Dallas Court of Appeals, No. 05-13-00656-CV (July 28, 2014)
Justices Lang, Myers (Opinion), and Brown
The Court of Appeals affirmed the trial court’s judgment, which awarded life insurance proceeds to a decedent’s father instead of the decedent’s former wife, concluding ERISA did not preempt the father’s state-law claims, and the former wife had waived her rights to the proceeds in an agreed divorce decree.
Matthew Didyk was insured by a life insurance policy issued as part of an employee benefit plan. He designated his wife, Wendy Hennig, as the beneficiary of the policy. Matthew and Hennig later divorced, and their agreed final divorce decree awarded Matthew, as his sole and separate property, the life insurance policy and all past, present, and future benefits arising from his employment. Matthew did not, however, inform his insurer of a change in beneficiary designation.
When Matthew died, both Hennig and Matthew’s father, Michael Didyk, asserted entitlement to the insurance proceeds. The insurer filed an interpleader action in federal court as a result of these competing claims, and the federal court dismissed the insurer and ordered the proceeds distributed to Hennig in accordance with Matthew’s beneficiary designation. Michael sued Hennig in state court, both individually and as the administrator of Matthew’s estate, to recover those sums pursuant to the divorce decree. After a non-jury trial, the trial court entered a judgment awarding the proceeds to Michael.
The Court of Appeals first addressed Hennig’s argument that Michael’s claim was preempted by ERISA. The Court observed that, in its 2009 decision in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, the United States Supreme Court “held that an ERISA plan administrator must distribute benefits to the beneficiary named in the plan, regardless of any state-law waiver purporting to divest that beneficiary of his right to the benefits. Kennedy, however, explicitly left open the question of whether the decedent’s estate could sue the designated beneficiary of an ERISA-governed policy after the funds were distributed.” The Court went on to agree with the Fourth Circuit’s analysis in Andochick v. Byrd, and held that a post-distribution suit to determine ultimate entitlement to proceeds previously distributed in accordance with ERISA is not preempted.
The Court also agreed with the trial court that Michael was ultimately entitled to the insurance proceeds. The Court rejected Hennig’s argument that she had given up only her right to the insurance policy, and not the policy proceeds, in the divorce decree. The Court noted that its previous decision in McDonald v. McDonald recognized a “presumption that people who are divorcing intend to revoke beneficiary designations in favor of their soon-to-be ex-spouses in the absence of explicit language to the contrary.” Moreover, the divorce decree at issue here expressly awarded Matthew not only his life insurance policy, but also “all sums, matured or unmatured, accrued or unaccrued, vested or otherwise, and all increases and proceeds, and any other rights related to any . . . benefits existing by reason of the husband’s past, present, or future employment.” The Court concluded this language showed the parties intended that Hennig surrender her rights to the life insurance policy and any claim to future policy proceeds. The Court therefore affirmed the trial court’s judgment.
