IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

METROPOLITAN LIFE INSURANCE §

COMPANY §

§

VS. § CIVIL ACTION NO. 4:05-CV-782-Y

§

RENEE A. BUCKE, et al. §

ORDER GRANTING DEFENDANT

SALLIE KIBBIE’S MOTION FOR SUMMARY JUDGMENT

AND DENYING DEFENDANT RENEE BUCKE’S MOTION FOR SUMMARY JUDGMENT

Before the Court are two summary-judgment motions filed by

defendants Renee Bucke and Sally Kibbie (docs. ## 20 & 37) in this

interpleader cause of action. Both motions call upon the Court to

decide which defendant under the Employee Retirement Income

Security Act of 1974 is entitled to the proceeds of a lifeinsurance policy. Plaintiff Metropolitan Life Insurance Company

(“MetLife”) filed as an interpleader to have the Court determine

the rightful beneficiary of a life-insurance policy. Defendant

Sally Kibbie (“Kibbie”) is the named beneficiary. Defendant Renee

Bucke (“Renee”) is the surviving spouse of the decedent-insured,

Michael Bucke (“Michael”), and a non-beneficiary claimant to the

proceeds. 

I. Factual Background

The relevant material facts in this case are undisputed.

Michael was a participant in an employee welfare benefit plan

(hereafter, sometimes just “plan”) provided by his employer,

American Airlines. This plan was called: “The Group Life and

 

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Health Benefits Plan for Employees of Participating AMR Corporation

Subsidiaries” (“the Plan”). Interpleader MetLife is the claims

fiduciary for the Plan. 

Michael enrolled for $50,400 in basic and $69,100 in optional

life-insurance coverage for a total of $119,500 in life-insurance

benefits under the Plan. In 1989, Michael designated his wife,

Renee, as the sole beneficiary of the Plan, and informed her of the

designation. But under the terms of the Plan, Michael was free to

change his designation at will and without the consent of the

beneficiary.

In 2000, Renee filed for divorce in the Superior Court of

California. In connection with the filing for divorce, the

California state court issued a “Standard Family Law Restraining

Order.” See CAL. FAM. CODE § 2040(a)(3). Among other things, that

order provided:

Starting immediately, you and your spouse are

restrained from:

2. . . . changing the beneficiaries of any

life insurance or other coverage . . . held

for the benefit of the parties . . . . 

Renee, however, never received a qualified domestic relations order

(“QDRO”) under 29 U.S.C. § 1056(d), and the standard restraining

order issued by the California state court does not meet the

requirements under 29 U.S.C. § 1056(d) to qualify as a QDRO. 

 

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Michael was served with the petition for divorce and the

standard restraining order. Prior to his being served, Renee’s

attorney sent notice to MetLife informing it of the pending divorce

proceedings and that ownership of certain benefits it had issued to

Michael were at issue in the proceeding. The notice instructed

MetLife “to maintain the named beneficiaries or covered dependents

under the policy unless the terms of the policy or other provisions

of law require otherwise . . . .” And the notice instructed

MetLife “to send notice to the named beneficiaries . . . upon . .

. change of designated beneficiaries under the policy.” 

During the pendency of the divorce, Michael resided in Texas,

and he was residing in Texas at the time he was served with the

divorce papers and the restraining order. His wife remained in

California.

Defendant Kibbie was Michael’s “girlfriend/significant other”

in Texas. According to Kibbie, their “relationship had been

ongoing for some five years after [Michael] had become estranged

from his spouse, [Renee], and her filing for divorce in California.” During this time, Michael became ill and Kibbie “was his

primary caretaker.”

In 2004, Michael changed the Plan and designated Kibbie as the

sole beneficiary of the life-insurance benefits under the Plan. He

did not inform Renee of this change and evidently neither did

MetLife. Michael died in January 2005, while the divorce was still

 

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pending. Renee learned of Michael’s change to his beneficiary

designation under the Plan after his death.

