Bonner v. SYG Assocs., Inc.

498 F.Supp.3d 859

Eliza BONNER, Plaintiff,

v.SYG ASSOCIATES, INC., et al., Defendants.

Civil Action No. 1:19-cv-1514

United States District Court, E.D. Virginia, Alexandria Division.

Signed October 30, 2020

Lucas Joel Kline, Hale Ball Carlson Baumgartner Murphy PLC, Fairfax, VA, for Plaintiff.

John Christian Hanssen, Moyes & Associates, PLLC, Leesburg, VA, for Defendants.

MEMORANDUM OPINION

T. S. Ellis, III, United States District Judge Jimmy Ghadban ("Decedent") died on February 11, 2019 without designating a beneficiary to receive the funds in a 401(k) Plan he maintained with his employer, SYG Associates, Inc. ("SYG"), pursuant to the Employment Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et. seq. Thereafter, Decedent's third wife, Plaintiff Eliza Bonner ("Plaintiff") claimed that she was Decedent's surviving "spouse" and hence entitled to the funds in Decedent's 401(k) Plan as the default beneficiary. The 401(k) Plan Administrators, Mary Kathryn Hamill, Susan Webb, and SYG (collectively, "Defendants"), disagreed with Plaintiff's claim to be Decedent's "spouse" and declined to award Plaintiff the funds in Decedent's 401(k) Plan. Plaintiff then brought this ERISA action to recover the funds in Decedent's 401(k) Plan and for other equitable relief.

Before the completion of discovery, Defendants moved for summary judgment, arguing that Plaintiff was not entitled to the funds in Decedent's 401(k) Plan because Plaintiff was a bigamous spouse and therefore not a "spouse" within the meaning of ERISA and Decedent's 401(k) Plan. Defendants’ motion for summary judgment was denied because the then-existing record was anemic as it did not reflect whether Decedent's marriage to Plaintiff was bigamous. At the time of Defendants’ motion, neither party had adequately explored whether Decedent's 1993 marriage to his second wife, Martha de la Vega ("de la Vega") had ended in divorce or was still valid, thereby rendering Decedent's 2001 marriage to Plaintiff bigamous and thus void ab initio. Accordingly, the parties were invited to search pertinent state and county records for any evidence of a divorce between Decedent and de la Vega and to supplement the record with any evidence that Decedent's marriage to de la Vega had ended in divorce.

The parties completed discovery and supplemented the record on the question as to whether Decedent's marriage to de la Vega had ended in divorce. At issue now on the merits is Plaintiff's Motion for Relief, which seeks the relief requested in the Compliant, as well as equitable relief that is not specifically requested in the Complaint. Thus, the remedies Plaintiff seeks here are:

(1) recovery of the funds in Decedent's 401(k) Plan under ERISA § 1132(a)(1)(B) by way of an Order directing the Plan Administrators to take the necessary steps to award the funds in Decedent's 401(k) Plan to Plaintiff as Decedent's "spouse";

(2) equitable relief under ERISA § 1132(a)(3), specifically (i) reformation of Decedent's 401(k) Plan to name Plaintiff as the "spouse" entitled to Decedent's 401(k) Plan and (ii) creation of a Virginia state law constructive trust to hold the funds in Decedent's 401(k) Plan in trust for the benefit of Plaintiff; and

(3) statutory damages and pre-judgment interest under ERISA § 1132(c)(1) based on Defendants alleged failure to provide Plaintiff with Plan documents, as well as payment of attorneys’ fees under ERISA § 1132(g)(1).

Defendants object to all three forms of relief, as they contend that the supplemented record discloses no evidence of a divorce between Decedent and de la Vega. The questions presented by Plaintiff's Motion for Relief have been fully briefed and argued, including oral argument held on August 21, 2020. Accordingly, the questions presented by Plaintiff's Motion for Relief are now ripe for disposition on the merits.¹

I.

The facts recited in the following indented bullets are derived from the record in this case and are not disputed.

• Decedent resided in Prince William County, Virginia from the early 1990s until his death on February 11, 2019.

• Plaintiff is putatively Decedent's third wife.

• Defendant SYG is a Virginia company that was owned by Decedent while he was alive.

• Defendants Hamill and Webb are Decedent's daughters from his first marriage and are also employees of SYG.

• Decedent created and funded a 401(k) Plan ("Decedent's 401(k) Plan") with SYG. Decedent's 401(k) Plan is governed by the terms of SYG's Flexible 401(k) Profit Sharing Plan ("Plan").

• It is undisputed that Decedent never designated a beneficiary to receive the funds in Decedent's 401(k) Plan. It is also undisputed that, in the absence of a named beneficiary, the funds in Decedent's 401(k) Plan must go to Decedent's "spouse" and that the Plan's definition of "spouse" incorporates Virginia law's definition of "spouse."

