Court Opinion

ID: 4693031
Source: CourtListenerOpinion
Date Created: 2021-06-04 18:04:41.499417+00
Date Added: 2024-06-11T08:05:20.045466
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                   SUMMARY
                                                                 May 27, 2021

                                2021COA75

No. 20CA0038 Ragan v. Ragan — Employment Law — ERISA;
General Provisions Concerning Probate and Nonprobate
Transfers — Revocation of Probate and Nonprobate Transfers by
Divorce

     This appeal concerns the interplay between Colorado’s divorce

revocation statute, section 15-11-804, C.R.S. 2020, under which

any beneficiary designation of a former spouse is automatically

revoked upon divorce, and the Employee Retirement Income

Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, under which

an ERISA plan administrator must distribute plan proceeds to the

beneficiary named in the plan. In In re Estate of MacAnally, 20 P.3d

1197, 1203 (Colo. App. 2000), a division of this court held that

ERISA preempts the divorce revocation statute in the

“pre-distribution” context by requiring plan proceeds to be

distributed to the named beneficiary. A division of the court of
appeals now recognizes that ERISA preemption extends to

post-distribution lawsuits pursuant to section 15-11-804(8)(b). The

division therefore concludes as a matter of first impression in

Colorado that, absent an express waiver of rights to the proceeds,

ERISA precludes a lawsuit against a former spouse to recover

insurance proceeds that were distributed to her as the named

beneficiary.
COLORADO COURT OF APPEALS                                      2021COA75

Court of Appeals No. 20CA0038
El Paso County District Court No. 19CV31274
Honorable Gregory R. Werner, Judge

Rozalyn Ragan, Personal Representative of the Estate of Charles Phillip Ragan,
Deceased,

Plaintiff-Appellant,

v.

Melissa Ragan, a/k/a Melissa Hudson,

Defendant-Appellee.

                           JUDGMENT AFFIRMED

                                  Division V
                            Opinion by JUDGE YUN
                       J. Jones and Navarro, JJ., concur

                           Announced May 27, 2021

The Drexler Law Group, LLC, Matthew B. Drexler, Brian Melton, Stephen A.
Brunette, Colorado Springs, Colorado, for Plaintiff-Appellant

The Gasper Law Group, PLLC, Kenneth H. Gray, Jack Roth, Colorado Springs,
Colorado, for Defendant-Appellee
¶1    At the time of Charles Phillip Ragan’s death, his ex-wife,

 Melissa Ragan, a/k/a Melissa Hudson, remained the named

 beneficiary of his employer-sponsored life and accidental death

 insurance policies. After the insurance proceeds were distributed to

 Ms. Ragan, Mr. Ragan’s estate (Estate) sued her to recover those

 proceeds.

¶2    The Estate’s case implicates the interplay between Colorado’s

 divorce revocation statute, section 15-11-804, C.R.S. 2020, and the

 Employee Retirement Income Security Act of 1974 (ERISA),

 29 U.S.C. §§ 1001-1461, which the parties agree governs the

 insurance policies. On one hand, ERISA provides that an employee

 benefit plan “shall . . . specify the basis on which payments are

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

 fiduciary shall administer the plan “in accordance with the

 documents and instruments governing the plan,” 29 U.S.C.

 § 1104(a)(1)(D), and make payments to a beneficiary who is

 “designated by a participant, or by the terms of an employee benefit

 plan,” 29 U.S.C. § 1002(8). ERISA also provides that it “shall

 supersede any and all State laws insofar as they may now or

                                   1
 hereafter relate to any employee benefit plan” covered by ERISA.

 29 U.S.C. § 1144(a).

¶3    On the other hand, section 15-11-804(2)(a)(i) (subsection (2))

 of Colorado’s divorce revocation statute provides that any

 beneficiary designation of a then-spouse is automatically revoked

 upon divorce. Section 15-11-804(8)(b) (subsection (8)(b)) further

 provides that if “any part of this section is preempted by federal

 law,” a former spouse “who . . . received a payment . . . to which

 that person is not entitled under this section is obligated to return

 that payment” or “is personally liable for the amount of the

 payment . . . , to the person who would have been entitled to it were

 this section or part of this section not preempted.”

