Estate of Easterday Appeal of: Easterday

J-A08021-17
2017 PA Super 315IN RE: ESTATE OF MICHAEL J. IN THE SUPERIOR COURT OF
EASTERDAY, DECEASED PENNSYLVANIA
APPEAL OF: COLLEEN A. EASTERDAY
No. 2911 EDA 2016
Appeal from the Order Entered March 22, 2016
In the Court of Common Pleas of Montgomery County
Orphans' Court at No(s): 46-2014-X3615
*****
IN RE: ESTATE OF MICHAEL J. IN THE SUPERIOR COURT OF
EASTERDAY, DECEASED PENNSYLVANIA
APPEAL OF: MATTHEW M. EASTERDAY
No. 2946 EDA 2016
Appeal from the Order Entered March 22, 2016
In the Court of Common Pleas of Montgomery County
Orphans' Court at No(s): 46-2014-X3615
BEFORE: PANELLA, J., LAZARUS, J., and STEVENS, P.J.E.*
OPINION BY LAZARUS, J.: FILED OCTOBER 03, 2017
These are cross-appeals from the order entered in the Court of
Common Pleas of Montgomery County, Orphans’ Court Division, adjudicating
the rights of the parties with respect to pension and insurance benefits
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*
Former Justice specially assigned to the Superior Court.
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payable as a result of the death of Michael Easterday (“Decedent”). Upon
review, we affirm.
Decedent died intestate on September 21, 2014. He was survived by
two sons, Christopher and Matthew, a daughter, Amanda E. Easterday
Melvin, and his second wife, Colleen A. Easterday. Matthew was granted
letters of administration on the Decedent’s estate. Just over one year prior
to the Decedent’s death, on August 13, 2013, Colleen initiated divorce
proceedings against the Decedent in Lancaster County. Colleen was
represented in the divorce action by David R. Dautrich, Esquire. Decedent
did not retain counsel. The parties executed a postnuptial agreement
(“PNA”) on December 5, 2013, wherein they agreed, inter alia, to waive any
rights in and to the pension and retirement plans of the other, including any
right the parties may have as a surviving spouse or beneficiary thereof. The
agreement provided that it was to remain in full force and effect regardless
of reconciliation, a change in marital status or the entry of a final divorce
decree, absent modification or termination of the agreement by the parties’
written mutual consent. The parties never terminated or modified the
agreement.
In November 2013, Attorney Dautrich’s office prepared an affidavit of
consent to divorce for Decedent’s signature and gave the document to
Colleen to give to Decedent to sign. Decedent signed the affidavit on
November 30, 2013 and returned it to Colleen by hand. Colleen retained the
affidavit in her possession for a period of time before returning it to her
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counsel for filing on or before January 14, 2014. Attorney Dautrich was
aware that Decedent’s affidavit was dated more than thirty days earlier.
Nevertheless, he instructed his staff to mail both parties’ affidavits of
consent to the Lancaster County Prothonotary for filing, which was done on
January 14, 2014. The affidavits were time-stamped by the court on
January 16, 2014. On January 24, 2014, Colleen filed a praecipe for
divorce finalization and a praecipe to transmit the record. Decedent died
before the decree was entered. At the time of Decedent’s death, Colleen
remained the named beneficiary of Decedent’s pension and life insurance
policy. Three days after Decedent’s death, Colleen withdrew the divorce
action.
On November 17, 2014, Matthew Easterday, as administrator of the
Decedent’s estate (“Estate”), filed a petition seeking to compel Colleen to
preserve and turn over to the estate the life insurance proceeds and pension
benefits she had received. The Estate argued that: (1) the parties’ PNA
controlled the disposition of the pension proceeds and required that
distribution be made to the estate regardless of the beneficiary designation;
and (2) Decedent’s designation of Colleen as beneficiary of his insurance
policy became ineffective under 20 Pa.C.S.A. § 6111.2.
