UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-20537
SYLVIA MANNING, EXECUTOR OF THE ESTATE OF HOUGHTON H. WEST,
Plaintiff-Appellant,
VERSUS
AUDREY ALLISON HAYES, ET AL,
Defendants,
AUDREY ALLISON HAYES,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Texas
May 19, 2000
Before EMILIO M. GARZA, DeMOSS, and STEWART, Circuit Judges.
DeMOSS, Circuit Judge:
In this insurance dispute, the estate of a deceased ERISA plan
participant and the decedent’s ex-wife are battling over the
proceeds to an ERISA plan providing life insurance benefits. The
district court granted summary judgment in favor of Defendant-
Appellee Audrey Allison Hayes, who is both the decedent’s ex-wife
and the named beneficiary under the policy. Plaintiff-Appellant
Sylvia Manning, in her capacity as executor of the estate of
Houghton H. West, appeals. We affirm, although for reasons that
are substantially different than those employed by the district
court.
I.
On February 15, 1993, UNUM Life Insurance Company of America
issued a life insurance policy to Houghton H. West through his
employer, the Amherst Securities Group. On December 22, 1994, West
and Audrey Allison Hayes, in light of their impending marriage,
executed a prenuptial agreement titled the Separate Property
Preservation and Definition Agreement. As suggested by the title
of the document, the primary purpose of the agreement was to define
the substantial separate assets held by both West and Hayes, and to
memorialize their agreement that neither party had or would have an
equitable or legal interest in property separately owned by the
other. The agreement provided that, in the event the marriage was
terminated, neither party would assert any claim for such things as
reimbursement, aid, comfort, or support and maintenance, and
further, that neither party would assert any claim in accounts held
solely in the name of the other. The agreement recognized that
community property would be acquired during the marriage, primarily
from earnings, and that such property would be subject to a just
and equitable distribution. Finally, the agreement contained
representations that each party would attempt to avoid commingling
2
community property with separate property or the proceeds of
separate property owned by the other. Although the agreement
included a non-exhaustive list of each of the parties assets, the
agreement made no mention of employee benefits or insurance
proceeds generally, or the Unum policy in particular.
Five days later, on December 27, 1994, West and Hayes were
married. Almost one year later, on December 15, 1995, West
voluntarily designated Hayes as the beneficiary on the Unum policy.
West did not designate any alternative beneficiaries.
Six months later, on June 26, 1997, West and Hayes were
divorced. There were no children born to the marriage. The final
divorce decree holds that “no community property other than
personal effects has been accumulated by the parties,” and that
such property is “awarded to the party having possession.” The
decree then states that the foregoing division was “made pursuant
to the terms of the Separate Property Preservation and Definition
Agreement.” The divorce decree does not otherwise refer to the
terms of that or any other agreement concerning the division of
property or refer specifically to the Unum policy.
Less than one month later, on July 29, 1997, West died of
pancreatic cancer. After West’s death, Hayes claimed benefits as
the named beneficiary of the Unum policy. West’s estate disputed
Hayes’ entitlement to those benefits, arguing that Texas Family
Code § 9.301 required the proceeds to be paid to the estate. Texas
Family Code § 9.301 provides, in relevant part:
3
(a) If a decree of divorce or annulment is rendered after an
insured has designated the insured’s spouse as a beneficiary
under a life insurance policy in force at the time of
rendition, a provision in the policy in favor of the insured’s
former spouse is not effective unless:
(1) the decree designates the insured’s former spouse as the
beneficiary;
(2) the insured redesignates the former spouse as the
beneficiary after rendition of the decree; or
(3) the former spouse is designated to receive the proceeds in
trust for, on behalf of, or for the benefit of a dependant of
either former spouse.
The dispute between West’s estate and Hayes was not settled,
and in February 1998, Manning sued Hayes and Unum on behalf of the
estate in Texas probate court, seeking a declaratory judgment that
the estate was entitled to the proceeds. Unum removed on the basis
of ERISA preemption. See Employee Retirement Income Security Act,
29 U.S.C. § 1001 et seq. Shortly thereafter, Unum interpleaded the
proceeds of the policy into the registry of the district court and
was dismissed, leaving only Manning, on behalf of the estate, and
Hayes as parties to the suit.