¶4    The Estate concedes that ERISA preempts subsection (2) and

 that the plan administrator properly distributed the insurance

 proceeds to Ms. Ragan. But the Estate argues that

 subsection (8)(b) allows the Estate to recover those proceeds from

 Ms. Ragan, who, by operation of subsection (2), was not entitled to

 those proceeds. The district court disagreed, concluding that

 subsection (8)(b), like subsection (2), is preempted by ERISA and

                                   2
 that the Estate therefore had “no legal interest” in the insurance

 proceeds.

¶5    We affirm the district court’s judgment. In In re Estate of

 MacAnally, 20 P.3d 1197, 1203 (Colo. App. 2000), a division of this

 court held that ERISA preempts Colorado’s divorce revocation

 statute in the “pre-distribution” context by requiring an ERISA plan

 administrator to distribute plan proceeds to the beneficiary named

 in the plan. We now recognize that ERISA preemption extends to

 post-distribution lawsuits. Based on our analysis of legal authority

 from other jurisdictions, we conclude as a matter of first impression

 in Colorado that, absent an express waiver of rights to the proceeds,

 ERISA precludes a lawsuit against a former spouse to recover

 insurance proceeds that were distributed to him or her as the

 named beneficiary.

                           I.   Background

¶6    Charles and Melissa Ragan were married in 2012 and divorced

 in December 2016. Less than five months later, on May 13, 2017,

 Mr. Ragan died in a car-bicycle accident. Before the dissolution of

 the Ragans’ marriage, Mr. Ragan took out several life and

 accidental death insurance policies through his employer, Federal

                                   3
 Express, all of which named Ms. Ragan as the beneficiary.

 Mr. Ragan did not change the beneficiary of these policies after his

 divorce from Ms. Ragan.

¶7    Shortly after Mr. Ragan’s death, Ms. Ragan was notified of the

 existence of the policies and received benefits in the amount of

 approximately $535,000. Ms. Ragan contends, and the Estate does

 not dispute, that she was unaware of the existence of the policies

 before Mr. Ragan’s death. No party asserts that Ms. Ragan waived

 or voluntarily relinquished her right to receive the insurance

 proceeds.

¶8    Following a hearing, a domestic relations court found that the

 insurance proceeds were not a material asset or liability of the

 marital estate, that no maintenance or child support obligations

 had to be secured with the proceeds, and that, therefore, the

 Estate’s claim for recovery of the proceeds from Ms. Ragan was not

 within that court’s continuing jurisdiction.

¶9    In May 2019, the Estate filed a complaint in district court

 against Ms. Ragan and her businesses,1 seeking to recover the

 1The complaint alleges that Ms. Ragan used the insurance
 proceeds to establish her businesses.

                                   4
  insurance proceeds pursuant to subsection (8)(b) and asserting

  related claims for breach of contract, breach of the covenant of good

  faith and fair dealing, unjust enrichment, civil theft, and piercing

  the corporate veil. The primary basis for the Estate’s claims is that

            DECEDENT’s designations of FORMER
            SPOUSE as beneficiary of said policies were
            revoked as a matter of law upon entry of the
            above-referenced Decree of Dissolution on
            December 28, 2016, under C.R.S.
            § 15-11-804(2)(a), with the same effect as if
            FORMER SPOUSE had disclaimed said
            beneficiary designations, under C.R.S.
            § 15-11-804(4).

  Thus, the Estate alleges that “FORMER SPOUSE was not entitled to

  receive the insurance benefits specified above, and is obligated to

  return or repay same to the ESTATE, together with any benefits

  arising from payment of said benefits to her, under C.R.S.

  § 15-11-804(8).”

¶ 10   Ms. Ragan filed a motion for declaratory relief pursuant to

  C.R.C.P. 57 and a motion to dismiss pursuant to C.R.C.P. 12(b)(5).

  She argued that because ERISA preempts subsection (2) by

  requiring the insurance proceeds to be distributed to her, it likewise

  preempts subsection (8)(b) by precluding a post-distribution lawsuit

  against her to recover those proceeds. In response, the Estate

                                     5
  argued that although ERISA preempts subsection (2), it does not

  preempt subsection (8)(b) because attempting to recover benefits

  before they have been distributed to the beneficiary differs from

  attempting to recover benefits from the beneficiary after they have

  been disbursed.

¶ 11   The district court granted both of Ms. Ragan’s motions. It

  concluded that precedent from the United States Supreme Court

  and other courts, including a division of this court, makes clear

  that ERISA preempts any revocation statute — like section

  15-11-804 — that automatically revokes a beneficiary designation

  upon divorce. The only exception, the court explained, is in the

  context of waiver by private agreement between the parties.

