United States Court of Appeals
Fifth Circuit
IN THE UNITED STATES COURT OF APPEALS
F I L E D
December 22, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-10212
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
Plaintiff
v.
KIMBERLYE FINCH
Defendant - Appellant
v.
EDDIE LEE GALAWAY, Administrator, on behalf
of Estate of Bradford Wayne Galaway
Defendant - Appellee
Appeal from the United States District Court for the
Northern District of Texas
Before KING, Chief Judge, and HIGGINBOTHAM and DAVIS, Circuit
Judges.
KING, Chief Judge:
The Guardian Life Insurance Company of America filed this
interpleader action in order to determine who should receive the
proceeds of a life insurance plan governed by ERISA. Eddie Lee
Galaway, the administrator of the decedent’s estate, claimed that
the estate should receive the proceeds because Kimberlye Finch,
the named beneficiary and the decedent’s ex-wife, waived her
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rights to them when she and the decedent divorced. By order of
the district court and with the consent of all parties, this case
was transferred to a magistrate judge. Applying the federal
common law of waiver, the magistrate judge agreed with Eddie Lee
Galaway, determining that Finch had waived her rights under the
plan. Accordingly, the magistrate judge granted summary judgment
in his favor. Finch now appeals this decision, citing Egelhoff
v. Egelhoff, 532 U.S. 141 (2001), for the proposition that a
federal district court must look to the text of ERISA itself, not
to federal common law, when identifying the beneficiary of a plan
governed by ERISA. For the following reasons, we AFFIRM the
judgment of the district court.
I. FACTUAL AND PROCEDURAL BACKGROUND
Bradford Wayne Galaway (“Galaway”) and Kimberlye Finch
married on September 22, 2001. On February 1, 2002, the Guardian
Life Insurance Company (“Guardian”) had issued to Galaway’s
employer a group life insurance policy covering Galaway. Galaway
named Finch as the beneficiary of this policy. All parties to
this suit agree that this life insurance policy is an employee
welfare benefits plan governed by § 3(21)(A) of Title I of the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. §§ 1001-1461 (2000).
On June 20, 2002, Galaway and Finch divorced. As part of
the divorce proceedings, they voluntarily entered into an Agreed
Final Decree of Divorce that awarded Galaway all “right, title,
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interest, and claim in and to” his life insurance policies. The
Agreed Final Decree of Divorce divested Finch of her interest in
any such policies.
On November 8, 2002, Galaway died intestate in an airplane
accident. At the time of his death, Galaway had not changed the
named beneficiary of his life insurance policy.
After Galaway’s death, both Eddie Lee Galaway, as
administrator of Bradford Wayne Galaway’s estate, and Finch
claimed sole entitlement to the insurance proceeds. On May 30,
2003, Guardian filed an interpleader action in the United States
District Court for the Northern District of Texas, in which it
asked the court to identify the proper beneficiary of the
insurance proceeds.
In deciding the present case, the magistrate judge, citing
Fifth Circuit precedent, applied federal common law to determine
that Finch had waived her rights to the insurance proceeds.
Accordingly, the magistrate judge granted summary judgment in
favor of Eddie Lee Galaway and denied Finch’s cross-motion for
summary judgment. Finch now appeals this decision.
II. STANDARD OF REVIEW
This court reviews a district court’s grant of summary
judgment de novo. Martinez v. Schlumberger, Ltd., 338 F.3d 407,
410-11 (5th Cir. 2003); Clift v. Clift, 210 F.3d 268, 269-70 (5th
Cir. 2000). Summary judgment is appropriate when no genuine
issue as to any material fact exists and the moving party is
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entitled to judgment as a matter of law. FED. R. CIV. P. 56(c).
III. ANALYSIS
On appeal, Finch argues that the magistrate judge erred when
she relied on federal common law to identify the beneficiary of
the life insurance plan. In support of this claim, Finch invites
the court’s attention to Egelhoff, 532 U.S. at 141, which she
claims undermines this circuit’s longstanding practice of looking
to federal common law to determine if the named beneficiary of an
ERISA-governed benefits plan has effected a valid waiver of her
rights. All parties appear to agree that this issue--whether,
after Egelhoff, courts can rely on federal common law to
determine if the beneficiary of an ERISA plan has waived her
rights--is the sole issue before the court. Likewise, all
parties appear to agree that this case should be disposed of on
summary judgment because the facts of the case are not in
dispute.
