Cowser-Griffin v. Griffin (ORDER) ( 2015 )

VIRGINIA:
In the Supreme Court of Virginia held at the Supreme Court
Building in the City of Richmond, on Thursday, the 26th day of
February, 2015.
Kimberley Cowser-Griffin, Executrix
of the Estate of David Griffin, Appellant,
against Record No. 140350
Court of Appeals No. 1177-13-1
Sandra D.T. Griffin, Appellee.
Upon an appeal from a
judgment rendered by the Court
of Appeals of Virginia.
Upon consideration of the record, briefs, and argument of
counsel, the Court is of opinion that the Court of Appeals of
Virginia did not err.
For the reasons stated in the majority opinion of the Court of
Appeals in Griffin v. Griffin, 62 Va. App. 736, 753 S.E.2d 574
(2014), the judgment of the Court of Appeals is affirmed. The
appellant shall pay to the appellee two hundred and fifty dollars
damages.
This order shall be certified to the Court of Appeals of
Virginia and to the Circuit Court of Sussex County, and shall be
published in the Virginia Reports.
Justice Kelsey took no part in the consideration of this case.
_______________
JUSTICE MILLETTE, with whom CHIEF JUSTICE LEMONS and SENIOR JUSTICE
KOONTZ join, dissenting.
Because I conclude that ERISA-governed death benefits
successfully vested in his surviving spouse at David Griffin's
death, and are therefore not subject to limitation by a posthumously
entered Qualified Domestic Relations Order (QDRO), I must
respectfully dissent.
In 1996, in the course of their original divorce action, David
and Sandra Griffin entered into a Property Settlement Agreement
(PSA) in which they agreed to name their children as beneficiaries
in "401(k) plans and other such plans which would be distributed
upon the death of either party." This PSA was incorporated into
their 1998 final divorce decree.
David Griffin died on May 26, 2012. At the time, he was
actively employed at Dominion Power with an ERISA-governed Dominion
Salaried Savings Plan (the Plan), which provides retirement and
death benefits payable pursuant to ERISA. In this instance, upon
the death of a Plan participant, the Plan documents provide for a
lump sum payment to the surviving spouse unless the spouse
explicitly consents to another beneficiary or unless a QDRO has
been entered providing for an alternate beneficiary.
It is undisputed that Mr. Griffin's surviving spouse, Kimberly
Cowser-Griffin, did not consent to the naming of other
beneficiaries. It is likewise undisputed that neither the PSA or
divorce decree met the statutory requirements for a QDRO. For this
reason, Sandra Griffin now seeks entry of a posthumous QDRO to
award the Griffin children Plan benefits.
2
I.
The majority concludes that nothing prevents posthumous QDROs.
I agree that posthumous QDROs are at times permissible. Indeed,
the regulations concerning timing of QDROs promulgated by the Labor
Relations Board appear to permit posthumous QDROs, stating that a
QDRO does not fail "solely because of the time at which it is
issued," and illustrating this rule with an example involving the
death of a participant. 29 C.F.R. § 2530.206(c)(1); see also 29
C.F.R. § 2530.206(c)(2) (ex. 1). If Mr. Griffin was unmarried at
the time of his death with no designated beneficiaries, for
example, I would agree that a posthumous QDRO would be permissible.
However, those facts are not before the Court today.
Mr. Griffin did remarry, and at the time of his death his Plan
reflected Mrs. Cowser-Griffin as both the named beneficiary and the
default beneficiary under the Plan. The Plan, for ERISA purposes,
had no record of anyone other than Mrs. Cowser-Griffin having an
interest in his benefits. Thus, Mrs. Cowser-Griffin submits that
at her husband's death she acquired a vested interest in the
benefits under the Plan as his surviving spouse. At that point,
the issue before this Court became distinguishable from an issue
"solely" related to "timing" as set forth in 29 C.F.R.
§ 2530.206(c). The issue was no longer merely a matter of timing,
but also one of vested interest.