  Because “no facts have been pled in this case that such an

  agreement exists” and “the Estate does not reference any such

  waiver in this case,” the court concluded that ERISA preempts the

  Estate’s post-distribution claims against Ms. Ragan to recover

  funds that were properly distributed to her as the named

  beneficiary.

¶ 12   The Estate filed a motion to alter or amend the judgment. The

  court denied the motion, noting that “all of the cases cited by [the

                                    6
  Estate] involve a purported voluntary relinquishment of a claim by

  the beneficiary” while this case, in contrast, involves the revocation

  of a beneficiary’s interest by operation of state law.

                               II.   Analysis

¶ 13   The Estate contends that the district court erred by

  concluding that ERISA preempts subsection (8)(b).2 Specifically, the

  Estate argues that ERISA does not preempt its claims because they

  are “for post-distribution recovery of insurance proceeds paid to a

  decedent’s former spouse, and [are] not an action against an ERISA

  plan administrator to attempt to recover insurance proceeds prior

  to distribution by the ERISA plan administrator.” Ms. Ragan

  contends that the Estate’s appeal is frivolous and requests an

  assessment of fees and costs as sanctions pursuant to C.A.R. 38(b).

  After setting out the standard of review, we turn first to Colorado’s

  divorce revocation statute, then to ERISA and the body of case law

  surrounding ERISA preemption. We then address Ms. Ragan’s

  request for sanctions.

  2The Estate does not argue on appeal that its claims for breach of
  contract, breach of the covenant of good faith and fair dealing,
  unjust enrichment, civil theft, and piercing the corporate veil
  survive if ERISA preempts subsection (8)(b).

                                     7
                         A.   Standard of Review

¶ 14   We review the district court’s summary judgment ruling on a

  declaratory judgment claim under C.R.C.P. 57 de novo. Fire House

  Car Wash, Inc. v. Bd. of Adjustment for Zoning Appeals, 30 P.3d 762,

  766 (Colo. App. 2001). We also review the district court’s ruling on

  a motion to dismiss under C.R.C.P. 12(b)(5) de novo. Scott v. Scott,

  2018 COA 25, ¶ 17. And we review the district court’s statutory

  interpretation de novo. In re Estate of Johnson, 2012 COA 209, ¶ 8.

               B.   Colorado’s Divorce Revocation Statute

¶ 15   Subsection (2) provides that, with certain exceptions not

  applicable here, a divorce revokes any revocable disposition or

  appointment of property made by a divorced individual to the

  individual’s then-spouse in a governing instrument, including a

  beneficiary designation in an insurance policy. § 15-11-804(2)(a)(i);

  Estate of Johnson, ¶ 9.

¶ 16   Subsection (8)(a) then provides that “a former spouse . . . who,

  not for value, received a payment . . . to which that person is not

  entitled under this section is obligated to return the payment . . . ,

  or is personally liable for the amount of the payment . . . , to the

                                     8
  person who is entitled to it under this section.” Subsection (8)(b)

  further provides that

            [i]f this section or any part of this section is
            preempted by federal law with respect to a
            payment . . . covered by this section, a former
            spouse . . . who, not for value, received a
            payment . . . to which that person is not
            entitled under this section is obligated to
            return that payment . . . , or is personally
            liable for the amount of the payment . . . , to
            the person who would have been entitled to it
            were this section or part of this section not
            preempted.

  § 15-11-804(8)(b).

                               C.   ERISA

¶ 17   “ERISA is a comprehensive statute regulating employee

  pension and welfare plans.” Estate of MacAnally, 20 P.3d at 1199.

  “The purpose of ERISA is ‘to protect the interests of employees and

  their beneficiaries in employee benefit plans and to ensure that

  plans and plan sponsors are subject to a uniform body of benefit

  law . . . .’” Id. at 1201 (quoting Barrett v. Hay, 893 P.2d 1372, 1380

  (Colo. App. 1995)).

¶ 18   ERISA provides that an employee benefit plan “shall . . .

  specify the basis on which payments are made to and from the

  plan,” 29 U.S.C. § 1102(b)(4), and that the fiduciary shall

                                    9
  administer the plan “in accordance with the documents and

  instruments governing the plan,” 29 U.S.C. § 1104(a)(1)(D).

