Hallingby Ex Rel. the Estate of Hallingby v. Hallingby

10-4102-cv
Hallingby v. Hallingby
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC
DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan Courthouse, 500 Pearl Street, in the City of New York, on the 4th day
of January, two thousand twelve.
Present:
GUIDO CALABRESI,
ROBERT A. KATZMANN,
BARRINGTON D. PARKER,
Circuit Judges.
________________________________________________
JO DAVIS HALLINGBY, as Executrix of the Estate of
PAUL HALLINGBY, JR.
Plaintiff-Appellant-Cross-Appellee,
v. No. 10-4102-cv
MAI V. HALLINGBY,
Defendant-Appellee-Cross-Appellant.
________________________________________________
For Plaintiff-Appellant-Cross-Appellee: RICHARD H. DOLAN (Niall D. O’Murchadha, on the
brief), Schlam, Stone & Dolan, LLP, New York,
N.Y.
For Defendant-Appellee-Cross-Appellant: THOMAS E. ENGEL (Katherine B. Thornburgh, on
the brief), McKool Smith P.C., New York, N.Y.
Appeal from the United States District Court for the Southern District of New York
(Marrero, J.).
ON CONSIDERATION WHEREOF, it is hereby ORDERED, ADJUDGED, and
DECREED that the judgment of the district court is AFFIRMED.
Plaintiff-Appellant-Cross-Appellee Jo Davis Hallingby (“Jo Hallingby”), as Executrix of
the Estate of Paul Hallingby, Jr. (the “Estate”), and Defendant-Appellee-Cross-Appellant Mai V.
Hallingby, now known as Mai Harrison (“Harrison”), both appeal from a March 3, 2010 order of
the district court (Marrero, J.) granting in part and denying in part both of their respective
motions for summary judgment. Harrison also appeals from an order dated September 7, 2010,
as amended by an order dated September 29, 2010 and ultimately entered October 1, 2010,
awarding Jo Hallingby attorneys’ fees and costs in the amount of $202,621.31.
The Estate brings this action principally seeking a declaratory judgment that it is the
rightful holder of the survivorship interest in certain annuities issued to Paul Hallingby, Jr.
(“Paul Hallingby”), as well as recovery for breach of contract and unjust enrichment against
Harrison, Paul Hallingby’s former wife, for Harrison’s acceptance of survivorship payments
under those annuities after Paul Hallingby’s death. The Estate contends that Harrison waived
her interest in the annuities by agreeing, in Article II(2) of her and Paul Hallingby’s divorce
agreement, that “the parties acknowledge they have no right, title or interest in any of the . . .
annuities . . . now in the name of the other, whether in the other’s sole name or jointly or in trust
for another.” J.A. 53. Harrison responds by arguing that Article II(2) of the divorce agreement
does not refer to the annuities at issue here because her survivorship interest therein had “vested”
long before the execution of the divorce agreement, and so was constructively in her own
“name.” Harrison also argues that, even if she had waived her interest in the annuities, such a
waiver would be unenforceable because § 3.3(B) of the annuities states that Paul Hallingby, as
the primary annuitant, does “not have the right to change the survivor annuitant for any reason”
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after the benefits have vested. J.A. 229. We assume the parties’ familiarity with the underlying
facts and procedural history of this case.
“We review a grant of summary judgment de novo, examining the evidence in the light
most favorable to, and drawing all inferences in favor of, the non-movant. Summary judgment
should be granted only if there is no genuine issue as to any material fact, and if the moving
party is entitled to a judgment as a matter of law.” Call Ctr. Techs., Inc. v. Grand Adventures
Tour & Travel Publ’g Corp., 635 F.3d 48, 51 (2d Cir. 2011) (internal quotation marks and
citation omitted).
We first consider whether Harrison waived her survivorship interest in the annuities. It is
well-established that, under New York law, a designated beneficiary may waive his or her right
to survivorship benefits so long as the waiver is “explicit, voluntary and made in good faith.”