Finch’s claim that the magistrate judge improperly applied
federal common law when deciding this case fails. In this
circuit, we have applied federal common law to determine whether
the named beneficiary of a plan governed by ERISA has waived her
rights under the plan. See Manning v. Hayes, 212 F.3d 866 (5th
Cir. 2000), cert. denied, 532 U.S. 941 (2001). For the reasons
set forth below, Egelhoff does not undermine this approach.
A. Fifth Circuit Precedent
In a series of cases, this court has held that when ERISA
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preempts state law, we apply federal common law to determine
whether a beneficiary like Finch has effected a waiver. See
Manning, 212 F.3d at 866; Clift, 210 F.3d at 268; Brandon v.
Travelers Ins. Co., 18 F.3d 1321 (5th Cir. 1994). Following this
line of precedent, a waiver is valid if it is “explicit,
voluntary and made in good faith.” Manning, 212 F.3d at 871; see
also Clift, 210 F.3d at 269-71; Brandon, 18 F.3d at 1325-27. In
Brandon, a case quite similar to the present one, we held that a
decedent’s ex-wife, who was the named beneficiary of a life
insurance plan governed by ERISA, was not entitled to the
proceeds of the plan because she waived them in a settlement
agreement. Specifically, in Brandon, this court found that ERISA
preempted a Texas state law that would have automatically
nullified upon divorce the decedent’s previous designation of his
then-wife as the plan’s beneficiary. Brandon, 18 F.3d at 1325.
After making this finding, this court then sought to “ascertain
the law that is applicable to the controversy” by looking to the
“statutory language or, finding no answer there, to federal
common law . . . .” Id. (internal quotation marks omitted).
Similarly, in Manning, this circuit followed the same approach.
See Manning, 212 F.3d at 870. Specifically, it asked “whether,
having established that the state law is preempted, the federal
law governing the resolution of [the case] may be reasonably
drawn from the text of ERISA itself, or must instead be developed
as a matter of federal common law.” Id. Thus, in a series of
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cases, this court has consistently applied federal common law to
determine the proper beneficiary of plans governed by ERISA.
Outside of this circuit, the majority of courts that have
considered whether federal common law governs disputes between an
ex-spouse who is an ERISA plan’s designated beneficiary and other
claimants to the plan’s proceeds have reached the same conclusion
that this court has reached. Specifically, most courts have: (1)
concluded that ERISA does not preempt a waiver by a named
beneficiary of her interest in the plan’s proceeds; and (2)
relied on federal common law principles in order to determine if
the named beneficiary effected a valid waiver of her rights under
the plan. See Hill v. AT&T Corp., 125 F.3d 646, 648 (8th Cir.
1997); Estate of Altobelli v. Int’l Bus. Machs. Corp., 77 F.3d
78, 81-82 (4th Cir. 1996); Mohamed v. Kerr, 53 F.3d 911, 914 (8th
Cir. 1995), cert. denied, 516 U.S. 868 (1995); Fox Valley &
Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275, 280
(7th Cir. 1990) (en banc), cert. denied, 498 U.S. 820 (1990);
Metro. Life Ins. Co. v. Flinkstrom, 303 F. Supp. 2d 34, 39-43
(D. Mass. 2004); John Hancock Mut. Life Ins. Co. v. Timbo, 67 F.
Supp. 2d 413, 419-20 (D.N.J. 1999). Only the Sixth Circuit has
clearly gone the other way, finding that the text of ERISA
forecloses employing federal common law to determine a plan’s
beneficiary. Metro. Life Ins. Co. v. Pressley, 82 F.3d 126, 129-
30 (6th Cir. 1996) (concluding that “[t]he Sixth Circuit takes a
different view [from the majority of other circuits] and holds
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that ERISA itself supplies the rule of law.”). Hence, the
majority of circuits that have considered the issue presently
before this court have concluded, as we have done in the past,
that it is appropriate to apply federal common law to determine
if the named beneficiary of an ERISA plan has waived her rights.