In November 1998, both Manning and Hayes moved for summary
judgment. Manning argued that this Court’s opinion in Brandon v.
Travelers Ins. Co., 18 F.3d 1321 (5th Cir. 1994), which dealt with
similar facts, adopted Texas Family Code § 9.301 for purposes of
the federal common law applicable in similar ERISA actions.
Manning therefore argued that both Brandon and § 9.301 dictated a
result in favor of the estate. Hayes argued that Brandon was both
4
wrongly decided at the time, because inconsistent with ERISA
provisions governing competing claims for life insurance proceeds,
and subsequently undermined by the Supreme Court’s decision in
Boggs v. Boggs, 117 S. Ct. 1754 (1996), which applied an expansive
preemption analysis. Alternatively, Hayes argued that Brandon did
not purport to adopt the rule codified in Texas Family Code § 9.301
for similar ERISA actions, and that the facts at issue in Brandon
were distinguishable, such that Brandon did not dictate a result in
favor of the estate in this case.
The district court considered these motions, eventually
concluding that Hayes, as the named ERISA beneficiary, was entitled
to the proceeds of the life insurance policy. Manning timely
appealed. We review the district court’s grant of summary judgment
de novo. Clift v. Clift, __ F.3d __, 2000 WL 373981 at *2 (5th Cir.
Apr. 12, 2000).
II.
Congress passed ERISA in 1974 to establish a comprehensive
federal scheme for the protection of the participants and
beneficiaries of employee benefit plans. See 29 U.S.C. § 1001; see
also Pilot Life Ins. Co. v. Dedeaux, 107 S. Ct. 1549, 1551 (1987);
Shaw v. Delta Air Lines Inc., 103 S. Ct. 2890, 2896 (1983). ERISA
broadly preempts “any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan.” 29 U.S.C.
§ 1144(a). A law “relates to” an employee benefit plan when the
5
law has “a connection with or reference to such a plan.” Shaw, 103
S. Ct. at 2900. The scope of the ERISA preemption provisions is
“deliberately expansive,” and they are consistently construed to
accomplish the congressional purpose of insuring certain minimum
standards in the administration of employee benefit plans. See
Pilot Life Ins., 107 S. Ct. at 1552.
There is no doubt that Manning’s claim on behalf of the estate
is preempted, to the extent that it relies upon the Texas
beneficiary redesignation statute. Almost every circuit court to
consider the issue, including this one, has determined that a state
law governing the designation of an ERISA beneficiary “relates to”
the ERISA plan, and is therefore preempted. See Dial v. NFL Player
Supplemental Disability Plan, 174 F.3d 606, 611 (5th Cir. 1999);
Brandon, 18 F.3d at 1325; see also Metropolitan Life Ins. Co. v.
Pettit, 164 F.3d 857, 862 (4th Cir. 1998); Mohamed v. Kerr, 53 F.3d
911, 913 (8th Cir. 1995); Krishna v. Colgate Palmolive Co., 7 F.3d
11, 15 (2d Cir. 1993); Metropolitan Life Ins. Co. v. Hanslip, 939
F.2d 904, 906 (10th Cir. 1991); Brown v. Connecticut General Life
Ins. Co., 934 F.2d 1193, 1195 (11th Cir. 1991); McMillan v. Parrott,
913 F.2d 310, 311 (6th Cir. 1990); Fox Valley & Vicinity Constr.
Workers Pension Fund, 897 F.2d 275, 278 (7th Cir. 1989). But see
Emard v. Hughes Aircraft Co., 153 F.3d 949, 961 (9th Cir. 1998)
(holding that ERISA does not preempt California constructive trust
6
or community property law in a dispute between a surviving and
former spouse over life insurance benefits), cert. denied sub nom.,
119 S. Ct. 903 (1999).
The more difficult issue is whether, having established that
the state law is preempted, the federal law governing the
resolution of this and similar cases may be reasonably drawn from
the text of ERISA itself, or must instead be developed as a matter
of federal common law. There is presently a circuit split on this
issue. A majority of the circuit courts to have considered the
issue have recognized that ERISA does not expressly address the
circumstances, if any, in which a non-beneficiary may avoid the
payment of life insurance benefits to the named beneficiary. For
that reason, these courts have held that the issue is governed by
federal common law. See, e.g., Clift, 2000 WL 373981 at *2-3;
Brandon, 18 F.3d at 1325-26; see also Hill v. AT&T Corp., 125 F.3d
646, 648 (8th Cir. 1997); Mohammed, 53 F.3d at 913.
