Opinion
No. C00-0026
July 9, 2001
ORDER
This matter comes before the court pursuant to the plaintiff Beverly Hogan's April 2, 2001 motion for summary judgment (docket number 14) and defendant Raytheon Co.'s April 9, 2001 cross-motion for summary judgment (docket number 18). The parties consented to the exercise of jurisdiction by a United States Magistrate Judge. For the reasons set forth below, the plaintiff's motion for summary judgment is granted and the defendant's motion for summary judgment is denied.
I. Factual Background
The parties have stipulated to all the relevant facts. Plaintiff Beverly Jean Hogan ("Beverly Hogan") was married to Robert Joe Hogan ("Robert Hogan") from before 1985 until June 5, 1997. The marriage was dissolved by the Chancery Court of Lincoln County, Tennessee by a filed Decree of Divorce ("the Decree") on June 5, 1997. From January 1, 1985 until the date of dissolution on June 5, 1997, Robert Hogan participated in the Raytheon Company ("Raytheon") Retirement Income Plan for Appliances Employees, or its predecessor plan, the Amana Refrigeration, Inc. Retirement Income Plan. Raytheon controlled and administered the plan ("the Plan").
In Section III(B) of the Decree, Beverly Hogan was awarded one-half of Robert Hogan's "present retirement funds as will be set forth by a separate Qualified Domestic Relations Order." In June 1997, a copy of the Decree was provided to Raytheon. Raytheon acknowledged the receipt of the Decree in an Intra-Office Memorandum of a fully authorized Raytheon agent.
Robert Hogan died on March 7, 1998. He was not married at the time of his death. On March 9, 1998, an Order was entered in the Chancery Court of Lincoln County, Tennessee naming Beverly Hogan as the alternate payee with respect to Robert Hogan's benefits in the Plan.
Beverly Hogan has a life expectancy of 28.3 years. Robert Hogan was 48 years old and was not receiving pension benefits under the Plan at the time of his death. The earliest that Robert Hogan would have been entitled to pension benefits under the Plan was at age 55, or on November 1, 2004. Robert Hogan made no contributions to the Plan. Under Section 7.1 of the Plan, Robert Hogan was entitled only to a return of his contributions plus credited interest because he died before reaching his Retirement Date, as defined in Section 1.49 of the Plan.
Section 7.2 of the Plan allows for a surviving spouse benefit in the event the Plan participant dies before reaching his Retirement Date. Section 7.3 provides for the amount of the benefit. This benefit becomes payable the first day of the month following the Participant's death and is payable for the surviving spouse's lifetime. In the posthumous QDRO, Beverly Hogan elected to be designated as the surviving spouse under the Plan.
Beverly Hogan argues that Robert Hogan's death on March 7, 1998 does not defeat her claims based on the previously entered domestic relations order. Raytheon argues the March 9, 1998 domestic relations order is not a qualified domestic relations order under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq.
II. ERISA and Alienation of Benefits
ERISA contains a general spendthrift provision prohibiting plan benefits from being assigned or alienated. 29 U.S.C. § 1056(d)(1). Congress passed the Retirement Equity Act of 1984 (REA), Pub. Law 98-397, 98 Stat. 1426 (1984), which created an exception to the general prohibition against alienation of pension benefits in order to allow a spouse to obtain benefits from a pension plan after the death of a spouse or a divorce. See Ablamis v. Roper, 937 F.2d 1450, 1452-53 (9th Cir. 1991). The prohibition against alienation does not apply to a Qualified Domestic Relation Order ("QDRO"). 29 U.S.C. § 1056(d)(3). A QDRO is "domestic relations order" ("DRO") which meets specific requirements.See id.
A DRO is "any judgment, decree, or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant and is made pursuant to a State domestic relations law. . . ." Id. § 1056(d)(3)(B)(ii)(I)-(II). The DRO must also clearly specify the name and address of the participant and alternative payee; the amount or percentage of benefits that the plan is to pay the alternative payee and the manner in which the amount or percentage is to be determined; the number of payments or period time; and each plan to which the order applies. Id. § 1056(d)(3)(C). Furthermore, the DRO may not require the plan to provide additional benefits not otherwise provided in the plan or provide for increased benefits. Id. § 156(d)(3)(D). In addition to the requirements of a DRO, a QDRO must "create or recognize the existence of an alternative payee's right to, or assign to an alternative payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan. . . ." Id. § 1056(d)(3)(B)(i)(I).
