Files v. Exxonmobil Pension , 428 F.3d 478 ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
11-2-2005
Files v. Exxonmobil Pension
Precedential or Non-Precedential: Precedential
Docket No. 04-2390
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-2390
RITA M. FILES,
Appellant
v.
EXXONMOBIL PENSION PLAN;
ADMINISTRATOR-BENEFITS FOR
THE EXXONMOBIL PENSION PLAN;
JEANNETTE C. KELLINGTON;
GARCES & GRABLER, P.C.;
EDWARD J. NOWICKI;
ROBERT H. GOODWIN;
JOHN DOES, 1-5; JOHN DOES 6-10;
JANE DOES, 1-5; JANE DOES 6-10;
ABC, P.A., DEF PARTNERSHIP AND/OR XYZ, P.C.
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 02-cv-05374)
District Judge: Honorable Garrett E. Brown, Jr.
Argued May 11, 2005
Before: SLOVITER and FISHER, Circuit Judges,
and POLLAK,* District Judge.
(Filed November 2, 2005)
Richard D. Brown (Argued)
Green & Savits
35 Airport Road, Suite 350
Morristown, NJ 07960
Attorney for Appellant
Joseph T. Walsh, III (Argued)
McCusker, Anselmi, Rosen, Carvelli & Walsh
127 Main Street
Chatham, NJ 07928
Attorneys for Appellees
OPINION OF THE COURT
FISHER, Circuit Judge.
This case involves the pursuit of benefits from the
ExxonMobil Pension Plan (formerly known as the Annuity Plan)
(“Pension Plan”) by the ex-wife of a now-deceased Pension Plan
participant. The principal issue is whether either the Property
Settlement Agreement (“PSA”) entered by the Superior Court of New
*
The Honorable Louis H. Pollak, United States District Judge
for the Eastern District of Pennsylvania, sitting by designation.
2
Jersey, Chancery Division: Family Part, Ocean County (“New Jersey
Court”), prior to the ex-husband’s death, or an order nunc pro tunc
obtained from that same court subsequent to the ex-husband’s death,
constitutes a Qualified Domestic Relations Order (“QDRO”) pursuant
to the Employee Retirement Income Security Act of 1974 (“ERISA”),
as amended by the Retirement Equity Act of 1984 (“REA”), see 29
U.S.C. § 1056(d)(3). The District Court, in reliance on its broad
reading of our opinion in Samaroo v. Samaroo, 193 F.3d 185 (3d Cir.
1999), cert. denied, 529 U.S. 1062 (2000), granted the Pension Plan’s
motion for summary judgment, concluding that the order nunc pro
tunc could not create a right to survivorship benefits after the ex-
husband’s death. As to the PSA entered before the ex-husband’s
death, the District Court concluded that it did not meet the statutory
QDRO requirements and that any attempt to qualify that order as a
QDRO after his death to provide the ex-wife with survivorship
benefits was improper under Samaroo. Because we conclude that the
PSA constituted a QDRO pursuant to the process contemplated
within 29 U.S.C. § 1056(d)(3), providing the ex-wife with a separate
interest in the pension benefit prior to her ex-husband’s death, we will
reverse the District Court’s order and remand for further proceedings.
I. Facts
Rita Files (“Files”) married Ed Rutyna (“Rutyna”) in
November 1972. Rutyna worked for ExxonMobil from September
5, 1972 to April 7, 1993, and participated in two ERISA-governed
plans through ExxonMobil – the Pension Plan and a Savings Plan
(formerly known as the Exxon Thrift Plan) (“Savings Plan”).1 When
he left ExxonMobil in 1993, Rutyna had a fully-vested pension
entitlement. However, since he was under fifty years of age, he was
1
The Pension Plan and Savings Plan, although distinct benefit
plans, share the same administration.
3
not yet eligible to receive his pension; the earliest he would become
eligible would be September of 1996, on reaching fifty.
Nearly two years after Rutyna could begin receiving pension
benefits, Rutyna and Files agreed to the PSA, which was incorporated
into the Dual Judgment of Divorce entered by the New Jersey Court
on July 16, 1998. Paragraph 3.2 of the PSA, provided in relevant
part:
The Husband is the owner of an Exxon pension and
Exxon . . . [Savings] Account and a TOSCO pension.
Wife hereby waives, now and forever, any right, title
or claim on the Husband’s TOSCO pension funds.
The wife shall be entitled to one-half of the Exxon
pension and one-half of the Exxon . . . [Savings]
Account. The transfer shall be by QDRO [“qualified
domestic relations order”] as to the pension and by
transfer to an account designated by the wife as to the
. . . [Savings] Account.
After the PSA was entered by the New Jersey Court, Rutyna’s
divorce counsel, by letter dated August 16, 2000, advised the
ExxonMobil Benefits Administrative Office (“Benefits
Administrator”) of the divorce and requested a sample QDRO “in
order to distribute his Pension and . . . [Savings] fund in accordance
with the terms of the divorce.”2 The Benefits Administrator
2
Because of the importance of the statutory scheme to an
understanding of the parties’ respective positions regarding whether
the PSA meets the statutory requirements for a QDRO, we set forth
the relevant statutory provisions throughout our factual recitation.