With respect to a former spouse’s claim as a designated
beneficiary, this Court has specifically held that the former
spouse may waive his or her beneficiary status in a subsequent
divorce decree or agreement, provided the waiver is explicit,
voluntary and made in good faith. Clift, 2000 WL 373981 at *3;
Brandon, 18 F.3d at 1326-27. In Brandon, we held that the former
spouse effectively waived her beneficiary status by virtue of
explicit language in the divorce decree depriving her of any
7
interest in the participant’s employee benefit plans. See id. at
1323, 1327. Thus, in this Circuit, the determination of who is
entitled to the proceeds of an ERISA plan providing life insurance
benefits may depend upon more than merely the plan documents, and
may be properly defined by reference to the federal common law of
waiver as applied to the particular facts of the case.
Hayes urges a contrary rule. Hayes contends that ERISA
§ 1104(d) expressly requires that plan benefits be paid directly to
the ERISA designated beneficiary, and further, bars any
inconsistent federal common law permitting a broader inquiry.
Hayes thus argues that the preemption issue is one of conflict
preemption, rather than preemption under the “relates to” clause of
§ 1144(a).
The Sixth Circuit is the only circuit to unambiguously employ
this minority approach. See McMillan v. Parrott, 913 F.2d 310
(6th Cir. 1990); see also Metropolitan Life Ins. Co. v. Marsh, 119
F.3d 415 (6th Cir. 1997); Metropolitan Life Ins. Co. v. Pressley,
82 F.3d 126 (6th Cir. 1996). The decisions of that circuit hold
that ERISA § 1104(d), which simply provides that plan
administrators are to discharge their duties “in accordance with
the documents and instruments governing the plan,” expressly
provides the statutory rule for resolving competing claims to
insurance proceeds. Indeed, the Sixth Circuit construes this
statutory subsection to set forth a “clear mandate” that plan
8
administrators determine the beneficiary with reference to the plan
documents, and only the plan documents. See Marsh, 119 F.3d at 420
(“ERISA itself supplies the rule of law for determining the
beneficiary.”); Pressley, 82 F.3d at 130 (Section 1104(d)
establishes “a clear mandate that plan administrators follow plan
documents to determine the designated beneficiary.”); McMillan, 913
F.2d at 312 (holding that § 1104(d) establishes the exclusive rule
for determining beneficiary status). Thus, under the Sixth
Circuit’s minority rule, the named beneficiary must always prevail,
without regard to any other circumstances or provisions of law.1
Hayes relies upon this analysis, as well as the Supreme
Court’s recent disposition in Boggs, which involved a clear case of
conflict preemption in a different context, for the proposition
that ERISA precludes any reliance upon federal common law when
resolving a dispute between a named ERISA beneficiary and another
claimant. The district court essentially accepted these arguments,
holding that the controlling ERISA law was to be drawn directly
from ERISA § 1104(a) rather than the federal common law. The
district court repudiated this Court’s analysis in Brandon, and
1
We note in passing that even the Sixth Circuit’s application
of the minority rule has, at times, been less than enthusiastic.
See Pressley, 82 F.3d 126, 130 (6th Cir. 1996) (noting that McMillan
“dictates the disposition of this case,” and that the panel was
“not free to reject it in favor of some other approach”); McMillan
v. Parrott, 913 F.2d 310, 312 (6th Cir. 1990) (setting forth an
alternative holding premised upon application of federal common
law).
9
opined that it was wrongly decided. The district court likewise
relied upon stray language from the Supreme Court’s decision in
Boggs as additional support for the proposition that the federal
common law can have no place when determining the beneficiary of an
ERISA life insurance policy.
III.
We conclude that the district court erred. The rule announced
by this Court in Brandon and recently reaffirmed in Clift is the
law in this Circuit. Neither the district court nor a panel of
this Court is at liberty to change that rule. Moreover, we are not
persuaded, in the context of this case and premised upon the
arguments made by these parties, that the rule requires any
correction.