Kibbie submitted a claim for the Plan benefits in March 2005,

as the named beneficiary. Renee submitted a claim for those

benefits in April, on the grounds that she was Michael’s spouse at

the time of his death and that the state-court restraining order

prohibited Michael from removing her as the sole beneficiary under

the Plan. 

Because of the conflicting claims, MetLife initiated this

interpleader to determine the rightful beneficiary under the Plan.

MetLife, however, has already paid one-half of the life-insurance

benefits to Kibbie. According to MetLife, before initiating this

action it “denied [Renee’s] claim to one-half of the Plan benefits

due to [Michael’s] 2004 beneficiary designation naming [Kibbie] as

the sole beneficiary of the Plan benefits.” MetLife provides no

explanation for its decision to pay one-half of the proceeds to

Kibbie knowing there was a dispute as to the rightful beneficiary

under the Plan, but retaining the other half of the benefits and

interpleading to determine the rightful beneficiary of all of the

benefits. Nevertheless, in March 2006, this Court granted

MetLife’s motion to deposit the remaining half of the insurance

benefits into the Court registry for distribution to the party

legally entitled to them. MetLife made that deposit in May.

 

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II. The Law 

Summary judgment is proper when the record establishes “that

there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law.” FED. R.

CIV. P. 56(c). In this case, the parties agree as to the material

facts that inform the Court’s decision, including that the Plan is

governed by ERISA and that Michael had changed the beneficiary

under that Plan in violation of the California state-court

restraining order. The parties’ dispute presents a legal question:

under the undisputed facts, who is entitled to the proceeds of the

insurance policy? 

Both defendants agree that the Plan is an employee welfare

benefit plan as defined and governed by the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq.

They also agree that the California state court’s standard

restraining order is not a QDRO because it fails to meet the

requirements of ERISA, 29 U.S.C. § 1056(d)(3). As well, both agree

that the California state court’s standard retraining order, to the

extent that it prohibits Michael from changing the beneficiary of

the policy, is preempted by ERISA. And both argue that the cases

of Central States Southeast & Southwest Areas Pension Fund v.

Howell, 227 F.3d 672 (6th Cir. 2000), and Sun Life Assurance

Company of Canada v. Dunn, 134 F. Supp. 2d 827 (S.D. Tex. 2001),

should be followed in determining the issue in this case. The

 

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defendants disagree as to what that determination should be,

however. Accordingly, a discussion of these cases is necessary.

A. Relevant Cases

1. Central States Southeast & Southwest Areas Pension Fund v.

Howell, 227 F.3d 672 (6th Cir. 2000)

In Central States, Kenneth and JoAnn Howell were married in

1978. Kenneth Howell had three children from a prior marriage.

JoAnn Howell filed for divorce in 1994 in Michigan. The Michigan

divorce court prohibited both of the Howells from “acting to

dispose of . . . any of the [parties’] marital assets . . . during

the pendency of the divorce proceedings.” Central States, 227 F.3d

at 673. Despite the court’s order, Kenneth changed the beneficiary

designation on three life-insurance policies from JoAnn to the

children of his prior marriage. One of the life-insurance policies

was secured through the Central States Southeast and Southwest

Areas Health & Welfare Fund (“Central States”) and fell under

ERISA. Kenneth died while the divorce was still pending. 

After his death, Kenneth’s children made demand upon Central

States for the insurance benefits. Concerned as to whether JoAnn

or the children were the rightful beneficiaries of the policy,

Central States interpled in federal court.

The United States Court of Appeals for the Sixth Circuit

concluded that ERISA preempted the state court’s restraining order.

 

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Id. at 678. The Sixth Circuit reasoned that the state court’s

order was a state law that related to an ERISA plan, and that it

did not meet the requirements of a QDRO sufficiently to except it

from ERISA’s preemptive effect. Id. at 676, 678; see also 29

U.S.C. §§ 1144(a)(preemption language), 1144(b)(7)(excepting QDROs

from preemption), 1056(d)(3)(listing the requirements of a QDRO).