ERISA’s anti-alienation provision states that “[e]ach pension plan
shall provide that benefits provided under the plan may not be
4
responded, by letter dated September 16, 2000, that Rutyna’s written
authorization was required for the release of information. By letter
dated September 18, 2000, Rutyna’s divorce counsel provided
Rutyna’s authorization for the release of information to distribute his
pension and savings accounts in accordance with the terms of the
PSA. The Benefits Administrator then provided, by letter dated
September 29, 2000, a Pension Plan estimate, a statement of account
for the Savings Plan as of September 27, 2000, a package of materials
explaining the Pension Plan’s QDRO policies and practices, and a
sample QDRO. An enclosed Q & A sheet entitled “Information
About Thrift and Annuity Plan Benefits as Part of the Divorce
Process” stated that –
assigned or alienated.” 29 U.S.C. § 1056(d)(1). The REA amended
that anti-alienation provision by setting forth a process to give effect
to divorce decrees and state-court orders that pertain to ERISA
regulated plans if the order is determined to be a QDRO. See Boggs
v. Boggs, 520 U.S. 833, 847 (1997); McGowan v. NJR Service Corp.,
423 F.3d 241, 249 (3d Cir. 2005); 29 U.S.C. § 1056(d)(3)(A).
“QDRO” is defined as a “domestic relations order . . . which creates
or recognizes the existence of an alternate payee’s right to, or assigns
to an alternate payee the right to, receive all or a portion of the
benefits payable with respect to a participant under a plan,” and
which meets certain statutory requirements, which are set forth in 29
U.S.C. § 1056(d)(3)(C)(i)-(iv). 29 U.S.C. § 1056(d)(3)(B)(i); see
infra at n.7. “[D]omestic relations order means any judgment, decree,
or order . . . which . . . relates to the provision of . . . marital property
rights . . . made pursuant to a State domestic relations law. . . .” 29
U.S.C. § 1056(d)(3)(B)(ii). An “alternate payee’ is “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.” 29 U.S.C. § 1056(d)(3)(K).
5
Once Exxon’s Benefits Accounting or Benefits
Administration Office receives written notice of a
divorce (either pending or final), . . . [Savings] and . . .
[Pension] Plan benefits will generally be ‘blocked.’
If benefits are blocked, the participant may not receive
them until one of the documents noted below [e.g. a
divorce decree or a QDRO] is provided or 18 months
has passed from the time the participant could first
receive the benefits.3
3
This 18-month block is consistent with the process
contemplated by ERISA § 206(d)(3)(H)(i)-(v), 29 U.S.C.
§ 1056(d)(3)(H)(i)-(v), which provides:
(i) During any period in which the issue of whether a
domestic relations order is a qualified domestic
relations order is being determined (by the plan
administrator, by a court of competent jurisdiction, or
otherwise), the plan administrator shall separately
account for the amounts . . . which would have been
payable to the alternate payee during such period if
the order had been determined to be a qualified
domestic relations order.
(ii) If within the 18-month period described in clause
(v) the order ... is determined to be a . . . [QDRO], the
plan administrator shall pay the segregated amounts
(including any interest thereon) to the person or
persons entitled thereto.
(iii) If within the 18-month period described in clause
(v) -
(I) it is determined that the order is not
a . . . [QDRO], or
(II) the issue as to whether such order
6
Indeed, following receipt of the August 16, 2000 letter from Rutyna’s
divorce counsel, the administrator blocked Rutyna’s savings account.4
is a qualified domestic relations order
is not resolved,
then the plan administrator shall pay the segregated
amounts (including any interest thereon) to the person
or persons who would have been entitled to such
amounts if there had been no order.
(iv) Any determination that an order is a qualified
domestic relations order which is made after the close
of the 18-month period described in clause (v) shall be
applied prospectively only.
(v) For purposes of this subparagraph, the 18-month
period described in this clause is the 18-month period
beginning with the date on which the first payment
would be required to be made under the domestic
relations order.
4
When questioned as to whether that block also applied to the
pension account, Rodney Leis, testifying as the Pension Plan’s
designee pursuant to Rule 30(b)(6) of the Federal Rules of Civil
Procedure, confirmed that, consistent with ERISA, 29 U.S.C.
§ 1056(d)(3)(H)(i)-(v), a pension account generally would be blocked
for retirees once the Plan “knew that somebody’s in the process of
divorce.” As to terminees (which is what Rutyna was), Leis testified
“so the general question would we put a block on the pension plan,
if we know that there was an imminent retirement and they also had
the divorce, I certainly hope that our organization put a block on both
of them [the savings and the pension plans].” A. 183. He further
characterized this as “an administration procedure that we didn’t send
money to the wrong parties.” Id. Although Files contends that the
ExxonMobil Human Resources Department confirmed, in
7
But, Rutyna’s divorce counsel never provided the QDRO information
received from the Pension Plan to either Files or her counsel. When
Rutyna died on February 25, 2001 at age 54, no QDRO had been
submitted to the Pension Plan.
After Rutyna’s death, a letter exchange ensued between Files
and the Benefits Administrator setting forth their respective positions
regarding Files’s entitlement to benefits under each Plan pursuant to
the PSA. Three (3) days after Rutyna’s death, Files’s divorce counsel
notified Exxon’s legal department of the death, acknowledged that no
QDRO had been filed, and inquired whether the Pension Plan would
honor the PSA. Files herself also notified the Plans of Rutyna’s death
in her capacity as executrix of his estate. The Benefits Administrator
replied to Files by letter dated March 14, 2001, seeking a death
certificate and stating unequivocally that as to the Pension Plan “there
are no survivor benefits due and payable.”5 Files’s new counsel (also
correspondence to Rutyna’s divorce counsel dated August 29, 2000,
that a block was placed on both the savings and pension accounts, the
Pension Plan clarified in its correspondence of October 24, 2001 to
Files’s counsel that the block pertained only to the savings account.
