Sveen v. Melin
138 S. Ct. 1815
| SCOTUS | 2018Background
- Minnesota enacted a revocation-on-divorce statute (Minn. Stat. §524.2‑804) in 2002 making divorce automatically revoke revocable beneficiary designations to a former spouse for wills and will substitutes (including life insurance), subject to court order or express reaffirmation by the policyholder.
- Mark Sveen named his then‑wife Kaye Melin as primary beneficiary of a life insurance policy in 1998 and his two children as contingent beneficiaries; Sveen and Melin divorced in 2007; the decree did not address the policy; Sveen did not change beneficiaries and died in 2011.
- Minnesota applied its 2002 statute to revoke Melin’s designation, so proceeds shifted to the contingent beneficiaries (Sveen’s children); Melin sued claiming the statute’s retroactive application to a pre‑existing contract violates the Contracts Clause.
- District Court awarded proceeds to the children; the Eighth Circuit reversed, holding retroactive application violated the Contracts Clause; the Supreme Court granted certiorari.
- Supreme Court (Kagan) reversed the Eighth Circuit, holding retroactive application does not violate the Contracts Clause because the statute does not substantially impair the contract under the two‑step test; Justice Gorsuch dissented.
Issues
| Issue | Melin's Argument | Sveen Children / State's Argument | Held |
|---|---|---|---|
| Whether retroactive application of Minnesota’s revocation‑on‑divorce statute to a beneficiary designation made before enactment violates the Contracts Clause | Retroactive change impairs the core contractual obligation (beneficiary selection) and interferes with reasonable reliance on existing contract terms | The statute is a default rule reflecting typical intent, is easily overridden by a simple change‑of‑beneficiary, and thus does not substantially impair contracts | Held: No Contracts Clause violation — statute does not substantially impair the contract; Court stopped at step one of test and reversed the Eighth Circuit |
| Whether the statute undermines contracting parties’ reasonable expectations | A policyholder could reasonably expect a beneficiary designation to remain in effect; retroactive change upsets settled expectations | Divorce courts already could alter beneficiary designations and outcomes were therefore not reasonably certain; reliance on perpetuity of designation is weak | Held: Court found reliance interests minimal because divorce courts have broad power to affect beneficiary designations, so expectations of permanence are limited |
| Whether the statute is merely a default/paperwork rule remediable by simple action | Retroactivity can still be unconstitutional even if reversal is possible after the fact; the statute changes an express contract term | Statute functions like long‑upheld recording/filing statutes; policyholder can easily preserve original designation by filing a change form, so burden is minimal | Held: Court treated the statute as a minimal, easily‑avoided default condition analogous to historically upheld filing/recording laws; this supports no substantial impairment |
Key Cases Cited
- El Paso v. Simmons, 379 U.S. 497 (1965) (Contracts Clause does not bar all laws affecting pre‑existing contracts; two‑step impairment test applies)
- Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) (articulates factors for substantial impairment inquiry)
- Texaco, Inc. v. Short, 454 U.S. 516 (1982) (upheld minimal filing requirement that terminated preexisting mineral interests absent a simple claimant filing)
- Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983) (framework weighing impairment against legitimate public purpose and reasonableness of means)
- Jackson v. Lamphire, 3 Pet. 280 (1830) (upheld recording statute extinguishing unrecorded claim; minimal filing burden tolerated)
- Vance v. Vance, 108 U.S. 514 (1883) (upheld statute rendering unrecorded mortgages unenforceable against third parties)
- Gilfillan v. Union Canal Co. of Pa., 109 U.S. 401 (1883) (upheld statute treating silence as written consent where a simple writing could preserve rights)
- Conley v. Barton, 260 U.S. 677 (1923) (upheld statute requiring affidavits before foreclosure; characterized such requirements as conditions easily complied with)
- Hillman v. Maretta, 569 U.S. 483 (2013) (recognizes that replacing an insured’s selected beneficiary frustrates the insurance scheme)