Section 1104 defines the fiduciary duties owed by the plan
administrator to plan participants and beneficiaries. That section
does not either expressly or implicitly purport to establish any
methodology for determining the beneficiary of an ERISA plan or for
resolving competing claims to insurance proceeds. Thus, considered
in isolation, § 1104(d) is a very thin reed upon which to find
complete conflict preemption with respect to competing claims to
life insurance proceeds. While we can certainly appreciate the
simplicity of the bright line rule embraced by the Sixth Circuit,
that simplicity comes at too great a cost. As we noted in Brandon,
the law of family relations, which includes an individual’s right
10
to expressly apportion property upon divorce, has traditionally
been a fairly sacrosanct enclave of state law. See Brandon, 18
F.3d at 1327. Similarly, the Sixth Circuit’s bright line rule that
a beneficiary designation cannot be challenged would supplant what
is a fairly uniform set of state laws providing that a named
beneficiary who kills a plan participant in order to obtain the
plan benefits is not entitled to recover those proceeds. See
Emard, 153 F.3d at 959 n.11 (noting that forty-four states and the
District of Columbia have such laws in effect). While ERISA
§ 1144(a) requires the conclusion that the state law governing such
matters is itself preempted when it relates to an ERISA plan, we
have no trouble concluding, as have many of the courts that have
addressed the issue, that the traditional deference given to state
law in these areas supports our decision to borrow from state law
when determining the federal common law that should control such
claims. See, e.g., Clift, 2000 WL 373981 at *3; Mohamed, 53 F.3d
at 913; Brandon, 18 F.3d at 1325. In sum, ERISA is broad enough in
its preemptive scope to accomplish the purposes of ERISA; namely
the imposition of adequate safeguards with “respect to the
establishment, operation, and administration” of employee benefit
plans for the benefit of ERISA plan participants and beneficiaries.
See 29 U.S.C. § 1001(a). There is no additional need to breathe
imaginary preemptive effect with respect to competing claims for
life insurance benefits into general provisions addressing another
11
topic altogether.
Neither is a contrary approach required by Boggs. In Boggs,
two parties asserted competing claims to the pension benefits of
one Isaac Boggs after his death in 1989. Boggs’ sons from a prior
marriage claimed entitlement to the pension benefits by virtue of
their deceased mother’s testamentary transfer of her state law
community property interest in Boggs’ undistributed pension
benefits. Boggs’ surviving wife claimed entitlement to the pension
benefits by virtue of ERISA § 1055, which mandates that covered
pension plans protect the interests of surviving spouses by
providing benefits in the form of a qualified joint and survivor
annuity, and ERISA § 1056, which provides that the benefits due
under a covered pension plan are inalienable and unassignable,
absent a qualified domestic relations order (QDRO) meeting certain
statutory requirements.
Recognizing that Boggs was positioned “at the intersection of
ERISA pension law and state community property law,” 117 S. Ct. at
1760, the Supreme Court held that “[t]he surviving spouse annuity
and QDRO provisions, which acknowledge and protect specific pension
plan community property interests, give rise to the strong
implication that other community property claims are not consistent
with the statutory scheme,” 117 S. Ct. at 1763. The Supreme Court
noted that Congress significantly strengthened the specific
statutory protection afforded surviving spouses against competing
12
interests by amending the statute in 1984. See id. at 1761. The
Supreme Court then employed a conflict preemption analysis to hold
that Louisiana community property law permitting a testamentary
transfer of a former spouse’s community property interest in the
undistributed pension benefits of her former spouse, who remarried
prior to death, was completely preempted by contrary provisions of
ERISA that were plainly intended to provide an income stream to
surviving spouses that was both inalienable and immune to competing
interests absent compliance with the specific statutory framework
for preserving such interests with a QDRO. See id. at 1763-66.
Hayes maintains, and the district court at least implicitly
held, that Boggs somehow undermines this Court’s analysis and
reliance upon federal common law in Brandon. We disagree. The
principles at work in Boggs are clearly inapplicable in this case.
As an initial matter, this case does not involve either pension
benefits or the express provisions of ERISA ensuring special
protection to surviving spouses in the context of pension benefits.
