Court Opinion

ID: 9755459
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:38:46.688342+00
Date Added: 2024-06-11T07:28:07.673000
License: Public Domain

Justice HANKINSON
filed a concurring and dissenting opinion, in which Chief Justice PHILLIPS, Justice BAKER, and Justice O’NEILL joined.
I concur in part and dissent in part to the Court’s judgment. In my view, *128ERISA does not preempt Marleen Barnett’s claim for a constructive trust against her husband Christopher’s estate, and the Court has no principled basis for treating Marleen’s claim differently from that of an ordinary creditor seeking to garnish or impose a constructive trust on estate funds. The Court holds that Texas’ community-property law has a “connection with” an ERISA plan, and that therefore ERISA preempts Marleen’s claim. 67 S.W.3d at 121. This broad holding ignores not only the lack of clear and manifest proof that Congress intended ERISA to preempt state marital-property law, but also the United States Supreme Court’s repeated admonitions that ERISA will not be lightly interpreted to preempt areas of longstanding, traditional state regulation. See California Div. of Labor Standards Enforcement v. Dillingham Constr., Inc., 519 U.S. 316, 330-31, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997); New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654-55, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). Once the insurance proceeds were properly paid to the named beneficiary — in this case, Christopher’s estate — ERISA’s objectives and concerns were no longer at issue, and anyone, including Marleen, could pursue a claim against the estate. By reading Egelhoff v. Egelhoff, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001), to preempt Marleen’s remedy, the Court does precisely what Justice Scalia has cautioned against: “decreeing] a degree of pre-emption that no sensible person could have intended.” Dillingham, 519 U.S. at 335-36, 117 S.Ct. 832. Therefore, although I concur in the remainder of the Court’s judgment, I respectfully dissent to the Court’s judgment that ERISA preempts Marleen’s claim for a constructive trust.
In part II of its opinion, the Court concludes that under Texas community-property law, Marleen would be entitled to recover from the executor of Christopher’s estate, his mother Dora Barnett, for wrongfully distributing one half of the proceeds of the Prudential life-insurance policy. In part III B, the Court closely analyzes Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), and Guidry v. Sheet Metal Workers National Pension Fund, 493 U.S. 365, 110 S.Ct. 680, 107 L.Ed.2d 782 (1990), recognizing that those cases do not foreclose the remedy of a constructive trust, at least for ERISA welfare-plan benefits. I agree with the Court’s analysis of the relevant United States Supreme Court precedent and with the Court’s conclusion up to that point. I do not agree, however, with the Court’s conclusion that Egelhoff v. Egelhoff, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001), mandates preemption of Marleen’s claim against her husband’s estate for a constructive trust. No language in Egel-hoff changes or distinguishes the holdings of Mackey and Guidry. Moreover, this Court fails to consider the most important distinction between Egelhoff and the case before us- — Egelhoff did not address the issue presented here. In Egelhoff, the Supreme Court determined whether ERISA preempted a challenge to a statute that literally changed the terms of a plan document by automatically revoking the designation of a former spouse as a beneficiary. 532 U.S. at 147, 121 S.Ct. 1322. The plan administrator in Egelhoff thus had to determine the effect of the state statute before deciding whether to pay the named beneficiary. Id. at 147, 121 S.Ct. 1322. We are simply not presented with that situation here. The plan administrator in this case did not have to discern and apply state law before deciding whom to pay. Rather, the administrator only had to pay, and did pay, the insurance proceeds to the *129designated beneficiary, Christopher’s estate. This was in accord with ERISA’s mandate. Marleen’s claim against Dora, as executor of the estate, should therefore proceed under state law, as would the claim of any other creditor.
The lesson of Mackey and Guidry important to this case is that third parties may garnish or impose a constructive trust on welfare-plan benefits under state laws as long as those state laws have general applicability and do not specifically refer to ERISA benefit plans. See Mackey, 486 U.S. at 831-32, 108 S.Ct. 2182; Guidry, 493 U.S. at 371-72, 110 S.Ct. 680. Accordingly, the issue here is whether state community-property laws that recognize a claim for constructive fraud on the community and provide for a constructive trust as a remedy are distinguishable from the general garnishment and constructive-trust laws that Mackey and Guidry held ERISA did not preempt.