Consequently, whether the block also pertained to the pension
account is subject to dispute.
5
From the outset, the Plan characterized the pension benefits
sought by Files as “survivor benefits,” which are explicitly provided
for within ERISA. See 29 U.S.C. § 1055. 29 U.S.C. § 1056(d)(3)(F)
provides that to the extent provided for in a QDRO, a former spouse
of a plan participant shall be treated as a surviving spouse for
purposes of § 1055 (providing for mandatory plan provisions
regarding joint and survivor annuity and pre-retirement survivor
annuity provisions). ERISA, however, does not insist that a state
court recognize a former spouse as an alternate payee to such an
8
her counsel in this appeal), then wrote to the Plans on March 31,
2001, requesting summary plan documents and asking that no
distribution be made until he could determine whether the PSA met
the QDRO requirements for each Plan. A week later, by letter dated
April 6, 2001, Files’s counsel wrote another letter, enclosing the PSA,
explaining Files’s position that the PSA was a QDRO as to both the
Savings and Pension Plans, and requesting distribution of benefits
pursuant to both Plans. But, that letter characterized the pension
benefit sought as a fifty percent “survivor benefit” under the Pension
Plan and requested forms to allow Files to “elect commencement of
her surviving spouse benefit.”6
The administrator of both the Savings and the Pension Plans,
by letter of July 18, 2001, denied Files’s claim for benefits pursuant
to the PSA, indicating within its determination that: (1) the PSA
interest in her spouse’s pension, but merely yields to the prerogative
of state law to do so. See Critchell v. Critchell, 746 A.2d 282, 286
(D.C. Cir. 2000). Nor does ERISA limit the plan benefits that may
be addressed within state court domestic relations orders to “survivor
benefits.” Accordingly, the Plan’s characterization of the benefits
Files seeks as “survivor benefits” does not control our determination
of whether the domestic relations orders in question constitute
QDROs.
6
We note that the imprecision in characterizing Files’s claim
for pension benefits as one for a “fifty percent survivorship benefit”
in light of the Plans March 14, 2001 correspondence stating that as to
the Pension Plan there were no “survivor benefits due and payable”
only served to confuse this already difficult record as to the benefit
that Files actually sought. That imprecision, however, was later
clarified by Files’s counsel when describing her claim as one for a
“separate interest” in fifty percent of Rutyna’s pension benefits.
9
would be treated as a QDRO for purposes of the Savings Plan (and
specifically that Files would get one-half of that account and, because
of the lack of a beneficiary designation, Rutyna’s children would get
the remainder); (2) the PSA would not be treated as a QDRO for
purposes of the Pension Plan; and (3) the absence of an award of
“survivor benefits to Alternate Payee” in the PSA, coupled with
Rutyna’s death before either Files or Rutyna commenced their receipt
of Pension Plan benefits, resulted in no benefits payable to Files as an
“Alternate Payee” because the PSA did not award her surviving
spouse benefits.7 That letter also stated that the Pension Plan would
7
The Pension Plan based its denial of QDRO status to the PSA
as regards the pension on the following statutory provisions. A
domestic relations order is a QDRO “only if such order clearly
specifies . . . (i) the name and last known mailing address . . . of the
participant and . . . of each alternate payee covered by the order,
(ii) the amount or percentage of the participant’s benefits to be paid
by the plan to each such alternate payee, or the manner in which such
amount or percentage is to be determined, (iii) the number of
payments or period to which such order applies, and (iv) each plan to
which such order applies,” (29 U.S.C. § 1056 (d)(3)(C)(i)-(iv)) and
“only if such order –
(i) does not require a plan to provide any type or form
of benefit, or any option, not otherwise provided
under the plan,
(ii) does not require a plan to provide increased
benefits (determined on the basis of actuarial value),
and
(iii) does not require the payment of benefits to an
alternate payee which are required to be paid to
another alternate payee under another order previously
determined to be a . . . [QDRO].”
10
not entertain a nunc pro tunc order with respect to the Pension Plan
survivor benefits as that would violate 29 U.S.C. § 1056(d)(3)(D) by
requiring the Pension Plan to pay increased benefits. The Pension
Plan’s position is premised on its determination that Rutyna’s pension
benefits lapsed upon his death in the absence of any designated
survivor annuity; consequently, any state court DRO providing for
payment of pension benefits to an alternate payee that was presented
to the Pension Plan subsequent to Rutyna’s death would, in the
Pension Plan’s opinion, result in the Pension Plan having to provide
increased benefits in violation of 29 U.S.C. § 1056(d)(3)(D)(ii).
By letter dated August 9, 2001, Files’s counsel appealed
administratively the Pension Plan’s denial of Files’s claim for pension
benefits pursuant to the PSA. In that letter, Files’s counsel stated that
it was his understanding, based on the block placed on the savings
account, that the Pension Plan was on notice of the divorce
proceedings prior to Rutyna’s death. He further explained that Files
was seeking to enforce an interest created by the PSA during
Rutyna’s lifetime, entitling her to fifty percent of Rutyna’s accrued
benefits, which was enforceable by Files in her own right regardless
of Rutyna’s death because that interest was not a surviving spouse
benefit. Files’s counsel also enclosed with that letter “a proposed
form of separate interest QDRO” and inquired whether it would
qualify as a QDRO for Pension Plan purposes upon its entry by the
New Jersey Court. The letter explained: “It should be evident from
the interest thereby created that Ms. Files[’s] benefit is neither a
survivor benefit nor a benefit that would increase the Plan’s cost . . .
