*1 260 Mich MacINNES v MacINNES 12, 2003, Docket No. 241649. Submitted November at Detroit. Decided January 2004, at 9:05 am. Cheryl Rowley, deceased, brought postjudgment The estate of A. against Machines, motion the Genesee Circuit Court D. Joe Rowley’s ex-husband, provision for enforcement of a in their judgment rights pro- divorce that released all of either to the any policy ceeds of life insurance on the life of the other. The court, Beagle, X, Duncan M. determined that the acted as any right proceeds a waiver of of the defendant to the of a life policy provided Rowley by employer, insurance that was her company employee administered an insurance as an welfare plan regulated by Employee benefit Retirement Income Secur- ity seq., Act 29 USC 1001 et and on which the defendant (erisa), beneficiary despite remained as the divorce. The court ordered the pay equal pro- defendant to the estate an amount to the insurance appealed, arguing pro- ceeds he received. The defendant that the Rowley’s policy ceeds from life insurance should be his because governed by plan’s the insurance was records erisa, beneficiary, preempts pro- showed him as the and the divorce recipient proceeds. vision’s exclusion of him as a of insurance He argued also that the consent decree was not a contract under rights beneficiary. which he had waived his as a Appeals The Court of held: preempt rights 1. Erisa does not a waiver of under state law. A provision determining divorcing spouse pro- to the policy spouse ceeds of life insurance owned the other required by 552.101(2) MCL (3). Though federal courts are preempts respect divided on the issue whether erisa state law with determining ERISA-regulated status an under benefits plan, majority hold, of the federal courts and the Court of Appeals held, preempt explicit that erisa does not waiver of nonparticipant beneficiary plan. interest of such a right proceeds 2. The defendant waived his to the life insurance judgment. in the divorce The consent of divorce is a con- tract, any potential previously existing property rights in the insurance could be waived in that contract. A reasonable MacInnes in the person that he waived his interest have understood would entry by consenting question insurance benefits judgment. Affirmed. majority’s result, Murphy,J., concurring rea- stated that *2 majority plan-desig- soning held that a extent that the erred to the plan ERISA-governed in an can waive an interest nated legally way judgment. by That waiver would a consent divorce of plan of an obligate to determine the existence administrator erisa, by preemption provision of and abide it. The effective waiver plan 1144(a), permit a to circumvent the does not court 29 USC obliga- legal not allow for the creation of manner. Erisa does status to determine for the administrator tion judgment, language predicated even contained a divorce on solely theory. controlled a waiver The administrator under permits Waiver, factually established, an if documents. recovery proceeds paid plan-designated bene- to a for the of action ficiary paid the administrator as to a court or trust account part interpleader action. of — — Judgments — — Waivers Life Insurance Divorce Consent 1. Employee Security Act. Retirement Income Security preempt Employee not Income Act does The Retirement provision rights where a in a consent under a state law waiver of divorcing spouse rights judgment each determines the of divorce policy employer-provided proceeds life insurance of an seq.; et 552.101). (29 MCL the other USC 1001 owned Property op Judgments — — — Waivers Contracts 2. Divorce Consent Rights. may contract, property rights judgment of divorce is a A consent be waived that contract. Gentry), Kevin S. for P.C. Gentry Offices, (by Law plaintiff. Russell C. Ander- Schmidt, Isgrigg (by & Anderson for the defendant. son) Murphy Neff, Hood, P.J.,
Before: Fort JJ. by delayed leave appeals Neff, J. Defendant court in of the trial enforcement order postjudgment pay plaintiff to him directing action a divorce 260 proceeds upon $95,000 in life insurance he received Cheryl Rowley, wife, the death of his former where change designation she failed to on policy couple’s her life insurance after the divorce. original The decedent’s estate was substituted for the plaintiff by pursuant the court to MCR 2.202. The court concluded that the in the consent rights of divorce that released all of either party proceeds policy life insurance on right the life of the other waived defendant’s Rowley’s proceeds. life insurance We affirm.