In her answer and new matter, Colleen asserted that: (1) the PNA did
not control the distribution of the pension proceeds because the parties
never changed beneficiary designations; (2) section 6111.2 does not apply
because the Decedent’s affidavit of consent was stale and invalid; and (3)
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the parties were in the process of reconciling prior to Decedent’s death and
Decedent intended that Colleen should remain the beneficiary of both his
pension and insurance policies.
After a hearing held on October 20, 2015, and following the
submission by the parties of memoranda of law, the Honorable Stanley Ott
issued an order granting the Estate’s petition in part and denying it in part.
Specifically, the court concluded that the Estate was entitled to the
Decedent’s pension benefits pursuant to the PNA, but Colleen was entitled to
the insurance proceeds, which were not addressed in the PNA. Both parties
filed exceptions, which, after oral argument before the Orphans’ Court sitting
en banc, were deemed denied by operation of law pursuant to Pa.O.C.R.
7.1(f). These timely consolidated appeals followed.
The Estate raises the following issues on appeal:
1. Whether the Orphans’ Court committed an error of law by
holding that the Superior Court’s decision in Tosi v. Kizis, 8[5]
A.3d 585 ([Pa. Super.] 2014), appeal den’d, 626 Pa. 700,
applies in the present case, and that Tosi required the Orphans’
Court to consider the merits of the Estate’s [p]etition under the
legal fiction that there were no divorce proceedings pending at
the time of Decedent’s death, despite the factual reality that
there was a divorce action filed by Colleen A. Easterday against
the Decedent and which was pending in Lancaster County at the
time of the Decedent’s death.
2. Whether the Orphans’ Court committed an error of law by not
ruling that 20 Pa.C.S. § 6111.2 applies to this case to invalidate
Decedent’s designation of Colleen A. Easterday as beneficiary of
Decedent’s American General Life Insurance Policy because
Decedent died domiciled in Pennsylvania during the course of
divorce proceedings, no decree of divorce had been entered, but
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grounds for divorce had been established pursuant to 20
Pa.C.S.A. § 3323(g) prior to Decedent’s death.
Appellant’s Brief of Estate, at 6-7.
In her consolidated appeal, Colleen raises the following issue for our
review:
Did the Decedent make a deliberate and conscious choice that
his wife was to be the irrevocable beneficiary of his Fed-Ex
pension plan and that she was to receive those benefits after his
death, even though a post-nuptial agreement contained a waiver
signed by her regarding the Fed-Ex ERISA pension?
Appellant’s Brief of Colleen Easterday, at 4.
We begin by noting our scope and standard of review of a decision of
an Orphans’ Court. The findings of a judge of the Orphans’ Court, sitting
without a jury, must be accorded the same weight and effect as the verdict
of a jury, and will not be reversed by an appellate court in the absence of an
abuse of discretion or a lack of evidentiary support. In re Estate of
Talerico, 137 A.3d 577, 580–81 (Pa. Super. 2016), quoting In re Jerome
Markowitz Trust, 71 A.3d 289, 297–98 (Pa. Super. 2013). An abuse of
discretion is not merely an error of judgment, but if in reaching a conclusion
the law is overridden or misapplied, or the judgment exercised is manifestly
unreasonable, or the result of partiality, prejudice, bias or ill-will, as shown
by the evidence of record, discretion is abused. Id. When the Orphans’
Court arrives at a legal conclusion based on statutory interpretation, our
standard of review is de novo and our scope of review is plenary. Id.,quoting In re Estate of Fuller, 87 A.3d 330, 333 (Pa. Super. 2014)
(citation omitted).
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We begin with the claims raised by the Estate challenging the lower
court’s award of the life insurance proceeds to Colleen. The Orphans’ Court
concluded that, because Colleen withdrew the divorce action after Decedent
died, the proper course was to proceed as if the action had never been filed
and award the proceeds in accordance with the policy’s beneficiary
designation. The court found the provision of the Probate, Estates and
Fiduciaries (“PEF”) Code regarding the effect of a pending divorce on
beneficiary designations, section 6111.2, to be inapplicable.1 The court
concluded that this result was compelled by this Court’s holding in Tosi v.
