Briese v. Montana Public Employees' Retirement Board , 366 Mont. 148 ( 2012 )

September 4 2012
DA 11-0725
IN THE SUPREME COURT OF THE STATE OF MONTANA
2012 MT 192ERENE BRIESE,
Petitioner and Appellant,
v.
MONTANA PUBLIC EMPLOYEES’
RETIREMENT BOARD,
Respondent and Appellee.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. CDV 10-982
Honorable Kathy Seeley, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Kathryn S. Syth; LaRance & Syth, P.C.; Billings, Montana
Nathan S. Haney; Karell, Dyre, Haney, PLLP; Billings, Montana
For Appellee:
Katherine E. Talley; Special Assistant Attorney General; Helena, Montana
Submitted on Briefs: May 16, 2012
Decided: September 4, 2012
Filed:
__________________________________________
Clerk
Justice Beth Baker delivered the Opinion of the Court.
¶1 The Montana Public Employees’ Retirement Board (MPERB) denied death
benefits1 to Petitioner Erene Briese (Erene) because her deceased husband, who had
originally named her as his beneficiary under the Montana Sheriffs’ Retirement System
(SRS), had later filed a new designation, dropping her as a beneficiary, while marital
dissolution proceedings were pending. Erene appealed to the District Court, which
affirmed the MPERB’s order. Erene now appeals the District Court’s order. We reverse.
¶2 We consider the following issues on appeal:
¶3 1. Did Erene’s application for and acceptance of benefits on behalf of the
children render her claim moot or waive her right to challenge the beneficiary
designation?
¶4 2. Does a temporary restraining order issued in a marital dissolution proceeding
under § 40-4-121(3), MCA, apply to the designation of a beneficiary under the Sheriffs’
Retirement System?
PROCEDURAL AND FACTUAL BACKGROUND
¶5 Erene’s late husband, David Briese (David) was a member of the SRS as a result
of his employment as a deputy sheriff for Yellowstone County. The SRS is administered
by the Montana Public Employees’ Retirement Administration (MPERA), and governed
by the MPERB. In 2001, David designated Erene as his primary beneficiary under the
SRS plan.
1
We will use the term “death benefits” to refer to any type of payment to a designated
beneficiary upon the death of an SRS member before retirement under § 19-7-901, MCA.
2
¶6 In 2004, David filed a petition for dissolution of marriage. Under § 40-4-121(3),
MCA, the dissolution court issued a standard temporary restraining order that restrained
both parties from disposing of property, except in the usual course of business or for the
necessities of life, without either the consent of the other party or an order of the court, or
from changing the beneficiaries of “insurance or other coverage . . . held for the benefit
of a party . . . .” In August 2006, while the marital dissolution proceedings were still
pending, and without consent of Erene or the court, David filed a new designation with
the SRS, dropping Erene as beneficiary and naming instead their two minor children.
David was killed in the line of duty a few months later, in November 2006. At the time
of his death, David and Erene were separated but not divorced.
¶7 Erene apparently learned of the 2006 change in beneficiary in early 2008. Counsel
for Erene sent a letter to MPERA notifying the agency that Erene considered the 2006
change of beneficiaries to be void because it was done in violation of the temporary
restraining order. MPERA wrote back, stating that it was statutorily obligated to honor
the 2006 designation of David and Erene’s children as beneficiaries, and instructing
Erene, as the surviving parent of the minor children, to choose among various options for
payment. Erene responded by submitting the necessary forms to activate monthly
payments to Erene for the benefit of the children.
¶8 In 2009, Erene discovered that the payment of benefits to the children rather than
to her had adverse tax consequences for the family, and she sought again to have David’s
2001 beneficiary designation enforced by MPERA. MPERA issued an “administrative
3
decision,” again denying Erene’s request, and informing her of her right of administrative
appeal. Erene appealed to the MPERB, which also denied her request.
¶9 In December 2009, Erene requested that the MPERB’s denial of benefits be
formally reviewed by a hearing examiner under the Montana Administrative Procedure
Act (Title 2, chapter 4, MCA). By agreement of the parties, no hearing was held. The
hearing examiner proposed, and the MPERB adopted, a final order holding that (1) Erene
waived her right to contest the validity of the 2006 beneficiary designation when she
applied for benefits on behalf of her children; (2) the issue was moot because, once
benefits were granted to her children, the parties could not be restored to their original
positions; and (3) the temporary restraining order in the dissolution proceedings was not
applicable to an SRS beneficiary designation.