i
Rowley
Defendant and
divorced on November 1,
nine-year marriage.
judg-
1995, after a
The consent
provided
ment of divorce
“that...
all
of either
any policy
in and to the
or contract
*3
upon
of life
. . .
insurance
the life of the other in
designated
which said
was named or
as benefi-
ciary
hereupon
payable
. . . shall
become and be
to
policy,
the estate of the owner of said
or such named
affirmatively desig-
as shall hereafter be
Rowley
nated.”
died on
1,
November 2000.At the time
participated
Delphi
of her death, she
in a
Automotive
Disability
Program
Life and
Benefits
administered
Metropolitan
Company,
employee
Life Insurance
an
plan regulated by
Employee
welfare benefit
Security
Retirement Income
Act
29
USC 1001
(ERISA),
seq.
participated
program
et
The deceased had
in this
couple’s
designated
before the
divorce and had
defen-
beneficiary.
changed
dant as her
She had not
the ben-
eficiary designation after the divorce and before her
Metropolitan
paid
proceeds
death.
Life
the insurance
283
v
MacInnes MacInnes
The trial
$95,0001 to defendant.2
approximately
of
judg-
to
plaintiffs motion
enforce
granted
court
pay plain-
defendant
to
of divorce and ordered
ment
proceeds.
equal to the insurance
an amount
tiff
n
application
of a statute
The construction
(After
Burba
Burba
v
law.
questions
involve
of
647;
(2000);
610
873
Remand),
637,
461
NW2d
Mich
534-535; 664
App 531,
Mich
Atchison,
256
Atchison
question
what con-
Similarly, the
(2003).
249
NW2d
v Gen
of law. Leibel
question
a waiver is a
stitutes
NW2d 179
Corp,
App 229, 240;
250
646
Motors
Mich
stipulation
as a
agreement,
A settlement
such
(2002).
as
in a
is construed
property
divorce,
settlement
and une-
Interpretation
unambiguous
a contract.
Mas-
question
is a
of law.
language
contract
quivocal
Thomas, 206
Ins
Indemnity &
Co v
sachusetts
Life
This Court
App 265,
NW2d 708
268;
(1994).
supra.
Burba,
of law.
questions
de novo
reviews
m
$95,000
he is
argues
Defendant
entitled
because
Rowley’s
policy
from
life insurance
pay
equal
directed
to the total
The order
defendant
amount
$30,500
proceeds,
$61,000
portion,
including
from the
life
insurance
basic
$3,500
portion,
accident
from the extra
interest.
reason,
opinion analysis
concurring
obiter dictum
this
For
case,
v Amer
Dressel
not
the resolution
this
because it is
essential
Energy,
ibank,
Ltd v
Terra
8;
(2003);
NW2d 151
468 Mich
568 n
400;
(2000).
Michigan,
App 393,
The facts
241 Mich
We find the
issue is not whether a state
this case the ultimate
preempted. To the extent
that defendant
statute is
in the divorce
that the
contends
indirectly
because MCL
preempted
552.101(2)
(3)
a provision
all divorce
contain
require
judgments
spouse
determining
divorcing
260 policy
life insurance
owned
spouse,
disagree.
other
we
The circumstances of this case convince us that the
presented
appropriately
issue
is most
resolved under
principles
preemption.
of waiver rather than
See Met-
ropolitan
Pressley,
(CA
Ins Co v
126,
F3d
Life
1996) (“[although
appeal] agree
[federal courts of
preempts
regarding
designa-
that law
state
[they]
split concerning
beneficiaries,
tion of
are
determined”).
manner in
which
is then
*6
majority
Under the view taken
the
of the federal
preempts
circuits, “[e]ven where state law with
respect
determining beneficiary
status under an
ERISA-regulated
plan,
preempt
benefits
erisa does not
explicit
by nonparticipant
waiver of interest
ben-
eficiary
plan.”
of such a
Melton Melton,
v
324
941,
F3d
(CA 2003);
7,
945
see also Silber v Silber, 99 NY2d
(2003);Pressley, supra.