Under Sixth Circuit law, the ERISA plan fiduciary is required to

pay out life-insurance proceeds in strict compliance with the plan

documents. Central States, 227 F.3d at 678. The Sixth Circuit

interprets ERISA section 1104, which states that “a fiduciary shall

discharge his duties with respect to a plan . . . in accordance

with the documents and instruments governing the plan . . .,” as

setting forth a clear mandate that plan fiduciaries must disburse

life-insurance benefits to the beneficiary designated in the plan

documents and only in accordance with the plan documents. Id.; see

also Metropolitan Life Insurance Company v. Marsh, 119 F.3d 415

(6th Cir. 1997); Manning v. Hayes, 212 F.3d 866, 871 (5th Cir.

2000)(explaining Sixth Circuit law). 

But the Sixth Circuit found “no precedent binding on this

Court on the issue of whether, once the beneficiary is determined,

ERISA preempts all causes of action and possible remedies based

upon state law that might be traced to the ERISA plan proceeds.”

 

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Central States, 227 F.3d at 678. Thus, the Sixth Circuit looked to

and followed the Tenth Circuit case of Guidry v. Sheet Metal

Workers National Pension Fund, 39 F.3d 1078, 1081-83 (10th Cir.

1994)(en banc decision after remand)(“Guidry II”). 

The Supreme Court had remanded Guidry back to the Tenth

Circuit after it reversed that circuit’s holding that a constructive trust could be imposed on ERISA pension-plan benefits. Guidry

v. Sheet Metal Workers National Pension Fund, 493 U.S. 365, 376-77

(1990)(“Guidry I”). The Supreme Court held that ERISA section

1056(d)(1) precludes the imposition of a constructive trust on

pension-plan benefits. The Supreme Court concluded that ERISA’s

anti-alienation provision contains numerous exceptions, but that

none applied to the circumstances of the Guidry case. Because of

this, the Supreme Court concluded that the anti-alienation

provision reflected,

a considered congressional policy choice, a

decision to safeguard a stream of income for

pensioners (and their dependents, who may be,

and perhaps usually are, blameless), even if

that decision prevents others from securing

relief for the wrongs done to them. If exceptions to this policy are to be made, it is for

Congress to undertake that task.

Id. at 376. 

After the Supreme Court remanded Guidry, the Tenth Circuit

considered whether a constructive trust could be imposed on ERISA

pension benefits after they have been distributed to the benefi-

 

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ciary, and decided that it could be. Guidry II, 39 F.3d at 1081-

83. Thus, although ERISA’s anti-alienation provision “precluded

the imposition of a constructive trust before distribution of

benefits to the beneficiary, . . . nothing in the legislative

scheme prevented the imposition of a constructive trust after the

benefits were paid to the beneficiary of the pension benefits.”

Central States, 227 F.3d at 678.

The Sixth Circuit found the Tenth Circuit’s reasoning

persuasive and followed it, adding that “the district court has the

discretion to impose a constructive trust upon [plan] benefits in

accordance with applicable state law if equity so requires.” Id.

at 679. The appellate court then remanded the case to the district

court for consideration of whether a constructive trust in favor of

JoAnn Howell should be imposed under the principles of equity under

Michigan law. Id. 

2. Sun Life Assurance Company of Canada v. Dunn, 134 F. Supp. 2d

827 (S.D. Tex. 2001)

In Sun Life, a final divorce decree named defendant Marcia

Dunn as the sole managing conservator for her and John Dunn’s

child, Kelly. In addition to requiring John to pay child support,

the divorce decree required him to maintain life insurance for no

less than $200,000 and to name Kelly as the irrevocable beneficiary

and Marcia as trustee. One of the policies John took out to comply

 

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with the order was a $160,000 life-insurance policy administered by

Sun Life Assurance Company of Canada (“Sun Life”). This policy

constituted an ERISA-governed employee welfare benefit plan.

Although John initially named Kelly as the primary beneficiary, he

later changed the beneficiary designation, making Kelly a secondary

beneficiary. As a result, John was in violation of the divorce

decree because he failed to maintain the requisite amount of life

insurance and name Kelly the beneficiary.