¶10 Erene petitioned the First Judicial District Court for judicial review of the
MPERB’s final order. The District Court affirmed the order without addressing the
waiver or mootness arguments, finding that the temporary restraining order did not apply
to David’s designation of SRS beneficiaries.
STANDARD OF REVIEW
¶11 On judicial review of an agency’s decision subject to the Montana Administrative
Procedure Act, a district court reviews findings of fact for clear error and conclusions of
law for correctness. Micone v. Dept. of Pub. Health & Human Servs., 2011 MT 178,
¶ 10, 361 Mont. 258, 258 P.3d 403 (citing In re Fair Hearing of Hofer, 2005 MT 302,
¶¶ 13-14, 329 Mont. 368, 124 P.3d 1098). The same standard applies to our subsequent
4
review of the district court decision. Micone, ¶ 10. A district court’s interpretation of a
statute is a conclusion of law, which we review for correctness. In re Marriage of Funk,
2012 MT 14, ¶ 6, 363 Mont. 352, 270 P.3d 39 (citing In re C.D.H., 2009 MT 8, ¶ 21, 349
Mont. 1, 201 P.3d 126).
DISCUSSION
¶12 1. Did Erene’s application for and acceptance of benefits on behalf of the
children render her claim moot or waive her right to challenge the beneficiary
designation?
¶13 Before reaching the substantive issue in this appeal, we address MPERB’s claims
that the issue is moot, or that Erene waived her claim when she applied for benefits on
behalf of her minor children.
¶14 Mootness is a threshold issue which must be resolved before addressing the
underlying dispute. Med. Marijuana Growers Ass’n v. Corrigan, 2012 MT 146, ¶ 18,
___ Mont. ___, ___ P.3d ___ (citing Povsha v. City of Billings, 2007 MT 353, ¶ 19, 340
Mont. 346, 174 P.3d 515). The mootness doctrine is one of several doctrines designed to
limit the judicial power of this Court to justiciable controversies—that is, controversies
“upon which a court’s judgment will effectively operate, as distinguished from . . .
dispute[s] invoking a purely political, administrative, philosophical, or academic
conclusion.” Progressive Direct Ins. Co. v. Stuivenga, 2012 MT 75, ¶ 16, 364 Mont.
390, 276 P.3d 867. The fundamental question to be answered in any review of possible
mootness is “whether it is possible to grant some form of effective relief to the
appellant.” Stuivenga, ¶ 37.
5
¶15 MPERB claims that it is impossible to grant effective relief to Erene because, once
the payments commenced, MPERB had fully discharged its obligations under the law.
MPERB cites § 19-2-803, MCA, in support of its position. That section provides, in
pertinent part:
(1) . . . [I]f any benefit from a system is payable to a minor, the benefit
must be paid to one of the following: (a) a surviving parent, if any
. . .
(3) The payment must be in full and complete discharge and acquittance of
the board and system on account of the benefit. The person receiving
benefit payments pursuant to this section shall account to the minor for the
money when the minor reaches the age of majority.
We conclude that § 19-2-803, MCA, does not prevent the Court from granting relief or
render moot the issue raised on appeal. Read as a whole, it protects MPERB from a
minor’s direct claims for additional payment after proper payment already has been made
to a surviving parent or other designated recipient on behalf of the minor. The effect of
the statute is to make the person receiving the benefit accountable directly to the minor.
It does not apply to this case.
¶16 Pointing out that she did not elect a lump-sum payment, Erene claims it is possible
to grant her effective relief by ordering that all future monthly payments be made to her
in her own capacity, as well as by ordering the issuance of corrected tax forms. We agree
with Erene that it is possible to grant some form of effective relief, at least insofar as
future monthly payments are concerned. Since MPERB did not address the issuance of
6
corrected tax forms in its brief on appeal, we presume this is no longer a point of
contention and do not address it further.
¶17 MPERB next argues that, even if the case is not moot, Erene has waived her
challenge by applying for and accepting benefits on behalf of the children under the 2006
beneficiary designation. Waiver is the voluntary and intentional relinquishment of a
known right, and must be manifested in some unequivocal manner. Tvedt v. Farmers Ins.
Group of Cos., 2004 MT 125, ¶ 33, 321 Mont. 263, 91 P.3d 1 (citing Idaho Asphalt
Supply v. DOT, 1999 MT 291, ¶¶ 19, 23, 297 Mont. 66, 991 P.2d 434).
¶18 When denying Erene’s initial claim for benefits in 2008, MPERA did not inform
her of her right to challenge the denial by appeal to MPERB. Under Admin. R. M.
2.43.1501(2) (2003), Erene had the right to appeal MPERA’s decision to MPERB.
