United States Court of Appeals

For the Eighth Circuit

___________________________

No. 16-1172

___________________________

Metropolitan Life Insurance Company

lllllllllllllllllllll Plaintiff

v.

Kaye Melin

lllllllllllllllllllll Defendant - Appellant

Ashley Sveen; Antone Sveen

lllllllllllllllllllll Defendants - Appellees

____________

Appeal from United States District Court 

for the District of Minnesota - Minneapolis

____________

 Submitted: November 17, 2016

 Filed: April 3, 2017

____________

Before BENTON and SHEPHERD, Circuit Judges, and EBINGER,1

 District

Judge.

____________

1The Honorable Rebecca Goodgame Ebinger, United States District Judge for

the Southern District of Iowa, sitting by designation.
BENTON, Circuit Judge.

Mark A. Sveen designated his then-wife, Kaye L. Melin, as the primary

beneficiary of his life insurance policy, and his children as contingent beneficiaries.

Later, Minnesota extended its revocation-upon-divorce statute to life insurance

policies. The district court awarded the proceeds to the children, rejecting Melin’s

argument that applying the statute retroactively is an impermissible impairment under

the Contract Clause. Having jurisdiction under 28 U.S.C. § 1291, this court reverses

and remands.

I.

Sveen purchased the life insurance policy in 1997 and married Melin later that

year. The following year, he named her as the primary beneficiary and his two adult

children as contingent beneficiaries. Sveen had additional life insurance with his

children as primary beneficiaries. Melin and Sveen divorced in 2007. Sveen never

changed the beneficiary designation on the policy.

In 2002, Minnesota amended its probate code to apply the revocation-upondivorce statute to life insurance beneficiary designations: “the dissolution or

annulment of a marriage revokes any revocable . . . beneficiary designation . . . made

by an individual to the individual’s former spouse.” Minn. Stat. Ann. § 524.2-804.

When Sveen died in 2011, Melin was still the primary beneficiary on the

policy. The insurance company filed an interpleader to determine whether the

revocation-upon-divorce statute revoked this beneficiary designation. Sveen’s

children—the contingent beneficiaries—and Melin cross-claimed for the proceeds.

The district court granted summary judgment to the Sveens. This court reviews

constitutional claims de novo. Walker v. Hartford Life & Accident Ins. Co., 831

F.3d 968, 973 (8th Cir. 2016).

-2-
II.

A.

The Sveens argue that Melin lacks standing to assert a constitutional challenge

to the revocation-upon-divorce statute.

A non-party may assert a claimunder a contract if the individual is a third-party

beneficiary. See Dayton Dev. Co. v. Gilman Fin. Servs., Inc., 419 F.3d 852, 855 (8th

Cir. 2005). Third-party standing is appropriate where: (1) the litigant “suffered an

‘injury in fact,’ [ ] giving him or her a ‘sufficiently concrete interest’ in the outcome

of the issue in dispute”; (2) what the litigant seeks has a “close relation” to the rights

of the absent party; and (3) there is “some hindrance to the [absent] party’s ability to

protect his or her own interests.” Powers v. Ohio, 499 U.S. 400, 411 (1991), quoting

Singleton v. Wulff, 428 U.S. 106, 112 (1976). 

A contested beneficiary like Melin hasstanding because: (1) she would suffer

the loss of policy proceeds, a concrete injury, if the statute were applied; (2) she seeks

to enforce the contract as written, vindicating Sveen’s written intent; and (3) Sveen’s

death hinders his ability to protect his interest to enforce the contract. See, e.g.,

Mearns v. Scharbach, 12 P.3d 1048, 1055 (Wash. Ct. App. 2000) (holding former

spouse had third-party standing to assert constitutional challenge to retroactive

application of revocation-upon-divorce statute where policyholder’s children were

contingent beneficiaries).

B.

The Contract Clause prohibits a state law from “impairing the Obligation of

Contracts.” U.S. Const. art. I, § 10, cl. 1. The prohibition, though not absolute,

encompasses laws that “operate[ ] as a substantial impairment of a contractual

-3-
relationship” and do not serve a legitimate public purpose or are not “based upon

reasonable conditions and [ ] of a character appropriate to the public purpose.”

Energy Reserves Grp., Inc. v. Kan. Power & Light Co., 459 U.S. 400, 410-12

(1983), quoting first Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244

(1978), then quoting U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 22 (1977).

This court has held that a revocation-upon-divorce statute like the one here

violates the Contract Clause when applied retroactively. Whirlpool Corp. v. Ritter,

929 F.2d 1318, 1324 (8th Cir. 1991). There, the husband had designated his thenwife as his beneficiary before Oklahoma passed its revocation-upon-divorce statute.

