Graef v. Retirement Income ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CAROL KIRBY GRAEF,
Plaintiff-Appellant,
v.
RETIREMENT INCOME PLAN FOR
EMPLOYEES OF ALBEMARLE
CORPORATION; ALBEMARLE
CORPORATION; SAVINGS PLAN FOR THE
No. 98-1188
EMPLOYEES OF ALBEMARLE
CORPORATION,
Defendants-Appellees,
v.
WAYNE C. KIRBY, II; ROBIN S.
KIRBY; BRANDON K. REEVES,
Third Party Defendants.
Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Dennis W. Shedd, District Judge.
(CA-97-3379-3-19)
Argued: September 24, 1998
Decided: December 17, 1998
Before WIDENER, WILLIAMS, and MICHAEL, Circuit Judges.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Robert Edward Hoskins, FOSTER & FOSTER, L.L.P.,
Greenville, South Carolina, for Appellant. Robert Oliver King,
OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.,
Greenville, South Carolina, for Appellees. ON BRIEF: Paul W.
Owens, Jr., LOURIE, CURLEE, BARRETT & SAFRAN, Columbia,
South Carolina, for Appellant. Michael T. Brittingham, OGLETREE,
DEAKINS, NASH, SMOAK & STEWART, P.C., Columbia, South
Carolina, for Appellees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Carol Kirby Graef appeals the district court's grant of summary
judgment in favor of Albemarle Corporation, the Retirement Income
Plan for Employees of Albemarle Corporation (Retirement Plan) and
the Savings Plan for Employees of Albemarle Corporation (Savings
Plan).1 Graef challenges the district court's determination pursuant to
federal common law that, although she was Kirby's surviving spouse
for the purpose of the Plans, she waived her rights to benefits under
the Plans when she instituted a family court action seeking an equita-
ble division of marital property and did not appeal from the ruling
therein.2 We agree that Graef is a surviving spouse for the purpose of
_________________________________________________________________
1 For convenience, we refer to the Retirement Plan, the Savings Plan,
and Albemarle Corporation collectively as "Albemarle."
2 Graef filed the original complaint against Albemarle and the Retire-
ment Plan. The parties, with the consent of the court, stipulated on
December 1, 1997, that the claims asserted by Graef against the Retire-
ment Plan would also be considered claims against the Savings Plan.
Because no issue has been raised regarding Albemarle's determination
that Graef's claim for benefits under the Retirement Plan was materially
similar to her claim for benefits under the Savings Plan, we refer to both
collectively as "the Plans."
2
the Plans and that pursuant to federal common law, Graef waived her
rights to benefits when she failed to appeal the family court order that
divided the marital property. We therefore affirm the district court's
grant of summary judgment.
I.
Kirby and Graef were married on May 10, 1981. They subse-
quently divorced on August 12, 1987. From July 6, 1987, to Novem-
ber 5, 1992, the parties, although divorced, intermittently resided
together. On November 5, 1992, the parties permanently separated,
and shortly thereafter, Graef sued Kirby in family court for separate
maintenance and support and sought an equitable division of the mari-
tal assets. In that suit, Graef claimed that the 1987 divorce decree was
null and void, and in the alternative, that the parties had formed a
common law marriage as a result of their cohabitation from July 1987
to November 1992. The family court held a hearing on the matter on
July 13, 1993. On September 7, 1993, the family court issued an order
finding that the parties had established a common law marriage fol-
lowing their divorce. As part of its order, the family court awarded
Graef separate maintenance and support and equitably apportioned
Kirby's and Graef's marital assets. Included among the assets consid-
ered as marital property was Kirby's "retirement account at Ethyl
Corporation" that accrued during the marriage. 3 In the equitable distri-
bution of the marital assets, Graef's interest in a portion of the retire-
ment account, as well as the remaining marital property, was satisfied
by transfer to her of the family home and an award of $2,718.80 in
cash, payable by Kirby.
Although neither Kirby nor Graef appealed the manner in which
the marital assets were apportioned and distributed, Kirby appealed
the family court's determination that their 1987-1992 cohabitation
constituted a common law marriage. Unfortunately, while his appeal
of the family court's common law marriage ruling was pending,
Kirby died in an automobile accident. On December 8, 1994, the
South Carolina Court of Appeals affirmed the family court's decision
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3 Ethyl Corporation is the predecessor of Albemarle Corporation. The
parties do not contest that the "retirement account" includes Kirby's
interest in both the Retirement Plan and the Savings Plan.