[A]s structured the benefit would have been removed from Mr.
Rutyna’s interest effective as of the date of the...[PSA].”
29 U.S.C. § 1056(d)(3)(D)(i)-(iii).
11
The Pension Plan again denied Files’s claim for benefits
pursuant to the PSA on October 24, 2001. First, the Pension Plan
clarified that a block had been placed only on Rutyna’s savings
account, not on his pension account. Next, the Pension Plan quoted
extensively from its Summary Plan Description to support its denial
– “if a terminee [which is what Rutyna was8] dies before a vested
pension benefit payment begins and without a surviving spouse no
benefit is payable.” The Pension Plan concluded as follows:
We have reviewed the 1998 PSA and have determined
that it does not specifically state that Ms. Files shall
be considered a surviving spouse. Survivor benefits
are fixed as of the participant’s death and the
proposed DRO . . . would expand the liability of the
Plan. Your argument that a separate interest DRO
would have given Ms. Files survivor rights is well
taken but there is no assurance that a separate interest
DRO is what would have been agreed to by the
parties. Therefore, we cannot qualify the . . .
[proposed DRO] as a QDRO at this time as no
pension benefits are payable in accordance with . . .
the Plan.
Files’s counsel replied with yet another appeal dated December 17,
2001, again requesting pension benefits pursuant to the PSA. He
explained that a QDRO was entered within the eighteen month
segregation period following notice to the Plan of the divorce
proceedings. The letter continued that because Files was granted a
separate interest enforceable under state law effective upon entry of
8
The Summary Plan Description for the Pension Plan defines
“terminee” as a “person who separates from service without
becoming a retiree.”
12
the PSA, after entry of the QDRO, that interest must be paid to her
upon her request following Rutyna’s earliest retirement age under the
Pension Plan.
In light of the Pension Plan’s continued denial of Files’s claim
pursuant to the terms of the PSA, upon Files’s request, the New
Jersey Court entered a subsequent order dated February 7, 2002,
providing:
NOW, THEREFORE, the Court does hereby enter
this Order nunc pro tunc from the date of the . . .
[PSA], July 16, 1998, as and for a Qualified Domestic
Relations Order [QDRO] within the meaning of . . .
Section 206(d) of . . . [ERISA], for the express
purpose of enabling . . . [Files] to compel the . . .
[Pension Plan] to make payment to her of her property
entitlement under state law in accordance with the
Domestic Relations Order embodied in this Court’s
Dual Judgment of Divorce entered on July 16, 1998.
(hereinafter, “Order nunc pro tunc”). By letter dated February 28,
2002, a copy of this Order nunc pro tunc was forwarded to the
Pension Plan, which it forwarded to its consultants for review. On
May 30, 2002, the Pension Plan informed Files that, given the entry
of the Order nunc pro tunc, it was no longer considering whether the
PSA would qualify as a QDRO. By letter dated October 7, 2002, the
Pension Plan’s consultants denied Files’s claim for benefits pursuant
to the Order nunc pro tunc explaining:
[The Pension Plan] will not qualify an order
pertaining to the [Pension Plan] that is first submitted
to the Plan and entered by the Court after a
participant’s date of death. On the date of [Rutyna’s]
13
death, he was not married, and the Plan did not have
a QDRO on file pertaining to his benefit. Therefore
in accordance with the terms of the Plan, no further
benefit is payable to any party.
II. Procedural History
Files initiated this action by filing a four count complaint in
the United States District Court for the District of New Jersey. In
Count I, against the Pension Plan and its Administrator, she requested
benefits and alleged a breach of fiduciary duty claim related to the
Pension Plan’s failure and refusal to pay her benefits in accordance
with the PSA or the Order nunc pro tunc. In Counts II through IV,
she alleged legal malpractice against both her own and Rutyna’s
divorce counsel, alleging that counsel had failed to effectuate the
transfer of her interest in the Pension Plan benefits by (1) failing to
prepare the PSA in a form that would be enforced by the Pension
Plan; (2) failing to prepare a QDRO prior to Rutyna’s death in a form
that would be enforced by the Pension Plan; and (3) failing to obtain
the Pension Plan’s approval of either the PSA or another domestic
relations order as a QDRO prior to Rutyna’s death.
On cross-motions for summary judgment regarding Count I
of the Complaint, the District Court denied Files’s motion and
granted the Pension Plan’s.9 At the outset, the District Court
characterized Files’s position as not seeking a survivorship benefit
through her separate interest QDRO obtained by the Order nunc pro
9
Although the District Court continued to exercise
supplemental jurisdiction over the legal malpractice claims, a consent
judgment was entered later against Rutyna’s divorce counsel, and the
remaining counsel defendants were dismissed, with the District Court
retaining jurisdiction for enforcement of the consent judgment.
