Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
Opinion Clifford W. Taylor Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
FILED APRIL 26, 2006
MARILYN VIRGINIA SWEEBE,
Plaintiff-Appellant,
v No. 126913
HERBERT ORVILLE SWEEBE,
Defendant-Appellee.
_______________________________
BEFORE THE ENTIRE BENCH
CAVANAGH, J.
The issue in this case is whether the preemption provision of the Employee
Retirement Income Security Act (ERISA), 29 USC 1001 et seq., precludes a
named beneficiary from waiving the proceeds from a life insurance policy. We
hold that it does not. While a plan administrator is required by ERISA to
distribute plan proceeds to the named beneficiary, the named beneficiary can then
be found to have waived the right to retain those proceeds. In this case, the Court
of Appeals correctly held that plaintiff waived her right to retain the proceeds.
Accordingly, we affirm the Court of Appeals order that directs plaintiff to pay an
amount equal to the insurance proceeds to the decedent’s estate.
FACTS AND PROCEEDINGS
Plaintiff Marilyn V. Mason (formerly Marilyn V. Sweebe) and the
decedent, Herbert O. Sweebe, were divorced in 1986. At the time, they agreed to
give up any interest either had in any insurance contract or policy of the other.
They memorialized this in their judgment of divorce as follows:
IT IS FURTHER ORDERED AND ADJUDGED that any
interest which either of the parties may now have or may have had in
any insurance contract or policy, and any other interest in any
insurance contract or policy of the other party, shall be extinguished,
and that the parties shall in the future hold all such insurance free
and clear from any right or interest which the other party now has or
may have had therein, by virtue of being the beneficiary, contingent
beneficiary or otherwise.
The decedent had a life insurance policy provided by his employer. The
decedent had designated plaintiff as the beneficiary of the life insurance policy in
1963, and he never changed this designation after his divorce from plaintiff.
Therefore, when the decedent died in 2001, the insurance plan administrator paid
the plan proceeds to plaintiff because she was listed as the named beneficiary.
The decedent’s surviving spouse, defendant Gail Sweebe, was appointed
personal representative of his estate. Acting on behalf of the estate, she filed a
motion to enforce the waiver in the judgment of divorce. The circuit court denied
the motion because it held that ERISA preempted the waiver.
On application for leave to appeal, the Court of Appeals reversed the order
of the circuit court in a peremptory order and remanded for entry of an order
directing plaintiff to pay the decedent’s estate an amount equal to the insurance
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proceeds. Sweebe v Sweebe, unpublished order of the Court of Appeals, entered
July 19, 2004 (Docket No. 253520). The Court held that plaintiff could not retain
the life insurance proceeds because she expressly waived any entitlement to the
proceeds in the consent divorce judgment. Plaintiff applied for leave to appeal,
which this Court granted. Sweebe v Sweebe Estate, 472 Mich 881 (2005).
STANDARD OF REVIEW
The proper interpretation of a statutory provision is a question of law that
this Court reviews de novo. Lincoln v Gen Motors Corp, 461 Mich 483, 489-490;
607 NW2d 73 (2000). Likewise, contract interpretation is also a question of law
reviewed de novo. Sands Appliance Services, Inc v Wilson, 463 Mich 231, 238;
615 NW2d 241 (2000). Waiver is a mixed question of law and fact. Klas v
Pearce Hardware & Furniture Co, 202 Mich 334, 339; 168 NW 425 (1918). The
definition of a waiver is a question of law, but whether the facts of a particular
case constitute a waiver is a question of fact. Id. A trial court’s findings of fact
are reviewed for clear error. Sands, supra at 238.
ANALYSIS
The life insurance policy at issue in this case is an employee benefit plan
governed by ERISA. 29 USC 1003(a). In general, ERISA’s preemption provision
states that ERISA supersedes all state laws that relate to an employee benefit plan.
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29 USC 1144(a).1 Therefore, under ERISA preemption, Michigan law cannot
affect ERISA’s determination of the proper beneficiary. ERISA provides that a
plan administrator must distribute the proceeds of an insurance policy to the
named beneficiary. 29 USC 1104(a)(1)(D). A “beneficiary” is “a person
designated by a participant, or by the terms of an employee benefit plan, who is or
may become entitled to a benefit thereunder.” 29 USC 1002(8). In this case, the
named beneficiary was plaintiff. Under ERISA, plaintiff is entitled to receive the
insurance proceeds because the decedent designated her as the beneficiary.
