Diana Weaver, Independent of the Estate of Francis J. Weaver, and Rita Marie Wilson Weaver v. Patsy Keen

Diana Weaver, et al. v. Patsy Keen

IN THE

TENTH COURT OF APPEALS

No. 10-99-305-CV

     DIANA WEAVER,

     INDEPENDENT EXECUTRIX OF THE

     ESTATE OF FRANCIS J. WEAVER,

     AND RITA MARIE WILSON WEAVER,

                                                                         Appellants

     v.

     PATSY KEEN,

                                                                         Appellee

From the County Court at Law No. 4

Dallas County, Texas

Trial Court # 97-05343-D

                                                                                                                                                                                                                          

OPINION DENYING MOTION FOR REHEARING

                                                                                                                

      On January 10, 2001, we determined that the Texas redesignation statute, applied as federal common law, prevents a former spouse from receiving ERISA-qualified pension plan benefits, absent one of its exceptions. Weaver v. Keen, 2001 WL 25718, at *6 (Tex. App.—Waco Jan. 10, 2001, no pet. h.). Having determined that the trial court erred in making a contrary finding, we reversed the judgment and remanded for further proceedings. Id.

      On rehearing, Keen requested that we defer our decision pending the United States Supreme Court’s disposition of Egelhoff v. Egelhoff, which addresses similar issues. The United States Supreme Court has since issued Egelhoff v. Egelhoff, ___ U.S. ___, 121 S. Ct. 1322, ___ L.Ed.2d ___, 2001 WL 273198 (March 21, 2001). We find that it does not affect the analysis applicable to this case.

      The only issue in Egelhoff was whether ERISA preempts a Washington statute providing that the designation of a spouse as the beneficiary of an employee benefit plan is revoked automatically upon divorce. Id. at *4. The Supreme Court held that it does. Id. at *5. The Court reasoned that giving effect to state statutes that purport to revoke beneficiary designations would require plan administrators “to master the relevant laws of 50 States” and would make uniform national plan administration impossible. Id. Similarly, our opinion stated that federal law, not section 9.302 of the Texas Family Code, determined who was entitled to proceeds of an employee benefit plan. Weaver, 2001 WL 25718, at *3. Thus, our conclusion that federal law controls is supported by Egelhoff.

      Having established that our state law is preempted, we next determined the applicable federal law which governed the resolution of the dispute. Id. In making this determination, we looked “to either the statutory language [of ERISA] or, finding no answer there, to federal common law” which “may draw guidance from analogous state law.” Id. (citing Brandon v. Travelers Ins. Co., 18 F.3d 1321, 1325 (5th Cir. 1994)). There is presently a circuit split on this issue. Id. (citing Manning v. Hayes, 212 F.3d 866, 870 (5th Cir. 2000), cert. denied, ___ U.S. ___, 121 S. Ct. 1401, ___ L.Ed.2d ___, 2001 WL 285802 (March 26, 2001)).

      We agreed with the majority approach that ERISA does not expressly address whether a former spouse designated as the primary beneficiary of an ERISA-qualified pension plan is entitled to the proceeds under that plan. Id. at *5 (citing Brandon, 18 F.3d at 1326; Fox Valley & Vicinity Const. Workers Pension Fund v. Brown, 897 F.2d 275, 278 (7th Cir. 1990); Lyman Lumber Co. v. Hill, 877 F.2d 692, 693 (8th Cir. 1989); Emmens v. Johnson, 923 S.W.2d 705, 712 (Tex. App.—Houston [1st Dist.] 1996, writ denied)). We held, then, that the issue is governed by federal common law. Id.

      At least three federal courts have concluded that under federal common law the designated beneficiary can waive rights to plan proceeds. Brandon, 18 F.3d at 1327; Fox Valley, 897 F.2d at 280; Lyman, 877 F.2d at 693. In Brandon, the Fifth Circuit examined federal common law to determine whether a spouse designated during marriage as an ERISA beneficiary of a life insurance policy waived her benefits in an agreed divorce decree. Brandon, 18 F.3d at 1324. The court followed the approach of the Eighth and Seventh Circuits and looked to state law for guidance. Id. at 1326-27 (citing Fox Valley, 897 F.2d at 280-81; Lyman, 877 F.2d at 693).

      Accordingly, the court adopted section 9.302 as a matter of federal common law, construing it to create a presumption of waiver absent redesignation following divorce. Id. at 1326. However, the court modified that federal common law by adding a requirement that “any waiver be voluntary and in good faith.” Id. The Fifth Circuit recently reaffirmed this rule in Manning. Manning, 212 F.3d at 871. On March 26, 2001, five days after Egelhoff was issued, the United States Supreme Court denied the petition for writ of certiorari in Manning. Manning v. Hayes, ___ U.S. ___, 121 S. Ct. 1401, ___ L.Ed.2d ___, 2001 WL 285802 (March 26, 2001)).

      The First Court of Appeals also analyzed the issue in this case as it relates to profit sharing plans. Emmens, 923 S.W.2d at 707. Emmens similarly involved a beneficiary designation of a former spouse which was not changed following a divorce. Id. In determining applicable federal common law, the court determined that Brandon’s approach was incorrect because “the waiver issue [is] irrelevant[.]” Id. at 710. The court also disagreed with Brandon’s characterization of section 9.302 as creating a presumption of waiver, reasoning that it simply nullifies the designation. Id. The court then adopted the rule of section 9.302, without modification, as federal common law on the issue and held that divorce automatically terminated a former spouse’s designation as the primary beneficiary under an ERISA plan. Id. at 712.

      Accordingly, although we were guided by the Fifth Circuit’s approach, ultimately we adopted our sister court’s approach. Weaver, 2001 WL 25718, at *6. That is, we adopted section 9.302, without modification, as federal common law on the issue and held that divorce automatically terminated a former spouse’s designation as the primary beneficiary under an ERISA plan. Id. As a result, we found that the Texas redesignation statute, applied as federal common law, prevents a former spouse from receiving ERISA-qualified pension plan benefits, absent one of its exceptions. Id.

      Because our approach was the same as the Fifth Circuit’s approach in Manning, absent the modification, and because the United States Supreme Court has recently denied the petition for writ of certiorari in Manning, we continue to believe that our original disposition of this case was correct. Furthermore, as we stated in our original opinion, even under the Fifth Circuit’s approach, we believe the record demonstrates that Patsy’s “waiver” was voluntary and made in good faith. Id. at *5. Thus, Manning would also prevent her from receiving the proceeds. Manning, 212 F.3d at 871.

      For these reasons, we deny the motion for rehearing.

 

                                                                         BILL VANCE

                                                                         Justice

Before Chief Justice Davis,

      Justice Vance, and

      Justice Gray

Motion for rehearing denied

Opinion delivered and filed April 18, 2001

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BILL VANCE

Justice

 

Before Chief Justice Gray,

  Justice Vance, and

          Justice Reyna

Affirmed

Opinion delivered and filed March 23, 2005

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