14
tunc, but instead as seeking to be paid the separate property interest
awarded to her by the terms of the PSA. The Pension Plan argued
that Files sought a property interest not provided for by law and was
not entitled to survivorship benefits pursuant to ERISA in light of her
counsel’s failure to file the QDRO with the Pension Plan prior to
Rutyna’s death. The District Court agreed with the Pension Plan.
The District Court first determined that despite Files’s
assertion, the PSA did not meet the requirements of a QDRO. In the
course of its reasoning, the District Court determined that Rutyna
could not assign or alienate his benefits except through a QDRO
pursuant to the REA, which amended ERISA’s anti-alienation
provision. 29 U.S.C. § 1056(d)(3)(A).10 Next, the District Court
determined that the PSA failed to meet the statutory requirements of
a QDRO as set forth in 29 U.S.C. § 1056(d)(3)(B)-(D). Specifically,
the District Court determined that the PSA failed to name Files as an
10
That provision provides:
(d) Assignment or alienation of plan benefits
(1) Each pension plan shall provide that benefits
provided under the plan may not be assigned or
alienated.
* * *
(3)(A) Paragraph (1) shall apply to the creation,
assignment, or recognition of a right to any benefit
payable with respect to a participant pursuant to a
domestic relations order, except that paragraph (1)
shall not apply if the order is determined to be a
qualified domestic relations order [QDRO]. Each
pension plan shall provide for the payment of benefits
in accordance with the applicable requirements of any
qualified domestic relations order.
15
“alternate payee” as required by § 1056(d)(3)(B)(i)(I); did not detail
the number of payments or pay period as required by
§ 1056(d)(3)(C)(iii); would require the Pension Plan to provide
increased benefits as prohibited by § 1056(d)(3)(D)(ii); and did not
designate Files as a surviving spouse as permitted by § 1056(d)(3)(F).
Relying on our decision in Samaroo, the District Court then
affirmed the Pension Plan’s refusal to honor the Order nunc pro tunc.
The District Court characterized our holding in Samaroo as “where
a PSA or divorce judgment does not create a survivorship right to
pension benefits, a QDRO entered after the death of the plan
participant also cannot do so,” and further explained that per our
Samaroo holding, the Order nunc pro tunc was not a QDRO because
it violated the prohibition against requiring the Pension Plan to
provide increased benefits “by providing for a survivorship interest
in benefits that had lapsed after the participant’s death.” Accordingly,
the District Court concluded that because it was undisputed that a
QDRO was never filed with the Pension Plan and that Rutyna’s
benefits lapsed upon his death, any attempt by Files to obtain a nunc
pro tunc amendment to the PSA must fail.
Second, the District Court rejected Files’s argument that the
Order nunc pro tunc was a “separate interest QDRO” which did not
create survivorship interests, but rather reaffirmed that the PSA had
granted Files a fifty percent property interest in Rutyna’s pension that
did not lapse upon his death.11 The District Court viewed Files’s
11
As explained more fully within, we understand Files to be
asserting that the PSA created her separate interest in Rutyna’s
pension at the time the PSA was entered and that the Order nunc pro
tunc merely was her attempt to “qualify” that PSA as a QDRO
acceptable to the Pension Plan as contemplated by 29 U.S.C.
§ 1056(d)(3).
16
arguments in this regard as an attempt to “do an end-run around the
law, which required a QDRO . . . .” The District Court held that the
Order nunc pro tunc “separate interest QDRO” could not be entered
after Rutyna’s death in light of our holding in Samaroo. Ultimately,
the District Court determined that “[r]egardless of whether [Files] is
claiming a survivorship right or not, the fact is that [she] is attempting
to create a right to pension benefits which had lapsed after her ex-
husband had passed and this right was not clearly provided for in a
QDRO prior to his death or in the PSA.”
Files initiated this timely appeal from the entry of summary
judgment in favor of the Pension Plan, over which we exercise de
novo review and apply the same standard as the District Court.
Samaroo, 193 F.3d at 189. In that regard, the District Court properly
applied a de novo standard of review regarding the Pension Plan’s
denial of Files’s claim for pension benefits. 29 U.S.C.
§ 1056(d)(3)(G)(i)(II) requires only that the Pension Plan
administrator make the initial determination of whether an order is a
QDRO. Id. (citing Firestone Tire and Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989)). Whether either the PSA or the Order nunc pro tunc
qualify as a QDRO under federal law are questions of statutory
construction over which reviewing courts exercise de novo review.
Id.III. Discussion
Files contends that the District Court erred in its application
of our holding in Samaroo. In Samaroo, we held, limited to the facts
before us in that case, that a nunc pro tunc state court order entered
after the death of a pension plan participant and which awarded
survivor benefits to the deceased participant’s ex-wife was not a
QDRO because an entitlement to survivor benefits under a pension
plan must be determined as of the date of the plan participant’s death.
17
Otherwise, given that the plan’s pension obligations to its participant
lapsed upon his death, a grant of survivor benefits nunc pro tunc
made posthumously would result in increased benefit obligations to
the plan. 193 F.3d at 190 and n.3. In contrast, Files asserts that her
entitlement to fifty percent of Rutyna’s Pension Plan benefits was
fully established upon the New Jersey Court’s adoption of the PSA
in its July 16, 1998 Order, prior to Rutyna’s death. Files does not
seek survivor benefits from the Pension Plan nor did she create a new
entitlement to pension benefits through the Order nunc pro tunc.
According to Files, she sought the Order nunc pro tunc in an effort to
meet the QDRO requirements in order to enforce her entitlement to
fifty percent of Rutyna’s pension as granted to her by the PSA.