Kizis, 85 A.3d 585 (Pa. Super. 2014).2 The Estate argues that the Orphans’
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1
Section 6111.2 provides that, where a domiciliary of the Commonwealth
designates his spouse as beneficiary of a life insurance policy and dies (1)
during the course of divorce proceedings in which (2) no decree of divorce
has been entered and (3) grounds have been established as provided in 23
Pa.C.S.A. § 3323(g), the spousal designation becomes ineffective for all
purposes and must be construed as if the spouse or former spouse had
predeceased the individual. 20 Pa.C.S.A. § 6111.2.
2
In Tosi, Husband died during the pendency of divorce proceedings. At the
time of Husband’s death, both he and Wife had filed affidavits of consent,
thus establishing grounds for divorce under section 3323. Four months after
Husband’s death, Wife filed a praecipe to discontinue the divorce action
pursuant to Pa.R.C.P. 229. The trial court denied Husband’s estate’s petition
to strike the discontinuance. On appeal, the estate asserted that, once the
parties both filed affidavits of consent, section 3323(d.1) of the Divorce Code
mandated that the parties’ economic claims be resolved pursuant to the
Divorce Code and that the court erred in allowing Wife to discontinue the
action.
In affirming the trial court, this Court concluded that Wife’s power to
discontinue the action under Rule 229 was not preempted by section
3323(d.1). Rather, the Court found that “the language of [section
(Footnote Continued Next Page)
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Court erred in applying Tosi and, consequently, in failing to apply section
6111.2. The Estate asserts that the holding in Tosi is a narrow one, limited
to situations in which a party to a divorce action files a discontinuance
seeking to avoid the application of equitable distribution rules after the death
of the other party. Because neither Michael Easterday nor his estate ever
sought equitable distribution under the Divorce Code, the Estate claims that
this matter is outside the scope of the holding in Tosi. Rather, the Estate
asserts, the disposition of the insurance proceeds is governed by section
6111.2, the application of which, it claims, is fixed as of the date of a
decedent’s death.
To the extent the decision of the Orphans’ Court in this matter was
grounded in the rationale of Tosi, it is unsound. In Tosi, Husband died
during the pendency of divorce proceedings. At the time of Husband’s
death, both he and Wife had filed affidavits of consent, thus establishing
grounds for divorce under section 3323. Four months after Husband’s
death, Wife filed a praecipe to discontinue the divorce action pursuant to
Pa.R.C.P. 229. The trial court denied Husband’s estate’s petition to strike
the discontinuance, and the estate appealed. On appeal, the estate asserted
_______________________
(Footnote Continued)
3323(d.1)] merely provides that in the event of [the] death of one of the
parties in a divorce action, the action may continue and the economic claims
shall be determined under equitable distribution principles rather than under
the elective share provisions of the [PEF] Code.” Tosi, 85 A.3d at 589(emphasis added).
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that, once the parties both filed affidavits of consent, section 3323(d.1) of
the Divorce Code mandated that the parties’ economic claims be resolved
pursuant to the Divorce Code and that the court erred in allowing Wife to
discontinue the action.
In affirming the trial court, this Court concluded that Wife’s power to
discontinue the action under Rule 229 was not preempted by section
3323(d.1). Rather, the Court found that “the language of [section
3323(d.1)] merely provides that in the event of [the] death of one of the
parties in a divorce action, the action may continue and the economic claims
shall be determined under equitable distribution principles rather than under
the elective share provisions of the [PEF] Code.” Tosi, 85 A.3d at 589(emphasis added).