395, 402, 404;
B. WAIVER
A
majority
of federal circuit courts of appeal have
concluded that
of beneficiary
waivers
rights
possi-
are
ble under ERISA-governedplans.4 Silber,
at 402.
3
holdings
State courts are bound
of federal courts on a federal
question on
among
appellate
which there is no conflict
federal
courts.
Technologies, Inc,
App 466, 470;
v Credit
245 Mich
LIFE INSURANCE except adjudged, is and as other- It further ordered party pro- provided, rights in all of either and to the wise any policy insurance, life endow- ceeds of or contract of annuity ment, upon other in which said or the life of the beneficiary, party designated as or to which was named or permit approach, an alteration of beneficiaries. Conse- which does not minority quently, view, as waiver common-law doctrines such under supra Silber, may designation. at not be used to override a 403. App 260 Mich by assignment change said became entitled or of ben- eficiary anticipation thereof, during marriage or policy whether such contract or was shall heretofore or hereupon effective, hereafter be written become shall payable become and be to the estate of the owner of said policy, or such named as shall hereafter be affirmatively designated. argue
Defendant
not
does
that he did not know-
voluntarily
ingly
agree
provision
to the above
argues
the consent
Rather,
divorce.
he
provision
rights
that the
does not waive his
only
proceeds,
insurance
but acts
to substitute the
estate as the insurance
and therefore
given
should not be
effect because it is in conflict
preemption goals
pro-
with the
of ERISA.
Moreover,
imposes
duty
pay
vision
no
on him to
over the life
proceeds.
disagree.
insurance
We
Having
majority
concurred with the
view the fed
giving
eral
circuits
concluded that
effect to the
provision
compromise
purpose
above
does not
goals
erisa, Melton,
at
we hold that
rights
pro
defendant waived his
to the life insurance
ceeds at issue and thus is not entitled to retain them.
regard
The above
is all-inclusive with
relinquishment
right
defendant’s
of his
to life insur
proceeds
policies
ance
from
owned
his former
“[E]xcept
provided,
wife:
as otherwise
all
...
proceeds
any policy
...
of life
. . .
insurance
hereupon
payable
shall
become and be
to the estate
policy
(Emphasis added.)
of the owner of said
. . . .”
language
explicit
This
in its intent to divest defen
dant of his interest in life insurance
from
policies
by Rowley.
owned
Thomas v Detroit Retire
Sys,
ment
155, 160-161;
Opinion the Court of Indemnity, supra Massachusetts 268; at see (2001); Clift, necessary words” for (no “magic also view, In our effect to the waiver). giving effective justice serves the ends of where a divorc- waiver best Silber, supra is clear. at 403-404. couple’s intent ing argument We find no merit defendant’s erroneously trial court viewed the consent judgment of divorce as a contract. As the trial court recognized, entered is in the divorce consent judgment contract, i.e., nature of a and a settlement agreement, stipulation property settlement, and is a contract: stipulation judgment of was a Included divorce and property containing provision, settlement entitled “Insur- ance Waiver”. . . . pursuant par-
Judgments agreement entered to the judicial contract, ties are of the nature of a rather than a party. against Furthermore, order entered one a settlement stipulation property agreement, which is what the set- is, applied tlement is a contract and is to be construed Indemnity, supra (cita- as such. at 267-268 [Massachusetts omitted).] tions case,
In this the consent judgment divorce stated parties stipulated that the agreed judgment divorce, which included the on life insur- required ance. Defendant’s that he is not argument pay plaintiff the life insurance because neither of divorce— signed parties entry because consented to although document, they are not bound the absence of ordinary their under signatures rules of con- tract —borders on the frivolous. Concurring Opinion by Murphy, directing
We affirm the trial order defendant court’s pay plaintiff equal to proceeds an amount to the total insurance *9 any $95,000.
of Defendant has waived issue support concerning the lack of $95,000 record for the stipulated placing amount because he $95,064.74in appeal pending escrow and he admits that the correct placed Phinney amount was into escrow. v Perlmut- (1997). ter, 222 513, 544; 564 NW2d532 Affirmed. Hood, P.J.,
Fort
concurred.
