384 F. Supp. 3d 328
E.D.N.Y.2019Background
- Steven Wood (decedent) divorced Andrae Wood in 2006; their Property Settlement Agreement (PSA) included: wife waives claims to husband's pensions/annuities and "including the right to be named as a survivor beneficiary."
- Decedent was a union member with ERISA-governed pension and annuity; he designated ex-wife Andrae as primary beneficiary and his father as contingent beneficiary; he did not change designations after divorce.
- Decedent died intestate in December 2012; Andrae received plan benefits beginning March 2013 after claiming entitlement from plan administrator.
- Decedent’s father and the Estate made competing claims; the plan paid Andrae under the plan documents. The father later assigned his claims to plaintiff Culwick (administratrix) in Feb. 2017.
- Culwick sued for breach of contract, conversion, unjust enrichment, and declaratory relief; Andrae counterclaimed for breach of contract, breach of implied covenant, and tortious interference. Cross-motions for summary judgment followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue on contract/related claims | Estate (as administratrix) has standing as successor to decedent's private contract rights; breach of PSA invaded decedent's rights | Estate lacks concrete injury because contingent beneficiary (father) — not Estate — would have received benefits; assignment occurred after suit | Estate has Article III standing for contract and unjust-enrichment claims (private-right invasion), but lacks standing for conversion claim tied solely to father's interest; assignment did not cure conversion standing issue |
| Probate exception / federal jurisdiction | Federal court may adjudicate contract dispute over ERISA-distributed funds; no ongoing probate to interfere with | Case implicates estate property and probate jurisdiction | Probate exception does not bar federal jurisdiction; dispute is not within narrow probate exception |
| Conversion / Unjust enrichment — timeliness & pleading theory | Unjust enrichment relates back to original complaint; conversion/unjust enrichment are viable remedies for wrongful receipt | Conversion and unjust enrichment are time-barred (conversion accrues on first wrongful receipt) and, in any event, Plaintiff is bound by assignment timing | Conversion claim is time-barred as assigned after the 3-year limitations period; unjust enrichment survives limitations but fails on the merits because an express contract exists and the economic-loss rule bars recovery in tort |
| Breach of contract — interpretation and ERISA preemption risk | PSA language (waiver of any claims including right to be survivor beneficiary) disclaims wife's entitlement; Andrae breached by accepting benefits; ERISA doesn't preempt enforcement between private parties post-distribution | Plan documents and ERISA/plan-docs rule mean administrator correctly paid named beneficiary; ERISA preemption or policy (per Staelens) should bar reallocation via state contract law | Court construes PSA as an express waiver of survivor-beneficiary rights; Andrae breached the PSA by claiming benefits. ERISA/plan-docs rule does not preclude a breach-of-contract suit against a beneficiary; preemption principles do not bar enforcement here |
| Declaratory relief & counterclaims | N/A (Plaintiff seeks declaration that Andrae breached) | Declaratory relief unnecessary; counterclaims arise appropriately | Declaratory claim is duplicative and dismissed; Court grants summary judgment for Plaintiff on Andrae's counterclaims (breach, implied covenant, tortious interference) because no evidence of bad faith and Estate stands in decedent's shoes |
| Damages procedure | Plaintiff seeks recovery of benefits and fees | Defendant argues limits based on contingent beneficiary status and payments after father's death | Breach established; damages (including prejudgment/postjudgment interest and fees) referred to Magistrate Judge for computation/ R&R; some payments received after contingent beneficiary's death may not be recoverable — factual/valuation issues remain for damages phase |
Key Cases Cited
- Kennedy v. Plan Adm'r for DuPont Savings & Inv. Plan, 555 U.S. 285 (2009) (plan administrator must pay benefits to person named on plan documents)
- Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3d Cir. 2012) (estate may sue beneficiary post-distribution to recover ERISA plan funds)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (Article III requires a concrete injury even for statutory violations)
- Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001) (ERISA preempts state law that interferes with uniform plan administration)
- Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
- Marshall v. Marshall, 547 U.S. 293 (2006) (federal courts may adjudicate claims against an estate if they do not administer the estate or interfere with probate)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standards)