Opinion
Civil Action No. 3:03-CV-1323-BF.
June 2, 2004
MEMORANDUM OPINION AND ORDER
Before the Court is "Cross-Claimant's Kenneth Cox, as Representative of the Estate of Mary Margarette Knox, Motion for Summary Judgment," filed February 26, 2004. This action concerns a dispute between step-siblings, and is brought to determine the beneficiary to the proceeds of an employee welfare benefit plan regulated by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001, et seq. At issue is whether the estate of the only named beneficiary has a vested interest in the policy upon the death of the insured. Having considered the evidence of the parties in connection with the pleadings, the Court hereby DENIES Defendant Cox's motion for summary judgment. The Court further finds that Defendant Marvin Knox, as Trustee of the Testamentary Estate of Norman L. Knox, Kerrie Dobbs, Jean Hunt, and Leslie Ann Donley, is entitled to summary judgment, and thus has a vested interest in the Death Benefit Proceeds, which total $61,000.00 I. Background
In this case, Defendant Marvin Knox, as Trustee of the Testamentary Estate of Norman L. Knox, Kerrie Dobbs, Jean Hunt, and Leslie Ann Donley, did not move for summary judgment. However, "courts are widely acknowledged to possess the power to enter summary judgments sua sponte, so long as the losing party was on notice that she had to come forward with all of her evidence." Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986). Here, Defendant Kenneth Cox, as Representative of the Estate of Mary Margarette Knox, was on notice.
The original amount available under the policy was $67,500.00. However, pursuant to the District Court's September 19, 2003 Order "Dismissing Plaintiff HCA, Inc.," only $61,000.00 is available — HCA retained $6,500.00 for attorneys' fees and costs incurred in filing its "Complaint in Interpleader."
The background information comes from the "Complaint in Interpleader," filed June 13, 2003, "Cross-Claimant's Kenneth Cox, as Representative of the Estate of Mary Margarette Knox, Motion for Summary Judgment," filed February 26, 2004, "Defendants Marvin Knox, as Trustee of the Testamentary Estate of Norman L. Knox, Kerrie Dobbs, Jean Hunt, Leslie Ann Donley's Response to Cross-Claimant's Motion for Summary Judgment," filed March 17, 2004, and from "Cross-Claimant's Kenneth Cox, as Representative of the Estate of Mary Margarette Knox, Reply to Response to Motion for Summary Judgment," filed March 23, 2004.
Norman L. Knox ("Decedent") was an employee of Plaintiff Hospital Corporation of America, Inc. ("HCA"), a corporation organized under the laws of the State of Delaware with its principal place of business in Nashville, Tennessee. HCA established and maintained an employee welfare benefit plan ("Plan") pursuant to ERISA, whereby HCA agreed to pay Plan participants a specified benefit ("Benefits") upon their death. On November 26, 1984, pursuant to Decedent's employment with HCA and his participation in the Plan, Decedent and HCA entered into an Executive Death Benefit Agreement ("Agreement"), whereby HCA agreed to provide certain death benefits to Decedent. Under the terms of the Plan and the Agreement, Decedent executed a Beneficiary Designation Form, designating Emma Jane Knox ("Emma Jane"), his wife at the time, as the beneficiary of any Benefits payable under the Plan and the Agreement. The Agreement contains the following provisions regarding designation of a beneficiary:
2.6 Beneficiary Designation. The Employee shall file with the Employee Benefits Section of the Human Resources Department of HCA a written designation of one or more natural persons, his estate, or a trust established by the Employee or the Employee's spouse as the beneficiary who shall be entitled to receive the amount of any Death Benefit payable upon his death under Section 2.2 hereof; provided, however, that any such designation shall be considered invalid and of no effect unless the beneficiary specified is the spouse of the Employee, a descendant of the Employee, or the Estate of the Employee or a trust established by the Employee or the Employee's spouse. The Employee may from time to time (but not more frequently than annually) revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with HCA. The last such designation received by HCA shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by HCA prior to the Employee's death, and in no event shall it be effective prior to such receipt by HCA in writing upon the forms from time to time designated for such purpose.
2.7 Lack of Beneficiary Designation. If no beneficiary designation is in effect at the time of the Employee's death, the amount of any Death Benefit payable under this Agreement shall be paid to the Employee's surviving spouse, if any. If the Employee should die leaving no surviving spouse, then such amount, if any, shall be paid to the Employee's surviving descendants, who shall receive such benefits by right of representation through their lineal ancestors. If the Employee should die leaving no surviving descendants, then the amount of any Death Benefit payable under this Agreement upon his death shall be paid to the Employee's Estate.
Kerrie Dobbs, Jean Hunt and Leslie Donley ("Kerrie, Jean and Leslie") are the natural children of Decedent and Emma Jane.
Emma Jane died on July 8, 1994. At the time of her death, Emma Jane was the beneficiary designated to receive Benefits under the Plan. However, Decedent never submitted a new Beneficiary Designation Form following her death. On March 25, 1995, Decedent married Mary Margarette Knox ("Margarette"), who has two natural children, Kenneth Cox and Gaytha Cox-Reid ("Kenneth and Gaytha"). Decedent later died on February 11, 2001. Accordingly, approximately $61,000.00 in Benefits became payable to Decedent's beneficiary, in accordance with the terms of the Agreement. Then, on July 16, 2001, Margarette died.
The $61,000.00 in funds payable pursuant to the Agreement has been deposited into the registry of the Court. Kerrie, Jean and Leslie claim that they are entitled to the Benefits as the descendants of Emma Jane, the sole beneficiary named on the Agreement. However, step-siblings Kenneth and Gaytha contend that they are entitled to the Benefits as the descendants of Margarette, the surviving spouse of Decedent.