Both ERISA § 1055 and ERISA § 1056 are facially limited in
application to pension plans, and neither section purports to have
any application with respect to competing claims to benefits under
a non-pension employee welfare plans, such as the life insurance
policy at issue here. See 29 U.S.C. §§ 1055, 1056; see also
Brandon, 18 F.3d at 1324 (characterizing employer-provided life
insurance policies as “welfare plans” within the meaning of 29
13
U.S.C. § 1002(1)). Of equal importance, this case does not involve
the assertion of any community property interest. Hayes is not
asserting a community property interest. To the contrary, Hayes is
the designated beneficiary under the plan. For that reason, those
ERISA provisions that have been construed to protect those
interests of a former spouse that are inconsistent with plan
documents or other ERISA provisions, provided those interests are
preserved in a QDRO, are simply inapplicable to this dispute.2
Likewise, the estate does not claim entitlement on the basis of a
community property interest. Rather, the estate seeks to void
West’s designation of beneficiary by virtue of the statutory
presumption erected by Texas Family Code § 9.301, and then to rely
instead upon Texas law governing the distribution of assets in the
absence of such a designation. As should be apparent, Boggs dealt
with a clearly distinguishable situation involving explicit ERISA
provisions addressing an issue plainly within the express
regulatory provisions of the statute. In sum, we are not persuaded
2
The district court seems to have confused these facts in its
written decision. For example, the district court recognized that
the statutory provisions protecting surviving spouses were
inapplicable here, although it premised that observation upon the
fact that West did not remarry, rather than upon the fact that
Manning’s claims do not involve pension benefits. Similarly, the
district court noted that ERISA generally requires that a former
spouse preserve his or her interest in plan benefits by obtaining
a QDRO, but noted that Hayes’ non-compliance with those provisions
could be excused in this case, not because she is the named
beneficiary who has no need to preserve her consistent interest,
but because West did not choose to remarry in the month following
the date upon which his divorce decree became final.
14
that Boggs requires any more expansive view of the discrete ERISA
preemption issue presented in Brandon.
The district court’s broad reliance upon § 1104 for the
proposition that ERISA expressly requires payment to a named
beneficiary without regard any other circumstances and without
resort to federal common law reflects nothing more than an
inappropriate reliance upon the Sixth Circuit’s minority position,
which has been soundly rejected by this Circuit and a majority of
other circuits to consider the issue. Similarly, the district
court’s reliance upon Boggs is without support; Boggs does not
provide any rule of law that may be applied to this case. For the
foregoing reasons, we conclude a reconsideration of the legal
principles set forth in Brandon and recently reaffirmed in Clift is
neither appropriate nor desirable.
IV.
Having ascertained that our Circuit follows the majority
approach by applying federal common law to disputes between a non-
beneficiary claimant and the named ERISA beneficiary to life
insurance proceeds, and that neither the express language of ERISA
nor the Supreme Court’s decision in Boggs require that we abandon
that approach, we must now determine the content of the applicable
federal common law.
Manning correctly notes that federal common law may be
determined by reference to analogous state law. See Wegner v.
15
Standard Ins. Co., 129 F.3d 814, 818 (5th Cir. 1997); Sunbeam-Oster
Co., Inc. Group Benefits Plan for Salaried and Non-Bargaining
Hourly Employees v. Whitehurst, 102 F.3d 1368, 1374 n. 18 (5th Cir.
1996); Jones v. Georgia Pacific Corp., 90 F.3d 114, 115 (5th
Cir. 1996); Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1451
(5th Cir. 1995). Manning then argues on behalf of the estate that
this Court incorporated the requirements of the Texas redesignation
statue, Texas Family Code 9.301, into the federal common law in
Brandon.
We disagree. While it is true that we used the Texas statute
as a starting point, holding that we would “adopt the Texas rule
creating a presumption of waiver absent redesignation following
divorce,” Brandon, 18 F.3d at 1326, we recognized that “wholesale
adoption of the Texas redesignation statute” would not
“sufficiently protect the interests of [ERISA] beneficiaries,” id.
at 1326. We therefore modified that rule by requiring that any
waiver by a designated beneficiary of ERISA life insurance proceeds
be “explicit, voluntary, and made in good faith.” Id. at 1327.