3
on the common law marriage issue. Kirby's estate pursued it no fur-
ther. Graef later remarried.
On October 13, 1995, the South Carolina Court of Common Pleas,
County of Orangeburg, determined that Graef was not a surviving
spouse for the purposes of the South Carolina Probate Code because
the family court order of September 7, 1993, was a final order that
terminated all marital property rights between the parties. The state
court held that Graef was not in line to receive a share of Kirby's
estate by operation of the South Carolina rules of intestate succession.
Graef did not appeal this decision.
In 1996, Kirby's three children from a prior marriage submitted
claims for the benefits at issue in this appeal. Albemarle, relying on
the state court's determination that Graef was not a surviving spouse,
determined that Kirby's children were the appropriate beneficiaries
under the Plans and disbursed the benefits to them. 4 Graef subse-
quently filed a claim for these benefits, asserting that she was Kirby's
surviving spouse and, under the terms of the Plans, was entitled to the
benefits.5 By letter dated August 15, 1997, Albemarle denied Graef's
claims. Albemarle concluded that the determination by the state court
that Graef was not a surviving spouse was dispositive of her claim.
On October 31, 1997, Graef filed this ERISA suit in the United States
District Court for the District of South Carolina to recover the bene-
fits.
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4 On December 11, 1997, Albemarle filed a third party complaint
against Kirby's children, seeking reimbursement from them if the district
court determined that Albemarle paid Kirby's benefits to them in error.
The children have not joined the defense of this appeal because the dis-
trict court determined that Graef was not entitled to Kirby's benefits, and
therefore, they have no current liability to reimburse the Plans.
5 The Plan Administrator determined that Kirby's beneficiary designa-
tion on file with the Retirement Plan on the date of his death did not
name Graef as the beneficiary of his Retirement Plan benefit. Because
Albemarle determined that Graef's claim for benefits under the Retire-
ment Plan was materially similar to her claim for benefits under the Sav-
ings Plan, we assume that Kirby's beneficiary designation on file with
the Savings Plan on the date of his death also did not name Graef as the
beneficiary.
4
On cross motions for summary judgment filed by Albemarle and
Graef, the district court first found that Graef was the surviving
spouse for the purpose of the Plans. The district court then applied
federal common law and found that Graef waived her claim to bene-
fits under the Plans when she instituted the family court action that
divided the marital estate and did not appeal from the resulting mari-
tal property division. Based on the latter finding, the district court
granted Albemarle's motion for summary judgment. Graef appeals
this ruling, arguing that her waiver of benefits is governed by ERISA,
rather than federal common law, and that her filing a family court
action seeking, and being awarded, an equitable division of marital
property did not comport with ERISA's spousal waiver requirements
as set out in 29 U.S.C.A. § 1055(c)(2)(A) (West Supp. 1998).
II.
Summary judgment is appropriate only if there are no material
facts in dispute and the moving party is entitled to judgment as a mat-
ter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)
(citing Fed. R. Civ. P. 56(c)). Because, as both sides agree, there are
no material facts in dispute, summary judgment is appropriate in this
case. This Court reviews a grant of summary judgment de novo. See
Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th
Cir. 1988).
III.
Graef first asserts that the district court's decision that she is a sur-
viving spouse for the purpose of the Plans was proper; Albemarle
contests Graef's assertion that she is a surviving spouse. Albemarle
argues that in denying Graef's claim to Kirby's benefits, it correctly
relied upon the state court's holding that Graef was not Kirby's sur-
viving spouse for the purposes of the South Carolina Probate Code.
Thus, Albemarle argues, Graef is not Kirby's surviving spouse for the
purposes of the Plans either.
Albemarle acknowledges that the Plans are subject to ERISA. It is
well-established that an ERISA regulated benefit plan is interpreted
"using ordinary principles of contract law, enforcing the plan's plain
language in its ordinary sense." Bailey v. Blue Cross & Blue Shield,
5
67 F.3d 53, 57 (4th Cir. 1995). If the plan language is unambiguous,
this Court will not defer to a contrary interpretation by the plan
administrators. Davis v. Burlington Indus., 966 F.2d 890, 895 (4th
Cir. 1992). In interpreting a plan, "[c]ontract terms must be construed
to give meaning and effect to every part of the contract, rather than
leave a portion of the contract meaningless or reduced to mere sur-
plusage." Goodman v. RTC, 7 F.3d 1123, 1127 (4th Cir. 1993).
