Benyo v. Breidenbach

233 A.3d 774

ESTATE OF Michael A. BENYO and Jeffrey Benyo, Individually, Appellees

v.Scott F. BREIDENBACH, Esq., Representative of the Estate of Marsha Benyo, Appellant

No. 90 MAP 2019

Supreme Court of Pennsylvania.

Argued: May 19, 2020

Decided: July 21, 2020

Scott Francis Breidenbach, Esq., Breidenbach Associates Law Offices LLC, for Appellant.

Daniel Ian Sager, Esq., for Appellee.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE WECHT

In an issue of first impression, the Superior Court held that anti-alienation provisions governing municipal pensions found in various statutes¹ protected assets from attachment and other legal process (including a contract claim) only while those assets remained in the possession of the pension fund administrator. Specifically, the Superior Court determined that a spouse's promise to waive her right to her husband's pension benefits, including agreeing to transfer such benefits after receiving them from the administrator, was legally enforceable. Because the Superior Court's interpretation is consistent with the plain language of the statutes, the context in which the provisions appear, and Pennsylvania precedent interpreting similar statutory language, we affirm the decision of the Superior Court.

I. Background

Marsha Benyo ("Marsha") and Michael Benyo ("Michael") married in 1989. Michael served as a police officer for the North Coventry Township Police Department, entitling him to a municipal pension benefit. When Michael retired in 2010, he selected the joint annuity benefits option and provided that Marsha would be his joint annuitant.² Under this plan, Michael would receive $2,137.99 per month for the rest of his life, and, in the event that Michael predeceased Marsha, she would continue to receive the same amount for the remainder of her life.³ Because the Pennsylvania Municipal Retirement System ("PMRS") calculated the monthly benefits using a formula that accounted for the life expectancies of both beneficiaries, Michael's selection of Marsha as his joint annuitant could not be revoked.⁴ As Michael did not contribute to the plan himself, his designated beneficiary would receive no death benefit.⁵

On May 21, 2012, Michael filed for divorce. On June 18, 2012, Michael and Marsha executed a property settlement agreement to divide their property. This agreement provided, in relevant part:

Wife will agree to waive all right, title and interest in Husband's Police Pension. Wife will sign any necessary paperwork upon demand to facilitate said waiver. In addition, Wife agrees to waive any death benefit from Husband's Pension. She will sign any necessary paperwork to facilitate said waiver. At the time of the signing of this Agreement, Wife is to receive a one hundred percent (100%) death benefit. If the Plan Administrator of said Pension will not permit a waiver of said death benefit to Wife or a change of beneficiary based on Wife's life expectancy, Wife will agree to sign any necessary paperwork, including a statement in writing that she waives the benefits and instructs her estate to make payment of any benefits it may receive to a beneficiary designated by Husband. As of the date of the signing of this Agreement, the designated beneficiary of the death benefit will be Jeffrey Benyo^{[6 ]} .... Unless Wife receives a written statement from Husband that the designated beneficiary has changed, any proceeds that she or her estate receives shall be paid to Jeffrey Benyo. It is understood that, if Wife fails to fulfill the obligation set forth in the Agreement, Jeffrey Benyo and/or the estate of Michael Benyo may pursue all claims he or the estate may have against Wife and may seek appropriate sanctions including but not limited to counsel fees.

Currently Husband is receiving monthly payments from his Police Pension. The aforesaid benefits were used for the benefit of both parties. As a result, Wife agrees to reimburse Husband for fifty percent (50%) of the net proceeds he received since October 2010. Said reimbursement shall be performed on or before June 30, 2012. As of June 30, 2012, said reimbursement will be Seventeen Thousand Eight Hundred Twenty Dollars ($17,820).

Trial Court Exhibit P1 (Property Settlement Agreement) ("PSA") at 8-9. Michael and Marsha both signed the PSA. See id. at 11; see also id. at 3 ("Each party had an opportunity to review this agreement and the legal effects with an attorney."). Both agreed that "the parties will execute any and all written instruments, assignments, releases, satisfactions, deeds, notes or other writings as may be reasonably necessary and desirable for the proper effectuation of" the PSA. Id. at 5. In the event either party breached the PSA, "the other party [would] have the right to sue for damages for such breach," including the right to attorneys’ fees. Id. at 10-11. Finally, "the date of execution" of the PSA was "defined as the date upon which it is executed by the parties," though the PSA was to be "incorporated into any divorce decree which may be entered with respect to the parties." Id. at 2.