Consistent with ERISA, this Court cannot undermine her status as the beneficiary.
Therefore, the plan administrator properly distributed the proceeds from the life
insurance policy to plaintiff in accord with ERISA requirements.
Because the plan administrator distributed the proceeds to plaintiff, the
named beneficiary, as required by ERISA, we find that the issue in this case solely
involves waiver and not ERISA preemption. Plainly, the issue is whether plaintiff,
having lawfully renounced her interest in the insurance proceeds in a binding
judgment of divorce, may lawfully retain them. This issue is governed exclusively
by Michigan law because the proceeds have been properly distributed under
ERISA.
1
In relevant part, the preemption provision states that “the provisions of
this title and title IV shall supersede any and all State laws insofar as they may
now or hereafter relate to any employee benefit plan . . . .”
4
A recent case decided by this Court—State Treasurer v Abbott, 468 Mich
143; 660 NW2d 714 (2003)—also dealt with ERISA. While Abbott dealt with
pension benefits and ERISA’s antialienation provision, the principle espoused by
this Court was that the Abbott defendant’s pension plan proceeds were no longer
protected by ERISA after they had been paid by the plan administrator.2
Similarly, today’s decision does not invade the purview of ERISA because the
plan administrator is still only required to do that which ERISA explicitly directs
the administrator to do—distribute the proceeds to the named beneficiary.
Accordingly, while a plan administrator must pay benefits to the named
beneficiary as required by ERISA, this does not mean that the named beneficiary
cannot waive her interest in retaining these proceeds. Once the proceeds are
distributed, the consensual terms of a prior contractual agreement may prevent the
named beneficiary from retaining those proceeds.
A number of courts have also addressed this issue and have similarly held
that ERISA does not preempt a waiver by a beneficiary. See, e.g., Melton v
Melton, 324 F3d 941, 945 (CA 7, 2003); Clift v Clift, 210 F3d 268, 270 (CA 5,
2000); Altobelli Estate v Int’l Business Machines Corp, 77 F3d 78, 79 (CA 4,
1996); Mohamed v Kerr, 53 F3d 911, 916 (CA 8, 1995); Fox Valley & Vicinity
2
While members of this Court, myself included, disagreed with the
majority’s analysis in Abbott, the general proposition that ERISA is not implicated
once a plan administrator distributes the proceeds from a plan to the beneficiary is
one that I do not dispute.
5
Constr Workers Pension Fund v Brown, 897 F2d 275, 280, 281 (CA 7, 1990).
While the United States Court of Appeals for the Sixth Circuit has held to the
contrary in Metro Life Ins Co v Pressley, 82 F3d 126, 130 (CA 6, 1996), and
McMillan v Parrott, 913 F2d 310, 312 (CA 6, 1990), the plan administrators in
those cases had not yet paid the proceeds to the named beneficiaries, contrary to
the situation in this case.
Our decision today holding that a valid waiver is not preempted by ERISA
and should be enforced is consistent with numerous past decisions by this Court
recognizing that parties have a broad freedom to contract. See, e.g., Grosse Pointe
Park v Michigan Muni Liability & Prop Pool, 473 Mich 188, 200; 702 NW2d 106
(2005); Fresard v Michigan Millers Mut Ins Co, 414 Mich 686, 694; 327 NW2d
286 (1982). This Court has long held that “[w]aiver is the intentional
relinquishment of a known right.” Bailey v Jones, 243 Mich 159, 162; 219 NW
629 (1928); see also Quality Products & Concepts Co v Nagel Precision, Inc, 469
Mich 362, 372; 666 NW2d 251 (2003). It is also well-settled that a waiver may be
shown by express declarations or by declarations that manifest the parties’ intent
and purpose. Klas, supra at 334.
Consistent with other courts that have reviewed this issue and with general
contract interpretation principles, a court must examine the language of the waiver
provision to determine the intent of the parties and if there was a valid waiver of
the rights in question. See Rasheed v Chrysler Corp, 445 Mich 109, 127 n 28; 517
NW2d 19 (1994); Silber v Silber, 99 NY2d 395, 404-405; 786 NE2d 1263 (2003);
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Manning v Hayes, 212 F3d 866, 874 (CA 5, 2000). There is no magic language
that must be included to effectively waive a person’s interest in plan proceeds.
Rather, courts that have examined what constitutes a waiver have consistently
stated that a waiver must simply be explicit, voluntary, and made in good faith.