John’s action went undetected until his death. At that time,

Kelly was designated to receive approximately $59,200 in lifeinsurance proceeds. 

Sun Life filed an interpleader to determine the proper

recipient of the life-insurance proceeds under the ERISA policy.

After concluding that ERISA preempted the divorce decree to the

extent that the decree applied to John’s Sun Life policy, the

district court held, nonetheless, that the divorce decree vested

Kelly with an “equitable interest in the Sun Life policy.” Id. at

837. The court then decided that Kelly had established the

elements for the imposition of a constructive trust under Texas

law, and imposed one on the policy proceeds for her benefit. Id.

 

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B. The Parties’s Construction of the Relevant Cases

1. Renee’s Arguments

Relying on Central States and Sun Life, Renee argues that

“under principles of equity,” ERISA does not preempt “the imposition of a constructive trust on benefits” after the benefits have

been distributed to the designated beneficiary under the Plan.

(Defendant Renee Bucke’s Brief Supp. Summ. J. 6.) Renee contends

that she is entitled to a constructive trust under Texas law

because Kibbie would be unjustly enriched if allowed to retain the

benefits. Renee argues,

A court is permitted to impose a constructive

trust on the proceeds of an insurance policy

paid to a “totally innocent beneficiary” of a

wrongful act, if a non-designated beneficiary

can show that a designated beneficiary would

be unjustly enriched because of such wrongful

act.

(Defendant Renee Bucke’s Brief Supp. Summ. J. 7.) According to

Renee, her husband was under a state-court order not to change the

beneficiary under any of his life-insurance policies, including his

policy under the Plan, but that without notifying her, he did so

anyway “in contempt of that court.” Id. Because, she argues,

Kibbie received one half of the benefits under the Plan by the

wrongful act of Michael, “Kibbie has been unjustly enriched.” Id.

Thus, she concludes,

Under the equitable doctrine of constructive

trust, [Kibbie] should be required to hold the

funds that she has already received as a

 

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result of [Michael’s] violation of a court

order, in trust for [Renee] and should be

ordered to turn those funds over, pursuant to

the status guaranteed [Renee] by the order of

the California court . . . . Likewise, [Renee] is equitably entitled to the funds

interplead into the registry of the Court.

(Defendant Renee Bucke’s Brief Resp. Summ. J. 7-8.)

2. Sally Kibbie’s Arguments

Naturally, Kibbie sees it differently; see contends that Renee

“and/or her legal counsel do not understand the [Sixth Circuit’s]

findings and ruling.” (Defendant Sally Kibbie’s Resp. Summ. J. 4.)

Kibbie argues that she is the rightful beneficiary under the Plan

because the state-court restraining order is preempted by ERISA and

thus “[Michael] acted lawfully in designating [her] as the . . .

beneficiary . . . .” Id.

Kibbie also argues that under the principles of equity, a

constructive trust is inappropriate. Kibbie contends that Michael

and Renee had been estranged for five years and did not live

together; Kibbie was the one who cared for Michael throughout his

illness that regrettably claimed his life; and, she maintains that

Renee “has already received substantial financial proceeds from

other retirement/pension plans established by [Michael] through

American Airlines.” (Defendant Sally Kibbie’s Resp. Summ. J. 7-8.)

Therefore, Kibbie argues, 

 

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If the rules of equity are to be applied, the

wishes of [Michael] should be honored, and

this Court should summarily determine that

Kibbie is the rightful recipient of the insurance proceeds in issue because she was his

friend and caretaker. 

(Defendant Sally Kibbie’s Resp. Summ. J. 7-8.) 

Finally, Kibbie ends by inexplicably quoting the following

passage from Sun Life:

When Congress was adopting ERISA, it had

before it a provision to bar the alienation or

garnishment of ERISA plan benefits, and chose

to impose that limitation only with respect to

ERISA pension benefits plans, and not ERISA

welfare benefit plans. In a comprehensive

regulatory scheme like ERISA, such omissions

are significant ones. (quoting Mackey v.