The statute defines an "alternative payee" as "any spouse, former spouse, child, or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant."Id. § 1056(d)(3)(K).
When a plan receives a DRO, the statute directs the plan administrator to "promptly notify the participant and each alternative payee of the receipt of such order and the plan's procedures for determining the qualified status of domestic relations orders. . . ." Id. § 1056(d)(3)(G)(i)(I). The statute also directs that the plan administrator, "within a reasonable period after receipt" of a DRO, to "determine whether [the DRO] is a [QDRO] and notify the participant and each alternative payee of such determination." Id. § 1056(d)(3)(G)(i)(II). During the period in which the plan is in the process of determining whether a DRO is a QDRO, the plan administrator must segregate accounts which would have been payable to an alternative payee during the interim period should the DRO be determined to meet the QDRO requirements. Id. § 1056(d)(3)(H)(i). The statute provides for an 18-month period for resolution of whether a DRO is a QDRO. See id. § 1056(d)(3)(H)(v).
III. The Entry of a QDRO After the Death of a Participant
On June 5, 1997, the Chancery Court of Lincoln County, Tennessee entered the Divorce Decree. This Decree states that Beverly Hogan is awarded "one-half of [Robert Hogan's] present retirement funds as will be set forth by a separate Qualified Domestic Relations Order." This order meets the basic DRO requirements under Section 1056(d); however, it does not meet the specificity requirements to qualify it as a QDRO. On July 1, 1997, the Plan administrator sent a letter to Robert Hogan acknowledging its receipt of the Decree and instructed him about the requirements for a QDRO. A QDRO was entered by the state court on March 9, 1998, two days after Robert Hogan died but within the 18-month period permitted for securing a QDRO. Beverly Hogan argues the March 9, 1998 order meets the requirements of a QDRO and therefore its entry two days after Robert Hogan's death does not relieve the Plan of its obligation to pay her the benefits to which she is entitled under the QDRO.
The Ninth Circuit has examined the nature of a plaintiff's rights to pension benefits under a DRO in two cases. In In re Gendreau, 122 F.3d 815, 818 (9th Cir. 1997), the court examined the QDRO requirements and determined that a plaintiff's "interest in the pension plans (or, at a minimum, her right to obtain a QDRO which would in turn give her an interest in the plans) was established under state law at the time of the divorce decree." The court explained: "The QDRO provisions of ERISA do not suggest that [a plaintiff] has no interest in the plans until she obtains a QDRO, they merely prevent her from enforcing her interest until the QDRO is obtained." Id. at 819.
In Trustees of the Directors Guild of America-Producer Pension Benefits Plans v. Tise, 234 F.3d 415 (9th Cir. 2000), the plan participant died before the QDRO was entered. The court analyzed the statutory scheme and determined that "unless the QDRO could issue after the plan participant's death, Congress' intent to protect the interests of plan participants' former dependents could be thwarted." Id. at 423. The court's reasoning was based on the statute's language and intent. First, it stated: "[F]or all the detail of the QDRO requirement, ERISA nowhere specifies that a QDRO must be in hand before benefits become payable." Id. at 421. Second, the court reasoned that the statutory scheme allows for situations in which the issuance of a QDRO did not occur until after benefits become payable. Id. The statute provides specific provisions for segregating benefits while the plan determines if a DRO is a QDRO. Id. Third, the court recognized the 18-month QDRO determination period and concluded that "the evident purpose of the 18-month period was to provide a time in which any defect in the original DRO could be cured." Id. at 422. Finally, the court noted the specific circumstances in which the statute provides for "the putative alternative payee loses the right to hold up the payment of benefits to the participant or his designated beneficiary." Id. at 422.
In Tise, the court determined that the claimant was entitled to the pension benefits. It held: "Because [the claimant] had placed the plan on notice of her interest in [the deceased plan participant's] pension plan proceeds before his death, the fact that he died before the QDRO issued is immaterial." Id. at 426. The court noted that the claimant in Tise had obtained the QDRO within the 18-month statutory period.
