to appeal this Court's judgment, they must file a notice of appeal with the district clerk within 30 days of the judgment. Execution of the judgment is automatically stayed by rule for a period of 10 days. FED. R. CIV. P. 62(a). The Court will continue the stay for an additional 20 days, or until March 8, 2006. The Clerk of this Court is directed to withhold execution of the Judgment pending further order of this Court. Should any party file an appeal, the Court will further stay the judgment pending resolution of the appeal. If no notice of appeal is filed on or before March 8, 2006, the Court will direct that the invested funds be released to Betty Jo Sinski in accordance with the judgment.