Silber v. Silber, 99 N.Y.2d 395, 404 (2003). Here, there is no dispute that Harrison and Paul
Hallingby entered the divorce agreement voluntarily and in good faith. As to explicitness, the
language of the divorce agreement is clear: Hallingby and Harrison each agreed that they “have
no right . . . in any. . . annuities. . . now in the name of the other.” This is an all-encompassing
disclaimer, covering “any” annuity held by the other party. Moreover, the disclaimer is similar
in language and scope to contractual provisions that New York courts have found to constitute a
waiver of an individual’s right to the survivorship interest in his or her ex-spouse’s retirement
benefits. See, e.g., March v. March, 233 A.D.2d 371, 372 (2d Dep’t 1996) (holding that the
following constituted a waiver of an ex-wife’s interest in her former husband’s retirement plans:
“[the ex-wife] has no right, title or interest in any of the . . . pension plans, retirement plans,
profit-sharing plans, annuities or IRAs now in the name of the [ex-husband]”); Curley v. Giltrop,
68 N.Y.2d 651, 652 (1986) (holding that the following constituted a waiver of the ex-wife’s
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interest in her ex-husband’s survivorship pension benefits: “[the ex-wife shall] not make any
claim on [decedent’s] retirement . . . or any insurances, or request maintenance from [the ex-
husband]”) (emphasis supplied by the Court of Appeals omitted).
In addition, we are unconvinced by Harrison’s argument that her survivorship interest in
the annuities was in her own “name” simply because that interest had vested. The annuities were
issued to Paul Hallingby, by his former employer, in recompense for his years of employment.
While § 3.3(B) of the annuities bars Paul Hallingby, as the primary annuitant, from “chang[ing]
the survivor annuitant for any reason,” this provision does not speak to Harrison’s intent with
respect to Article II(2) of the divorce agreement, nor to Harrison’s own power under New York
common law to disclaim her interest in the annuities. Cf. Kennedy v. Plan Adm’r for DuPont
Sav. & Inv. Plan, 555 U.S. 285, 295 (2009) (“[T]he law certainly is not so absurd as to force a
man to take an estate against his will.”) (internal quotation marks and brackets omitted).
Accordingly, we affirm the district court’s conclusion that Harrison waived her survivorship
interest in Paul Hallingby’s annuities by agreeing to Article II(2) of the divorce agreement.
Next, we consider the enforceability of Harrison’s waiver under New York law. New
York courts have frequently held that an otherwise valid waiver of a property right is enforceable
to divest an individual of that right, even where the waiver is inconsistent with applicable
contractual or statutory provisions restricting that property right’s alienation. See Eredics v.
Chase Manhattan Bank, N.A., 100 N.Y.2d 106, 111 (2003) (stating that, in the interests of
“fairness in effectuating the clear intent of the parties,” a beneficiary of a Totten Trust may
waive his or her rights thereto even though the grantor of the trust had failed to follow New York
statutory requirements for its revocation); see also, e.g., Curley, 68 N.Y.2d at 653-54 (enforcing
the terms of an ex-wife’s waiver of her interest in her ex-husband’s pension benefits even though
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she remained the designated beneficiary under the terms of the pension plan); Silber, 99 N.Y.2d.
at 404 (same). In Silber, the New York Court of Appeals directed New York courts to enforce
waivers where necessary to “effectuat[e] the clear intent of parties” rather than adhere to “[s]trict
application” of statutory or contractual provisions that are inconsistent with the waiver. Id. at
403-04 (enforcing a beneficiary’s waiver of her benefits under a pension plan governed by the
Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq., even though that Act
provides that “benefits provided under [a pension] plan may not be assigned or alienated,” 29
U.S.C. § 1056(d)(1)). By contrast, Harrison points to no case in which a New York court ever
refused to enforce a valid, good-faith waiver of a property interest because of some
countervailing restriction on that property right’s alienation. Accordingly, we find that
Harrison’s waiver is enforceable, and we consequently affirm the district court’s ruling that
Harrison breached the divorce agreement by accepting survivorship annuity payments after Paul
Hallingby’s death in violation of this waiver.