See, e.g., Melton, supra at 945; Clift, supra at 271.
In the context of this case, “explicit” means that the divorce decree is not
completely silent on the issue of insurance proceeds. Clift, supra at 271.
However, there are no specific words that must be included. In determining if a
waiver exists, a court must determine if “a reasonable person would have
understood that she was waiving her beneficiary interest in the life insurance
policy at issue.” Id. at 271-272.
In this case, plaintiff signed a provision in her judgment of divorce in which
she extinguished any interest she had or may have had in any insurance contract or
policy of the decedent.3 The provision she signed stated “that any interest which
either of the parties may now have or may have had in any insurance contract or
policy, and any other interest in any insurance contract or policy of the other
party, shall be extinguished . . . .” (Emphasis added.) It also stated that “the
parties shall in the future hold all such insurance free and clear from any right or
interest which the other party now has or may have had therein, by virtue of being
3
The provision in the judgment of divorce in this case is a waiver of rights,
but it does not meet the requirements of a qualified domestic relations order. See
29 USC 1056(d)(3)(B)(i) and (ii).
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the beneficiary, contingent beneficiary or otherwise.” (Emphasis added.) Our
review of this provision indicates that plaintiff clearly and unequivocally waived
her right to the plan proceeds. Plaintiff and the decedent freely reached an
agreement about how to divide property and insurance proceeds. Therefore,
plaintiff consented to the waiver of her right to receive proceeds from the
decedent’s insurance plan. Under Michigan law, plaintiff validly waived the right
to retain the proceeds under the binding judgment of divorce.
Today’s decision is not in conflict with the United States Supreme Court’s
decision in Egelhoff v Egelhoff, 532 US 141; 121 S Ct 1322; 149 L Ed 2d 264
(2001). In Egelhoff, the Court addressed a mandatory state statute that
automatically revoked named beneficiaries upon divorce. The statute governed
the distribution of benefits in all applicable cases, requiring plan administrators to
administer plans in accord with differing state requirements. The statute clearly
invaded an area that is covered by ERISA.
In contrast, the beneficiary in this case was not determined by a state
statute. Plaintiff and the decedent each freely contracted to waive any interest in
insurance proceeds from the other’s plans. There is no invasion into the
requirements of ERISA because the plan administrator distributed the proceeds to
the named beneficiary, as required by ERISA. However, after the plan
administrator distributed the proceeds as required by ERISA, a claim could then
be filed against the named beneficiary alleging that she waived her right to retain
the proceeds.
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Moreover, our decision today does not conflict with the United States
Supreme Court’s decision in Boggs v Boggs, 520 US 833; 117 S Ct 1754; 138 L
Ed 2d 45 (1997). The issue in Boggs was whether ERISA preempted a state law
allowing a nonparticipant spouse to transfer by testamentary instrument an interest
in proceeds from an undistributed pension plan. Boggs involved a conflict
between ERISA pension law and state community property law, which would
create a direct right in the proceeds from an ERISA plan. The case before this
Court involves a life insurance policy, not pension benefits,4 and does not conflict
with ERISA because the plan administrator’s responsibilities do not change. This
case is simply a contractual waiver dispute between two parties.
Accordingly, we affirm the Court of Appeals order. We conclude that the
benefits were properly paid to plaintiff under ERISA, but plaintiff has no legal
right to retain the proceeds under the waiver provision in the judgment of divorce.
Plaintiff must pay an amount equal to the insurance proceeds to the decedent’s
estate, which will then distribute the proceeds according to the decedent’s will or
the laws of intestacy. However, we also note that today’s holding does not
preclude anyone, including plaintiff, from asserting that there is a will or other
valid expression of testamentary intent that the court should recognize, or from
4
“Pension benefits support participants and beneficiaries in their retirement
years, and ERISA’s pension plan safeguards are designed to further this end.” Id.
at 852.
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asserting a valid claim against the estate in the usual fashion our probate statutes
and rules allow.
CONCLUSION
We hold that while a plan administrator is required by ERISA to distribute
the proceeds from a plan to a named beneficiary, the named beneficiary can then
be found to have waived the right to retain the distributed proceeds. In this case,
plaintiff waived her right to the proceeds from the plan when she agreed to the
judgment of divorce, which contained a waiver provision. Accordingly, we affirm
the Court of Appeals order that requires plaintiff to pay an amount equal to the
insurance proceeds to the decedent’s estate.
Affirmed.
Michael F. Cavanagh
Clifford W. Taylor
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
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