It is undisputed that neither Sandra Griffin nor her children
filed a QDRO with the Plan in the fourteen years between the 1998
final divorce decree and Mr. Griffin's death. The PSA and final
divorce decree provided them with rights under state law, but not
rights that were enforceable under ERISA. For the purposes of
3
Virginia law, rights vest at the entry of a divorce decree that
includes a domestic relations order (DRO). See Himes v. Himes, 12
Va. App. 966, 970, 407 S.E.2d 694, 697 (1991). For the purposes of
ERISA, however, benefits may only be alienated in the presence of a
QDRO meeting the provisions set forth in 29 U.S.C. § 1056(d). 1 See
29 U.S.C. § 1144(a) (setting forth ERISA's express preemption
clause, providing that it "shall supersede any and all State laws
insofar as they . . . refer to any [covered] employee benefit
plan"); Hopkins v. AT&T Global Info. Solutions Co., 105 F.3d 153,
155-57 (4th Cir. 1997) (holding that a QDRO must be entered before
interests have vested in a subsequent surviving spouse).
Certainly, the PSA and divorce decree in this case provided an
interest that could have formed the basis of a subsequent QDRO to
enforce these rights under ERISA at any time until the death of Mr.
Griffin. If, at death, the benefits did not vest in Mrs. Cowser-
Griffin, Sandra Griffin could still obtain a QDRO and enforce these
rights. If, on the other hand, the benefits have vested in Mrs.
1
A DRO is a QDRO if it recognizes an alternate payee's rights
to "benefits payable with respect to a participant under [an ERISA]
plan." 29 U.S.C. § 1056(d)(3)(B). It must specify the name and
mailing address of the alternate payee and the affected plan
participant, the amount or percentage of the benefits to be paid or
the means by which that amount will be determined, the number of
payments or time period to which the order applies, and the plan to
which the order applies. 29 U.S.C. § 1056(d)(3)(C). It also must
not violate the restrictions set forth in 29 U.S.C. § 1056(d). An
alternate payee seeking to establish a DRO as a QDRO must present
the order to the Plan Administrator, who will timely inform him or
her whether the DRO is qualified under ERISA. 29 U.S.C.
§ 1056(d)(3)(G).
4
Cowser-Griffin, the right to enforce the state domestic relations
order was cut off at the time of vesting. 2
Thus, the issue today is whether the funds vested in Mrs.
Cowser-Griffin as beneficiary at Mr. Griffin's death.
II.
An inquiry to determine the time of vesting must begin with
the Plan documents:
ERISA's principal function [is] to protect contractually
defined benefits. The statutory scheme, we have often
noted, is built around reliance on the face of written
plan documents. "Every employee benefit plan shall be
established and maintained pursuant to a written
instrument," [29 U.S.C.] § 1102(a)(1), and an
administrator must act "in accordance with the documents
and instruments governing the plan" insofar as they accord
with the statute, [29 U.S.C.] § 1104(a)(1)(D). The plan,
in short, is at the center of ERISA.
2
It is worth noting that the term "vesting" has a slightly
more limited scope in its common usage for retirement account
purposes than the traditional legal definition used in this
discussion. The Plan documents and 29 U.S.C. § 1055 refer to
"vesting" and "vested participants," respectively: this usage,
common to retirement accounts, pertains to the time at which a
participant obtains a nonforfeitable right to all or part of his or
her account. See 29 U.S.C. § 1055(h). This vesting essentially
addresses the rights of the participant vis-à-vis his or her
employer: the status of a benefit as "vested" under colloquial
retirement language does not have any bearing on the status of the
participant's rights versus any third parties, such as spouses or
children, claiming that benefit. It is thus distinguishable from
the traditional legal sense, defined as "[h]aving become a
completed, consummated right for present or future enjoyment; not
contingent; unconditional; absolute ." Black's Law Dictionary 1794 (10th ed. 2014).
5
US Airways v. McCutchen, 569 U.S. ___, ___, 133 S. Ct. 1537, 1548
(2013) (some internal quotation marks and citations omitted).
Under the heading "Death Benefits," David Griffin's Plan
states that:
If you die while employed by Dominion, the entire value of
your account is distributed to your beneficiary, including
the value of all Company Matching contributions that
automatically become vested upon your death.
Federal law requires that, if you are married when you
die, your spouse must receive the distribution unless she
or he approves your choice of another (or an additional)
beneficiary before your death. Your spouse must agree to
your choice of that beneficiary by signing the spousal
consent portion of a Beneficiary Authorization Form
obtained from ACS. The form must have been completed,
signed, notarized, and returned to ACS before your
death. 3,4
Based upon the amount in David Griffin's account at the time of
his death, the Plan also dictated that a payment to a surviving
spouse would be made in a lump sum payment.
The Plan documents, in combination with relevant statutes,
afford the basis for this Court to conclude that the benefits at
issue became vested in Mrs. Cowser-Griffin at the time of Mr.