• As of December 18, 2019, the value of Decedent's 401(k) Plan was $721,916.88.

• The Plan designates SYG as the Plan Administrator of the Plan. Upon Decedent's death, Hamill and Webb served as additional Plan Administrators of the Plan and Decedent's 401(k) Plan.

• Decedent's first wife was Brenda Alexander. Hamill and Webb are issue of Decedent's marriage to Alexander. Decedent's marriage to Alexander ended in the entry of divorce decree in Prince William County, Virginia in 1987.

• On March 5, 1993, Decedent and de la Vega were married in the Commonwealth of Virginia in a ceremony officiated by Thomas E. Davis.

• On March 14, 2001, Decedent and Plaintiff were married in the state of Hawaii in a ceremony officiated by Reverend John Souter. Two days prior to the marriage, Decedent and Plaintiff completed a State of Hawaii Marriage License Worksheet and a State of Hawaii Marriage License Application. Both documents indicate (1) that Decedent's marriage to Plaintiff was Decedent's second marriage and (2) that Decedent had obtained a divorce from his first wife in 1987 in Prince William County, Virginia.

• As of March 14, 2001, Plaintiff knew that, from approximately 1990 to 1994, Decedent and de la Vega lived together in a house on Burwell Road in Nokesville, VA. Plaintiff and Decedent lived together in a house on Burwell Road in Nokesville, VA from approximately 1995 to 2003, at which time Plaintiff and Decedent moved to a different house in Nokesville, VA.

• In 2005, de la Vega moved from Virginia to Pima County, Arizona. De la Vega has lived in Pima County, Arizona from 2005 to the present day.

• The Commonwealth of Virginia Department of Health, Division of Vital Records has no record of any divorce between Decedent and de la Vega from the date of their marriage through Decedent's date of death.

• No Superior Court in Arizona has a record of a divorce between Decedent and de la Vega at any time from the date of their marriage through Decedent's date of death.

• Neither party contends that the state of Hawaii has a record of a divorce between Decedent and de la Vega.

• De la Vega has not filed for divorce from Decedent in any state, nor has she learned, from any source, that Decedent ever filed for divorce from her in any state.

• At some point after Decedent's death on February 11, 2019 but prior to Decedent's funeral later in February 2019, Plaintiff informed Webb and Hamill that, in 2016, Decedent changed the beneficiary on Decedent's $150,000 life insurance policy from Webb and Hamill to Plaintiff. Webb and Hamill were not aware of the change to Decedent's life insurance policy until Plaintiff informed them of the change in February 2019. After hearing about the change to Decedent's life insurance policy, Hamill and Webb asked Plaintiff to make a gift of $150,000 to SYG, as SYG at that time was nearing insolvency. Plaintiff declined to do so.

• At some point in February 2019, Hamill, Webb, and Plaintiff all purportedly learned that Decedent had never divorced from de la Vega. Plaintiff further asserts that she was completely unaware of Decedent's marriage to de la Vega until February 2019. Hamill and Webb have always known about Decedent's marriage to de la Vega.

• At some point in March 2019, Plaintiff, claiming to be Decedent's "spouse," completed her sections of a 401(k) Distribution Due to Death form and had the Executor of Decedent's estate deliver the Distribution Form to Webb. Defendants refused to complete the remaining sections of the 401(k) Distribution Form. Defendants also refused to take steps to transfer the funds in Decedent's 401(k) Plan to a bank account in Plaintiff's name.

• Plaintiff asserts that Decedent, while he was alive, told Plaintiff orally that Plaintiff would receive the funds in Decedent's 401(k) Plan in the event of Decedent's death.

• At some point in March or April 2019, Hamill, Webb, and defense counsel contacted de la Vega by telephone and encouraged de la Vega to make a claim to the funds in Decedent's 401(k) Plan. At the time of the telephone call, de la Vega was not aware that Decedent had a 401(k) Plan with SYG.

• In the months following this telephone call, Hamill, Webb, and defense counsel remained in contact with de la Vega and discussed distribution of the funds in Decedent's 401(k) Plan. On December 20, 2019, de la Vega, claiming to be Decedent's spouse, completed a 401(k) Distribution Due to Death form and sent the form to Defendants.

Although there is no dispute as to the foregoing facts, there is a dispute about whether Hamill, Webb, and de la Vega reached an agreement in which de la Vega, were she to succeed in her claim to the funds in Decedent's 401(k) Plan, would share a portion of the funds in Decedent's 401(k) Plan with Hamill and Webb. Specifically,

• Plaintiff claims that Hamill, Webb, and defense counsel convinced de la Vega to share with Hamill and Webb an unspecified portion of the funds in Decedent's 401(k) Plan as a reward to Hamill and Webb for informing de la Vega that she was eligible to inherit the funds Decedent's 401(k) Plan as Decedent's "spouse."

• Defendants dispute this, arguing that there is no

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