MPERA, in two separate letters to Erene dated May 30, 2008, (1) stated that MPERA
was “require[d]” to honor the 2006 change of beneficiaries, and (2) informed Erene that
she “must complete, have notarized and return to this office” the claim forms for the
children before being provided with the payment options that were available. It gave no
indication that further review was available by appeal to MPERB under Admin. R. M.
2.43.1501(2) at that time. As a matter of due process, MPERA was obligated to inform
Erene of any right to appeal and the procedures for seeking such appeal. See Pickens v.
Shelton-Thompson, 2000 MT 131, ¶¶ 13, 15, 300 Mont. 16, 3 P.3d 603 (citing Mont.
Const. art. II, § 17; Dorwart v. Caraway, 1998 MT 191, ¶ 76, 290 Mont. 196, 966 P.2d
1121).
7
¶19 It was not until July 2009 that MPERA informed Erene of her appeal rights, in a
letter that also stated that she had already “mooted” her argument by applying for benefits
on her children’s behalf more than a year earlier. As Erene’s counsel told the District
Court, under the circumstances, Erene had little choice but to apply for the benefits when
she did because MPERA did not give her any other options and “she had to support the
kids.” Under these circumstances, we do not agree that Erene’s application for benefits
on behalf of her children in June 2008 was a voluntary and intentional relinquishment of
a known right. We conclude that she did not waive her argument and we proceed to the
merits of her claim.
¶20 2. Does a temporary restraining order issued in a marital dissolution proceeding
under § 40-4-121(3), MCA, apply to the designation of a beneficiary under the Sheriffs’
Retirement System?
¶21 When David filed his 2006 change of beneficiaries, MPERB had no knowledge of
the dissolution proceedings and, therefore, no reason to question the new designation.
Section 19-2-801(1)-(2), MCA, allows a member to designate a beneficiary on a
membership card and, “[u]nless otherwise provided by statute,” to change that
designation by filing with the board a new membership card. Subsection (4) provides
that, in general, “the beneficiary designation on the most recent membership card filed
with the board is effective for all purposes until the member retires.”
¶22 Erene argues, however, that David’s 2006 change of designation was invalid and
void as a matter of law because it violated the temporary restraining order issued in the
marital dissolution proceeding under § 40-4-121(3), MCA. If the 2006 designation is
8
invalidated, then “the most recent membership card filed with the board” is the 2001
membership card designating her as David’s beneficiary.
¶23 Section 40-4-121(3), MCA, provides, in relevant part:
When the clerk of the district court issues a summons pursuant to this
chapter [(Termination of Marriage, Child Custody, Support)], the clerk
shall issue and include with the summons a temporary restraining order:
(a) restraining both parties from transferring, encumbering,
hypothecating, concealing, or in any way disposing of any property, real or
personal, whether jointly or separately held, without either the consent of
the other party or an order of the court, except in the usual course of
business or for the necessities of life. . . .
(b) restraining both parties from cashing, borrowing against,
canceling, transferring, disposing of, or changing the beneficiaries of any
insurance or other coverage, including life, health, automobile, and
disability coverage held for the benefit of a party or a child of a party for
whom support may be ordered. . . .
The question posed by this case is whether the restriction of a restraining order issued
under this statute on “changing the beneficiaries of any insurance or other coverage”
applies to a change of beneficiary under the SRS. We hold that it does.
¶24 Section 40-4-101, MCA, provides that Montana’s law concerning separation and
dissolution of marriage, which encompasses the statute at issue in this case,
shall be liberally construed and applied to promote its underlying purposes,
which are to:
(1) strengthen and preserve the integrity of marriage and safeguard
family relationships;
(2) promote the amicable settlement of disputes that have arisen
between parties to a marriage;
9
(3) mitigate the potential harm to the spouses and their children
caused by the process of legal dissolution of marriage; [and]
(4) make reasonable provision for spouse and minor children during
and after litigation . . . .
(Emphases added.)
¶25 The purpose of the law requiring a temporary restraining order is clearly to
maintain the status quo with respect to all property of the parties. The statute is
expansively worded to capture any property, real or personal, along with any inchoate
right to property as the beneficiary of “any insurance or other coverage.” This action
mitigates the potential harm to spouses and children caused by the dissolution process
itself and ensures that reasonable provision is made for the spouse and children during the
litigation. The plain language of subsection (b) is quite broad, restricting both parties
from unilaterally “changing the beneficiaries of any . . . coverage . . . held for the benefit
of a party.” Section 40-4-121(3)(b), MCA (emphasis added). On its face, therefore, the
statute appears to restrict the removal of a spouse as a beneficiary under any type of
benefit coverage, including as a beneficiary of an SRS retirement account, so long as a
dissolution action is pending.