Griffin's death. This result is consistent with the majority of
3
QDROs are mentioned in the Plan as a method of recognizing
the rights of an alternate payee, but the Plan does not go into
detail as the requirements are set forth by statute.
4
Although David Griffin changed his beneficiaries from his
children to his wife in violation of the PSA after he remarried,
had he not done so, Mrs. Cowser-Griffin would still be the
beneficiary under the Plan pursuant to the requirements of ERISA
absent a QDRO or Mrs. Cowser-Griffin's notarized consent.
6
ERISA case law, which treats the retirement or death of a
participant as a vesting event for the surviving spouse
beneficiary. 5
In Hopkins, 105 F.3d at 154-55, the United States Court of
Appeals for the Fourth Circuit considered the case of a former
spouse attempting to garnish her ex-husband's ERISA benefits to
collect unpaid alimony by means of a QDRO. The ex-husband had
retired but was still living, and at the time of his retirement had
been remarried. The first wife sought a QDRO to garnish two kinds
of ERISA benefits: pension benefits to the participant and
surviving spouse benefits.
The Fourth Circuit was the first to examine the issue of when
vesting occurs for an ERISA beneficiary of surviving spouse
benefits. The court concluded that vesting of surviving spouse
benefits occurs at retirement, and for this reason the surviving
spouse benefits could not be subject to a QDRO. Id. at 156; accord
Samaroo v. Samaroo, 193 F.3d 185, 190 (3d Cir. 1999).
The Fourth Circuit relied on the general finality of surviving
spouse benefits in ERISA at the time of retirement to conclude that
the benefit vests at retirement in the spouse to whom the
participant is married at retirement. Hopkins, 105 F.3d at 156-57.
After retirement, under 29 U.S.C. § 1055, the court stated, such
benefits cannot be changed even by the participant. Id. at 157.
In essence, those benefits therefore irrevocably belong to the
spouse to whom the participant is married at retirement.
5
Whether the vesting event is retirement or death depends on
the type of benefits involved and whether the participant passed
7
Unlike the instant case, the court in Hopkins evaluated an
annuity subject to 29 U.S.C. § 1055. However, the distinction
between the participant's and the beneficiary's benefits that drove
the court's reasoning is also true for Mr. Griffin and his
surviving spouse. The determinative factor, that the form of the
benefit becomes fixed at the vesting event, is just as true in this
instance in which the Plan mandates a lump sum payment to the
surviving spouse.
Additionally, the Fourth Circuit explicitly noted that the
need for expedient administration or calculation of annuities,
while not inconsistent with the holding, was not the basis for its
decision. Hopkins, 105 F.3d at 157, n.7 ("Although ERISA and the
terms of the plan, and not matters of administrative convenience,
determine a person's pension rights, it is worth noting that our
holding does not burden the efficient management of the plan.") In
short, ERISA's protections of the rights of surviving spouse are
equally applicable to non-annuitized benefits.
The United States Court of Appeals for the Ninth Circuit
similarly held in Carmona v. Carmona, 603 F.3d 1041, 1057-58 (9th
Cir. 2010), that "a state [domestic relations order] may not create
an enforceable interest in surviving spouse benefits to an
alternate payee after a participant's retirement, because
ordinarily at retirement the surviving spouse's interest
irrevocably vests." While not identical in their reasoning,
Hopkins and Carmona share similar rationales, reach the same
conclusion, and represent the most cohesive guidance as to how to
approach posthumous QDROs for surviving spouse benefits. The
away during his or her employment.
8
notion that vesting of surviving spouse benefits occurs at the
retirement or death of a participant has been adopted by other
courts and is worth this Court's considered attention today. See
also Rivers v. Central & S.W. Corp., 186 F.3d 681, 683-84 (5th Cir.
1999) ("[B]enefits irrevocably vested in [the second wife] on the
date of [her husband's] retirement," and plaintiff's failure to
obtain a QDRO prior to her ex-husband's retirement forever barred
her from acquiring any interest in the plan.); Langston v. Wilson
McShane Corp., 828 N.W.2d 109, 114-16 (Minn. 2013) (reviewing case
law nationally on the issue and adopting the Hopkins-Carmona
approach).
An obvious distinction between the survivor benefits at issue
in this case and those in the persuasive cases cited above is that
those cases pertained to benefits that were designated upon
retirement as surviving spouse benefits. The instant case involves
a 401(k)-type benefit that would have presumably been paid out to
the Plan participant had he not died during his employ, but instead
resulted in death benefits to a surviving spouse.