We next turn to assessing the district court’s conclusion that the Estate could not prove
actual damages with sufficient specificity because it could not establish with “reasonable
certainty that had Harrison performed under [Article II(2) of the divorce agreement] MetLife
would have honored [Paul] Hallingby’s change-of-beneficiary request and made payments to
[Jo] Hallingby.” Hallingby v. Hallingby, 693 F.Supp.2d 360, 369 (S.D.N.Y. 2010). We find no
error in the court’s ultimate conclusion. Notably, § 3.3(B) of the annuities bars Paul Hallingby
from “chang[ing] the survivor annuitant for any reason,” and MetLife therefore could have
rightfully concluded that Harrison’s waiver of her interest in “any” of her former husband’s
“annuities” in the divorce agreement operated to extinguish the survivorship annuity altogether,
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rather than transfer the survivorship annuity to Paul Hallingby’s residual estate. Accordingly,
the estate suffered no identifiable damages.1
We now turn to Harrison’s claim that the district court erred in awarding the Estate
attorneys’ fees and costs of $202,621.31 pursuant to a fee-shifting provision in the divorce
agreement. An award of attorneys’ fees is reviewed for abuse of discretion. See Reiter v. MTA
N.Y.C. Transit Auth., 457 F.3d 224, 229 (2d Cir. 2006). A court abuses its discretion to award
attorneys’ fees and costs where the award is predicated on an error of law or a clearly erroneous
factual finding, or “its decision . . . cannot be located within the range of permissible decisions.”
Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204, 209 (2d Cir. 2009) (internal
quotations omitted). Here, while it would have been helpful for the district court to address the
fact that its fee award exceeds the total amount in controversy in this litigation, see Diamond D
Enter. USA, Inc. v. Steinsvaag, 979 F.2d 14, 19 (2d Cir. 1992) (under New York law, an award
of fees “in excess of the amount involved in a litigation would normally appear to be
unreasonable”), we cannot say that the district court abused its discretion in awarding the Estate
attorneys’ fees and costs based on the actual number of hours worked by its attorneys and their
customary billing rates. See Arbor Hill Concerned Citizens Neighborhood Assoc. v. Cnty. of
Albany, 522 F.3d 182, 184 n.2, 189 (2d Cir. 2008) (in awarding fees, courts should “set[] a
reasonable hourly rate, taking account of all case-specific variables,” focusing on “what a
reasonable client would expect to pay,” and then multiplying that rate by the number of hours
worked). After reviewing the Estate’s fee application, which included itemized lists of the fees
1
MetLife was originally a party to this action, but was dismissed from the action with prejudice
on the basis of its representation to the district court that it had no interest in the outcome of this
dispute, and that it would make payments to either Harrison or Jo Hallingby as determined by
the Court.
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incurred by the Estate in prosecuting the instant action up until that point, the district court came
to the considered conclusion that the requested fees and costs were reasonable. In light of the
fact that this action has been pending since 2006, and has resulted in multiple appeals to this
Court, we cannot conclude that the district court’s decision to award fees and costs of
$202,621.31 amounted to an abuse of discretion.
Finally, we are not persuaded by Harrison’s argument that we do not have subject matter
jurisdiction over this action because the New York court from which it was removed did not
have jurisdiction at the time of removal. As we stated on a prior appeal in this action:
Although the existence of federal subject matter jurisdiction over an action
removed from state court to federal court is normally to be determined as of the
time of removal, it is now established that if a case was erroneously removed to
federal court and a judgment was subsequently entered on the merits, the
jurisdictional flaw that existed at the time of removal “is not fatal to the ensuing
adjudication if federal jurisdictional requirements are met at the time judgment is
entered.” [Caterpillar Inc. v. Lewis, 519 U.S. 61, 64 (1996)]. Thus, we view the
critical issue to be whether the district court had subject matter jurisdiction at any
time before it rendered judgment.
Hallingby v. Hallingby, 574 F.3d 51, 56 (2d Cir. 2009) (internal citation and quotation marks
omitted). Because the Complaint alleges that the estimated present value of the Annuities is
$150,000 and there is complete diversity, this Court has diversity jurisdiction over this action.
For the foregoing reasons, the judgment of the district court is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, CLERK
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