¶26 This interpretation is buttressed by application of the doctrine of statutory
construction known as ejusdem generis. Under this doctrine, where a list of specific
things is followed by a more general word or phrase, the general word or phrase is
interpreted to include only items that are “similar in nature” to those listed. Mattson v.
Montana Power Co., 2009 MT 286, ¶ 32, 352 Mont. 212, 215 P.3d 675 (quoting Circuit
10
City Stores v. Adams, 532 U.S. 105, 114-15, 121 S. Ct. 1302, 1309 (2001)). The statute
specifically mentions life insurance among the types of coverage “includ[ed]” in its
restriction. The SRS coverage given to beneficiaries of deceased members is “similar in
nature” to life insurance. See Schade v. Arizona State Retirement Sys., 510 P.2d 42, 44
(Ariz. 1973) (“The benefits provided for beneficiaries under the State Employees’
Retirement System . . . are in the nature of proceeds of an annuity or life insurance
contract.”); Rogers v. Rogers, 152 So.2d 183, 186 (Fla. 1st Dist. App. 1963) (benefits
provided for designated beneficiaries under the Florida Teachers’ Retirement System are
in the nature of the proceeds of a life insurance contract); Teachers’ Retirement Sys. v.
Vial, 304 So.2d 53, 56-57 (La. 1st Cir. App. 1974), aff’d 317 So.2d 179 (La. 1975) (death
benefit features of the Teachers’ Retirement System are indistinguishable from life
insurance); cf. Sowell v. Teachers’ Retirement Sys., 214 Mont. 200, 204-05, 693 P.2d
1222, 1224-25 (1984) (comparing precedent concerning life insurance to the designation
of a beneficiary in the Montana Teachers’ Retirement System and applying statutes to
determine beneficiary of death benefits).
¶27 Under a standard life insurance contract, payment is made upon the death of the
insured to a “beneficiary” designated by the insured. See 43 Am. Jur. 2d Insurance
§§ 533, 1668 (LEXIS current through 2011). Under the SRS plan, payment is made upon
the death of the member to a “beneficiary” designated by the member. See Admin. R. M.
2.43.1302(22) (2012) (defining a “primary beneficiary” as “a beneficiary designated to
receive payments upon the death of a member”). Like life insurance, the beneficiary
11
designation is part of an agreement to pay monies on the death of the member and, like
life insurance, the payment is not realized during the member’s lifetime. The death
benefits inure to the beneficiary directly through the decedent’s designation of the
beneficiary, the primary distinction being that the designation is made under and by
virtue of specific statutory authority rather than under an insurance contract. Sections 19-
7-901, 19-7-503(2), 19-7-801(5)(b)(ii), MCA; see Vial, 304 So.2d at 56-58. The
coverage provided to Erene by David’s designation of her as a “beneficiary” under the
SRS plan—coverage that provides protection to the beneficiary in the event of the death
of the member—is “similar in nature” to life insurance, and therefore included within the
language of § 40-4-121(3)(b), MCA, and the restraining order.
¶28 The statute, moreover, is not confined to “insurance” but also includes “any . . .
other coverage.” We construe a statute to give effect to all of its provisions. Section 1-2-
101, MCA; see also State v. Booth, 2012 MT 40, ¶ 12, 364 Mont. 190, 272 P.3d 89.
Section 40-4-121(3)(b), MCA, construed liberally and applied to promote its underlying
purposes, prohibits any changes of beneficiary under the SRS plan, if the beneficiary at
the time the restraining order is issued is a “party or a child of a party for whom support
may be ordered.”
¶29 MPERB’s reliance on cases from other jurisdictions in which specific restraining
orders were held to be too vague to apply to a change of beneficiaries for death benefits is
misplaced. As indicated above, the language of Montana’s standard restraining order
clearly enjoins any change of beneficiaries for “any . . . coverage . . . held for the benefit
12
of a party.” The broad language restraining a change of beneficiaries eliminates any need
to specifically list all of the types of accounts to which it applies. The use of the term
“including life, health, automobile, and disability coverage” indicates that this listing of
types of coverage is not exclusive. (Emphasis added.) See e.g. In re Marriage of
Keepers, 213 Mont. 350, 356, 691 P.2d 810, 813 (1984); Norman J. Singer & J.D.
Shambie Singer, Sutherland on Statutes and Statutory Construction vol. 2A, § 47.23, 417
(7th ed., West 2007) (“When ‘include’ is utilized, it is generally improper to conclude
that entities not specifically enumerated are excluded.”). The restraining order in this
case applied to David’s change of SRS beneficiary.