(concurring).
agree
majority’s
I
with the
Murphy,
J.
conclusion that we can affirm the trial court’s order
directing
pay plaintiff
equal
defendant to
an amount
to the total insurance
$95,000.
IBut do
majority’s analysis
entirely
not believe that the
con
Employee
sistent with the
Retirement Income Secur
ity
seq.,
Egelhoff
Act (erisa), 29 USC 1001 et
v
Egelhoff, 532 US
141;
1322;
S Ct
L 149 Ed 2d 264
majority
(2001). The
states:
by
majority
Under the view taken
of the federal cir
cuits,
preempts
where
respect
state law with
“[e]ven
determining
status
ERISA-regulated
under an
plan,
preempt
explicit
benefits
erisa does not
an
waiver of
by
nonparticipant beneficiary
interest
plan.”
of such a
Melton,
941,
(CA 7, 2003);
Melton
324 F3d
see also
Silber,
395,
Silber v
402, 404;
99 NY2d
Through ERISA is not this bifurcated plan are able to offended because administrators beneficiary determine status and distribute beneficiary a “in accordance with the documents to governing plan ,” the . . . 29 USC and instruments beneficiary 1104(a)(1)(D), without the need to make interpretation on of divorce determinations based approach, plan- judgments. Through a bifurcated by legally designated could remain bound explicit pro- waiver of interest in benefits or plan would create havoc for ceeds. To hold otherwise my opinion, and, administrators would violate ERISA by injustice allowing a to or would work an voluntary relinquishment rights. a of retreat from Egelhoff, at the United States In Supreme preempted Washing- held that ERISA Court provided designation of a which “that the statute, ton by Concurring Opinion Murphy, as the spouse nonprobate asset is automatically upon Egelhoff revoked divorce.” The Court stated: plan particular
The statute binds erisa administrators to a determining choice rules for status. The pay administrators must benefits to the beneficiaries cho- by law, plan sen state rather than to those identified in the implicates documents. The statute thus an area of core particular, ERISA concern. In it runs counter to ERISA’s com- plan “specify pay- mands that a shall the basis on which plan,” 1102(b)(4), ments are made to and from the § fiduciary plan that the shall administer the “in accordance governing plan,” with the documents and instruments payments 1104(a)(1)(D), making “beneficiary” § to a who is by participant, “designated plan.” the terms of [the] 1002(8). words, generally applicable § In other unlike laws regulating nothing say,” “areas where erisa has which we upheld notwithstanding have their incidental effect on erisa plans, payment governs benefits, this statute a cen- tral matter of administration. Washington prohibited
The statute also has a connection plans nationally with because it interferes with uni- principal form goals administration. One of the of ERISA employers is to enable “to establish a uniform administra- scheme, provides procedures tive which a set of standard guide processing of claims and disbursement of bene- Uniformity impossible, however, plans subject fits.” if are legal obligations to different in different States. Washington poses precisely The statute at issue here payments threat. Plan simply administrators cannot malee beneficiary specified identifying docu- they ments. Instead must familiarize themselves with state they statutes so that can determine whether the named ben- *11 eficiary’s by operation status has been “revoked” of law. . . .