Indeed, Files premises her arguments regarding the District Court’s
assertedly erroneous application of Samaroo upon the fact that, in
contrast to the facts in Samaroo, she possessed an entitlement
pursuant to the PSA to fifty percent of Rutyna’s pension prior to
Rutyna’s death.
The Pension Plan characterizes the issue here as whether Files
could receive a share of Rutyna’s pension under state law without
first meeting ERISA’s requirement that a QDRO, providing for a
survivorship benefit, be submitted to the Pension Plan prior to his
death. In an apparent attempt to place this case squarely within the
limited holding of Samaroo, the Pension Plan characterizes the
benefit sought by Files, through her submission to the Pension Plan
of the Order nunc pro tunc, as a survivorship benefit that was not
provided for in the PSA. If that were the case, as the Pension Plan
asserts, Samaroo would control. But, as set forth below, we conclude
that Files does not seek a survivorship benefit and that, therefore,
Samaroo is not controlling.
Because the holding in Samaroo was expressly limited to its
facts, our decision here is informed by a close review of those facts.
18
In Samaroo, the AT&T Management Pension Plan sought a
declaration that the ex-wife was not entitled to the pre-retirement
benefits of her ex-husband, who had died while still actively
employed by AT&T. In Samaroo, the divorce decree was silent as to
the pre-retirement survivor’s annuity, providing –
(d) Pensions, Profit Sharing and Bell System
Savings Plan
Savings Plan - - (1) Husband has a vested
pension having a present value, if husband
were to retire at this time, of $1,358.59 per
month. 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 ex-husband died nearly three years later while still
actively working for AT&T, and before reaching the qualifying age
for pension payments, the pension benefit granted to the ex-wife and
expressly provided for in the divorce decree never came to fruition.
Although the AT&T Pension Plan expressly provided for a pre-
retirement survivor annuity for the surviving spouse of any Plan
participant who died after vesting but before retiring, there was no
annuity to be paid because there was no surviving spouse. Not
surprisingly, the AT&T Pension Plan denied the ex-wife’s claim for
the pre-retirement survivor annuity on the grounds that the DRO did
not mention her entitlement to such rights and there was no pre-
retirement survivor’s annuity payable. The ex-wife thereafter
obtained a nunc pro tunc amendment to the divorce decree to create
such an entitlement, providing her with “rights of survivorship to
50% of Husband’s vested pension benefits.”
19
On these facts, we held that the nunc pro tunc state court order
was not a QDRO and further determined that enforcing the amended
divorce decree would have resulted in an impermissible increase in
plan benefits in violation of ERISA, 29 U.S.C. § 1056(d)(3)(D). We
expressly limited our holding to the facts there before us, noting that
elevating the nunc pro tunc order to QDRO status essentially would
permit the participant to change the operative facts “after he has lost
the gamble [on his longevity and retirement elections]” and “would
wreak actuarial havoc on administration of the Plan.” Samaroo at
190 and n.3.12
12
We reached our conclusion in Samaroo based in part upon
concerns that permitting the ex-wife in that case to alter her benefits
after the death of the plan participant essentially altered the actuarial
computations relied upon by the plan given that the ex-husband died
before becoming eligible to elect pension benefits. In that regard, we
relied upon the reasoning set forth in Hopkins v. AT & T Global
Information Solutions Co., 105 F.3d 153, 156 (4th Cir. 1997), where
the United States Court of Appeals for the Fourth Circuit declined to
give QDRO status to a state order granting an ex-wife surviving
spouse benefits in order to collect past-due alimony from her ex-
husband’s pension. The Hopkins court recognized that defined
benefit plans are based on actuarial calculations that would be
rendered invalid if participants were allowed to change the operative
facts retroactively. The participant in Hopkins had retired and began
drawing on his pension in the form of a joint survivor annuity based
on the lives of himself and his second wife. It was after he had begun
drawing on this pension that his ex-wife obtained the state order
declaring that she be treated as the surviving spouse. The Fourth
Circuit held that the DRO was not a QDRO because the current
wife’s right to the survivor’s benefits had already vested upon the
plan participant’s retirement. Id. at 156-57. But, the key distinction
between Hopkins and Files’s claim is that in Hopkins, there was an
20
The operative distinction between the facts here versus
Samaroo is the type of benefit awarded to the ex-wives in the
property settlements within the respective divorce decrees. Although
the issue of whether the divorce decree itself met ERISA’s QDRO
requirements was not before us in Samaroo, we nevertheless noted
the problems with granting that decree QDRO status, and our
statements in that regard are instructive to our analysis of the instant
case. First, in Samaroo, we determined that the decree evidenced an
intention to divide only property rights existing at the time of the
divorce, not an intention to give the ex-wife an interest in post-
divorce earnings. Samaroo, 193 F.3d at 188 n.2. Second, we
concluded that the decree only gave the ex-wife an entitlement to
benefit payments when they were paid to the participant rather than
“conveying to her a portion of . . . [ex-husband’s] interest in the
Plan.” Id. In contrast, the PSA here conferred upon Files a fifty
percent interest in Rutyna’s pension; in other words “conveying to her
a portion of . . . [husband’s] interest in the Plan” not limited to
property rights existing as of the date of the divorce. See id. There
was no question that Files could have enforced her right to receive
that fifty percent interest on or after Rutyna’s fiftieth birthday (the
date the pension became payable), separate and apart from Rutyna’s
election regarding the remaining fifty percent. We conclude that Files
possessed a separate interest in fifty percent of Rutyna’s pension as
of the July 16, 1998 PSA.
attempt to divest benefits already vested in a subsequent spouse,
whereas here, there was no such vesting, and therefore, no such
disruption to actuarial planning. See also Singleton v. Singleton, 290
F. Supp. 2d 767 (W.D. Ky. 2003) (following Hopkins in preventing
first wife, who never put plan on notice of QDRO, from displacing
second wife as the surviving spouse as those benefits vested in second
wife upon husband’s retirement).