In deciding this matter, the Orphans’ Court concluded that, as Colleen
had withdrawn the divorce action subsequent to Decedent’s death, the
holding in Tosi required him to proceed as though no divorce had ever been
filed, which resulted in Colleen being entitled to the insurance proceeds as
named beneficiary. Because the court proceeded under the fiction that the
divorce action had never been filed, section 6111.2 did not apply to
invalidate the beneficiary designation.
However, prior to the court’s decision in this matter, on May 6, 2015,
our Supreme Court adopted Rule of Civil Procedure 1920.17, effective July 1,
2015. Rule 1920.17 provides, in relevant part, as follows:
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(d) In the event one party dies during the course of the divorce
proceeding, no decree of divorce has been entered and grounds
for divorce have been established, neither the complaint nor
economic claims can be withdrawn except by the consent of the
surviving spouse and the personal representative of the
decedent. If there is no agreement, the economic claims shall
be determined pursuant to the Divorce Code[.]
Pa.R.C.P. 1920.17(d). The note to Rule 1920.17 specifically provides that
“[t]o the extent that Tosi [] holds that 23 Pa.C.S. 3323(d.1) does not
prevent the plaintiff in a divorce action from discontinuing the divorce action
following the death of the defendant after grounds for divorce have been
established, it is superseded.” Pa.R.C.P. 1920.17(d), note.3
In adopting Rule 1920.17, the Court signaled its disapproval of the
broad effect of Tosi, which effectively granted any surviving spouse the
unilateral power to determine whether the assets of the deceased spouse
would be distributed under the Divorce Code or the PEF Code, based solely
on the self-interest of the surviving spouse, where grounds for divorce had
been established. New Rule 1920.17 addresses this inequity by requiring
that, where grounds have been established, a discontinuance may only be
granted if the personal representative of the deceased spouse consents.
The Supreme Court superseded Tosi specifically as it applied to
section 3323(d.1) of the Divorce Code, and did not address the possible
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3
We note that neither the Orphans’ Court nor either of the parties
acknowledged the adoption or impact of Rule 1920.17.
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application of its rationale to section 6111.2 of the PEF Code.4 However, we
believe that the Court’s adoption of Rule 1920.17 provides a clear indication
that the Court would look with similar disfavor upon an interpretation of
section 6111.2 that would grant a surviving spouse/plaintiff the power to
negate the intent of the statute – to protect a divorcing spouse from
inadvertently providing a windfall to his or her surviving ex-spouse simply by
neglecting to change a beneficiary designation – by discontinuing the divorce
action after grounds have been established. Thus, we decline to apply Tosi
to the instant matter and hold that the Orphans’ Court erred by doing so.
Having concluded that Tosi is not dispositive, we must determine
whether section 6111.2 applies to invalidate Decedent’s designation of
Colleen as beneficiary of his insurance policy. To that end, the key inquiry in
this matter becomes whether or not grounds have, in fact, been established
pursuant to 23 Pa.C.S.A. § 3323(g), such that the disposition of the
insurance proceeds is determined under section 6111.2.
Section 3323(g) provides that where, as here, the parties are
proceeding under section 3301(c) of the Divorce Code – the “no fault”
provision – grounds are established where both parties have filed affidavits
of consent. Pursuant to Pa.R.C.P. 1920.42(b), affidavits of consent must be
filed (1) ninety days or more after filing and service of the complaint and (2)
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4
Section 6111.2 was not at issue in Tosi.
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within thirty days of the date the consents are executed. In this case, the
Decedent’s affidavit was filed more than thirty days after it was executed, in
violation of Rule 1920.42. As a result, Colleen asserts, the Decedent’s
affidavit was invalid5 and grounds were never established under section
3323(g). Accordingly, she argues, section 6111.2 does not apply.
The Estate, on the other hand, argues that, while strict compliance
with the time limitations under Rule 1920.42(b) may be necessary to obtain
a final decree of divorce, “section 3323(g), to which [s]ection 6111.2 refers,
clearly contains no such time limitation.” Appellant’s Brief of Estate, at 31.