  Additionally, each ERISA-governed plan must “provide that benefits

  provided under the plan may not be assigned or alienated.”

  29 U.S.C. § 1056(d)(1). With certain exceptions not relevant here, a

  plan fiduciary must “discharge his duties with respect to a plan

  solely in the interest of the participants and beneficiaries.”

  29 U.S.C. § 1104(a)(1).

¶ 19   ERISA further contains an express preemption provision,

  29 U.S.C. § 1144(a), which states that ERISA “shall supersede any

  and all State laws insofar as they may now or hereafter relate to any

  employee benefit plan” covered by ERISA.

                 D.    Law Governing ERISA Preemption

¶ 20   Two types of preemption — statutory or express preemption

  and direct or conflict preemption — have been used to conclude

  that ERISA preempts state divorce revocation statutes.

¶ 21   Statutory or express “preemption occurs when a statute

  expressly states that it preempts other law.” Estate of MacAnally,

  20 P.3d at 1201. “In the ERISA context, ERISA preempts a state

  law pursuant to statutory [or express] preemption where a state law

                                     10
  relates to any employee benefit plan covered by ERISA.” Id.; see

  29 U.S.C. § 1144(a). A state law “‘relates to’ an employee benefit

  plan . . . if it has a connection with or reference to such a plan.”

  Barrett, 893 P.2d at 1376 (quoting Shaw v. Delta Air Lines, Inc.,

  463 U.S. 85, 96-97 (1983)).

¶ 22   Direct or conflict preemption, in turn, occurs where

  “compliance with both federal and state regulations is a physical

  impossibility, . . . or where state law stands as an obstacle to the

  accomplishment and execution of the full purposes and objectives

  of Congress.” Boggs v. Boggs, 520 U.S. 833, 844 (1997) (citation

  omitted). “In the face of [a] direct clash between state law and the

  provisions and objectives of ERISA, the state law cannot stand.” Id.

¶ 23   In Estate of MacAnally, 20 P.3d at 1203, a division of this

  court held that ERISA preempts Colorado’s divorce revocation

  statute in the “pre-distribution” context — that is, before benefits

  are distributed to a named beneficiary by an ERISA plan

  administrator. At the time of Richard MacAnally’s death, his former

  spouse, Imogene Levin, remained the named beneficiary of his

  ERISA-governed annuity contracts. Id. at 1199. MacAnally’s estate

  argued that Levin’s designation as the beneficiary was revoked by

                                     11
  operation of law. Id. The division noted that, under 29 U.S.C.

  § 1104, an ERISA plan administrator must pay a death benefit to

  the beneficiary named in the plan (Levin) if the plan participant dies

  before retirement, while the divorce revocation statute, in contrast,

  changed the beneficiary to whom benefits must be paid from Levin

  to an unnamed beneficiary (MacAnally’s estate). Id. at 1203. Under

  these circumstances, the division concluded, the divorce revocation

  statute directly conflicted with ERISA, and based on principles of

  direct or conflict preemption, ERISA preempted the divorce

  revocation statute. Id.

¶ 24   The year after Estate of MacAnally, the United States Supreme

  Court reached a similar conclusion. See Egelhoff v. Egelhoff,

  532 U.S. 141 (2001). In Egelhoff, a husband designated his wife as

  the beneficiary of an ERISA-governed life insurance policy provided

  by his employer. After the couple divorced, the husband failed to

  change the beneficiary of the life insurance policy. Id. at 144.

  When the husband died, the plan proceeds were paid to his ex-wife

  according to the pre-divorce beneficiary designation. The

  decedent’s children from a previous marriage sued the ex-wife to

  recover the proceeds, citing a Washington statute that provided for

                                    12
  automatic revocation upon divorce of the designation of a former

  spouse as beneficiary. Id. at 144-45. Based on ERISA’s express

  preemption provision, 29 U.S.C. § 1144(a), the Court held that

  ERISA preempted the Washington statute. Egelhoff, 532 U.S. at

  146.

¶ 25     The Court reasoned that the Washington statute required plan

  administrators to pay benefits to the beneficiaries chosen by state

  law rather than to those identified in the plan documents. Id. at

  147. This outcome, the Court said, contradicts ERISA’s

  requirements 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 that the fiduciary shall administer the plan “in accordance with

  the documents and instruments governing the plan,” 29 U.S.C.