¶30 That Montana law did not require David to designate Erene as his beneficiary in
the first place does not change the fact that he did so. Once Erene was designated as a
beneficiary, the account was held “for the benefit of” Erene as well as David, and the
restraining order applied. Nor does it matter that the change of beneficiaries did not
affect the value of David’s retirement benefits or how they ultimately may have been
distributed as part of the marital estate. Under its plain language, the temporary
restraining order issued under § 40-4-121(3)(b), MCA, prohibited David from changing
his SRS beneficiary during the marriage dissolution proceedings.
¶31 Finally, the fact that David substituted his children, who also were protected by
the temporary restraining order, for his spouse does not change the result. Section 40-4-
121(3)(b), MCA, does not include any exceptions for changes to beneficiaries from
13
spouse to protected child or vice versa. 2 A temporary restraining order issued under the
broad restriction of the statute prohibits a party’s attempt to change one of those
designated beneficiaries during the proceeding. David’s 2006 change of beneficiaries
was unlawful because it was made in violation of the restraining order and § 40-4-121(3),
MCA.
¶32 MPERB nonetheless argues that the temporary restraining order does not apply to
it because it was not a party to the dissolution action, citing §§ 40-4-121(3)(b) and 27-19-
105, MCA. The restraining order did not, by its terms, restrain MPERB from any
particular acts. Nor was MPERB a “person[] in active concert or participation with
[David]” within the meaning of § 27-19-105(4), MCA. Whether MPERB was bound by
the terms of the restraining order is not the issue here, however. Under § 19-2-801(2),
MCA, a member is not allowed to change beneficiaries in violation of a statutory
provision. David’s 2006 beneficiary designation was made in violation of a statutorily-
mandated court order that was binding on him.
¶33 Section 40-4-121(3)(b), MCA, provides protection to some individuals or entities
affected by a violation of the temporary restraining order. That provision states:
“[N]othing in this subsection (3) adversely affects the rights, title, or interest of a
purchaser, encumbrancer, or lessee for value if the purchaser, encumbrancer, or lessee
does not have actual knowledge of the restraining order.” As administrator of the
2
David could have changed his SRS beneficiary with the consent of Erene or an order of the
court. Cf. § 40-4-121(3)(a), MCA (restraining both parties from disposing of any property
“without either the consent of the other party or an order of the court”). There is no indication in
the record that he had either consent or a court order.
14
retirement system, MPERA is not a “purchaser, encumbrancer, or lessee for value” under
§ 40-4-121(3)(b). Furthermore, MPERA obtained actual knowledge of the restraining
order early in 2008, before any benefits were paid, when Erene’s counsel sent a letter
challenging David’s 2006 change of beneficiaries.
¶34 MPERB further contends that public policy and legislative intent do not support
application of § 40-4-121(3)(b), MCA, to beneficiary changes in the SRS plan, citing
Sowell, 214 Mont. at 207, 693 P.2d at 1226, and State ex rel. Neuhausen v. Nachtsheim,
253 Mont. 296, 301, 833 P.2d 201, 204 (1992), superseded, 1993 Mont. Laws ch. 259.
Neither of those cases applies to Erene’s case, however, as neither of them interpreted
§ 40-4-121(3)(b), MCA, or involved the effect of a temporary restraining order. Sowell
involved a claim for death benefits by a surviving spouse who had never been named as a
beneficiary, not, as in Erene’s case, a spouse who was the properly designated beneficiary
at the time a restraining order restricting changes to the beneficiary was issued.
Neuhausen did not even address a claim for death benefits by a beneficiary, but rather
involved the division of retirement benefits between a member and his ex-spouse as part
of a divorce decree.
¶35 Also inapt is MPERB’s citation to § 19-2-1004, MCA, which states, in relevant
part, that “the right of a person to any benefit or payment from a retirement system or
plan” is not subject to execution, garnishment, attachment or any other process. This
provision does not prevent MPERB or a district court from determining the rights of
various parties to the benefits of the plan in the first place, as in this case.