II. Analysis
A. Summary Judgment Standard
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate when the pleadings and the record evidence show that no genuine issue of material fact exists and that, as a matter of law, the movant is entitled to judgment. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). An issue of material fact is genuine if the evidence could lead a reasonable jury to find for the non-moving party. Hanks v. Transcontinental Gas Pipe Line Corp., 953 F.2d 996 (5th Cir. 1992) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In determining whether a genuine issue for trial exists, the court must view all of the evidence in the light most favorable to the non-movant. Anderson, 477 U.S. at 248.
The movant "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavit, if any,' which it believes demonstrates the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting FED. R. CIV. P. 56(c)). If the non-movant bears the burden of proof at trial, the movant need not support the motion with evidence negating the opponent's case; rather, the movant may satisfy its burden by showing that there is an absence of evidence to support the non-movant's case. Latimer v. Smithkline French Lab., 919 F.2d 301, 303 (5th Cir. 1990); Little, 37 F.3d at 1075.
Once the movant makes this showing, the burden shifts to the non-movant to show that summary judgment is not appropriate. Little, 37 F.3d at 1075 (citing Celotex, 477 U.S. at 325). This burden is not satisfied by some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence. Id. Rather, the non-moving party must come forward with competent summary judgment evidence showing that there is a genuine issue for trial. FED. R. Civ. P. 56(e). However, "courts are widely acknowledged to possess the power to enter summary judgments sua sponte, so long as the losing party was on notice that she had to come forward with all of her evidence." Celotex, 477 U.S. at 326.
B. Employee Retirement Income Security Act ("ERISA")
ERISA regulates those employee benefit plans that "provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, or death." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44 (1987). "The designation of a beneficiary to the proceeds of an insurance policy has been held to `relate to' an employee benefit plan such that ERISA preempts any state law governing the designation of a beneficiary." Transamerica Occidental Life Ins. Co. v. Fisher, No. 3:98-CV-3060-BC, 1999 U.S. Dist. LEXIS 11191, at *11 (N.D. Tex. July 16, 1999) (citing Brandon v. Travelers Ins. Co., 18 F.3d 1321, 1325 (5th Cir. 1994) and Connecticut Gen. Life Ins. v. Thomas, 910 F. Supp. 297, 301 (S.D. Tex. 1995)). Section 1104(a)(1)(D) requires a fiduciary to make payments to a beneficiary "in accordance with the documents and instruments governing the plan." 29 U.S.C. § 1104(a)(1)(D). In construing the terms of ERISA employee benefit plans, courts interpret the contract language "in an ordinary and popular sense as would a person of average intelligence and experience." Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1452 n. 1 (5th Cir. 1995) (internal citations omitted); see also Marlowe v. SBC Pension Benefit Plan, No. 4:02-CV-111, 2003 U.S. Dist. LEXIS 9780, at *17-18 (E.D. Tex. June 9, 2003) ("[A]pplication of the principles of contract interpretation of the terms of an ERISA plan require the court to apply the plain language of the plan.").
Here, because the parties agree that the Plan is governed by ERISA, the issue before the Court is solely a question of law. Defendant Cox argues that because Margarette was the surviving spouse of Decedent, and no effective designation of an alternate beneficiary had been made, Margarette's estate (Kenneth and Gaytha) are entitled to recover the remaining $61,000.00 in death benefit proceeds. The Court will now turn to the applicable provisions of the Agreement.
Specifically, Defendant Cox argues that Tennessee has always followed the general rule that when a life insurance contract provides that an insured retains the right to change beneficiary, the beneficiary has no vested rights in that designation, and has only an expectancy that is extinguished upon their death.
Specifically, Paragraph 2.6 of the Agreement provides that "any designation shall be considered invalid and of no effect unless the beneficiary specified is the spouse of the Employee, a descendant of the Employee, or the Estate of the Employee or a trust established by the Employee or the Employee's spouse." (Agreement, ¶ 2.6, Beneficiary Designation) (emphasis added). The Agreement further states that the employee's surviving spouse is entitled to the death benefits only "[i]f no beneficiary designation is in effect at the time of the Employee's death." (Agreement, ¶ 2.7, Lack of Beneficiary Designation). Therefore, and contrary to Defendant Cox's argument, the contingent beneficiary provision of Paragraph 2.7 is inapplicable, and would apply only if Decedent had failed to name a proper beneficiary under Paragraph 2.6. In other words, a plan administrator would apply Paragraph 2.7 only if Decedent's beneficiary designation included a person who was not his spouse, his descendant, or included in his estate or trust.
Here, Decedent designated Emma Jane, his wife at the time, as the beneficiary of any Benefits payable under the Agreement. The Court determines that the terms of the Agreement are unambiguous, and a person of ordinary intelligence and experience would understand what the policy provides and what is expected of the insured. Therefore, Emma Jane's estate (Kerrie, Jean and Leslie) is the proper beneficiary under the Agreement, and is thus entitled to recover the remaining $61,000.00 paid into the registry of the Court.
III. Conclusion
For the foregoing reasons, "Cross-Claimant's Kenneth Cox, as Representative of the Estate of Mary Margarette Knox, Motion for Summary Judgment" is DENIED. The Court also ORDERS entry of summary judgment for Defendant Marvin Knox, as Trustee of the Testamentary Estate of Norman L. Knox, Kerrie Dobbs, Jean Hunt, and Leslie Ann Donley.
SO ORDERED.