Lanier Collection Agency & Serv., Inc., 486

U.S. 825, 837 (1988)).

134 F. Supp. 2d at 836. (Defendant Sally Kibbie’s Resp. Summ. J.

8.) From that passage, the district court concluded that, “There

is therefore a presumption of free alienation of ERISA welfare

benefits.” Sun Life, 134 F. Supp. 2d at 836. 

Kibbie fails to inform the Court as to why the Supreme Court

passage from Mackey quoted in Sun Life furthers her position. She

simply ends her brief with that passage. But in both of those

cases, the designated beneficiary of the welfare plan benefits was

“alienated” from the benefits in favor of a non-designated

beneficiary. That is precisely what Renee hopes to achieve over

the objection of Kibbie.

 

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C. Analysis

 ERISA is the principle federal statute that governs employee

benefit plans. See 29 U.S.C. § 1001, et seq. Under ERISA, plans

fall into two categories: “employee pension benefit plans” and

“employee welfare benefit plans.” See 29 U.S.C. § 1002. The Court

agrees with the defendants that the Plan at issue here is an

employee welfare benefit plan governed by ERISA. Under 29 U.S.C.

§ 1002(1), an employee welfare benefit plan is, among other things:

any plan . . . established or maintained by an

employer . . . to the extent that such plan .

. . was established or maintained for the

purpose of providing for its participants or

their beneficiaries, through the purchase of

insurance or otherwise . . . benefits in the

event of . . . death . . . . 

The Court also agrees with the parties that ERISA preempts the

California state court’s restraining order to the extent it

prohibits Michael from changing the beneficiary under the Plan.

ERISA preempts “any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan . . . .” 29 U.S.C.

§ 1144(a). The term “State law” includes “all laws, decisions,

rules, regulations, or other State action having the effect of law

. . . .” 29 U.S.C. § 1144(c)(1). Thus, a state-court order, such

as a temporary restraining order having the effect of law, is

preempted by ERISA insofar as it relates to an employee benefit

plan. 

 

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The Supreme Court has held that “a state law relates to an

ERISA plan if it has a connection with or reference to such a

plan.” Egelhoff v. Egelhoff, 532 U.S. 141, 147 (2001)(internal

quotations and citations omitted). And the Fifth Circuit has held

“that a state law governing the designation of an ERISA beneficiary

‘relates to’ the ERISA plan, and is therefore preempted.” Manning

v. Hayes, 212 F.3d 866, 870 (5th Cir. 2000). 

Here, the California restraining order forbids Michael from

freely changing his designated beneficiary under the Plan.

According to the Plan documents, Michael was free to change his

beneficiary at will and without the consent of the designated

beneficiary. The California restraining order, if effective, would

frustrate a right Michael enjoys under the terms of an ERISA plan.

Also, the California restraining order effectively voids Michael’s

change of beneficiary and reinstates his original designation of

Renee. Thus, the Court agrees with the defendants that ERISA

preempts the California state court’s standard restraining order.

Having determined that ERISA preempts the California order,

thereby rendering it powerless over Michael’s beneficiary designation, the Court must decide whether Renee, as a non-beneficiary

claimant, is nevertheless entitled to the proceeds of the Plan.

The Court concludes that she is not. 

The Fifth Circuit has held that “ERISA does not expressly

address the circumstances, if any, in which a non-beneficiary may

 

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avoid the payment of life insurance benefits to the named beneficiary.” Manning, 212 F.3d at 871; see also, The Guardian Life

Insurance Company of America v. Finch, 395 F.3d 238, 242-43 (5th

Cir. 2004)(holding Egelhoff does not undermine holding); Brandon v.

The Travelers Insurance Company, 18 F.3d 1321, 1325 (5th Cir.