Id. at 1319-20. Two years after the statute was passed, they divorced. Id. The

husband never updated the beneficiary designation. Id. This court held that

automatically revoking an ex-spouse’s beneficiary designation made before

enactment of the statute would violate the Contract Clause. Id. at 1322. The

unconstitutionality turned on the policyholder’s rights and expectations:

[A]t the time James designated Darlene as his beneficiary, Oklahoma

law provided that she would remain the beneficiary unless and until he

designated someone else; thus, when James attempted to order his

personal affairs, this rule of insurance contract construction became a

part of the insurance contract’s obligations. James was entitled to

expect that his wishes regarding the insurance proceeds, as ascertained

pursuant to this then-existing law, would be effectuated. By reaching

back in time and disrupting this expectation, the Oklahoma legislature

impaired James’ contract.

Id.

“It is a cardinal rule in our circuit that one panel is bound by the decision of a

prior panel.” Owsley v. Luebbers, 281 F.3d 687, 690 (8th Cir. 2002). The Whirlpool

case controls this case. The Sveens argue that Whirlpool is distinguishable or,

alternatively, should not be followed.

-4-
Though Whirlpool addressed an Oklahoma statute, both it and the Minnesota

statute have the same effect: to disrupt the policyholder’s expectations and right to

“rely on the law governing insurance contracts as it existed when the contracts were

made.” Whirlpool, 929 F.2d at 1323. The Sveens argue that Whirlpool is

distinguishable in several ways.

First, factually: The beneficiary in Whirlpool was the mother of the

policyholder’sfour minor children, while Melin and Sveen had no children together.

Id. Though the Whirlpool court noted it was “plausible” that the policyholder would

want to provide financial security for his children by designating their caregiver (not

his new wife) as the beneficiary, this court was explaining that the statute was just as

likely to “either effectuate or frustrate his intent.” Id. The holding rested on the

policyholder’s right to “rely on the law governing insurance contracts as it existed

when the contracts were made.” Id. The holding did not depend on the age or

number of children. See id.

Second, the Sveens note that Minnesota law gives a beneficiary no vested

interest in the policy. See McCloud v. Aetna Life Ins. Co., 21 N.W.2d 476, 478-79

(Minn. 1946). This, too, is beside the point. What matters are the policyholder’s

rights and expectations, not any interest of the beneficiary. See Whirlpool, 929 F.2d

at 1323. 

Third, the Sveens stress that the Minnesota statute has exceptions allowing the

policyholder to “opt out of the default rule of revocation.” Not only is this irrelevant

to Whirlpool’s focus on the policyholder’s right to rely on the law at the time of

contract formation, but Whirlpool itself found a similar escape insufficient. Id. The

Oklahoma statute allowed a policyholder to “rename” a formerspouse as beneficiary,

but: “This fact does not cure the constitutional infirmity.” Id. Similarly, here, that

the statute would have allowed him to opt out does not remedy the violation of

Sveen’s rights that would occur by applying the statute to “directly alter[ ] the

obligations and expectations of the contracting parties.” Id.

-5-
The rest ofthe Sveens’ attempted distinctions eithermischaracterize Whirlpool

or do not confront its rationale—maintaining the policyholder’s expectations under

the law that existed at the time of contracting.

According to the Sveens, Whirlpool “undercuts the policy reasons served by

revocation upon divorce statutes” because “there is no justification for extending

Contract Clause concerns to a statute that only affects the donative component of a

life insurance policy.” See, e.g., Stillman v. Teachers Ins. & Annuity Ass’n Coll.

Ret. Equities Fund, 343 F.3d 1311, 1322 (10th Cir. 2003) (disagreeing with

Whirlpool and citing criticism by the Joint Editorial Board for the Uniform Probate

Code). But see Mass. Mut. Life Ins. Co. v. Curley, 459 F. Appx. 101, 106 (3d Cir.

2012) (relying on Parsonese v. Midland Nat. Ins. Co., 706 A.2d 814 (Pa. 1998) to

reach the same result as Whirlpool). The Whirlpool case rejects this argument:

The legislature, in passing this statute, determined that people fail to

consider the need to change their insurance policies after experiencing

a change in family relations. . . . However, this same conclusion

suggeststhat an individual could rely on the pre-existing law and neither

know nor expect that the rules governing his policy have changed, and

thus might fail to consider the need to investigate potential changes in

the law.

Whirlpool, 929 F.2d at 1323. This court’s previous opinion forecloses any

conclusion other than that the statute here is unconstitutional when applied

retroactively.

* * * * * * *

The judgment is reversed, and the case remanded for proceedings consistent

with this opinion.

______________________________

-6-