15
¶36 The Dissent questions the administrative forum in which Erene has raised her
claim for benefits and argues that MPERB committed “no legal error,” suggesting that
Erene’s only remedy was to request relief in the dissolution proceeding or to file a
separate declaratory judgment action. We have held that “an action [for] dissolution of
marriage abates upon the death of either party prior to the entry of decree, and at that time
the trial court loses jurisdiction to determine incidental issues such as the disposition of
property rights involved in the marriage.” In re Marriage of Lawrence, 212 Mont. 327,
330-31, 687 P.2d 1026, 1028 (1984). We need not decide in this case whether a court
retains jurisdiction over the enforcement of orders entered before one of the spouses has
died. See Aither v. Estate of Aither, 913 A.2d 376, 379 (Vt. 2006) (noting split of
authority). Here, MPERB claimed the authority to determine the applicability of a
restraining order issued pursuant to § 40-4-121(3), MCA, to an SRS account, and found it
to be inapplicable as a matter of law. Erene properly pursued this request for judicial
review in order to adjudicate the validity of MPERB’s determination, and the District
Court had the authority to decide that issue. Section 2-4-704(2)(a)(i), (iv), MCA
(authorizing reversal of an agency decision if the district court determines that the
administrative decision is “in violation of . . . statutory provisions” or “affected by other
error of law”).
¶37 Either MPERB or Erene could have resolved any uncertainties in MPERB’s legal
obligations by seeking a declaratory judgment under the provisions of Montana’s
Uniform Declaratory Judgments Act, Title 27, chapter 8, MCA. See § 27-8-102, MCA
16
(stating that the purpose of the Act is “to settle and to afford relief from uncertainty and
insecurity with respect to rights, status, and other legal relations”); Sowell, 214 Mont. at
202, 693 P.2d at 1223 (action brought by a denied claimant “to declare her rights with
respect to the retirement and death benefit account of . . . deceased”). The availability of
an alternative remedy did not foreclose Erene’s right to judicial review of MPERB’s
administrative determination.
¶38 We have not had occasion to address the question whether a violation of a
temporary restraining order automatically voids the beneficiary change. In most cases,
the remedy for violation of a restraining order is a civil or criminal contempt action
against the violator. See §§ 3-1-501(1)(e), 45-7-309(1)(c), MCA. Such a remedy,
however, is “no remedy at all in this context; it evaporates [with the death of the
violator,] the instant it is needed.” Aither, 913 A.2d at 380.
¶39 Courts from other jurisdictions have taken various approaches toward this
problem. Many courts have held that a court may set aside an improper change of
beneficiaries and award the proceeds to the beneficiary who was protected by the
restraining order. In Webb v. Webb, 134 N.W.2d 673, 674-75 (Mich. 1965), for example,
the Michigan Supreme Court stated:
It needs no citation that for violation of an injunction, a court, under its
general powers, may order a return to the status quo. . . . Transfers of
property in violation of an injunction are invalid and may be set aside . . .
and subsequent death of the injunction violator does not prevent the court
from exercising such power.
17
(Citations omitted.) See also Northwestern Mutual Life Ins. Co. v. Hahn, 713 N.W. 2d
709, 712 (Iowa App. 2006) (“[A] court may set aside a change in beneficiary of a life
insurance policy made in violation of a temporary injunction.”); Aither, 913 A.2d at 381(“Because husband’s change in the beneficiaries of his life insurance policy was in
violation of the family court order, wife may be entitled to a return to the status quo the
order was intended to preserve.”); Standard Ins. Co. v. Schwalbe, 755 P.2d 802, 806
(Wash. 1988) (“[W]e hold that the trial court had the power to award the insurance
proceeds to . . . the named beneficiary protected by the preliminary injunction.”).
¶40 Other courts, while holding that the violation does not serve to automatically void
the beneficiary change, generally have found that courts have the authority to grant some
form of relief through use of their powers of equity. See e.g. Valley Forge Life Ins. Co. v.
Delaney, 313 F. Supp. 2d 1305, 1307-09 (M.D. Fla. 2002) (rejecting a per se rule that
automatically voids beneficiary changes made in violation of a temporary injunction, but
acknowledging that a removed beneficiary may seek redress in a court of equity); Davis
v. Prudential Ins. Co., 331 F.2d 346, 349-51 (5th Cir. 1964) (holding that an injunction
does not void automatically a prohibited transfer, but that the surviving spouse
nevertheless was entitled to recovery under a theory of constructive fraud); American
Family Life Ins. Co. v. Noruk, 528 N.W.2d 921, 923-24 (Minn. App. 1995) (rejecting a
bright-line rule under which a change of beneficiary made in violation of a temporary
court order would be void as a matter of law, holding that “equitable principles, rather
than a per se rule, should govern”).
18
¶41 At a minimum, we agree with those courts that have held that a court has equitable
power to order a return to the status quo when a party violating a temporary restraining
order has died.3 Thus, in this case, the District Court should have invalidated David’s
2006 change of beneficiaries because it was made in violation of the statutorily-mandated
restraining order, and should have determined that his 2001 designation of Erene is “the
most recent membership card filed with the board” under § 19-2-801(4)(a), MCA.