The Estate asserts that neither section 3323(g) nor section 6111.2 imposes
a time limit on the filing of the affidavits, nor do they explicitly incorporate
the limits set forth in Rule 1920.42(b). As such, Decedent’s otherwise
untimely affidavit was sufficient, under the facts of this case, to establish
grounds and require the application of section 6111.2.
Alternatively, assuming, arguendo, that the thirty-day limitation
applies, the Estate asserts that this Court “has viewed untimely affidavits as
valid to establish grounds for divorce under section 3323(g) . . . for various
purposes, including a request to bifurcate a divorce claim from economic
claims.” Id. at 33, citing Bonawits v. Bonawits, 907 A.2d 611 (Pa. Super.
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5
The Orphans’ Court found the issue of the validity of Decedent’s affidavit of
consent to be a “red herring” in light of its determination that Tosi was
dispositive and, thus, did not make a determination on the issue.
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2006). Accordingly, strict compliance with the thirty-day time limit is not
necessary to establish grounds for divorce under sections 3323 and 6111.2,
and “a minor technical violation of a procedural rule should not invalidate an
affidavit of consent filed by a party.” Id. at 34.
Finally, the Estate argues that Colleen is judicially estopped from
arguing that Decedent’s affidavit was invalid because it was “disingenuous
and directly contrary to the position she took in the [d]ivorce [a]ction.” Id.
at 35. Specifically, the Estate points to Colleen’s praecipe to transmit,
wherein she requested the divorce court to enter a decree of divorce based,
in part, on the fact that both parties had filed their affidavits of consent.
Only now that it is in her interest that the affidavit be deemed invalid, the
Estate asserts, does Colleen argue the opposite position.
We first address the Estate’s contention that the time limitation for the
filing of affidavits of compliance as set forth in Rule 1920.42 is inapplicable
and, thus, Decedent’s affidavit, although untimely under the rule, was
sufficient to establish grounds under section 3323(g). For the following
reasons, we disagree.
The legislature has declared that “[t]he family is the basic unit in
society and the protection and preservation of the family is of paramount
public concern.” 23 Pa.C.S.A. § 3102(a). In light of the various policy
considerations favoring the protection of the family unit, the Rules of Civil
Procedure preclude the entry of default judgments in the divorce context.
See Pa.R.C.P. 1920.41. In keeping with these policy considerations and the
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seriousness with which the dissolution of marriage is to be treated, Rule
1920.42(b) requires that the parties’ affidavits of consent demonstrate a
present intent to finalize a divorce by mandating that they be executed
within thirty days of filing. Under the rule, stale affidavits may not form the
basis for the entry of a final decree.
Where one party dies during the pendency of a divorce action, the
establishment of grounds takes on added significance, as it will be the
determinative factor in whether the parties’ economic issues are settled
under the Divorce Code or the PEF Code. In effect, section 3323(d.1) treats
the establishment of grounds as the functional equivalent to the entry of a
final decree, where the death of one party renders such finality impossible.6
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6
Pennsylvania courts have long held that an action in divorce abates upon
the death of either party and the death of a party prior to the entry of a final
decree precludes the finalization of a divorce. See Taper v. Taper, 939
A.2d 969, 973 (Pa. Super. 2007) (no statutory authority allows for entry of
posthumous decree of divorce). However, in 2005, the legislature amended
section 3323 of the Divorce Code to provide for the continuation of the
action for economic purposes where one party dies prior to the entry of a
final decree, but after grounds have been established. Under those
circumstances, section 3323(d.1) directs a determination of the parties’
economic rights under principles of equitable distribution rather than under
the provisions of the PEF Code. See 23 Pa.C.S.A. § 3323(d.1). Under the
prior version of the statute, the death of one spouse prior to the entry of a
final decree resulted in the abatement of the action, leaving the surviving
spouse to exercise his or her elective rights under the PEF Code. The 2005
amendment demonstrates a recognition on the part of the legislature that
the prior state of affairs “ma[de] it difficult to advise clients on whether to
bifurcate divorce proceedings, because of the difficulties often involved in
predicting whether equitable distribution would provide a more favorable
result than the elective share procedure.” Id., cmt. In enacting section
3323(d.1), the legislature provided certainty, as well as a mechanism to
(Footnote Continued Next Page)
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Given the added significance the establishment of grounds acquires under
such circumstances, it is reasonable to conclude that the legislature intended
to require compliance with the same procedural requirements precedent to
the entry of a divorce decree. Consequently, we conclude that a “stale”
affidavit of consent is insufficient to establish grounds under section
3323(g).