Requiring erisa administrators to master the relevant laws litigation of 50 States and to contend with would [divorce] congressional goal “minimizing undermine the the admin- istrative and financial on administrators— burden[s]” MacInnes Concurring by Opinion Murphy, ultimately [Egelhoff, the beneficiaries. borne burdens omitted).] (citations at 147-150 that “we have Court further stated Supreme The family pre-empted law to find state not hesitated plans.” to erisa with erisa or relates when it conflicts Johnson, 297 Metropolitan In Ins Co v Id. at 151. Life Court of 7, United States (CA 2002), F3d “Egelhoff the Seventh Circuit stated that Appeals for that a state law cannot proposition stands for the plan beneficiary designation invalidate an person.” distribution to another mandating I that in Mrs. remained the Egelhoff, Egelhoff note beneficiary policy pen- listed of a life insurance despite time Mr. death Egelhoff’s sion at the entry of a divorce and life insurance judgment, proceeds paid were to Mrs. Mr. Egelhoff. Egelhoff’s statutory children heirs at previous marriage, ultimately law, sued, unsuccessfully, recover Egelhoff. Although life insurance from Mrs. unnecessary purpose case, for the this it resolving appear any Michigan would thus that divorce statute provides or divorce entered after trial that for a person(s) desig- different from the in ERlSA-plan nated documents would not be enforcea- ble under erisa’s until an preemption provision actual is made in the documents. change Egelhoff not, however, did involve a situation where waived a plan-designated allegedly question claim to benefits. The becomes whether the applied waiver can be in the context of doctrine of if present case, and, applicable, what manner it apply. should I as inter- above,
As noted would hold erisa, preted by Supreme Egelhoff, Court in does not *12 260 Concurring Opinion by Murphy, J. legal obligation a for the allow for the creation of plan beneficiary to determine status administrator predicated judg- language in a on contained divorce theory; plan ment, even under a waiver adminis- solely by plan trator is to be controlled docu- apply ments. But I would still the doctrine of waiver, factually permit recovery pro- if established, to paid beneficiary plan-designated ceeds ery to a or recov- proceeds deposited in a court or trust account by plan part interpleader a administrator as of an acknowledge approach action. I that this does not fully adopt ruling the Seventh in Melton, and, Circuit’s part ruling in fact, combines in Melton with the ruling Pressley. Sixth Circuit’s approach in I find that this by Egelhoff is mandated and could be Melton, coined as the “limited waiver doctrine.” In at the Seventh Circuit stated: preempts We therefore hold that ERISA Illinois state law respect determining beneficiary rightful with of Rich- ERISA-regulated group ard’s term life [deceased husband] policy. ERISA-regulatedemployee insurance Since Richard’s plan according benefits determines status person(s) plan documents, named we also find that Peggy proper beneficiary deceased’s is the [the ex-wife] policy. the insurance
Having Peggy, determined that and not Alexandria [the daughter], deceased’s minor is the of Richard’s group policy, term life insurance we still must address Alex Peggy andria’s contention that her waived interest these agreement benefits the terms of her divorce with 1] Richard.[ Peggy During marriage Richard married Melton in 1993. their primary beneficiary Peggy employee Richard named as the of his plan, group benefits life which included term insurance benefits. May Peggy agreement Richard and divorced in 2001. Their divorce contained a blanket revocation of their interests in all financial and MacInnes Concurring Opinion Murphy, implicitly indicates that Melton “waiver” can be uti- modify concerning lized to determination who receipt pro- shall be entitled to actual of benefits or affecting legal ceeds; therefore, administrator’s obligation proceeds, to distribute which distribution person could the administrator be made to not named as documents. The competing administrator, in the face of claims, would *13 interpleader either have to initiate an action or be payment forced make a to determination on the basis interpretation judgment of an the divorce and con- trolling law so as to determine whether an effective waiver occurred. Melton and the cases relied on sidestep preemption provision therein of 29 USC expressly necessarily 1144(a), which and relates to preemption by turning law, of state to federal concerning law common waiver. The federal court Valley Vicinity “[w]e [& stated that noted Fox Con- struction Pension Brown, Workers Fund v 897 F2d (CA (en 1990) banc)] 7, that ERISA is silent on the issue of what constitutes a valid waiver of interest and we therefore turned to federal common law gap.” supra fill Melton, Illinois state law to at 945. The Seventh Circuit further stated:
Essentially, evaluating when we are whether the wiaver given case, is effective in a we are more concerned [sic] person with whether reasonable would have understood property rights arising "by “any reason of their marital relation” and party by assigned agreement” including “annuities, asset to a this policies,” life insurance and other financial instruments. . . . Although Peggy . . . Richard divorced six months before Rich- died, Peggy ard was still the named of Richard’s employee policy. group [Melton, term life insurance at 943- 944.] 260 Opinion by
Concurring Murphy, waiving or bene- that she was her interest question magic language with contained fits in than (citation omitted).] at 945-946 the waiver itself. [Id. analysis requires approach and I find that this subjective deter- a divorce review of contemplation law and state after of federal mination, regarding a waiver waiver, to determine whether law con- This burden on administrators occurred. Egelhoff ruling that reflected con- flicts with the upholding administrative schemes cern with uniform require plan to cir- need to not administrators and a cumnavigate fifty legal waters of the states and litigation Indeed, within the states. individual divorce require plan overwhelming burden to it would be decipher judgments to administrators to divorce had as determine if an effective waiver opposed occurred simply examining documents for the beneficiary. interpleader Having actions, named to file multiple plan pro- parties making are claims to where plan-designated versus ceeds, i.e., beneficiaries alleged judgment-designated beneficiaries, would also administrators. be burdensome *14 company Pressley, In the insurance filed an inter- pleader parties, action in which two the deceased’s on ex-wife, estate and the deceased’s made claims apply insurance benefits. The Sixth Circuit refused to who ex-wife, the doctrine of waiver where the was beneficiary plan allegedly documents, named as the recovery waived the of insurance reason judgment. 127-128, of the divorce Id. at 130. The fed- eral court stated: requires plan 404(a)(1)(D)
Section
of ERISA
that a
adminis-
discharge
“in
with the docu-
trator
his duties
accordance
governing
plan
and
. . . .” 29 U.S.C.
ments
instruments
MacInnes
v Concurring
Opinion by
Murphy,
Parrott,
1104(a)(1)(D). The Court in McMillan
§
913 F2d
[v
(CA 1990)]
found
section
establish
clear
plan
plan
mandate that
administrators
follow
documents to
beneficiary.
designated
determine
I conclude that correct consistent Egelhoff plan with to the extent that it held that a solely by plan administrator should be controlled doc- by clearly I would, however, uments. find indi- that, plan cating only by plan that a administrator is bound language documents not the contained in divorce judgments, danger purpose there is no for the of a preemption applying respect violation in waiver with attempted recovery already-paid, plan- to an from an designated beneficiary recovery or from a court or interpleader trust account utilized action. There- my Pressley goes fore, view too far in the name of preemption. my analysis, obliga-
To summarize the actions and plan solely tions of a administrator should be con- plan proceeds trolled documents, paid accordingly, should be without the need to deter- multiple mine if a waiver occurred. When claims are simply made, the administrator could distribute proceeds pursuant documents administrator, desired, if could commence an inter- pleader judgment-designated action. The proceed theory recovery could under a waiver to seek paid plan-designated pro- from a or from deposited pursu- ceeds with a court or trust account interpleader judgment-desig- ant to an action. The beneficiary, legally nated however, could not force a
Concurring Opinion Murphy, payment to that make direct administrator to beneficiary contrary a documents under to the theory,2 judgment-designated nor could the waiver making a distri- sue the administrator for beneficiary. plan-designated bution to proceeds were distributed Because here beneficiary, plan-designated I would defendant, the permit argument. I find that it is a close call a waiver regarding made an effective whether defendant considering in Mel- a similar factual situation waiver, was no effec- in which the court held there ton being said, at That I Melton, tive waiver. 946. analysis my agree colleagues’ con- and ultimate with in fact waived his clusion that defendant proceeds plan. ERISA-governed from the affirming.
I concur beneficiary, proceeding preclude judgment-designated I would not place theory, legally forcing under a waiver from administrator pending suit, in a or trust account the outcome of a which court necessarily beneficiary, plan-designated as a suit would include make distribution whatsoever. where the administrator refuses to