B. Finch’s Arguments
In her appellate brief, Finch argues that Egelhoff
effectively overrules this circuit’s decisions looking to federal
common law to identify the beneficiary of an ERISA plan.
Instead, according to Finch, Egelhoff requires courts to look
solely to the text of ERISA and to the plan documents--not to
federal common law--in order to determine the proper beneficiary
of a life insurance policy governed by ERISA. In support of this
claim, Finch cites a passage in Egelhoff in which the Supreme
Court stated that “ERISA’s pre-emption section, 29 U.S.C.
§ 1144(a), 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.” Egelhoff, 532 U.S. at 146
(internal quotation marks omitted). Finch also notes that the
Supreme Court held that a “fiduciary shall administer the plan
‘in accordance with the documents and instruments governing the
plan,’ making payments to a ‘beneficiary’ who is ‘designated by a
participant, or by the terms of [the] plan.’” Id. at 147
(alteration in original) (internal citation omitted). According
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to Finch, the magistrate judge’s ruling in the present case,
which relies on federal common law rather than the language of
the plan documents, effectively abrogates ERISA as it relates to
life insurance plans. Thus, Finch argues that the magistrate
judge erred when she looked to federal common law in order to
identify the plan’s beneficiaries.
Second, Finch argues that the magistrate judge erred because
applying federal common law to determine a plan’s beneficiary
would undermine the goal of uniformity in the application of
ERISA. In support of this claim, Finch notes that in Egelhoff,
the Supreme Court held that ERISA preempted a Washington statute
providing for the automatic revocation of the designation of a
former spouse as a plan’s beneficiary upon a divorce. According
to the Court, preemption was necessary in order to prevent
“[r]equiring ERISA administrators to master the relevant laws of
50 States . . . .” Egelhoff, 532 U.S. at 149. The Court further
noted that “[u]niformity is impossible, however, if plans are
subject to different legal obligations in different States.” Id.
at 148. While Egelhoff pertained to a state statute, Finch
contends that the uniformity it refers to would be defeated if
plans are subject to different legal obligations in different
federal districts or circuits. Accordingly, Finch claims that
the magistrate judge erred when she relied on federal common law
to decide this case.
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C. The Effect Of Egelhoff
Contrary to Finch’s assertions, Egelhoff does not undermine
this court’s practice of applying federal common law to determine
if an ERISA plan’s named beneficiary has effected a valid waiver
of her rights under the plan. First, the holding of Egelhoff is
inapplicable to the present case because Egelhoff does not
address the application of federal common law to ERISA plans.
Rather, Egelhoff only addresses whether ERISA preempts a state
statute that automatically revokes the designation of a spouse as
the beneficiary of a life insurance policy upon divorce.
Egelhoff, 532 U.S. at 141. The Supreme Court’s holding in
Egelhoff--that ERISA does preempt a state statute that
automatically revokes an ex-spouse as a plan’s beneficiary after
a divorce--is unremarkable and is in line with a number of
decisions from this court holding that ERISA preempts state laws
of this sort. See, e.g., Manning, 212 F.3d at 870 (holding that
29 U.S.C. § 1144(a) preempts all state laws insofar as they
relate to an ERISA plan). Finch’s attempt to extend the holding
of Egelhoff beyond its facts so as to undermine the magistrate
judge’s reliance on federal common law in the present case is
unsupported by any case law and flatly contradicts this court’s
prior precedent. See, e.g., Manning, 212 F.3d at 871; Clift, 210
F.3d at 269-71; Brandon, 18 F.3d at 1325-26. This court sees no
reason to extend the scope of Egelhoff to find that it preempts
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federal common law in addition to state statutes. Accordingly,
the magistrate judge properly relied on federal common law when
determining that Finch had waived her rights under the life
insurance plan.
Second, the goal of uniformity that the Supreme Court
discusses in Egelhoff is not undermined when courts rely on the
federal common law of waiver to determine if a beneficiary has
waived her rights under an ERISA plan. To begin with, Egelhoff
only discusses the problems created when plan administrators must
look to state law in order to identify a plan’s beneficiary.