Raytheon argues that this court should not adopt the reasoning of theTise court and instead relies primarily on Guzman v. Commonwealth Edison Co., No. 99 C 582, 2000 WL 1898846 (N.D.Ill., Dec. 28, 2000) and Samaroo v. Samaroo, 193 F.3d 185 (3d Cir. 1999). Guzman is distinguishable. InGuzman, the plan had not been given notice of the plaintiff's claim until a month after the plan participant died and therefore the entry of the QDRO would have increased the plan's obligations without the plan having received any prior notice. Guzman, 2000 WL 1898846, at *3.
Samaroo is also distinguishable. In Samaroo, the original divorce decree did not state that the plaintiff was entitled to a pre-retirement survivor annuity provided under her former husband's plan. Samaroo, 193 F.3d at 186. After the former husband's death, the plaintiff obtained anunc pro tunc amendment to the decree which purportedly created an entitlement to the benefits. Id. The court reasoned that allowing a QDRO to be entered which entitled the plaintiff to the benefits "would wreak actuarial havoc on the administration of the Plan" because the annuity provisions of the plan were based on actuarial calculations. Id. at 190. The court also noted that had the former husband not died, he "enjoyed the right to remarry and thereby bestow on a new wife the survivorship rights under his preretirement annuity." Id. 190-91. If a QDRO had been entered before his death naming the former wife as a surviving spouse, he could not have conferred those benefits on a new wife had he remarried.Id. The court stated:
When [the former husband] died without remarrying or naming [the former wife] as alternate payee of the survivor's rights, the right to dispose of the benefits lapsed. Allowing [the former husband] (or his estate) to preserve the right to confer the benefits on a new wife as long as he was alive and had the possibility of remarrying, and then to designate [the former wife] as the surviving spouse after his death, is allowing him to have his cake and eat it, too.
Id.
In Samaroo, the original divorce decree contained specific language regarding the former wife's interest in the pension plan: "At the time of husband's retirement and receipt of his pension he agrees to pay to wife one half of said monthly amount." Id. at 187. When she later sought thenunc pro tunc order, she intentionally tried to get the pre-retirement annuity that was not left to her in the divorce decree.
In the instant case, the Decree clearly gave Beverly Hogan a present interest in Mr. Hogan's pension plan. Under the statutory terms, a QDRO can "not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan." 29 U.S.C. § 1056(d)(3)(D)(i). Section 7.2 of the Plan allows for the payment of a pre-retirement death annuity to the surviving spouse. The statute specifically allows for "payment of benefits to be made to an alternative payee . . . in any form in which such benefits may be paid under the plan to the participant. . . ." See id. § 1056(d)(3)(E)(i)(III) (excluding this type of payment from the requirements of § 1056(d)(3)(D)(i)). The pension plan allowed for the payment of the surviving spouse annuity and she had the option of choosing to be a surviving spouse under the terms of the Plan. Beverly Hogan's choice does not violate the statutory terms of ERISA; therefore, she is entitled to benefits as specified in Section 7 of the Plan.
She got one-half of his "present retirement funds." At the time of the Decree, there were no present retirement funds. She got half of what he had which had two components, a pension benefit, and a surviving spouse benefit.
The plaintiff did nothing wrong here. It was simply fortuitous that her ex-husband died during the 18-month period permitted to secure a QDRO. It is not like the Samaroo case where the plaintiff failed to ask for something in a divorce decree and then sought to change the decree nunc pro tunc to avoid the consequences of her error. The defendant here would have the plaintiff get nothing simply because she had the benefit of knowing of her ex-husband's death during the time allowed by law to secure a QDRO.
IT IS ORDERED
That plaintiff's April 2, 2001, motion for summary judgment (docket number 14) is granted. The defendant's April 9, 2001, cross-motion for summary judgment (docket number 18) is denied. The Plan shall pay plaintiff surviving spouse benefits pursuant to Sections 7.2 and 7.3 of the Plan. The Clerk of Court shall enter judgment accordingly.