The Estate also argues that, even if the Rule 1920.42 time limit
applies, we should not require strict compliance with it, because doing so
would elevate form over substance. While, under other facts, this argument
might be persuasive, under the present circumstances, we find that waiving
the requirement would not effectuate justice where the Decedent had an
opportunity to rectify the untimely affidavit but, for whatever reason, chose
not to do so. The following facts, stipulated to by the parties, are relevant to
this determination.
Diane Carroll, an employee at the law firm of Colleen’s attorney, was
contacted by judicial staff in the Lancaster County Court of Common Pleas,
who advised her that the Decedent’s affidavit of consent was stale and that
he was required to sign and submit a new affidavit. Thereafter, on February
6, 2014, Carroll prepared and mailed a letter to the Decedent, explaining
_______________________
(Footnote Continued)
effectuate the parties’ presumed intent which, but for the death of one of
them, would have resulted in the entry of a final decree and a determination
of their economic rights through equitable distribution.
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that his original affidavit had been rejected as untimely and requesting that
he sign and return a new affidavit, which Carroll enclosed for his signature.
The day after she mailed that letter, Carroll spoke to the Decedent,
explained the situation and told him that he would have to sign a new
affidavit of consent. In the ensuing 7½ months leading up to the Decedent’s
death on September 21, 2014, Decedent failed to file the new affidavit or
return it to Colleen’s counsel for filing.
From these stipulated facts, it is far from clear that, at the time of his
death, Decedent possessed a present intent to divorce, such that we should
excuse the staleness of his affidavit of consent and conclude that grounds
were established. If anything, Decedent’s inaction, after having explicitly
been advised of the necessity to re-execute his invalid affidavit of consent,
evidences an intent to delay the proceedings, if not terminate them.
Accordingly, we decline the Estate’s invitation to overlook the affidavit’s
untimeliness.
Finally, the Estate argues that Colleen is judicially estopped from
asserting the invalidity of Decedent’s affidavit because she previously took a
contrary position in the divorce action. Generally, under the doctrine of
judicial estoppel, “a party to an action is estopped from assuming a position
inconsistent with his or her assertion in a previous action, if his or her
contention was successfully maintained.” In re Adoption of S.A.J., 838
A.2d 616, 620 (Pa. 2003) (citation omitted). This argument may be quickly
dispensed with by noting that, although Colleen’s counsel did file with the
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prothonotary a praecipe to transmit the record on January 24, 2014, the
document candidly noted that Decedent’s affidavit had been executed on
November 30, 2013, more than thirty days earlier. When this fact was
brought to counsel’s attention by the court, counsel made no argument that
the affidavit’s untimeliness should be excused. Rather, counsel prepared a
new affidavit for Decedent’s signature, mailed it to him, and contacted him
to request that he re-execute the document. On these facts, it is readily
apparent that the doctrine of judicial estoppel is inapplicable, most notably
because, even assuming Colleen could be deemed to have previously taken
a contrary position as to the affidavit’s validity, that contention was not
“successfully maintained.”