The parties dispute the meaning of the term "surviving spouse."
The Plan defines surviving spouse as follows:
1.42. Surviving Spouse or Spouse means, unless otherwise
provided in a Qualified Domestic Relations Order pursuant
to Plan section 13.04, a Member's spouse to whom he was
married, as determined under the laws of the jurisdiction in
which the Member resided at the time of determination, at
the earlier of his Annuity Starting Date or the date of his
death.
(J.A. at 65-66.) The problem with Albemarle's interpretation of "sur-
viving spouse" is that it focuses solely on the phrase "as determined
under the laws of the jurisdiction in which the Member resided at the
time of determination" to the exclusion of the phrase immediately
preceding: "a Member's spouse to whom he was married." Under the
plain language of the Plans, and reading the definition to give every
word meaning, Graef is Kirby's surviving spouse if she was a person
"to whom he was married, as determined under the laws [of South
Carolina]" at the date of his death.
Under South Carolina law, a marital relationship"continues until
death or dissolution by proper judicial decree." Fennell v. Littlejohn,
125 S.E.2d 408, 412 (S.C. 1962), superseded by statute on other
grounds, Russo v. Sutton, 422 S.E.2d 750 (S.C. 1992). At the time of
his death, it is undisputed that Kirby was in a valid common law mar-
riage with Graef and that there was no "proper judicial decree" dis-
solving the marriage. In South Carolina, a common law marriage is
the same in all respects as a ceremonial marriage. See Campbell v.
Christian, 110 S.E.2d 1, 4-5 (S.C. 1959) (holding that a common law
marriage is legal and cannot be invalidated by one party's disavowal
of it). Indeed, although the state court determined that Graef was not
6
Kirby's surviving spouse for the purposes of the South Carolina Pro-
bate Code, it specifically noted that Graef was still married to Kirby
under South Carolina law. The district court therefore properly deter-
mined that Graef is the surviving spouse for the purposes of the Plans.
IV.
Graef next argues that, as a surviving spouse, her waiver of rights
to benefits under the Plans is governed by a specific ERISA provi-
sion, rather than federal common law. Graef further argues that she
did not waive her rights to benefits under the Plans by instituting a
family court action and by not appealing from the resulting family
court order dividing marital property because that order did not meet
the ERISA requirements for waiver set out in 29 U.S.C.A.
§ 1055(c)(2)(A) (West Supp. 1998).
The Retirement Equity Act (REA), 98 Pub. L. No. 98-397, 98 Stat.
1426 (1984), amended ERISA "to ensure that a participant's spouse
receives survivor benefits from a retirement plan even if the partici-
pant dies before reaching retirement age." Hurwitz v. Sher, 982 F.2d
778, 781 (2d Cir. 1992). ERISA, as amended, provides that each pen-
sion plan to which 29 U.S.C. § 1055 applies shall provide a "qualified
preretirement survivor annuity" to the surviving spouse of a plan par-
ticipant. 29 U.S.C.A. § 1055(a)(2) (West Supp. 1998). The object of
the surviving-spouse annuity, and the rest of § 1055, "is to ensure a
stream of income to surviving spouses." Boggs v. Boggs, 117 S. Ct.
1754, 1761 (1997).
ERISA states that "a plan meets the requirements of this section
only if under the plan, each participant may elect at any time during
the applicable election period to waive the . . . qualified preretirement
survivor annuity form of benefit." 29 U.S.C.A.§ 1055(c)(1)(A)(i)
(West Supp. 1998). ERISA further provides that a participant's
waiver of benefits shall not take effect unless
(i) the spouse of the participant consents in writing to such
election, (ii) such election designates a beneficiary (or a
form of benefits) which may not be changed without spousal
consent (or the consent of the spouse expressly permits des-
ignations by the participant without any requirement of fur-
7
ther consent by the spouse), and (iii) the spouse's consent
acknowledges the effect of such election and is witnessed by
a plan representative or a notary public.