Moreover, we measured the adequacy of the asserted waiver under
this modified standard with reference to the existing federal,
rather than state, common law. See Brandon, 18 F.3d at 1326-27
(discussing Lyman Lumber Co. v. Hill, 877 F.2d 692 (8th Cir. 1989)
and Fox Valley & Vicinity Constr. Workers Pension Fund, 897 F.2d
275 (7th Cir. 1989)). We therefore reject Manning’s argument that
16
Brandon necessarily requires a result in favor of the estate
because we incorporated the Texas redesignation statute into the
federal common law when deciding that case. To the contrary,
whether the estate is entitled to the proceeds of the life
insurance policy must be determined with reference to the express
contractual language purporting to establish Hayes’ waiver, as well
as any other factual circumstances bearing upon whether that waiver
was intentionally and voluntarily made in good faith. See Brandon,
18 F.3d at 1322, 1327 (discussing divorce decree provisions as well
as other facts bearing upon the issue of waiver).
V.
Brandon provides the rule of federal common law applicable to
this dispute. That rule is that a named ERISA beneficiary may
waive his or her entitlement to the proceeds of an ERISA plan
providing life insurance benefits, provided that the waiver is
explicit, voluntary, and made in good faith. The final question
requiring our consideration is whether Hayes in fact waived her
beneficiary status.
There does not appear to be any issue relating to whether the
parties acted voluntarily or in good faith when signing the
prenuptial agreement that is made the basis of Manning’s waiver
argument. To the contrary, the sole issue appears to be whether
the express provisions of that agreement establish Hayes’ explicit
waiver of her status as the named ERISA beneficiary under the Unum
17
policy as a matter of law.
Manning asserts that Hayes waived her interest in the policy
as a matter of law by signing the prenuptial agreement, which was
later made the basis of the property division ordered by the
divorce decree. Hayes responds that the prenuptial agreement is
incompetent to waive her interest in the policy because it was
executed prior to the creation of her interest as a designated
beneficiary and because the document does not explicitly waive her
interest in either West’s employee benefit plans or the Unum policy
in particular.
In deciding this issue, we are guided by the treatment given
analogous waiver language in the existing precedent. In Brandon
and Clift, we held that former spouses effectively waived their
interest in the proceeds of ERISA life insurance policies by virtue
of explicit language appearing in the divorce decrees. In Brandon,
the divorce decree expressly divested the former spouse of any
interest in or claim to:
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.
Brandon, 18 F.3d at 1323. In Clift, a more obvious case of waiver,
the divorce decree expressly divested the former spouse of any
18
interest in or claim under “any and all policies of life insurance
(including cash value) insuring the life” of her former husband.
Clift, 2000 WL 373981 at *4.
Although neither case technically involves life insurance
benefits, we have likewise invoked the Eighth Circuit’s decision in
Lyman Lumber v. Hill, 877 F.2d 692 (8th Cir. 1989), and the Seventh
Circuit’s decision in Fox Valley & Vicinity Constr. Workers Pension
Fund, 897 F.2d 275, 278 (7th Cir. 1989), when measuring the adequacy
of an alleged waiver of beneficiary status under federal common
law. See Brandon, 18 F.3d at 1326.
In Lyman Lumber, a former spouse, who was also the named
beneficiary, claimed benefits under her deceased husband’s ERISA
profit-sharing plan. Her claim was opposed by a contingent
beneficiary, who relied upon the terms of the divorce decree, which
provided that the husband would “have as his own, free of any
interest” of the former spouse, “his interest in the profit-sharing
plan of his employer.” Lyman Lumber, 877 F.2d at 693. The Eighth
Circuit held that the divorce decree was adequate to divest the
former spouse of any shared ownership interest under the profit-
sharing plan, but that the divorce decree was not adequate, absent
specific language mentioning the beneficiary interest, to divest
the former spouse of her status as plan beneficiary. See id. at
693-94. Thus, the Lyman Lumber court found no waiver.
In Fox Valley, a former spouse, who was also the named
19
beneficiary, claimed entitlement to the proceeds of a lump sum
death benefit under the deceased participant’s ERISA pension plan.
Her claim was opposed by the participant’s mother, who claimed that
the former spouse had waived her interest in the pension plan by
virtue of language in the divorce decree, which provided:
The 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.
Fox Valley, 897 F.2d at 277. The Fox Valley court held that the
preceding language was adequate to waive the former spouse’s
interest in the lump sum death benefits payable pursuant to the
deceased participant’s pension plan. Id. at 282.