1994). The Fifth Circuit has repeatedly rejected the contention

that ERISA section 1104(a) “expressly provides the statutory rule

for resolving competing claims to insurance proceeds . . .,” and

has expressly rejected “the bright-line rule” that “the named

beneficiary must always prevail, without regard to any other

circumstances or provisions of law.” Manning, 212 F.3d at 871-72;

Clift v. Clift, 210 F.3d 268 (5th Cir. 2000); Finch, 395 F.3d at

239-40); Brandon, 18 F.3d at 1327. Thus, the Fifth Circuit

“follows the majority approach by applying federal common law to

disputes between a non-beneficiary claimant and the named ERISA

beneficiary to life insurance proceeds, and neither the express

language of ERISA nor the Supreme Court’s [decisions] require that

we abandon that approach . . . .” Manning, 212 F.3d at 874.

When ERISA preempts state law like the California restraining

order at issue here, the Court is required to apply federal common

law to determine who is the appropriate beneficiary under the Plan.

Finch, 395 F.3d at 240. The Court must first look to the ERISA

statute, but if it is silent on the issue, then the Court may look

to federal common law “as long as the federal common law rule

 

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created is compatible with ERISA’s policies.” Cooperative Benefit

Administrators, Inc. v. Ogden, 367 F.3d 323, 329 (5th Cir. 2004).

In applying federal common law, the Court “may draw guidance

from analogous state law.” Brandon, 18 F.3d at 1325; see also,

Manning, 212 F.3d at 874. But federal common law “cannot be

defined solely by reference to the law of but a single state.”

Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, et

al., 354 F.3d 348, 359 (5th Cir. 2003). 

In Brandon, the court held that ERISA preempted a divorce

decree that awarded Richard Brandon all right, title, interest, and

claim in any employee benefit plan. Richard had named his wife,

Wanda Brandon, as the beneficiary on a life-insurance policy

provided by his employer. When Richard petitioned for divorce, he

and Wanda agreed to a property division that included Wanda’s

relinquishment of any claim to the policy’s proceeds. The state

court accepted the parties’ agreement dividing the property and

entered a divorce decree incorporating that agreement. Richard,

however, failed to remove Wanda as a beneficiary under his employee

insurance policy. After his death, Wanda filed a claim for the

proceeds, but was denied because of the divorce decree. 

The Fifth Circuit held that ERISA preempted the divorce

decree. Brandon, 18 F.3d at 1325. But the court did not end its

inquiry there. After expressly rejecting the notion that ERISA

section 1104(a) required insurance proceeds of an ERISA welfare

 

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benefit plan to be paid to the named beneficiary, the court applied

federal common law and determined that Wanda had waived any right

or claim to the benefits. Id. at 1326. The court held, “The

divorce decree was a bona fide waiver of her rights to the

insurance policy proceeds and we are bound to carry out the

provisions of the agreement signed by the parties.” Id. at 1327.

As a result, though the named beneficiary, Wanda did not receive

the benefits of the ERISA life-insurance policy. See also Finch,

395 F.3d at 243 (affirming district-court decision that ERISA

preempted divorce decree but that ex-spouse had waived any rights

to insurance policy proceeds and thus ordered the proceeds paid to

a non-beneficiary).

In its fashioning of the federal common law of waiver, the

Fifth Circuit looked to a Texas statute that creates a presumption

of waiver of benefits absent a redesignation following a divorce.

Id. at 1326. Although the Fifth Circuit drew from the Texas

statute, it stopped short of a wholesale adoption: 

In this case . . . we adopt the Texas rule

creating a presumption of waiver absent

redesignation following divorce. . . . However, in looking to state family law for

guidance, we recognize that wholesale adoption

of the Texas redesignation statute will not

sufficiently protect the interests of beneficiaries. Thus, in our fashioning of federal

common law, we modify the adoption of state

law to require that any waiver be voluntary

and in good faith.

 

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Id. Thus, the clear instruction is that while the Court may and

should look to state law in the formulation of federal common law,

it must also insure that the policies and objectives of ERISA are

protected when fashioning federal common law to address matters as

to which ERISA is silent.