  § 1104(a)(1)(D), making payments to a beneficiary who is

  “designated by a participant, or by the terms of an employee benefit

  plan,” 29 U.S.C. § 1002(8). Egelhoff, 532 U.S. at 147. Further, the

  Court concluded that the Washington statute interfered with

  ERISA’s objective of nationally uniform plan administration, which

  enables employers to “establish a uniform administrative scheme”

  and provide “a set of standard procedures to guide processing of

                                    13
  claims and disbursement of benefits.” Id. at 148 (quoting Fort

  Halifax Packing Co. v. Coyne, 482 U.S. 1, 9 (1987)). No such

  uniformity can exist if plans are subject to different legal obligations

  in different states because plan administrators would need to know

  every state’s law on this subject to determine whether the

  designation of a beneficiary had been revoked by operation of law.

  Id. at 149.

                 E.    ERISA Preempts Subsection (8)(b)

¶ 26   The Estate acknowledges that, under Estate of MacAnally and

  Egelhoff, subsection (2) is preempted by ERISA and that the plan

  administrator thus properly distributed the insurance proceeds to

  Ms. Ragan. However, the Estate contends that ERISA does not

  preempt the Estate’s “post-distribution” suit under subsection (8)(b)

  to recover those funds.

¶ 27   The Estate bases its argument on Kennedy v. Plan

  Administrator for DuPont Savings & Investment Plan, 555 U.S. 285

  (2009), and Andochick v. Byrd, 709 F.3d 296 (4th Cir. 2013). In

  Kennedy, the Supreme Court held that an ERISA plan

  administrator must distribute benefits to the beneficiary named in

  the plan, notwithstanding the fact that the named beneficiary

                                    14
  signed a waiver disclaiming her right to the benefits. 555 U.S. at

  288. But the Court left open the question of whether, once the

  benefits were distributed by the administrator, the plan

  participant’s estate could enforce the named beneficiary’s waiver

  against her. Id. at 299 n.10 (“Nor do we express any view as to

  whether the Estate could have brought an action in state or federal

  court against [the named beneficiary] to obtain the benefits after

  they were distributed.”).

¶ 28   In Andochick, the Fourth Circuit took up the question left open

  by Kennedy and held that ERISA does not preempt

  “post-distribution suits to enforce state-law waivers” against ERISA

  beneficiaries. 709 F.3d at 299-301; see also, e.g., Estate of

  Kensinger v. URL Pharma, Inc., 674 F.3d 131, 132 (3d Cir. 2012)

  (after ERISA plan administrator distributes funds to named

  beneficiary who waived her right to plan proceeds, plan

  participant’s estate can sue named beneficiary to enforce her waiver

  and recover the funds); Sweebe v. Sweebe, 712 N.W.2d 708, 710

  (Mich. 2006) (“While a plan administrator is required by ERISA to

  distribute plan proceeds to the named beneficiary, the named

                                    15
  beneficiary can then be found to have waived the right to retain

  those proceeds.”).

¶ 29   The Estate argues that, if ERISA does not preempt

  post-distribution suits to enforce express waivers by named

  beneficiaries of their rights to ERISA plan proceeds, neither should

  it preempt a post-distribution suit based on a state statute that

  purports to divest a named beneficiary of her right to plan proceeds

  by operation of law. For three reasons, we are not persuaded.

¶ 30   First, none of the cases relied on by the Estate allows a

  state-law-based post-distribution claim for ERISA benefits in the

  absence of a waiver by the named beneficiary.3 Indeed, several of

  3 During oral argument, counsel for the Estate appeared to argue
  that Evans v. Diamond, 957 F.3d 1098 (10th Cir. 2020), Stillman v.
  Teachers Insurance & Annuity Ass’n College Retirement Equities
  Fund, 343 F.3d 1311 (10th Cir. 2003), and Walsh v. Montes,
  388 P.3d 262, 265 (N.M. Ct. App. 2016), allow post-distribution
  claims for ERISA-governed benefits based on a state statute. But
  none of these cases supports this proposition. Evans, 957 F.3d at
  1104-05, held that a different federal statute, the Federal Employee
  Retirement Systems Act, preempted an estate’s lawsuit to enforce a
  beneficiary’s waiver and, in doing so, decided that Kennedy v. Plan
  Administrator for DuPont Savings & Investment Plan, 555 U.S. 285,
  299 n.10 (2009), was inapplicable. Stillman, 343 F.3d at 1314-23,
  did not involve ERISA preemption or ERISA-governed benefits. And
  Walsh, 388 P.3d at 266, involved a claim for recovery of
  ERISA-governed benefits based on an express waiver, not a state
  statute.