Underlying the result in each of these cases is a focus upon
the specificity or explicitness of the language used to affect the
alleged waiver. Clift presents the easiest case, given that the
former spouse expressly waived any interest in life insurance
policies insuring the life of her former husband. The case is also
instructive because in Clift, we did not distinguish between an
interest in the life insurance policy and beneficiary status under
that policy, as the Eighth Circuit did in Lyman Lumber. Indeed,
Clift expressly declined the Seventh Circuit’s lead in this regard,
by rejecting a former spouse’s invitation to hold that magic words,
such as a right to “proceeds” or a “beneficiary interest” must be
included in a valid waiver. The Court explained that, while waiver
will not be presumed in the absence of fairly explicit language
20
setting forth the waiver, neither is any particular formulation
required. See Clift, 2000 WL 373981 at *3-4. Rather, the Court
clarified that the Court “will only find waiver if, upon reading
the language in the divorce decree, a reasonable person would have
understood that” the beneficiary was “waiving [his or] her
beneficiary interest in the life insurance policy at issue.” Id.
at *4. Brandon and Fox Valley serve as examples of less obvious,
but nonetheless adequate, waivers. In both of those cases, the
courts were persuaded by divorce decrees that explicitly divested
the former spouse of any interest arising from the employment of
the participant spouse. Thus, although we must eschew any
mechanistic formulation of the language required to cause a valid
waiver, the inclusion of language explicitly divesting a former
spouse of an interest in any and all employee benefit plans of the
other is probably sufficient to support an alternative
beneficiary’s claim that the former spouse waived his or her
beneficiary status.
Applying these principles to this case, we find no waiver.
The prenuptial agreement was executed prior to the time that Hayes
was designated as beneficiary under the policy. The clear purpose
of the document, as reflected by the title, was to define and
provide for the preservation of separate property brought to the
marriage. The broad language waiving West’s and Hayes’ interests
in the other’s “property” does not in any manner either explicitly
21
or implicitly contemplate waiver of a subsequently acquired
beneficiary interest in a life insurance policy.
Manning suggests that the prenuptial agreement was
incorporated into the divorce decree, such that the terms of that
agreement were revived and applied to the parties’ then-existing
interests. We disagree. As an initial matter, the divorce decree
does not purport to incorporate or revive the terms of the
prenuptial agreement. To the contrary, the divorce decree provides
that there is no community property to be divided aside from
personal effects, and that that property would be awarded to the
person in possession. The divorce decree then provides that the
foregoing division, i.e. that each party retained their own
personal effects, was made pursuant to the Separate Property
Preservation and Definition Agreement. The divorce decree does not
provide that either West’s or Hayes’ interests were otherwise being
divided in accordance with that agreement.
Moreover, even if we agreed that the divorce decree
effectively divides the parties’ after-acquired interests in
accordance with the prenuptial agreement, we would still find no
waiver here. While the prenuptial agreement is broadly drafted,
there is nothing in that agreement either implicitly or explicitly
addressing either insurance or employee benefits. Likewise, and as
set forth above, there is nothing in the agreement that would have
placed a reasonable person on notice that Hayes was waiving her
after-acquired beneficiary interest in the Unum life insurance
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policy. See Clift, 2000 WL 373981 at *4.
To conclude, we have not found any cases holding that an
agreement negotiated prior to marriage for the purpose of defining
and preserving separate property is effective to negate an insured
spouse’s subsequent and voluntary decision to designate the other
spouse as a named beneficiary under an ERISA plan. We do not say
that such an agreement would never suffice, but something
substantially more than the tangential and obscure references to
each of the parties “property” rights would have to be present to
support a finding of waiver. The divorce decree in this case is
likewise inadequate to revive the preclusive effect of the
agreement, if any. The divorce decree relies upon and invokes the
agreement solely for the purpose of clarifying that there is no
community property and therefore no property to be divided by the
family court. The divorce decree does not purport to revive the
various provisions of the agreement for the purpose of precluding
Hayes’ claim to benefits pursuant to her status as the designated
beneficiary of West’s life insurance policy. For these reasons, we
find no waiver of Hayes’ interests, and affirm the district court’s
holding that Hayes is entitled under ERISA and subject to the terms
of the plan to recover the proceeds of the Unum life insurance
policy.
CONCLUSION
The district court is affirmed.
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