Life-insurance policies provided pursuant to an employee-benefit plan are welfare-plan benefits, not pension-plan benefits. See 29 U.S.C. § 1002(1). Welfare-plan benefits are not subject to ERISA’s anti-alienation provision. See Mackey, 486 U.S. at 836,108 S.Ct. 2182. Therefore, the Texas community-property law that permits a spouse to impose a constructive trust on welfare-plan benefits to remedy constructive fraud on the community should not be preempted for the same reasons that ERISA does not preempt state law that allows strangers to an employee-benefit plan to garnish or impose a constructive trust on welfare-plan benefits. See id. at 831-32, 108 S.Ct. 2182; Guidry, 493 U.S. at 371-72, 110 S.Ct. 680; see also Manaban v. Meyer, 862 S.W.2d 130, 135-39 (Tex.App. —Houston [1st Dist.] 1993, writ denied) (holding that ERISA did not preempt a state-law claim against a defendant who unduly influenced the decedent to name her as the beneficiary of an ERISA plan life-insurance policy).
The Court correctly notes that the Supreme Court granted certiorari in Egelhoff to resolve a conflict among the circuit courts “about whether statutes like that of Washington are pre-empted by ERISA.” In Egelhoff, the Supreme Court cited Emard v. Hughes Aircraft Co., 153 F.3d 949 (9th Cir.1998), cert. denied sub nom. Stencel v. Emard, 525 U.S. 1122, 119 S.Ct. 903, 142 L.Ed.2d 902 (1999), as a case finding no preemption. But in Emard the Ninth Circuit considered more than one issue. It considered not only whether ERISA preempted application of the California statutes that would require the distribution of proceeds to someone other than the designated beneficiary, 153 F.3d at 956-61, but also whether a constructive trust could be imposed on life-insurance proceeds after the proceeds were distributed to the named beneficiary. 153 F.3d at 954-55. The court concluded that Mackey and Gui-dry supported its holding that ERISA did not bar the application of California’s law of constructive trusts. Id. In Egelhoff, the Supreme Court rejected the Ninth Circuit’s holding on the first issue, concluding that state statutes that directly conflict with ERISA’s mandate to pay proceeds according to plan documents are preempted, but the Supreme Court did not mention the constructive-trust issue or Mackey and Guidry. Thus I disagree with the Court’s broad statement in this case that Egelhoff “implicitly rejected the reasoning in Emard.” 67 S.W.3d 118. The Supreme Court considered and decided only one of several discrete issues presented in that case. And the issue it did decide is not the issue presented here.
Finally, giving effect to Marleen’s community-property rights in her husband’s life-insurance policy proceeds does not conflict with ERISA’s concern for uniform *130and efficient administration. Marleen is no different than an ordinary creditor seeking to garnish the life-insurance proceeds or to impose a constructive trust. Because a constructive trust can be imposed only after a judicial determination that there has been a fraud on the community and that Marleen is entitled to a constructive trust on identifiable proceeds, there is no conflict with ERISA’s desire for uniformity in plan administration. I see no principled basis for treating Mar-leen any differently under ERISA than any other judgment creditor of Christopher’s estate.
By concluding that we must interpret Egelhoff to preempt Marleen’s claim, the Court ignores the Supreme Court’s recognition that to construe “relate to” too broadly would remove any limitation on preemption from ERISA:
If “relate to” were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes preemption would never run its course, for “[rjeally, universally, relations stop nowhere”.... But that, of course, would be to read Congress’s words of limitation as mere sham, and to read the presumption against pre-emption out of the law whenever Congress speaks to the matter with generality.
Travelers, 514 U.S. at 655, 115 S.Ct. 1671. And this is why the Supreme Court mandates that ERISA not be lightly interpreted to preempt well-established state law. See Dillingham, 519 U.S. at 330-81, 117 S.Ct. 832; Travelers, 514 U.S. at 654-55, 115 S.Ct. 1671. In sum, I agree with the court of appeals that “[t]he administration of Christopher’s probate estate does not relate to an employee benefit plan. [Mar-leen’s] suit against [Dora] as executrix of Christopher’s estate, imposes no regulation on HL & P’s plan or its administrator, and the obligations imposed on an executrix of a probate estate do not implicate ERISA’s regulatory concerns.” 985 S.W.2d 520, 526. The designated beneficiary of the benefit plan, Christopher’s estate, was properly paid. At that point, ERISA no longer applied. Marleen claims only that the executor of the estate must distribute the estate’s proceeds in accord with state law, and that claim should not be preempted. Accordingly, although I concur in the remainder of the Court’s judgment, I dissent from its judgment that ERISA preempts Marleen’s claim for a constructive trust.