In fashioning and applying this federal common law of waiver,

the Fifth Circuit harmonized two competing yet compelling policy

objectives. It recognized that “the law of family relations, which

includes an individual’s right to expressly apportion property upon

divorce, has traditionally been a fairly sacrosanct enclave of

state law.” Manning, 212 F.3d at 872. On the other hand, the

Fifth Circuit recognized that Congress passed ERISA to “protect .

. . participants in employee benefit plans and their beneficiaries

. . . .” 29 U.S.C. § 1001(b); Id. The Fifth Circuit’s federal

common law of waiver champions both policy objectives.

It has been almost universally recognized that, upon divorce,

each spouse no longer desires to inherit from the other or to have

the ex-spouse remain as a beneficiary. See Egelhoff, 532 U.S. at

158-59 (Breyer, J., dissenting). Following this recognition, many

states, like Texas and Washington as mentioned in Manning and

Egelhoff, have adopted statutes that automatically revoke the

designation of a spouse as a beneficiary on a life-insurance policy

upon divorce. In essence, absent any evidence to the contrary,

these statutes presume that upon divorce, an insured no longer

 

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desires to have the insured’s spouse remain as his beneficiary.

Thus, the federal common law of waiver, as applied in Brandon,

protects the right of individuals to apportion property upon

divorce by giving effect to a divorce decree that incorporates a

property-settlement agreement that the spouses entered into

voluntarily and in good faith. At the same time, the Fifth

Circuit’s federal common law of waiver protects participants in

employee benefit plans and their beneficiaries by recognizing that,

upon divorce, the participant no longer desires to have the

participant’s spouse remain as a beneficiary. 

Renee, by contrast, invites the Court to apply principles of

equity to void a desired beneficiary designation, thereby giving

roundabout effect to an ERISA-preempted state-court restraining

order. Unlike the participants in Brandon, who are presumed to no

longer desire to have their spouses remain as their beneficiaries,

here, Michael specifically and intentionally designated Kibbie as

his beneficiary on his ERISA-governed life-insurance policy. Thus,

the fashioning of federal common law in this case to require the

imposition of a constructive trust (an equitable remedy) would

further the goal of recognizing family law as a sacrosanct enclave

of state law, but do so at the expense of ERISA’s goal of protecting participants and their beneficiaries. For that reason, the

Court concludes that accepting Renee’s invitation to impose a

constructive trust on the Plan’s proceeds for her benefit would be

 

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inappropriate. In reality, Renee is requesting that the Court

carve out an equitable exception to ERISA’s legislative requirements. This the Court will not do. 

The Supreme Court has stated that there is “a presumption

against preemption in areas of traditional state regulation such as

family law.” Egelhoff, 532 U.S. at 151. But that is nothing more

than a presumption that “can be overcome where . . . Congress has

made clear its desire for preemption.” Id. Such a clear indication is present here. 

ERISA commands that a plan shall “specify the basis on which

payments are made to and from the plan.” 29 U.S.C. § 1102(b)(4).

And as noted above, ERISA section 1104 requires employee benefit

plan fiduciaries to discharge their duties in accordance with the

plan’s documents and instruments. Here, the Plan documents and

instruments specifically gave Michael the right to change his

beneficiary designation at will and without the consent or

knowledge of his previously designated beneficiary. MetLife was

required under section 1104 to honor Michael’s change in his

beneficiary designation from his wife, Renee, to his companion,

Kibbie. And ERISA is designed to protect Michael and his choice as

to his designated beneficiary. This protection includes preempting

any state law that is to the contrary.