                                   16
the cases explicitly distinguish between post-distribution suits to

enforce waivers and post-distribution suits based on state divorce

revocation statutes. In Sweebe, for example, the Michigan Supreme

Court emphasized that its holding that a valid waiver is not

preempted by ERISA was consistent with the principle that parties

have a broad freedom to contract, 712 N.W.2d at 712, while, in

contrast, a state statute that automatically revoked a beneficiary

designation upon divorce would “clearly invade[] an area that is

covered by ERISA,” id. at 713. In Culwick v. Wood, 384 F. Supp. 3d

328, 345 (E.D.N.Y. 2019), the court noted that a former spouse’s

contention that ERISA preempted New York’s divorce revocation

statute was “a red herring” because the claim against her was

based on her express waiver of her right to plan proceeds, not on

the state statute. And in Hennig v. Didyk, 438 S.W.3d 177, 183

(Tex. App. 2014), the court determined that it need not resolve

whether ERISA preempted a post-distribution suit under Texas’s

divorce revocation statute because the named beneficiary expressly

waived her rights to plan proceeds. Thus, while the Estate cites

these and other cases holding that ERISA does not preempt

post-distribution suits to enforce express waivers by named

                                  17
  beneficiaries, it fails to show how those cases support its contention

  that ERISA should not preempt a post-distribution suit based on a

  divorce revocation statute.

¶ 31   Second, the Washington Court of Appeals examined a case

  almost identical to this one and held that ERISA “preempts a

  party’s reliance on [Washington’s divorce revocation statute] for

  recovery of ERISA funds in the hands of the designated beneficiary.”

  Estate of Lundy v. Lundy, 352 P.3d 209, 215 (Wash. Ct. App. 2015).

  The Lundy court emphasized that, while Kennedy recognized an

  open question in the context of waiver by private agreement

  between the parties, it did “not recognize an open question in the

  context of a state-law-based claim to . . . ERISA benefits” after they

  had been distributed to the named beneficiary. Id. at 214.

¶ 32   In reaching its conclusion, the Lundy court looked to a Ninth

  Circuit case, Carmona v. Carmona, 603 F.3d 1041 (9th Cir. 2010).

  In Carmona, a husband designated his then-wife as his survivor

  beneficiary under two ERISA-governed pension plans. Id. at 1048.

  When the husband remarried, he petitioned the family court to

  revoke his designation of his ex-wife as survivor beneficiary and

  substitute his new wife. Id. at 1049. After the husband’s death,

                                    18
  the court ordered the plan administrator to change the survivor

  beneficiary from his ex-wife to his new wife or, in the alternative,

  ordered that the funds his ex-wife received be placed in a

  constructive trust with his new wife as beneficiary. Id. The Ninth

  Circuit held that the plan administrator was not required to redirect

  the surviving spouse benefits to the new wife and that the

  constructive trust was impermissible because “state law doctrines

  (including constructive trusts) may not be invoked to assign

  benefits to parties other than those designated as beneficiaries

  under ERISA.” Id. at 1061. “Any alternative rule,” the court

  observed, “would allow for an end-run around ERISA’s rules and

  Congress’s policy objective of providing for certain beneficiaries,

  thereby greatly weakening, if not entirely abrogating, ERISA’s broad

  preemption provision.” Id.

¶ 33   Thus, as the Lundy court noted, Carmona “explicitly

  disapprove[d] of state law ‘end-runs’ around ERISA imposed by

  state courts.” Lundy, 352 P.3d at 214. Accordingly, the court held

  that ERISA preempts claims under Washington’s divorce revocation

  statute both before and after plan proceeds are distributed to the

  named beneficiary. Put another way, the plan participant’s estate

                                    19
  could not “revive” the preempted statute “simply by applying it in a

  postdistribution argument.” Id.

¶ 34   We, like the Lundy and Carmona courts, agree that

  subsection (8)(b) cannot be used as a statutory end-run around

  preemption and “cannot be used to contravene the dictates of

  ERISA.” Carmona, 603 F.3d at 1061. Accordingly, we conclude

  that subsection (8)(b) cannot revive the preempted subsection (2)

  simply by effecting the same result after ERISA plan proceeds have

  been distributed to the named beneficiary.