Based on the foregoing, we conclude that grounds for divorce were not
established pursuant to section 3323(g). Consequently, section 6111.2 does
not apply to invalidate Decedent’s beneficiary designation and the Orphans’
Court did not err in awarding the proceeds of the Decedent’s insurance
policy to Colleen as the named beneficiary.7
We now turn to Colleen’s sole appellate claim. The Orphans’ Court
ruled that the PNA entered into by the parties barred Colleen from retaining
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7
Although our analysis differs from that employed by the Orphans’ Court in
reaching its decision, we may affirm the lower court’s ruling on any basis.
See Blumenstock v. Gibson, 811 A.2d 1029, 1033 (Pa. Super. 2002)
(appellate court not limited by trial court’s rationale and may affirm on any
basis).
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Decedent’s benefits under his FedEx pension plan and awarded them to the
Estate. Colleen asserts that, despite the terms of the PNA, Decedent made a
deliberate and conscious choice to give his Fed-Ex pension to Colleen after
he died by making an irrevocable election that Colleen was to be the
designated survivor beneficiary. Colleen cites the fact that she and the
Decedent “remained in close contact, and that she assisted him with routine
activities of daily living and was his constant and sole caretaker, up until the
day that she found him dead[.]” Appellant’s Brief of Colleen Easterday, at 6-
7. Finally, Colleen asserts that the Employee Retirement Income Security
Act (“ERISA”) preempts Pennsylvania state law, specifically section 6111.2
of the PEF Code, as well as the terms of the parties’ PNA. Thus, she argues,
she is entitled to retain the pension benefits.
In response, the Estate asserts that the PNA – which was executed
after the Decedent signed the pension beneficiary designation – clearly and
unambiguously sets forth the parties’ waiver of their rights to each other’s
pension benefits and that a written modification to the contrary was never
executed by the parties. Moreover, the Estate asserts that the Decedent’s
alleged intent to “gift” to Colleen his benefits is irrelevant, as Colleen
affirmatively waived her right to retain the benefits, regardless of whether or
not Decedent wanted her to have them. Furthermore, the Estate argues
that any alleged reconciliation between the parties is similarly irrelevant, as
the PNA specifically provides that it remains in full force and effect despite
any reconciliation between the parties. Finally, while conceding that, under
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ERISA, the Decedent’s plan administrators are precluded from disbursing his
pension benefits to anyone other than Colleen as named beneficiary, the
Estate asserts that ERISA does not invalidate or preempt Colleen’s state law
waiver of her right to retain the pension proceeds once they are distributed
to her.
We begin our analysis by noting that a property settlement agreement
is subject to the law governing contracts, and is to be reviewed as any other
contract. Mazurek v. Russell, 96 A.3d 372, 378 (Pa. Super. 2014).
Because contract interpretation is a question of law, our standard of review
is de novo and our scope of our review is plenary. Id. When a contract is
free from ambiguity, the court must interpret the contract as written. Id.Only where the contract terms are ambiguous may the court receive
extrinsic evidence to resolve the ambiguity. Id.Under Pennsylvania law, spouses may waive their rights to each
other’s pension benefits via a property settlement agreement, where such
waiver is specific. Layne v. Layne, 659 A.2d 1048 (Pa. Super. 1995). In
the instant matter, the parties’ agreement provides as follows:
11. PENSIONS, 401(K) and IRA: Husband and Wife shall each
retain 100% of their respective stocks, pensions, retirement
benefits, profit sharing plans, deferred compensation plans, etc.
and shall execute whatever documents necessary to effectuate
this agreement.
Post Nuptial Agreement, 12/5/13, at ¶ 11.
1. Husband and Wife agree that any and all Pension, Profit
Sharing or Deferred Compensation Plan of which Husband is a
Participant, shall remain the sole property of Husband.
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...
5A. Wife hereby [w]aives any joint or survivor annuity
benefits[.]
Id. at Exhibit “B” ¶¶ 1 & 5A.