Egelhoff, 532 U.S. at 148 (stating that uniformity would be
undermined if plans are subject to different legal obligations in
different states). Egelhoff never holds that uniformity would be
undermined if courts relied on federal common law. In fact, plan
administrators must at times look to federal common law (e.g., to
determine how a certain provision of ERISA has been interpreted
in a particular circuit). Thus, reliance on federal common law
cannot alone undermine the uniformity that the Supreme Court
discusses in Egelhoff. Moreover, applying federal common law to
determine if an ERISA plan’s beneficiary waived her rights can be
seen as promoting, rather than undermining, national uniformity.
See Fox Valley, 897 F.2d at 281-82 (“As we have noted, federal
courts are charged with creating federal common law rules to
govern ERISA, and the creation of such federal rules will provide
the needed uniformity.”). Thus, Finch’s argument that reliance
10
on federal common law would undermine national uniformity fails.
Third, the Supreme Court in Egelhoff strongly suggested that
courts can at times rely on common law principles when
determining the identity of the beneficiary of an ERISA plan.
Egelhoff, 532 U.S. at 152. Referring to state “slayer” statutes,
the Supreme Court stated:
In the ERISA context, these “slayer” statutes could
revoke the beneficiary status of someone who murdered a
plan participant. Those statutes are not before us, so
we do not decide the issue. We note, however, that the
principle underlying the statutes--which have been
adopted by nearly every State--is well established in
the law and has a long historical pedigree predating
ERISA. And because the statutes are more or less
uniform nationwide, their interference with the aims of
ERISA is at least debatable.
Id. (internal citations omitted). Accordingly, the Supreme Court
has, at times, noted that it might be proper for lower courts to
look to common-law principles when interpreting provisions of
ERISA. See id.; Varity Corp. v. Howe, 516 U.S. 489, 498, 502
(1996) (using the common law as a starting point for interpreting
ERISA’s fiduciary duties).
Finally, several post-Egelhoff decisions from other circuits
reinforce our conclusion that Egelhoff does not undermine this
court’s application of federal common law to determine if an
ERISA plan’s named beneficiary has effected a valid waiver. For
instance, in Melton v. Melton, 324 F.3d 941 (7th Cir. 2003), the
Seventh Circuit relied on federal common law to determine if a
valid waiver had been effected by a plan’s beneficiary. The
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Seventh Circuit concluded that “[e]ven where ERISA preempts state
law with respect to determining beneficiary status under an
ERISA-regulated benefits plan, ERISA does not preempt an explicit
waiver of interest by a nonparticipant beneficiary of such plan.”
Id. at 945. Similarly, in Metropolitan Life Insurance Co. v.
Johnson, 297 F.3d 558, 567 (7th Cir. 2002), the Seventh Circuit
stated that “[t]he Supreme Court has recognized, in situations
where ERISA preempts state law but is silent on a topic, that
courts would have to develop a body of federal common
law . . . .” A number of federal district courts and state
courts have reached similar conclusions. See, e.g., Flinkstrom,
303 F. Supp. at 39-43; Metro. Life Ins. Co. v. Palmer, 238 F.
Supp. 2d 821, 824-26 (E.D. Tex. 2002); Keen v. Weaver, 121 S.W.3d
721, 725 (Tex. 2003) (“We do not believe that Egelhoff precludes
the application of federal common law to this dispute.”); Silber
v. Silber, 99 N.Y.2d 395, 404 (N.Y. 2003) (“[T]he weight of
federal authority now favors the view that a named beneficiary
may waive its rights as a designated beneficiary through a waiver
that meets common-law requirements.”).
Thus, for all of the foregoing reasons, Egelhoff does not
undermine this court’s longstanding approach of relying on
federal common law to determine if an ERISA plan’s beneficiary
has effected a common law waiver. Accordingly, the district
court did not err when, following Fifth Circuit precedent, it
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relied on federal common law to grant summary judgment in favor
of Eddie Lee Galaway because Finch had effected a valid waiver of
her rights under the life insurance plan.
IV. CONCLUSION
For the foregoing reasons, this court AFFIRMS the judgment
of the district court.
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