Following execution of the PSA, and Marsha's waiver of her right to Michael's pension benefits, Marsha and Michael began to divide the balance of their remaining property and continued their divorce proceedings. On October 2, 2012, a praecipe to transmit the record to the court for entry of the divorce decree was filed. But in an order dated October 31, 2012, the trial court indicated that it would not enter the decree because Michael improperly served the divorce complaint. The next day, the trial court notified the parties that they had to file a new praecipe.

Michael died on November 2, 2012, before he served a new divorce complaint. Michael's Estate asked PMRS to begin paying Michael's pension benefits to Jeffrey. However, in an August 1, 2013 letter, PMRS informed the Estate that Marsha did "not have any further rights of assignment." Trial Court Exhibit D5 (Sean Christine Deposition), Christine Deposition Exhibit 6 (PMRS Letter to Michael's Estate, 8/1/2013) ("PMRS Letter"), at 1. PMRS determined that the PSA, to the extent that it required PMRS to begin making payments to Jeffrey, was "not in compliance with Pennsylvania Municipal Retirement Law; and, whereas the PMRS has not received anything in writing from Marsha Benyo instructing [PMRS] to stop payments, ... Marsha Benyo ... is the rightful recipient of Michael Benyo's pension benefit and shall be paid accordingly." Id. at 2. However, PMRS further stated that, if Marsha "were to enter into an agreement whereby she redistributes monies after being paid by PMRS, that is outside the scope of this agency's purview and would not affect our contractual obligation to pay her the entitled joint annuity benefit." Id. at 1.

Marsha continued to refuse to transfer the pension benefits to the Estate or to Jeffrey, and the Estate and Jeffrey together (collectively, the "Estate") brought suit in the Chester County Court of Common Pleas. The cover sheet accompanying the original complaint noted that the Estate was filing a contract suit for a "[b]reach of a post-nuptial agreement." Complaint, No. 13-08348, Cover Sheet. Both the original complaint, id. at ¶¶ 18-22, and the amended complaint, Amended Complaint, No. 13-08348, at ¶¶ 18-22, included a count for breach of contract. The Estate conceded that, pursuant to PMRS’ determination, "[u]nder Pennsylvania law, a police pension cannot be assigned directly through the plan administrator so payments could be made directly to Jeffrey Benyo." Id. at ¶ 7. However, the Estate averred, "there is no law that precludes any beneficiary assigning the benefits to a third party upon receipt." Id. Marsha filed an answer to the amended complaint, arguing, among other things, that "[a]ny provisions of the" PSA "relating to pension and/or death benefits of Michael Benyo are invalid as violative of applicable federal and state law, including the Pa. Municipal Retirement Law (PMRL)." Answer, New Matter and Counterclaim, No. 13-08348, New Matter at ¶ 7.

The court of common pleas conducted a non-jury trial. PMRS membership chief Sean Christine testified that Michael could not have changed the beneficiary of the survivor annuity. See N.T. at 160-61. Christine also explained that Marsha could not request that PMRS send the payments directly to another individual. Id. at 169, 172-73. On cross examination, the Estate's attorney asked Christine, "[D]oes [PMRS] have any restrictions regarding Mrs. Benyo's use of the monies or transfer of the monies?" Id. at 178. Christine answered, "No, it does not," adding later that "it's similar to having your employer paying you. The employer pays you, and what you do with the money afterwards is your business." Id. ; see also id. at 184. Christine also responded affirmatively when asked whether the "survivor benefit" was a "pension benefit," indicating that he used the terms "interchangeably." Id. at 179-180; see also id. at 180 (stating that the phrases "pension benefit" and "survivor benefit" are "unique, but ... interchangeable in a sense").

On July 21, 2016, the trial court entered a verdict in favor of the Estate. The court concluded that Marsha and Michael "entered into a valid" PSA. Trial Court Order, No. 13-08348, 7/21/2016, at 1 n.2. Pursuant to that PSA, the trial court found that Marsha "renounced any entitlement she may have to [Michael's] police pension in whatever form it may take, including the death benefit." Id. According to the trial court, Marsha "breached the express terms of the [PSA] by retaining and failing to remit to the Estate ... the $2,137.99 monthly payment received from November 2012 to May 31, 2016." Id. at 1-2 n.2. The trial court ordered that Marsha transfer to the Estate those past payments and transfer future payments that were to be deposited into Marsha's account. Id. at 2-3. In its order, the trial court did not remark upon Marsha's claim that the PSA violated federal and...