The language of the parties’ agreement was clear and unequivocal
regarding Colleen’s waiver of her rights to Decedent’s pension. In fact,
Colleen does not dispute that, in executing the PNA, she effected a waiver of
those rights. See Appellant’s Brief of Colleen Easterday, at 10 (“This is true
even though [Decedent’s] wife, Colleen Easterday, signed a waiver giving up
any right that she may have had in his pension.”). Because the PNA is clear
and unambiguous on its face, extrinsic evidence is inadmissible.
Accordingly, Colleen’s attempt to alter the terms of the written agreement
with extrinsic evidence regarding Decedent’s “actual intent” and the parties’
alleged reconciliation must fail.8
Colleen’s argument that her state law waiver is superseded by ERISA
is similarly meritless. In support of this claim, Colleen relies on the decision
of the United States Supreme Court in Egelhoff v. Egelhoff ex rel.
Breiner, 532 U.S. 141 (2001). There, the Court held that statutes, such as
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8
In any event, the Agreement clearly and unambiguously states that it is to
remain in effect regardless of any reconciliation by the parties. See Post
Nuptial Agreement, 12/5/13, at ¶ 1 (“[I]t is the intent of the parties that any
cohabitation or reconciliation of the parties shall not render this Agreement
null and void, but rather, this Agreement shall remain in full force and effect
until specifically modified/revoked by subsequent addendum or
agreement.”). The parties never modified or revoked the PNA.
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section 6111.2 of the PEF Code, that provide for automatic revocation, upon
divorce, of any designation of a spouse as beneficiary of non-probate assets
was preempted, as they applied to plans governed by ERISA, because such
statutes directly conflict with the ERISA requirement that plans be
administered, and benefits be paid, in accordance with plan documents.
Colleen’s reliance is misplaced and her argument meritless.
In enacting ERISA, one of Congress’ chief policy goals was to ensure
national uniformity, certainty, and efficiency in the administration and
distribution of covered benefit plans. See id. (principal goal of ERISA to
enable employers to establish uniform administrative scheme, providing set
of standard procedures to guide processing of claims and disbursement of
benefits). Thus, individual state statutes are preempted to the extent they
conflict with ERISA’s requirement that plans be administered, and benefits
be paid, in accordance with plan documents.
In 2009, on facts similar to the matter sub judice, the Supreme Court
decided Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan, 555 U.S.
285 (2009). There, a participant in an ERISA pension plan designated his
wife as his sole beneficiary. The couple subsequently divorced, and the wife
waived her interest in her husband’s pension plan. However, the husband
died without amending the pension plan documents to replace his ex-wife as
the designated beneficiary. The husband's estate claimed a right to the plan
proceeds, citing the ex-wife’s waiver. The plan administrator, however,
relied on the husband’s designation form and paid the funds to the ex-wife.
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The husband’s estate then sued the plan administrator to recover the
benefits. The Supreme Court held that ERISA precluded the plan
administrator from distributing the benefits to anyone but the named
beneficiary, regardless of the existence of a valid waiver.
The Court left open, however, the question of whether the estate could
recover the benefits from the ex-wife after she received them from the plan
administrator. This question was subsequently answered in the affirmative
by the United States Court of Appeals for the Third Circuit in Estate of
Kensinger v. URL Pharma, 674 F.3d 131 (3d Cir. 2012), in which the
Court held, under facts nearly identical to Kennedy, that ERISA does not
bar an estate from attempting to recover pension funds distributed to an ex-
wife who had executed a waiver of rights to those funds.
Similarly, here, ERISA presents no bar to the Estate’s recovery of
pension funds distributed to Colleen. Colleen’s waiver was clear and
unequivocal and is binding. The Estate is entitled, under principles of state
contract law, to enforce the bargain entered into between Colleen and the
Decedent. Accordingly, the Orphans’ Court did not err in ordering that
Colleen turn over to the Estate all sums received to date as beneficiary of
Decedent’s FedEx pension plan, as well as all remaining proceeds thereof
that she is entitled to receive under the plan documents.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/3/2017
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