29 U.S.C.A. § 1055(c)(2)(A) (West Supp. 1998). 6 The clear objective
of this section is to protect surviving spouses by requiring of them an
informed waiver. In order to effect a valid waiver, a participant must
obtain his or her spouse's consent in writing before a notary public
or plan representative, the waiver must designate an alternative bene-
ficiary, and the spouse's consent must acknowledge the effect of the
waiver.
Albemarle argues, and the district court agreed, that this case is not
governed by ERISA, but by federal common law. If ERISA does not
address an issue directly, "federal courts may resolve it by developing
federal common law." Estate of Altobelli v. IBM, 77 F.3d 78, 80 (4th
Cir. 1996). Albemarle relies on the recent decision of this Court in
Altobelli, which held that a participant's former spouse, who was the
designated beneficiary under her ex-husband's ERISA plan, can
waive her benefits through specific language in a marital settlement
agreement that is incorporated into a divorce decree. Id. at 80-81; see
also Mohamed v. Kerr, 53 F.3d 911, 914 (8th Cir. 1995); Brandon v.
Travelers Ins. Co., 18 F.3d 1321, 1327 (5th Cir. 1994); Fox Valley &
Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275, 280-
81 (7th Cir. 1990) (en banc). The Altobelli court concluded that
because the purpose of ERISA's anti-alienation clause7 was to ensure
pensioners a steady stream of income, "[t]o bar a waiver in favor of
the pensioner himself would not advance that purpose." 77 F.3d at 81.
Albemarle argues that because Graef is a nonparticipant spouse, this
case falls squarely under the holding of Altobelli, and Graef waived
her claims to benefits under the Plans by not appealing the family
court order dividing the marital property.
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6 This provision for spousal waiver is located in Retirement Plan
§ 5.03(c).
7 "Each pension plan shall provide that benefits provided under the plan
may not be assigned or alienated." 29 U.S.C.A.§ 1056(d)(1) (West Supp.
1998).
8
Graef argues that Altobelli is distinguishable from this case because
Altobelli involved a former spouse who claimed a right to benefits of
her ex-husband's pension plan and insurance plan as a designated
beneficiary, while Graef claims a right to benefits under the Plans as
a surviving spouse. Graef argues that her status as a surviving spouse
brings her under the coverage of ERISA, and specifically, 29
U.S.C.A. § 1055. By its plain language, however, § 1055 applies only
to a waiver of a spouse's benefits by a participant; it does not cover
a waiver of a spouse's benefits by the spouse, absent an election by
the participant to waive. The participant in the Plans was Kirby. Nei-
ther party in this case alleges that Kirby effected a waiver of Graef's
benefits under the Plans by being a defendant in the family court action.8
Because ERISA, by its terms, does not cover the waiver of benefits
by a spouse, the district court properly resorted to federal common
law in deciding this case. We agree with the district court that our
holding in Altobelli governs this case even though this case involves
a waiver of benefits by a spouse via a judicial order rather than a
waiver of benefits by a former spouse via a voluntary property settle-
ment between the parties. We believe that Altobelli stands for the
proposition that a nonparticipant beneficiary can waive rights to bene-
fits in an ERISA plan where that individual demonstrates a clear
intent "to relinquish all interests" in the plan through a specific and
voluntary waiver. See Altobelli, 77 F.3d at 81; see also Fox Valley,
897 F.2d at 280-81. The family court's division of the marital prop-
erty was sufficiently specific to constitute a waiver by Graef of bene-
fits under the Plans because it expressly transferred to Kirby his
"retirement account at Ethyl." It was also the product of a knowing
and considered decision by Graef, who initiated the family court
action and did not appeal from the ruling therein. The district court
therefore properly concluded that Graef waived her rights to benefits
under the Plans.
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8 The issue of whether, consistent with § 1055, a participant can waive
a spouse's benefits by initiating, or actively participating in, a family
court action brought by either the participant or the spouse and that
which results in a judicial division of marital property is one we leave
for another day.
9
V.
In sum, we agree with the district court that Graef was a surviving
spouse for the purpose of the Plans and that Graef waived her rights
to benefits under the Plans when she instituted the family court action
and did not appeal from the resulting marital property division. We
therefore affirm the district court's grant of summary judgment.
AFFIRMED
10