Court Opinion

ID: 20712
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:36:59+00
Date Added: 2024-06-11T16:46:55.749659
License: Public Domain

Revised May 3, 2000

               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE FIFTH CIRCUIT

                       _____________________

                            No. 98-41601
                       _____________________

          KATHY CLIFT, ETC; ET AL

                               Defendants

          KATHY CLIFT, Kathy Clift as guardian of John Ryan Clift
          and Jennifer Lee Clift

                               Defendant - Cross Claimant -
                               Appellee

          v.

          PAMELA SUE CLIFT, now known as Pamela Sue Page

                               Defendant - Cross Defendant -
                               Appellant

          v.

          CONNECTICUT GENERAL LIFE INSURANCE COMPANY

                               Interpleader

_________________________________________________________________

           Appeal from the United States District Court
                 for the Eastern District of Texas
_________________________________________________________________
                           April 12, 2000
Before KING, Chief Judge, and REAVLEY and STEWART, Circuit
Judges.

KING, Chief Judge:

     Defendant-Cross Defendant-Appellant Pamela Sue Clift, now

known as Pamela Sue Page, appeals from the district court’s grant
of summary judgment in favor of Defendant-Cross Claimant-Appellee

Kathy Clift.   We affirm.

               I.   FACTUAL AND PROCEDURAL BACKGROUND

     Prior to his death in July of 1997, Phillip Clift

(“Phillip”) was twice married and twice divorced.   He and his

first wife, Appellee Kathy Clift (“Kathy”), had two children,

Jennifer Lee and John Ryan.   Phillip and Kathy divorced, and

Phillip married his second wife, Appellant Pamela Sue Page,

(“Pamela”), in 1995.   They divorced shortly before he died.

Upon his death, Phillip held a life insurance policy through his

employer in which he designated Pamela as the sole beneficiary.

     When it came time for the life insurance proceeds to be paid

out, Pamela claimed that she was entitled to them in light of

Phillip’s designation of her as beneficiary.   Kathy, as guardian

of her and Phillip’s two children, claimed that when Phillip and

Pamela divorced, Pamela waived her right to the life insurance

proceeds.   Under the terms of the policy, therefore, the children

were entitled to the proceeds.   Connecticut General Life

Insurance Company, the provider of the policy in question, was

uncertain to whom it should pay benefits, and this action ensued.

     Very little is disputed in this case.   The parties agree

that before their divorce, Phillip named Pamela as the

beneficiary of the proceeds from his life insurance policy.     They

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agree that the policy in question was offered by Phillip’s

employer through an employee benefit plan that is subject to and

governed by the provisions of the Employee Retirement Income

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

that therefore the policy itself is subject to ERISA.    They agree

that Phillip and Pamela divorced, and that their Texas divorce

decree provided, “[Phillip] is awarded the following as [his]

sole and separate property, and [Pamela] is hereby divested of

all right, title, interest, and claim in and to such property:

. . . Any and all policies of life insurance (including cash

value) insuring the life of [Phillip].”    Record at 138-39.   They

agree that Pamela consented to the terms of the divorce

voluntarily and that the settlement between Phillip and Pamela

was made in good faith.     Finally, they agree that if Pamela has

waived her right to the insurance proceeds, the children are

entitled to them.   The only question in the case is whether

Pamela waived her right to the proceeds from Phillip’s life

insurance policy in their divorce decree.

     Pamela and Kathy filed competing motions for summary

judgment in the district court.    The district court entered a

judgment granting Kathy’s motion and denying Pamela’s, from which

judgment Pamela timely appeals.

                      II.    STANDARD OF REVIEW

                                   3
           We review the granting of summary judgment de novo,

applying the same criteria used by the district court in the

first instance.   See Norman v. Apache Corp., 19 F.3d 1017, 1021

(5th Cir. 1994); Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir.

1994).   Summary judgment is proper “if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law.”    FED. R. CIV. P.

56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986).

We must view all evidence in the light most favorable to the

party opposing the motion and draw all reasonable inferences in

that party’s favor.     See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986).    We construe an unambiguous divorce decree

de novo.   See Webb Carter Constr. Co. v. Louisiana Central Bank,

922 F.2d 1197, 1199 (5th Cir. 1991).

                           III.   DISCUSSION

     In Brandon v. Travelers Ins. Co., 18 F.3d 1321 (5th Cir.

1994), we were confronted with a situation very similar to the

one before us now.    Richard Brandon had designated his wife,

Wanda, as the primary beneficiary of the proceeds of a life

insurance policy he held through his employer.    The policy was

governed by ERISA.    The couple later divorced, and Richard

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subsequently died without changing beneficiaries.       The couple’s

divorce decree provided, in part:

     Petitioner [Richard] is awarded the following as
     Petitioner's sole and separate property, and Respondent
     [Wanda] is divested of all rights, title, interest, and
     claim in and to such property ... (8) Any and all sums,
     whether matured or unmatured, accrued or unaccrued, vested
     or otherwise, together with all increases thereof, the
     proceeds therefrom, and any other rights relating to any
     profit-sharing plan, retirement plan, pension plan, employee
     stock option plan, employee savings plan, accrued unpaid
     bonuses, or other benefit program existing by reason of
     Petitioner's past, present, or future employment.

Id. at 1323.   We were asked to decide whether Wanda had waived

her right to the proceeds from the life insurance policy in the

divorce decree or whether the beneficiary designation controlled.

We first ruled that the anti-alienation provisions of ERISA do

not prevent waiver of a beneficiary interest in a life insurance

policy governed by ERISA.      See id. at 1324.   This left us with

the question of whether the language of the divorce decree before

us in that case constituted an effective waiver of Wanda’s

beneficiary interest in the policy insuring Richard’s life.       We

determined that the question was governed by federal common law

rather than state law, but we looked to analogous state law for

guidance.   See id. at 1326.    Our analysis in that case was

informed by cases from two sister circuits.       We briefly review

those cases here, as we did in Brandon.