CONCLUSION
¶42 The District Court’s order of October 7, 2011, is reversed. The case is remanded
for entry of judgment declaring the 2006 beneficiary designation invalid and for further
proceedings consistent with this opinion.
/S/ BETH BAKER
We concur:
/S/ MIKE McGRATH
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
/S/ BRIAN MORRIS
3
As the California Supreme Court has observed, “[t]he purpose of the provisions requiring the
filing of a change of beneficiary is largely to protect the retirement system against the possibility
of being called upon to pay twice.” Watenpaugh v. State Teachers’ Retirement Sys., 336 P.2d
165, 169 (Cal. 1959). Erene is not asking MPERB to pay twice, nor is she asking for a recipient
who was wrongfully paid benefits to return them. We do not, therefore, express any opinion on a
district court’s authority to make an equitable distribution in such a circumstance.
19
Justice James C. Nelson, concurring.
¶43 I concur in the Court’s Opinion on the facts presented here. It is especially
troubling to me that MPERA failed to notify Erene of her right to appeal the agency’s
denial of her challenge to David’s change of beneficiary and that MPERA effectively
stampeded Erene into applying for benefits. Opinion, ¶¶ 7, 17-19. It is equally troubling
that MPERA obtained actual knowledge of the restraining order before any benefits were
paid, yet went ahead and commenced paying benefits pursuant to David’s change of
beneficiary with the knowledge that the change was being challenged. Opinion, ¶ 33.
Given the agency’s knowledge of the restraining order, of Erene’s challenge, and of the
legal questions of first impression at issue, it seems to me that MPERA, taking a
conservative approach, could have worked through the court system to reach a temporary,
and ultimately final, disposition of this matter that would have protected the interests of
both Erene and the agency. Under the circumstances described above, it is difficult not to
conclude that MPERA was the author of its own problems.
¶44 I believe the Court’s legal analysis is sound and achieves the correct result in this
case. I am somewhat reluctant, however, to extrapolate beyond that for several reasons.
First, this is a case of first impression and, as noted, the facts here militate in Erene’s
favor. Our jurisprudence will necessarily have to develop on a case-by-case basis,
consistent with the facts and how, if at all, the Legislature addresses these sorts of
situations. Second, it is important to acknowledge that in many dissolution cases, the
public employee’s retirement benefit may be the only significant asset in the marital
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estate. Accordingly, it is vital that this asset be properly distributed according to
whatever law applies under the circumstances. Third, this case also demonstrates the
need for the Legislature to amend the statutes in Titles 40 and 19, MCA, to deal with
situations such as that presented here and other cases where the member changes
beneficiaries in violation of a temporary restraining order. In this regard, and in fairness
to MPERA, such statutory amendments should require that where a member is involved
in a dissolution proceeding, any temporary restraining order similar to the one in this case
must be, upon issuance, contemporaneously served on the agency and provide that the
agency be allowed to intervene in the proceedings to the extent necessary to resolve any
dispute in the distribution of the member’s retirement benefits.
¶45 With those caveats and suggestions, I concur.
/S/ JAMES C. NELSON
Justice Jim Rice, dissenting.
¶46 This administrative appeal challenges MPERB’s implementation of David’s 2006
beneficiary designation and refusal to reverse that action, which Erene argues was an
“erroneous decision.” However, Erene has established no legal error on the part of
MPERB.
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¶47 MPERB properly acted pursuant to its contractual, statutory, and constitutional
obligations to honor the beneficiary request made to it by David in 2006. See § 19-2-502,
MCA; Mont. Const. art. VIII, § 15. The Court nonetheless reverses MPERB’s actions
and faults MPERB for failing to seek a declaratory judgment to resolve “any
uncertainties in [its] legal obligations.” Opinion, ¶ 37. The Court attempts, but fails to
correctly identify, any legal error committed by MPERB, and acknowledges, as it must,
that MPERB was not subject to the temporary restraining order (TRO). Clearly, there
were no uncertainties in MPERB’s obligations, but more, it was not MPERB’s duty to
resolve any uncertainties that Erene may have perceived.
¶48 As the Court notes, the TRO, by its own express terms, was directed to, and
applied to, David and Erene only (“Respondent and Petitioner are hereby restrained from
. . . .”). The TRO was not directed to any third parties, here, MPERB. This is consistent
with statute. Section 40-4-121(3), MCA, provides that a domestic TRO restrains “both
parties” from acting to transfer their assets. Likewise, § 27-19-105, MCA, governing the
scope of injunctions and restraining orders, provides that a restraining order shall “be
binding only upon the parties to the action; their officers, agents, employees, and
attorneys; and those persons in active concert or participation with them who receive
actual notice of the order by personal service or otherwise.” (Emphasis added.)