21
Armed with this conclusion, we now turn to the question of
whether Files undertook appropriate steps to enforce her interest in
Rutyna’s pension benefits in light of the Pension Plan’s contention
that Rutyna’s death, in the absence of a QDRO providing for
survivorship benefits, caused his pension to lapse. Nothing in ERISA
requires that the Pension Plan must have been notified of Files’s
interest in fifty percent of Rutyna’s pension prior to his death in order
for Files to engage in the process, contemplated by ERISA, of
“qualifying” the PSA as a QDRO to enforce her already-existing
property interest. See Trs. of Directors Guild of Am. Producer
Pension Benefits Plans v. Tise, 234 F.3d 415, 421, as amended upon
denial of reh’g, 255 F.3d 661 (9th Cir. 2000) (where child support
order was converted to a QDRO nunc pro tunc after the death of plan
participant, court reasoned there was nothing in ERISA requiring that
a QDRO must be finalized before benefits become payable). As was
recognized by the United States Court of Appeals for the Ninth
Circuit in Tise, the detailed QDRO requirements set forth in ERISA
are devoid of any requirement that a QDRO be in place before plan
benefits reach pay status under the plan. Id. at 421. Nor do the
QDRO provisions of ERISA suggest that the alternate payee has no
interest in plan benefits until she obtains a QDRO; rather, they merely
prevent enforcement of that already-existing interest until the QDRO
is obtained. Id. (citing In re Gendreau, 122 F.3d 815, 819 (9th Cir.
1997), cert. denied, 523 U.S. 1005 (9th Cir. 1997)). In Gendreau, the
Ninth Circuit considered whether the husband/plan participant could,
by filing for bankruptcy, prevent his ex-wife from obtaining a QDRO
giving effect to a divorce decree that awarded her fifty percent of his
pension. The court concluded that the ex-wife’s interest was created
upon entry of the state order, which thereby also limited the
husband’s interest. These respective interests in the plan were not
altered merely because the divorce decree did not meet the statutory
requirements for a QDRO. 122 F.3d at 819. What was required was
for the ex-wife to obtain a revised state court order that met the
22
QDRO requirements in order to enforce the property interest
conferred upon her by the divorce decree; the QDRO only related to
enforcement of an already defined interest. Id. The court further
recognized that it was precisely because obtaining a QDRO is a time-
consuming process that ERISA recognizes periods where the status
of a QDRO is at issue. Id. Similarly, we conclude that nothing in the
statutory language precluded Files from pursuing a QDRO after
Rutyna’s death to enforce her previously existing fifty percent interest
in Rutyna’s pension. Despite the Pension Plan’s argument that all
pension benefits lapsed upon Rutyna’s death because there was no
QDRO, Files’s pursuit of a QDRO posthumously comes within the
ambit of the “qualification” process contemplated within 29 U.S.C.
§ 1056(d) as she simply seeks to enforce an interest created prior to
Rutyna’s death.
Indeed, the statutory QDRO requirements expressly
contemplate a “qualification” process by which plans, once on notice
of a state court DRO, will determine whether a state court DRO is
sufficient to alter existing plan obligations. See 29 U.S.C.
§§ 1056(d)(3)(H)(i)-(v). This “qualification” process commences
with a plan’s notice of the DRO. The statute expressly states that
once a plan receives a DRO, within “a reasonable period,” the
administrator shall determine whether that order is a QDRO, see 29
U.S.C. § 1056(d)(3)(G)(i)(II), and that each plan shall establish
reasonable procedures to determine the qualified status of domestic
relations orders, see 29 U.S.C. §§ 1056(d)(3)(G)(ii)(I)-(III). Thus, the
statute contemplates and the plan establishes the “process” by which
a DRO is “qualified.” Essential to this “qualification” process is the
statutory requirement that the plan take steps to ensure the
preservation of benefits that are otherwise payable while the
determination of QDRO status is undertaken. See Tise, 234 F.3d at
421-22; 29 U.S.C. § 1056(d)(3)(H)(i) (“[d]uring any period in which
the issue of whether a domestic relations order is a . . . [QDRO] . . .
23
the plan administrator shall separately account for the amounts . . .
which would otherwise have been payable to the alternate payee
. . . .”). In that regard, during the first eighteen months after which
benefits become payable, the plan must segregate the benefits
potentially payable to the alternate payee. 29 U.S.C.
§ 1056(d)(3)(H)(v). Moreover, ERISA contemplates further state
court proceedings during the eighteen-month QDRO determination
period in which the alternate payee can cure defects in the original
DRO by obtaining modification to the original DRO in order to
enforce it as a QDRO. Tise, 234 F.3d at 422 (citing 29 U.S.C.