The Court notes that, at first blush, Renee presents compelling arguments that there are strong equities that weigh in her

 

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favor. The “sacrosanct enclave” recognized in Brandon has included

the state’s apportioning of property upon a divorce and the right

of a spouse, such as Renee, to have the marital estate preserved

for equitable distribution upon divorce. Michael was properly

served with a petition for divorce accompanied with a restraining

order that legitimately sought to preserve the status quo between

the divorcing parties by ordering both parties, among other things,

not to make any changes to any life-insurance policies. This

included not only changing any designated beneficiaries, but also

doing anything that would diminish the value of any policy. The

purpose of the restraining order was to preserve the status quo as

to the marital property, thereby preserving the marital estate for

later equitable distribution. And it is undisputed that Michael

ignored that restraining order and changed the beneficiary under

the Plan. Save only ERISA’s intervention, Michael had a legal

obligation to refrain from changing his beneficiary and to preserve

the status quo until the divorce was final. See Estate of Ronald

D. Fuller, 2005 Cal.App.Unpub. LEXIS 3380 (Cal. Ct. App. 1st Dist.

Apr. 18, 2005)(holding redesignation of beneficiary of lifeinsurance policy in violation of family-law standard restraining

order was invalid). Arguably, intentionally ignoring the restraining order and secretly changing the beneficiary, Michael committed

a fraud upon Renee and the California state court. 

 

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In essence, Michael has converted ERISA preemption from a

shield into a sword. The goal of ERISA’s preemption was to shield

it from the differing “legal obligations in different States,” and

to ensure the uniform administration and enforcement of the

statutory scheme. Egelhoff, 532 U.S. at 148. It was not meant to

be perverted by a participant and used as a mechanism (to the

detriment of the participant’s spouse) to defy a state-court

restraining order designed to preserve the marital estate. 

While these are strong equities that weigh in favor of Renee,

the California court is not as powerless as Renee would have one

believe. True, the California court is powerless to reach

Michael’s employee insurance policy, but the state court could

still consider the value of that property and factor that into the

equitable distribution of other assets in the marital estate. And

although Renee has lost any claim in the proceeds of the Plan, she,

and not Kibbie, presumably (neither party indicates that a will

left anything to another) stands to inherit all or most of the

remaining assets in the marital estate. 

Moreover, the Supreme Court has made clear that “courts should

be loath to announce equitable exceptions to legislative requirements or prohibitions [where such requirements and prohibitions]

are unqualified by the statutory text.” Guidry I, 493 U.S. at 376.

Certainly, the equities in this case are no more compelling than

the equities in the Guidry case. There, Guidry was a union

 

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fiduciary who had been convicted of embezzling from his union’s

pension fund at the expense and detriment of many of the union’s

members. Perhaps their only chance for restitution lay in their

ability to attach Guidry’s pension benefits. The High Court

concluded, nonetheless, that the benefits could not be alienated,

and noted that “understandably, there may be a natural distaste for

the result we reach here. The statute, however, is clear.” Id.

And what Guidry teaches is that courts should not substitute equity

for the policy considerations and determinations of our elected

officials in Congress. The outcomes in cases like Guidry and this

one, which are controlled by laws duly enacted through the

democratic process, are for Congress to address—not the courts. 

Unfortunately for Renee, the unqualified statutory text is

clear here as well; the Plan must be enforced in accordance with

its documents and instruments, and Michael’s designated beneficiary

must be protected. ERISA commands that any state law that attempts

to diminish a participant’s freedom to designate whomever he wishes

as a plan beneficiary is preempted. 

Thus, Michael had the legal right to remove Renee as a

beneficiary without her consent or knowledge. Because Michael

acted lawfully and exercised rights that are federally protected

under ERISA, the Court cannot invalidate Michael’s action because

it appears to be inequitable. “It makes little sense to adopt such

a policy and then refuse enforcement whenever enforcement appears

 

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TRM/flg 25

inequitable.” Id. Applying that notion here, it makes little

sense to say on the one hand that Michael acted lawfully, but on

the other, because his lawful acts appear to be inequitable, the

Court will refuse enforcement. 

III. Conclusion 

For the foregoing reasons, the Court GRANTS defendant Sally

Kibbie’s summary-judgment motion and DENIES defendant Renee Bucke’s

summary-judgment motion. The funds currently being held in the

Court’s registry, plus all accrued interest, shall be paid to

defendant Kibbie. Further, all costs under 28 U.S.C. § 1920 are

taxed against the party that incurred them. 

SIGNED March 9, 2007.

 

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