Hardy v. Hardy
942 N.E.2d 838
| Ind. Ct. App. | 2011Background
- Carlos Hardy had a FEGLI life insurance policy through his employer; a divorce decree with Phyllis Hardy ordered equal designation of beneficiaries and that neither party could change coverage, and the Property Settlement Agreement reflected the same terms.
- Carlos and Phyllis later divorced; the MetLife/FEGLI policy was referenced as the policy at issue in the divorce decree.
- Carlos remarried Mary Jo Hardy in 2000; in 2007 a dissolution decree between Carlos and Mary Jo stated each party would be awarded their own life insurance and could remove the other as a beneficiary.
- Carlos died in 2008; the FEGLI policy totaled $98,000 with Mary Jo named as beneficiary at death.
- Plaintiffs (Phyllis and the Furnishes) filed suit seeking a declaratory judgment/constructive trust over FEGLI proceeds.
- The trial court granted Mary Jo’s summary judgment on FEGLIA preemption; denied Plaintiffs’ summary judgment; the court held the case ripe and final.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FEGLIA preempts state-law claims to FEGLI proceeds | Hardy argues state law can share proceeds and enforce decrees. | Hardy argues FEGLIA preempts state-law claims; decree cannot restrict beneficiary rights. | FEGLIA preempts state-law claims; affirm summary judgment. |
| Whether the divorce decree/constructive trust conflicts with FEGLIA precedence | Plaintiffs contend decrees can alter beneficiary rights under state law. | Mary Jo argues FEGLIA precedence governs and decrees cannot override it. | Decree cannot override FEGLIA order of precedence; preempted. |
Key Cases Cited
- Christ v. Metropolitan Life Insurance Co., 979 F.2d 575 (7th Cir. 1992) (FEGLIA preempts divorce decrees that conflict with policy order)
- Zaldivar v. Metropolitan Life Insurance Co., 413 F.3d 119 (1st Cir. 2005) (constructive trust preempted by FEGLIA; policy precedence controls)
- Ridgway v. Ridgway, 454 U.S. 46 (1981) (federal law prevails over state domestic-relations decrees)
- Hinkel v. Metropolitan Life Insurance Co., 121 F.3d 364 (8th Cir. 1997) (divorce decree cannot restrict insured’s right to change beneficiary under FEGLIA)
- Matthews v. Matthews, 926 F. Supp. 650 (N.D. Ohio 1996) (federal regulations preempt state-law claims against FEGLIA)
- McShan v. Metropolitan Life Insurance Co., 577 F. Supp. 165 (N.D. Cal. 1997) (FEGLIA preemption of state-law challenges to beneficiary designation)
- Holland v. Metropolitan Life Insurance Co., 134 F. Supp. 2d 1197 (D. Or. 2001) (statutory/regulatory requirements for FEGLI designation not fulfilled by decree)
- Christ v. Metropolitan Life Insurance Co. (additional discussion), 979 F.2d 575 (7th Cir. 1992) (core FEGLIA precedence principles relied upon)