§ 1056(d)(3)(H)(ii) (“[i]f within the 18-month period . . . the order (or
modification thereof) is determined to be a . . . [QDRO] . . . .”)). It
is only after this eighteen-month period has expired that the putative
alternate payee loses the right to uphold payment of plan proceeds to
a designated beneficiary. Id. (citing 29 U.S.C. § 1056(d)(3)(H)). And
even then, if the DRO ultimately is “qualified” as a QDRO, the
obligations thereunder shall be applied prospectively. See 29 U.S.C.
§ 1056(d)(3)(H)(iv).
We now turn to when the “qualification” process was
triggered by notice to the Pension Plan of the PSA. Significantly, the
Pension Plan’s own policies and correspondence thwart its current
assertion that it lacked notice of the PSA prior to Rutyna’s death.
ExxonMobil’s own policy as communicated to plan participants (and
presumably those seeking QDROs) provided that a block is placed on
both the savings and pension accounts until a QDRO or other
documentation is received by the Plan. Specifically, the “Information
About Thrift and Annuity Plan Benefits as Part of the Divorce
Process” provided that “[o]nce Exxon’s Benefits Accounting or
Benefits Administration Office receives written notice of a divorce
(either pending or final), . . . [Savings] and . . . [Pension] Plan
benefits will generally be ‘blocked.’” Consistent with this policy and
the statutory mandate, the Savings Plan segregated Rutyna’s savings
24
account in response to the August 16, 2000 letter from Rutyna’s
divorce counsel notifying it of the divorce. The record as to the
segregation of the pension account, however, is not as clear.
According to Files, as early as August 29, 2000, the Pension Plan
indicated in correspondence to Rutyna’s divorce counsel that both
Rutyna’s savings and pension accounts had been “blocked.”13 The
Pension Plan, however, subsequently clarified that the “block”
pertained only to the savings account. But, consistent with Files’s
position, Mr. Leis testified that once on notice of a divorce, the
Pension Plan generally would segregate pension benefits to ensure
that the funds were paid to the proper recipient (see supra. n.4).
Against this backdrop, we conclude that it is disingenuous for the
Pension Plan to assert that lack of notice of the DRO caused Rutyna’s
pension benefits to lapse upon his death. We find persuasive the fact
that consistent with its own policies, at least one of the ExxonMobil
plans deemed the August 16, 2000 letter sufficient notice to require
segregation of plan assets.
Even if we look to April 6, 2001, the date of the
correspondence by which the Pension Plan was provided with an
actual copy of the PSA, this notice standing alone triggered the
“qualification” process for Files to enforce her rights under the PSA
despite the fact that it was provided after Rutyna’s death.14 Files’s
13
Notably, that August 29, 2000 correspondence is not in the
record; rather, it is referenced within correspondence which is before
us.
14
We reiterate that ERISA does not prescribe a time frame as
to when, in relation to the state court’s entry of a domestic relations
order, the plan must be presented with a copy of the domestic
relations order so-entered in order to trigger the QDRO process.
Rather, ERISA only provides that the “qualification” process is
25
counsel furthered the process by providing the Pension Plan with
copies of the proposed Order nunc pro tunc on August 9, 2001 and
the February 7, 2002 Order nunc pro tunc on February 28, 2002. The
Pension Plan’s response to its receipt of the Order nunc pro tunc
reveals that the Pension Plan still was “qualifying” the PSA as a
QDRO. Although the Pension Plan’s May 30, 2002 letter to Files’s
counsel indicated that it would not “continue the appeal to consider
the property settlement as a domestic relations order when the court
has entered a subsequent one which was submitted for consideration,”
the Order nunc pro tunc was Files’s attempt to “qualify” the PSA by
addressing the Pension Plan’s stated concerns to date regarding its
recognition of the PSA as a QDRO.
Ultimately, it matters not whether we deem the Pension Plan
on notice prior to Rutyna’s death given its policies and the benefit
segregation undertaken by the Savings Plan, or after Rutyna’s death,
when it received the PSA in April 2002. Regardless of notice, we
reach the same conclusion – that Files simply engaged the statutorily
contemplated process to “qualify” the PSA as a QDRO in order to
enforce pre-existing rights. Nothing in the statute, or in our
precedent, requires that a QDRO be in place prior to the death of a
plan participant when the QDRO that is ultimately obtained by
engaging the statutory process simply seeks to enforce a separate
interest in a pension benefit that existed before the death of the plan
participant. See Tise, 234 F.3d at 421; Patton v. Denver Post Corp.,
326 F.3d 1148, 1153-54 (10th Cir. 2003) (upholding a nunc pro tunc
DRO issued eleven years after a divorce decree pertaining to plan
benefits from a plan not known about at the time of the divorce, and
declining to infer that the plan must have been notified of the interest
prior to the death of the participant); Hogan v. Raytheon Co., 302
triggered by “notice” to the plan of the state court domestic relations
order.
26
F.3d 854, 857 (8th Cir. 2002) (permitting posthumous qualification
of a DRO because during husband-participant’s life, plan was
provided with a copy of divorce decree awarding ex-wife fifty percent
of husband-participant’s present retirement funds, and DRO obtained
subsequent to husband-participant’s death designating ex-wife as
alternate payee for purposes of survivorship benefits was done within
the eighteen month period permitted to secure a QDRO).
IV. Conclusion
Based on the foregoing, we will reverse the order of the
District Court and remand for further proceedings consistent with this
opinion.
27