This has, I conclude, no substantive impact on the outcome.
Had Mr. Griffin retired and lived, his (likely depleting) benefits
would have continued to be subject to a QDRO, had Sandra Griffin
decided to seek one. During the course of his life, Mr. Griffin
could perpetually be bound to abide by his divorce decree by means
of a QDRO. Yet his death during his employ altered those benefits
into surviving spouse benefits, which under the preemptive powers
of ERISA made them the irrevocable property of a beneficiary who
was not a party to the final divorce decree. Sandra Griffin has no
9
power to enforce a QDRO against Mrs. Cowser-Griffin: she was not a
party to the original divorce proceedings.
The very provision that excepts the benefit at issue from 29
U.S.C. § 1055 does so based on the fact that it is fully payable at
death to the surviving spouse in a lump sum amount: it is a
surviving spouse benefit. 29 U.S.C. § 1055(b)(1)(C). The same
mandates protecting the surviving spouse that form the
irrevocability of the benefits in Carmona and Hopkins at retirement
apply to this benefit at the time of the participant's death.
III.
The majority opinion of the Court of Appeals, the reasoning of
which is affirmed today, begins its analysis setting forth the
reasons that the benefits at issue are excepted from 29 U.S.C.
§ 1055. That opinion, in fact, devotes nearly five pages of
analysis to this undisputed point; the benefits in this case
clearly fall under the 29 U.S.C. § 1055(b)(1)(C) exception.
The majority takes such pains to distinguish the case at bar
from the statute solely to convince this Court to ignore the
guidance by the High Court of our nation in Boggs v. Boggs, 520
U.S. 833 (1997), addressing Congressional intent to protect the
rights of surviving spouses:
[T]he Retirement Equity Act of 1984 (REA), Pub. L. 98-397,
98 Stat. 1426, enlarged ERISA's protection of surviving
spouses in significant respects. Before REA, ERISA only
required that pension plans, if they provided for the
payment of benefits in the form of an annuity, offer a
qualified joint and survivor annuity as an option entirely
within a participant's discretion. REA modified ERISA to
permit participants to designate a beneficiary for the
survivor's annuity, other than the nonparticipant spouse,
only when the spouse agrees. Congress' concern for
10
surviving spouses is also evident from the expansive
coverage of § 1055, as amended by REA. Section 1055's
requirements, as a general matter, apply to all
"individual account plans" and "defined benefit plans."
The terms are defined, for § 1055 purposes, so that all
pension plans fall within those two categories. While
some individual account plans escape § 1055's surviving
spouse annuity requirements under certain conditions,
Congress still protects the interests of the surviving
spouse by requiring those plans to pay the spouse the
nonforfeitable accrued benefits, reduced by certain
security interests, in a lump-sum payment.
Id. at 843 (emphasis added)(internal citations omitted).
The final sentence refers, of course, to the conditions of the
instant case. The majority emphasizes that this sentence is dicta
because Boggs pertained to an annuity covered by 29 U.S.C. § 1055.
Whether the statement is dicta does not make the analysis any
less accurate. REA did offer a comprehensive scheme to strengthen
protections for surviving spouses under 29 U.S.C. § 1055, and the
few individual accounts excepted from 29 U.S.C. § 1055 are still
accorded surviving spouse protections by the provisions of this
section requiring that surviving spouses be the named beneficiary
or consent to an alternate payee. See 29 U.S.C. § 1055(b)(1)(C).
While nothing stated in Boggs might have the precedential force to
dictate this Court's decision today, we are nonetheless considering
an issue of federal law upon which the Supreme Court of the United
States has seen fit to expound. This Court should not lightly
dismiss that exposition: Congress created a comprehensive
statutory structure to protect the rights of surviving spouses.
The systemic policy in ERISA that protects surviving spouses
11
applies equally to lump sum payments to surviving spouses excepted
from 29 U.S.C. § 1055.
In light of the consensus that annuity plans vest in
beneficiaries at the retirement or death of the participant, in the
absence of a credible reason to treat lump sum payment plans
differently for the purposes of vesting, and bearing in mind that
ERISA is structured with a policy preference toward protecting the
interests of the surviving spouse, I conclude that Mrs. Cowser-
Griffin's benefits vested upon the death of her husband. Upon
vesting, it became impossible for Sandra Griffin to obtain entry of
a Qualified Domestic Relations Order.
A Copy,
Teste:
Patricia L. Harrington, Clerk
12