Although MPERB had not received notice of the TRO when it acted, thus excluding it
from the TRO’s reach, that is not the important point. Critically, under the statute,
MPERB was not a “person” acting in concert or participation with David. Section 27-19-
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105, MCA. Rather, MPERB was a government agency acting pursuant to its legal
obligations and authority. While David was bound by the TRO, MPERB was not.
Rather, it was bound to follow the law governing the agency.
¶49 Fundamentally, and consistent with our statutes above cited, “[c]ourts are without
jurisdiction to enjoin administrative agencies from performing the duties delegated to
them by proper statute or authority.” 42 Am. Jur. 2d Injunctions § 156 (2010). Instead,
an injunction or restraining order “is an appropriate remedy to prevent wrongful acts by a
public official who is acting without lawful authority and beyond the scope of his or her
official power . . . .” 42 Am. Jur. 2d Injunctions § 156 (emphasis added). MPERB was
unquestionably acting within its lawful authority to meet its clear legal obligations to
David, and in so doing, was not subject to the TRO. MPERB was faced with no
“uncertainties” in its legal obligations which compelled it to seek a declaratory judgment,
as the Court declares. Opinion, ¶ 37. There being nothing legally improper about
MPERB’s actions, Erene’s administrative appeal of that action should be rejected.
¶50 The Court seeks to evade these principles by declaring whether “MPERB was
bound by the terms of the restraining order is not the issue,” Opinion, ¶ 32, but the Court
is mistaken. The premise of Erene’s challenge is that MPERB erred in failing to reverse
its actions when presented with the TRO. The TRO is the only order which MPERB is
alleged to have violated. If MPERB complied with governing law in changing the
beneficiary, and was not subject to the TRO, its decision is not subject to reversal in this
administrative proceeding.
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¶51 The Court acknowledges that the legal error here—changing beneficiaries in
violation of the TRO—was committed by David. Opinion, ¶ 34. However, realizing that
David’s error cannot serve as a basis to reverse MPERB’s actions in this administrative
appeal, the Court attempts to manufacture error on the part of MPERB. The Court
reasons that MPERB’s reversible error occurred when it found that § 40-4-121(3), MCA,
was “inapplicable as a matter of law” to an SRS account. Opinion, ¶ 36. However, even
assuming arguendo that MPERB so erred, such an error in statutory interpretation still
would not subject MPERB to the TRO, and therefore does not establish that MPERB
committed reversible error for purposes of this administrative proceeding. An error in
interpretation does not necessarily equate to an error in action, and here MPERB clearly
acted properly by complying with its governing authority. Again, the TRO was directed
to the parties, not MPERB. MPERB was obligated to comply with its governing
authority until and unless it received a proper legal directive to do otherwise. MPERB
acknowledges it is subject to family law orders affecting retirement plans entered
pursuant to § 19-2-907, MCA, which the Legislature specifically enacted to authorize
courts to recognize and modify retirement plans within domestic proceedings, following
our decision to the contrary in Neuhausen. However, such an order was apparently never
pursued, and Erene could not turn this administrative appeal into a declaratory judgment
action to challenge the validity of David’s actions during the dissolution proceeding.
This administrative appeal could only determine whether the agency properly acted under
its governing authority, and I would conclude it clearly did so. It should not be this
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Court’s business to rectify a perceived injustice in disregard to established statutory
procedures.
¶52 If Erene believed that David’s actions had violated the TRO and had created
uncertainty, it was incumbent upon her to initiate a declaratory judgment action or seek
judicial relief from the dissolution court which had issued the TRO. While I take no
position on the merits, a claim that David had violated the TRO would arguably have
remained justiciable even after his death. While the dissolution court may well have lost
jurisdiction to distribute the marital estate, the question would be whether a death barred
the court from addressing a prior and undisclosed violation of a restraining order which
had prejudiced a party. Such a question was arguably “one upon which a court’s
judgment will effectively operate.” Progressive Direct Ins. Co. v. Stuivenga, 2012 MT
75, ¶ 16, 364 Mont. 390, 276 P.3d 867. Assuming the court determined the TRO had
been violated, concrete relief was possible. However, the District Court reviewing
MPERB’s actions in this administrative appeal clearly had no authority to address that
violation.
¶53 I would affirm the District Court.
/S/ JIM RICE
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