¶ 35   Third, addressing a different federal law in Hillman v. Maretta,

  569 U.S. 483 (2013), the United States Supreme Court concluded

  that the law preempted a provision of Virginia’s divorce revocation

  statute very similar to Colorado’s subsection (8)(b). Although the

  federal law at issue in Hillman was the Federal Employees’ Group

  Life Insurance Act of 1954 (FEGLIA), 5 U.S.C. §§ 8701-8716, not

  ERISA, we nonetheless find the Court’s reasoning persuasive on the

  issue of whether a state statute can sidestep preemption. See

  Lundy, 352 P.3d at 212 (stating that although Hillman is not

  controlling, it “make[s] clear that the account proceeds go to the

                                    20
  federally determined beneficiary regardless of state law to the

  contrary”).

¶ 36   The Virginia statute at issue in Hillman provided, first, that a

  divorce or annulment revokes a “beneficiary designation contained

  in a then existing written contract owned by one party that provides

  for the payment of any death benefit to the other party.” Va. Code

  Ann. § 20-111.1(A) (West 2011) (Section A). In a provision

  equivalent to Colorado’s subsection (8)(b), the Virginia statute then

  provided that,

            [i]f this section is preempted by federal law
            with respect to the payment of any death
            benefit, a former spouse who, not for value,
            receives the payment of any death benefit that
            the former spouse is not entitled to under this
            section is personally liable for the amount of
            the payment to the person who would have
            been entitled to it were this section not
            preempted.

  Va. Code Ann. § 20-111.1(D) (Section D).

¶ 37   In Hillman, the husband named his then-wife as the

  beneficiary of his Federal Employees’ Group Life Insurance (FEGLI)

  policy. 569 U.S. at 488. They subsequently divorced, and the

  husband remarried. At the time of the husband’s death, however,

  his ex-wife remained the named beneficiary of his FEGLI policy. Id.

                                    21
  at 488-89. After the proceeds were distributed to the ex-wife, the

  new wife sued the ex-wife, arguing that the ex-wife “was liable to

  her under Section D for the proceeds of her deceased husband’s

  FEGLI policy.” Id. at 489. The ex-wife, however, argued that she

  should be allowed to keep the insurance proceeds because

  Section D — like Section A — was directly preempted by FEGLIA.

  Id.

¶ 38    The Supreme Court agreed. Id. at 490. In reaching its

  decision, the Court noted that FEGLIA provides that, upon an

  employee’s death, life insurance benefits are paid in accordance

  with a specified “order of precedence.” Id. at 486 (quoting 5 U.S.C.

  § 8705(a)). The proceeds accrue “[f]irst, to the beneficiary or

  beneficiaries designated by the employee in a signed and witnessed

  writing received before death.” 5 U.S.C. § 8705(a). “[I]f there is no

  designated beneficiary,” the benefits are paid “to the widow or

  widower of the employee.” Id. Thus, FEGLIA creates a scheme that

  gives highest priority to an insured’s designated beneficiary.

  Hillman, 569 U.S. at 493. The Court concluded that

             Section D interferes with Congress’ scheme,
             because it directs that the proceeds actually
             “belong” to someone other than the named

                                    22
             beneficiary by creating a cause of action for
             their recovery by a third party. It makes no
             difference whether state law requires the
             transfer of the proceeds, as Section A does, or
             creates a cause of action, like Section D, that
             enables another person to receive the proceeds
             upon filing an action in state court. In either
             case, state law displaces the beneficiary
             selected by the insured in accordance with
             FEGLIA and places someone else in her stead.

  Id. at 494 (citations omitted).

¶ 39   In his concurrence, Justice Thomas observed that “[t]he direct

  conflict between Section D and FEGLIA is . . . evident in the fact

  that Section D’s only function is to accomplish what Section A

  would have achieved, had Section A not been pre-empted.” Id. at

  501 (Thomas, J., concurring in the judgment). Though Section D

  does not directly preclude the payment of benefits to the designated

  beneficiary, Justice Thomas noted, “it accomplishes the same

  prohibited result by transforming the designated party into little

  more than a passthrough” for the individual state law has

  designated as the true beneficiary. Id. at 501-02.

