The Ministers and Missionaries Benefit Board v. Leon Snow v. The Estate of Clark Flesher
25 N.Y.S.3d 21
NY2015Background
- MMBB, a New York not-for-profit administering retirement and death-benefit plans, drafted plan documents stating they “shall be governed by and construed in accordance with the laws of the State of New York.”
- Decedent Clark Flesher named his then-wife LeAnn Snow (primary) and her father Leon Snow (contingent) as beneficiaries; Flesher divorced LeAnn in 2008, moved to Colorado in 2010, and died in Colorado in 2011.
- MMBB commenced a federal interpleader action to determine the proper payee; the District Court awarded proceeds to the Estate (represented by Michele Arnoldy) after applying New York’s EPTL 3-5.1(b)(2) to require use of Colorado law (decedent’s domicile) and concluding Colorado revocation statute revoked the Snows’ designations.
- The Second Circuit certified two questions to the New York Court of Appeals: (1) whether a contractual New York governing-law clause (outside GOL §5-1401) requires application of EPTL 3-5.1(b)(2); and (2) whether death/retirement plan proceeds constitute “personal property... not disposed of by will” under EPTL 3-5.1(b)(2).
- The Court of Appeals held that a contractual choice-of-law clause invoking “the laws of the State of New York” calls for application of New York substantive law only, and does not import New York’s conflict-of-laws rules or statutory choice-of-law directives such as EPTL 3-5.1(b)(2), unless the parties expressly state otherwise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a contract clause stating it is governed by New York law (not under GOL §5-1401) requires applying EPTL 3-5.1(b)(2) (a NY statutory choice-of-law rule that may point to another state’s law). | MMBB/estate: The governing-law clause means only New York substantive law applies and parties did not intend New York conflicts or statutory choice-of-law rules to re-import another state’s law. | Snows: The clause incorporates the entirety of New York’s laws, including statutory choice-of-law directives such as EPTL 3-5.1(b)(2), which would point to the decedent’s domicile law. | Held: No. A generic New York governing-law clause applies New York substantive law but does not import New York conflict-of-laws rules or statutory choice-of-law directives (like EPTL 3-5.1(b)(2)) absent express intent. |
| Whether plan proceeds are “personal property... not disposed of by will” under EPTL 3-5.1(b)(2). | Snows: Plan benefits are not the decedent’s personal property subject to EPTL 3-5.1(b)(2); beneficiary designation controls. | Estate/MMBB: Plan entitlements are intangible personal property of the member and thus fall within EPTL 3-5.1(b)(2). | Held: Not reached — answered as academic because Court resolved question 1 in the negative. |
Key Cases Cited
- IRB-Brasil Resseguros, S.A. v. Inepar Invs., S.A., 20 N.Y.3d 310 (N.Y. 2012) (choice-of-law clause selecting New York law meant New York substantive law governs and obviated common-law conflicts analysis under GOL §5-1401 context)
- Mastrobuono v. Shearson Lehman Hutton, 514 U.S. 52 (U.S. 1995) (a contractual choice-of-law clause may be read as substituting for a conflicts analysis)
- Welsbach Elec. Corp. v. MasTec N. Am., Inc., 7 N.Y.3d 624 (N.Y. 2006) (contracts interpreted to effectuate parties’ intent; courts generally enforce choice-of-law clauses)
- Matter of Lewis, 25 N.Y.3d 456 (N.Y. 2015) (application of EPTL substantive revocation rule to beneficiary designations upon divorce)