     In Lyman Lumber Co. v. Hill, 877 F.2d 692 (8th Cir. 1989),

Jeffrey Hill designated his wife, Colleen, as primary beneficiary

under his employer’s profit-sharing plan.     The Hills were later

                                    5
divorced, and Jeffrey died without changing the primary

beneficiary designation.   The Hills’ divorce decree stated that

Jeffrey “‘shall have as his own, free of any interest of

[Colleen], his interest in the profit-sharing plan of his

employer . . . .’” Id. at 693 (alteration in original).     The

Court of Appeals for the Eighth Circuit held that because the

divorce decree did not “specifically refer to and modify the

beneficiary interest” in the profit-sharing plan, it did not

revoke Colleen’s interest, and she was entitled to the

distribution.   See id. at 694.   The court reached that result

even though the divorce decree “gave Jeffrey his entire interest

in the Plan free of any interest of Colleen.”    Id. at 693.

     Shortly after the decision in Lyman Lumber, the Court of

Appeals for the Seventh Circuit, sitting en banc, was presented

with a similar case.   Fox Valley & Vicinity Constr. Workers

Pension Fund v. Brown, 897 F.2d 275 (7th Cir. 1989) (en banc),

concerned lump-sum death benefits provided for in a pension plan

governed by ERISA.   James Brown named his wife, Laurine, as

beneficiary under the plan.   James and Laurine divorced and

agreed to a court-approved property settlement that provided that

“[t]he parties each waive any interest or claim in and to any

retirement, pension, profit-sharing and/or annuity plans

resulting from the employment of the other party.”    Id. at 277.

James died without changing the beneficiary on his pension plan.

                                  6
      The court, in fashioning federal common law, looked to

Illinois law which provided that “a decree of divorce only

affects the rights of a divorced spouse if a property settlement

agreement specifically includes a provision terminating the

beneficiary’s interest.”    Id. at 281.   The court determined “that

the waiver contained in the marital property settlement

specifically dealt with the pension fund benefits, including the

Death Benefit at issue in [the] case.” Id.

      In Brandon, we followed the approach used by the Eighth and

Seventh Circuits in Lyman Lumber and Fox Valley and looked to the

federal common law to determine whether the language from Richard

and Wanda’s divorce decree constituted a sufficient waiver of

Wanda’s beneficiary interest in the proceeds of Richard’s life

insurance policy.    Like the Fox Valley court, we looked to state

law to inform the rule we fashioned under the federal common law.

See id. at 1326.    “[W]e adopt[ed] the Texas rule creating a

presumption of waiver absent redesignation following divorce.”

Id.   We modified that rule, however, by requiring that “any

waiver be voluntary and in good faith.”     Id.   We stated later in

the opinion that we “requir[ed] under federal common law that any

waiver of ERISA benefits be explicit, voluntary, and made in good

faith.”   Id. at 1327.   The decree in Brandon stated that Wanda

was “divested of all rights, title, interest, and claim in and to

. . . proceeds []from . . . any . . . benefit program existing by

reason of [Richard’s] past, present, or future employment.”      Id.

                                  7
at 1323.   We held that this language was sufficient to constitute

a bona fide waiver of Wanda’s beneficiary interest in the life

insurance policy.    See id. at 1327.

     Relying on the holding in Lyman Lumber and our requirement

of explicitness in Brandon, Pamela invites us to set forth a rule

in this case that waiver in a divorce decree of one’s beneficiary

interest in a life insurance policy governed by ERISA can only be

effected by specifically listing the “proceeds,” “beneficiary

interest,” or the like.   We decline her invitation.   Our holding

in Brandon does not require, as Pamela seems to suggest, that

certain “magic” words be used to accomplish an effective waiver

of a beneficiary interest.   Such rigidity is unnecessary and will

undoubtedly frustrate the intentions of those who choose to

divorce.

     While Brandon does not require that particular language be

used to waive a beneficiary interest, it likewise does not stand

for the proposition that waiver will be assumed absent language

to the contrary.    In Brandon, we looked to state law in

fashioning a rule yet explained that “wholesale adoption of the

Texas redesignation statute [would] not sufficiently protect the

interests of beneficiaries.”    Id. at 1326.   One method of

protecting those interests is to require that waiver be explicit,

meaning that waiver should not be inferred from a divorce decree

that is completely silent on the issue.   Requiring actual waiver

language rather than relying on silence helps protect the

                                  8
interests of beneficiaries.     Moreover, the task of determining

voluntariness and good faith would be overly-complicated were

silence sufficient to constitute waiver.       We will only find

waiver if, upon reading the language in the divorce decree, a

reasonable person would have understood that she was waiving her

beneficiary interest in the life insurance policy at issue.

Additionally, as we stated in Brandon, any waiver must be

voluntary and made in good faith.

     Here, Pamela entered into the agreement in her divorce

decree voluntarily, and the agreement was made in good faith.

Pamela simply argues that the language of the decree was

insufficient to constitute waiver of her beneficiary interest.

We disagree.   The divorce decree provided that “[Pamela] is

hereby divested of all right, title, interest, and claim in and

to . . . [a]ny and all policies of life insurance (including cash

value) insuring the life of [Phillip].”       Record at 138-39.    This

language is clear enough to trigger the presumption of waiver.

It placed Pamela on notice that she was waiving any and all

interests in the life insurance policy.       Had she intended to

retain her beneficiary interest, she should have demanded that

the divorce decree so provide.

                          IV.    CONCLUSION

                                   9
     For the foregoing reasons, the judgment of the district

court is AFFIRMED.

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