¶ 40   The Estate argues that Hillman’s rationale does not apply to

  this case because ERISA, unlike FEGLIA, does not contain a

  statutory order of precedence. While the Supreme Court

                                    23
determined that the federal interest in FEGLIA was “to ensure that

a duly named beneficiary will receive the insurance proceeds and be

able to make use of them,” Hillman, 569 U.S. at 491, the Estate

contends that the federal interest in ERISA is “to simply ensure that

employers and plan administrators act in accordance with the

plan’s written terms,” Walsh v. Montes, 388 P.3d 262, 265 (N.M. Ct.

App. 2016); see also Evans v. Diamond, 957 F.3d 1098, 1104-05

(10th Cir. 2020). But the Estate construes ERISA’s purpose too

narrowly. Although ERISA does not contain a statutory order of

precedence, “the protection of beneficiaries . . . [is] a paramount

ERISA objective.” VanderKam v. VanderKam, 776 F.3d 883, 886

(D.C. Cir. 2015). As the District of Columbia Circuit has explained,

              ERISA protects retirement benefits for millions
              of pension plan participants and their
              beneficiaries. 29 U.S.C. § 1001(b). Finding
              that the stability of retirement benefits directly
              affects the national economy, id. § 1001(a),
              Congress acted to ensure that accrued benefits
              remain unaltered by individuals and states
              alike. It accomplished this by prohibiting
              participants from assigning or alienating their
              own benefits, id. § 1056(d)(1), and, with limited
              exceptions, superseding state laws that “relate
              to any employee benefit plan,” id. § 1144(a).

Id. at 885.

                                     24
¶ 41   Notably, Congress created an exception from ERISA’s

  preemption and anti-alienation provisions for a narrow category of

  state court orders known as qualified domestic relations orders.

  29 U.S.C. § 1056(d)(3)(A). “Where Congress explicitly enumerates

  certain exceptions to a general prohibition, additional exceptions

  are not to be implied, in the absence of evidence of a contrary

  legislative intent.” Andrus v. Glover Constr. Co., 446 U.S. 608,

  616-17 (1980). As the district court in this case noted in its

  well-reasoned order,

            Congress could have put in place a default rule
            providing that insurance proceeds accrue to a
            widow or widower and not a named
            beneficiary. Congress could have put in place
            a provision that a divorce decree operates to
            control over the designation of a beneficiary.
            Congress could have put in place a provision
            whereby a decedent’s will is more reliable
            evidence of the decedent’s intention than a
            beneficiary designation form executed years
            earlier. Congress could have provided that the
            benefits automatically revert to the estate of
            the participant upon the participant’s divorce
            from the beneficiary. Congress did none of
            that. Instead, Congress established a clear
            and predictable procedure for an employee to
            indicate who the intended beneficiary of his life
            insurance shall be.

                                    25
¶ 42   To sum up, the Estate presents no authority supporting a

  state-law-based claim — rather than one based on waiver by private

  agreement between the parties — to recover ERISA plan proceeds

  after their distribution to the named beneficiary. Further, Lundy

  and Carmona explicitly disapprove of state law “end-runs” around

  ERISA preemption. And finally, we are persuaded by the reasoning

  in Hillman that federal law preempts a state statute similar to

  subsection (8)(b). Accordingly, we agree with the district court’s

  conclusion that ERISA preempts the Estate’s post-distribution

  claims to recover the insurance proceeds from Ms. Ragan.

                             F.    Sanctions

¶ 43   Ms. Ragan contends that the Estate’s appeal is frivolous and

  requests an assessment of fees and costs pursuant to C.A.R. 38(b).

  That we ultimately disagree with the Estate’s arguments does not

  mean the appeal was frivolous as filed or argued. See City of Aurora

  v. Colo. State Eng’r, 105 P.3d 595, 620 (Colo. 2005) (“Meritorious

  actions that prove unsuccessful and good faith attempts to extend,

  modify, or reverse existing law are not frivolous.”). No prior

  Colorado case has addressed the enforceability of subsection (8)(b).

  And because the Estate raised arguably meritorious contentions on

                                    26
  an issue of first impression in Colorado, we deny Ms. Ragan’s

  request for fees and costs.

                            III.   Conclusion

¶ 44   We affirm the judgment and deny Ms. Ragan’s request for fees

  and costs pursuant to C.A.R. 38(b).

       JUDGE J. JONES and JUDGE NAVARRO concur.

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